Jan.22, 2010

In Wisconsin, conservative and pro-business groups said Friday that they were considering a lawsuit to block a proposed law that would ban corporate spending during political campaigns.

In Kentucky and Colorado, lawmakers looked for provisions in their state constitutions that may need to be rewritten. And in Texas, lawyers for Tom DeLay, the former House majority leader, said the pending state campaign finance case against him should be thrown out.

A day after the United States Supreme Court ruled that the federal government may not ban political spending by corporations or unions in candidate elections, officials across the country were rushing to cope with the fallout, as laws in 24 states were directly or indirectly called into question by the ruling.

“One day the Constitution of Colorado is the highest law of the state,” said Robert F. Williams, a law professor at Rutgers University. “The next day it’s wastepaper.”

The states that explicitly prohibit independent expenditures by unions and corporations will be most affected by the ruling. The decision, however, has consequences for all states, since they are now effectively prohibited from adopting restrictions on corporate and union spending on political campaigns.

In his dissent to the 5-to-4 ruling, Justice John Paul Stevens highlighted the burden placed on states.

“The court operates with a sledgehammer rather than a scalpel when it strikes down one of Congress’s most significant efforts to regulate the role that corporations and unions play in electoral politics,” he wrote. “It compounds the offense by implicitly striking down a great many state laws as well.”

For now, the decision does not overturn all the state laws in question, but it is only a matter of time, experts said, before the laws will be challenged in the courts or repealed by state legislatures. Since the state laws are vulnerable, it is unlikely that officials will continue enforcing them, experts said.

Montana is one of the states that will probably be affected. It has one of the nation’s oldest campaign finance laws, approved by voters in 1912 after a copper baron, William A. Clark of Butte, bribed members of the State Legislature to get a United States Senate seat.

Chris Gallus, a former lobbyist and a lawyer who represents business interests in Montana, said his clients would most likely challenge the statute if it were not stricken.

States that can expect to see the biggest and most sudden influx of money are those — like Ohio and Florida — where it is relatively expensive to run campaigns and where races are competitive, said Ray La Raja, a political science professor at the University of Massachusetts, Amherst. He predicted corporate spending would increase in states where control of state governments hangs in the balance.

The ruling left many state lawmakers frustrated and uncertain how to proceed.

“It’s absolutely outrageous and we’ve got to find a way to deal with it,” said Michael E. Gronstal, the Senate majority leader in Iowa, where lawmakers were exploring how they might keep at least some of the restrictions on political expenditures in the current state law.

The decision could also affect pending trials, like that of Mr. DeLay, who was charged in 2005 with criminal violations of state campaign finance laws and money laundering.

“The money laundering and conspiracy to commit money laundering charges will definitely be undermined,” said Dick DeGuerin, Mr. DeLay’s lawyer. “The reason is that the foundation of the prosecution’s argument is that corporate donations are illegal in any part of the political process, but the Supreme Court just struck that idea down.”

But Carl Bryan Case, the director of the Appellate Division at the Travis County District Attorney’s Office, which is handling Mr. DeLay’s case, disagreed.

“The indictments against Mr. DeLay describe corporate contributions to a political campaign,” he said. “What the Supreme Court addressed was independent expenditures made by third parties on their own and without having to do with campaigns.”

Alan Schneider, the state prosecutor in Grand Traverse County, Mich., said he was concerned about his continuing criminal investigation of Meijer Inc.’s actions in a 2007 recall election. “We’re going to have to shift our focus entirely,” he said.

The court’s decision effectively overturns the section of the Michigan Campaign Finance Act that prohibits corporate financing of candidate campaigns, Mr. Schneider said. Meijer is accused of illegally funneling tens of thousands of dollars to groups to try to depose the township board in Acme Township in a 2007 recall election.

“Unfortunately, we now have to drop the felony charges we were pursuing and only go after the misdemeanors,” he said. “It’s frustrating.”

David Primo, a political science professor at the University of Rochester, counseled caution about predicting the impact of the Supreme Court decision. While it grants corporations and unions new access, it is also likely to spur state officials and campaign reform groups to push for new types of restrictions.

“This tug of war will continue as long as we have fundamental disagreements in the country over the role of money in politics,” he said.

The decision may galvanize reformers to push harder for public financing of elections.

It will also bring new pressure on states to improve their disclosure rules, experts said, since those rules will be one of the only ways left to regulate how corporations and other groups make expenditures in local races.

Joseph Birkenstock, the former chief counsel for the Democratic National Committee now with the law firm Caplin & Drysdale in Washington, said states that previously banned corporate expenditures would begin adapting disclosure rules so that the public can get the same information about corporate political advertisements that is currently available for advertisements paid for by individuals or political action committees.

Richard Hasen, an election law specialist at Loyola Law School in Los Angeles, said he expected state judicial races to be especially affected by the Supreme Court decision.

In recent years, he said, the states where corporate contributions were permitted saw an explosion in spending in judicial races. With the new ruling, those states and others where such donations were limited or banned are likely to see more money spent on these races.

Between 2000 and 2009, spending on state supreme court races across 22 states that had competitive elections was about $207 million, up from $86 million between 1990 and 2000, according Justice at Stake, at watchdog group that monitors money in court races.