Today, the United States Supreme Court issued a groundbreaking decision that impacts the political activity of every corporate entity. In Citizens United v. Federal Election Commission, 558 U.S. ____ 2010, the Court held that restrictions on corporate spending in political campaigns, whether directed to a candidate or to an issue, violated the First Amendment’s protection of political speech. This decision, which is expected to be applied to labor unions, 527s, and trade associations, will radically alter the role such organizations will play in elections. While the application of this decision will likely be subject to further regulation by agencies, including the Federal Election Commission, we address key elements of the decision and how it will impact the ability of corporations and others to express their opinions on issues or political candidates.
The Supreme Court’s decision in Citizens United has three elements that impact corporate political activity:
- Lifted Ban on Direct Corporate Political Expenditures. Most surprisingly, the Court held that a prohibition on corporations from using their general treasury funds to pay for campaign advertisements for or against an (1) issue or (2) political candidate was unconstitutional. However, corporations are still prohibited from making direct political contributions to candidates or political parties.
- Lifted Ban on Electioneering Activities Within Close Proximity of Primary or General Election. The Court held that a prohibition imposed by the McCain Feingold Bipartisan Campaign Reform Act of 2002 (“McCain Feingold’) on “electioneering communication,” i.e., those made by broadcast, cable or satellite, made within 30 days of a primary election or 60 days of a general election, was unconstitutional.
- Required Corporate Disclaimers. The Court held that a disclaimer requirement, also mandated by McCain Feingold, that identifies the corporation behind the advertisement was constitutional.
This decision upends the Court’s precedent that corporations may not use their general treasury funds to support or oppose candidates, and radically transforms the political role of corporate entities. We anticipate additional regulatory guidance, and will be analyzing such guidance and providing assistance related to campaign donations, electioneering activities and disclaimer requirements.