From the New York Times

Justices Hear Vigorous Attacks on New Campaign Finance Law
By LINDA GREENHOUSE

WASHINGTON, Sept. 8 — The new campaign finance law came under a strong attack at the Supreme Court today, with lawyers for the statute's opponents warning that it would weaken the national political parties, intrude on the states' electoral systems and infringe on the free speech of corporations and labor unions.
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While defenders of the law offered abundant counterarguments in the court's unusual special sitting — the first time since the Watergate tapes case in 1974 that the justices interrupted their summer recess to hear an argument — its fate appeared highly uncertain.
By the end of an intense four hours of high-level advocacy, it was far from clear that there would be five votes to uphold the major provisions of the Bipartisan Campaign Reform Act, a sweeping law that supporters describe as a last chance to curb the flood of big money into national politics.
The opponents' position that the court should strike down the law without giving it a chance to work was "a counsel of despair," Seth P. Waxman, the Congressional sponsors' lawyer, told the court.
The act, commonly known as the McCain-Feingold law after its Senate sponsors, bans the large checks to the political parties known as soft money and restricts some television advertising by corporations and labor unions.
The courtroom was crowded with lawyers representing the dozens of plaintiffs, including the United States Chamber of Commerce, the American Civil Liberties Union and the National Rifle Association, which filed suit last year to have the law declared unconstitutional. The Congressional sponsors were in the courtroom audience as well. It was an attentive audience attuned to every nuance of an argument that sometimes resembled a daylong discussion of the Internal Revenue Code.
Chief Justice William H. Rehnquist, widely seen as a swing vote on a court that is closely divided in campaign regulation cases, expressed skepticism of the law throughout the argument. The morning session was devoted to the ban on the receipt and use by the national parties of soft money, including new restrictions on the ability of the national parties to coordinate spending with and transfer money to state and local affiliates.
Chief Justice Rehnquist at one point told Mr. Waxman that his argument suggested "that the parties exist by the leave of Congress." He added, "Surely that isn't the case." He also questioned whether the anticorruption rationale of the law applied as strongly to political parties as it did to individual candidates.
Most of the afternoon session was spent on the law's provision regulating "electioneering communications," which are defined as televised issue advertising by corporations or unions that refers to a "clearly identified" federal candidate. For 60 days before a general election and 30 days before a primary, these may not be paid for directly by corporations or labor unions under the new law. Rather, the money must come from a political action committee set up to raise money from shareholders or union members for use in politics.
Chief Justice Rehnquist joined the majority in a 1990 decision that upheld Michigan's restrictions on campaign spending by corporations. Today, he surprised many of the election lawyers in the audience by describing that decision as "dubious" and appearing ready to disavow it. "I voted in the majority, but it seemed to me since then that the whole purpose of the First Amendment is to allow people who perhaps don't have much in the way of public opinion to try to change public opinion," he said to Deputy Solicitor General Paul D. Clement, who was arguing in defense of the issue-advertising provision and who repeatedly invoked the 1990 decision.
At another point, the chief justice commented to Laurence E. Gold, who was arguing against the provision on behalf of the A.F.L.-C.I.O., that the court's precedents had established that "it's not up to the government to decide there is too much speech coming from one place and not enough coming from another."

If Chief Justice Rehnquist proves as hostile to the new law as his comments today suggested, the law's fate may be — as has so often been the case in recent years — in the hands of Justice Sandra Day O'Connor, who has not taken an active part in the court's election cases and who said relatively little today.
"Do you take the position that no effective regulation of electioneering communications is permissible?" Justice O'Connor asked Floyd Abrams, who represented opponents of the provision, at the outset of his argument.
Mr. Abrams replied that the statute's definition of electioneering communications was "so overbroad" that it could not be sustained. Under previous law, as interpreted by judicial and regulatory decisions, the only issue advertisements subject to federal regulation were those that used the "magic words" of express advocacy, such as exhortations to "vote for" or "defeat" a particular candidate. As a result, virtually all issue advertisements have been able to escape regulation simply by avoiding those words.
The justices who appeared favorably disposed to the new law were, as expected, John Paul Stevens, David H. Souter and Stephen G. Breyer. Justices Anthony M. Kennedy and Antonin Scalia appeared strongly opposed. Justice Clarence Thomas was the only member of the court who did not speak today, but his previous opinions have made clear that he interprets the First Amendment as barring nearly all regulation of campaign finance.
Eight lawyers presented arguments today, 3 in defense of the statute and 5 on behalf of 10 plaintiffs or coalitions of plaintiffs who challenged the law's constitutionality. The lead case in the group is McConnell v. Federal Election Commission, No. 02-1674, named for Senator Mitch McConnell, Republican of Kentucky, who was the law's chief Congressional opponent.
With the lawsuits expedited under the terms of the statute, a special three-judge federal district court here heard the cases last December and issued a splintered decision in May, striking down all or part of 9 of 20 challenged provisions.
Thus nearly every party before the Supreme Court was appealing part of the lower court's judgment and defending another part. To avoid linguistic confusion over who was appealing and who was defending, the court called those who had filed the original lawsuits plaintiffs and those who opposed the lawsuits defendants — labels that the Supreme Court, which speaks in terms of "petitioners" and "appellants," has hardly ever used.
The legal firepower in the courtroom was considerable. Solicitor General Theodore B. Olson, fulfilling his duty to defend acts of Congress even though his ideological allies were nearly all on the other side, argued in defense of the ban on soft money. He was joined by his immediate predecessor, Mr. Waxman, the solicitor general in the Clinton administration. Kenneth W. Starr, another former solicitor general, was on the other side, representing Senator McConnell.
Mr. Starr fashioned an argument intended to appeal to Chief Justice Rehnquist and Justice O'Connor by characterizing the law as a federal intrusion on state sovereignty. State parties were restricted in how they could pay for even "quintessential state activity" like get-out-the-vote efforts, he said.
The justices spent more time than many people expected exploring the federalism overtones of the case, including a long discussion of complex formulas governing how the federal and state parties are supposed to allocate contributions.
The argument had moments of passion and of humor, with Mr. Waxman, who alone among the eight lawyers had the burden of arguing in the morning and in the afternoon, providing some of each. He spoke forcefully in urging the court to look at the "core" rather than the "capillaries" of the campaign finance system. "We have a dialectic going on here between people who want to use money to influence people in government and the institutions that need to preserve a sense of integrity and faith in the process," he said.
Toward the end of the four hours, Mr. Waxman said as he answered a question from Chief Justice Rehnquist, "I will be one of the happiest people on the face of the planet when I sit down today, however you decide."