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Posted: July 09, 2012

Guest column: The super PAC and its lesser-known sidekick

Cole Finegan and Chantell Taylor

By Cole Finegan and Chantell Taylor

You can’t avoid the articles, tweets, blogs and posts this election season about the omnipotent "Super PAC" – the unscrupulous spawn of the Supreme Court’s Citizens United decision – and how an unprecedented amount of money is pouring into these PACs to deluge voters with negative ads that will unquestionably influence the outcome of the presidential race and federal elections nationwide.

But little is said about the rise of Super PACs at the state level. In the wake of Citizens United, many states, including Colorado, passed legislation creating state-based Super PACs with the same unfettered fundraising abilities to give major donors even greater leverage. Whether state or federal, the Super PAC is the choice du jour for big-money campaigning this election, and it warrants a quick tutorial.

A Super PAC is literally a PAC with super powers. Stripped of its powers, it is just a "PAC" or non-connected political action committee, which is an organization regulated by the Federal Election Commission (FEC) that receives contributions and makes expenditures for the purpose of influencing a federal election. In Colorado, PACs formed to influence state elections are regulated by the secretary of state.

Although the rules vary somewhat between federal and state, in general PACs are free to engage in any type of campaign activity, but – and this is a critical point – they must raise funds under a strict contribution cap of just $5,000 (federal) and $550 (state) respectively. Additionally, traditional federal PACs are prohibited from accepting contributions from corporations and unions. To engage in political activities, a corporation or union had to establish a PAC "connected" to the entity and could only raise funds from a "restricted class" of stockholders and executive or administrative personnel. A Super PAC is free from these restrictions, and has the "super power" to raise and spend unlimited funds from unlimited sources so long as it does not coordinate with candidates.

So where did these super powers come from? In 2010, the Supreme Court concluded in the now-infamous Citizens United case that federal laws barring corporations and unions from spending their own funds to influence elections violated the First Amendment. In so concluding, the Court reasoned that independent spending (that is, spending not coordinated with candidates) could not corrupt the political process and, therefore, there was no legitimate government interest in regulating the activity.

This decision essentially gave corporations and unions the green light to raise and spend funds from virtually any source (not just their "restricted class") and to use those funds to expressly advocate for or against candidates. After Citizens United, federal courts and the FEC followed suit figuring that if independent spending could not corrupt the process, neither could fundraising that was strictly for independent committees. And so contribution limits were lifted for PACs engaged exclusively in independent expenditure activities. The "Super PAC" as we now know it, is technically called an independent expenditure committee.

Before 2010, Super PACs did not exist. Since then, Super PACs have raised more than $113 million for 2012 races according to FEC and media reports, $1 million of which comes from individual donors in Colorado. And those figures are just federal Super PACs.

Since the spring of 2010, state governments have grappled with exactly how to bring their laws into compliance with the Citizens United line of cases. State statutes banning corporate and union political spending were immediately rendered unconstitutional, and statutory constructs for traditional PACs couldn’t accommodate groups wanting to take advantage of their newfound rights to raise and spend limitlessly on independent campaign activities. As a result, many states now have established their own independent expenditure committees, or State Super PACs. In Colorado, at least 38 State Super PACs have registered with the secretary of state since 2010.

The impact of State Super PACs remains to be seen, but you can imagine how a few $10,000 or $100,000 checks from wealthy donors to a Super PAC targeting a state house or senate race has the potential to drown out the opponent and single-handedly skew the election.

As Super PACs continue to amass more power and influence over races up and down the ballot, voters, election reformers, candidates and legislators are desperately searching for their kryptonite.

Cole Finegan is the Managing Partner of Hogan Lovells' Denver office. He focuses his practice on working locally and nationally with businesses and governmental entities to create and expand public-private partnerships and has also represented clients in regulatory, land use and development, and legislative and public policy law for more than 20 years. Cole was recently recognized as a "Lawyer of the Decade" by Law Week Colorado and was also named one of the most influential people in Denver by 5280 magazine.

Chantell Taylor is an attorney at Hogan Lovells in Denver, advising clients on government regulation and legislative matters with an overall focus on public law. She has extensive experience in campaign finance and political law and has advised nonprofit organizations on obtaining and maintaining tax-exempt status, corporate governance, employment matters, lobbying and political activities.

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