[EL] query on 501c4 IEs and the FEC PAC rules

Fri Mar 16 16:45:34 PDT 2012

Good point.  And great to see the FEC's former GC on the list,

Steve

On Fri, Mar 16, 2012 at 7:36 PM, Norton, Lawrence <LNorton at wcsr.com> wrote:

>  Perhaps so, although I don’t think that c4s are often pushed into 527
> status, especially ones that are dissolved shortly after they are
> established.   I was only making the point that existing campaign finance
> rules appear adequate to address the disclosure concerns about this kind of
> conduit transaction. ****
>
> ** **
>
> Larry****
>
> ** **
>
> *lAWRENCE H. NORTON *
> *Womble Carlyle Sandridge & Rice, LLP*
> 1200 Nineteenth Street, N.W. ****
>
> Suite 500
> Washington, DC 20036
> Direct Dial: 202.857.4429 | Mobile: 240.994.2444 ****
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> E-mail: lnorton at wcsr.com <jkahl at wcsr.com> | Fax: 202.261.0097****
>
> ** **
>
> *From:* Steve Hoersting [mailto:hoersting at gmail.com]
> *Sent:* Friday, March 16, 2012 7:26 PM
> *To:* Norton, Lawrence
> *Cc:* Rick Hasen; law-election at uci.edu
>
> *Subject:* Re: [EL] query on 501c4 IEs and the FEC PAC rules****
>
>  ** **
>
> Interesting.
>
> If the c4 were "itself a Super PAC," as you put it, Larry, wouldn't that
> push the c4 into 527 status (even if we cannot be sure a perfect
> enforcement or self-reporting mechanism exists to push the c4 into 527
> status), or am I missing something?
>
> Steve****
>
> On Fri, Mar 16, 2012 at 7:20 PM, Norton, Lawrence <LNorton at wcsr.com>
> wrote:****
>
> There has been a lot of discussion about how the existing disclosure rules
> allow an individual to create a c4 merely as a conduit for contributing to
> a Super PAC.  It strikes me that the political committee test is relevant
> to this situation, too.  If the only thing a c4 does is make a large
> contribution to a Super PAC, then the c4 has met the two tests for
> political committee status: it has made over $1,000 in “contributions” and
> its major purpose is influencing federal elections. ****
>
>  ****
>
> Then you have the question of whether the c4 itself is a Super PAC,
> subject to federal reporting requirements but not limits and source
> restrictions.  I think the answer is that it would be, so long as it
> doesn't contribute to any federal political committees that are subject to
> contribution limits.****
>
>  ****
>
> *lAWRENCE H. NORTON *
> *Womble Carlyle Sandridge & Rice, LLP*
> 1200 Nineteenth Street, N.W. ****
>
> Suite 500
> Washington, DC 20036
> Direct Dial: 202.857.4429 | Mobile: 240.994.2444 ****
>
> E-mail: lnorton at wcsr.com <jkahl at wcsr.com> | Fax: 202.261.0097****
>
>  ****
>
> *From:* law-election-bounces at department-lists.uci.edu [mailto:
> law-election-bounces at department-lists.uci.edu] *On Behalf Of *Rick Hasen
> *Sent:* Friday, March 16, 2012 6:50 PM
> *To:* Steve Hoersting
> *Cc:* law-election at uci.edu
> *Subject:* Re: [EL] query on 501c4 IEs and the FEC PAC rules****
>
>  ****
>
> Of course each such claim will have to be investigated individually.
>
> I am making two predictions
>
> 1. there will be (or already are) 501c4 groups which will engage in enough
> electioneering that under a fair reading of the "major purpose" test the
> group should have (but didn't) register as PACs; and
> 2. if complaints are filed, and the composition of the FEC is as it is
> now, the FEC will deadlock on party lines as to whether such groups should
> have registered as PACs under the major purpose test.
>
> I will be happy if I am wrong on either or both.
>
> Rick
>
> On 3/16/12 3:45 PM, Steve Hoersting wrote: ****
>
> Respectfully, it seems the following statement puts the *penalizing cart*before the
> *investigative* *horse*:****
>
> and lawsuits against the FEC if it does not *take action against* such
> groups *for violating the PAC rules.*****
>
>
> Best,
>
> Steve****
>
> On Fri, Mar 16, 2012 at 6:38 PM, Rick Hasen <rhasen at law.uci.edu> wrote:***
> *
>
> It seems to me that there will likely be excesses in this election by
> c4s which are acting as shadow super PACs, which will lead to
> complaints, potential investigations, and lawsuits against the FEC if it
> does not take action against such groups for violating the PAC rules.
>
> Thanks to both of you and to others who weighed in on this issue in
> private messages.****
>
>
>
> On 3/16/12 3:34 PM, Trevor Potter wrote:
> > Presumably John's comments that c4s claim " validly" that they do not
> have as their "major purpose" the influencing of federal elections do not
> apply universally to all entities that chose to claim c4 status. Rather,
> that is a factual question to be answered by each entity that expends more
> than a significant portion of their resources on federal election activity.
> > Trevor Potter
> >
> > Sent from my iPad
> >
> > On Mar 16, 2012, at 6:25 PM, "John Pomeranz"<jpomeranz at harmoncurran.com>
>  wrote:
> >
> >> Correct.  501(c)(4)s argue (validly, I think) that their "major
> purpose" is not efforts to influence federal elections.  Significant
> support for that argument comes from the tax law's requirements for
> 501(c)(4) status.  To qualify for its exemption from federal income tax, a
> 501(c)(4) must have a primary "social welfare" purpose, which does not
> include efforts to intervene in any political campaign.
> >>
> >> There was some interesting debate on these issues, including the
> intersection of FECA's (or, really, the Supreme Court's) "major purpose"
> and the tax law's "primary purpose," during the FEC's efforts to craft a
> political committee rule in 2004.   Yet what constitutes major purpose and
> primary purpose remain, as you know, a hot topic of debate.
> >>
> >>
> >> John Pomeranz****
>
> >> Harmon, Curran, Spielberg&  Eisenberg, LLP****
>
> >> 1726 M Street, NW, Suite 600
> >> Washington, DC  20036
> >> office: 202.328.3500
> >> mobile: 703.597.7663
> >> fax: 202.328.6918
> >> e: jpomeranz at harmoncurran.com
> >>
> >>
> >>
> >> -----Original Message-----
> >> From: law-election-bounces at department-lists.uci.edu [mailto:
> law-election-bounces at department-lists.uci.edu] On Behalf Of Rick Hasen
> >> Sent: Friday, March 16, 2012 6:07 PM
> >> To: law-election at uci.edu
> >> Subject: [EL] query on 501c4 IEs and the FEC PAC rules
> >>
> >> I understand that in this election cycle and the last (since CU) 501c4
> organizations (which did not qualify as MCFL/QNC corporations) have been
> running not just electioneering communications ads, but also making
> independent expenditures (including express advocacy).
> >> How do 501c4s which are making IEs argue that they need not register
> with the FEC as a political action committee?  Are they arguing that
> electioneering is not their major purpose (along the lines of how they
> argue to the IRS that election related activity is not the "primary
> activity" for tax purposes)?
> >>
> >> Thanks.
> >> Rick
> >> --
> >> Rick Hasen
> >> Chancellor's Professor of Law and Political Science UC Irvine School of
> Law
> >> 401 E. Peltason Dr., Suite 1000
> >> Irvine, CA 92697-8000
> >> 949.824.3072 - office
> >> 949.824.0495 - fax
> >> rhasen at law.uci.edu
> >> http://law.uci.edu/faculty/page1_r_hasen.html
> >> http://electionlawblog.org
> >> _______________________________________________
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>
> --
> Rick Hasen
> Chancellor's Professor of Law and Political Science
> UC Irvine School of Law
> 401 E. Peltason Dr., Suite 1000
> Irvine, CA 92697-8000
> 949.824.3072 - office
> 949.824.0495 - fax
> rhasen at law.uci.edu
> http://law.uci.edu/faculty/page1_r_hasen.html
> http://electionlawblog.org
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>
>
>
> --
> Stephen M. Hoersting****
>
>  ****
>
> --
> Rick Hasen
> Chancellor's Professor of Law and Political Science
> UC Irvine School of Law
> 401 E. Peltason Dr., Suite 1000
> Irvine, CA 92697-8000
> 949.824.3072 - office
> 949.824.0495 - fax
> rhasen at law.uci.edu
> http://law.uci.edu/faculty/page1_r_hasen.html
> http://electionlawblog.org****
>
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> --
> Stephen M. Hoersting****
>

-- 
Stephen M. Hoersting
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