Corporations may independently participate in partisan political activities, as long as such participation is independent of and not coordinated with any candidate or political party, according to a recent advisory opinion issued by the Ohio Elections Commission (OEC).
This opinion comes on the heels of the landmark U.S. Supreme Court decision issued in Citizens United v. Federal Election Commission, 558 U.S. 50 (2010). In Citizens United, the U.S. Supreme Court held that corporations, trade associations and labor unions may use general treasury funds to make independent communications that expressly advocate the election or defeat of a political candidate or to fund independent electioneering communications. Prior to this decision, such activity was prohibited under §441b of the Bipartisan Campaign Reform Act.
Ohio’s Ban on Independent Corporate Expenditures
Ohio law also assumed the same basic ban on corporate spending for independent campaign communications that was struck down by the U.S. Supreme Court in Citizens United. For years, corporations have been prohibited under Ohio Revised Code Section 3599.03 from participating in the partisan political process by or on behalf of a candidate, except through a corporate sponsored political action committee. The OEC agreed to examine Ohio’s prohibition because Citizens United “called into question the continuing applicability of this statutory provision.”
In its opinion, the OEC concluded that “the [U.S. Supreme] Court’s decision allows corporations to participate in candidate campaigns, as long as there is no direct contribution to or coordination with either a candidate’s campaign committee or a partisan political committee.” While the ban on direct contributions to candidates or political parties from corporate entities remains intact, corporations may participate in partisan political activities in this independent way without fear of being subjected to a finding of a violation under Ohio Revised Code Sections 3517.105 and 3599.03.
The OEC recognized that because such expenditures were previously prohibited, Ohio law does not currently provide any means to facilitate the reporting of corporate independent expenditures. However, the Commission “encouraged” corporations to report independent expenditures in a manner consistent with a Form 30-B-1 filing. Corporations are required to report contributions to ballot issue committees on Form 30-B-1.
Ohio’s Ban on Electioneering Communications by Corporations
Unlike the Citizens United case, the OEC did not address Ohio’s ban on electioneering communications by corporations in its opinion. Under Ohio law, “electioneering communications” are defined as broadcast, cable or satellite communications that refer to a clearly identified candidate and that are made within 30 days of a primary or general election. Ohio Revised Code Section 3517.1011 specifically prohibits electioneering communications that are financed by a corporation’s general treasury funds.
Ohio’s electioneering communication ban, however, has been the subject of on-going federal litigation in U.S. District Court in Ohio Right to Life Society, Inc. v. Ohio Elections Commission, et al., Case No. 2:08-cv-00492. In 2008, the Ohio Right to Life Society (“ORTL”) filed suit to force the Ohio Elections Commission to follow the U.S. Supreme Court’s 2007 ruling in Federal Election Commission v. Wisconsin Right to Life, 551 U.S. 449 (2007). That case held that issue ads may not be banned from the months preceding a primary or general election.” In 2008, the U.S. District Court agreed and granted ORTL a preliminary injunction.
In the wake of Citizens United, ORTL moved for a temporary restraining order and preliminary injunction to enjoin the Defendants from enforcing Ohio’s electioneering communication ban. On September 15, 2010, the parties to the litigation entered into a consent decree and agreed that Ohio’s electioneering communication laws are unconstitutional to the extent that they prohibit a corporation or labor organization from using treasury dollars to independently pay for any broadcast, cable or satellite communication that refers to a clearly identified candidate during the 30 days preceding a primary or general election.
The parties also agreed that “[t]he Ohio general ban on corporate partisan political activities is unconstitutional to the extent that it prohibits a corporation from using the corporation’s money or property, or a labor organization’s money or property, to make independent expenditures for or in aid of candidate elections in Ohio.”
Independent Opportunities for Corporations
How do these two recent developments impact a corporation’s participation in the political process? Corporations may now legally use their general treasury funds to make independent expenditures that expressly advocate the election or defeat of a candidate. Corporations may also independently pay for speech that is electioneering communication. However, corporations intending to participate in the political process must be absolutely certain that their activities are independent. “Corporate activities are permissible as long as such participation is independent of and not coordinated with any candidate or political party.” Advisory Opinion 2010ELC-02. Ohio Revised Code Section 3517.01(B)(17) defines an independent expenditure as any expenditure made to advocate the election or defeat of a candidate without the consent of, and not in coordination, cooperation or consultation with, or at the request or suggestion of, the candidate or campaign committee. Further guidance on what constitutes “independenent” is provided in Ohio Administrative Code Section 111-3-02.
According to this administrative rule, expenditures will be presumed to be made with cooperation or with the prior consent of, or with the consent of, or in consultation with, or at the request or suggestion of, a candidate or campaign committee when it is:
- Based on information about the candidate’s plans, projects or needs provided to the person making the expenditure by the candidate or by the candidate’s campaign committee or agent with a view toward having an expenditure made; or
- Made by or through any person who is or has been authorized to raise or expend funds, who is or has been an officer of the candidate’s committee, or who is or has been receiving any form of compensation or reimbursement from the candidate, the candidate’s committee or agent.
If corporations violate this “independent” standard, their activities are considered coordinated and the expenditure will be deemed an in-kind contribution. In-kind contributions, like direct contributions, are prohibited under both federal and state law.
Note that the OEC Advisory Opinion and the consent decree only effect Ohio’s campaign finance laws. Neither decision has any impact on applicable IRS restrictions imposed on Section 501(c)(3) organizations.