Jan 16, 2004 -- LEGAL CENTER WEEKLY REPORT: January 16, 2004

Reform Groups: 527s Violate Campaign Finance Law

The Campaign Legal Center joined Democracy 21 and the Center for Responsive Politics this week in filing a complaint with the Federal Election Commission alleging that certain newly formed "527 organizations" created to spend soft money on the upcoming federal elections have violated campaign finance law.

According to media reports, these groups - Americans Coming Together (ACT), The Media Fund and The Leadership Forum - have been created expressly to spend large sums on partisan voter mobilization drives or "issue advocacy" designed to influence the coming federal elections, and have a major purpose of influencing federal candidate elections. Federal election law requires organizations with such a major purpose, and that spend more than $1,000 to influence federal elections, to register as political committees with the FEC. Federal political committees may only accept "hard money" - limited contributions from individuals and other federal political committees.

In particular, these groups have set up purportedly "non-federal" accounts which will accept corporate and labor funds and large contributions from individuals - soft money - and use them to finance partisan voter drives or "issue advocacy" aimed at the coming federal elections. The complaint alleges that these accounts are, in fact, clearly federal political committees that must be registered with the FEC, and must operate within the normal "hard money" source and amount restrictions. More broadly, it notes that "[i]n pursuing these schemes, these section 527 groups are attempting to replace the political parties as new conduits for injecting soft money into federal campaigns."

Click here to view the FEC complaint.

The issue of permissible activities for "527 organizations" was also placed before the FEC through the filing of an Advisory Opinion request by ACT on January 13. The ACT Advisory Opinion request, which has not yet been deemed complete by the Commission, inquires about (and argues for the legality of) ACT's voter mobilization plans. It also suggests that a prior Advisory Opinion request filed by a Republican organization known as Americans for a Better Country (ABC) - a request inquiring about activities similar to those which press accounts have indicated ACT will undertake - "does not generally present questions pertinent to ACT's activities."

The ACT request also takes issue with comments filed by the Campaign Legal Center and Democracy 21 in response to the prior Advisory Opinion request from ABC. These comments argue that corporate and labor treasury funds cannot be "indirectly" expended through 527 organizations for partisan voter drives to influence federal elections which are aimed at the general public. The Center for Responsive Politics separately endorsed this argument.

Meanwhile, the Republican National Committee also filed comments on the ABC request, concurring in the reform groups' conclusion about the impermissibility of "indirect" corporate and labor expenditures for partisan voter drives aimed at the general public. The RNC also expressed concern about large contributions from individuals to 527 organizations undertaking electioneering efforts with the express purpose of electing or defeating federal candidates, as well as the "apparent funneling of foreign money" through some 527s into federal elections.

Click here to view the ACT Advisory Opinion request.

Click here to view the ABC Advisory Opinion request.

Click here to view comment from the Campaign Legal Center and Democracy 21 on the ABC Advisory Opinion request.

Click here to view comments for the Center for Responsive Politics on the ABC Advisory Opinion request.

Click here to view comments from the RNC on the ABC Advisory Opinion request.

Moreover, on Thursday, the FEC endorsed a plan to commence a rulemaking on the issue of 527's, particularly to examine when such organizations would be treated as federal political committees that must raise and spend only hard money. Reports indicate that four FEC Commissioners - Chairman Bradley Smith and Commissioners David Mason, Michael Toner and Scott Thomas - voted in favor of the plan to undertake this rulemaking, while Vice Chair Ellen Weintraub and Commissioner Danny McDonald dissented. Hearings in conjunction with this rulemaking would be held in April; the objective is to adopt regulations in May.

Other FEC News:

* On January 7, the FEC adopted an Advisory Opinion addressing participation by federal officeholders and candidates at fundraising events, and in written fundraising solicitations, for the Republican Governors' Association. While allowing federal officeholders and candidates to attend RGA events, the Advisory Opinion rejected the notion that their solicitations of funds for a "Conference Account" maintained by the RGA were not subject to the Reform Act's soft money fundraising restraints.

To read this Advisory Opinion, please click here.

* On January 7, the FEC decided to solicit comment on a petition for the agency to commence a rulemaking on its policies for disclosing complaints, briefs, non-exempt investigatory materials and other documents upon the closure of enforcement cases. The petition was filed by the Campaign Legal Center , the National Voting Rights Institute, the Center for Responsive Politics and Democracy 21 following the D.C. Circuit's AFL-CIO v. FEC decision, which gives the FEC latitude to disclose materials relating to closed enforcement cases but forbids it from imposing unnecessary First Amendment burdens on privacy interests. The petition seeks that the Commission conform its regulations to AFL-CIO v. FEC in a manner which provides broad access to closed enforcement case materials. FEC Commissioners have indicated that the agency will commence a rulemaking in 2004 to conform the agency's regulations governing closed enforcement case disclosures to the AFL-CIO v. FEC decision.

To view the petition for rulemaking filed by the Campaign Legal Center and other reform groups, please click here.

* The FEC received an Advisory Opinion request from the campaign committee of U.S. Rep. Eliot Engel (D-NY), inquiring whether he may engage in unlimited fundraising for a committee created to defray the costs of redistricting litigation. The Campaign Legal Center filed comments on this Advisory Opinion request, arguing that this would constitute fundraising in connection with federal elections and thus was limited to "hard money" by the Reform Act.

To view the Advisory Opinion request, please click here ; to view the Legal Center 's comments, please click here.

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Experts to Discuss Presidential Public Financing

at University of Utah

On January 21, 2003 the Campaign Legal Center and the Hinckley Institute of Politics at the University of Utah will co-host a panel discussion titled: "The Race for the U.S. Presidency in 2004 and Beyond."

The panel will be moderated by the Campaign Legal Center's Director of Academic Affairs and Deputy General Counsel Kirk L. Jowers and will feature Michael J. Malbin, Executive Director of The Campaign Finance Institute, Thomas Mann, the W. Averell Harriman Chair and Senior Fellow in Governance Studies at The Brookings Institution, and Scott Thomas, a Federal Election Commissioner. The forum will explore the implications of the current system on the 2004 presidential race, the impact of money in presidential races and the various proposals to reform presidential funding.

The Week's Press

To read a variety of this week's editorials and articles on campaign finance issues, please click here.

To subscribe to, or unsubscribe from, our weekly reports, please send your request to info@campaignlegalcenter.org .

The Campaign Legal Center is a nonpartisan, nonprofit organization established in January 2002 to represent the public interest in strong enforcement of campaign finance and campaign media law. Through its legal staff, the Legal Center participates in the administrative and legal proceedings in which the nation's campaign and media laws are interpreted and enforced. Trevor Potter , a former FEC Commissioner and Chair, serves as General Counsel. Based in Washington , the Legal Center is associated with the University of Utah's Campaign and Media Studies Program, created to support inquiry and action on these issues through academic research, conferences and internship programs. The Program and the Legal Center have received generous financial support from The Pew Charitable Trusts, the Open Society Institute, the Joyce Foundation and the Stuart Family Foundation.