Courts issue key rulings on campaign spending

Washington (CNN) - A federal ban on "soft money" campaign donations to political parties can remain in place, a special federal court panel ruled Friday.

The decision preserves a key provision of the McCain-Feingold campaign reform act, which limits contributions to national, state, and local political parties. The case is likely to reach the Supreme Court in coming months.

In a separate and equally important court ruling, the federal government is still prevented from limiting donations to independent political groups.

These are the first two court rulings on campaign spending since a landmark Supreme Court decision on corporate campaign spending in January.

"Soft money" refers to unregulated, unlimited contributions to political parties for what are called "party-building" activities. Traditionally, soft money donations have been used for get-out-the vote drives, voter registration efforts and ads that say "Vote for Democrats" or "Vote for Republicans."

Potential uses of soft money, however, were limited by Congress with the passage of the 2002 Bi-Partisan Campaign Reform Act, known as McCain-Feingold for its Senate sponsors, Sen. John McCain, R-Arizona, and Sen. Russ Feingold, D-Wisconsin.

The Supreme Court upheld that key provision in 2003. It is one of the few parts of the bill to survive repeated court challenges.

The current case deals with a challenge from the Republican National Committee and local GOP groups in California, who sought unlimited donations from individuals.

The court avoided a broad reading of the free speech questions raised by the plaintiffs, who sought treatment of money going to political parties and candidates equal to that enjoyed by private groups.

"As a lower court, we do not possess the authority to refine" the 2003 high court ruling, the three judges wrote. "Under current law, outside groups - unlike candidates and political parties - may receive unlimited donations both to advocate in favor of federal candidates and to sponsor issue ads. We recognize the RNC's concern about this disparity, which, it argues, discriminates against the national political parties in political and legislative debates. But that is an argument for the Supreme Court or Congress."

That makes a high court challenge likely. The national committee sought the flexibility to raise soft money for state elections, congressional redistricting, and other expenses it claimed are unrelated to federal elections.

In the separate case, a unanimous panel on the U.S. Court of Appeals in Washington ruled Friday the conservative group SpeechNow.org can continue to raise and spend unlimited sums for independent campaign advertising, but must still regularly release names of its donors, along with other information.

The decision was "a tremendous victory for free speech" said Steve Simpson, an attorney who represented the group, who added that it "ensures that all Americans can band together to make their voices heard during elections."

All this comes more than two months after the Supreme Court issued a ruling that crafted a sweeping overhaul of campaign spending. In the so-called Citizens United case, a conservative majority eased long-standing restrictions on "independent spending" by corporations in political campaigns. It gave gave big business, unions and non-profits more power to spend freely in federal elections, negating to a large extent a century of government efforts to regulate the power of corporations to bankroll American politics.

The subsequent rulings Friday illustrate the ongoing anxiety and aggressiveness in this election year among a range of political parties and groups to navigate and challenge the growing complexity in campaign regulations. The Citizens United and SpeechNow decisions promise to open up the campaign coffers and ideological rhetoric among private groups seeking a voice in the crowded political arena.

There was no immediate reaction to the rulings from the Republican National Committee or federal regulators.

The SpeechNow decision does not affect spending by political action committees, separate groups created by corporations, unions and others that can contribute directly to federal candidates and party committees. PAC money has a $5,000-per-candidate limit, and must be funded through voluntary contributions from employees, members, or individuals, not by money directly from corporate or union treasuries.

The soft money case is Republican National Committee v. Federal Election Commission (08-1953). The independent spending case is SpeechNow.org v. Federal Election Commission (No. 08-5223).