Fix the FEC: Background Memorandum on New Bipartisan Legislation to Address a Dysfunctional Agency

The Restoring Integrity to America’s Election Act, introduced in June 2015 by two Democrats and two Republicans, Points the Way Forward for Bipartisan Cooperation

Federal Election Commission (FEC) Chair Ann M. Ravel describes her agency as “worse than dysfunctional” and says “the likelihood of [federal campaign finance] laws being enforced [in the 2016 election] is slim.”[1]

On June 25, 2015, Representatives Derek Kilmer (D-WA), Jim Renacci (R-OH), John Carney (D-DE) and Lou Barletta (R-PA) introduced H.R. 2931, “Restoring Integrity to America’s Elections Act,” a bill that seeks to restructure the FEC.

Finding bipartisan agreement in the notion that American taxpayers deserve better, the four Representatives put together a proposal that focuses on making the FEC actually work and perform its statutory functions.  The agency’s hallmarks are partisan and ideological division and an on-going inability to interpret and enforce the federal campaign finance laws.  In sum, the agency is failing to do much of its job. 

The History: Congress built In “Failure-to-Enforce”

From its inception in the 1970s, the FEC has been criticized for its weakness and ineffectiveness.  It’s been called the “Failure to Enforce Commission,” “a toothless tiger,” and the “most successful agency in Washington doing what it was designed to do—next to nothing.”

At the heart of the agency’s problems is its structure.  Congress passed the groundbreaking Federal Election Campaign Act (FECA) in 1971 to strengthen campaign finance laws; however, the new law failed to establish an independent agency to ensure the campaign finance provisions were enforced.  The Clerk of the House and the Secretary of the Senate were responsible for monitoring disclosure reports, as they had been since Congress enacted the Federal Corrupt Practices Act of 1925.  A Republican, Senate Minority Leader Hugh Scott (R-PA), was the first to call for an independent agency to enforce FECA.  His proposal had the support of his party.[2]

Minority Leader Scott, with the support of the Republican Party, proposed a five-member independent federal election commission.  Democrats, led by House Administration Committee Chairman Wayne Hays (D-OH), opposed the bill.  Hays was the chief fundraiser for the House Democrats and “made it his mission to defeat the bill, which he believed was ‘very dangerous.’”[3]  Hays would have succeeded in killing the idea altogether until the Watergate scandal intervened.  One of the recommendations coming from the Senate Watergate Committee was the creation of an independent nonpartisan agency to enforce the campaign finance laws.  The Committee described this proposal as “the most significant reform that could emerge from the Watergate scandal” and proposed a seven-member commission.

Instead, the 1974 amendments to FECA that were reluctantly signed into law by President Gerald Ford included creation of an FEC with an even number of commissioners.  The Commission was as weak as the House Democratic leadership could manage.  By law, no more than three of the commissioners could be members of the same political party.  In practice, through most of the Commission’s history, it’s had three Republicans and three Democrats—an agency designed to promote deadlock along party lines on issues that really mattered.[4]  The legislation gave congressional leaders the power to appoint four of the six Commissioners.  While this provision was ruled unconstitutional by the Supreme Court in Buckley v. Valeo (1976), an unspoken agreement was reached between Congress and the President to defer to House and Senate leaders on FEC nominations.  This unfortunate tradition has continued, as Presidents have proven reluctant to spend political capital on this weak agency.  The result is a Commission that is often filled with partisan or ideological loyalists—as opposed to honest enforcers—hand-picked by congressional leaders.[5] 

In response to the Buckley decision, Congress once again found a chance to weaken the FEC by amending FECA in 1976 to require affirmative votes from four commissioners in order to take any action, disallowing action on anonymous complaints, and requiring the Commission to attempt negotiated settlement agreements before filing a civil action against an alleged violator.[6]  After the FEC performed random audits following the 1976 elections—audits that found more than half of the reports had problems—Congress defunded the agency’s audit budget in 1978 and then banned random audits altogether in 1979.[7] 

In sum, the FEC was designed by those whom it regulates, with a structure that was intended to allow each party, each chamber and the President to protect their own interests.  Despite the Supreme Court finding it unconstitutional, that structure has continued to survive informally.  The Commission’s growing ideological split has only exacerbated the problems inherent in the agency’s structural deficiencies.

The Current Problem

The Federal Election Commission is failing to do much of its job.  The split commission cannot agree on even routine administrative matters.  For example, the General Counsel position has gone unfilled for more than two years because the Commission cannot reach a consensus on who to hire. The Commission could not even agree on a temporary, “acting”, General Counsel until just recently.  The FEC is the quintessential example of a captured agency, usually understood to be a regulatory agency formed to act in the public’s interest, but that acts in ways to benefit the industry it is supposed to be regulating rather than the public.

As the 2016 presidential race begins to take shape, the FEC remains unlikely to properly administer and enforce federal campaign finance laws. 

The slow pace of action has real consequences for voters and for those being regulated.  For example, the Commission deadlocked and thus failed to find wrong-doing by Crossroads GPS, a nonprofit affiliated with Karl Rove and other Republican operatives in spite of findings by the agency’s legal staff that the organization probably violated campaign finance rules with its political spending in the 2010 midterms.  The FEC’s legal staff concluded that there was sufficient evidence to investigate the spending by Crossroads GPS, which the group said amounted to $74.2 million to direct political activity, almost 40 percent of its spending.  The FEC General Counsel’s office found that the group’s political spending was in fact much higher and that it should have registered as a political committee, which would require it to disclose its donor list—a list that apparently included a single donation in 2012 of $22.5 million.  Campaign Legal Center President and former FEC Chairman Trevor Potter said the Commission’s failure to proceed in this case was extremely disappointing.  “The Office of General Counsel made some very strong arguments here.  The Commission’s inability to proceed to investigate whether donors … should have been required to be disclosed, as the Supreme Court assumed in Citizens United they would, is another example of the FEC’s failure.”[8]

The Commission also fails the regulated community, especially candidates.  In one recently closed case, the Commission found that Rep. Frank Guinta (R-NH) had violated the law by accepting illegal campaign contributions from his parents, a rare instance when the Commissioners actually agreed there was a violation.  And yet it took them five years to resolve the case.  During that time, Rep. Guinta ran for office three times—winning his seat, losing it and winning it again.  The voters lose when it takes the FEC this long to resolve cases against candidates and elected officials.

Rep. Guinta’s case is the rare example when the FEC actually enforced the law.  More often than not, the six-member Commission deadlocks along party lines.

The Proposed Solution

Coming out of discussions at the Bipartisan Working Group, an informal group of Members from both sides of the aisle, H.R. 2931 would change the FEC to a five-member body with an appointed Chair and no more than two commissioners from any party.  Certain administrative functions would be delegated to the Chair, allowing the Commission as a body to focus on the difficult questions of campaign finance law rather than getting hung up on squabbles over staffing.  Commission action on enforcement matters, rulemakings and advisory opinions would still require bipartisan support—three votes—but avoid the pitfall of a split vote and deadlock.

By making the FEC an odd-numbered commission, it would have a structure like almost every other federal agency in Washington, including the Federal Communications Commission, the Securities and Exchange Commission and the Federal Energy Regulatory Commission.  Arguments that such a structure places too much power in one party seem to ignore the fact that the President has the power to nominate one person to run the Federal Bureau of Investigation (FBI), the leading criminal justice enforcement agency, for 10 years.  One could argue that this is giving one party too much power, yet this process has worked. 

H.R. 2931 addresses the problem of deference to congressional leaders on nominations by establishing a Blue-Ribbon Panel to make recommendations to the President for FEC Commissioners, bringing public pressure to appoint qualified Commissioners with a demonstrated commitment to fulfilling the agency’s statutory duties. 

The Commission’s record on disclosure has been mixed.  While it has a functioning website that makes contribution and expenditure data available to the public, the Commission gutted the electioneering communication donor disclosure requirement contained in the Bipartisan Campaign Reform Act (BCRA) via a regulation promulgated in 2007—a regulation that CLC is still challenging in court—and failing on multiple deadlocked votes to fix the bad regulation.  Put simply, the FEC has too often failed.  Simply abolishing the agency is not the answer, especially given the poor track record of the Department of Justice (DOJ) when it had sole jurisdiction.

Concerns About Partisanship

Those who oppose modifying the FEC to a five-member body state that they believe a six-member Commission is the only way to ensure the agency charged with overseeing election laws does not operate in a partisan manner.  This concern, however, is misplaced.

First, every independent agency at the federal level but one[9] has an odd number of members.  These agencies deal with issues that involve much more money and wield more power.

Second, only two members of the five-member Commission may be of the same party.

Third, pointing to the congressional ethics committees, which have an even partisan split, as examples of the need for an even number undercuts the argument.  The ethics committees, especially in the House, have been riven with partisan dysfunction.  The House endured an almost 10-year ethics truce where, under the threat of mutually assured destruction, the parties filed no ethics complaints against each other.  The dysfunction was so bad it lead to the creation of the Office of Congressional Ethics (OCE), which has brought some degree of credibility to the House ethics process.  An investigation into allegations of violations by Rep. Maxine Waters (D-CA) became so polarized that an outside counsel was brought in to sort out the mess.  The counsel’s report laid out a harrowing record of partisan fighting and a total breakdown of the even-numbered Committee.  The Senate ethics process remains a black hole with little public accountability. 

Fourth, the original proposal for an independent agency to enforce federal election laws came from a Republican, Senate Minority Leader Hugh Scott (R-PA) who proposed a 5-member Commission.  The 6-member Commission came from Democrat Wayne Hayes, Chair of the House Administration Committee, who was committed to weakening any such agency as much as possible.

The FEC and the 2016 Elections

The FEC’s abject failure comes at a time when Super PACs and so-called “dark money” groups are drastically changing the face of political campaigns, especially at the federal level.  The skyrocketing amount of outside spending already occurring in the run up to the 2016 elections is a phenomenon created by the Supreme Court in Citizens United v. FEC and subsequent court decisions.  These decisions freed corporations and labor unions to make unlimited independent expenditures using their treasury funds, and so-called Super PACs to raise unlimited contributions to pay for such expenditures.

Part of the courts’ rationale for allowing this kind of spending was the assumption that the expenditures would, in fact, be independent of candidates and parties.  This has not proven to be the case.  The candidates’ close associates run super PACs, candidates attend fundraisers for their Super PAC, and campaign committees are delegating tasks they traditionally performed to the Super PACs.  These arrangements appear to be coordinated by any common sense understanding of the word.  And yet, in the last five years the FEC has dismissed at least 29 complaints alleging illegal coordination without so much as investigating the claims.  With a dysfunctional FEC, it is clear to candidates and their Super PACs that they can blatantly violate the law without fear of enforcement.  Candidates and outside groups have become increasingly bold in their violation of the law.

As the 2016 election cycle has already demonstrated, candidates and campaigns will always push the boundaries of the law when it comes to raising and spending money to get elected.  The American people deserve a steadfast watchdog, not toothless tiger, to ensure the laws are respected and enforced.  It is now time to fix what has proven to be exactly what Chairman Hays had hoped for in 1974—a weak, ineffective agency characterized by partisan dysfunction. 

Conclusion

The ‘‘Restoring Integrity to America’s Elections Act’’ provides a new starting point and should help initiate a new discussion about common ground for Republicans and Democrats who believe federal agencies should not simply exist, but actually function.  It does not serve the American taxpayer to have a “worse than dysfunctional” agency purposefully designed to serve the “regulated community,” i.e., politicians, especially incumbents.  This bipartisan effort of Representatives Kilmer, Renacci, Carney and Barletta provides a useful opportunity to restart the conversation on fixing the FEC.