WASHINGTON -- The U.S. Supreme Court yesterday returned to a lower court a challenge to the McCain-Feingold campaign-finance law's restrictions on "issue ads" that mention a candidate's name within 60 days of an election.

Taking the bench for the last time until Feb. 21, the justices also moved another step back from the Rehnquist court's so-called "federalism revolution" by ruling 5-4 that state agencies could be sued in bankruptcy proceedings. As she has done in so many cases, retiring Justice Sandra Day O'Connor cast the decisive vote.

In the campaign-finance case, which was argued only last Tuesday, the court declined to rule on an anti-abortion group's free-speech challenge to a major provision of the act that the court ruled in 2003 was not unconstitutional "on its face."

Justice O'Connor, who was in the 5-4 majority in that ruling, is expected to be gone from the bench when the justices return next month, replaced by Judge Samuel A. Alito Jr., the nominee still awaiting a Senate confirmation vote.

"This is a punt," said Prof. Richard L. Hasen, an election-law expert at Loyola Law School in Los Angeles. "Justice O'Connor holds the balance of power on campaign-finance issues, and the court couldn't have crafted a 5-4 decision either way in time for her expected departure."

The justices could have used the case to spell out when so-called grass-roots ads are allowed at election time.

Yesterday's decision concerned an ad that a Wisconsin anti-abortion group wanted to broadcast in the fall of 2004 urging that state's two Democratic senators, Russell Feingold and Herb Kohl, not to take part in a filibuster of President Bush's judicial nominees.

Under McCain-Feingold, such "issue ads" are banned if they mention a candidate and are aired within 60 days of a general election. Mr. Feingold was up for re-election in 2004.

The group, Wisconsin Right to Life Inc., asked a three-judge federal court to issue an injunction that would let the ad be aired without Federal Election Commission reprisal. The lower court refused, saying the group was unlikely to prevail on the merits and observing that the ad "may fit the very type of activity [the Supreme Court] found Congress had a compelling interest in regulating" -- that is, "issue ads" intended to influence elections.

In yesterday's other major ruling, the court split 5-4 in holding that the court-appointed administrator of a bankrupt bookstore chain could sue several state colleges in Virginia in an attempt to recover payments made before the business declared bankruptcy.

The state colleges had argued that they couldn't be sued because states are immune to lawsuits in federal court under the 11th Amendment. But the bankruptcy trustee cited another part of the Constitution, Article I, which gives Congress the power to establish "uniform laws on the subject of bankruptcies throughout the United States."

In a majority opinion laden with legal history and Latin terms, Justice John Paul Stevens said that at the Constitutional Convention in 1787, "the states agreed ... not to assert any sovereign immunity defense they might have had in proceedings brought pursuant to 'laws on the subject of bankruptcies.' "

"This is a case that shows the value of one vote," said Marquette University law professor Jay E. Grenig, who has followed the court's federalism cases closely. "If the case were decided a few months from now, with Alito on the court, it probably would come out 5-4 the other way."

"It's fitting, in a sense, that's the image that we have of O'Connor over the last 24 years," American University law professor Stephen Wermiel told the Associated Press. "She's leaving the bench, right down to the last minute playing the role that she has become known for playing, being the middle of the court."

In other action yesterday, the court:

Refused to decide whether states can restrict candidates for judgeships from participating in political-party activities and soliciting campaign contributions, letting stand a lower-court decision that voided rules adopted by the state of Minnesota to keep judicial elections nonpartisan.

Declined to hear an appeal by the Canadian manufacturer of the BlackBerry handheld communications device of a lower-court ruling that it had infringed on the patent of a Virginia company.