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Prior Approval Reform

The United States House of Representatives passed legislation that would end – for a year – the requirement that association Political Action Committees (PACs), such as ISRIPAC, obtain prior approval from an appropriate company official before it can solicit certain company employees for contributions to a PAC.

Last year, ISRI joined a coalition and has actively worked to repeal the prior approval requirement for trade associations’ PACs. It argued that requiring prior authorization (before association member companies may be solicited for contribution to the association’s PAC, appropriate company officials must provide the association with prior approval to allow association’s  PAC to do so) is unfair, places unnecessary restrictions on trade association PACs and makes it very difficult to help its membership while other PACs such as corporate or individual membership association PACs do not have such requirements or restrictions. Prior approval is required of all association PACs before a PAC may discuss its activities with the association’s membership under a mid-1970’s law aimed at limiting the influence of PACs in the election process. (Specifically, no representatives of a company may be in a room or other space where an association’s PAC activities are discussed unless their companies have been prior authorized to participate in PAC activities.) Recently, the limiting amendment to repeal the prior approval requirement was passed by the U.S. House. The repeal, if passed by the U.S. Senate and signed by the President, will last for one year unless either another one year extension or a full repeal is enacted. 

One of the main obstacles to reforming the PAC rules is the landmark “Citizens United” Supreme Court case. As a result of the Citizens United case, a new “Super-PAC” class was established that allows unlimited contributions to be collected and spent but with some restrictions such as no coordination between the Super-PAC and a candidate and no direct spending to promote a candidate. Trade association PACs such as ISRI PAC on the other hand, have strict contribution and spending limits and must regularly report directly to the Federal Election Commission.  Therefore, there is actually very little in common between a Super-PAC and a trade association PAC.

ISRI is hopeful that the one-year repeal of this provision will be enacted into law this year so that all eligible ISRI members can learn more about ISRI PAC, the bi-partisan political action committee associated with ISRI. This small but important step will level the playing field and remove the confusion between trade association PACs with strict contribution limits and reporting requirements and Super PACs that have no limits and very limited reporting requirements. 

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