Assembly Advances Bill to Close LLC Loophole, But Will it Matter?

Last week, the Assembly Election Law Committee reported A.2493, which would add Limited Liability Companies (LLCs) to Election Law § 14-116.  The bill would impose on LLCs the same $5,000 annual limit on contributions to candidates, parties and political committees that currently applies to corporations.

The bill was reported to the Assembly Codes Committee.  In 2010, the Codes committee reported the bill to Rules, where it died.  The Senate did not act on the bill.

But a case working its way through the courts in Montana may render this effort to treat LLCs in the same way as corporations moot.

In December, the Montana Supreme Court upheld the state’s 1912 Corrupt Practices Act in American Traditional Partnership v. Bullock, finding that its prohibition on political expenditures by corporations did not violate their freedom of speech as protected by the United States and Montana Constitutions.

Last Friday, the U.S. Supreme Court stayed the Montana decision, pending a decision on whether it will hear the case.

In ordering the stay, Justice Ruth Bader Ginsburg indicated that this case may go to the heart of the controversial 2010 Citizens’ United decision, in which the Court found that corporations have a First Amendment right to expressly support political candidates with independent spending:

“A petition for certiorari will give the court an opportunity to consider whether, in light of the huge sums currently deployed to buy candidates’ allegiance, Citizens United should continue to hold sway.”