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'Super PAC' supporting Romney rethinks donations from federal contractors

Restore Our Future had previously solicited money from federal contractors, despite a 36-year-old ban on such contributions. It's now warning contractors to get legal advice before giving.

May 05, 2012|By Matea Gold, Washington Bureau

WASHINGTON — Anxiety about the effect of a ban on political spending by federal contractors is prompting new caution by a company connected to such donations and a "super PAC" that accepted them.

Restore Our Future — a super PAC that has spent more than $42 million on behalf of GOP presidential candidate Mitt Romney — had previously solicited money from federal contractors. Now it is warning the contractors to get legal advice before giving.

Meanwhile, Oxbow Carbon, a major coal and petroleum supplier that gave Restore Our Future $750,000 last year, now says its contracts to sell fuel to the federal government are through a sister company that is a separate legal entity — an arrangement that allows it to skirt the prohibition on federal contractors making political expenditures.

The sister company, Oxbow Carbon & Minerals, controls the firms that have sold coal to the Air Force and the Tennessee Valley Authority, said spokesman Brad Goldstein. According to federal contracting records, the company received at least $21 million to provide the fuel.

"I can say without equivocation that Oxbow Carbon LLC is not a federal contractor," Goldstein wrote in an email.

The effort to clarify its status marks a shift by the privately held energy supplier.

When asked in March about its donation, Oxbow Carbon said it was a federal contractor and had a 1st Amendment right to make contributions to super PACs after the Supreme Court ruled in the Citizens United case that corporations could engage in political activity.

But the court did not address the 36-year-old ban on political expenditures by federal contractors, a Federal Election Commission regulation that grew out of congressional concerns about political corruption. The FEC has indicated that the statute is still in effect, although some election law experts believe it will be found unconstitutional in the wake of Citizens United.

Since that 2010 ruling, the ban has not yet been ruled on by the courts.

But there's some evidence that courts are inclined to uphold the rule. In April, a federal district court judge in Washington, D.C., shot down a challenge to a related part of the ban that prohibits contractors from making campaign contributions to candidates and political parties. The suit was filed by three federal contractors who argued that the prohibition violates their 1st Amendment rights.

U.S. District Judge James Boasberg denied their request for a preliminary injunction, saying they were unlikely to succeed in overturning the ban. In his ruling, he wrote that there was a reasonable basis to ban such donations, saying "the suggestion that those seeking federal contracts might 'pay to play' is hardly novel or implausible."

And because the ban still is on the books, most major super PACs explicitly warn donors on their websites that federal contractors cannot give.

But Restore Our Future took a different posture, soliciting money from companies that work for the government. In a May 2011 letter to potential donors, Charlie Spies, a Washington election law lawyer who serves as the group's treasurer, assured them that their contributions would not interfere with their ability to obtain state or local contracts. He did not mention the federal contractor ban.

After the Los Angeles Times/Tribune Washington Bureau reported in March that the super PAC had received money from federal contractors, the group took a more cautious approach. A warning on its website now reads, "Federal government contractors should consult counsel prior to making a contribution to Restore Our Future."

Spies declined to comment.

Meanwhile, Oxbow Carbon declined to say whether it still believes federal contractors are allowed to give to super PACs. But the company — founded by Palm Beach billionaire William Koch, who personally gave Restore Our Future $250,000 last year — is now taking pains to stress that its donations are coming from entities that do not work for the government.

In early March, Huron Carbon — a subsidiary of Oxbow — gave $1 million to the group. Spokesman Goldstein noted that Huron does not have any government contracts.

matea.gold@latimes.com

Ian Duncan in Washington contributed to this report.

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