This post was written by Lorraine M. Campos.

First there were PACs. Then there were Super PACs. Now there are…”Mega-PACs”?

One of the largest sources of controversy in the 2010 election cycle was the rise of Super PACs (also known by the Federal Election Commission’s (“FEC”) far blander name, “Independent Expenditure-Only Committees”). These Super PACs were approved in FEC Advisory Opinions 2010-09 and 2010-11 shortly after the Supreme Court’s decision in Citizens United v. FEC, and the D.C. Circuit’s decisions in EMILY’s List v. FEC and SpeechNow.org v. FEC.

Super PACs are not subject to the contribution and source limitations of regular PACs, but instead may raise unlimited contributions from individuals, political committees, corporations, and labor organizations. There was only one catch: Super PACs could only make independent expenditures. They were not permitted to make any monetary or in-kind contributions to other political committees, such as candidate committees and political parties.

A group called National Defense PAC (“NDPAC”) disagreed with that restriction. In August 2010, it submitted an advisory opinion request to the FEC to extend the limits of Super PACs. In particular, NDPAC sought permission to: (1) accept unlimited contributions from individuals, other PACs, corporations and unions “for the express purpose of making independent expenditures”; and (2) accept contributions subject to statutory amount and source limitations “to expend as campaign contributions to candidates.” NDPAC proposed that it would create two bank accounts to keep the two funds separate and apart.

The FEC created two draft advisory opinions, one approving NDPAC’s proposal and one denying it. However, it was unable to garner sufficient votes to pass either draft advisory order. Accordingly, in January 2011, NDPAC filed a complaint in the U.S. District Court for the District of Columbia seeking a declaratory judgment that the contribution limit provisions of the Federal Election Campaign Act (“FECA”) were unconstitutional as applied to NDPAC, and an injunction enjoining the FEC from enforcing those provisions against NDPAC. In June 2011, the court granted NDPAC’s motion for a preliminary injunction, finding that recent case law “lead[ ] to the inevitable conclusion that NDPAC has a strong possibility of success on the merits.”

Perhaps seeing the writing on the wall, the FEC settled the case at the end of August. In a Stipulated Order and Consent Judgment, it agreed that it would not enforce provisions of FECA against NDPAC, “as long as NDPAC maintains separate bank accounts (1) to receive such contributions for the purpose of making independent expenditures, and (2) to receive source- and amount-limited contributions for the purpose of making candidate contributions….”

The FEC’s settlement with NDPAC has the potential to shape the 2012 election cycle and beyond. It seems unlikely that it would deny to other PACs what it has consented to with NDPAC. Thus, we could quickly see the rise of “Mega-PACs” capable of both making contributions to political candidates and accepting unlimited funds for independent expenditures, provided they do each action through separate bank accounts. At least one group has already applied for “Mega-PAC” status, and more are sure to follow.