updated 12/21/2006 3:03:48 PM ET 2006-12-21T20:03:48

A federal court on Thursday loosened restrictions on corporations, unions and other special interest groups that run political advertising in peak election season.

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The 2-1 ruling said groups may mention candidates by name in commercials as long as they are trying to influence public policy, rather than sway an election.

The ruling came in a challenge to the so-called McCain Feingold law designed to reduce the influence of big money in political campaigns. The law banned groups from using unrestricted money to run advertisements that name candidates two months before a general election or one month before a primary.

Automatic Supreme Court appeal
Some lawmakers have predicted such a ruling would create a loophole in the 2002 law. The case automatically heads to the Supreme Court for review.

The Federal Election Commission had argued that it needed a consistent "bright line" rule to prevent organizations from influencing elections using phony issue advertisements, but the three-judge panel disagreed.

"The virtues of a bright-line rule surely cannot alone justify regulating constitutional speech," U.S. District Judge Richard Leon wrote.

Leon was joined in the opinion by U.S. Court of Appeals Judge David B. Sentelle. U.S. District Judge Richard W. Roberts dissented.

Federal Election Commissioner David M. Mason said the commission would review the opinion and hoped to have the matter resolved by next year's Iowa caucuses.

Wisconsin Right to Life has been fighting the law since 2004, when it sought to run an advertisement urging voters to contact Wisconsin Sens. Russ Feingold and Herb Kohl, both Democrats, and ask them not to hold up President Bush's judicial nominees.

Because Feingold was running for re-election in 2004, the ad was prohibited. Wisconsin Right to Life argued that it wasn't trying to influence an election and said the law restricted its constitutional right to petition the government.

Copyright 2006 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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