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FEC Rulings Open Door For 'Super' PACs FEC Rulings Open Door For 'Super' PACs

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Legacy Content / RULES OF THE GAME

FEC Rulings Open Door For 'Super' PACs

Liberal And Conservative Committees Get The Green Light For Unlimited Donations

August 2, 2010

In the wake of court rulings that roll 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 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."

The opinions come at a time when political players are still scrambling to sort through the implications of the high court's landmark Citizens United ruling. Both unions and business-friendly groups have spent heavily on campaign ads and have pledged to shell out tens of millions in the coming midterms. Yet the exact parameters of what they may and may not do are still unclear, as is how dramatically the ruling will actually boost campaign spending.

A flurry of high-octane, GOP-friendly groups have grabbed headlines lately, including American Crossroads, founded by Karl Rove and former Republican National Committee chairman Ed Gillespie, and headed by Steven Law, formerly a Bush administration official and counsel to the U.S. Chamber of Commerce. Commonsense Ten sets out, in part, to even the scales.

"We felt it was important to have an organization on our side that can help support Democrats when these third-party groups come in to defeat them," said Dixon. In addition to Dixon, a political consultant who previously worked on Capitol Hill and as a White House aide to then-Vice President Al Gore, Commonsense Ten's other organizers are Jim Jordan, the former executive director of the Democratic Senatorial Campaign Committee, and Jeff Forbes, a former Clinton White House aide.

The group also saw opportunities in the new regulatory landscape, Dixon said: "Because of the court decision, because we can accept unlimited contributions, we thought this was a very unique time for a committee like this." Now that the FEC has spelled out just how wide open the political playing field has become, many others will no doubt quickly follow suit.

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