The Constitutionality of Regulating Corporate Expenditures: A Brief Analysis of the Supreme Court Ruling in Citizens United v. FEC

Summary

In a 5-to-4 ruling, the Supreme Court in Citizens United v. FEC invalidated two provisions of the Federal Election Campaign Act (FECA), codified at 2 U.S.C. § 441b. It struck down the long-standing prohibition on corporations using their general treasury funds to make independent expenditures, and Section 203 of the Bipartisan Campaign Reform Act of 2002 (BCRA), which amended FECA, prohibiting corporations and labor unions from using general treasury funds for “electioneering communications.” The Court determined that these restrictions constitute a “ban on speech” in violation of the First Amendment. In so doing, the Court overruled its earlier holdings in Austin v. Michigan Chamber of Commerce, finding that it provided no basis for allowing the government to limit corporate independent expenditures. The Court also overruled the portion of its decision in McConnell v. FEC upholding the facial validity of Section 203, finding that the McConnell Court relied on Austin. The Court, however, upheld the disclaimer and disclosure requirements in Sections 201 and 311 of BCRA as applied to the movie that Citizens United produced and the advertisements it planned to run promoting the movie. According to the Court, while they may burden the ability to speak, disclaimer and disclosure requirements “impose no ceiling on campaign-related activities.”

As a result of the Court’s ruling, it appears that federal campaign finance law does not limit corporate and, most likely, labor union use of their general treasury funds to make independent expenditures for any communication expressly advocating election or defeat of a candidate, including broadcast and cablecast communications made immediately prior to an election. Corporations and unions may still establish PACs, but are only required to use PAC funds in order to make contributions to candidates, parties, and other political committees.