U.S. District Judge Colleen Kollar-Kotelly ordered the Federal Election Commission to write new rules to govern key aspects of fund raising, including when candidates and outside parties can coordinate activities.
The judge did not specifically address how candidates and political parties in the heat of current campaign should act in the absence of the rules. The law's main provisions, banning most large donations, are unaffected. But issues involving coordination must be addressed by regulators, for example.
CBS News Legal Analyst Andrew Cohen says the ruling is "likely to have more long-term ramifications than short-term ones. I can't see either a federal appeals court or the Federal Election Commission simply giving up and allowing this decision to change the rules of the game as it nears its end for this campaign cycle."
Jan Baran, a campaign finance lawyer who represents the U.S. Chamber of Commerce, the nation's largest business lobby, said he would advise his political clients to behave as though the rules are still in effect while waiting to see what the FEC does next.
Baran said he didn't view the judge's ruling as creating a free-for-all for election spending this fall: "There's a still a law there and people want to abide by the law, but they would like to have some guidance" on which rules interpreting the law are in effect, he said.
A commission member said Monday he wants the government to try to block the ruling from taking effect. "If the ruling is not stayed, many key parts of the federal election laws will be in chaos," said Commissioner Michael Toner, a Republican.
Kollar-Kotelly ruled some of the regulations the FEC devised after the law was passed in 2002 would "create an immense loophole" and allow for abuses that lawmakers who wrote the law never intended.
The judge's ruling was released Saturday on a court Web site and discovered Monday by the key parties.
The decision was a victory for the lawmakers who sponsored the 2002 law and accused the FEC of weakening some of the restrictions on big money. A campaign watchdog group hailed the ruling.
It "represents a massive and stinging repudiation of the Federal Election Commission and its repeated failures to properly interpret and implement the new campaign finance law," said Fred Wertheimer, president of Democracy 21 and a member of the legal team that brought the lawsuit.
Reps. Christopher Shays, R-Conn., and Martin Meehan, D-Mass., sued the FEC in October 2002 but the case was held up until the Supreme Court upheld the law, which broadly banned corporations and unions donations and large donations from any source. Such donations are known as "soft money."
The two lawmakers asked the judge to overturn several commission rules, arguing that the FEC opened several loopholes in the law by adopting weak regulations spelling out how the commission would enforce it. The FEC disagreed. It asked the judge to dismiss the lawsuit, arguing the commission had the authority to interpret the law as it did and that the lawmakers had no standing to sue over the rules.
The judge overturned several FEC rules, including those that:
"To exclude certain types of communications regardless of whether or not they are coordinated would create an immense loophole that would facilitate the circumvention of the act's contribution limits, thereby creating 'the potential for gross abuse,'" the judge wrote.