Democrats have removed a provision from the Disclose Act that would have inadvertently banned all foreign-owned corporations from having political action committees.

Foreign-owned multinationals and their trade group lobbied against the PAC provision in the last version of Disclose, arguing it would be unconstitutional to bar U.S. workers from creating PACs and contributing to them.

The language barring PACs was part of a larger provision in the bill that aimed to close foreign-influence loopholes for corporations. The Supreme Court’s Citizens United ruling allowed corporations to make unlimited campaign expenditures, creating a loophole for domestic subsidiaries of foreign companies to influence elections.

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The PAC provision is among several that were dropped from the latest versions of Disclose that Democrats introduced in the House and Senate. Democratic aides in both chambers said the legislation was simplified to give it a better chance at passage, and maintained that the PAC provision was not removed due to pressure from foreign companies.

“This year, with the influx of secret money flowing into elections from outside groups, we, along with our Senate counterparts, decided to focus on the disclosure of the sources of this money,” House bill sponsor Chris Van Hollen (D-Md.) told The Hill through a spokesman.

Other campaign finance issues that surfaced as a result of Citizens United, including election spending by foreign corporations, are being considered through “separate initiatives,” according to Van Hollen.

The Disclose 2010 Act was created by Democrats to limit the impact of the landmark Supreme Court ruling. That decision helped clear the way for unlimited money entering into the campaign finance system, so long as the money is used for activities independent of candidates or parties.

Two years later, Democrats have revived Disclose in an election-year push against super-PACs, which have emerged as a dominant force in the 2012 election. Van Hollen is sponsoring the House version, while Sen. Sheldon Whitehouse (D-R.I.) is pushing it in the upper chamber.

The new version of the Disclose Act would require some outside groups to provide the names of donors who contribute more than $10,000. It would also require an “I approve this message” disclaimer in campaign ads.

Whitehouse spokesman Seth Larson said the scope of the Senate’s Disclose Act was narrowed “to address concerns raised by some members during the debate in 2010.”

The removal of the provision is a win for the Organization for International Investment (OFII) and at least four other companies that lobbied on the provision in 2010.

OFII and some foreign corporations were concerned the provision would have affected U.S. employees of foreign companies. Subsidiaries fully staffed by American employees would have been prohibited from creating an employee PAC.

“Once we explained and debunked how the bill would have disenfranchised 5 million Americans who worked directly in the U.S., the [Van Hollen and leadership] staff were very responsive,” OFII President Nancy McLernon said.

“There [was] definitely some surprise when we unpack[ed] the issue,” she added.

While OFII’s initial explanation of the unintended consequences from the provision in 2010 could keep subsidiaries’ employees out of hot water, the larger issue of foreign companies influencing U.S. elections is still a hot topic on Capitol Hill.

Larson said the shedding of provisions does not mean Whitehouse’s office has given up on the issues. The senator still supports the original provisions, “but recognizes that focusing strictly on disclosure is the best way to garner widespread support,” Larson told The Hill.

The House side has not given up on the foreign-corporation provisions, either. Rep. Bill Pascrell (D-N.J.) plans to reintroduce standalone legislation on foreign election spending “very soon,” according to Paul Brubaker, his communications director.

"American elections — from local school boards to the United States presidency — are about the future," Pascrell told The Hill. "And our nation's future should be determined by the American people."

Pascrell is locked in a tough primary fight against fellow Democratic Rep. Steve Rothman following redistricting in New Jersey.