Reprieve For 'Soft Money'?

A federal court Friday struck down most of a ban on the use of large corporate and union contributions by political parties, casting doubt on the future of the new campaign finance law that was supposed to govern next year's high-stakes presidential election.

The court, which made its ruling effective immediately, also ruled unconstitutional sweeping new restrictions on election-time political ads by special-interest groups and others. However, it said more narrow limits the law's sponsors included in the legislation as a backup were constitutional.

The ruling clears the way for an immediate appeal by the losing parties to the U.S. Supreme Court. The high court's decision will establish the ground rules for the 2004 elections and beyond.

The decision is a victory for the Republican National Committee and dozens of interest groups, who argued that the law would undermine their ability to participate in politics. It is a loss for the chief congressional sponsors of the campaign finance bill — Republican Sen. John McCain of Arizona and Democratic Sen. Russell Feingold of Wisconsin — who fought for years to get new regulation enacted. The two argued that it was time to end the corrupting influence of big money in politics.

The ruling came from a special three-member, fast-track panel of Appeals Court Judge Karen LeCraft Henderson, District Judge Colleen Kollar-Kotelly and District Judge Richard Leon.

In a 2-1 vote, the court ruled that political parties can raise corporate and union contributions for general party-building activities such as get-out-the-vote drives and voter registration but cannot use them for issue advertising. The two Republican-appointed judges — Henderson and Leon — voted to strike down the soft-money ban.

Also voting 2-1, the court struck down a provision barring a range of interest groups from airing issue ads mentioning federal candidates in those candidates' districts in the month before a primary election and within two months of a general election. It upheld a backup provision in the law that barred a range of groups from airing ads that promote, support, attack or oppose a candidate close to an election.

In making its ruling effective immediately, the court's action bars the Federal Election Commission from enforcing the restrictions it struck down.

The court also said it would release the fund-raising documents and other records it relied upon to make its ruling, but it will keep under seal those parts of the documents that it didn't use in its rulings.

The new campaign finance law took effect Nov. 6, forcing an immediate change in party fund raising.

It prohibited the national party committees from raising contributions known as "soft money" from corporations, unions and others. The Democratic and Republican parties have collected the unlimited checks in ever-increasing amounts: The fall election saw some contributions of $1 million and more. The parties were allowed to use the money on general party-building activities such as voter registration drives and issue ads.

While banning national parties from collecting it, the new law let state and local parties continue raising soft money in limited amounts if state law permitted. It barred them from using such money on federal election activity, including general get-out-the-vote drives when federal candidates are on the ballot.

The law also imposed new restrictions on political advertising close to elections. It banned a range of interest groups from airing TV and radio ads within a month of a primary and two months before a general election if they named a federal candidate, were funded with unlimited corporate or union contributions and targeted the candidate's district.

Among other major provisions, the law directed the Federal Election Commission to write tougher rules restricting interest group coordination of election activities with candidates and political parties and political party committees' coordination with each other. Those opposing the coordination limits, including the U.S. Chamber of Commerce, argued that the new rules would chill political speech and that the law was so vague it put interest groups, corporations and unions at risk of investigation simply for talking to lawmakers.

While attempting to cut six-figure soft money checks out of politics, the law raised the limits on so-called hard money, limited contributions from individuals and political action committees to candidates and party committees. The individual contribution limit doubled in January, from $1,000 to $2,000 per election.

The law banned minors from contributing to national party committees or federal candidates, however. Ruling unanimously, the court struck down that ban as unconstitutional.

President Bush signed the law in March 2002, saying, "I believe that this legislation, although far from perfect, will improve the current financing system for federal campaigns," Mr. Bush also said at the time that parts of the bill, including the political ad restrictions, presented "serious constitutional concerns."

Within hours of the bill's signing, the National Rifle Association and Sen. Mitch McConnell, R-Ky., filed lawsuits arguing many of the law's restrictions violated free-speech and other constitutional rights.

Dozens of groups joined their effort to overturn parts of the law, including the Republican National Committee, the Democratic and Republican parties of California, the AFL-CIO, the U.S. Chamber of Commerce, the AFL-CIO, the American Civil Liberties Union, the Libertarian National Committee, the National Right to Life Committee and the National Association of Broadcasters.

While several political party committees and interest groups sued because they felt the law removed too much money from politics, others argued it should be struck down because it put too much in.

Several groups — including the National Voting Rights Institute, the U.S. Public Interest Research Group and the Fannie Lou Hamer Project — targeted the law's increase in contribution limits.

While others have argued that new political spending restrictions in the law violate free speech, those challenging the higher hard money limits say it impinges on speech rights by giving wealthy donors too loud a voice in elections.