Campaign Finance Law: A Legal Analysis of the Supreme Court Ruling in McConnell v. FEC
Prepared for Members and Committees of Congress
In its most comprehensive campaign finance ruling since Buckley v. Valeo in 1976, on December
10, 2003, the U.S. Supreme Court upheld against facial constitutional challenges key portions of
the Bipartisan Campaign Reform Act of 2002 (BCRA), P.L. 107-155, also known as the McCain-
Feingold or Shays-Meehan campaign finance reform law. In McConnell v. FEC, a 5 to 4 majority
of the Court upheld restrictions on the raising and spending of previously unregulated political
party soft money and a prohibition on corporations and labor unions using treasury funds to
finance “electioneering communications,” requiring that such ads may only be paid for with
corporate and labor union political action committee (PAC) funds. The Court invalidated BCRA’s
requirement that parties choose between making independent expenditures or coordinated
expenditures on behalf of a candidate and its prohibition on minors age 17 and under making
campaign contributions. This report provides an analysis of the Supreme Court’s major holdings
in McConnell v. FEC, including a discussion of the developments leading to the enactment of
BCRA, the 1976 seminal campaign finance decision, Buckley v. Valeo, and implications for future
A. Brief History of Federal Campaign Finance Law................................................................1
B. Overview of 1976 Seminal Campaign Finance Supreme Court Decision: Buckley
1. Contribution and Expenditure Limits.............................................................................2
2. Reporting and Disclosure Requirements.........................................................................4
3. Issue and Express Advocacy Communications...............................................................4
C. Developments Leading to Enactment of BCRA...................................................................5
1. Increased Use of Party Soft Money................................................................................5
2. Soft Money Spent on Issue Advertising..........................................................................6
3. 1998 Senate Investigation of 1996 Federal Elections.....................................................7
II. McConnell v. FEC.......................................................................................................................8
A. Lower Court Litigation.........................................................................................................8
B. U.S. Supreme Court Opinion................................................................................................9
1. Restrictions on Political Party Soft Money Upheld........................................................9
2. Prohibition on Using Corporate and Labor Union Treasury Funds to Finance
“Electioneering Communications” Upheld.....................................................................11
3. Requirement that Sponsors of Election-Related Advertisements Self-Identify
(“Stand-By-Your-Ad Provision”) Upheld......................................................................13
4. Requirement that Political Parties Choose Between Coordinated and
Independent Expenditures After Nominating a Candidate Invalidated.........................13
5. Prohibition on Campaign Contributions by Minors Age 17 and Under
In va lidated .................................................................................................................... .14
6. Challengers to “Millionaire Provisions” Held to Lack Standing..................................14
A. Implications for Future Cases Involving Issue and Express Advocacy..............................15
B. Supreme Court Deference to Congressional Findings........................................................16
Author Contact Information..........................................................................................................16
The Bipartisan Campaign Reform Act of 2002 (BCRA)1 is the most recently enacted federal law
regulating money in the political sphere. One of the first such federal campaign finance law dates 2
back to the 1907 Tillman Act, which responded to President Roosevelt’s request for legislation
prohibiting all corporate political contributions. In 1925, with the Federal Corrupt Practices Act,
Congress extended the prohibition on corporations making “contributions” to include “anything
of value” and criminalized both the acceptance of corporate contributions as well as the making 3
of such contributions. With the Labor Management Relations Act of 1947, Congress prohibited 4
labor union contributions in connection with federal elections.
In 1972, Congress enacted the Federal Election Campaign Act (FECA).5 As first enacted, FECA
required disclosure of contributions and expenditures over a certain amount; prohibited
contributions made in the name of another person and by government contractors; and ratified the
earlier prohibition on the use of corporate and union general treasury funds for contributions and
expenditures, but permitted corporations and unions to establish and administer separate
segregated funds (also known as political action committees or PACs) for election related
contributions and expenditures. Citing deficiencies in the 1972 law and responding to Watergate,
Congress amended FECA in 1974, to include limits on individual, PAC, and party contributions; 6
limits on candidate spending; and the establishment of the Federal Election Commission (FEC).
Primarily in response to the Supreme Court striking down the appointment process of the FEC in 78
its 1976 seminal decision, Buckley v. Valeo, Congress amended FECA in 1976, and again in
In the landmark 1976 decision, Buckley v. Valeo,10 the Supreme Court considered the
constitutionality of FECA, as amended in 1974, and the Presidential Election Campaign Fund
1 P.L. 107-155.
2 Tillman Act, ch. 420, 34 Stat. 864.
3 Federal Corrupt Practices Act of 1925, §§ 301, 313, 43 Stat. 1070, 1074.
4 Labor Management Relations Act (Taft-Hartley Act), 61 Stat. 136.
5 Federal Election Campaign Act of 1971, P.L. 92-225.
6 Federal Election Campaign Act Amendments of 1974, P.L. 93-443.
7 424 U.S. 1 (1976).
8 Federal Election Campaign Act Amendments of 1976, P.L. 94-283.
9 Federal Election Campaign Act Amendments of 1979, P.L. 96-187. For further discussion of the history of campaign
finance law, see CRS Report 97-1040, Campaign Financing: Highlights and Chronology of Current Federal Law, by
Joseph E. Cantor.
10 424 U.S. 1 (1976).
Act.11 The Court upheld the constitutionality of certain provisions, including (1) contribution 1213
limits to federal office candidates, (2) disclosure and record-keeping provisions, and (3) public 14
financing of presidential elections. The Court found other provisions unconstitutional, including 15
(1) expenditures limitations on candidates and their political committees, (2) the $1,000 16
limitation on independent expenditures, (3) expenditure limitations by candidates from their 17
personal funds, and (4) the method of appointing members to the Federal Election 18
Commission. In general, the Court struck down expenditure limitations, but upheld reasonable
contribution limitations, disclosure requirements, and public financing provisions, so long as
participation is voluntary, not compelled.
In considering the constitutionality of these statutes, the Buckley Court applied the standard of
review known as “exacting scrutiny,” which is a standard applied by a court when presented with
regulations that burden core First Amendment activity. “Exacting scrutiny” requires a regulation
to be struck down unless it is narrowly tailored to serve a compelling governmental interest.
When analyzing First Amendment claims, a court will generally first determine whether the
challenged government action implicates “speech” or “associational activity” guaranteed by the
First Amendment. Notably, the Buckley Court held that the spending of money, whether in the
form of contributions or expenditures, is a form of “speech” protected by the First Amendment. A
number of principles contributed to the Court’s analogy between money and speech. First, the
Court found that candidates need to amass sufficient wealth to amplify and effectively 19
disseminate their message to the electorate. Second, restricting political contributions and
expenditures, the Court held, “necessarily reduces the quantity of expression by restricting the
number of issues discussed, the depth of the exploration, and the size of the audience reached.
This is because virtually every means of communicating ideas in today’s mass society requires 20
the expenditure of money.” The Court then observed that a major purpose of the First
Amendment was to increase the quantity of public expression of political ideas, as free and open
debate is “integral to the operation of the system of government established by our 21
Constitution.” From these general principles, the Court concluded that contributions and
expenditures facilitated this interchange of ideas and could not be regulated as “mere” conduct 22
unrelated to the underlying communicative act of making a contribution or expenditure.
11 26 U.S.C. § 9001 et seq.
12 2 U.S.C. § 441a.
13 2 U.S.C. § 434.
14 Subtitle H of the Internal Revenue Code of 1954, codified at 26 U.S.C. § 9001 et seq.
15 Formerly 18 U.S.C. § 608(c)(1)(C-F). The Court made an exception for presidential candidates who accept public
16 Formerly 18 U.S.C. § 608e.
17 Formerly 18 U.S.C. § 608a.
18 Formerly 2 U.S.C. § 437c(a)(1)(A-C).
19 See Buckley, 424 U.S. at 21.
20 Id. at 19.
21 Id. at 15.
22 Id. at 17.
However, according to the Court, contributions and expenditures invoke different degrees of First 23
Amendment protection. Recognizing contribution limitations as one of FECA’s “primary
weapons against the reality or appearance of improper influence” on candidates by contributors,
the Court found that these limits “serve the basic governmental interest in safeguarding the 24
integrity of the electoral process.” Thus, the Court concluded that “the actuality and appearance
of corruption resulting from large financial contributions” was a sufficient compelling interest to
warrant infringements on First Amendment liberties “to the extent that large contributions are 25
given to secure a quid pro quo from [a candidate.]” Short of a showing of actual corruption, the
Court found that the appearance of corruption from large campaign contributions also justified
Reasonable contribution limits, the Court remarked, leave “people free to engage in independent
political expression, to associate [by] volunteering their services, and to assist [candidates by 26
making] limited, but nonetheless substantial [contributions.”] Further, according to the Court, a
reasonable contribution limitation does “not undermine to any material degree the potential for
robust and effective discussion of candidates and campaign issues by individual citizens,
associations, the institutional press, candidates, and political parties.” Finally, the Court found
that the contribution limits of FECA were narrowly tailored insofar as the Act “focuses precisely 27
on the problem of large campaign contributions.”
On the other hand, the Court determined that FECA’s expenditure limits on individuals, political
action committees (PACs), and candidates imposed “direct and substantial restraints on the
quantity of political speech” and were not justified by an overriding governmental interest. The
Court rejected the government’s asserted interest in equalizing the relative resources of candidates
and in reducing the overall costs of campaigns. Restrictions on expenditures, the Court held, 28
constitute a substantial restraint on the enjoyment of First Amendment freedoms. As opposed to
reasonable limits on contributions, which merely limit the expression of a person’s “support” of a
candidate, the “primary effect of [limitations on expenditures] is to restrict the quantity of
campaign speech by individuals, groups and candidates.” “A restriction on the amount of money a
person or group can spend on political communication during a campaign necessarily reduces the
quantity of expression by restricting the number of issues discussed, the depth of their 29
exploration, and the size of the audience reached,” the Court noted.
The Court also found that the government’s interests in stemming corruption by limiting
expenditures were not compelling enough to override the First Amendment’s protection of free
and open debate because unlike contributions, the risk of quid pro quo corruption was not present, 30
as the flow of money does not directly benefit a candidate’s campaign fund. Upon a similar
premise, the Court rejected the government’s interest in limiting a wealthy candidate’s ability to
23 See id. at 24.
24 Id. at 59.
25 Id. at 27.
26 Id. at 28.
27 Id. at 29.
28 Id. at 39.
29 Id. at 19.
30 Id. at 55.
draw upon personal wealth to finance his or her campaign and struck down the personal 31
In Buckley, the Supreme Court generally upheld FECA’s disclosure and reporting requirements,
but noted that they might be found unconstitutional as applied to certain groups. While compelled
disclosure, in itself, raises substantial freedom of private association and belief issues, the Court
held that these interests were adequately balanced by the state’s regulatory interests. The state
asserted three compelling interests in disclosure: (1) providing the electorate with information
regarding the distribution of capital between candidates and issues in a campaign, thereby
providing voters with additional evidence upon which to base their vote; (2) deterring actual and
perceived corruption by exposing the source of large expenditures; and (3) providing regulatory
agencies with information essential to the election law enforcement. However, when disclosure
requirements expose members or supporters of historically suspect political organizations to
physical or economic reprisal, then disclosure may fail constitutional scrutiny as applied to a 32
The Supreme Court’s language in Buckley prompted analysts to label election-related
communications as either “issue” or “express advocacy” communications. In order to pass
constitutional muster and not be struck down as unconstitutionally vague, the Court ruled that
FECA could only apply to non-candidate “expenditures for communications that in express terms
advocate the election or defeat of a clearly identified candidate for federal office,” i.e., 33
expenditures for express advocacy communications. In a footnote to the Buckley opinion, the
Court further defined “express words of advocacy of election or defeat” as, “vote for,” “elect,” 34
“support,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat,” and “reject.”
31 Id. at 51-54.
32 See National Association for the Advancement of Colored People (NAACP) v. Alabama, 357 U.S. 449 (1958). The
reasoning in Buckley and Brown v. Socialist Workers ‘74 Campaign Comm., 459 U.S. 87 (1982), has historical roots in
NAACP v. Alabama. In NAACP, the Court addressed whether a non-profit organization’s associational rights were
abridged by a state statute compelling disclosure of its members and agents without regard to their position and
responsibilities in the association. The organization did not comply with the disclosure requirement. Finding for the
NAACP, the Court held that the freedom of association is an “inseparable aspect” of the freedoms guaranteed by the
First and Fourteenth Amendments, see id. at 460-61; that compelled disclosure of the association’s membership would
effectively restrain that freedom, see id. at 461-463; and that, under strict scrutiny, the state’s interests in disclosure
were insufficient to overcome the association’s deprivation of right, see id. at 463-366. The Court stressed that the
“vital relationship between freedom to associate and privacy in one’s associations” was unduly burdened by the
disclosure requirement, as past revelation of membership identity resulted in economic reprisal, loss of employment,
threat of physical coercion, and other manifestations of public hostility. Id. at 462. See also McIntyre v. Ohio Elections
Commission, 514 U.S. 334 (1995)(further defining the scope of Buckley’s disclosure jurisprudence to proscribe
disclosure requirements that infringe on the right of an individual to publish and distribute leaflets anonymously,
expressing a political point of view, in a referenda or other issue-based election).
33 Id. at 44.
34 Id. n. 52. Many lower courts have held that these specific terms of advocacy, commonly referred to as the “magic
words,” are mandatory in order for a communication to be considered express advocacy and therefore fall under the
scope of federal regulation. See, e.g., Maine Right to Life Comm. v. Federal Election Comm’n, 914 F.Supp. 8, 12 (D. st
Maine 1996), aff’d per curiam 98 F.3d 1 (1 Cir. 1996), cert. denied, 118 S.Ct. 52 (Oct. 6, 1997)(holding that the FEC
had surpassed its authority when it included a “reasonable person” standard in its definition of “express advocacy” and
that the expanded standard threatened to infringe on First Amendment protected issue advocacy); Vermont Right to
Communications not meeting the express advocacy definition in that footnote became commonly 35
referred to as issue advocacy communications. In its rationale for establishing such a bright line
distinction between issue and express advocacy, the Court noted that the discussion of issues and
candidates as well as the advocacy of election or defeat of candidates “may often dissolve in
practical application.” That is, according to the Court, candidates (especially incumbents) are 36
intimately tied to public issues involving legislative proposals and governmental actions.
In the years following the 1976 landmark decision in Buckley, various developments persuaded
Congress that further legislation was necessary to regulate the role of corporations, labor unions,
and wealthy contributors in the electoral process. The Supreme Court in McConnell v. FEC
outlined changes in three specific areas over the years that led to the enactment of BCRA: the
increased use of party soft money, soft money spent on issue advertising, and the 1998 Senate 37
investigation into the 1996 federal elections.
In general, the term “hard money” or “federal money” refers to funds that are raised and spent
according to the contribution limits, source prohibitions, and disclosure requirements of FECA,
while the term “soft money” or “non-federal money” is used to describe funds raised and spent
outside the federal election regulatory framework, but which may have at least an indirect impact
on federal elections. Since FECA narrowly defines the term “contribution” to include only a gift 38
of anything of value “for the purpose of influencing any election for Federal office,” donations
with the purpose of influencing only state and local elections are unregulated by FECA.
Therefore, prior to the enactment of BCRA, federal law permitted corporations, unions, and
Life Comm. v. Sorrell, 216 F.3d 264 (2d Cir. 2000)(striking down a disclosure requirement triggered by speech
“expressly or implicitly” advocating the election or defeat of a candidate and finding that the Supreme Court in
Buckley had established an “express advocacy standard” to insure that campaign finance regulations were neither too
vague nor intrusive on First Amendment protected issue advocacy). But see, Federal Election Comm’n v. Furgatch, 807 th
F.2d 857 (9 Cir. 1987), cert. denied, 484 U.S. 850, 864 (1987)(upholding a more expansive definition of express
advocacy by including a “reasonable person” standard).
35 For further discussion of Buckley and related decisions, including decisions regarding issue and express advocacy,
see CRS Report RL30669, Campaign Finance Regulation Under the First Amendment: Buckley v. Valeo and Its
Supreme Court Progeny, by L. Paige Whitaker.
36 Buckley, 424 U.S. at 42. In Buckley, the Court also upheld the constitutionality of the system of voluntary
presidential election expenditure limitations linked with public financing, through a voluntary income tax checkoff,
codified at 26 U.S.C. § 9001 et seq. The Court found that restricting taxpayers from being able to earmark their $1.00
“checkoff” to a candidate or party of the taxpayer’s choice did not violate the First Amendment. As the checkoff
constituted an appropriation by Congress, it did not require outright taxpayer approval, as “every appropriation made
by Congress uses public money in a manner to which some taxpayers object.” The Court also rejected a number of
Fifth Amendment due process challenges, including a challenge contending that the public financing provisions
discriminated against minor and new party candidates by favoring major parties through the full public funding of their
conventions and general election campaigns, and by discriminating against minor and new parties who received only
partial public funding under the Act. Id. at 85-86. The Court held that “[a]ny risk of harm to minority interests ... cannot
overcome the force of the governmental interests against the use of public money to foster frivolous candidacies, create
a system of splintered parties, and encourage unrestrained factionalism.” Id. at 101.
37 McConnell v. FEC, 124 S. Ct. 619, 648-54 (2003).
38 2 U.S.C. § 431(8)(A).
individuals to contribute soft money to political parties for activities with the intent of influencing
state or local elections.
After the Buckley decision was issued, questions arose regarding contributions that were intended
to influence both federal and state elections. As the McConnell Court observed, a literal reading
of FECA’s definition of “contribution” would have required such mixed-purpose activities to be 39
funded with hard money. However, in 1977, the FEC ruled that political parties could fund
mixed-purpose activities–including get-out-the-vote drives and generic party advertising – in part 40
with soft money. Extending its ruling, in 1995, the FEC ruled that parties could also use soft
money to defray the costs of “legislative advocacy media advertisements,” even if the ads 41
mentioned a federal candidate, so long as they did not expressly advocate election or defeat.
As a result of the increase in the permissible uses of soft money, the amount of soft money raised
and spent by the national political parties increased dramatically, from 5% ($21.6 million) of total
party receipts in 1984 to 42% ($498 million) of total party receipts in 2000. The national parties
transferred large amounts of their soft money receipts to the state parties, which were permitted to
use a larger percentage of soft money to fund mixed-purpose (federal and state) election 42
activities. As the McConnell Court noted, many soft money contributions were “dramatically”
larger than the hard money contributions permissible under FECA; indeed, in the 2000 election
cycle, the parties raised almost $300 million from just 800 donors, each of whom contributed a
minimum of $120,000. Often such soft money contributions were solicited by the candidates,
who directed potential donors to party committees and tax-exempt organizations that could
legally accept soft money, after a donor had already contributed the hard money maximum to the
candidate’s committee. Moreover, the Court recognized that the largest corporate donors often
made significant contributions to both parties, thereby bolstering the perception that such
contributions were made with the purpose of gaining access to elected officials and avoiding
being placed at a disadvantage in the legislative process, rather than being based on ideological
support. Such solicitations, transfers, and uses of soft money, according to the Court, enabled the
parties and candidates to “circumvent” FECA’s source restrictions, disclosure requirements, and 43
In Buckley v. Valeo, the Supreme Court construed FECA’s disclosure and reporting requirements
and expenditure limits “to reach only funds used for communications that expressly advocate the 44
election or defeat of a clearly identified candidate.” A strict reading of FECA subsequently
resulted in the origin of issue and express advocacy. The use or omission of express words of
advocacy, often referred to as “magic words,” such as “vote for” or “vote against,” marked a
bright statutory line between express advocacy communications and issue advertisements.
Express advocacy communications were subject to FECA regulation and could only be financed
39 McConnell, 124 S. Ct. at 648 (2003).
40 See 11 CFR § 102.6(a)(2)(1977)(permitting parties to allocate their administrative expenses “on a reasonable basis”
between accounts containing non-federal funds, including corporate and union donations); FEC Advisory Op. 1978-10;
FEC Advisory Op. 1979-17.
41 FEC Advisory Op. 1995-25.
42 McConnell, 124 S. Ct. at 649.
43 See, id. at 648-650.
44 Buckley, 424 U.S. at 80.
with hard money. However, if a communication avoided using express terms of advocacy,
federally unregulated soft money could be used to finance such advertisements, also known as
The McConnell Court acknowledges that, at first blush, the distinction between issue and express
advocacy appears meaningful. However, the two categories of advertisements have proven
“functionally identical in important respects.” That is, both types of ads have been used “to
advocate the election or defeat” of clearly identified candidates even though issue ads steadfastly
avoid using the “magic words” of express advocacy. There is little difference, the Court found,
between an ad that urged voters to “vote against Jane Doe” and one that condemned Jane Doe’s 45
record on a given issue and urged viewers to “call Jane Doe and tell her what you think.” The
conclusion that such ads were designed to influence elections, according to the Court, was
confirmed by the fact that nearly all of them were broadcast within 60 days of a federal election.
Since such ads could be legally financed with federally unregulated soft money, they were
attractive to organizations and candidates. Indeed, according to the McConnell Court, when the
candidates and parties were running out of money, they would “work closely with friendly 46
interest groups to sponsor so-called issue ads.” Moreover, the amount of spending on the ads
increased significantly: in the 1996 election cycle, $135 to $150 million was estimated to have
been spent on multiple broadcasts of approximately 100 ads, as compared with an estimated $500
million spent on more than 1,100 different ads in the 2000 cycle. As with the case of soft money
contributions to the political parties, the Court concluded that candidates and parties used the
availability of issue ads to “circumvent FECA’s limitations,” soliciting donors who had already
contributed their federally permissible hard money quota to donate additional soft money funds to 47
non-profit corporations to spend on “so-called issue ads.”
In 1998, the Senate Committee on Governmental Affairs issued a six-volume Report outlining the
results of its comprehensive investigation into the 1996 federal election campaigns, focusing in
particular on the impact of soft money and the practice by federal officeholders of granting 48
special access in exchange for political donations. As the Court in McConnell v. FEC noted, the
Senate Report concluded that the “soft money loophole” had resulted in a “meltdown” of the
federal campaign finance regime that had been designed “to keep corporate, union, and large
individual contributions from influencing the electoral process.” The Report criticized the
methods by which both parties raised and spent soft money and concluded that both parties
promise and provide special access to candidates and senior government officials in exchange for
45 McConnell, 124 S.Ct. at 650-51. As the Court noted, campaign professionals testified before the district court that
the most effective campaign ads, similar to the most effective commercials for products such as Coca-Cola, should, and
did, avoid the express words of advocacy. Id. at 651.
46 Id. at 651 (citing McConnell v. FEC, 251 F. Supp. 2d 176, 540 (D.D.C. 2003)(Kollar-Kotelly, J.)(quoting internal
AFL-CIO Memorandum from Brian Weeks to Mike Klein, “Electronic Buy for Illinois Senator,” (Oct. 9, 1996), AFL-
CIO 005244). Furthermore, the Court found that because FECA’s disclosure requirements did not apply to so-called
issue ads, sponsors of these ads often used misleading names to conceal their identity. For example, “Citizens for
Medicare” was not a grassroots citizens organization but instead was a platform for the Pharmaceutical Research and
Manufacturers of America (PhRMA), a drug manufacturers’ association. Id.
47 Id. at 651-52 (citing McConnell v. FEC, 251 F. Supp. 2d 176, 303-04 (D.D.C. 2003)(Henderson, J.)(citing
Annenberg Public Policy Center, Issue Advertising in the 1999-2000 Election Cycle 1-15 (2001)).
48 S. Rep. No. 105-167 (1998).
large soft money donations.49 Proposals for reform were included in the Report, including a
recommendation for the elimination of political party soft money donations and restrictions on 50
“sham” issue advocacy by non-party groups.
The following section of this report provides an overview of the lower court litigation and an
analysis of the Supreme Court’s major holdings in McConnell v. FEC.
On March 27, 2002, the President signed into law BCRA, P.L. 107-155.51 Most provisions of the
new law became effective on November 6, 2002. Shortly after President Bush signed BCRA into
law, Senator Mitch McConnell filed suit in U.S. District Court for the District of Columbia
against the Federal Election Commission (FEC) and the Federal Communications Commission
(FCC) arguing that portions of BCRA violate the First Amendment and the equal protection
component of the Due Process Clause of the Fifth Amendment to the Constitution. Likewise, the
National Rifle Association (NRA) filed suit against the FEC and the Attorney General arguing
that the new law deprived it of freedom of speech and association, of the right to petition the
government for redress of grievances, and of the rights to equal protection and due process, in
violation of the First and Fifth Amendments to the Constitution. Ultimately, eleven suits
challenging the law were brought by more than 80 plaintiffs and were consolidated into one lead 52
case, McConnell v. FEC.
On May 2, 2003, the U.S. District Court for the District of Columbia issued its decision in 53
McConnell v. FEC, striking down many significant provisions of the law. The three-judge panel, 54
which was split 2 to 1 on many issues, ordered that its ruling take effect immediately. After the
49 McConnell, 124 S. Ct. at 652 (citing id. vol. 4, at 4611). The Court quoted one Senator from the Senate Report
stating that “the hearings provided overwhelming evidence that the twin loopholes of soft money and bogus issue
advertising have virtually destroyed our campaign finance laws, leaving us with little more than a pile of legal rubble.”
Id. (citing id. vol. 5, at 7515).
50 Id. at 653-54.
51 For further information regarding BCRA, see CRS Report RL31402, Bipartisan Campaign Reform Act of 2002:
Summary and Comparison with Previous Law, by Joseph E. Cantor and L. Paige Whitaker.
52 No. 02-CV-0582 (D.D.C., consolidated May 13, 2002).
53 McConnell v. FEC, 251 F. Supp. 2d 176, (D.D.C., 2003). In brief, the three-judge district court panel struck down
BCRA’s blanket prohibition on the raising of soft money by national parties and the use of soft money by state and
local parties, but retained the ban on using soft money for public communications that mention clearly identified
federal candidates. The panel also retained the prohibition on the raising of soft money by federal candidates and
officials. Regarding “electioneering communications,” which BCRA prohibits from being financed with corporate and
union treasury funds, the three-judge panel struck down the regulation of all broadcast ads that refer to clearly
identified federal candidates in the last 30 days of a primary or 60 days of a general election, but upheld a portion of
BCRA’s secondary definition, thus allowing regulation of advertisements that supported or opposed federal candidates,
regardless of when they were disseminated. For further discussion regarding the district court ruling, see, CRS Report
RS21511, Campaign Finance: Brief Overview of District Court Opinion in McConnell v. FEC, by L. Paige Whitaker.
54 Section 403(a) of BCRA provides that if an action is brought for declaratory or injunctive relief challenging the
constitutionality of any provision of the Act, it shall be brought in the U.S. District Court for the District of Columbia
and shall be heard by a 3-judge court.
court issued its opinion, several appeals were filed and on May 19 the U.S. district court issued a
stay to its ruling, leaving BCRA, as enacted, in effect until the Supreme Court ruled. Under the
BCRA expedited review provision, the court’s decision was directly reviewed by the U.S.
Supreme Court. On September 8 the Supreme Court returned to the bench a month before its term
officially began to hear an unusually long four hours of oral argument in the case.
The Supreme Court’s decision in McConnell v. FEC,55 issued on December 10, 2003, is its most 56
comprehensive campaign finance ruling since Buckley v. Valeo in 1976. Most notably, the
McConnell Court upheld, by a 5 to 4 vote, against facial constitutional challenges two critical
BCRA provisions, titles I and II. In the first 119 pages of the 248 page majority opinion,
coauthored by Justices Stevens and O’Connor and joined by Justices Souter, Ginsburg, and
Breyer, the Court upheld the limits on raising and spending previously unregulated political party
soft money and the prohibition on corporations and labor unions using treasury funds–which is
unregulated soft money–to finance directly electioneering communications. Instead, BCRA
requires that such ads may only be paid for with corporate and labor union political action
committee (PAC) funds, also known as hard or federally regulated money.
In upholding BCRA’s “two principal, complementary features,” the Court readily acknowledged
that it is under “no illusion that BCRA will be the last congressional statement on the matter” of
money in politics. The Court observed, “money, like water, will always find an outlet.” Hence,
campaign finance issues that will inevitably arise and the corresponding legislative responses 57
from Congress “are concerns for another day.”
The following section of this report provides an analysis of the Court’s opinion upholding titles I
and II and a discussion of the Court’s ruling with regard to several other BCRA provisions.
Title I of BCRA prohibits national party committees and their agents from soliciting, receiving, 58
directing, or spending any soft money. As the Court notes, title I takes the national parties “out 59
of the soft-money business.” In addition, title I prohibits state and local party committees from
using soft money for activities that affect federal elections; prohibits parties from soliciting for
and donating funds to tax-exempt organizations that spend money in connection with federal
elections; prohibits federal candidates and officeholders from receiving, spending, or soliciting
soft money in connection with federal elections and restricts their ability to do so in connection
with state and local elections; and prevents circumvention of the restrictions on national, state,
and local party committees by prohibiting state and local candidates from raising and spending
soft money to fund advertisements and other public communications that promote or attack
55 124 S. Ct. 619 (2003). In addition to the 248 page majority opinion, the decision also contains six separate opinions
concurring in part and dissenting in part.
56 424 U.S. 1 (1976). For discussion of the Court’s ruling in Buckley, see previous section.
57 Id. at 706.
58 2 U.S.C. § 441i(a).
59 McConnell, 124 S. Ct. at 654.
federal candidates.60 Plaintiffs challenged title I based on the First Amendment as well as Art. I, §
Due Process Clause of the 14 Amendment. The Court upheld the constitutionality of all
provisions in title I, finding that its provisions satisfy the First Amendment test applicable to
limits on campaign contributions: they are “closely drawn” to effect the “sufficiently important
interest” of preventing corruption and the appearance of corruption.
Rejecting plaintiff’s contention that the BCRA restrictions on campaign contributions must be
subject to strict scrutiny in evaluating the constitutionality of title I, the Court applied the less
rigorous standard of review–”closely drawn” scrutiny. Citing its landmark 1976 decision, Buckley
v. Valeo, and its progeny, the Court noted that it has long subjected restrictions on campaign
expenditures to closer scrutiny than limits on contributions in view of the comparatively
“marginal restriction upon the contributor’s ability to engage in free communication” that 61
contribution limits entail. The Court observed that its treatment of contribution limits is also
warranted by the important interests that underlie such restrictions, i.e. preventing both actual
corruption threatened by large dollar contributions as well as the erosion of public confidence in 62
the electoral process resulting from the appearance of corruption. The Court determined that the
lesser standard shows “proper deference to Congress’ ability to weigh competing constitutional 63
interests in an area in which it enjoys particular expertise.” Finally, the Court recognized that
during its lengthy consideration of BCRA, Congress properly relied on its authority to regulate in
this area, and hence, considerations of stare decisis as well as respect for the legislative branch of
government provided additional “powerful reasons” for adhering to the treatment of contribution 64
limits that the Court has consistently followed since 1976.
Responding to plaintiffs’ argument that many of the provisions in title I restrict not only
contributions but also the spending and solicitation of funds that were raised outside of FECA’s
contribution limits, the Court determined that it is “irrelevant” that Congress chose to regulate
contributions “on the demand rather than the supply side.” Indeed, the relevant inquiry is whether
its mechanism to implement a contribution limit or to prevent circumvention of that limit burdens
speech in a way that a direct restriction on a contribution would not. The Court concluded that
title I only burdens speech to the extent of a contribution limit: it merely limits the source and
individual amount of donations. Simply because title I accomplishes its goals by prohibiting the 65
spending of soft money does not render it tantamount to an expenditure limitation.
In his dissent, Justice Kennedy criticized the majority opinion for ignoring established
constitutional bounds and upholding a campaign finance statute that does not regulate actual or 66
apparent quid pro quo arrangements. According to Justice Kennedy, Buckley clearly established
that campaign finance regulation that restricts speech, without requiring proof of specific corrupt
60 2 U.S.C. §§ 441i(b), 441i(d), 441i(e), 441i(f).
61 McConnell, 124 S. Ct. at 647 (quoting FEC v. Beaumont, 123 S. Ct. 2200 (2003)).
62 Id. at 656 (quoting FEC v. National Right to Work, 459 U.S. 197, 208 (1982)).
63 Id. at 656-57. The Court further noted that “closely drawn” scrutiny provides Congress with sufficient room to
anticipate and respond to circumvention of the federal election regulatory regime, which is designed to protect the
integrity of the political process. Id.
65 Id. at 657-58.
66 Id. at 742-59 (Kennedy, J., concurring, in part, dissenting, in part) (joined by Chief Justice Rehnquist, Justices Scalia
(except to the extent it upholds FECA § 323(e) and BCRA § 202) and Thomas (only with respect to BCRA § 213).
activity, can only withstand constitutional challenge if it regulates conduct that presents a
“demonstrable quid pro quo danger.” The McConnell Court, however, interpreted the anti-
corruption rationale to allow regulation of not only “actual or apparent quid pro quo
arrangements,” but also of “any conduct that wins goodwill from or influences a Member of
Congress.” Justice Kennedy further maintained that the standard established in Buckley defined
undue influence to include the existence of a quid pro quo involving an officeholder, while the
McConnell Court, in contrast, extended the Buckley standard of undue influence to encompass
mere access to an officeholder. Justice Kennedy maintained that the Court, by legally equating
mere access to officeholders to actual or apparent corruption of officeholders, “sweeps away all 67
protections for speech that lie in its path.”
Unpersuaded by Justice Kennedy’s dissenting position, that Congress’ regulatory interest is
limited to only the prevention of actual or apparent quid pro quo corruption “inherent in”
contributions made to a candidate, the Court found that such a “crabbed view of corruption” and
specifically the appearance of corruption “ignores precedent, common sense, and the realities of 68
political fundraising exposed by the record in this litigation.” According to the Court, equally
problematic as classic quid pro quo corruption, is the danger that officeholders running for re-
election will make legislative decisions in accordance with the wishes of large financial
contributors, instead of deciding issues based on the merits or constituent interests. Since such
corruption is neither easily detected nor practical to criminalize, the Court reasoned, title I offers 69
the best means of prevention, i.e., identifying and eliminating the temptation.
Title II of BCRA creates a new term in FECA, “electioneering communication,” which is defined
as any broadcast, cable or satellite communication that “refers” to a clearly identified federal
candidate, is made within 60 days of a general election or 30 days of a primary, and if it is a 70
House or Senate election, is targeted to the relevant electorate. Title II prohibits corporations
and labor unions from using their general treasury funds (and any persons using funds donated by
a corporation or labor union) to finance electioneering communications. Instead, the statute
requires that such ads may only be paid for with corporate and labor union political action 71
committee (PAC) regulated hard money. The Court upheld the constitutionality of this
In Buckley v. Valeo, the Court construed FECA’s disclosure and reporting requirements, as well as
its expenditure limitations, to apply only to funds used for communications that contain express 72
advocacy of the election or defeat of a clearly identified candidate. Numerous lower courts have
since interpreted Buckley to stand for the proposition that communications must contain express
67 Id. at 746.
68 Id. at 665.
69 Id. at 666.
70 2 U.S.C. § 434(f)(3)(A)(i). “Targeted to the relevant electorate” is defined as a communication that can be received
by 50,000 or more persons in a state or congressional district where the Senate or House election, respectively, is
occurring. 2 U.S.C. § 434(f)(3)(C).
71 2 U.S.C. § 441b(b).
72 Buckley, 424 U.S. at 80.
terms of advocacy, such as “vote for” or “vote against,” in order for regulation of such
communications to pass constitutional muster under the First Amendment. Absent express
advocacy, lower courts have held, a communication is considered issue advocacy, which is 73
protected by the First Amendment and therefore may not be regulated.
Effectively overturning such lower court rulings, the Supreme Court in McConnell held that
neither the First Amendment nor Buckley prohibits BCRA’s regulation of “electioneering
communications,” even though electioneering communications, by definition, do not necessarily
contain express advocacy. The Court determined that when the Buckley Court distinguished
between express and issue advocacy it did so as a matter of statutory interpretation, not
constitutional command. Moreover, the Court announced that, by narrowly reading the FECA
provisions in Buckley to avoid problems of vagueness and overbreadth, it “did not suggest that a
statute that was neither vague nor overbroad would be required to toe the same express advocacy 74
line.” “[T]he presence or absence of magic words cannot meaningfully distinguish 75
electioneering speech from a true issue ad,” the Court observed.
While title II prohibits corporations and labor unions from using their general treasury funds for
electioneering communications, the Court observed that they are still free to use separate
segregated funds (PACs) to run such ads. Therefore, the Court concluded that it is erroneous to 76
view this provision of BCRA as a “complete ban” on expression rather than simply a regulation.
Further, the Court found that the regulation is not overbroad because the “vast majority” of ads
that are broadcast within the electioneering communication time period (60 days before a general 77
election and 30 days before a primary) have an electioneering purpose. The Court also rejected
plaintiffs’ assertion that the segregated fund requirement for electioneering communications is
under-inclusive because it only applies to broadcast advertisements and not print or internet
communications. Congress is permitted, the Court determined, to take one step at a time to
address the problems it identifies as acute. With title II of BCRA, the Court observed, Congress
chose to address the problem of corporations and unions using soft money to finance a “virtual 78
torrent of televised election-related ads” in recent campaigns.
In his dissent, Justice Kennedy criticized the majority for permitting “a new and serious intrusion
on speech” by upholding the prohibition on corporations and unions using general treasury funds
to finance electioneering communications. Finding that this BCRA provision “silences political
speech central to the civic discourse that sustains and informs our democratic processes,” the
dissent further noted that unions and corporations “now face severe criminal penalties for
broadcasting advocacy messages that ‘refer to a clearly identified candidate’ in an election 79
73 For further discussion regarding lower court rulings holding that express words of advocacy are the constitutional
minima in order for a communication to be subject to regulation, see, CRS Report RL30669, Campaign Finance
Regulation Under the First Amendment: Buckley v. Valeo and Its Supreme Court Progeny, by L. Paige Whitaker.
74 McConnell, 124 S. Ct. at 688.
75 Id. at 689.
76 Id. at 695.
77 Id. at 696.
78 Id. at 697.
79 Id. at 762 (Kennedy, J., concurring, in part, dissenting, in part)(joined by Chief Justice Rehnquist and Justices Scalia
(except to the extent it upholds FECA § 323(e) and BCRA § 202) and Thomas (only with respect to BCRA § 213).
While Justice Kennedy’s opinion served as the primary dissent for the minority, in a separate dissent, Justice Scalia
In upholding BCRA’s extension of the prohibition on using treasury funds for financing
electioneering communications to non-profit corporations, the McConnell Court found that even
though the statute does not expressly exempt organizations meeting the criteria established in its 80
1986 decision in FEC v. Massachusetts Citizens for Life (MCFL), it is an insufficient reason to
invalidate the entire section. Since MCFL had been established Supreme Court precedent for
many years prior to enactment of BCRA, the Court assumed that when Congress drafted this
section of BCRA, it was well aware that this provision could not validly apply to MCFL-type 81
By an 8 to 1 vote, the Court upheld section 311 of BCRA, which requires general public political
ads that are “authorized” by a candidate clearly indicate that the candidate or the candidate’s 82
committee approved the communication. Rejecting plaintiffs’ assertion that this provision is
unconstitutional, the Court found that this provision “bears a sufficient relationship to the 83
important governmental interest of ‘shedding the light of publicity’ on campaign financing.”
By a 5 to 4 vote, the Court invalidated BCRA’s requirement that political parties choose between 84
coordinated and independent expenditures after nominating a candidate, finding that it burdens 85
the right of parties to make unlimited independent expenditures. Specifically, section 213 of 86
BCRA provides that, after a party nominates a candidate for federal office, it must choose
between two spending options. Under the first option, a party that makes any independent
expenditure is prohibited from making any coordinated expenditure under this section of law;
under the second option, a party that makes any coordinated expenditure under this section of
law—one that exceeds the ordinary $5,000 limit—cannot make any independent expenditure with
respect to the candidate. FECA, as amended by BCRA, defines “independent expenditure” to
wrote, “[t]his is a sad day for the freedom of speech,” further commenting that “[i]f the Bill of Rights had intended an
exception to the freedom of speech in order to combat this malign proclivity of the officeholder to agree with those who
agree with him, and to speak more with his supporters than his opponents, it would surely have said so.” Id. at 720,
80 479 U.S. 238 (1986)(holding that the following characteristics exempt a corporation from regulation: (1) its
organizational purpose is purely political; (2) its shareholders have no economic incentive in the organization’s
political activities; and, (3) it was neither founded by nor accepts contributions from business organizations or labor
81 Id. at 699.
82 2 U.S.C. § 441d.
83 McConnell, 124 S. Ct. at 710.
84 2 U.S.C. § 315(d)(4).
85 McConnell, 124 S. Ct. at 703.
86 2 U.S.C. § 315(d)(4).
mean an expenditure by a person “expressly advocating the election or defeat of a clearly 87
identified candidate” and that is not made in cooperation with such candidate.
According to the McConnell Court, the regulation presented by section 213 of BCRA “is much
more limited than it initially appears.” A party that wants to spend more than $5,000 in
coordination with its nominee is limited to making only independent expenditures that contain the
magic words of express advocacy. Although the Court acknowledges that “while the category of
burdened speech is relatively small,” it is nonetheless entitled to protection under the First
Amendment. Furthermore, the Court determined that under section 213, a party’s exercise of its
constitutionally protected right to engage in free speech results in the loss of a longstanding
valuable statutory benefit. Hence, to pass muster under the First Amendment, the provision “must
be supported by a meaningful governmental interest” and, the Court announced, the interest in 88
requiring parties to avoid the use of magic words does not suffice.
By a unanimous vote, the Court invalidated section 318 of BCRA, which prohibited individuals 89
age 17 or younger from making contributions to candidates and political parties. Determining
that minors enjoy First Amendment protection and that contribution limits impinge on such
rights, the Court determined that the prohibition is not “closely drawn” to serve a “sufficiently 90
In response to the government’s assertion that the prohibition protects against corruption by
conduit–that is, parents donating through their minor children to circumvent contribution limits –
the Court found “scant evidence” to support the existence of this type of evasion. Furthermore,
the Court postulated that such circumvention of contribution limits may be deterred by the FECA
provision prohibiting contributions in the name of another person and the knowing acceptance of 91
contributions made in the name of another person. Even assuming, arguendo, that a sufficiently
important interest could be provided in support of the prohibition, the Court determined that it is
over-inclusive. According to the Court, various states have found more tailored approaches to
address this issue, for example, counting contributions by minors toward the total permitted for a
parent or family unit, imposing a lower cap on contributions by minors, and prohibiting
contributions by very young children. The Court, however, expressly declined to decide whether 92
any alternatives would pass muster.
By a unanimous vote, the Court determined that the challenges to sections 304, 316, and 319 of
BCRA, also known as the “millionaire provisions,” were properly dismissed by the district court
87 2 U.S.C. § 301(17).
88 McConnell, 124 S. Ct. at 702.
89 2 U.S.C. § 441k.
90 McConnell, 124 S. Ct. at 711.
91 See, 2 U.S.C. § 441f.
92 McConnell, 124 S. Ct. at 711.
due to lack of standing.93 The millionaire provisions, which therefore remain in effect, provide for
a series of staggered increases in otherwise applicable limits on contributions to candidates if a 94
candidate’s opponent spends a certain amount in personal funds on his or her own campaign.
McConnell v. FEC is a sweeping decision upholding pivotal aspects of BCRA’s comprehensive
overhaul of the federal campaign finance law. Most notably, the Supreme Court upheld
restrictions on the raising and spending of previously unregulated political party soft money and a
prohibition on corporations and labor unions using treasury funds to finance “electioneering
communications,” requiring that such ads may only be paid for with corporate and labor union
political action committee (PAC) funds. As some commentators have observed, the fact that the
Court upheld both key provisions of BCRA was unexpected and many experts continue to sort
out the implications of this complex decision on the regulated community as well as on the 95
Court’s campaign finance jurisprudence.
One important question that has been raised in the wake of McConnell v. FEC is whether the line
between issue and express advocacy retains any constitutional significance. On the one hand,
some have interpreted McConnell to mean that the Court has rejected the constitutional protection
of issue advocacy and the attendant requirement that campaign finance laws can only regulate
election-related, (and uncoordinated with any candidate), communications that contain terms of 96
express advocacy. However, a recent development appears to revive the issue of whether and
under what circumstances issue advocacy can be regulated.
On January 16, 2004, in Anderson v. Spear, the U.S. Court of Appeals for the Sixth Circuit found
that the Supreme Court in McConnell v. FEC “left intact the ability of courts to make
distinctions” between issue and express advocacy “where such distinctions are necessary to cure
vagueness and overbreadth in statutes which regulate more speech than that for which the 97
legislature has established a significant governmental interest.” Reversing a district court
decision, the Sixth Circuit ruled unconstitutional a Kentucky statute prohibiting “electioneering”
within 500 feet of a polling place. The statute defines “electioneering” to include “the displaying
of signs, the distribution of campaign literature, cards, or handbills, the soliciting of signatures to
any petition, or the solicitation of votes for or against any candidate or question on the ballot in
94 2 U.S.C. § 315(a).
95 Kenneth P. Doyle, BCRA Supporters Meet to Assess Impact of Sweeping Court Decision Upholding Law, MONEY
AND POLITICS REPORT, Jan. 20, 2004 (quoting former U.S. Solicitor General Seth Waxman, a defendant’s attorney
before the Supreme Court in McConnell v. FEC: “[a]lmost no one thought this law was simply going to be upheld.”)
96 Kenneth P. Doyle, Federal Court Strikes Kentucky Laws, Ruling Issue Advocacy Still Protected, MONEY AND
POLITICS REPORT, Jan. 21, 2004 (reporting that McConnell was “widely viewed as eliminating constitutional protection
for issue advocacy”).
97 Anderson v. Spear, 2004 U.S. App. LEXIS 586, 36 (2004).
any manner, but shall not include exit polling.”98 The plaintiff in this case, Hobart Anderson, who
filed to run as a write-in candidate in Kentucky’s 1999 gubernatorial election, challenged the
definition of “electioneering” on the grounds that it would regulate constitutionally protected
issue advocacy, including the distribution of write-in voting instructions.
In striking down the statute, the Sixth Circuit found that McConnell v. FEC “in no way alters the
basic principle that the government may not regulate a broader class of speech than is necessary
to achieve its significant interest.” According to the court, unlike the record in McConnell, the
record in Anderson lacks evidence that such a broad definition of electioneering is necessary to
achieve the state’s interest in preventing corruption. Further distinguishing this case from
McConnell, the court noted that unlike BCRA, there is no evidence that “an express advocacy
line would be ‘functionally meaningless’ as applied to electioneering proximate to voting 99
A notable aspect of the Supreme Court’s ruling in McConnell v. FEC is the extent to which the
majority of the Court deferred to Congressional findings and used a pragmatic rationale in
upholding BCRA. According to the Court, the record before it was replete with perceived
problems in the campaign finance system, circumstances creating the appearance of corruption,
and Congress’ proposal to address these issues. As the Court remarked at one point, its decision
showed “proper deference” to Congress’ determinations “in an area in which it enjoys particular 100
expertise.” Furthermore, “Congress is fully entitled,” the Court observed, “to consider the real-101
world” as it determines how best to regulate in the political sphere.
L. Paige Whitaker
98 Id. at 31 (citing KY. REV. STAT. ANN. § 117.235(3)).
99 Id. at 36-37. Attorney James Bopp, who represented the plaintiff in this case, is reported as stating that this decision
is of “national importance” because it is the first lower court opinion interpreting the Supreme Court’s ruling in
McConnell v. FEC, demonstrating that the express advocacy standard articulated in Buckley was not overruled by
McConnell. Kenneth P. Doyle, Federal Court Strikes Kentucky Laws, Ruling Issue Advocacy Still Protected, MONEY
AND POLITICS REPORT, Jan. 21, 2004.
100 McConnell, 124 S. Ct. at 656-57.
101 Id. at 686.