Order Code RS21693
December 19, 2003
CRS Report for Congress
Received through the CRS Web
Campaign Finance Law: The Supreme Court
Upholds Key Provisions of BCRA in
McConnell v. FEC
L. Paige Whitaker
Legislative Attorney
American Law Division
Summary
In its most comprehensive campaign finance ruling since Buckley v. Valeo in 1976,
on December 10, 2003, in McConnell v. FEC, 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, commonly known as the McCain-Feingold or Shays-
Meehan campaign finance reform law).
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.
Background. On March 27, 2002, the President signed into law the Bipartisan
Campaign Reform Act of 2002 (BCRA), P.L. 107-155 (H.R. 2356, 107th Congress),
which is commonly known as the McCain-Feingold or Shays-Meehan campaign finance
reform law, named after the primary sponsors of the legislation. 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 deprives 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
Congressional Research Service ˜ The Library of Congress

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were brought by more than 80 plaintiffs and were consolidated into one lead case,
McConnell v. FEC.1
On May 2, 2003, the U.S. District Court for the District of Columbia issued its
decision in McConnell v. FEC, striking down many significant provisions of the law.2
The three-judge panel, which was split 2 to 1 on many issues, ordered that its ruling take
effect immediately.3 After the 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 four
hours of oral argument in the case.
Restrictions on Political Party Soft Money and Electioneering
Communications Upheld. In its most comprehensive campaign finance decision
since Buckley v. Valeo4 in 1976, on December 10, 2003, in McConnell v. FEC, the U.S.
Supreme Court upheld against facial constitutional challenges key portions of BCRA.5
The most significant portion of the Court’s decision is the 119 page majority opinion
coauthored by Justices Stevens and O’Connor, joined by Justices Souter, Ginsburg, and
Breyer, in which the Court upheld two critical features of BCRA: 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 money. In general, the term “hard money” refers to funds that
1 No. 02-CV-0582 (D.D.C., consolidated May 13, 2002).
2 McConnell v. FEC, No. 02-CV-0582 (D.D.C., May 2, 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 only 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 McConnell v. FEC, by L. Paige Whitaker.
3 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.
4 424 U.S. 1 (1976)(upholding the constitutionality of portions of the Federal Election Campaign
Act of 1971 (FECA), including contribution limits, disclosure and record-keeping provisions, and
public financing of presidential elections, but invalidating limits on expenditures and independent
expenditures, expenditure limits by candidates from their personal funds, and the method of
appointing members to the FEC.)
5 No. 02-1674, slip op. (U.S. Dec. 10, 2003). In addition to the 248 page majority opinion, the
decision also contains six separate opinions concurring in part and dissenting in part.

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are raised and spent according to the contribution limits, source prohibitions, and
disclosure requirements of the Federal Election Campaign Act (FECA), while the term
“soft 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.
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 from Congress “are concerns for another day.”6
Restrictions on Political Party Soft Money Upheld. Title I of BCRA prohibits
national party committees and their agents from soliciting, receiving, directing, or
spending any soft money.7 As the Court notes, Title I takes the national parties “out of
the soft-money business.”8 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 federal
candidates.9 Plaintiffs challenged Title I based on the First Amendment as well as Art.
I, § 4 of the U.S. Constitution, principles of federalism, and the equal protection
component of the Due Process Clause of the 14th 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 contribution limits entail.10 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 the electoral
6 Id. at 118-19.
7 2 U.S.C. § 441i(a).
8 McConnell v. FEC, No. 02-1674, slip op. at 23 (regarding BCRA Titles I and II)(U.S. Dec. 10,
2003).
9 2 U.S.C. §§ 441i(b), 441i(d), 441i(e), 441i(f).
10 No. 02-1674, slip op. at 24 (quoting FEC v. Beaumont, 123 S. Ct. 2200 (2003)).

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process resulting from the appearance of corruption.11 The Court determined that the
lesser standard shows “proper deference to Congress’ ability to weigh competing
constitutional interests in an area in which it enjoys particular expertise.”12 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 limits that the Court has
consistently followed since 1976.13
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 spending of soft money
does not render it tantamount to an expenditure limitation.14
Unpersuaded by a dissenting Justice’s 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,15 the Court found that such a “crabbed view of
corruption” and specifically the appearance of corruption “ignores precedent, common
sense, and the realities of political fundraising exposed by the record in this litigation.”16
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 the best means of
prevention, i.e., identifying and eliminating the temptation.17
Prohibition on Using Corporate and Labor Union Treasury Funds to Finance
Electioneering Communications Upheld. Title II of BCRA creates a new term in
11 Id. at 26 (quoting FEC v. National Right to Work, 459 U.S. 197, 208 (1982)).
12 Id. at 27. 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.
13 Id.
14 Id. at 28-29.
15 See, id. at 8-10, 15 (Kennedy, J., concurring, in part, dissenting, in part)(finding that the
Buckley Court relied on the principle that campaign finance regulation that restricts speech
without requiring proof of a specific act of corruption only withstands constitutional challenge
if it regulates conduct that presents “a demonstrable quid pro quo danger”).
16 Id. at 43.
17 Id. at 44.

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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 House or Senate
election, is targeted to the relevant electorate.18 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 committee (PAC) regulated hard money.19 The Court upheld the constitutionality
of this provision.
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 advocacy of the election or defeat of a clearly
identified candidate.20 Numerous lower courts have since interpreted Buckley to stand for
the proposition that communications must contain express 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 protected by the First
Amendment and therefore may not be regulated.21 Effectively overturning such lower
court rulings, the McConnell Court 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 line.”22 “[T]he presence or absence of magic words cannot
meaningfully distinguish electioneering speech from a true issue ad,” the Court
observed.23
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 view this provision of BCRA as a “complete ban” on
18 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).
19 2 U.S.C. § 441b(b).
20 Buckley, 424 U.S. at 80.
21 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.
22 McConnell, slip op. at 85.
23 Id. at 86.

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expression rather than simply a regulation.24 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 election and 30 days
before a primary) have an electioneering purpose.25 The Court also rejected plaintiffs’
assertion that the segregated fund requirement for electioneering communications is
underinclusive 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 torrent of televised election-related ads” in recent
campaigns.26
In upholding BCRA’s extension of the prohibition on using treasury funds for
financing electioneering communications to non-profit corporations, the Court found that
even though the statute does not expressly exempt organizations meeting the criteria
established in its 1986 decision in FEC v. Massachusetts Citizens for Life (MCFL),27 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 entities.
Requirement that Political Parties Choose Between Coordinated and
Independent Expenditures After Nominating a Candidate Invalidated. The
Court invalidated BCRA’s requirement that political parties choose between coordinated
and independent expenditures after nominating a candidate,28 finding that it burdens the
right of parties to make unlimited independent expenditures.29
Prohibition on Campaign Contributions by Minors Age 17 and Under
Invalidated. The Court invalidated BCRA’s prohibition on individuals age 17 or
younger making contributions to candidates and political parties.30 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 important interest.”31
24 Id. at 98.
25 Id. at 100.
26 Id. at 101.
27 479 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 not founded by nor
accepts contributions from business organizations or labor unions). Id. at 259, 264.
28 2 U.S.C. § 315(d)(4).
29 McConnell, slip op. at 108.
30 2 U.S.C. § 441k.
31 McConnell, slip op. at 10-11 (regarding BCRA Titles III and IV).

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