A U.S. Supreme Court decision Thursday removing decades-old campaign limits on corporations and labor unions could boost special-interest spending in a handful of competitive California races this year, most notably Sen. Barbara Boxer's re-election contest.
Campaigns for state offices are unaffected because California allows companies and unions to spend unlimited amounts independently to help candidates. But the decision ensures the state will find it even more difficult to rein in such spending.
In a 5-4 decision, the court's conservative majority said Thursday that federal rules governing corporate contributions violate free-speech rights established by the First Amendment.
"The government may regulate corporate political speech through disclaimer and disclosure requirements, but it may not suppress that speech altogether," Justice Anthony Kennedy wrote for the majority.
The court ruling focuses specifically on campaign spending by corporations acting independently of efforts by candidates they support or oppose. It leaves intact limits on direct corporate contributions to candidates.
Watchdog groups fear the decision will dramatically increase special-interest influence in federal campaigns across the country, starting with this year's midterm elections.
"In competitive races, we will be seeing massive corporate and labor union contributions," warned Bob Stern, president of the Center for Governmental Studies and an architect of California campaign finance rules.
Disclosure rules remain
But supporters of the ruling said corporations and unions have long found ways around federal election laws, such as contributing to "527" tax-exempt groups that escaped regulation in the past. They said the decision would make clearer who is contributing because disclosure rules remain in place.
"The more convoluted the campaign finance system becomes, the more money that goes into politics through vehicles other than campaigns and political parties," said Ron Nehring, chairman of the California Republican Party.
California could have four to six congressional competitive contests this fall that draw heavy outside financing, according to Allan Hoffenblum, publisher of the California Target Book, which handicaps elections. But the biggest California impact likely would be in the U.S. Senate contest.
"It certainly changes the Boxer race," Stern said. "It means corporations, without setting up a (political action committee), can spend as much as they want opposing Boxer."
Lance Olson, a Democratic campaign finance attorney, thought Boxer could benefit more.
After Republicans scored an upset win in Massachusetts' Senate race Tuesday, Olson said, "I assume Democrats are going to be paying more attention (here). Part of that process will be unions getting involved directly in the race through, of course, independent expenditures."
The court decision bodes poorly for cities in California that limit how much companies and unions contribute to independent committees in local races. Thursday's decision was silent on fund-raising limits for independent committees — as opposed to an individual union or corporation — but a separate case on that issue is making its way to the Supreme Court.
'Hillary' movie prompted decision
Charles Bell, a Republican campaign finance attorney representing a challenge to limits in Long Beach, believes the court will overturn those restrictions as well. "It's a trend," he said.
The ruling Thursday in Citizens United v. Federal Election Commission was prompted by a conservative documentary titled "Hillary: The Movie." In January 2008, the nonprofit Citizens United released the film and sought to distribute it en masse through on-demand cable television but found doing so would violate Federal Election Commission rules.
Nehring praised Thursday's ruling because he said FEC restrictions had a "chilling effect on free speech." The Supreme Court previously upheld restrictions on independent corporate campaign spending, most notably in a 1990 decision, Austin v. Michigan Chamber of Commerce.
"It was just a matter of having enough retirements before the case could be overturned," said Thomas Joo, a University of California at Davis law professor and expert on corporations.
"People say it's going to help Republicans because corporations like Republicans and to some extent, that's true," Joo said. "But it's really going to help corporations. Whether you're a Democrat or a Republican, if you miss out on this money, you're going to be at a great disadvantage."
The last decade of California state elections provides a glimpse into a world with unlimited independent expenditures.
In 2000, voters approved Proposition 34 in California, imposing new campaign finance limits on candidates. In response, donors shifted contributions to independent committees.
From 2001 to 2008, donors spent $100 million on California independent expenditures, according the Fair Political Practices Commission, which regulates campaign finance.
The largest expenditure was $9.9 million for former State Treasurer Phil Angelides in his 2006 Democratic primary race. Two Angelides friends, developers Angelo Tsakopoulos and Eleni Tsakopoulos-Kounalakis, gave $8.7 million, while the California Teachers Association added $1 million. The money helped Angelides defeat multimillionaire State Controller Steve Westly.
FPPC chairman responds
Ross Johnson once backed Proposition 34 as a state senator. But as FPPC chairman, he has railed against independent expenditures and responded angrily Thursday to the Supreme Court's ruling. He said it would prevent the FPPC and Legislature from rolling back independent expenditures in California.
"It's an absolutely terrible decision," Johnson said. "I think it's absolutely idiotic to argue that a corporation has the same legal rights as an individual."
Michael Doyle of the McClatchy Washington Bureau contributed to this report.