June 25 (Bloomberg) -- The U.S. Supreme Court gave companies, labor unions and interest groups more power to run broadcast ads before elections, limiting the reach of a federal campaign-finance law.

The 5-4 ruling marks a shift for the court, which in 2003 upheld the law, including a provision that restricts pre-election ads. The court today said that provision couldn't be constitutionally applied to three 2004 ads, aired by a Wisconsin anti-abortion group, that called on the U.S. Senate to hold votes on President George W. Bush's judicial nominees.

``Discussion of issues cannot be suppressed simply because the issues may also be pertinent in an election,'' Chief Justice John Roberts wrote for the court. ``Where the First Amendment is implicated, the tie goes to the speaker, not the censor.''

The ruling underscores the influence of Roberts and fellow Bush appointee Samuel Alito in moving the court in a conservative direction. Roberts and Alito were joined today in the campaign ad case and two other constitutional rulings by Justices Antonin Scalia, Clarence Thomas and Anthony Kennedy.

In one, the court put new limits on student speech rights, ruling against an Alaska high school senior who was suspended after hoisting a banner declaring ``Bong Hits 4 Jesus'' during an event in front of his school. The justices said public school officials have broad power to curtail expression they see as undermining anti-drug efforts.

Faith-Based Initiatives

The court, nearing the end of its term, also limited taxpayers' power to challenge government actions as unconstitutionally promoting religion. The justices threw out a suit aimed at Bush's faith-based initiatives office, saying taxpayers couldn't sue over White House-sponsored conferences that help groups compete for social-service funding.

In the campaign-finance dispute, Scalia, Thomas and Kennedy said they would have gone further than Roberts and Alito by directly overturning the 2003 ruling and striking down the so- called electioneering provision on free-speech grounds.

Justice David Souter in dissent said the court had reversed the 2003 decision in all but name and undermined efforts to reduce the role of money in electoral politics.

``After today, the ban on contributions by corporations and unions and the limitation on their corrosive spending when they enter the political arena are open to easy circumvention,'' Souter wrote. Justices John Paul Stevens, Ruth Bader Ginsburg and Stephen Breyer joined him in dissent.

Feingold Candidacy

The ads by Wisconsin Right to Life Inc. referred to Democratic Senator Russ Feingold, who was up for re-election and joined Senate efforts to block votes on Bush's judicial nominees. Feingold, along with Republican Senator John McCain of Arizona, was also one of the principal sponsors of the 2002 campaign- finance law.

Wisconsin Right to Life, which also opposes euthanasia and embryonic stem cell research, pulled its ads after three weeks because of legal concerns.

The McCain-Feingold law bars corporations and labor unions from using funds from their general treasuries to buy pre- election broadcast ads that target specific federal candidates.

Roberts said the Wisconsin commercials were entitled to an exemption from that ban because they ``plainly are not the functional equivalent of express advocacy'' for or against a candidate.

He said courts ``should find that an ad is the functional equivalent of express advocacy only if the ad is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.''

Senate Reaction

The ruling ``is a victory for free speech and confirmation that grassroots advocacy organizations have the same free speech rights as all Americans,'' Kentucky Senator Mitch McConnell, a Republican who opposed the McCain-Feingold law, said in a statement.

Feingold said the new test ``seems susceptible to easy manipulation by groups intent on spending corporate and union money to influence elections.''

The U.S. Chamber of Commerce's chief legal officer, Steven J. Law, said the ruling ``allows us to communicate freely on critical legislative issues, regardless of when during the election cycle they occur.''

The electioneering ban applies only to money in the general treasuries of corporations and labor unions, not to funds handled by their separate political action committees. The law also contains an exemption for some non-profit corporations. The Wisconsin group didn't qualify for that exemption.

Third Time

The Supreme Court has said lawmakers can restrict election- related spending in the name of preventing corruption, protecting the integrity of the voting process and preserving public confidence in the government. Roberts today said none of those rationales warranted application of the law to the Wisconsin ads.

The case marked the third time the Supreme Court addressed the so-called electioneering provision. In 2003, the court upheld the ban as part of a broader ruling that backed the campaign finance overhaul. Last year the court clarified that ruling by saying it didn't prevent Wisconsin Right to Life from challenging the applicability of the restriction to particular ads.

``Today, as a practical matter, corporations received the victory that they did not achieve in 2003,'' said Edward B. Foley, director of the election law program at Ohio State University's Moritz College of Law.

The Bush administration argued in favor of applying the law to the Wisconsin ads. The administration said the ads began running days after the last Senate vote on the filibusters that blocked consideration of several of Bush's judicial nominees.

Review Granted

The court today also agreed to decide during its next term:

To contact the reporter on this story: Greg Stohr in Washington at gstohr@bloomberg.net.

Last Updated: June 25, 2007 15:16 EDT