Federal appeals panel strikes down Montana corporate-contributions ban

By The Associated Press

09.27.00

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HELENA, Mont. — A 1996 voter-passed law that prevents direct corporate contributions to ballot-measure campaigns is an unconstitutional infringement on the right of free speech, a federal appeals panel has ruled.

But the three-judge panel of the 9th U.S. Circuit Court of Appeals rejected yesterday an argument that existence of the illegal restriction during most of the 1998 election season requires that approval of an anti-mining initiative that year be overturned.

Both decisions uphold rulings by U.S. District Judge Charles C. Lovell of Helena.

The 2-1 decision by the appeals court panel yesterday said Montana's ban on corporate spending on ballot measures, created by Initiative 125, could not stand without definitive proof that such a limit on constitutional rights is justified by the need to protect the political process from corruption.

Since the I-125 trial produced testimony on both sides of that issue, the appeals panel said it could not conclude Lovell was wrong in finding no threat to the democratic process.

"A restriction so destructive of the right of public discussion as I-125, without greater or more imminent danger to the public interest than existed in this case, is incompatible with the freedoms secured by the First Amendment," Judge Pamela Ann Rymer wrote for the panel. She was joined by Judge Margaret McKeown.

Attorney General Joe Mazurek says he believes the ruling should be appealed because it deals with a law enacted by citizens and of national significance.

But he says that decision will be up to defendants in the suit, including the state political practices commissioner.

Jonathan Motl, author of I-125 and an attorney for those defending the law, says he wants the ruling appealed to either the full 9th Circuit or the Supreme Court.

The issue is too important to drop, he said.

"Montanans passed a unique law that is on the cutting edge of campaign-finance reform, and the law squarely presents a unique issue that is going to change policy for our country if it's upheld."

Stanley Kaleczyc, attorney for business groups challenging the initiative, called yesterday's ruling "a vindication of the right of people in Montana to hear both sides of the issue and make an intelligent decision when they go in to vote."

He said he expects an appeal to be filed because the final outcome of this will have an effect in all 26 states with initiative and referendum processes.

The heart of the legal dispute was I-125, which banned corporations from making contributions or expenditures to support or fight a ballot issue.

The measure, approved by 52% of voters, allowed businesses to create a separate fund for collecting money from shareholders, employees or corporate officers, but not from the company itself.

Several trade associations, led by the Montana Chamber of Commerce, challenged the law in court and argued the restriction violated their rights of political association and free speech.

I-125 supporters contended corporate contributions had corrupted the state's political processes to the point that those who spent the most on ballot-measure campaigns almost always won. They said such money must be limited to assure fairness in elections.

Lovell agreed with I-125 foes and said he found no evidence that corporate money had corrupted Montana's political process, something necessary to justify the restriction in the law.

But, in a related case, he refused to overturn a 1998 anti-mining initiative based on claims that the corporate-spending ban had tainted the election.

Initiative 137 prohibited use of cyanide in new open-pit gold mines. Critics of that measure, primarily mining companies, contended they were unfairly prevented by the unlawful I-125 from waging a campaign to defeat the cyanide ban, which was passed by 53% of voters.

The appeals panel agreed with Lovell's decision not to void approval of I-137.

Although the 1996 law affected opponents' ability to campaign, the appeals court panel said it found no substantial effect. I-137 opponents had 11 days from the time I-125 was overturned until the election in which to wage a fight against the cyanide ban, the panel noted.

Also, it said, "the state has a significant interest in avoiding the costs of a special election. In these circumstances, we cannot say that the district court abused its discretion in failing to void the results of the election."

Judge Michael Daly Hawkins dissented, saying the majority ignored the 1990 Supreme Court decision Austin v. Michigan Chamber of Commerce that appears to allow the kind of campaign-finance law contained in I-125.

"Because the initiative also allows for a segregated fund, I think it is justified by Montana's asserted interest in eliminating what its people have determined to be distorting effects of corporate wealth on the electoral process," he said.

Backers of I-125 include the Montana Public Interest Research Group, League of Women Voters, Common Cause and the national Voting Rights Institute. Motl says any decision on whether to appeal will be made by that group and the attorney general's office, which is charged with defending state laws.

Previous

Appeals court weighs two Montana ballot initiatives
Lawyer who argued against Initiative 137 asserts that federal judge's two rulings on separate measures were inconsistent.  11.04.99

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