On January 21, 2010, the U.S. Supreme Court held that the government may not restrict any corporation, whether for-profit or nonprofit, from spending money on political speech so long as the corporation does not coordinate its communications with campaigns or political parties. Specifically, the Citizens United v. F.E.C. decision permits unlimited, independent, corporate-funded:

  • Communications in any medium that “expressly advocate” the election or defeat of clearly identified federal candidates, such as by urging the public to “vote for Jones,” to “defeat Smith,” or to question a candidate’s fitness for office;and,

     

  • “Electioneering communications,” which are television, radio, or cable TV ads that identify a federal candidate (even without mentioning the election) and run in his or her district within 30 days before the primary or 60 days before the general election.

          While the Court did not address the First Amendment rights of labor unions, to the extent that unions are incorporated, they will enjoy the same rights under this decision as any nonprofit or forprofit corporation. Importantly, the Court left intact other election-related restrictions on corporations, such as the ban on direct monetary campaign contributions and the Federal Election Commission’s electioneering communications on-air sponsor identification and post-expenditure disclosure requirements.

          The President and some members of Congress have sharply criticized the decision and have promised to introduce legislation to curtail its effects. At the same time, lower courts, the FEC, and the IRS must conform existing laws and regulatory requirements to the Supreme Court’s ruling. Future legislative and regulatory activity related to the decision will likely include the following:

  • Congress: Legislation designed to re-regulate corporate-financed political speech may build on existing disclaimer and disclosure requirements for independent expenditures and public communications. Such an approach would have the best chance of surviving constitutional scrutiny because the Court upheld similar requirements for electioneering communications.
  • FEC: The FEC will need to eliminate or modify a host of existing regulations to comply with the decision, including rules that govern candidate participation in corporate events, voter guides and corporate website content.
  • IRS: The IRS will need to resolve the conflict between the decision’s protection of nonprofit corporations’ election-related speech and current IRS regulations that prevent tax-exempt charities and foundations from intervening in elections through independent expenditures.
  • State law: Legislatures or courts in the 24 states that restrict corporate independent expenditures and/or express advocacy in state elections likely will repeal or overturn those provisions on First Amendment grounds.