D. Mark Renaud mrenaud@wileyrein.com October 28, 2011 APTA PAC Webinar D. Mark Renaud mrenaud@wileyrein.com October 28, 2011

Overview Regulations Three Possible PAC Structures APTA’s Restricted Class Prior Authorization PAC Establishment Costs PAC Administration Costs Some Common Rules for PACs

Regulations Federal PACs are highly regulated by the Federal Election Commission (FEC) As a result, federal PACs Are fully transparent Are limited in the amount of contributions they may receive Are limited in the amount of contributions they may make to federal candidates Disclose all transactions on the public record Post-Citizens United, PACs still are the only entities that may make direct contributions to candidates.

Possible PAC Structures There are three possible options as to how a federal PAC could be structured for APTA A connected PAC A nonconnected PAC A PAC connected to affiliated 501(c)(4)

Connected PAC Connected directly to APTA Advantages - No new organization other than the PAC - Trade association (corporate) funds may be used to pay the PAC’s administrative expenses - An administrative account may be established within the (c)(6) so that funds/dues from public entities are not used for PAC administrative expenses - The PAC name must include the APTA name - The PAC may use payroll deduction

Connected PAC (con’t) Disadvantages - Some may feel that the PAC is too closely associated with APTA - No separate entity between the (c)(6) and the PAC - Solicitations for the PAC are limited to the PAC’s restricted class

Nonconnected PAC A nonconnected PAC is not connected to APTA Advantages - Completely separated from APTA - No additional new organization other than the PAC - May solicit anyone for contributions Disadvantages - Administrative costs must be paid from contributions received - Otherwise, must use volunteer services, which reduces effectiveness - Likely not able to have APTA in the PAC name

PAC Connected to an Affiliated (c)(4) Advantages - Some, but not full, separation from APTA - Have a vehicle (the (c)(4)) into which corporate fund may be raised in order to pay the PAC’s administrative costs - May use payroll deduction Disadvantages - Must establish a separate organization in addition to the PAC - Must run the (c)(4) per tax rules (i.e., it must have a primary purpose other than supporting the PAC – could be grassroots lobbying) - Limited to APTA’s restricted class - Must determine whether APTA’s name may be a part of the PAC name

APTA’s Restricted Class APTA’s “restricted class” for PAC purposes consists of the following persons: APTA’s individual members The executive and administrative personnel and shareholders (and their families) of member companies that provide APTA with prior approval for solicitations in a given calendar year Prior Approval rules A corporation may only give prior approval to one trade association in a calendar year But, parent and subsidiary/sister corporations are treated separately

Costs of a Federal PAC Costs of Establishing a Federal PAC Internal and outside legal organizational costs Costs to retain vendors to outsource reporting Internal and external fundraising costs Costs of Administering a Federal PAC Reporting costs Legal compliance costs Payment of costs for personnel to attend candidate/party events

Rules for PACs Some common sense rules that PACs often impose on themselves through bylaws Adherence to all applicable campaign finance rules A ban on soliciting and receiving contributions from foreign nationals The types of committees to which the PAC will give and the types to which it will not give The scope of the restricted class (if less than what is permissible by law) Lines of authority over disbursements, bank accounts, etc. Indemnification of officers and agents