Scott Rate

September, 2010

What is an independent expenditure (IE)? An IE is a payment for a communication to support or oppose a political candidate that is not coordinated with that candidate. A recent Supreme Court decision lifted the prohibition on labor unions and corporations making IEs in federal elections. The state of California had already permitted labor unions and corporations to make IEs, although currently many California cities have imposed contribution limits on committees that make IEs and prohibited labor union and corporations from making IEs.

Following the Supreme Court decision in Citizens United v. Federal Election Commission, many have had their restrictions struck down by several courts as they relate to IEs. For example, the city of Long Beach contribution limit on committees making IEs was invalidated by the Ninth Circuit Court of Appeals. Also, the DC Circuit Court of Appeals struck down contribution limits on committees that make federal IEs.

Since the Supreme Court decision, the Federal Election Commission has issued advisory opinions stating that federal committees that solely engage in IE activities may solicit and accept unlimited contributions from individuals, political committees, corporations and labor organizations.

Cities recognizing the Supreme Court decision have begun to respond by adjusting their restrictions. On June 22, the Los Angeles City Council repealed the City’s $500 contribution limit for committees that make IEs in a Los Angeles City election. With that council action, there are no limits on how much an entity may contribute to a Los Angeles City IE committee. Similarly, corporations and labor unions may now make IEs. This is an important change that could lead to more companies and associations becoming involved with the 2011 Los Angeles City elections.

Wayne Ordos, attorney at law and past executive director of the Fair Political Practices Commission, recently stated: “I have always maintained that a limit on contributions to an independent expenditure committee was unconstitutional … It was just a matter of time until the limits would be lifted.”

The former contribution limit, however, never impacted LAPPL PAC because no member ever came close to the $500 limit per year. For this very reason, it actually placed membership organizations like LAPPL at a huge advantage in the area of IEs.

Even though the IE environment has changed, understand that there continue to be strong disclosure laws, and a myriad of disclaimer rules and notices required by the L.A. City Ethics Commission that apply to IE activities in City elections.

Please feel free to contact me at scottrate@lappl.org with your questions and comments