U.S. court rejects election limits for non-profits

WASHINGTON (Reuters) - Federal regulations restricting how non-profit groups spend and raise money to advance policy positions and support political candidates violate free-speech rights, a U.S. appeals court ruled on Friday.

The ruling striking down the regulations was a victory for EMILY’s List, a non-profit group that advocates abortion rights and supports Democratic female candidates who support such rights, though the decision could be appealed to the U.S. Supreme Court.

The group had challenged the regulations adopted in 2004 by the Federal Election Commission, the agency in charge of campaign finance rules for congressional and presidential elections.

The decision was a setback for supporters of federal campaign finance rules who say they are necessary to deter corruption in politics.

Many non-profit activist groups devoted to a wide range of causes raise money and spend it to back specific candidates or promote particular issues. The ruling could heighten the importance of these groups in political campaigns.

Another free-speech challenge is pending before the Supreme Court, which heard arguments earlier this month on corporate spending limits in U.S. political campaigns. The high court’s conservative majority appeared concerned that the restrictions may be too broad and silence free-speech rights of businesses.


That case involved a challenge to a key part of the 2002 campaign finance law named after Senator John McCain, the unsuccessful Republican presidential nominee in 2008, and Democratic Senator Russell Feingold.

In the case before the appeals court, the commission had put limits on how much non-profit groups could raise and spend.

The agency required that non-profit groups pay for a large percentage of election-related activities out of their so-called hard-money accounts. Donations to these regulated accounts are capped at $5,000 a year for individual contributors.

The court ruled the regulations unconstitutionally restricted the ability of such groups to spend money for election-related activities such as advertisements, get-out-the-vote efforts and voter registration drives.

The commission also required that a donation be subject to the $5,000 cap if the solicitation sent by the non-profit group indicated the donation would be used to support the election or defeat of a particular candidate.

The appeals court ruled that the regulations violated the free-speech rights of citizens to form non-profit groups to express their views about policy issues and on candidates for public office.

It overturned a ruling in 2008 by a federal judge who upheld the regulations. A spokeswoman said the commission was reviewing the ruling.

Editing by Eric Beech and Will Dunham