FEC Seal

HOME / ABOUT THE FEC / COMMISSIONERS / FORMER COMMISSIONERS / COMMISSIONER SCOTT E. THOMAS / STATEMENTS AND OPINIONS

BEFORE THE FEDERAL ELECTION COMMISSION

In the matter of

Americans for Tax Reform MUR 4204

 

STATEMENT OF REASONS

 

VICE CHAIRMAN JOHN WARREN MCGARRY

COMMISSIONER SCOTT E. THOMAS

COMMISSIONER DANNY LEE MCDONALD

 

 

            The facts in MUR 4204 are very simple.  An organization subject to the prohibitions of 2 U.S.C. 441b ran a radio advertisement attacking a candidate in a hotly contested race for Federal office.  In creating this ad, the organization used the same vendor employed by the opposing candidate’s party operatives.  We agreed with the legal analysis and recommendation of the Office of General Counsel that the ad constituted “express advocacy” and that even if it didn’t, the evidence of coordination should be pursued.

 

            Commissioners Aikens and Elliott disagreed that the ad contained “express advocacy” and blocked an investigation into the coordination question.  In their opinion, such a communication was simply an “issue ad” and, apparently, coordination was irrelevant.  By their votes in this matter, Commissioners Aikens and Elliott have given a green light to this sort of electioneering.  They have sent a clear message to the regulated community that such activity will remain unquestioned and unchallenged by the Federal Election Commission.

 

I.

 

            Americans for Tax Reform, Inc. (“ATR”) identifies itself as a non-profit membership organization established to promote lower tax rates.  ATR contacts federal candidates and urges them to sign its voter “pledges.”  It informs candidates that it will publicize their responses.  ATR then informs voters whether specific federal candidates signed their pledges through media advisories and radio advertisements.  ATR distributed two pledges-- the “Taxpayers Protection Pledge” and the “Health Care Protection Pledge”-- in connection with the election in Kentucky’s Second Congressional District on May 24, 1994.  As a corporation, ATR may not use its corporate funds to make any “contribution or expenditure in connection with any [federal] election.”  2 U.S.C. 441b.

 

            On June 10, 1994, the Democratic Congressional Campaign Committee (“DCCC”) filed a complaint with the Federal Election Commission alleging that Americans for Tax Reform, Inc. had violated FECA.  The DCCC alleged  that ATR had engaged in activity “designed to influence federal elections without complying with the source restrictions, contribution limits and disclosure requirements” of the statute.  In their complaint, the DCCC enclosed newspaper articles detailing particular ATR activities in Kentucky.

 

            In April of 1995, the Office of General Counsel prepared a report for Commission consideration that contained a factual and legal analysis of the allegations presented in the complaint as well as a response to the complaint received from Americans for Tax Reform. The General Counsel’s Report recommended that the Commission find reason to believe ATR violated 2 U.S.C. 441b by making prohibited expenditures of corporate funds in connection with a federal election.  The General Counsel’s Report reasoned  ATR had run a radio advertisement on May 22, 23 and 24, 1994, which expressly advocated the election of a clearly identified candidate. The General Counsel’s Report also disclosed information suggesting ATR may have been coordinating its anti-tax pledges and media advisories with federal candidates.  As an alternative to a corporate violation of 441b, the General Counsel’s Report recommended that the Commission find reason to believe ATR violated 2 U.S.C. 433(a) and 434(a) and (b) for failing to register as a political committee and report its receipts and disbursements.  Finally, the General Counsel’s Report recommended that an investigation of the matter be conducted through interrogatories and requests for production of documents. 

 

            On April 18, 1995, the Commission approved the General Counsel’s recommendation to find reason to believe that ATR violated 441b.  Commissioners McDonald, McGarry, Potter and Thomas supported the recommendation and Commissioners Aikens and Elliott opposed it.  The Commission postponed for one week, however, its final consideration of the legal analysis supporting the 441b finding. On April 25, 1995, a motion to adopt the General Counsel’s conclusion that the radio ad violated 441b because it constituted express advocacy failed to secure the four affirmative votes needed.  2 U.S.C. 437g(a)(2).  Commissioners Thomas, McDonald and McGarry supported the General Counsel’s recommendation, and Commissioners Aikens and Potter opposed the recommendation, with Commissioner Elliott absent.  The Commission approved, however, pursuing the 441b violation on the theory of a coordinated in-kind contribution by a vote of four to one with Commissioners Aikens opposing and Commissioner Elliott absent.

 

            After conducting its investigation, the Office of General Counsel prepared another report for Commission consideration.  In light of evidence gathered during its investigation and in order to resolve remaining unanswered questions, the report recommended that the Commission approve subpoenas and orders for further discovery.  In addition, given new evidence related to these activities, the report made reason to believe recommendations against several candidate committees that were involved.

 

            On September 25 and October 1, 1996, the Commission considered the General Counsel’s Report.  Commissioners Aikens and Elliott indicated that they opposed the General Counsel’s recommendations and that they wished to close the matter.  In an attempt to salvage the case by narrowing its scope, Commissioner Thomas moved that  the Commission find reason to believe only one candidate committee violated 441b and that the Commission just investigate the possible coordination related to the radio ad.  Even this limited effort, however, was rejected, with the motion failing by a vote of three to two--Commissioners Aikens and Elliott opposing.  The Commission then voted to close the matter.

 

            We believe our colleagues erred in at least two respects.  First, we think it clear that the radio advertisement constituted “express advocacy” and, thus, was prohibited under 2 U.S.C. 441b.  Second, the Commission has a responsibility at the very least to investigate whether the radio advertisement, with its obvious electioneering message, was coordinated with the candidate’s campaign committee.  Indeed, even without the additional investigation there already were strong indications the radio advertisement was coordinated and, accordingly, prohibited under 441b. By their opposition to the General Counsel’s legal recommendations, Commissioners Aikens and Elliott have once again signaled that they are unwilling to pursue and investigate such communications so long as the sponsoring organization can assert that the communications are “issue ads.”

 

II.

 

            Under the Act, corporations and labor organizations may not make contributions or expenditures from their treasury funds in connection with federal campaigns, and candidates and their campaign committees may not accept such prohibited contributions or expenditures.  2 U.S.C. 441b.  In Federal Election Commission v. Massachusetts Citizens for Life, 479 U.S. 238 (1986)(“FEC v. MCFL”), the Supreme Court interpreted 441b to mean that expenditures for communications not coordinated with a candidate’s campaign must constitute “express advocacy” in order to be subject to the 441b prohibition.  As a result of FEC v. MCFL, independent corporate or labor union communications that do not contain express advocacy are allowed under the Act.  After reviewing the applicable case law, the text of the ATR radio advertisement, and the circumstances surrounding its broadcast, we believe the radio advertisement asks the general public to support and vote for a specific federal candidate.

 

A.

 

            In creating the express advocacy standard, the Supreme Court in Buckley v. Valeo, 424 U.S. 1 (1976)(“Buckley”), sought to draw a distinction between issue advocacy and partisan advocacy focused on a clearly identified candidate.  The Buckley Court upheld as constitutional certain reporting requirements on expenditures made by individuals and groups that were  “not candidates or political committees,” 424 U.S. at 80, but expressed its concern these reporting provisions might be applied broadly to communications that discussed public issues which also happened to be campaign issues.  In order to ensure  expenditures made for pure issue discussion would not be reportable under the Act, the Buckley Court construed these reporting requirements “to reach only funds used for communications that expressly advocate the election or defeat of a clearly identified candidate.”  Id. (emphasis added).

 

            As a result, the Buckley Court explained the purpose of the express advocacy standard was to limit application of the pertinent reporting provision to “spending that is unambiguously related to the campaign of a particular federal candidate.”  424 U.S. at 80 (emphasis added); see also 424 U.S. at 81 ( Under an express advocacy standard, the reporting requirements would “shed the light of publicity on spending that is unambiguously campaign related. . . .”)(emphasis added).  The Court, however, provided no definition of what constituted “spending that is unambiguously related to the

campaign of a particular federal candidate” or “unambiguously campaign related.”  The Buckley Court only indicated that express advocacy would include communications containing such obvious campaign related words or phrases as “‘vote for,’ ‘elect,’ ‘support,’ ‘cast your ballot for,’ ‘Smith for Congress,’ ‘vote against,’ ‘defeat,’ ‘reject.’”  424 U.S. at 44 n.52 and at 80 n.108.

 

            In FEC v. MCFL, supra, the Supreme Court clarified the scope of the express advocacy standard.  The Court indicated that a communication could be considered express advocacy even though it lacked the specific buzzwords or catch phrases listed as examples in Buckley.  The Court explained that express advocacy could be “less direct” than the examples listed in Buckley so long as the “essential nature” of the communication “goes beyond issue discussion to express electoral advocacy.”  479 U.S. at 249.

 

            Similarly, in FEC v. Furgatch, 807 F.2d 857, 863 (9th Cir.), cert. denied, 484 U.S. 850 (1987)(“Furgatch”), the Ninth Circuit concluded that a communication could constitute express advocacy even though it did not contain any of the catch phrases listed in Buckley.  The court noted that the list in Buckley “does not exhaust the capacity of the English language to expressly advocate the election or defeat of a candidate.”  807 F.2d at 863.  The court found that “speech need not include any of the words listed in Buckley to be express advocacy under the Act,”  807 F.2d at 864, and that “‘express advocacy’ is not strictly limited to communications using certain key phrases.”  807 F.2d at 862.  The court pointed out that such a wooden and mechanical construction would invite and allow for the easy circumvention of the Act.  Id.

 

            Rather than rely on the inclusion or exclusion of certain “magic words” for determining whether a particular communication contained express advocacy, the Furgatch court concluded that for a communication “to be express advocacy under the Act . . . it must, when read as a whole, and with limited reference to external events, be susceptible of no other reasonable interpretation but as an exhortation to vote for or against a specific candidate.”  807 F.2d at 864 (emphasis added).  In defining “express advocacy” under this standard, the court considered the following factors:

 

First, even if it is not presented in the clearest, most explicit language, speech is “express” for present purposes if its message is unmistakable and unambiguous, suggestive of only one plausible meaning.  Second, speech may only be termed “advocacy” if it presents a clear plea for action, and thus speech that is merely informative is not covered by the Act.  Finally, it must be clear what action is advocated.  Speech cannot be “express advocacy” . . .  when reasonable minds could differ as to whether it encourages a vote for or against a candidate or encourages the reader to take some other kind of action.

 

Id.

 

B.

 

            On May 22, 23, and 24, 1994, ATR ran a radio advertisement in connection with the Kentucky Congressional race between Ron Lewis and Joe Prather.  The advertisement  literally was broadcast in the hours just before the May 24, 1994 election.  A script of the ad reads:

 

On Tuesday, May 24, Second District Kentuckians will choose who will be their voice in the critical debates on health care reform in Washington.  Bill Clinton has put forward a plan that mandates costs on businesses, establishes price controls that will lead to rationing, limits choices that health care consumers now enjoy and, under many names and guises, raises taxes.  Ron Lewis has signed a pledge to vote against any such plan that adds up to more government.  But. . . Joe Prather won’t.  So you need to call Joe Prather.  You need to call him now at (502) 765-2600 and urge him to support a pro-market, pro-consumer health care reform. . .Because his vote could be critical, so is your phone call (502) 765-2600.  A message paid for by Americans for Tax Reform.

 

April 6, 1995 General Counsel’s Report at 19.

 

            We have no doubt that these advertisements, produced and paid for by ATR, are “unambiguously related to the campaign of a particular federal candidate.”  Buckley, 424 U.S. at 80.  The advertisement identifies the congressional office for which an election is being held, names the candidates for that office, provides the date of the election, and indicates that voters “will choose” who will be “their voice” on election day.  Against this election related backdrop, the advertisement then provides a head-to-head comparison of the opposing candidates and clearly indicates which candidate is favored and which candidate is not.  In view of these considerations, we believe that “when read as a whole . . . [the radio advertisement] is susceptible of no other reasonable interpretation but as an exhortation to vote for or against a specific candidate.”  807 F.2d at 864.

 

            As in Furgatch, “our conclusion is reinforced by consideration of the timing” of the advertisement.  807 F.2d at 865.  In Furgatch, the court noted that the newspaper ad criticizing President Carter failed “to state expressly the precise action called for, leaving an obvious blank that the reader is compelled to fill in.”  Id.  The court went on to find, however, the advertisement constituted express advocacy partly because “[t]iming the appearance of the advertisement less than a week before the election left no doubt of the action proposed.”  Id. (emphasis added).

 

            In this case, not only did ATR start running its advertisement just two days before the election, but it also ran the advertisement on election day itself.  It appears that as soon as the election was over, moreover, it stopped running the radio advertisement. We believe  here, as in Furgatch, the timing of the radio advertisement leaves “no doubt of the action proposed.”  Id. (emphasis added).  In our opinion the radio advertisement conveyed a message to the voting public that unmistakably urged the election or defeat of clearly identified candidates.  Accordingly, we concluded that the advertisement constituted express advocacy and that ATR made a prohibited expenditure in violation of 2 U.S.C. 441b.

 

            In so finding, we do not accept Commissioner Aikens and Elliott’s argument that the radio advertisement falls short of express advocacy because it fails to contain certain words or phrases of exhortation such as “Vote against Joe Prather because he won’t sign the pledge.”  Indeed, the Furgatch court specifically rejected this argument since “an entity may give a clear impression that is never succinctly stated in a single phrase or sentence.”  807 F.2d at 863.  Furgatch clearly stated that “[T]he court is not forced under this standard to ignore the plain meaning of campaign-related speech in search of certain fixed indicators of ‘express advocacy.’” 807 F.2d at 864.  See FEC v. MCFL, 479 U.S. at 249 (“The fact that this message is marginally less direct than “Vote for Smith” does not change its essential nature.”)

 

            The limited and crabbed construction of express advocacy espoused by Commissioners Aikens and Elliott in MUR 4204 virtually invites clever political consultants to package hard-hitting political ads which, nevertheless, fall short of express advocacy because they easily avoid the use of certain magic words or phrases.  The Furgatch court recognized this when it wrote:

 

A test requiring the magic words ‘elect,’ ‘support,’ etc., or their nearly perfect synonyms for a finding of express advocacy would preserve the First Amendment right of unfettered expression only at the expense of eviscerating the Federal Election Campaign Act. ‘Independent’ campaign spenders working on behalf of candidates could remain just beyond the reach of the Act by avoiding certain key words while conveying a message that is unmistakably directed to the election or defeat of a named candidate.

 

807 F.2d at 863.  The ATR radio advertisement is at the core of express advocacy.  By finding that the Americans for Tax Reform ad was not express advocacy, Commissioners Aikens and Elliott effectively have provided a road map to other organizations who now can spend without limit in closely fought federal races and stay outside both the disclosure requirements and the prohibitions of the law.[1]

 

 

III.

 

            Even if the ATR radio advertisement did not constitute express advocacy, there is still strong evidence ATR violated the prohibitions of 2 U.S.C. 441b.  Under the statute, expenditures are treated as contributions and thus are prohibited by 441b if they are made in cooperation, consultation or concert with a candidate, a candidate’s authorized committee or their agents.[2]  Moreover, the statute prohibits any candidate or committee from knowingly accepting such prohibited contributions.  2 U.S.C. 441b.  The record in MUR 4204 indicates ATR may have coordinated the radio advertisement with candidate Ron Lewis.  The Office of General Counsel recommended that the Commission investigate further to determine whether there was coordination.  Commissioners Aikens and Elliott, however, did not want to consider the issue and blocked the investigation.

 

            Commission regulations presume an expenditure has been coordinated with a candidate when the expenditure is :

 

(A)   Based on information about the candidate’s plans, projects, or needs provided to the expending person by the candidate, or by the candidate’s agents, with a view toward having the expenditure made;

 

(B)   Made by or through any person who is, or has been, authorized to raise or expend funds, who is, or has been, an officer of an authorized committee, or who is, or has been, receiving any form of compensation or reimbursement from the candidate, the candidate’s committee or agent.

 

11 C.F.R. 109.1(b)(4)(i)(emphasis added). Thus, if ATR used a person who previously  received or currently was receiving compensation from the campaign committee of candidate Lewis or his agent, any ATR expenditure in support of Mr. Lewis, or in opposition to his opponent, would be presumed to be coordinated and, thus, an in-kind contribution to the Lewis campaign.  See FEC v. National Conservative Political Action Committee, (“NCPAC) 647 F.Supp. 987 (S.D.N.Y. 1986)(Court finds that there was coordination where NCPAC, an “independent” committee, used the same vendor as the candidate committee that was aided by NCPAC’s expenditures).  See also Advisory Opinion 1979-80, 1 Fed. Elec. Camp. Fin Guide (CCH)  5469 (“the time-buyer’s continued work for NCPAC would compromise NCPAC’s ability to make independent expenditures in opposition to the Democratic candidate.”); Advisory Opinion 1982-20, 1 Fed. Elec. Camp. Fin Guide (CCH) 5665. 

 

            In MUR 4204, there is evidence ATR used the same vendor for its “Will Choose” radio advertisement that the National Republican Congressional Committee (“NRCC”) used on behalf of Mr. Lewis, who was the party nominee at the time.  The NRCC reported the expenditures for its pro-Lewis ads, totaling $58,590, were coordinated party expenditures made on behalf of Lewis.  It appears that in making such expenditures the NRCC was acting as Mr. Lewis’ agent.  As described above, the Commission’s regulations and precedent presume coordination if an expenditure is made by a person that is being compensated by the candidate or the candidate’s agent.  11 C.F.R. 109.1(b)(4)(i)(B).  Accordingly, there is a presumption that the Lewis campaign,  through its agent the NRCC, coordinated with ATR through the use of a common vendor, thus making a prohibited corporate contribution to that campaign.

 

            Despite the statute, Commission regulations, precedent, and case law, Commissioners Aikens and Elliott voted against pursuing this matter.  By their actions, it appears Commissioners Aikens and Elliott once again have decided not to enforce the coordination provisions built into the law-- this time when common vendors are involved.[3] 

IV.

 

            In MUR 4204, Commissioners Aikens and Elliott refused to pursue a violation of 2 U.S.C. 441b on either an express advocacy theory or on coordination grounds.  Despite overwhelming evidence in support of either approach, they decided simply to drop this matter and take no action against Americans for Tax Reform.  Having found that the ATR radio advertisement falls outside the reach of the statute, it is virtually impossible to think of any set of circumstances under which Commissioners Aikens and Elliott might find that an asserted “issue ad” was in violation of the statute.

 

            The consequences of Commissioners Aikens and Elliott’s approach to this and other cases are serious.  They have provided an outlet for illegal money in the campaign finance system.  By finding that advertisements such as those run by Americans for Tax Reform do not meet their definition of express advocacy or impermissible coordination, Commissioners Aikens and Elliott have countenanced a large loophole which permits corporations and labor organizations to spend unlimited sums on federal candidates outside of the law’s prohibitions and reporting requirements.  These results are not compelled by the courts and reflect an abdication of the FEC’s responsibility.

 

            12/10/96                                                          / s /

_____________________                              ____________________________________

Date                                                                 John Warren McGarry

                                                                        Vice Chairman

 

            12/10/96                                                          / s /

_____________________                              ____________________________________

Date                                                                 Scott E. Thomas

                                                                        Commissioner

 

            12/10/96                                                          / s /

_____________________                              ____________________________________

Date                                                                 Danny Lee McDonald

                                                                        Commissioner

 



[1]               MUR 4204 is not unique.  Through the years, Commissioners Aikens and Elliott, along with Commissioners Potter or Josefiak, repeatedly have blocked finding express advocacy in such ads.  Perhaps the best example of their approach can be found in MUR 3616 (Nita Lowey for Congress), where they found that an advertisement featuring the candidate’s name, picture and campaign slogan, and paid for by the candidate’s campaign committee and published the month before the election was not express

advocacy.  See also MUR 3162 (Citizens for Informed Voting in the Commonwealth); MURs 3167/3176 (Christian Coalition); MUR 3376 (Gerry Studds for Congress Committee); and MUR 3678 (Clyde Evans).

 

 

[2]              The Act defines the term “independent expenditure” to mean:

 

an expenditure by a person expressly advocating the election or defeat of a clearly identified candidate which is made without cooperation or consultation with any candidate, or any authorized committee or agent of such candidate, and which is not made in concert with, or at the request or suggestion of, any candidate, or any authorized committee or agent of such candidate. 

 

2 U.S.C. 431(17)(emphasis added).  This definition makes clear that coordinated expenditures by corporations, which are made in “cooperation or consultation” with a federal candidate or his or her campaign committee, cannot qualify as “independent expenditures” and must therefore be treated as in-kind contributions under 441b.  As the Supreme Court in Buckley indicated, an independent expenditure  is made “totally independently of the candidate and his campaign.”  Buckley, 424 U.S. at 47 (emphasis added).  See 2 U.S.C. 441a(a)(7)(B)(i)(Expenditures made “in cooperation, consultation, or concert,  with, . . . a candidate, his authorized political committees, or their agents, shall be considered to be a contribution to such candidate.”)

 

[3]               MUR 4204 is not unique.  Commissioners Aikens and Elliott also repeatedly have refused to proceed on a coordination theory in prior enforcement matters.  See, e.g., MUR 2272 (American Medical Association Political Action Committee and Williams for Congress Committee); MUR 2766 (Auto Dealers and Drivers for FreeTrade PAC and Friends of Connie Mack); and MUR 3069 (National Security Political Action Committee and Bush-Quayle ‘88); and MUR 4282 (Archdiocese of Philadelphia and Santorum ‘94 Committee).