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Campaign Finance Experts See Few Implications for Virginia Ruling

Campaign finance experts are saying privately that despite outrage over a judge’s decision this week that corporations could donate money directly to federal candidates, the verdict would probably not have any real effects on the 2012 elections.

The interpretations of Thursday’s U.S. District Court decision by Judge James C. Cacheris vary. Campaign finance lawyers believe the decision applies to only a small section of the country, would allow federal candidates to raise donations only from Virginia companies and even those contributions would be subject to donation limits.

“I would not expect anyone to accept corporate contributions based on this decision,” said Fred Wertheimer, president of Democracy 21. Wertheimer said while the court case could has the potential to have serious effects, he does not see it as a game changer for the upcoming election. “Anyone that goes out and starts raising corporate money, does so at their own peril.”

The United States v. William Danielczyk Jr. & Eugene Biagi ruling found that the defendants did not break laws by using corporate funds to reimburse donations made by employees.

Following the ruling, FEC press officials would not publicly state whether the agency believed Congressional candidates running within the court’s jurisdiction could immediately start raising funds from corporations.

Members with districts in Virginia under the court’s authority also did not respond to requests asking whether they believed the ruling would allow them to start raising corporate money immediately.

“It’s too early to tell whether or not this is going to have an impact on federal elections generally for 2012,” one FEC official said. “But certainly the case raises an interesting issue post Citizens United and it’s just a matter of time before there are more cases like this.”

In their defense, Danielczyk and Biagi cited the Supreme Court’s decision in Citizens United v. the Federal Election Commission.

This ruling would go well beyond the 2010 Supreme Court decision in Citizens United allowing corporations and unions to use corporate funds to donate to organizations running advertisements to affect federal campaigns. Thursday’s ruling would allow corporations to give directly to candidates, instead of an organization that would run campaign ads.

Campaign finance reform advocates said Thursday’s decision was a misinterpretation of Citizens United and will likely be appealed to the Circuit Court of Appeals and potentially the U.S. Supreme Court.

But James Bopp Jr., the lawyer who launched the landmark Citizens United case, said he believed the judge interpreted the case law appropriately.

“It’s not the stretching of the facts,” Bopp said referring to the government’s argument. “It’s the application of the law. I think the rational of Citizens United means that corporations cannot be prohibited from making donations to candidates.”

Bopp said he sees the same First Amendment issue of free speech for individuals and corporations being properly applied in Thursday’s decision, but said that these donations could still be subject to contribution limits. Currently, individuals can only give $2,500 to each federal candidate per election and Bopp believes such a donation limit would be applicable.

Because the court’s jurisdiction is eastern Virginia, campaign finance lawyers believe the ruling would only apply to a handful of federal candidates who are running in races in that area. It could also affect Senatorial candidates running in Virginia and presidential candidates.

Even if candidates in the 10 or so applicable races wanted to accept such donations, some lawyers question whether corporations outside eastern Virginia could even make these donations.

To further complicate things, federal authorities could still prosecute those who break the corporate ban on donations to Congressional candidates by charging them in a different court locality, according to Campaign Legal Center Associate Legal Counsel Tara Malloy.

“You can forum shop but you probably can’t forum shop throughout the entire nation,” Malloy said. “I guess you could have a Virginia-based federal candidate, taking money from a Virginia-based corporation in this [Virginia] district. … Maybe if you had all these situations tied to this territory, then the flexibility of the forum may not exist.”

With such uncertainty about the ruling’s implications, campaign lawyers said the biggest question is whether it will be overturned on appeal. If higher courts approve the decision, the implications could be huge for future elections because it would reverse a nationwide ban on corporate donations to federal candidates, which has stood since the Tillman Act passed in 1907.

But it is still unknown whether the U.S. government will even appeal the ruling. A spokesperson for the US Attorney’s Office would only say the opinion is under review. Either way, the current decision and the appeal will hinge on legal interpretations of Citizens United.

Bopp noted that Citizens United was used by the defendants giving to then-Sen. Hillary Rodham Clinton. The Citizens United case stemmed from a negative documentary about Clinton called “Hillary: The Movie.” Meanwhile, Danielczyk and Biagi used corporate funds to reimburse donations to Clinton’s 2006 and 2008 Senate and presidential campaigns.

“It is kind of ironic,” Bopp said. “The good news is that the First Amendment applies to everybody.”

Correction: May 31, 2011

The original version of this story indicated that individuals can give only $2,500 to each federal candidate per election cycle. In fact, those limits apply to each election — primary and general — meaning an individual could give as much as $5,000 for a normal cycle.

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