On Friday a federal appeals court blocked key portions of Puerto Rico’s campaign finance law regulating the internal affairs of corporations and unions from taking effect.
Siding with three unions and one non-profit — all affiliated with the SEIU — the U.S. Court of Appeals for the First Circuit found that Puerto Rico’s Law 222 was likely to place an unconstitutional burden on the unions’ right to engage in political speech.
As a result, it enjoined Law 222 until a future court could hear arguments on its constitutionality.
Puerto Rico enacted Law 222 in 2011 as a response to the U.S. Supreme Court’s landmark 2010 Citizens United decision prohibiting government restrictions on independent political expenditures by corporations and unions.
One of the Puerto Rico law’s requirements stated that a corporation or union must establish a separate committee with legally mandated membership meetings in order to make indirect contributions.
A “majority plus one” of the organization’s members must not only be present at these committee meetings but also approve any election-related expenditures.
Puerto Rico’s election comptroller issued regulations further defining the conditions of these meetings, covering such minute details as meeting start times and restricting the agenda to election-related spending.
The penalties for violating these provisions could reach as high as $30,000 per day. Furthermore, the highest-ranking financial officer of a corporation or union in violation of the law could be found at fault even if he lacked knowledge of the violation.
The First Circuit stated these constraints were likely to be found unconstitutional and unnecessary regulations of political speech when examined at a future stage of the case.
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