Thursday, February 18, 2010, 12:02 PM

Citizens United: FAQ on the Impact and Implications of a Landmark Supreme Court Ruling

On January 21, 2010, the Supreme Court handed down a landmark ruling that invalidated restrictions on the content and timing of political ads funded by corporations and labor organizations. (Citizens United v. Federal Election Commission). The ruling frees corporations, trade associations, advocacy groups and labor organizations to fund independent ads that support or oppose officeholders and candidates.

The Supreme Court's recognition that corporations have a First Amendment right to engage in independent political speech has implications well beyond political advertising. The ruling has prompted a wholesale reassessment of federal and state laws that limit the political speech rights of corporations, including the right to communicate about elections with employees, customers and vendors; finance voter registration and get-out-the-vote efforts; publish and distribute voter guides; and sponsor candidate debates. This reassessment will likely pave the way for corporations to use a host of new tools for influencing elections and public policy.

See our FAQ regarding the case by clicking here.

BLIZZARD OF NEW LAWS AND REGULATIONS IN THE NEW YEAR

As if the Citizens United decision weren’t enough, the New Year has already brought many new state laws and regulations affecting political activity. Quite a beginning for an election year.

FEC Revisits Coordination Rules: The Supreme Court’s recognition that corporations and unions may advocate for and against candidates was premised on the assumption that such speech is not “coordinated” with candidates and parties. As it turns out, at the time of the Court’s decision the FEC was in the midst of a rulemaking proceeding on its coordinated communications rules – the third try by the agency after earlier attempts have been invalidated by a D.C. federal court.

After the ruling, the FEC extended its comment period to February 24, asking this overarching question: "Now that Citizens United permits additional entities, such as public corporations and labor organizations, to make independent expenditures, does the proposed rule on coordinated communications adequately address these organizations?" The Commission also asks whether it should set a heightened bar for complaints that companies or advocacy groups have coordinated with a candidate. The concern is that, absent a mechanism to screen out dubious complaints at an early stage, the threat of a coordination complaint will chill protected speech. The FEC’s supplemental request for public comment can be reached at this link.

Separately, the FEC has announced that it will initiate a rulemaking regarding the impact of Citizens United on existing agency rules. No timetable has yet been set for those efforts.

White House Re-energizes Lobbying Reform Effort in Citizens United Aftermath: The Obama Administration’s displeasure with the Supreme Court's decision is no secret. The President himself voiced his disapproval directly to the Justices during the State of the Union speech. Now, the Administration is linking its fear that Citizens United will contribute to "undue" corporate influence – particularly foreign influence – on the political process with its desire for more lobbying reform. In a recent blog post by Ethics Advisor Norm Eisen, the White House is calling for additional regulation of lobbyists in the aftermath of the Citizens United decision. Specifically, the Administration is calling for:

  • Low-dollar limits on contributions that lobbyists may bundle or make to federal candidates
  • Elimination of the registration exemption for lobbyists who spend less than 20% of their time on lobbying activity for a client
  • Mandatory disclosure of the "details of every lobbying contact" by lobbyists
  • Fuller disclosure by foreign agent lobbyists; and
  • Full disclosure of earmark requests on a new database

New Jersey: The Garden State already has one of the toughest pay-to-play regimes in the country, and it just got more interesting. As one of his first acts, Governor Chris Christie signed Executive Order No. 7 on January 20, which extends political contribution limits and reporting requirements to unions that have collective bargaining agreements with the state.

The New Jersey Election Law Enforcement Commission (ELEC) has also proposed a record retention requirement of four years for entities required to file annual reports under the state's pay-to-play law. A hearing on the proposal was held on Tuesday. Remember that New Jersey’s annual pay-to-play report is due on March 30, 2010.

Ohio & California: Both states have embarked upon tougher enforcement of their lobbying and gift laws. The Ohio Attorney General has announced a campaign to investigate violations of the state's lobbying laws and to collect debts owed by lobbyists. Meanwhile, the California Fair Political Practices Commission has announced an effort to investigate 38 lawmakers who accepted, but failed to report, gifts from lobbying groups.

North Carolina: Last fall, Governor Beverly Perdue issued Executive Order No. 24 that is sure to have repercussions this election year. Now all cabinet agency employees are prohibited from accepting gifts from existing and prospective state contractors. The gift ban had previously applied to just a limited group of executive branch officials.

Illinois & New Mexico: While Illinois and New Mexico recently enacted for the first time limits on campaign contributions, you should be aware that these new limits will not go into effect until after this year’s elections. So the gubernatorial campaigns in both states are subject to the older – wide open – contribution rules. This week, the New Mexico House of Representatives passed a bill that would prohibit lobbyists and contractors from contributing to candidates and political parties.

Pennsylvania: New pay-to-play laws applying to municipal pension funds took effect on December 17, 2009. The law requires that all Pennsylvania municipal pension funds adopt and follow a Code of Conduct that prohibits professional service contractors (including investment, legal, and consulting services) from offering a gift of more than "nominal value" to any "official, employee or fiduciary of a municipal pension system." It also prohibits such contractors from soliciting a campaign contribution for a municipal official or candidate for municipal office, or for the political party of that official or candidate. The law contains a "look-back" provision that bars firms from entering into contracts if they have made a prohibited contribution in the preceding two years. And finally, professional service contractors must disclose and update annually political contributions made over the past five years by their officers, directors, executive-level employees, owners (5% or more) and affiliated entities. A knowing and material misstatement (or omission) regarding any disclosure requirement in this law will prevent the entity from entering into a contract for up to three years.

Virginia: Earlier this week, the Virginia Senate passed a bill prohibiting bidders on state contracts worth more than $5 million from donating to the governor’s campaign committee. The bar would apply between the time a bid is submitted and the award of the contract.

Dallas: The City of Dallas adopted a pay-to-play ordinance, effective December 1, 2009, that bars campaign contributions to city council members by bidders on city contracts. The contribution ban extends to the bidders’ employees, and any person acting as a representative or agent of the bidder.

You are invited to a webinar

Citizens United: What the Landmark Supreme Court Ruling Means for Election-Related Spending By Corporations and Associations

DATE: Thursday, March 11, 2010
TIME: 12:00 p.m. – 1:00 p.m. (EST)
WHERE: ANYWHERE! Join from your desk or anywhere with Web access!
COST: There is no charge to attend, but space is limited.

The landmark Supreme Court ruling in Citizens United v. FEC changes the rules for corporate spending in federal and state elections. The ruling removes barriers on election ad spending by corporations, corporate coalitions and trade associations. It also expands the right of corporations to communicate with employees, customers and vendors, and donate to advocacy groups in support of their election activities. More than ever, it is essential for companies and associations to understand the scope of these new opportunities and the restrictions that continue to apply.

Why should you attend this webinar?

The opportunities to help your business through political activity and lobbying have never been greater. But so, too, are the risks from noncompliance.

This program will address new opportunities for influencing officeholders and candidates, and offer practical tips for keeping your company and employees out of trouble. We’ll address important questions that you and your management team should be asking, including:


  • How has the Supreme Court changed the rules for corporate participation in federal and state elections? For trade associations and advocacy groups?
  • What are the new opportunities for using political engagement to achieve business goals? What are the legal and business risks? What are the rules of the road you need to know about?
  • How are PACs affected? How about direct corporate contributions, using corporate resources to augment personal fundraising, or site visits by officeholders and candidates?
  • How are federal, state and local laws likely to change in the wake of Citizens United? Will the ruling lead to even more state and local restrictions on campaign contributions by government contractors and their employees ("pay-to-play" laws) and on lobbying by contractors? What steps is the FEC taking to clarify its regulations?
  • How have the risks of political engagement changed in the wake of Citizens United? What changes should corporations and associations consider to strengthen their compliance systems?

About the speakers:

Larry Norton and Jim Kahl head Womble Carlyle's Political Law Practice. They represent corporations, trade associations, non-profit organizations, and others in connection with campaign finance, lobbying, and gift laws. Prior to joining Womble Carlyle, Larry and Jim served as General Counsel and Deputy General Counsel, respectively, of the Federal Election Commission from 2001-2007. They co-author a blog on political law issues called Political GPS. Larry and Jim filed a brief in the Supreme Court in support of the winning party, Citizens United.

Questions about this Webinar? Please contact Katie Tedrow via email or via phone at (202) 857-4502.

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