Hartford - A federal appeals court upheld the framework of Connecticut's campaign finance system Tuesday but struck down key provisions, including a ban on political contributions by state lobbyists and the supplemental grants that allow participants to keep pace with opponents who exceed spending limits.

The decision from the 2nd Circuit U.S. Court of Appeals arrived unanticipated by many in state politics on Tuesday, less than one month before a primary election day when multiple statewide candidates will be participating in the public financing system for the first time.

And even as word of the twin rulings from the appeals panel was still reaching state officials, another court decision landed: A Superior Court judge in Hartford rejected a request by Republican Tom Foley to block his chief rival for the gubernatorial nomination, Lt. Gov. Michael Fedele, from receiving his grant from the same public financing system - including $937,500 in the form of a supplemental payment that the federal court has now called into question.

Foley had sought to block Fedele from receiving his campaign grant, arguing that Fedele and his running mate, Danbury Mayor Mark Boughton, had improperly combined their campaign committees in order to reach the threshold to receive a public grant - meaning that contributions from individuals who gave to both men could be double-counted, in Foley's view.

But Judge Julia Aurigemma ruled against Foley's request for a temporary injunction Tuesday, one day after hearing arguments in the case.

The Foley campaign immediately filed an appeal with the Connecticut Supreme Court, seeking to block Fedele from beginning to spend the $2.1 million grant he received from the Citizens Election Program. Fedele, meanwhile, said he would forge ahead, and will launch a new round of television ad spots Wednesday.

In a press availability after a meeting of the State Bond Commission, Gov. M. Jodi Rell, who signed the campaign finance reform law after a multiyear struggle to win passage in the General Assembly, said she was "disappointed, to say the least" that contribution bans on lobbyists had been stricken from the law.

Rell said she and lawmakers had acted in good faith in proposing the ban, after a series of political corruption scandals that included the resignation and imprisonment of her predecessor, John G. Rowland.

"I think it was the best intentions of the legislature and myself, because we obviously thought we were making a difference," Rell said.

Lobbyists have long disagreed, and many saw the law as a scapegoating of their profession.

Christopher J. VanDeHoef, a principal at TCORS Capitol Group, noted that the appeals court decision had echoed the argument of the lobbyists and their families who contested that aspect of the law in court.

"Out of all the issues with corruption over the last 10 or 12 years," VanDeHoef noted, citing a similar passage in the appeals court decision, "none of those involved lobbyists giving to campaigns."

But the governor put an optimistic spin on the appeals court's decision to let some provisions of the law stand, including the basic structure of its public grants and qualifying process for participating candidates.

"Campaign finance reform is alive and well," the governor said, though once again, under repeated questioning, she declined to endorse Fedele, her former running mate, the only Republican gubernatorial candidate participating in the system she helped create.

Fedele, meanwhile, was energized by the court victory in his case, which clears the way for him to begin airing commercials in an attempt to cut into Foley's recent lead in the polls.

Foley has "continually used the courts to kind of maneuver," Fedele said, and to "silence" his campaign. Now, he said, "our plan is to be on the air tomorrow."

Almost seven months to the day after it heard oral arguments in two suits challenging the constitutionality of Connecticut's campaign finance system, the appeals court reversed a lower court and struck down the ban on campaign contributions by registered lobbyists and their spouses, as well as the ban on soliciting of campaign contributions by lobbyists and state contractors.

The court upheld the ban on contributions given directly to political candidates by those who have contracts with the state, and lifted an injunction on the operation of the campaign finance system.

Immediate concerns

Still, the companion decision of the 2nd Circuit could have profound effects on two candidates using the system: Fedele and Democrat Dan Malloy. Both face independently wealthy competitors in Foley and Ned Lamont who are not participating in the campaign finance system.

That has meant that Fedele and Malloy are eligibile to receive payments under the so-called "trigger provisions" of the campaign finance law: If they abide by the public financing system's spending limits but are outspent by their opponents, they are entitled to supplemental grants to help them stay competitive.

But the appeals court struck down those trigger provisions as unconstitutional, potentially depriving both Fedele's and Malloy's campaigns of much-needed funding should they reach the general election. Both Fedele and Malloy have already received supplemental grants based on their opponents' spending in the primary, but Attorney General Richard Blumenthal said those funds could be "retained and spent" by the campaigns.

Meanwhile, the lower court must still decide if those trigger provisions can be severed from the campaign finance law without rendering the entire campaign finance system unconstitutional.

"I think most importantly the basic structures of the Citizens Election Program were upheld as constitutional," said Beth A. Rotman, the executive director of the public financing program. "The funding structure, the grant amounts, the minor party requirements: All of those things were questioned by the Green Party and found problematic by (Judge Stefan) Underhill, the second circuit reversed all of that."

The parties will now wait for Underhill to decide the question of the "severability" of its supplemental grants from the portions of the system that were upheld as constitutional, or, as Rotman said, "whether that branch can be chopped off from the rest of the program."

A conference before Underhill on the status of that case will be held at 2 p.m. today in Hartford.

Still, Fedele said in a brief appearance outside his office in the Capitol that his campaign team believed he was entitled to begin using the $2.1 million grant the campaign received from the Citizens Election Program, and which had been held up since Foley filed suit on Friday.

Fedele had planned to go up on television with an ad campaign on Saturday, and will now rush those advertisements onto the airwaves today.

Blumenthal, who represented the state in defending the campaign finance law in the courts, said in a written statement that he would continue to defend the law, and said campaigns like Malloy's and Fedele's are entitled to use the grants they have received so far.

t.mann@theday.com