As the independent regulatory agency responsible for administering and enforcing the Federal Election Campaign Act (the Act), the Federal Election Commission must "[safeguard] the integrity of the electoral process without...impinging upon the rights of individual candidates and citizens to engage in political debate." Buckley v. Valeo. To that end, the Commission promulgates regulations explaining the Act's requirements, issues advisory opinions that apply the law to specific situations, handles civil enforcement of the Act and defends the statute against legal challenges. This chapter examines major legal issues the Commission confronted during 1996. Many of those issues touch upon the core tension between valid governmental interests and the Constitutional freedoms of speech and association.
Corporations and labor organizations are prohibited from using their treasury funds to make contributions or expenditures in connection with federal elections. 2 U.S.C. Sec.441b. The statute and FEC regulations contain several exceptions that permit corporations and unions to form PACs and otherwise communicate their views. Several 1996 court decisions and FEC advisory opinions explored the parameters of the corporate/labor prohibition and its exceptions.
MCFL Nonprofits
In its 1986 FEC v. Massachusetts Citizens for Life (MCFL) decision,
the Supreme Court created an exception to Sec.441b that exempts certain
nonprofit corporations from the prohibition on corporate independent expenditures.
In response to that ruling, the Commission prescribed new regulations, which
were successfully challenged on Constitutional grounds in 1996.
The MCFL Court, citing First Amendment concerns, had concluded that independent expenditures made by MCFL were not subject to the ban because MCFL had the following essential features:
In 1995, the FEC promulgated regulations at 11 CFR 114.10 to incorporate the MCFL decision into its regulatory framework. These regulations establish a test to determine whether a corporation qualifies for exemption from the Act's prohibition against corporate independent expenditures.
Minnesota Citizens Concerned for Life (MCCL), a nonprofit corporation, immediately brought suit to challenge the constitutionality of these regulations. MCCL alleged that it did not qualify to make independent expenditures under the regulations because:
On April 19, 1996, the U.S. District Court for the District of Minnesota ruled that the FEC's regulations defining and governing qualified nonprofit corporations (11 CFR 114.10) were unconstitutional on First Amendment grounds.
The court based its ruling on a decision by the U.S. Court of Appeals for the Eighth Circuit that addressed a similar Minnesota state law. In that opinion, the appeals court rejected the argument that the MCFL language served as a bright-line test for determining which corporations were entitled to make independent expenditures. Day v. Holahan (34 F.3d 1356 (8th Cir., 1994)). The Day decision concluded that Minnesota's regulations were too restrictive and not narrowly tailored to serve a compelling governmental interest because they disqualified from the independent-expenditure exemption those nonprofit, membership corporations that engaged in some business activities and/or accepted some corporate donations, but not in significant amounts.
The district court in the MCCL case also found that the FEC's definition of a qualified nonprofit corporation at 114.10(c) was not severable from the rest of 114.10; consequently, the court rejected the entire provision.1 This decision is pending on review before the Eighth Circuit.
Express Advocacy
In addition to creating the nonprofit exemption, the MCFL decision limited
the scope of the Sec.441b prohibition based on the nature of the corporate
or labor spending. In response to this decision, the Commission prescribed
a regulation defining express advocacy. And, once again, a successful challenge
to that regulation was mounted in 1996.
The Supreme Court, again citing First Amendment concerns, had held that the ban on corporate and labor organization independent expenditures could only be constitutionally applied in instances where the money was used to expressly advocate the election or defeat of a clearly identified candidate for federal office. The Court's landmark Buckley v. Valeo decision listed examples of phrases that constitute express advocacy: "vote for," "elect," "support," "cast your ballot for," "vote against," "defeat," "reject."
The FEC incorporated this list into its definition of express advocacy at 11 CFR 100.22(a). Subpart (b) of 11 CFR 100.22 is based, inter alia, on the decision of the Court of Appeals for the Ninth Circuit in FEC v. Furgatch. The court of appeals held that language may be said to expressly advocate a candidate's election or defeat if, when taken in context and with limited reference to external events, it can have no other reasonable interpretation.
A nonprofit corporation immediately challenged the new definition, and the courts responded quickly. On October 18, 1996, the U.S. Court of Appeals for the First Circuit summarily upheld a district court ruling in Maine Right to Life v. FEC that subpart (b) of the regulatory definition exceeded the FEC's statutory authority because it broadened the definition of express advocacy beyond the Supreme Court's interpretation.
The district court concluded that the Supreme Court's MCFL decision and a decision of the Court of Appeals for the First Circuit in Faucher v. FEC supported using Buckley's list of phrases as a bright-line test to detect express advocacy. The rigid approach of a bright-line test, noted the court, avoided the chilling of speech that occurs when the communicator is uncertain about whether or not his or her message contains express advocacy. Further, the court said, the idea that the content of a message might become express advocacy as an election nears adds to the chilling effect of 11 CFR 100.22(b) on free speech.
In its opinion, the district court had explicitly recognized the difficulty the FEC faced in crafting a regulation that effectively defines express advocacy, but noted that the Buckley, Faucher and MCFL decisions required the court to safeguard issue advocacy over the interest of keeping corporate and labor organization money out of the electoral process. Based on these precedents, therefore, the courts ruled that 11 CFR 100.22(b) was invalid because it defined express advocacy in broader terms than did the Buckley, MCFL and Faucher decisions.
The appeals court also cited FEC v. Christian Action Network (CAN), where a district court--in a decision summarily affirmed this year by the Court of Appeals for the Fourth Circuit--ruled that CAN's television and newspaper ads purchased with corporate funds were not prohibited by Sec.441b because they contained no express advocacy. The ads, which ran during the weeks leading up to the 1992 Presidential general election, assailed Bill Clinton and Al Gore for their alleged position on homosexual rights issues. (For more information on the district court decision, see Annual Report 1995.)
On December 17, 1996, the Court of Appeals for the First Circuit declined to rehear Maine Right to Life v. FEC.
Coordination with Candidates
Among the statutory exceptions to Sec.441b are provisions that permit specific
types of corporate/labor communications. Generally, corporations and unions
may spend treasury funds to expressly advocate the election or defeat of
candidates when they communicate with their corporate executives and stockholders
or, in the case of a union, with their members. FEC regulations that took
effect in 1996 flesh out this statutory provision.
In addition to clarifying that corporate and labor communications to the general public that contain express advocacy are considered prohibited expenditures, these regulations make clear that, generally, when corporations and unions coordinate their communications with specific candidates, they are making prohibited in-kind contributions to the candidates. These regulations are based on Buckley and later opinions, which held that "controlled or coordinated expenditures are treated as contributions rather than expenditures under the Act." The regulations, in certain instances, clarify what constitutes impermissible coordination with candidates. For example, specific regulations at 11 CFR 114.4(c)(4) and (5) make it illegal for a corporation or labor organization to distribute voting records or voter guides to the general public if, among other things, the organization consults or coordinates with candidates concerning the content or distribution of such materials. At 11 CFR 114.4(c)(5)(ii), the FEC lists specific restrictions for voter guides produced with corporate or union treasury funds for distribution to the public, such as prohibiting a corporate or labor organization from contacting a candidate (except through written questions to which a candidate may respond in writing) and requiring the organization to give all candidates for a particular office an equal opportunity to respond.
Two 1996 court cases addressed these rules: Clifton v. FEC and FEC v. Christian Coalition.
The U.S. District Court for the District of Maine in Clifton concluded that the FEC had based its voter guide regulations on too broad an interpretation of the Sec.441b prohibition on corporate expenditures. The court said that the regulations mistakenly hinge on whether a corporation has had any contact with a candidate rather than on whether the voter guide conveys issue advocacy on behalf of a candidate (which the court found would be an acceptable interpretation).
In concluding that the FEC had overstepped its authority in promulgating 11 CFR 114.4(c)(4) and (5), the court pronounced that, "as long as the Supreme Court holds that expenditures for issue advocacy have broad First Amendment protection, the FEC cannot use the mere act of communication between a corporation and a candidate to turn a protected expenditure for issue advocacy into an unprotected contribution to the candidate."
The Commission has appealed the decision.
In the Christian Coalition case, the FEC asked the district court to find that the Coalition, a corporation, had made prohibited in-kind contributions and independent expenditures on behalf of Republican candidates during the 1990, 1992 and 1994 election cycles (in violation of Sec.441b) and had failed to report the independent expenditures (in violation of 2 U.S.C. Sec.434(c)). Specifically, the FEC alleged that the Christian Coalition:
The Commission also asked the court to enjoin the Christian Coalition from violating Sec.441b and 434(c) and to assess an appropriate civil penalty for each violation.
The case was pending at year's end.
Corporate Communications to Restricted Class
The Commission addressed another facet of corporate/labor communications
in two 1996 advisory opinions--the aforementioned exception that allows
corporations and unions to send corporate executives and stockholders or
union members (the so-called "restricted class") communications
that expressly advocate the election or defeat of a clearly identified candidate
and that solicit contributions to be sent directly to the candidate. 11 CFR
114.1(j) and 114.2(f)(4)(ii). The regulations make clear that such communications
may not, in any way, facilitate the making of contributions. 11 CFR
114.2(f) and 114.3. Examples of illegal corporate facilitation include acting
as a conduit for contributions or providing potential contributors with
stamps and envelopes addressed to political committees other than the corporation's
own PAC. Although the corporation may not provide addressed envelopes, it
may provide contributors with the addresses of political committees.
In AO 1996-1, the Commission concluded that the Association of Trial Lawyers of America (ATLA) could communicate its endorsement of candidates to its members (its restricted class) and encourage them to support the ATLA-endorsed candidates by bestowing honorific designations on generous contributors.
Two characteristics of ATLA's proposed communications were key to this determination: ATLA's program did not facilitate the making of contributions and ATLA members would not suffer adverse effects if they decided not to participate in the program.
Corporate coordination with candidates was also an issue in the ATLA opinion. As part of its effort, ATLA planned to communicate with candidates before endorsing them to determine, for instance, their stand on certain issues. The Commission said that if ATLA's communication with a candidate's campaign included a discussion of the candidate's plans, projects or needs, ATLA's ability to make political communications to the general public would be compromised. Communicating with the candidate beyond what is permitted by 11 CFR 114.3 might be considered evidence of coordination that would negate the independence of future election communications to the general public. 11 CFR 109.1(b)(4) and 114.2(c).
Coordination would also be presumed in the case of an expenditure made by or through an ATLA member who was or had been an officer of a candidate's committee, or who was or had received compensation or reimbursement from a candidate, a candidate's committee or an agent of a committee. 11 CFR 109.1(b)(4). Further, coordination would be presumed if an ATLA member who held a significant position in a candidate's campaign were also either a member of ATLA's executive committee, an ATLAPAC officer or were otherwise involved in the planning or execution of ATLA's or ATLAPAC's political programs.
The Commission reached a similar conclusion in AO 1996-21, ruling that the Business Council of Alabama (BCA) could send to its individual members and to the official representatives of its organizational members (its restricted class) communications that endorsed and/or opposed federal candidates or that solicited contributions on behalf of the favored candidates.
BCA's proposed communications avoided facilitation problems and were otherwise consistent with the above-described legal guidelines. BCA also had to ensure that contributions were made voluntarily, that a BCA member would not be penalized for not making contributions, and that contributions were made by individuals from their personal funds or by another person who was a lawful source of contributions.
Issues of coordination and express advocacy also affected the activities of party committees in 1996. On June 26, the U.S. Supreme Court ruled that the First Amendment precludes application of the Act's party expenditure limits (2 U.S.C. Sec.441a(d)) to independent campaign expenditures by political parties. The Court's decision in FEC v. Colorado Republican Federal Campaign Committee reversed the Commission's long-held view that a party could not make electoral expenditures "independently" of its own candidates since a party's principal function is to elect its candidates to public office.
The Court decided not to address a constitutional challenge to the application of Sec.441a(d) to coordinated expenditures by party committees. Instead, the Court chose to "defer consideration of the broader issues until the lower courts have reconsidered the question in light of our current opinion." The case was remanded to the lower courts for further proceedings consistent with this decision.
Background
At 2 U.S.C. Sec.441a(d), the Act permits political party committees to make
expenditures up to specified amounts "in connection with the general
election campaign of candidates for Federal office." During the 1986
U.S. Senate race in Colorado, the Colorado Republican committee assigned
its entire expenditure authority under Sec.441a(d) to the National Republican
Senatorial Committee, but then spent $15,000 for a radio advertisement critical
of the campaign statements of then-Representative Tim Wirth, who was seeking
the Democratic Senate nomination.
The ad was broadcast throughout the state several months after Representative Wirth had registered as a candidate with the FEC, but before the Colorado primary election. At the time the ad was aired, three candidates were seeking the Republican nomination.
In its campaign finance reports, the Colorado Republican committee characterized the ad as a generic voter education expense that was not subject to the Sec.441a(d) limit. The FEC, however, acting in response to an administrative complaint, viewed the ad as a coordinated party expenditure in connection with the Colorado Senate election. After unsuccessful efforts to reach a negotiated settlement, the Commission filed suit against the committee for violating the Act's party expenditure limits and the corresponding reporting requirements.
The FEC alleged that the ad was subject to the Sec.441a(d) limits because it contained an "electioneering message" about a clearly identified candidate. AOs 1984-15 and 1985-14.
The committee argued that the ad did not contain express advocacy and was therefore not subject to the Sec.441a(d) limits. Further, it counterclaimed with a First Amendment challenge to the constitutionality of the Sec.441a(d) limits.
Lower Court Decisions
The U.S. District Court for the District of Colorado held that only communications
containing express advocacy counted towards the Sec.441a(d) spending limits.
Since, in its view, the ad did not contain express advocacy, it declined
to address the constitutional question.
The U.S. Court of Appeals for the 10th Circuit reversed, upholding the FEC's "electioneering message" standard as applied to the ad, as well as the constitutionality of these spending limits.
Supreme Court Decision
In its landmark Buckley decision, and successor cases, the Supreme
Court distinguished between independent expenditures, which it held cannot
in most instances be constitutionally limited, and contributions (including
expenditures coordinated with candidates), which can be limited.
The FEC had presumed--and had codified in its regulations--that party expenditures on behalf of candidates were "coordinated" with candidates and thus subject to limits. The Supreme Court disagreed, stating that there was no evidence that the anti-Wirth ad had actually been coordinated between the committee and the three candidates who were then seeking the Republican Senate nomination. Rather, the ad "was developed by the Colorado Party independently and not pursuant to any general or particular understanding with a candidate." The Court also found that the potential for, or appearance of, corruption, which the Buckley Court found sufficient to justify limiting contributions, was not present to the extent that would justify limiting such independent spending by political parties on behalf of their candidates. Accordingly, the Court held that the First Amendment precluded application of the spending limit in Sec.441a(d) to independent expenditures by party committees. Four justices would have found the statutory limit unconstitutional as applied to coordinated expenditures. However, there were not enough votes to take this step, and the plurality opinion concluded that it was premature to consider that issue on the record before the Court. Accordingly, the case was remanded to the lower court for further proceedings on that question.
Party Response to Ruling
In light of the Court's decision, the Democratic Senatorial Campaign Committee
(DSCC) and the Democratic Congressional Campaign Committee (DCCC) asked
the FEC to revise its rules to explain how party committees, with their
traditionally close contacts with candidates, could make independent expenditures.
The Commission initiated a rulemaking, but acknowledged that it could not
revise the rules in time for the November election. The committees also
submitted an advisory opinion request (AOR 1996-30) on the subject. The
Commission failed to approve the General Counsel's draft advisory opinion
by the required four-vote majority. As a result, the Democratic committees
filed a lawsuit asking the District Court for the District of Columbia for
guidance. (DSCC v. FEC) On October 9, 1996, the court dismissed the
case citing the FEC's jurisdiction in the area.
Reports filed by the Republican and Democratic national committees indicate that both made independent expenditures in connection with the 1996 elections. The Republican committees reported approximately $9.9 million in independent spending, and the Democrats disclosed about $1.4 million.
The Commission considered the status of particular party organizations in several 1996 advisory opinions. Three opinions addressed "state party committee" status, and one examined the qualifications for "national party committee" status. These designations are important because only qualified state and national committees may make coordinated party expenditures in support of their general election nominees. (See previous section.) In addition, the Act affords national party committees a higher limit on contributions received and the opportunity to qualify for public funding of their Presidential nominating conventions.
State Party Status
Under the Act and Commission regulations, a "state committee"
is defined as an organization which, by virtue of the bylaws of a political
party, is responsible for the day-to-day operations of the party at the
state level, as determined by the Commission.
In AO 1992-30, the Commission established two criteria necessary to qualify as a state committee of a political party. First, the organization must have a state affiliate agreement that delineates activities that "are commensurate with" the day-to-day operations of a party at a state level. Second, the state affiliate must gain ballot access for its Federal candidates.
The Commission applied these criteria in three advisory opinions issued in 1996. In AO 1995-49 the Commission determined that the Natural Law Party of Texas (Texas Party) was not a state party committee of the Natural Law Party of the United States of America (the Natural Law Party National) because it had not secured ballot access in the State of Texas for its Presidential and other federal candidates. On the other hand, in AOs 199627 and 1996-43, the Commission concluded that the Libertarian Party of Illinois and the Green Party of New York did qualify as state committees because they met both of the established requirements.
National Committee Status
In AO 1996-35, the Commission determined that the Greens/Green Party USA
(G/GPUSA) did not conduct enough national political campaign activity to
qualify as a national party committee.
The Act defines a national party committee as the organization that, by virtue of a party's bylaws, is responsible for the day-to-day operations of that party at the national level. The Commission relies on several criteria to determine whether a political party has demonstrated sufficient activity on the national level to qualify. Those criteria include:
A party cannot qualify for national committee status if its activity is focused only on the Presidential and Vice Presidential election, if the activity is limited to one state or if the party has only a few federal candidates on a limited number of state ballots. On the other hand, ballot access for Presidential candidates is a prerequisite for any organization trying to attain national committee status.
In the 1996 election cycle, the G/GPUSA mounted a presidential campaign with Ralph Nader as its candidate, and ran eight candidates for congressional seats in five states. It also claimed 14 state affiliates, published a party journal, held party conventions and maintained a website on the internet.
Although Mr. Nader appeared on the ballot as the Green Party presidential nominee in 16 states, he apparently did not qualify as a candidate under the Act. In an effort to avoid the FEC's registration and reporting requirements, Mr. Nader had said that he would campaign for the presidency without meeting the Act's definition of a candidate. The Commission, therefore, could not consider Mr. Nader a candidate in evaluating G/GPUSA's status as a national committee. That fact, combined with the party's limited success in achieving ballot access for congressional candidates, led the Commission to conclude that G/GPUSA's 1996 activity was insufficient to qualify it for national committee status.
The Act defines a political committee as any group of persons that either receives contributions or makes expenditures exceeding $1,000 per year for the purpose of influencing a federal election. 2 U.S.C. Sec.431(4). In applying this definition, the Commission has considered an additional factor--whether a group's major purpose is the nomination or election of candidates.
The major-purpose test was the subject of both litigation and an advisory opinion in 1996.
GOPAC Case
Through the course of an enforcement investigation (MUR), the Commission
determined that GOPAC first qualified as a political committee in 1989 when
it raised and spent more than $1,000 for the purpose of overturning the
Democratic majority in the House of Representatives, and as such was required
to register and file with the FEC from that point forward. GOPAC argued
that it did not qualify as a political committee under the Act until 1991,
at which time it did register with the FEC, because before that time its
major purpose was not to influence the election of federal candidates.
The major-purpose test dates back to the Supreme Court's Buckley v. Valeo decision in which the Court ruled that the definition of political committee "need only encompass organizations that are under the control of a candidate or the major purpose of which is the nomination or election of a candidate." The FEC contended that the Buckley decision did not require that a group provide direct support to a specific federal candidate in order for the group to be considered a political committee under the major purpose test. Instead, the FEC argued that Buckley's definition of "political committee" encompassed groups organized to engage in partisan electoral politics or electoral activity, once they crossed the $1,000 statutory threshold of federal contributions or expenditures. Accordingly, the FEC argued that if GOPAC's major purpose was to advocate the election of Republicans as a class of candidates, then the purpose of its activities was by definition campaign related. And if its expenditures, or the contributions it received, to influence the election of federal candidates exceeded $1,000, it qualified as a political committee under the Act.
The court disagreed because it found the term "partisan electoral politics" to be vague and therefore to have a chilling effect on the First Amendment rights of issue advocacy groups. In its February 28, 1996, opinion, the court quoted the Buckley decision: " . . . the distinction between discussion of issues and candidates and advocacy of election or defeat of candidates may often dissolve in practical application."
The court reasoned that a bright-line test was therefore required. The court concluded that the appropriate bright line was provided by limiting the definition of political committee to groups whose major purpose was the election of a particular federal candidate or candidates. The court said that this test drew two relatively clear lines: it distinguished between federal and nonfederal candidates; and it distinguished between groups that support particular federal candidates and those that lend general party support.
The court noted that the FEC conceded that there was no evidence of direct GOPAC support to specific federal candidates in 1989 and 1990. The record indicated that GOPAC developed and distributed materials espousing a set of ideas for Republican candidates, including federal candidates. GOPAC also targeted cash contributions to local and state candidates in areas where it hoped this support might indirectly influence the election of other candidates, including federal candidates, on the Republican ticket. GOPAC also provided assistance to Congressman Newt Gingrich in 1989 and 1990. Based on these facts, the Commission concluded that GOPAC's major purpose was the election of candidates. However, the court found it critical that GOPAC's support appeared to have been limited to state and local candidates, to general nationwide dissemination of ideological materials and to Congressman Gingrich in his role as GOPAC chairman and not as a federal candidate. The court therefore ruled in GOPAC's favor and dismissed the FEC's complaint. The Commission deadlocked 3-2 on the staff's recommendation to appeal the decision.
Akins v. FEC
On December 6, 1996, the U.S. Court of Appeals for the District of Columbia
Circuit, sitting en banc (i.e., with all active judges present), ordered
the Commission to reconsider its dismissal of a complaint alleging that
the American Israel Public Affairs Committee (AIPAC) had violated the Act
by failing to register as a political committee. The court said the Commission
should review the complaint based solely on the Act's definition of political
committee, and not the major purpose test.
The ruling reversed both the district court's decision and the initial ruling of a three-judge panel of the court of appeals in the case. In district court, the FEC had successfully argued that precedents in Buckley v. Valeo and FEC v. MCFL held that an organization that receives contributions or makes expenditures in excess of $1,000 becomes a political committee only if its major purpose is influencing federal elections. The appeals court panel affirmed the lower court ruling, but the en banc court decided to rehear the case before all of the active judges of the D.C. Circuit.
Upon rehearing, the appeals court found that the FEC erred in its interpretation of Buckley and MCFL as they relate to the definition of political committee. The court said that both Buckley and MCFL invoked the major purpose test only with reference to independent expenditures. Since AIPAC's activities involved coordinated expenditures (considered to be in-kind contributions), the court concluded that the major purpose precedents did not apply, and that any group must be considered a political committee if it makes coordinated expenditures (or any other type of contribution) exceeding $1,000 in a calendar year.
Advisory Opinion
The major-purpose test was also central to an advisory opinion issued in
1996, which ran contrary to the court's later decision in Akins.
In AO 1996-3, the Commission determined that the Breeden-Schmidt Foundation
was not a political committee because influencing federal elections was
not its major purpose.
The Foundation appeared, at first glance, to be a "political committee" under 2 U.S.C. Sec.431(4)(A) because its contributions to federal candidates exceeded $1,000 in a calendar year. However, the Foundation also made disbursements of significant amounts for nonelection purposes.
In fact, except for the Foundation's first year of operation (1990), when its disbursement programs were not yet fully developed, contributions to federal, state and local candidates constituted no more than 10 percent of the Foundation's total outlays for any one calendar year, and the total contributions for each of the six succeeding years remained under $5,000 per year. None of the other disbursements made by the Foundation was in any way related to election campaigns.
Apart from the contributions, there was no indication that the Foundation's disbursements were related to election campaigns. For example, the Foundation did not appear to distribute materials featuring candidates or members of Congress, recruit candidates for public office or solicit people to assist campaigns for public office.
The Federal Election Campaign Act (the Act) requires political committees to report names, addresses, occupations and employers of people who contribute more than $200 in a year to committee coffers. When reported information on a contributor is incomplete, a committee will be in compliance with the law if it can demonstrate that "best efforts" were used to obtain and report the information. See 2 U.S.C. Sec.431(13), 432(i) and 434(b)(3)(A).
In 1994, the FEC revised its rules at 11 CFR 104.7 to explain the minimum steps a committee had to take in order to demonstrate best efforts. Under the rules, a committee had to place the following statement conspicuously on solicitation materials: "Federal law requires political committees to report the name, mailing address, occupation and name of employer for each individual whose contributions aggregate in excess of $200 in a calendar year." Committees also had to make a stand-alone, follow-up request for contributor information in instances where the contributor failed to respond to the original request or provided incomplete information.
Shortly after the Commission promulgated these rules, the Republican National Committee (RNC), National Republican Senatorial Committee (NRSC) and the National Republican Congressional Committee (NRCC) filed a lawsuit challenging their constitutionality. The district court upheld the rules, noting that they "merely [provide] a 'safe harbor' for any committee that is unable to obtain all of the required information" and impose a "minimal burden" on committees given the strong governmental interest in disclosure of contributor information. (See Annual Report 1994.) The plaintiff committees appealed the decision.
On February 20, 1996, the U.S. Court of Appeals for the District of Columbia Circuit affirmed most of the district court's decision,2 finding only the particular wording of the mandatory language prescribed in the regulation to be misleading and therefore contrary to law. The language was inaccurate, the court said, because the Act does not require committees to report full contributor information for each donor; rather, it only requires them to undertake "best efforts" to obtain and report it. The court found that 11 CFR 104.7(b) had the effect of forbidding a more accurate paraphrasing of the law, such as: "Federal law requires us to use our best efforts to collect the information."
Additionally, the mandatory language was misleading, the court said, because it led readers to infer that federal law required contributors to disclose this information. In fact, neither the Act nor any other federal law requires contributors to do so.
In light of the court's decision, the Commission published a Notice of Proposed Rulemaking on October 9, 1996, seeking comments on proposed revisions to its best efforts regulations. The revisions would require committees to include an accurate statement of the law's requirements in all solicitations. The Notice offered two examples that would satisfy the notice requirement and sought comment on whether it would be preferable to require political committees to use one or the other. The examples were:
Committees could substitute their own wording for the "best efforts" statement as long as it complied with federal guidelines.
Another proposed change to the regulations would clarify that, in the event that a separate segregated fund (SSF) had incomplete contributor information, it would be expected to report contributor information that its connected organization already had.
The Federal Election Campaign Act prohibits the use of excess campaign funds to pay for personal expenses. 2 U.S.C. Sec.439a. During 1996, the Commission received a number of advisory opinion requests concerning the personal use of campaign funds, following the Commission's promulgation of regulations on this matter in 1995. The Commission had revised its rules to clarify what is meant by "personal use" of campaign funds. The regulations differentiate campaign and officeholder expenses from unlawful personal use expenses.
Under 11 CFR 113.1(g), the personal use ban applies to expenses that would exist irrespective of the campaign or officeholder duties. The regulations list specific expenses that are considered per se (or automatic) personal use expenses, which cannot be defrayed with campaign funds. The rules state that the Commission will address payments for legal services, meals, travel, vehicles and mixed-used expenses on a case-by-case basis. The requests for advisory opinions fell within these areas.
Advisory Opinions
In response to these requests, the Commission issued numerous advisory opinions
that clarified how the personal use rules applied to specific situations:
As explained earlier in this chapter, corporations are prohibited from making contributions or expenditures in connection with a federal election. 2 U.S.C. Sec.441b. But the FECA exempts from this prohibition those disbursements that are made for "any news story, commentary, or editorial distributed through the facilities of any broadcasting station...unless such facilities are owned or controlled by any political party, political committee, or candidate." 2 U.S.C. Sec.431(9)(B)(i). Thus, a bona fide news entity is free to publish or broadcast candidate-related material contained in news stories and editorials as long as it is not owned or controlled by a party, a political committee or a candidate. In 1996, the Commission promulgated new regulations to clarify that the news story exemption also applies to cable television organizations. (The rules also permit cable stations to stage candidate debates.)
In three 1996 advisory opinions, the Commission determined that the requesting organizations were eligible for the news story exemption, but in a fourth opinion, the requester did not qualify.
In AO 1996-16, the Commission determined that the on-line, television and radio entities of Bloomberg, L.P., qualified as press entities. As such, they were entitled to the news story exemption at 2 U.S.C. Sec.431(9)(B)(i) and could conduct their proposed Electronic Town Meetings with Presidential candidates.
Similarly, in AO 1996-41, the Commission permitted A.H. Belo Corporation, in conjunction with PBS affiliate stations, to produce and broadcast television programs that featured candidates for federal and state office.
Belo owned seven television stations in six states and, in conjunction with PBS affiliates in each of the areas, proposed to feature congressional and gubernatorial candidates who were running in districts that encompassed viewing audiences of the various stations. Belo satisfied the basic criteria for the news exemption. It was a bona fide press entity as described in FEC regulations. None of Belo's seven television stations was owned by a political party, committee or candidate, and all appeared to be actively involved in local news coverage. And Belo's proposal constituted valid activity as a press entity.
The Commission reached the same conclusion in AO 1996-48. The National Cable Satellite Corporation's (NCSC) two cable television networks--C-SPAN and C-SPAN 2--qualified for the news story exemption and could, as a result, air candidate biographies and campaign commercials as part of their regular programming to cover the campaigns. The Commission found that NCSC qualified as a broadcaster within the meaning of the press exemption and did not appear to be controlled by any party, political committee or candidate.
In a somewhat different situation, the Commission determined in AO 1996-2 that Compuserve's plan to provide free on-line accounts to federal candidates would constitute an illegal corporate contribution. While the news story exemption was not the focal point of the Commission's analysis, the opinion noted that Compuserve would not qualify as a bona fide news entity for purposes of the news story exemption. (Compuserve's plan also fell outside the exemption for corporate discounts made in the ordinary course of business, since that exemption does not permit corporations to provide valuable goods and services free of charge.)
In AOs 1996-36 and 1996-37, the Commission addressed questions concerning the application of contribution limits to elections held in Congressional districts redrawn by court order during the course of the campaign.
On August 5, 1996, the United States District Court for the Southern District of Texas redrew the boundaries of 13 Congressional districts due to a previous court decision that three of those districts were the result of racial gerrymandering. Vera v. Bush. The court ordered that special general elections--open to all candidates--be held on November 5 in those districts. If no candidate received a majority of the votes in the November 5 special election, a special runoff election would be held in that district on December 10, 1996, between the top two vote-getters in the November 5 election.
In response to requests from candidates running in the special election, the Commission identified four separate sets of contribution limits that might apply to a given candidate. Separate limits would apply to: (1) the March 12 primary; (2) a "defunct" general election campaign that ended August 5 (the date of the court decision); (3) a November 5 special general election (open to all candidates, not just March 12 primary winners); and (4) a December 10 runoff (if the candidate participated in a runoff). Coordinated party expenditures made on or before August 5 would not count against the $30,910 limit for the November 5 special general election in each district. There would not be a separate coordinated party expenditure limit for the December 10 runoff.
Under 2 U.S.C. Sec.438(a)(4), the FEC must make disclosure reports and other statements filed with it available for public inspection and copying within 48 hours of receipt. The Act also requires political committees to identify each individual whose aggregate contributions exceed $200 in a calendar year by listing their name, mailing address, occupation and employer. 2 U.S.C. Sec.434(b)(3)(A).
The statute tries to balance the public disclosure of campaign finance information against the need to protect the privacy of individual contributors. To that end, any information pertaining to the names and addresses of individual contributors that is taken from the reports or other statements filed with the Commission may not be sold or used for the purpose of soliciting contributions or for commercial purposes. 2 U.S.C. Sec.438(a)(4).
D.H. Blair & Co. Inc., a New York City brokerage firm, agreed to pay a $100,000 civil penalty after some of its employees used political committee contributor lists for commercial purposes. MUR 4320. The lists were used as a source for making "cold calls" to potential clients, in violation of the Act's "sale and use restriction."
Background
Beginning in late 1994, an employee of the FEC's Public Disclosure Division
noticed an unusual pattern of telephone requests from brokerage firm employees
for lists of individual contributors. The Disclosure Division referred the
matter to the Office of General Counsel, and the Commission voted to conduct
an investigation. Prior to the Commission's finding probable cause to believe
the law had been violated, Blair agreed to enter into a conciliation agreement
with the Commission. In addition to paying the civil penalty, Blair agreed
to:
In an effort to educate the brokerage community, the Commission also approved sending informational letters about the sale and use restriction in the Act to three organizations with oversight over the securities industry--the Securities and Exchange Commission, NASD Regulation Inc. and the New York Stock Exchange--and to four brokerage firms where employees were identified as having requested contributor lists from the FEC's Public Records Office.
During 1996, the Commission faced several court challenges pertaining to its enforcement activity. Most concerned the timeliness of FEC actions.
Under 2 U.S.C. Sec.437g(a)(8)(A), anyone who files a complaint with the FEC may seek court intervention if the FEC fails to complete action on the complaint within 120 days. On April 17, 1996, the U.S. District Court for the District of Columbia ruled that the FEC acted contrary to law when, pursuant to its enforcement priority system, it allowed nearly 600 days to pass without taking any meaningful action on an administrative complaint filed by the Democratic Senatorial Campaign Committee (DSCC).
The court reasoned that while FEC decisions concerning whether to conduct an investigation were entitled to judicial deference, the agency's failure to consider a complaint for nearly 600 days was subject to judicial review.
The criteria the court used to review the FEC's inaction are outlined in Rose v. FEC (1984) and Telecommunications Research & Action Center v. FCC (1984); they are:
Based on its analysis of the factors listed above, the court ruled that the FEC's failure to consider the DSCC's complaint for nearly 600 days was contrary to law. The court noted, however, that while this litigation was pending, the FEC had moved forward with respect to the DSCC's complaint. The court warned that should the FEC stall on this matter again, "the need for additional judicial intervention may well be compelling."
In September, the DSCC sought additional judicial intervention, asking the court again to order the FEC to complete the consideration of its complaint within 30 days or give the DSCC the authority to file a civil action against the NRSC.
On November 25, 1996, the court denied the request, concluding that the FEC's actions did not yet constitute a failure to act that was contrary to law. The court based its ruling, in part, on the FEC's considerable work load, lack of resources and competing priorities.
The court noted that the statute of limitations period in which the Commission could file an enforcement suit on some of the violations alleged in the DSCC's administrative complaint was coming to a close. As a result, the court ordered the FEC to file status reports on its progress on the complaint every 30 days and scheduled a March status conference for the FEC and the DSCC in the event that the matter had not been resolved by then.
In another case, a U.S. District Court in Texas dismissed Congressman Stephen E. Stockman's claim that the FEC had unreasonably delayed its investigation into his 1994 campaign (MUR 3847).
The court considered several facts in reaching this decision:
In granting summary judgment to the FEC, the court said that the agency's delay in resolving MUR 3847 was not unreasonable. Moreover, the court said, "There is no evidence showing that the time spent to investigate this matter is a product of anything other than the excessive demands on a strapped federal agency."
Another enforcement-related case involved the 60-day period in which a complainant may petition for judicial review of an FEC decision to dismiss an administrative complaint. 2 U.S.C. Sec.437g(a)(8)(B). The U.S. Court of Appeals for the District of Columbia Circuit found that Absalom Jordan did not file his petition within that time frame, and remanded the case to district court for dismissal. Mr. Jordan did not file suit with the district court until 63 days after the FEC had voted to dismiss his complaint.
1 A regulation that contains unconstitutional provisions must be stricken in its entirety unless that which remains after the unconstitutional provisions are excised is fully operative as law and the body enacting the regulation would have enacted the constitutional provisions even in the absence of those which are unconstitutional.
2 On January 6, 1997, the Supreme Court denied a petition for certiorari submitted by the party committees.