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.

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Photo of Robert Kelner Robert Kelner

Robert Kelner is the chair of Covington’s Election and Political Law Practice Group. Mr. Kelner provides political law compliance advice to a wide range of corporate and political clients.  His compliance practice focuses on federal and state campaign finance, lobbying disclosure, pay to…

Robert Kelner is the chair of Covington’s Election and Political Law Practice Group. Mr. Kelner provides political law compliance advice to a wide range of corporate and political clients.  His compliance practice focuses on federal and state campaign finance, lobbying disclosure, pay to play, and government ethics laws, as well as legal ethics rules.  His expertise includes the Federal Election Campaign Act, Lobbying Disclosure Act, Ethics in Government Act, Foreign Agents Registration Act, and Foreign Corrupt Practices Act.  He is also a leading authority on the arcane rules governing political contributions by municipal securities dealers, investment advisers, hedge funds, and private equity funds.  Mr. Kelner advises Presidential political appointees on the complex process of being vetted and confirmed for such appointments.

In addition, he regularly advises corporations and corporate executives on instituting political law compliance programs.  He conducts compliance training for senior corporate executives and lobbyists.  He has extensive experience conducting corporate internal investigations concerning campaign finance and lobbying law compliance, as well as other corporate compliance matters.  Mr. Kelner regularly defends clients in investigations by the Federal Election Commission, the U.S. Department of Justice, the U.S. House & Senate Ethics Committees, the House Oversight & Government Reform Committee, the House & Senate Judiciary Committees, the House Energy & Commerce Committee and its Subcommittee on Oversight & Investigations, the Senate Finance Committee, the Senate Special Committee on Aging, the Senate Permanent Subcommittee on Investigations, the Senate Health, Education, Labor, and Pensions Committee, and other congressional committees.  He has prepared numerous CEOs and corporate executives for testimony before congressional investigation panels, and he regularly leads the Practicing Law Institute’s training program on congressional investigations for in-house lawyers.  He also defends clients in Lobbying Disclosure Act audits by the GAO and enforcement actions and audits by state election and lobbying enforcement agencies.

Mr. Kelner has appeared as a commentator on political law matters on The PBS News Hour, CNBC, Fox News, and NPR, and he has been quoted in the New York Times, Washington Post, Wall Street Journal, Legal Times, Washington Times, Roll Call, The Hill, Politico, USA Today, Financial Times, and other publications.

Photo of Robert Lenhard Robert Lenhard

Robert Lenhard is a member of the firm’s Election & Political Law practice group and advises corporations, trade associations, not-for-profit organizations, and high-net-worth individuals on compliance with federal and state campaign finance, lobbying, and government ethics laws.

Mr. Lenhard routinely assists clients in…

Robert Lenhard is a member of the firm’s Election & Political Law practice group and advises corporations, trade associations, not-for-profit organizations, and high-net-worth individuals on compliance with federal and state campaign finance, lobbying, and government ethics laws.

Mr. Lenhard routinely assists clients in establishing and operating federal and state PACs, compliance programs associated with campaign finance and pay-to-play laws; advises advocacy groups and their donors; conducts compliance trainings and audits of federal and state lobbying and political programs; and counsels clients on compliance with congressional gift and travel rules.

Prior to joining the firm in 2008, Mr. Lenhard served as Chairman of the Federal Election Commission (FEC) in 2007 and Vice Chairman of the agency in 2006, during which time the agency handled over 10 major rulemakings, had among its most productive years in enforcement and audit, and adopted several reforms to the enforcement process.  Mr. Lenhard has also led the Presidential Transition Team that reviewed the FEC for the incoming Obama administration in 2008-2009.

Photo of Kevin Glandon Kevin Glandon

Kevin Glandon is an associate in the firm’s government affairs, litigation, and white collar defense and investigations practice groups.  Glandon advises a wide range of clients regarding the Federal Election Campaign Act and FEC regulations; state and SEC pay-to-play restrictions; federal and state…

Kevin Glandon is an associate in the firm’s government affairs, litigation, and white collar defense and investigations practice groups.  Glandon advises a wide range of clients regarding the Federal Election Campaign Act and FEC regulations; state and SEC pay-to-play restrictions; federal and state campaign finance, gift, and lobbying laws; and U.S. House and Senate ethics rules.