Analyzing NRSC v. FEC: What the Supreme Court’s Ruling Means for Parties, PACs and Donors

Episode Summary

Skadden partners Charlie Ricciardelli and Tyler Rosen are back on the latest episode of “The Lobby Bar” to break down the 6-3 Supreme Court decision in National Republican Senatorial Committee v. Federal Election Commission, which struck down limits on how much political parties can spend in coordination with their candidates. During the episode, the hosts examine what the decision means for political parties going forward, including its effects on what the decision leaves untouched: contribution limits, disclosure regimes and earmarking restrictions. Charlie and Tyler also analyze the implications on super PACs and 501(c)(4) organizations’ political spending following the ruling and look at a range of other key topics.

Voiceover (00:00):
From Skadden, you're listening to The Lobby Bar, a political law podcast where we strive to make political law accessible, and host Charlie Ricciardelli and Tyler Rosen deliver practical insights on the compliance challenges and regulatory developments that matter to legal, compliance, and government affairs professionals across all industries.

Tyler Rosen (00:23):
Hello, I'm Tyler Rosen.

Charlie Ricciardelli (00:25):
And I'm Charlie Ricciardelli.

Tyler Rosen (00:26):
And we are partners in the Political Law Compliance and Investigations practice at Skadden, Arps in Washington, D.C. And you are listening to The Lobby Bar. And you are listening to a very special episode today. We are giving some breaking or maybe not-so-breaking news talking about the Supreme Court case, the very last day of the Supreme Court term for this year back on June 30th, of NRSC v.FEC.

Charlie Ricciardelli (00:50):
Is it fair to call this an emergency non-emergency podcast or a laid back emergency podcast?

Tyler Rosen (00:56):
A little bit of a laid back emergency podcast. We were prepared to do this as an emergency podcast if the opinion were maybe, not to get ahead of ourselves, but if it were a little more monumental than it turned out to be, I think we were prepared to go full sirens blaring and just do it live. But we wanted to sit back, percolate and think about some of the reactions that we've seen to it, some of the practical implications. Just to level-set, this is not going to be a con law podcast, although we are going to talk about a Supreme Court decision. I think our focus here is going to be much more on what are the practical implications? What do companies and practitioners and everyone need to ... what does it all mean rather than the ins and outs of jurisprudence?

Charlie Ricciardelli (01:36):
Yeah, no, I think that's right. The goal here is to be as practical as possible, but that's not going to get you out from under actually describing the case, Tyler, which we've nominated.

Tyler Rosen (01:45):

I was going to say, yeah, that's right. Just after saying that, let's get into the holding and the reasoning of the opinion. So, NRSC v. FEC, the National Republican Senatorial Committee, which is a national party committee for the Senate Republicans with the purpose of advancing their candidates for an election to the U.S. Senate, brought a challenge against the coordinated expenditure limits for political parties under the Federal Election Campaign Act, or FECA. So, what does that mean? The coordinated expenditure limits are limitations — or I should say were now — were limitations on what a political party could spend in coordination with its candidates. So, spending in coordination with each particular Senate candidate in each state. And there were similar limits for House candidates and Senate candidates, and it was of interest to all of the national political parties. And so they brought this challenge and the Supreme Court ultimately held that the limits on these party committee spending violate the First Amendment of the Constitution.

(02:46):
Just very briefly, again, not a con law podcast. We're going to totally skip over the standing section, which was actually a fairly large part of the opinion. But, the logic of the opinion was they first got into what the level of scrutiny, the standard of review is going to be. In campaign finance cases in recent years, the court has used two different levels of analysis for whether a statutory provision is constitutional. The first is sort of one that you might know if you're a constitutional generalist — a strict scrutiny standard. And those have been the tests used when it comes to restrictions on expenditures. They've also developed a secondary test of closely drawn scrutiny when it comes to restrictions on contributions. And there, the idea is that there is more of a free speech right to spend money than there is to make contributions.

(03:37):
And, so, the level of tailoring that there needs to be for restriction on expenditures needs to be higher than it does when it comes to a restriction on contributions. All that being said, Justice Kavanaugh writing for the court said, "Doesn't matter. It fails under either of those tests and we’re not even really going to say definitively which one we're applying.” So, the party coordinated expenditure limits are neither closely drawn, nor do they survive strict scrutiny. Really, the way they got there was that the only permissible government interest in restricting these types of expenditures is the prevention of quid pro quo corruption or the appearance of quid pro quo corruption. And then that's been the trend emerging out of the court's jurisprudence on campaign finance over the last 20 years, Citizens United being the most prominent, but there've been a number of cases where that doctrine has been developed by the court.

(04:27):
And it said that it failed that standard. It wasn't closely drawn. It didn't necessarily do enough to prevent the quid pro quo corruption because those limits are disproportionate given the really significant interest that a political party has in supporting its candidates. In some ways, this is almost (more of) an association opinion than this a speech one because the party is in a special place to advance the interests of its candidates, which are really intrinsically the party's own interest. I mean, the party exists to elect candidates and not being able to coordinate candidates is in the Court's view a significant infringement on their speech and associational rights. They also felt that there was, and then to get a preview a little bit of the dissent, there's concerns, and also in some of the briefing on this case, was that this would really just effectively be an end run around the contribution limits on contributing to candidates. Well, they said there's other ways that you can get at that risk, the short of having these limits on coordinated expenditures. So, Charlie, do you want to talk about the dissent a little bit more?

Charlie Ricciardelli (05:33):
Yeah, I think that's right. I mean, the dissent essentially had two main points in the first one Tyler just raised is when you strip all of this away and you have the majority saying, listen, there's only one justification for these types of restrictions on a party's spending in coordination with its candidates and it's to prevent quid pro quo corruption. What the dissent says, well, these spending restrictions, restricting the amount that a political party can spend in coordination with a candidate, those are important because without them, you're essentially eviscerating the base limits or the limits on contributions to a candidate because a donor would just be able to make a very large contribution to one of these party committees. And the dissent uses the example of a joint fundraiser that includes not only the RNC, DNC, but all of the state parties which can each accept $10,000.

(06:24):

So you add all that up, you're talking about over a half-a-million dollars in contributions. A donor can write that check in connection with a joint fundraiser for a candidate. And, their point being that this is an end run around the limit to that candidate because they are essentially confident that that money is going to be spent on behalf of or for that candidate. Whereas if you had these coordinated spending limits, the parties couldn't use that money in coordination with the candidate to run TV ads, etc. And so the primary substantive point that they were making was we should retain these limits on what a political party can do in coordination with the candidates to make contribution limits to the candidates meaningful. Otherwise, we're just going to funnel this money, for lack of a better term, through the parties to the candidates. The majority wasn't buying that argument, saying that there were less restrictive alternatives to address this anti-circumvention consideration.

(07:17):
I mean, Justice Kavanaugh in writing the opinion cited the fact that to an extent, what I just described is illegal. If you're actually earmarking a donation that you're making to the party for the use of a candidate or to be spent on behalf of that candidate, that's impermissible. So he said, "Well, we're already addressing anti-circumvention with earmarking restrictions. There is disclosure of these contributions which would allow the government to go after these earmarking cases." But the dissent took sort of a dim view of that, saying a “come on” type of view of that argument saying, "Listen, you've got these candidates out there raising eye watering sums into these joint fundraising committees. We think that that's inherently an end run around the limits." And then, of course, they also made the stare decisis point. We're overturning precedent from Colorado, too, which is the case that upheld these coordinated spending limits back in 2001.

(08:09):
A mere 25 years later, the majority rebutted that saying, "Listen, the facts on the ground have changed." The constitutional law, the First Amendment case law around this, as Tyler was mentioning, is different now. For example, it was the case back in 2001 that a permissible justification for a government restricting this type of spending was to prevent undue influence. Well, we've seen that that's no longer the case. The court has moved away from that saying that the only reason to uphold one of these types of restrictions is to prevent quid pro quo corruption. And given that special relationship between a party and a candidate, the burden here is too great and we have other means available to deal with this. So Justice Kagan wrote a dissent that many felt (was) compelling, joined by Justices Sotomayor and Jackson, but at the end of the day, we're left with a 6-3 decision, as Tyler mentioned.

Tyler Rosen (08:57):
I like that formulation, Charlie.

Charlie Ricciardelli (08:59):
The “come on” formulation or the-

Tyler Rosen (09:02):
No, no. That it's to an extent illegal. What was the-

Charlie Ricciardelli (09:05):
Oh, to a large extreme maybe.

Tyler Rosen (09:07):
I'm going to start using that one, advisor-

Charlie Ricciardelli (09:08):
To an extent what I just described, it could be illegal. Let's put it that way.

Tyler Rosen (09:12):
Could be illegal. Sure.

Charlie Ricciardelli (09:12):
And we'll talk a little bit about earmarking restrictions. All joking aside, I mean, those are in place, and I think there may be a little bit more emphasis on them now. So, we will talk a little bit later in the podcast about what that means and what we should be on the lookout for.

Tyler Rosen (09:26):
So we're going to do the rest of this podcast — we made it, I think, through the con law piece — and are now going to talk a little bit more about the implications and do it in the form of FAQs, if you will, that we've been getting or that we could be getting. So, I'm going to start off, Charlie, another big Supreme Court campaign finance law case. Does this one mean that we can just fire our political law counsel because campaign finance law is over?

Charlie Ricciardelli (09:51):
Well, give me the big softball. I think anyone can predict the answer to that. Very much no. And not only because my daughter does eat food and I require you to come and ask me questions for that to happen. But kidding aside, listen, I think almost as important as what this case does is what it doesn't do. This leaves undisturbed contribution limits. There's limits on contributions that are made to parties, PACs, candidates, etc. It does nothing. It leaves undisturbed all the disclosure regimes around these contributions, the earmarking restrictions that we talked about. And I think, I mean listen, there's a whole host of reasons not to fire your political law counsel, but one thing that we will touch on a bit more is another thing that this case doesn't do that I think a lot of people thought … maybe not a lot of people, but some people were thinking it could also impact our restrictions on coordinated spending by outside groups.

(10:46):
And I think it's important to realize how narrow this opinion is in some ways. And again, Tyler said it well when he said that there's this special relationship between a party and its candidates, where there is this heightened First Amendment concern about restricting a party's ability to coordinate its spending with its own candidates. It's the whole point of a political party. That does not apply to C4s and super PACs, for example, that are still subject to restrictions on their ability to coordinate spending with those candidates because they still need to be independent. As I'm sure many of you listening realize, those outside groups are becoming more and more commonly used. And we have a whole podcast on 501(c)(4)s and how they're becoming more prevalent in this space. So, more and more of our clients are using and deploying C4s and other outside groups, which are still really largely unaffected by this. And so it's still important to observe all those rules of the road and know what you're getting into when you're dealing with them.

Tyler Rosen (11:47):
I totally agree with that. It is a softball question, but it's a real question. I think especially in the run-up to the decisions released, there were folks thinking that this was going to be kind of a watershed moment for campaign finance law. Clearly there was coming out of the oral argument, there was clear that there was going to be a majority that was opposed to these limits and the limits were likely to go, but what form that took was very much up in the air and could have been, as Charlie said, something much broader that gets at coordinated spending more broadly or something that adjusted … made strict scrutiny the rule for all campaign finance cases. There's lots of ways it could have gone that would've been sort of broader in its impact, but this one's very specific to parties.

Charlie Ricciardelli (12:29):
And listen, I mean the jury is still out to a degree. This could still — maybe five, 10 years from now — we may look at this as a watershed moment for Supreme Court campaign finance jurisprudence. They may continue to go further. I mean, there's some language in the opinion that makes you wonder whether contribution limits to non-candidates are in jeopardy or looked askance by a certain constituency of the court. So we'll see. For now, we remain gainfully employed, which is always exciting. We've spent a fair amount of time talking about coordinated expenditure limits and contribution limits. And I do think that this is an opportunity to dial in a little bit on the differences between contributions and expenditures — set up other parts of this conversation. I think there is some confusion about the difference between contributions and expenditures and the implications. So Tyler, do you want to spend a little bit of time teasing that out for the audience?

Tyler Rosen (13:22):
I would love to, because it is a question that comes up and people oftentimes, if you're coming to this area of law fresh, a contribution and expenditure sounds like it might possibly be the same thing, but it's very different in its application. So, a contribution, I mean to think about it at its most basic level, a contribution is you giving somebody money. An expenditure is otherwise spending money. And I think that's the starting point. Contributions have limits. Expenditures by and large don't. This case was another example of a particular type of expenditure, the limit going away. When we think about contributions, there are two big buckets for them. The first is monetary contributions. It's giving somebody a check, like sending money, whether it's cash or a check or going through ActBlue or WinRed, one of the online contribution credit card processors, a monetary contribution to a political committee.

(14:16):
There are also in-kind contributions where you're providing a thing of value to a campaign and you're doing it — spending with their knowledge and consent basically. If you are paying for food for a fundraiser for a campaign, that is an in-kind contribution. So, that's what we think about with contributions. For expenditures on the campaign side, it's every time they're spending money, if they're running ads or they're paying staff or what have you, all of that is an expenditure. In the donor, corporate, super PAC world, when we think about expenditures, we're usually thinking about independent expenditures, meaning those that are done without coordination with the campaign. So under FEC rules and state campaign finance laws can be a little bit different, and they generally have this contribution expenditure distinction, but there can be some distinctions in the nuances about independent expenditure rules.

(15:05):
An independent expenditure is an expenditure for a communication, such as advertising through a website, digital device application, advertising platform, newspaper, TV, direct mail that expressly advocates the election or defeat of a clearly identified candidate and is not made in consultation or cooperation with or at the request or suggestion of any candidate, his or her authorized committee or agents or a political party committee or its agents. So, basically it is spending, you see the TV ads: “John Smith is the worst person ever to run for office, paid for by people who hate John Smith, not coordinated with any candidate or committee.” And these are these independent expenditure ads, whether it's done by a super PAC or a 501(c)(4) or even it could be paid for directly by a company if they so chose or an individual, but they are done without coordination.

(15:56):
And the sort of key question in a lot of that and in a lot of campaign finance comes down to what does coordination mean? And at the federal level, there's regs defining coordination, and then they're relatively narrow in terms of what coordination is. It requires coordination on the substance and the targeting of the communication. It does not restrict fundraising, for instance. So, a candidate can say "Oh, I hope that you'll give money to this." The opponent of John Smith can say, "It would be really great if you made a contribution to the people who hate John Smith.” And then a donor can give money to that super PAC. Super PAC can run the ads. There's also, I said they can't coordinate on the messaging, but there are ways that these groups have found to be fairly creative about that.

(16:44):
There's essentially an exception for communications that are public. So you find things like candidates saying, "Gosh, people need to hear about John Smith's record on whatever issue." And if they say that in public speech and the super PAC hears that and says, "Oh gee, we need to do some attack ads on that issue." that's not coordination. They may also put it on a piece of their website, a place on their website that's publicly available to anybody who clicks through to the right place, but “folks need to hear about John Smith's record on X, Y, and Z.” And then specifically it should go to this demographic and all that and get very granular about what a super PAC can be doing. So, all of which say that they can get a little cute around the edges.

Charlie Ricciardelli (17:27):
That's got a fun name too, right? It's called “redboxing.”

Tyler Rosen (17:31):
It does.

Charlie Ricciardelli (17:31):
You'd find your way to that micro site or that little page they're running. And the information that Tyler is just mentioning would be in a red box, which is like a maybe actually blinking, but at least a red-outlined signal that, hey, this is the information or this is the demographic we need to go after. But the fact that it was public didn't make it impermissible coordination. I think to take it a little bit to apply this and to do a, we usually save our so what for the end of the episode, but to inject a little bit of so what to this. Number one, just one of the impacts of this case is that now the parties are able to coordinate their spending on an unlimited basis with candidates. With this, they used to have, and they're probably in the process of dismantling if they haven't already, the parties used to have essentially independent expenditure units in them.

(18:23):
Now they weren't just super PACs in the traditional connotation of that term, but they were groups within the parties that were walled off from the candidates that would spend money expressly advocating for their candidates without coordinating so that they could observe those limits. Well, that's gone now. There's no need to maintain that type of separation. So again, as we'll see, their operations are going to become more efficient because they don't have to observe that type of separation. I think the other thing, especially for this audience to think about the importance of the coordination restrictions that remain, which are on outside groups coordinating with candidates with parties is if you're, and I mentioned a few minutes ago, we're seeing more and more clients working with groups like 501(c)(4) organizations. It's not exclusively 501(c)(4)s, but they’re the most likely suspects. When you are working with those C4s, you need to recognize that they need to remain independent.

(19:20):
And so you need to be careful to the extent that you're interacting with C4s and you're interacting with the candidates and their campaign representatives because maybe you're making donations or going to fundraisers. You don't want to become a conduit for coordination. You don't want to be carrying the message or the content or timing that the candidate is looking for back to the C4. I think that's an important watch-out for those of you who may be interacting with those groups.

Tyler Rosen (19:44):
So we've laid out contributions and expenditures. What's really, Charlie, the practical implications of this for the political parties? What's the implication of this case?

Charlie Ricciardelli (19:54):
I think the biggest implication is, as I teased a minute or two ago, they're going to become more efficient. This is a good decision for the parties without question. They can dismantle those independent expenditure units. They are now free to coordinate with their candidates on their messaging, run those ads, talk to the candidates about how they want them run. Frankly, pay for the candidate's ads.

(20:17):
The candidates will run the ads and turn around and hand the bill to the parties and they'll run them in coordinated fashion that way. And I think that's helpful. I mean, it frees up a big pot of money, number one, to support their candidates directly. But also, it makes the political parties’ spending more efficient because what they're able to do is keep in mind the candidates are able to take advantage of what's called the lowest unit charge when they're running ads. So, the broadcasters have to give them the lowest available rate to run TV ads. The parties don't get that, but the candidates do. And now the FCC has said to the extent they're coordinated party and candidate ads, they still will get the lowest unit charge. So, that's probably the biggest practical impact for candidates and parties. I mean, it's going to make them more efficient.

Tyler Rosen (21:05):
So, just to put a fine point on that, a dollar buys a candidate and now a party committee, more ads than the dollar buys a super PAC or a 501(c)(4).

Charlie Ricciardelli (21:16):
That's right. That's right. I think the dollars go farther when they're given to a party committee versus given to a super PAC. So, I think there's a big question about the balance of power and has it shifted in a meaningful way from the outside groups, 501(c)(4)s, super PACs to the political parties. I don't think there's any real question, at least in my mind, that yes, it has shifted to a degree, which may be the third time I've used that phrase in this podcast. But, I think the question is how much? And I think that's a big question, but we've certainly seen a lot of use of joint fundraising committees already, but I think you're just going to see that more and more as these candidates work together with the parties, create these joint fundraisers. They're raising money into the parties, which can be more efficiently and effectively used.

(22:08):
I think you'll see candidates really trying to get sort of soft credit for the amount of money being raised into the parties. We've seen, interestingly enough, those joint fundraising committees, which by the way are these umbrella organizations essentially. They're committees set up … their entire reason for being is to raise money and then distribute it to their constituent component committees. So, you'll see these victory funds where it's the candidate committee, maybe their leadership PAC, a national party committee and the federal accounts of state parties so they can raise big dollars into the joint fundraiser and then it gets divvied up to the constituent funds. Typically, what we've seen is the waterfall, the first dollars going into the candidate's campaign account and then hitting the parties. We've recently seen, in some instances, an inversion of that waterfall where they're actually raising money into the parties first.

(22:59):
In fact, sometimes into the recount or building accounts. One theory for why that might be the case is the candidates who are involved in these joint fundraisers want to raise as much money into the parties as possible from large donors, fill up those buckets and get the credit for them before the donor hits their limit to the party committees. But in any event, we're going to see more of these joint fundraising committees. The parties are certainly going to become to an extent more powerful, I think, than they have been before. But it leads to this question, which I'll let you talk about, Tyler, is this the death knell for the outside groups, the super PACs, the 501(c)(4) or is that overstated?

Tyler Rosen (23:38):
Yeah, I think it's very overstated because I do think that there's still going to be a lot of interest and a lot of the things that have driven activity for super PACs and 501(c)(4)s are still there. First, I mean, as you've alluded to, there are limits on what you can give to a political party. For the national party committees for the general account, it's $44,300 for the current year. That adjusts for inflation, but that's the ballpark of it. Which is a lot of money. I mean, let's be clear. I'm not writing $44,000 checks to political committees. I'm actually not writing any checks to political committees, but if I were, I wouldn't be writing $44,000 ones. And then there, as you referenced, there are the non-contribution accounts for the NRSC and the other Senate and House committees, the recount and the recount/legal and the headquarters accounts, and then the national party committees, the DNC and the RNC get also an account for their conventions.

(24:27):
But each one of those, you can give up to $132,900. And so when you add that up, we're talking about hundreds of thousands of dollars. I'm really not going to contribute that to a political committee, but there are a lot of people out there who are looking to give more than that. And so those folks are still going to be attracted to super PACs and 501(c)(4)s where there are no contribution limits. At least with 501(c)(4)s there's also the additional piece where they're not generally required to disclose their donors. And so, if people are looking to make contributions that are generally not disclosed, then 501(c)(4)s are still going to hold that appeal. So, I think maybe, as you said, some incremental shift in people who weren't maxing out to the party committees, but were giving to super PACs may shift some of that money from super PACs to the party committees, but it is a very particular tranche of donor that they're going to be going after.

Charlie Ricciardelli (25:21):
Yeah, it's just hard to confront the sheer numbers that these super PACs and C4s are raising. I mean, we're talking about, especially in this last cycle, as we all saw, just millions of dollars at a clip, if not tens of millions of dollars. And that's just what's the phrase? “Quantity has equality all its own.” It's a little hard to declare parties the clear victors in this space.

Tyler Rosen (25:41):
Yeah, I think that's right. I do think on the joint fundraising piece, I think there's an interesting question about whether there's going to be any shift in the balance of power from the parties to the candidates. If the candidate is out there raising money for a joint fundraising committee, and now there's no restriction on the ability of the candidate and the campaign to coordinate with the spending by the party committee, are they going to have more of a role, saying "Hey, I raised $10 million for your party committee, and here's what I want to see in advertising with the bulk of that money."

Charlie Ricciardelli (26:15):
Yeah. And listen, to the extent that they are strong fundraisers and can actually command that type of a draw from donors, I could see that. I guess that is the question, is which candidates are really able to pull in those big numbers from those big donors?

Tyler Rosen (26:31):
So the opinion talked about the importance of the earmarking rules. What should we be looking out for there, Charlie?

Charlie Ricciardelli (26:37):
Yeah, I mean, listen, from the donor's perspective, and obviously the candidates and the parties are going to have to look out for this also, you want to be cautious and recognize that these earmarking rules are out there. And when I say earmarking rules, I mean restrictions on earmarking contributions to candidates through the parties without it counting as a contribution directly to the candidate. So, I think what you want to look out for, well, let's just talk about what, at least as a matter of federal law, states differ on how they define earmarking. But, an earmark for purposes of the FEC is any designation, instruction or encumbrance on that money that it be spent on behalf in this context of the candidate. So, it's an instruction, designation, or encumbrance on the money you give to a party requiring that it’s spent on a particular candidate.

(27:25):
At that point, you've earmarked it, it counts as a contribution to the candidate. And if you're already maxing out to the candidate, you've made an excessive contribution. Those clearly can be in the regulation — it can be express, it can be implied, they can be oral, they can be written. So, you really want to take precautions to make sure that you're not crossing over that line. It's always been the case that's not necessarily new here, but I think there may be more scrutiny or more emphasis on it, at least from some quarters. Because listen, the dissent, as I mentioned, was very focused on this and focused on the insufficiency of earmarking rules and their enforcement to prevent this type of corruption because of the ability to, in their view, the ability to circumvent the limits to candidates.
So, there may be more people focused on this earmarking issue. So, when you're giving to the parties, I think you want to be careful not to, again, veer into the lane of instructing that that money be used for a particular candidate or using language suggesting that that is why you're giving to that party committee.

(28:27):
The other question we wanted to talk about is obviously the Supreme Court case is focused on FECA, the federal campaign finance law. What about state laws? What impact is this going to have at the state level, if any?

Tyler Rosen (28:40):
And I think it could have a significant, and in some cases maybe even more significant than what we're seeing at the federal level, because there are other states that have similar constructs to this where there are different rules on giving to parties than for campaigns. And then there are restrictions on the ability of the party to coordinate with the candidates. And, so, the logic of the opinion I think would hold for similar state regimes as well. What I think gets potentially, and why I say it's potentially more interesting, is that the delta between the rules for giving to a candidate and giving to a party committee can be even larger under some state laws than they are under federal law. For instance, there are a good number of states where corporate contributions are prohibited for candidates just like they are under FECA, but they're permitted when it comes to giving to a party committee.

(29:28):
And, so, you could have a situation where it allows corporate money to be used to run ads for candidates, which couldn't be done directly under campaign finance law, or there may be no limits on giving to a party committee at all. And, so, in those cases, it really could put a major dent in state super PACs. There may be some other reasons why a state super PAC is organized around an ideological issue, a particular candidate. So, I don't think this is even going to be the end of super PACs in those states, but it really does move a lot of, I think, the interest from a super PAC to a party committee as these decisions sort of trickle down to the state. And the process for how it trickles down is going to be interesting to see. Some state regulators may determine that they are unable to enforce parts of their laws based on this opinion. Others may get challenged, but it's definitely like, a “watch this space,” I think.

Charlie Ricciardelli (30:20):
Yep. Agreed.

Tyler Rosen (30:22):
All right. So what, Charlie?

Charlie Ricciardelli (30:23):
The official “so what” section? Yeah. We've done a lot of “so what” along the way. My big so what, the one thing that we haven't really touched on, I think, is the impact on our clients' PACs. I think the message here is maybe get your checkbooks ready for those corporate PACs because I mean, listen, for a very long time, a lot of our clients and many, many corporate PACs were reticent to earn their money on donating to these party committees. And so I think this case, again, as we've talked about, makes the parties a little bit more powerful, a little bit more effective and efficient in their spending and ability to help their candidates better. So, I think you're going to see more asks for the corporate PACs to fill up those party committee coffers, which is not necessarily a bad thing for the PACs.

(31:12):
I mean, there's been a lot of discussion in the industry the past few years about the relevance of corporate PACs in this new fundraising spending environment. We've talked a lot about the increase in these outside groups, the rise of 501(c)(4) being utilized and just the massive amounts of money that they're able to bring to bear. Whereas these corporate PACs are still raising money from eligible individuals at $5,000 per year. They're subject to their $5,000 per election limits to candidates. Some people would describe it as almost quaint in the world where we're seeing 10, 15, $20 million contributions super PACs. I've always disagreed with that. I think there's a very important role for these corporate PACs, and we could do an entire podcast on the importance of this. I mean, it activates and energizes your employee base, your eligible employee base. There's a branding opportunity.

(32:06):
I think that there's something that the candidates really value in receiving these corporate PAC contributions that are transparent, etc. So, I think that has been overstated for a long time. I do think that the limits for PACs should be indexed for inflation, just like individual limits are, but they aren't yet, but “watch this space.” But listen, I think that the reinvigoration of the parties in this manner and making them more efficient is going to help because the PACs are going to be able to make those contributions. I think you're going to see more of those asks and I think it'll make the PACs even more relevant than they are now.

Tyler Rosen (32:41):
I think the other “so what” is specifically for a company subject to federal pay-to-play rules. I think there's a watch-out here, maybe a so what or a watch-out or what have you. With the rise of joint fundraising committees that we're already starting to see that I think is going to grow throughout the fall and beyond, firms subject to those pay-to-play rules do really need to be careful about joint fundraising committees that include state party committees, which have a role to play here in terms of taking in contributions and potentially transferring them to the national party committees. So, I think it's important that investment advisors and municipal securities broker-dealers and swap-dealers and the like are making sure that they are thinking about how to handle joint fundraising committees. That may be, even though federal candidates who don't hold state or local office aren't covered by these rules, it may mean preclearing all contributions so that you see, is this the Cory Booker campaign or is this the Booker Victory Fund, an entity that includes a party committee that requires us to do an analysis under the pay-to-play rules?

Charlie Ricciardelli (33:41):
I don't want to get off on a tangent, but that last little watch-out or caveat could potentially age incredibly poorly. This is not the subject of this podcast, but we could go down the road of what's a federal pay-to-play rule because the SEC has put the SEC's pay-to-play rule, Rule 206(4)-5, on its regulatory agenda. There's a lot of discussion about whether those rules are going to be repealed or potentially amended. So, it's a very different “watch this space” and potentially fertile ground for a podcast down the road. But I agree. We're putting the cart before the horse. It's important. It's important for those of you subject to those rules to really apply the appropriate diligence when you're given to these JFCs. I think that's it for my “so whats.” We want to thank everybody once again for joining us. Hopefully you found this illuminating, interesting. If you like what you're listening to, obviously please like and subscribe and we will see you back at The Lobby Bar for another episode soon.

Voiceover (34:37):
Thank you for joining us for today's episode of The Lobby Bar, a political law podcast. If you like what you're hearing, be sure to subscribe in your favorite podcast app so you don't miss any future conversations. Additional information about Skadden can be found at skadden.com.