The rules on corporate contributions to Super PACs were made clearer today when the Federal Election Commission (FEC) released its finding that Chevron Corporation’s $2.5 million contribution in 2012 to the Congressional Leadership Fund (a Super PAC) had not violated the bar on government contractors making contributions in federal elections.
Public Citizen and several environmental groups had alleged that Chevron Corporation and Chevron U.S.A. Inc. had numerous federal contracts, and consequently could not contribute to a Super PAC. On a bipartisan 5-1 vote, the FEC dismissed the charges, finding that Chevron Corporation—which made the contribution—was not a federal contractor at the time, and that federal contractor status could not be imputed to the company merely because it had a wholly-owned subsidiary that owned a subsidiary that in turn owned a subsidiary that owned a federal contractor. In so doing, the FEC followed the agency’s longstanding practice of permitting a parent company with a federal contractor subsidiary to make a contribution as long as it has sufficient funds from sources other than the contractor subsidiary. Nor is the federal contractor ban particularly stringent, permitting officers, shareholders, a corporate PAC, and subcontractors to contribute, even when the contractor cannot.
Having resolved the case by applying the facts to existing law, the FEC did not address an even more fundamental issue raised by Chevron: Applying the federal contractor ban to contributions to a Super PAC is inconsistent with the Supreme Court’s limiting of campaign finance restrictions to the prevention of quid pro quo corruption or its appearance. Last Wednesday’s decision in McCutcheon v. FEC highlights the doctrinal fragility of the federal contractor ban in cases like this.
Full disclosure: Covington represented Chevron before the FEC in this matter.