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Schumer, Van Hollen Outline Legislative Response to Citizens United

February 12, 2010, Caplin & Drysdale Political Law Alert: Important Recent Developments

Congressional Democrats yesterday unveiled the framework of their upcoming legislative response to the recent and controversial U.S. Supreme Court decision in Citizens United, which lifted the long-time ban on corporations' independent spending in federal elections. As outlined, the forthcoming legislation would:

  • Ban federal election expenditures by any "foreign corporation," defined as an entity (1) with foreign ownership of 20 percent or more; or (2) whose Board majority is comprised of non-U.S. citizens; or (3) whose U.S. operations, or "decision-making with respect to political activities," is directed or controlled by a foreign entity. This provision could prevent some foreign corporations' U.S. subsidiaries from establishing political action committees, an activity permitted in the past.

  • Require a CEO to appear on camera in all corporate-sponsored, election advertisements to state that he or she "approves this message," much like candidates must do now.

  • Compel for-profit and nonprofit corporations to conduct all candidate-specific advertising through "political activities accounts" registered with the Federal Election Commission and regularly disclose the accounts' donors and expenditures, similar to what FEC-regulated PACs disclose currently.

  • Mandate the disclosure of an organization's top contributors at the end of all ads sponsored by that organization.

  • Restrict political expenditures by federal government contractors and TARP recipients.

  • Impose new political-expenditure reporting requirements for all Lobbying Disclosure Act registrants.

  • Require corporations to disclose all political expenditures to shareholders on a regular basis and to the public on a corporate Web site within 24 hours.

  • Bolster existing rules that limit "coordination" of advertising efforts with federal campaigns.

Specific legislative language has not yet been released. The legislation's principal sponsors, Senator Charles Schumer (D-NY) and Congressman Chris Van Hollen (D-MD), plan to introduce a bill during the week of February 22nd. Messrs. Schumer and Van Hollen promise to move their reforms "expeditiously" through Congress, so that they take effect before the 2010 general election.

Caplin & Drysdale will provide timely updates on this important legislation as it advances through the legislative process.

Please contact Caplin & Drysdale's political activity law practice if you have any questions.

Trevor Potter at 202-862-5092 or
Matthew T. Sanderson at 202-862-5046 or

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Caplin & Drysdale's Political Activity Law Group is a bipartisan practice, representing major corporate, tax-exempt and political clients. The group advises clients on regulated political activities, lobbying, and government ethics laws. The firm also maintains practices in the fields of international tax, tax controversy and fraud, tax-exempt organizations, creditors' rights and bankruptcy litigation, and white collar defense.

This alert is intended as a summary of legal issues for your general information. It does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose.


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