Overview
This article was published in the New York Law Journal.
Since the Supreme Court's opinions in Citizens United v. FEC and SpeechNow v. FEC allowed unlimited independent spending in elections for corporations, an essential component of maintaining contribution limits has been whether election-related efforts are coordinated. Today, the Supreme Court ruled that restrictions on coordinated expenditures by political parties are unconstitutional as they amount to a "prophylaxis upon prophylaxis." Nat'l Republican Senatorial Comm. v. FEC, No. 24-621, slip op. at 20 (U.S. June 30, 2026).[1] The Court's 6-3 vote today overruled its 25-year-old opinion upholding the restrictions in Colorado II. Coordinated party expenditure limits were enacted to prohibit circumvention of contribution limits whereby parties would otherwise act as routing mechanisms for large sums of money. Although the opinion relates to political party expenditures, it has implications for companies and senior executives seeking to engage in federal elections.
What was the Court's findings in NRSC v. FEC?
The majority opinion found that the combination of contribution limits, disclosure obligations, and prohibitions on earmarking function sufficiently to mitigate concerns of quid pro quo corruption, such as that coordinated party expenditure limits are not warranted when weighed against First Amendment interests. In so doing, the Court has bolstered the legal support for continued contribution limits and mandatory disclosure (which was upheld 8-1 in Citizens United) and for "'[v]igilant enforcement' of the earmarking rules as a more 'precise response' . . . to any 'circumvention concerns.'" Id. at 3. One basis for the Court's opinion is the relative weakening of political parties due to the ability of outside spenders to spend unlimited funds. Id. at 2–3.
Justice Kagan's dissent explains that the majority is not considering the "real world" scenario in which federal candidates can raise up to $551,300 by conducting joint fundraising between the candidate, 50 state party committees, and national party committees. Because party committees can make unlimited transfers between themselves, the dissent cites to examples of the funds being transferred almost immediately back to the national party committee. The dissent states that now "the party can serve as the candidate's checking account." Id. at 10 (Kagan, J., dissenting). Although joint fundraising committees commonly include disclaimers that they will not accept "earmarked" funds, when the solicitation is from or on behalf of a candidate, the recipient is likely to assume the funds will be used for that candidate's benefit.
The majority's reliance on disclosure laws as an effective bulwark against corruption may prove to be an interesting hook for regulators and others to focus on the so-called "dark money" activities, which relates to using non-PACs, such as 501(c)(4) organizations, to fundraise without disclosing donors, who then transfer funds to super PACs and other political entities.
What does it mean for corporations and their executives who seek to be electorally active?
- Party joint fundraising committees and other party fundraising is likely to increase, which will increase pay-to-play risks for government contractors. Companies that have public sector business are likely subject to pay-to-play laws that may restrict individual and company giving to state and local political parties. Most pay-to-play laws cover direct and indirect giving to political parties and covered officials, which is broader than simply funds that are earmarked. With more unlimited coordination between candidates and parties, there is more opportunity for pay-to-play risk for companies that can result in the loss of contracts, debarment, and suspension.
- Government affairs personnel, lobbyists, and company executives should be mindful of fundraising efforts or conversations with government officials that could be construed as earmarking. Candidates, PACs, and those that fundraise on their behalf, such as lobbyists, should be mindful of their discussions relating to fundraising, especially when paired with substantive policy conversations, due to the appearance of quid pro quo or earmarking.
- Anticipate investigations and other scrutiny. Ironically, as hard restrictions in campaign finance are loosened, there is a greater focus from regulators, journalists, and criminal enforcement authorities around fundraising practices looking for actual or apparent improper influence of quid pro quo. Even contributions and electoral activity that are legal may be subject to such scrutiny. Democratic Members of Congress, for example, have been particularly focused on campaign activities of companies that they claim have received favorable treatment from the current administration. We expect this scrutiny to continue, and so engaging in best practices to mitigate the appearance of quid pro quo or earmarking is strongly recommended.
- Federal corporate campaign finance restrictions are unchanged. The decision makes no changes as to the federal campaign finance laws most relevant to corporations—direct contributions from corporations to federal candidates and parties remain prohibited—and similarly, prohibitions on contributions from national banks, foreign nationals, and federal contractors are all still in place.
- Federal corporate PAC rules are unchanged, but it may be a good time to consider whether your policies and practices are fine-tuned for current risks. As for a corporation's PAC, there are no changes to those rules either—companies may raise funds from certain employees and shareholders to make federal contributions from those voluntary contributions, as long as corporate funds derived from business operations are not used to make contributions. A corporate PAC may contribute up to $5,000 annually to another PAC, so it is quite common for corporate PACs to donate $5,000 to national or state party committees. This practice is likely to continue, and perhaps the parties will increase their fundraising solicitations in this regard. When making those corporate PAC contributions to state parties, company executives and employees should be mindful of any appearance of earmarking or contributions made for or as a reward for any government action or inaction. It may be a good time to consider whether your PAC policies and PAC contribution criteria include cautions regarding earmarking.
What's next?
Even prior to today's opinion, we are seeing in this election cycle a proliferation of the types and ferocity of campaign fundraising efforts directed towards companies and their executives. As we wrote in Law360 in February, companies are well-advised to consider a health check of their corporate and executive political activities in the current environment. Contact Steptoe's Political Law Team for guidance.
[1] Steptoe LLP served as counsel of record for the Brennan Center at NYU's amicus brief in this matter, arguing that the question should be left to the legislature and pointing to the democratic benefits of strong political parties. Brief for the Brennan Center for Justice as Amicus Curiae Supporting Respondents, NRSC v. FEC, No. 24-621, slip op. at 20 (U.S. June 30, 2026) (No. 24-621).
