Supreme Court Eliminates Limits on Party Coordinated Expenditures
On the last day of its term, the Supreme Court, in a 6-3 decision, invalidated the Federal Election Campaign Act's limits on the amount of money political parties may spend in coordination with their candidates. The Court’s decision comes at a pivotal moment in the election cycle, with the mid-term elections less than six months away and the FEC without a quorum and unable to provide guidance regarding the Court’s decision. Caplin & Drysdale is prepared to help clients navigate the changing legal landscape and understand how the Court’s decision may affect their plans to participate in the political process.
NRSC v. FEC: Coordinated Expenditure Limits Invalidated
Enacted in 1974 as part of Congress’s amendments to the Federal Election Campaign Act, coordinated expenditure limits capped the amounts national and state party committees could spend on advertising and other campaign activity in coordination with federal candidates. Those limits were adjusted over the years and varied depending on certain factors — reaching approximately $4 million for U.S. Senate races and $130,000 for House races.
In FEC v. Colorado Republican Federal Campaign Committee, (Colorado II), the Supreme Court narrowly upheld these limits against a First Amendment challenge on grounds that the limits served the purpose of preventing circumvention of the base contribution limits—that is, the amount donors may give to candidates. However, since Colorado II was decided, the Court’s decisions in Citizens United v. FEC and McCutcheon v. FEC invalidated key campaign finance restrictions. Citizens United helped pave the way for Super PACs, while McCutcheon struck down the aggregate limits on the total amount an individual could contribute to federal candidates, parties, and PACs during an election cycle.
Against this backdrop, the NRSC, NRCC, then-Senator JD Vance, and then-Rep. Steve Chabot challenged the party coordinated expenditure limits, arguing that the limits are unconstitutional and that Colorado II should be overruled. The DNC, DSCC, and DCCC defended the constitutionality of the limits and Colorado II. The Supreme Court held that preventing circumvention of the individual contribution limits does not justify restricting coordinated spending by parties with their candidates. Instead, the Court concluded that existing base limits, earmarking rules, and disclosure requirements are sufficient to prevent circumvention of the base limits.
Practical Implications of the Supreme Court’s Ruling
The practical effect of the ruling is that national and state party committees may now spend without limit on activities, including advertisements in full coordination with federal candidates. The ruling has other implications as well:
Joint Fundraising. The ruling paves the way for parties and candidates to use joint fundraising committees (“JFC”) as vehicles to maximize the amount of money they raise for candidate support while shifting costly candidate advertising to the party committees. During the 2024 cycle, parties and candidates began running television ads through JFCs that were practically indistinguishable from traditional candidate ads but were largely paid for by the party committees per the FEC’s joint fundraising regulations. A lawsuit was filed challenging this practice on grounds that use of JFCs in this manner was unlawful because it exceeded party contribution limits. The case was stayed pending the Supreme Court’s decision in NRSC v. FEC. In light of Court’s decision eliminating party coordinated expenditure limits, the central claim in this litigation may be moot, but parties and candidates should monitor this case through final resolution for further developments.
Lowest Unit Rate. The Supreme Court’s decision has significant consequences for coordinated ads distributed through television and other broadcast outlets. Candidates and their authorized committees may take advantage of the Federal Communications Commission’s lowest unit charge for broadcast ads, which provides substantially lower rates than those available to groups such as Super PACs. Although the Solicitor General told the Supreme Court that coordinated expenditure communications do not qualify for lowest unit rate in NRSC v. FEC, the FCC recently issued guidance, stating that such ads and JFC ads that include candidates do qualify for the lowest unit rate. Related litigation is ongoing. In the short term, we expect that parties and candidates will seek lowest unit rate for party coordinated communications, including those by JFCs, which may be the decision’s most consequential practical effect as parties can now spend significantly more on these ads.
Super PACs. The Court partly justified invalidating the coordinated party limits by pointing to the influence of Super PACs and the distinct role of political parties. Super PACs will likely continue to play a significant role in elections for the foreseeable future for the simple reason that they can raise and spend unlimited money. Further, FEC advisory opinions and enforcement precedents have also allowed Super PACs, which are supposed to engage only in independent expenditures, to coordinate with candidates and parties on certain activities. For instance, a 2024 FEC advisory opinion permitted Super PACs to participate in JFCs with parties and candidates and coordinate with them on JFC communications. And under another advisory opinion, parties and candidates may coordinate in certain respects on canvassing with Super PACs, an issue now in litigation. Ultimately, the Supreme Court’s decision is likely to encourage parties, candidates, and aligned Super PACs to allocate resources strategically for maximum impact, with the parties now working closely with candidates on messaging and Super PACs independently supporting those efforts.
State Parties (Non-Federal) and State Candidates. The Court’s decision addressed coordinated expenditure limits at the federal level. Many states separately limit how much state parties may contribute to state and local candidates or spend in coordination with them. The Court’s decision does not immediately invalidate those state limits. Although these limits are vulnerable in light of the Court’s reasoning, state parties and state candidates may need to seek guidance from state regulatory authorities before engaging in activity that would exceed state limits.
Vendors/Contracts. Although political parties may now pay vendor invoices without limit on behalf of candidates, the ruling does not rewrite or alter any contracts that are in place between candidate campaigns and their vendors. Vendors, candidates, and parties should understand their obligations and potential liability under relevant contracts. Contracts should clearly identify the parties, their duties and responsibilities, and who has decision-making authority.
If you have questions concerning this Alert or for more information, please contact a member of the Political Law Group.
