527 Organization - Legal History

Legal History

The line between interest and express advocacy was the source of heated debate and litigation.

Prior to the passagi of the McCain-Feingold law, also known as the Bipartisan Campaign Reform Act, it was generally accepted that 527s were not covered by campaign finance laws. McCain-Feingold specifically extended certain campaign finance limitations to 527s running ads within 60 days of a general election or 30 days of a primary election. Based on the Supreme Court's decision in McConnell v. Federal Election Commission, upholding the McCain-Feingold law, many persons urged the Federal Election Commission (FEC) to use its regulatory power to extend campaign finance laws to cover these groups. The Commission held hearings in April 2004 to determine whether or not 527s should be regulated under campaign finance rules, but concluded that the law did not cover these independent 527 organizations unless they directly advocated the election or defeat of a candidate or engaged in advertising within the 30 and 60 day windows specified by Congress in the McCain-Feingold law. Federal Election Commission rulings after the 2004 election put advertisements which questioned a candidate’s character and fitness for office off limits to 527s specifically.

• On September 18, 2009, the Federal Appeals Court in Washington, D.C., ruled that these groups have a First Amendment right to raise and spend freely to influence elections so long as they do not coordinate their activities with a candidate or a party.

• In January 2010, the Supreme Court held that the government may not keep corporations or unions from spending money to support or denounce individual candidates in elections. While corporations or unions may not give money directly to campaigns, they may seek to persuade the voting public through independent expenditure groups.

• In July 2010, the U.S. District Court of Appeals for the D.C. Circuit ruling in Speechnow.org v. Federal Election Commission created independent expenditure-only committees known as Super PACs which, like 527s, can raise unlimited amounts of money from individuals, unions, associations and corporations to influence elections. Speechnow.org v. Federal Election Commission, 599 F.3d 686, (U.S.C.A. D.C. 2010). These PACs must also disclose their finances to the FEC and cannot coordinate with candidates or political parties. The difference is that they may directly advocate for or against a candidate.