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February 14, 2012

What is a SuperPAC? Understanding what it means for you

The term "SuperPAC" refers to a new kind of political action committee that was made possible as a result of two recent court decisions. The first was a landmark decision by the 2010 United States Supreme Court in Citizens United v. Federal Election Commission ("FEC") that overturned the long-standing ban on independent spending by corporations and unions for political purposes. The second was a ruling by the U.S. Court of Appeals for the D.C. Circuit in v. FEC, which on the heels of Citizens United, held that no limits could be placed on contributions to groups that made only "independent expenditures".

Prior to Citizens United, it was simply illegal for corporations or unions to make contributions to and expenditures on behalf of any candidate for federal office. If a corporation or union wanted to participate in federal elections, its sole vehicle for doing so was the establishment, administration and solicitation of contributions to a political action committee ("PAC"). The PAC served as a means for combining individual contributions to particular candidates whose views towards business and government were in accord with those of the corporation or union.

As a result of Citizens United and Speechnow, corporations and unions can now make unlimited "independent expenditures" from their own funds, not directly to candidates, but to an "independent-expenditure only committee," otherwise known as a "SuperPAC," to advocate for or against specific political candidates.

What is an "independent expenditure?" According to FEC regulations (11 CFR 100.16(a)), the term "independent expenditure" means an expenditure by a person that expressly advocates the election or defeat of a clearly identified candidate and that is not made in concert or cooperation with or at the request or suggestion of the candidate, the candidate's authorized political committee, a political party committee or their agents. In other words, a SuperPAC may raise and spend unlimited sums of money from corporations, unions and individuals to support or attack individual candidates, provided that the SuperPAC does not coordinate directly with a candidate or political party. The SuperPAC expenditures must be made "independent" of the candidate – without the candidate's knowledge, involvement or approval.

Thus, while SuperPACs have no limits on what they can spend to openly support or oppose particular candidacies, they are prohibited from donating money directly to a political candidates. The SuperPACs must operate independently of a candidate and must register and report their donors to the FEC as a traditional PAC would. If corporations or unions wish to contribute directly to individual federal candidates, they must still rely on traditional PACs for that purpose. A traditional PAC can at most contribute up to $5,000 per candidate per election.

The decisions in Citizens United and Speechnow have dramatically changed the rules regarding campaign expenditures by opening the doors to an influx of unlimited money from corporations, unions and individuals to SuperPACs who in turn can spend their unlimited funds for "independent expenditures" in support or opposition of targeted candidates.

The 2012 Elections are serving as the first real testing-grounds for the impact of SuperPACs on the American political system. Already, millions of dollars have been poured into and spent by SuperPACs in states that have held presidential primaries, and both supporters and opponents of SuperPACs are gearing up to debate their future. Estimates vary, but it is widely expected that SuperPACs will spend upwards of $2 billion on the upcoming Presidential election in the form of campaign advertising and other advocacy efforts.

While supporters argue that free speech is being protected by SuperPACs under the First Amendment, opponents contend that it is impossible for SuperPACs to operate independently of candidates and the voice of the average citizen is being lost. Just this month, the United States Senate announced its intentions to call hearings to look into the impact of SuperPACs on account of their recent mass proliferation and spending.

In the interim, for good or bad, SuperPACs will have a significant impact on the 2012 federal elections, and provide a new means for corporations, unions and individuals to participate in the political process as never before. We suggest that anyone interested in establishing or participating in a SuperPAC exercise caution and consult with appropriate legal counsel to ensure compliance with this complex and ever-changing area of law. Hiscock & Barclay has a team of attorneys that can provide you with assistance.

If you have any questions regarding the foregoing or otherwise related to lobbying or election law compliance, please contact one of our Lobbying and Election Law Compliance Practice Area members.


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