Citizens United: The Supreme Court Decision and Its Potential Impacts

The long-awaited decision [1] in Citizens United v. Federal Election Commission was issued on Jan. 21. With a 5-4 ruling, the U.S. Supreme Court decided that corporations and unions may now directly and expressly advocate for the election or defeat of candidates for federal office, as long as they do not coordinate their efforts with campaigns or political parties. Many predict the impacts of the decision will be immense and far-reaching, both for nonprofit voter engagement and political discourse as a whole.

The majority opinion authored by Justice Anthony Kennedy argued that limits on so-called "independent expenditures" by corporations violate the First Amendment right to free speech. The Bipartisan Campaign Reform Act (BCRA), which the Citizens United decision partially invalidated, prohibited corporations (including nonprofit organizations) and labor unions from airing any "electioneering communications" – broadcast messages that refer to a federal candidate 30 days before a primary election and 60 days before a general election. Older law also barred corporations from using monies from their general treasuries for "express advocacy," to directly urge the election or defeat of a candidate for federal office.

The opinion stems from a controversy caused by a clash between Citizens United, a 501(c)(4) nonprofit organization, and regulations crafted by the Federal Election Commission (FEC). The nonprofit group wanted to release a film on a cable TV video-on-demand service about former Democratic presidential candidate Hillary Clinton during the 2008 presidential primary. The group also wanted to promote the film with several ads. The critical movie was partially funded by corporate contributions, in violation of BCRA and FEC regulations.

Before the Supreme Court ruling, Hillary: The Movie and the ads promoting the film were considered a prohibited electioneering communication. Citizens United challenged these campaign finance laws, charging that the provisions enforced by the FEC were an unconstitutional violation of the organization's free speech rights. The group also felt it should not be subject to donor disclosure and disclaimer requirements for its 90-minute film.

The case was first heard by the Court in March 2009. A few months later, the Court decided to not only rehear the case, but to expand the scope of the review to include broader First Amendment concerns. The new briefs had to address whether the 1990 decision in Austin v. Michigan State Chamber of Commerce [2], as well as parts of the 2003 decision in McConnell v. Federal Election Commission [3] that dealt with BCRA, should be overturned. Both of those opinions held that restrictions on direct corporate and union spending in campaigns were justified and upheld the government's right to limit corporate expenditures on electoral activity. The Supreme Court met in special session on Sept. 9 for the second hearing of Citizens United, and since then, many had fervently anticipated how the Court would rule.

After months of waiting and speculation, the Court overturned long-standing precedent, ruling that banning corporations from using money from their general treasuries for express advocacy was an unconstitutional violation of First Amendment political free speech rights. The majority opinion also struck down the electioneering communications rule as it applies to corporations. As a result, corporations and unions may now spend as much as they want on independent expenditures, in a way that could help the candidate of their choice, right up until Election Day.

This historic decision specifies that the First Amendment protects corporations and unions the same as individuals with regard to the ability to spend money to influence elections. Kennedy wrote that there was "no basis for the proposition that, in the context of political speech, the Government may impose restrictions on certain disfavored speakers."

Citizens United argued that its film was not electioneering because it did not advocate for or against any particular candidate, but rather that it was simply a documentary about Clinton. However, the Supreme Court agreed that the film was in fact an electioneering communication and "contained pejorative references to her [Clinton's] candidacy." Kennedy wrote, "The movie, in essence, is a feature-length negative advertisement that urges viewers to vote against Senator Clinton for President."

While the Court did not agree with Citizens United's argument that the film and its messages were not electioneering communications, it ruled that applying such prohibitions to corporations is censorship and a "ban on speech." The Court affirmed that such rules constraining speech are unconstitutional. The Court opinion stated, "The law before us is an outright ban, backed by criminal sanctions."

The Court rejected the argument that corporate money in elections will distort the political debate. It also found that regulations meant to level the playing field are not enough to justify campaign finance laws that restrict certain corporate campaign spending.

Justice John Paul Stevens wrote a scathing 90-page dissent, joined by Justices Stephen Breyer, Ruth Bader Ginsburg, and Sonia Sotomayor. Stevens wrote that the "ruling threatens to undermine the integrity of elected institutions across the Nation. The path [the Court] has taken to reach its outcome will, I fear, do damage to this institution." In a Jan. 26 speech, former Justice Sandra Day O'Connor also cautioned that the ruling may impact state judicial elections, allowing corporations to increasingly influence those who are supposed to be unbiased arbiters of the law.

Importantly, the decision does keep in place disclosure and disclaimer requirements. All of the justices except Clarence Thomas ruled against Citizens United's challenge to disclosure rules. These requirements involve reports that have to be filed with the FEC on electioneering communications, and the ads themselves must carry a disclaimer stating who is responsible for the content. The opinion states that "transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages."

Kennedy said disclosure and disclaimer provisions regarding those funding such ads are constitutional unless there is a specific threat of harassment of donors. This may leave open the possibility for future court challenges and ultimately reverse the disclosure provision if a group can successfully prove that donors did face mistreatment.

Nevertheless, the Court's endorsement of the Internet and meaningful disclosure is something to applaud. According to the opinion, "[With] the advent of the Internet, prompt disclosure of expenditures can provide shareholders and citizens with the information needed to hold corporations and elected officials accountable for their positions and supporters."

Unfortunately, as the Sunlight Foundation notes, [4] "The disclosure system they describe doesn't yet exist. The current disclosure system is insufficiently 'rapid and informative' and does not make effective use of modern technology."

Additionally, some predict that to protect their image with consumers and to avoid being associated with a particular candidate, corporations may now contribute more to trade associations or 501(c)(4) organizations to fund campaign advertising. This may ultimately weaken the disclosure argument that the Court makes, considering that Internal Revenue Service (IRS) rules and Supreme Court precedent provide for donor confidentiality for such tax-exempt organizations.

Reaction to the decision was swift and often passionate. Shortly after the opinion was released, OMB Watch issued a press release [5] that stated, "The corporate voice will now be more powerful than ever." Lateefah Williams, a nonprofit speech rights analyst at OMB Watch, added, "Our fear is that the voices of large portions of our citizenry and the charities that advocate on their behalf will be drowned out in the process."

President Obama criticized the ruling [6], calling it "a green light to a new stampede of special interest money in our politics. It is a major victory for big oil, Wall Street banks, health insurance companies and the other powerful interests that marshal their power every day in Washington to drown out the voices of everyday Americans."

The FEC issued a press release [7] announcing that it will be "considering the impact of the opinion on its existing regulations, as well as its ongoing enforcement processes, and will be providing guidance to the public as soon as possible regarding what steps will be taken to comply fully with the opinion."

Many nonprofits [8] are working to respond to the Citizens United decision, with various strategies either to shape legislation or craft other reforms to campaign finance regulations. Lawmakers have also reacted with ideas for addressing the impacts of the decision.

The ruling will certainly alter corporate and union spending on future elections, most immediately the 2010 midterm elections and the 2012 presidential election. Just how large of an impact the case will have remains to be seen, but many advocates and election law experts warn that the impending influx of corporate money could go far beyond the exercise of free speech and ultimately allow moneyed interests to wield disproportionate influence on both elections and the lawmakers whose campaigns such corporate spending will supplement.

Image in teaser by flickr user NCinDC [9], used under a Creative Commons license.