Political Activity Law Alert: Important Recent Developments, February 12, 2010
Congressional Democrats yesterday unveiled the framework of their upcoming legislative response to the recent and controversial U.S. Supreme Court decision in Citizens United, which lifted the long-time ban on corporations' independent spending in federal elections. As outlined, the forthcoming legislation would:
- Ban federal election expenditures by any "foreign
corporation," defined as an entity (1) with foreign ownership
of 20 percent or more; or (2) whose Board majority is comprised of
non-U.S. citizens; or (3) whose U.S. operations, or
"decision-making with respect to political activities,"
is directed or controlled by a foreign entity. This provision could
prevent some foreign corporations' U.S. subsidiaries from
establishing political action committees, an activity permitted in
the past.
- Require a CEO to appear on camera in all corporate-sponsored,
election advertisements to state that he or she "approves this
message," much like candidates must do now.
- Compel for-profit and non-profit corporations to conduct all
candidate-specific advertising through "political activities
accounts" registered with the Federal Election Commission and
regularly disclose the accounts' donors and expenditures,
similar to what FEC-regulated PACs disclose currently.
- Mandate the disclosure of an organization's top
contributors at the end of all ads sponsored by that
organization.
- Restrict political expenditures by federal government
contractors and TARP recipients.
- Impose new political-expenditure reporting requirements for all
Lobbying Disclosure Act registrants.
- Require corporations to disclose all political expenditures to
shareholders on a regular basis and to the public on a corporate
Web site within 24 hours.
- Bolster existing rules that limit "coordination" of advertising efforts with federal campaigns.
Specific legislative language has not yet been released. The
legislation's principal sponsors, Senator Charles Schumer
(D-NY) and Congressman Chris Van Hollen (D-MD), plan to introduce a
bill during the week of February 22nd. Messrs. Schumer and Van
Hollen promise to move their reforms "expeditiously"
through Congress, so that they take effect before the 2010 general
election.
Caplin & Drysdale will provide timely updates on this important
legislation as it advances through the legislative process.
This article is designed to give general information on the developments covered, not to serve as legal advice related to specific situations or as a legal opinion. Counsel should be consulted for legal advice.