While McCutcheon concluded the government’s anti-circumvention rationale was too speculative and attenuated to justify the biennial aggregate limits, the Court did discuss “multiple alternatives available” to the government that would serve this interest while still satisfying the First Amendment. One such suggestion involved “earmarking” rules—which bar donors from trying to circumvent the base limits by designating their contribution to a political committee for use or transfer to a candidate or candidate committee.
One earmarking rule currently forbids donors from contributing to both a candidate and a political committee when the donor knows that “a substantial portion” of the funds given to the committee will be used to support the candidate. It was this particular prohibition that formed the basis for the controversial Triad Management Services FEC enforcement matter—pursued by none other than Lois Lerner—in which the Commission found reason to believe a violation occurred where the donor was “in a position to know the PACs’ plans with regard to making future contributions to support” the candidate.
But while the Commission has addressed, to a small degree, whether a donor “knows” that a “substantial amount” of a payment will go to a certain candidate, it has never quantified or otherwise addressed the meaning of “substantial.” If 80 percent of a donor’s contribution will ultimately make it to a candidate, is that substantial? What about 10 percent? The Commission has never answered this question. Accordingly, the McCutcheon Court’s suggestion that the FEC define “how many candidates a PAC must support in order to ensure that ‘a substantial portion’ of a donor’s contribution is not rerouted to a certain candidate” could clarify a relatively unexplored area of federal earmarking regulation. Given the current dynamic at the FEC, however, we are unlikely to see any clarification of earmarking rules anytime soon.