Congress Considers Prior Authorization Reforms for Trade Association PACs

19 Sep, 2017

News

Congress Considers Prior Authorization Reforms for Trade Association PACs

What to Know: The House of Representatives is considering an appropriations bill, H.R. 3280, which would restrict the Federal Election Commission (FEC) from enforcing the “prior authorization” or prior approval requirement on trade association PACs for one year.

Introduced in July 2017, the bill provides fiscal year 2018 appropriations funding to various agencies and branches of government, including the FEC. Section 630 states that “none of the funds appropriated by this Act may be used to enforce the ‘prior approval’ requirements on corporate member trade association PACs outlined in section 316(b)(4)(D) of the Federal Election Campaign Act of 1971.” This would effectively defund the FEC’s ability to enforce current prior approval requirements, but trade association PACs would still be legally required to seek prior approval before soliciting members for contributions.

Why is Prior Approval Important? The FEC requires trade association PACs to obtain written prior approval from its corporate members before it can solicit them for PAC support. Additionally, corporations can only grant approval to one trade association PAC per calendar year. This requirement has been a longstanding burden for trade association PACs in their efforts to solicit the employees of corporate members.

What to Expect? It’s unclear how this appropriations bill will advance or whether language similar to section 630 will be incorporated into another moving legislative vehicle. The status of the bill is closely tied to budget negotiations. Meanwhile, supporters of repealing prior approval requirements, such as the Prior Approval Reform Coalition (PARC), are encouraging Congress to continue considering this language or a bill such as H.R. 2101, which repeals the prior approval requirement for corporate member trade association PACs altogether.

Need a Review of Prior Approval Requirements?

What exactly does granting prior approval include?

Granting prior approval gives the trade association PAC permission to communicate to certain employees (shareholders, principals, managers, and other salaried, exempt employees) about the PAC and the role it plays in promoting the industry’s advocacy efforts. Prior approval does not obligate a company or its employees to support or contribute to the PAC.

Can anyone in a company sign the prior approval form?

Prior approval may be granted by anyone so authorized by a company, typically a company’s chief executive, but may also include others in senior leadership positions. By signing a prior approval form, a company can allow the trade association PAC to solicit all its eligible employees or only certain individuals in the company.

Does prior approval have to be given every year?

Prior approval may be granted by a company for up to five consecutive years and may be withdrawn at any time. Only one form is required per member.

What if the company has its own federal PAC?

Companies can grant prior approval to one trade association PAC. This means that even if the company has its own federal PAC, their employees may still contribute up to the legal limit each year to both the trade association and company PAC.

If a company gives prior approval to a trade association PAC, does that limit their employees from giving to other PACs?

No. When a company grants prior approval, it does not preclude company employees from contributing to a state, federal, candidate, corporate or ideological PAC. The only restrictions are that a company cannot grant approval to more than one trade association PAC per calendar year and company employees may not be solicited to contribute to a trade association PAC that has not first received the company’s permission through prior approval.

For more information, Contact Kristin Brackemyre, Manager, PAC and Advocacy Practice

 

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