Associations Urge Change to PAC Rules

Posted February 1, 2005 at 6:56pm

Trade associations that represent industries from banking to mining have urged the Federal Election Commission to adopt proposed regulations that would make it easier to raise money for their political action committees.

In December, the FEC announced that it would formally consider adopting new rules to allow trade association PACs to collect contributions through a system of payroll deductions from member company employees — a change that would give them rights already exercised by corporate and union PACs.

In recent letters to the FEC, more than two-dozen trade-group officials praised the idea as a common-sense proposal that reflects Americans’ increased reliance on electronic methods for making financial transactions.

“Payroll deduction is a common method widely used to make payments of many types,” observed Gary Fields, the treasurer of the American Bankers Association BankPAC, in a Jan. 14 letter to the watchdog agency.

Noting that “contributions for charitable, savings, and other purposes are often made through payroll deductions” and that “the mechanisms for recordkeeping and automation are well-tested and seasoned,” Fields argued that “no legal or logical reason” exists to prohibit trade associations from utilizing such methods.

In addition to several banking associations, other groups trumpeting the cause in written comments to the FEC included the U.S. Chamber of Commerce, Credit Union National Association, Fisheries Institute, American Hospital Association, National Restaurant Association, Home Builders Association of Greater Cincinnati, National Stone, Sand & Gravel Association, National Funeral Directors Association, and National Association of Wholesaler-Distributors.

The AFL-CIO and the American Physical Therapy Association concurred with the stance of these groups, but urged the FEC to go even further in expanding the use of payroll deductions.

Laurence Gold, the associate general counsel to the AFL-CIO, said while the federation of labor unions essentially agrees with the proposal, it argues that the new rule should apply not just to any corporation but rather to “any corporation, including its subsidiaries, branches, divisions and affiliates.”

That would mean that if a corporation makes payroll deduction services available to a trade association PAC, it would also have to make the same payroll deduction services available to any labor organization that represents employees of the corporation, as well as employees of that corporation’s subsidiaries, branches, divisions and affiliates

Brett Kappel, an attorney with Vorys, Sater, Seymour and Pease who specializes in advising PACs, said he believes the AFL-CIO has a “very solid legal argument” and would be surprised if the FEC didn’t grant the organization’s request.

“FECA clearly states that if a corporation uses any method to facilitate the making of political contributions, it has to make the same method available to any labor organization representing any employees anywhere in the corporate organization,” Kappel remarked.

Glen David Mason, vice president of government affairs for the American Physical Therapy Association, emphasized a need to create parity between trade associations and membership organizations on the payroll deduction issue.

Mason proposed that the FEC adopt an amendment to the parallel FEC regulation governing membership organizations that would allow corporations owned by one or more members of a membership organization to collect and forward contributions to the membership organization’s PAC.

“Many of the APTA’s members are physical therapists in private practice who operate their practice through corporations,” Mason explained. “Such businesses often employ physical therapists who themselves are APTA members. No policy reason exists to treat such corporations differently from the corporations authorized to utilize payroll deduction arrangements” under the FEC’s proposed regulations.

The Internal Revenue Service declined to comment on the FEC’s notice of proposed rulemaking.

Depending on how quickly the FEC moves with its other agenda items, final action on the issue could occur as early as this summer.