The decision came in a lawsuit filed by Wisconsin Right to Life, an anti-abortion group that objected to rules governing so-called issue advocacy, in which groups express political opinions but don't advocate for or against specific candidates. The lawsuit, however, also challenged a host of other rules governing how outside groups spend during elections.
The strongly-worded decision from the 7th Circuit U.S. Court of Appeals said Wisconsin regulators had overstepped their bounds in banning spending by corporations, setting limits on how much they could raise for affiliated political committees and establishing burdensome rules for groups that merely mentioned candidates' names in ads.
"Like other campaign-finance systems, Wisconsin's is labyrinthian and difficult to decipher without a background in this area of the law," Judge Diane Sykes wrote for the court.
Part of the problem, she said, was that state law had not kept up with recent U.S. Supreme Court decisions limiting the government's power to regulate political speech. She went on to detail its flaws.
James Bopp, an Indiana attorney representing Wisconsin Right to Life, compared the law after Wednesday's decision to "the Titanic after hitting the iceberg."
"There have been so many holes blown into this campaign finance law that I don't know what you could do other than have the Legislature rewrite the whole thing," Bopp said.
Reid Magney, spokesman for the Government Accountability Board, which oversees Wisconsin elections, declined to comment. A spokeswoman for Attorney General J.B. Van Hollen said only that Justice Department lawyers were reviewing the decision.
Wisconsin election law attorney Mike Wittenwyler said the practical effect of the decision was muted by the GAB's earlier agreements to stop enforcing some aspects of the law, including the ban on corporate spending. But he said that it sent a strong message that the GAB had overstepped its bounds in regulating spending by outside groups and that Wisconsin legislators need to update state law.
A key issue in the case was the state's definition of issue advocacy. A GAB rule that said ads aired close to elections crossed the line from issue advocacy into so-called express advocacy, which brings additional regulation, if they mentioned a candidate. The appeals court said that wasn't enough.
The ruling noted that ads must use "magic words," such as "vote for," ''elect" or "reject" to merit additional regulation.
Wittenwyler said the court also made it clear that the rules governing groups advocating for or against candidates couldn't put too much of a burden on them.
For instance, if a person wanted to put up a campaign sign for a candidate, "what I should be able to do is go out and paint that sign - and then I shouldn't have to file a report," Wittenwyler said.
Ken Mayer, a political scientist at University of Wisconsin-Madison, said the appeals court decision could eventually allow some smaller groups to participate in elections by reducing legal and accounting costs involved in reporting their spending. Currently, those costs are significant enough that a group might not consider the expense worth it unless they planned to spend at least $100,000 on ads, he said
Mayer said he didn't think the decision would change the amount outside groups spend on Wisconsin elections because they already spend millions. He also noted that the state recently agreed to settle another lawsuit by stopping enforcement of a cap on how much people can donate in total to candidates running for office.
Jay Heck, executive director of the government watchdog group Common Cause of Wisconsin, said the failure to ever fully implement the GAB's rules has left the state without "meaningful" regulation of groups seeking to sway voters. The appeals court decision only confirms Wisconsin's place as "the Wild West in terms of groups being able to come in and run any kind of communication by simply avoiding the magic words."
"I think the result will be there will be much more dark money to flow into Wisconsin," Heck said.