In a victory for companies involved in politics, a federal appeals court Wednesday rejected part of a Minnesota campaign finance law that it says overburdens corporations that want to spend money to influence elections.

The Eighth Circuit Court of Appeals in St. Louis found that Minnesota law requiring companies to register and regularly report their political activities creates a "long-term morass of regulatory red tape" and potentially violates their constitutionally protected rights to free speech.

Any restrictions on those expenditures strike "at the core of our electoral process and of the First Amendment freedoms," Judge William Riley wrote on behalf of the 6-5 majority.

Riley wrote that Minnesota's law hinders companies' free speech, violating the U.S. Supreme Court's 2010 Citizens United ruling, which lifted limits on how much companies and unions can spend on political candidates or causes.

Minnesota's law requires companies and organization to create a political expenditure fund if they raise or spend more than $100 a year on political activity. The political organization must have a treasurer who keeps detailed records of expenditures and contributions and is also required to file regular reports with the state. Groups that fail to comply can be socked with steep fines and individuals could face imprisonment of up to five years.

The lawsuit was brought by Minnesota Citizens Concerned for Life, the Taxpayers League of Minnesota and Coastal Travel Enterprises, which argued the law is so burdensome it prevented them from exercising their right to political speech.

"This victory for free speech is tremendous," said James Bopp Jr., the attorney for the plaintiffs. "The Eighth Circuit recognizes that full-fledged political-committee burdens are onerous."

State Rep. Ryan Winkler, chief author of the law in question, said the decision, coupled with the Citizens United ruling, undermines the democratic system.

"These courts have degraded our democracy by eliminating rules that provide accountability for politicians and sunlight for the political spending of the richest and most powerful people and organizations in the country," said Winkler, DFL-Golden Valley.

Representing dissenters, Judge Michael Joseph Melloy said Minnesota's reporting requirements are not nearly the burden portrayed by the other side. He argued that even the smallest businesses already file forms and reports that are far more complicated.

The case is the latest in a nationwide attempt to test the limits of campaign finance laws after the Citizens United decision. The appeals court rejected a First Amendment challenge to Minnesota's law that prohibits corporate contributions directly to political candidates.

The appeals court ruling sends the case back to the lower court to decide whether Minnesota's law violates the Constitution. That could result in more appeals and potentially a decision by the U.S. Supreme Court.

Limited reach

For now, the decision has only limited reach in Minnesota, said Gary Goldsmith, executive director of the Minnesota Campaign Finance and Public Disclosure Board.

The appeals court specifically exempted from reporting requirements only political groups that have not been active since they last filed a report with the board. Normally, these groups must file regular campaign finance reports, even if they have not raised or spent money on political activity.

Goldsmith said the board would be sending out letters to all potentially affected associations notifying them that, for now, they might be exempted from the reporting requirements.

Goldsmith said Minnesota campaign finance officials remain hopeful that the courts ultimately uphold the state's campaign finance laws.

Baird Helgeson • 651-925-5044