FEC Advisory Rulings Could Spur "Super PAC's"

Now that the Disclose Act has been blocked, a National Journal article points out that, "in the wake of court rulings rolling back limits on independent campaign expenditures, the Federal Election Commission has issued two advisory opinions that spell out just how easy it will now be for political players to raise big money directly from corporations and unions".

Responding to questions from the anti-tax Club for Growth and a new Democrat-friendly political group dubbed Commonsense Ten, the FEC opinions spell out that corporations and labor unions may now make unlimited donations to independent expenditure committees — that is, groups that weigh in on elections without coordinating with or donating directly to candidates.

The FEC opinions follow on the Supreme Court’s January ruling in Citizens United v. Federal Election Commission to overturn the ban on direct corporate and union independent campaign expenditures. They also reflect a recent lower court ruling in SpeechNow.org v. FEC that found political committees making independent campaign expenditures may use corporate and union money to expressly attack or support candidates.

Unlike 527 groups, which report their activities to the IRS, "super" PACs will report to the FEC.

"I expect you’ll see an uptick in these kinds of groups," said Marc Elias, a partner at Perkins Coie and an attorney for Commonsense Ten. Indeed, the FEC advisory opinions appear to set the stage for a new generation of "super" political action committees that raise unlimited, previously-outlawed corporate and union money, while comprehensively reporting all receipts and expenditures. These groups must follow the same disclosure rules as fully-regulated PACs, but may not donate money to candidates.

The FEC advisory opinions have received mixed reviews. Some election lawyers warn that disclosure will be insufficient. Others point out that the opinion responding to the Club for Growth, for one, fails to establish a firewall between the group’s conventional PAC, which is fully regulated and gives to candidates, and its new independent-expenditure only PAC, which may collect large donations from corporations and (theoretically) unions.

"The Club for Growth advisory opinion gives corporate government relations officials the green light to establish independent expenditure-only committees and manage them in tandem with the corporation’s PAC to achieve the corporation’s political goals," said Brett Kappel, counsel at Arent Fox, in an e-mail analysis. The FEC found, for example, that a corporation’s president could serve simultaneously as the treasurer of the club’s independent expenditure-only committee and its conventional PAC.

But organizers at Commonsense Ten argue that the new regulations may actually enhance disclosure. Unlike 527 groups, which may collect unregulated money but report their activities to the Internal Revenue Service, "super" PACs like Commonsense Ten and the Club for Growth’s new independent committee will report to the FEC. The FEC reports tend to be more timely and comprehensive than those at the IRS, which lacks the commission’s culture of transparency.

"I think these kinds of committee take these electoral activities out of the shadows," said Monica Dixon, executive director of Commonsense Ten. "Everything we do — every penny we raise and every penny we spend — is going to be available on the FEC database. And that simply isn’t the case right now with these organizations that are setting themselves up as 527s."

Elias speculated that the FEC’s recent action may spur more groups to operate as independent expenditure-only PACs, as opposed to 527 organizations: "What I think this in practice will do is push committees out of 527 status and into federal PAC status."

 

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