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

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

3. 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.

4. 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)

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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