Explanation of Stop Super PAC-Candidate Coordination Act (H.R.425)
The Stop Super PAC-Candidate Coordination Act (H.R. 425) sponsored by Representatives David Price (D-NC) and Chris Van Hollen (D-MD deals with two important campaign finance problems.
The Act shuts down individual-candidate Super PACs and strengthens the rules that prohibit coordination between other outside spenders and candidates and parties.
The provisions in the Act are also included as part of the comprehensive Empowering Citizens Act (H.R.424), sponsored by Price and Van Hollen, which establishes a small donor, public matching funds system for presidential and congressional races.
Both of the bills were introduced in the last Congress.
Individual-candidate Super PACs operate as arms of the candidate they support. They are vehicles for candidates and their supporters to circumvent and eviscerate the candidate contribution limits by supporters of the candidate giving unlimited contributions to the individual-candidate Super PAC supporting that candidate.
The Act defines coordination between a candidate and a Super PAC to include factors that establish close relationships and ties between the candidate and the Super PAC. Once such coordination is established, all future expenditures by the Super PAC for public communications to support the candidate are treated as coordinated with the candidate. Under existing law coordinated expenditures are defined as also being in-kind contributions and are subject to the PAC contribution limit of $5,000 per year.
The Act defines a Super PAC to be coordinated with a candidate when:
– the Super PAC is directly or indirectly established by or at the request or suggestion of, or with the encouragement of, or with the approval of, the candidate or the agents of the candidate it supports;
– the candidate or the candidate’s agents solicit funds or engage in other fundraising activity for the Super PAC, including by providing or sharing fundraising lists with the Super PAC;
– the Super PAC is established, directed or managed by former political, media or fundraising advisers or consultants to the candidate or entities controlled by the candidate;
– the Super PAC has had communications with the family of the candidate about the candidate’s campaign; or
– the Super PAC has retained the professional services of any person who during the two-year period prior to the expenditure has provided or is providing professional services relating to the campaign to the candidate or the candidate’s campaign.
The Act also strengthens the general rules prohibiting coordination between a candidate and an outside spending group that have been seriously undermined by flawed, ineffectual FEC rules. The Act treat as coordinated any communications or any payments for communications made by any person pursuant to any general or particular understanding, or any discussion, with the candidate or the candidate’s agents about the communications or payments.
The Act also prohibits candidates and officeholders from soliciting funds for any Super PAC or other political committee that raises contributions that do not comply with the federal contribution limits and prohibitions and reporting requirements.
A New York Times editorial on August 4, 2014, said that individual-candidate Super PACs “could be shut down if Congress would pass the Empowering Citizens Act, a bill introduced in the House that would put strict limits on these kinds of coordinated contributions.”
An earlier editorial in The Washington Post (November 18, 2012) supporting the Empowering Citizens Act said the individual-candidate Super PAC provisions would “eliminate the candidate-specific super PACs, such as Mitt Romney’s Restore our Future and President Obama’s Priorities USA, that did the most to shred the fiction of independent expenditures.”
The Super PAC and coordination provisions in the comprehensive Empowering Citizens Act and in the Stop Super PAC-Candidate Coordination Act are the same. The latter bill contains only Super PAC and coordination provisions.
Detailed Explanation of Stop Super PAC-Candidate Coordination Act
The Stop Super PAC-Candidate Coordination Act embodies two complementary approaches to defining “coordination.”
First, the bill sets forth a general definition of what constitutes coordination that is based on the broad language used by the Supreme Court to describe the meaning of coordination in a number of cases where the Court has discussed independent spending.
In these cases, the Supreme Court has said that independent spending must be done “totally independently,” Buckley v. Valeo, 424 U.S. 1, 47 (1976); “not pursuant to any general or particular understanding,” Colorado Republican Federal Campaign Committee v. FEC, 518 U.S. 604, 614 (1996) (“Colorado I”); “without any candidate’s approval (or wink or nod),” FEC v. Colorado Republican Federal Campaign Committee, 533 U.S. 431, 442 (2001) (“Colorado II”); and must be “truly independent,” id. at 465.
Second, the bill creates a new category of “coordinated spender” to address spending by individual candidate Super PACs. The definition of a “coordinated spender” is based on factors that establish a close relationship or ties between the outside spender and the candidate.
Once an outside spender meets the definition of being a “coordinated spender” with a candidate, then all future expenditures by the “coordinated spender” for public communications to support the candidate are treated as coordinated expenditures with that candidate.
Under existing campaign finance law, coordinated expenditures are also in-kind contributions and as such the expenditures by the individual-candidate Super PACs would be subject to the PAC contribution limit of $5,000 per year.
General Coordination Standard
The Act contains a general definition of what constitutes coordination.
The Act adds to the existing definition of “contribution” a new subsection that defines a contribution to include “any payment made by any person . . . for a coordinated expenditure.”
The Act defines a “coordinated expenditure” to include a payment for an “expenditure,” including a partisan voter drive, or for a “covered communication” which is made “in cooperation, consultation, or concert with, or at the request or suggestion of” a candidate or a candidate’s campaign committee. (“Covered communication” is defined in the Act.)
The Act defines “cooperation, consultation or concert with” — to include any payment or communication by a person “which is not made entirely independently” of a candidate or his or her authorized committee.
The Act defines “which is not made entirely independently” of a candidate to include a payment “made pursuant to any general or particular understanding with, or pursuant to any communication with” the candidate or his or her committee regarding the payment or communication.
These standards are adapted from language in Supreme Court decisions and establish the general standard that defines coordinated spending between any outside spender (including a Super PAC, a corporation or a nonprofit organization) and a candidate. The standards apply to any kind of campaign expenditure, including expenditures for public communications, partisan voter mobilization and other campaign activities on behalf of a candidate.
The bill does not change the existing coordination rules that apply to spending by a political party on behalf of the party’s candidates.
The bill exempts from the definition of coordination any discussions by an outside spender with a candidate that are solely for purposes of lobbying the candidate on a policy matter, provided that there are no discussions between the outside spender and the candidate that relate to the candidate’s campaign.
The bill prohibits an outside spending group from using an internal firewall to avoid the application of the coordination provisions. Thus, a group that is coordinating with a candidate cannot set up a separate unit within the group and claim the separate unit is making “independent expenditures” and therefore the coordination by the group with the candidate is not covered by the coordination rules.
“Coordinated Spender” Standard
The bill creates a new “coordinated spender” standard to deal with the fact that individual candidate Super PACs are operating as arms of the candidate’s campaign while claiming to be making independent expenditures.
The concept of a “coordinated spender” covers spending by an individual-candidate Super PAC – a Super PAC that supports one candidate — and by any other entity that is closely associated with or tied to a candidate.
Once an outside spending group falls within the definition of a “coordinated spender,” all later spending by the group for “covered communications” are treated as “coordinated expenditures” by the group with the candidate being supported.
The approach of this section of the Act starts by defining a “coordinated expenditure” to include any payment that is made by a “coordinated spender” for a “covered communication.”
“Coordinated spender” and “covered communication” are defined terms in the Act.
A “coordinated spender” is then defined as any outside spender that meets any one of the following five standards:
(A) any person who is directly or indirectly established by or at the request or suggestion of a candidate or his campaign;
(B) any person for whom a candidate solicits funds or appears at a fundraising event;
(C) any person established, directed or managed by a candidate or by any person who has been employed by the candidate or retained as a consultant by the candidate during the preceding four years;
(D) any person who has retained a common vendor that was used by the candidate during the prior two years, or
(E) any person who is established or managed by, or has had more than incidental discussions with, a member of the candidate’s immediate family about the candidate’s campaign.
A “covered communication” is defined to include (a) any public communication by an outside spending group that refers to a candidate in the period 60 days before a primary and 120 days before a general election, and (b) any public communication by an outside spending group at any time that expressly advocates the election or defeat of a candidate, or that promotes or supports a candidate or attacks or opposes the candidate’s opponent.
In McConnell v. FEC, 540 U.S. 93 (2003), the Supreme Court upheld the “promotes, attacks, supports or opposes” test, known as the PASO test, a test that does not require express advocacy in the communication.
The Supreme Court stated that “any public communication that promotes or attacks a clearly identified Federal candidate directly affects the election in which he is participating.” The Court in upholding the PASO test said that the PASO words ‘provide explicit standards for those who apply them’ and ‘give the person of ordinary intelligence a reasonable opportunity to know what is prohibited.’”
The Act also prohibits candidates and officeholders from soliciting any funds for any Super PAC or other political committee that raises contributions that do not comply with the federal contribution limits and prohibitions and reporting requirements.
The Act addresses imposes strong penalties to address the issue of penalties for violating the coordination rules being treated by outside spenders as a cost of doing business.
The Act imposes fines for “knowing and willful” violations of the coordination rules by imposing a fine in an amount that is three times the amount of the coordinated expenditures involved in excess of the applicable contribution limit. The Act also imposes joint and several liabilities on any director, manager or officer of an outside spending group for any unpaid penalties by the group violating the coordination rules.
The Act repeals the existing FEC regulations on coordinated communications and directs the FEC to issue new regulations on coordinated spending. The bill provides that the statutory provisions will go into effect 120 days after enactment, regardless of whether the FEC has issued regulations to implement the provisions. This prevents the FEC from rendering the new coordination provisions inoperative simply by not issuing new regulations.
