FEC Lets PACs Take Unlimited Money For Independent Campaign Expenditures

BNA Money & Politics (October 6, 2011)
New FEC Policy on PACs

Key Development: All independent federal political action committees will be allowed to accept unlimited contributions, including corporate and union money.

Next Step: The federal PACs can notify the FEC they want to set up separate accounts for candidate contributions and independent campaign expenditures.

By Kenneth P. Doyle

All “non-connected” federal political action committees will be able to accept unlimited contributions, including corporate and union contributions, under a new policy announced by the Federal Election Commission Oct. 5.

Under the new policy, these PACs and other organizations will no longer have to establish separate entities—known as independent expenditure PACs, or Super PACs—in order to collect unlimited contributions.

The new policy applies only to PACs not established by individual companies or unions. Corporate and union PACs will continue to be subject to FEC contribution limits, the FEC indicated.

However, every independent PAC will be allowed to set up two separate bank accounts. One account, funded with limited individual contributions, can be used for the PAC to make direct contributions to federal candidates. The other account will be permitted to take unlimited contributions—regardless of long-standing FEC contributions limits and source limitation—but must be used solely for independent campaign expenditures.

The FEC noted that existing statutory and regulatory restrictions require that contributions to PACs come only from individuals in amounts limited to $5,000 annually. However, these restrictions will not be enforced against non-connected PACs that notify the FEC they want to collect unlimited contributions, the agency said.

Broader Leeway for PACs

The FEC indicated the new policy will remain in effect until it can write new PAC regulations responding to recent court decisions.

FEC Chairwoman Cynthia Bauerly said at the commission’s last open meeting Sept. 22 that the FEC was preparing new guidelines for those wanting to take advantage of a recent court settlement giving PACs broader leeway to raise unlimited contributions for independent campaign expenditures (3104 Money & Politics Report, 9/23/11).

Bauerly, a Democrat, indicated that she had agreed with FEC Vice Chairwoman Caroline Hunter, a Republican, to move forward on the matter. Hunter said recently such guidance would be provided after the Aug. 22 court settlement between the FEC and a PAC known as the National Defense PAC, or NDPAC.

Letter or Notice to FEC Needed

The FEC said in its announcement that existing PACs can take advantage of the new policy simply by submitting a letter or electronic notice to the commission explaining their intentions. Newly registered PACs also can provide a similar notice.

The new FEC policy came on the heels of the court settlement in the NDPAC lawsuit challenging FEC PAC rules. The settlement in the case, Carey v. FEC, was reached last summer and involved only NDPAC. The FEC has waited until now to clarify the implications of the case for others in the regulated political community.

The FEC said the notification letter submitted by PACs under its new policy may state the following: “Consistent with the stipulated judgment in Carey v. FEC, this committee intends to establish a separate bank account to deposit and withdraw funds raised in unlimited amounts from individuals, corporations, labor organizations, and/or other political committees. The funds maintained in this separate account will not be used to make contributions, whether direct, in-kind, or via coordinated communications, or coordinated expenditures, to federal candidates or committees.”

Constitutionality of PAC Limits Challenged

NDPAC’s supporters had said earlier that the settlement with the FEC entered in federal district court in Washington meant that contribution limits on all PACs are unconstitutional and can no longer be enforced. Other experts outside the FEC also said the settlement implied that any existing FEC-registered PAC could set up a separate account for independent campaign expenditures and collect unlimited contributions for that purpose.

Each PAC still will have to make contributions to candidates from an account that accepts only individual contributions limited to no more than $5,000 annually.

Experts have said the affirmative action by the FEC in the wake of the court settlement in the NDPAC case will provide guidance to allow other organizations to adjust their operations and begin collecting unlimited contributions. Previously, organizations have been allowed to collect unlimited contributions only if they established separate entities, now commonly known as Super PACs, to collect unlimited contributions.

The NDPAC settlement and new FEC guidance could allow existing PACs to streamline their solicitation efforts and cut down on their filings with the FEC for multiple units.

Internet Rulemaking Expected

The latest announcement by the FEC came on the eve of a scheduled Oct. 6 commission open meeting, at which the commissioners are expected to advance a new rulemaking notice regarding rules for internet political advertising.

A advance notice of proposed rulemaking, set to be voted on by the six commissioners, outlined issues to be addressed by the new regulatory effort. The notice indicated the FEC will address plans and practices of internet companies like Google, Facebook, and Twitter to sell campaign ads to federal candidates and others.

A key question has been whether the ads sold by these companies comply with current FEC disclaimer requirements or whether they might be exempt from such requirements.

The three FEC commissioners recommended by Democrats have indicated interest in clarifying the rules for internet ads, while the FEC’s three Republicans appear to be more concerned with the newly announced policy statement on PAC limits following up the NDPAC settlement.

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