How will the Supreme Court’s recent
ruling impact corporate campaign
finance laws?
W. Plumer Wiseman Jr.
502/587-3556
wpw@gdm.com
In Citizens United v. FEC, a
divided U.S. Supreme Court struck
down portions of 2 U.S.C. § 441b,
which prohibits corporations and
unions from making independent
expenditures for electioneering
communications. As a result,
Citizens United makes it
permissible for corporations and
unions to spend unlimited dollars
on independent advertising
intended to influence federal
elections at any time before a
primary or general election.
Because the Court’s holding deals
primarily with First Amendment
issues, it does little to clarify
practical matters germane to
corporations and unions, such as
how independent expenditures
may be restricted in the future or
the manner in which corporations
and unions may make independent
expenditures in state elections. So,
before spending your
organization’s dollars on political
advertisements, three key issues to
consider are as follows: (1) the
decision’s immediate effect on
federal law; (2) the decision’s
impact on state campaign
spending; and (3) the decision’s
potential effect on organizational
governance.
From a federal law perspective,
Citizens United invalidated
Issue 1, 2010
Greenebaum Doll & McDonald PLLC
Lexington • Frankfort • Louisville • Covington • Cincinnati
Mark A. Melvin
502/587-3773
mam3@gdm.com
restrictions on independent
corporate and union expenditures
on “electioneering
communications.” An
electioneering communication is
defined as “any broadcast, cable,
or satellite
communication…[that]…refers to
a clearly indentified candidate for
Federal office,” made within 30
days of a primary election or 60
days of a general election. In
addition, Citizens United only
applies to independent campaign
spending. Corporations and
unions are still prohibited from
collaborating directly with any
particular candidate or political
group.
The Court’s ruling did not
invalidate several key areas of
campaign finance regulation.
First, the ruling does not remove
restrictions on direct corporate
contributions to a particular
candidate, party or political group
during federal elections. Second,
the Court upheld current disclosure
requirements related to corporate
campaign expenditures,
specifically those associated with
independent electioneering.
Finally, the Court’s ruling does not
affect a corporation’s or union’s
ability to use political action
committees to promote political
speech.
888/779-1155 www.greenebaum.com
No less than twelve House and
Senate bills addressing the Court’s
ruling are currently before U.S.
Congressional Committees. All
bills introduced to this point are
aimed at limiting the immediate
and long term effects of Citizens
United. Several bills seek to
reduce foreign influence in U.S.
elections by preventing foreign
corporations or other companies
with foreign ownership from
running electioneering ads.
Others, such as H.R. 4537, seek to
amend the Securities Exchange
Act of 1934 by requiring
shareholder authorization prior to
an electioneering expenditure not
related to a corporation’s products
or services. Taxpayer protection
bills, such as H.R. 4550, would
prevent companies from spending
federal bailout money on
electioneering communications.
One joint resolution, H.J. Res. 68,
would amend the U.S. Constitution
to prohibit corporations and labor
organizations from using operating
funds for advertisements in
connection with any federal
election. These legislative efforts
to diminish Citizens United may
drag on for months and possibly
years. Those who prefer to bypass
Continued
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 How will the Supreme Court’s recent ruling impact corporate campaign
finance laws?
the “wait-and-see” approach may
instead choose to file legal actions
challenging the remaining
restrictions on corporate campaign
finance.
At the state level, Citizens United
calls into question many laws that
prohibit independent
electioneering expenditures on
state elections. Currently, 24
states ban or restrict corporate and
union spending in state elections.
For example, the Kentucky
Constitution and the Kentucky
Revised Statute (KRS) directly
forbid all corporate and union
spending aimed at influencing
state elections. The only exception
to Kentucky’s ban on corporate
and union campaign spending are
funds used to support ballot
initiatives, including constitutional
amendments. No bills currently
before the Kentucky General
Assembly directly address Citizens
United. Thus, while amendments
to Kentucky’s law during the
current legislative session are
unlikely, constitutional challenges
against portions of the Kentucky
Constitution or the KRS that
prohibit independent
electioneering expenditures are
likely.
Unlike Kentucky, the Ohio
Constitution does not address
corporate or union campaign
spending, and the Ohio Revised
Code contains limited restrictions
lawletter
Issue 1, 2010
similar to those overruled in
Citizens United. Ohio currently
permits corporate and union
expenditures for independent
electioneering communications
that occur no less than 30 days
prior to a primary or general
election. As with Kentucky, no
bills addressing this restriction are
before the Ohio legislature, but
constitutional challenges are
likely. Ohio does place
restrictions on direct corporate
contributions to both candidates
and political parties, and similar to
Kentucky, Ohio’s direct
contribution laws are likely not
invalidated by the Supreme Court
ruling.
Finally, corporate and union
leaders must be prepared for
potential changes in organizational
governance as a result of Citizens
United. Corporations particularly
should be aware of possible
shareholder-protection legislation
as both state and federal
governments may attempt to enact
laws that increase shareholder
power over electioneering
expenditures. For example,
shareholder-protection measures
could potentially take the form of
opt-out laws, whereby a Public disclosure alone may
corporation may, by default,
finance independent electioneering
communications.
Greenebaum Doll & McDonald PLLC
Lexington • Frankfort • Louisville • Covington • Cincinnati
To prevent electioneering Citizens United is a landmark case
expenditures, the corporate charter in the area of free speech and First
would have to include a provision Amendment rights, but the ruling
prohibiting such activity, thereby has created more questions than
causing the corporation to “opt- answers in the area of campaign
out” of its spending privileges. finance law. Until these questions
Conversely, laws currently being are answered, corporations, unions
proposed at the federal level and their respective counsel should
would, by default, prohibit track the fallout by monitoring
legislation and litigation related to
corporations from making
independent electioneering the Court’s ruling. Regardless of
expenditures. To make such potential new developments,
expenditures, corporations would corporations and unions with a
have to “opt-in” to such activity by desire to spend funds to influence
charter provision or shareholder candidate elections should
vote. Legislators may also attempt continue to carefully adhere to all
to condition corporate or union applicable disclosure requirements
benefits, such as tax breaks or and take precautions to ensure that
government subsidies, on an all advertising is truly
entity’s abstention from independent.
independent electioneering. Like
opt-in laws, however, legislation
creating conditional benefits based
on independent campaign
expenditures will be closely
scrutinized regarding their
restrictions on free speech.
Corporate and union leaders
should also note that, because
campaign disclosure requirements
remain in effect, shareholders and
union members must still be
informed about organizational
campaign spending activities.
prevent many organizations from
engaging in independent campaign
spending for fear of public
relations problems or, for
corporations, shareholder
derivative actions.
888/779-1155
www.greenebaum.com
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