Commissioner Thomas Statement for the Record in Audits of Clinton/Gore and Dole/Kemp Campaigns

Our colleagues, Commissioners Sandstrom, Wold, Elliott and Mason, recently joined in what must be seen as a very odd Statement of Reasons regarding the audits of the 1996 Clinton and Dole campaigns.[1] Little is written of the audits. Instead, the thrust of their statement is a tirade against an innocuous shorthand reference the Commission coined in Advisory Opinion 1985-14[2] to analyze whether party communications are subject to the statutory limits on support of particular candidates. The energy expended by our colleagues to savage the Commission’s own advisory opinion process is surprising. The strangest aspect of the Sandstrom et al. Statement, though, is that it claims to abhor vagueness but, in the end, is itself very confusing.

We write this Statement to explain the state of the law in this area, and to clarify that the Sandstrom et al. Statement does not effect a ‘sea change’ when analyzing which party communications should be subjected to the statutory limits on coordinated expenditures. In particular, we wish to emphasize that ‘express advocacy’ is not required.

The limits on coordinated expenditures by party committees on behalf of their candidates have been on the books for over 24 years. They were part of the Federal Election Campaign Act Amendments of 1974.[3] In addition to the $5,000 per election contribution limit available to all political committees,[4] parties have coordinated expenditure allowances permitting additional spending in connection with the general election campaigns of their candidates.[5]

The party coordinated expenditure limits serve an important role in preventing party donors from having an indirect way of effecting a ‘quid pro quo’ arrangement with candidates for federal office-- the link between money and official government action the statute is designed to prevent. If a party committee is able to undertake only a limited amount of coordinated expenditure activity on behalf of a particular candidate, donors or groups of donors will not be able to expect large-scale donations to the party to result in large-scale spending by the party on behalf of such candidate. For example, ten banking industry PACs who donate $15,000 each to a party’s House campaign committee and who are close to a particular House committee chairman running for reelection would not be able to expect $150,000 in coordinated expenditures by the party on behalf such candidate because the coordinated expenditure limit would prevent it.

The direct payment of funds to a candidate’s campaign has been treated as a “contribution”[6] subject to the contribution limit. A party’s coordinated payment to a third party on behalf of a candidate has been treated as either an in-kind “contribution” or a coordinated “expenditure,”[7] at the option of the expending committee.[8] If treated as a coordinated expenditure, the party has to
keep within the coordinated expenditure limit, but only the party need report the transaction.[9]

Because party committees are primarily in the business of electing candidates, the Commission has required virtually all party-building activity to be at least allocated so that indirect federal candidate support is not paid for with funds not permitted under federal law.[10] At the same time, recognizing party committees sometimes undertake generic party-building activities that may help their candidates only in a general way-- a way that should not result in a contribution to or coordinated expenditure on behalf of a particular candidate-- the Commission has tried to clarify when a party activity need not be subjected to a candidate-specific limitation. Thus, the Commission has specified at 11 C.F.R. § 106.1(c) that an expenditure for rent, personnel, overhead, general administrative costs, educational campaign seminars, training of campaign workers, or registration or get-out-the-vote drives need not be attributed to individual candidates unless the expenditure is “made on behalf of a clearly identified candidate, and the expenditure can be directly attributed to that candidate.”

When identifying which party activities fall under the candidate-specific limits, though, the Commission must deal first and foremost with the underlying statutory terms. A “contribution” is a payment or gift of value made “for the purpose of influencing any election for Federal office.”[11] A coordinated “expenditure” is a payment, advance or gift of anything of value made “for the purpose of influencing any election for Federal office” and “in connection with the general election campaign” of a candidate for Federal office.[12]

Over the years, the Commission has grappled with the difficult factual distinctions that make a party communication a generic party-building expenditure on the one hand, or an in-kind contribution or coordinated expenditure on the other. The best-known instances were Advisory Opinion 1984-15[13] and the aforementioned Advisory Opinion 1985-14. In each of those opinions, the Commission analyzed the facts according to the basic underlying statutory provisions cited above.

In Advisory Opinion 1985-14, the Commission developed a shorthand reference to the legal analysis to be used. Instead of repeating the statutory phrases, “for the purpose of influencing” and “in connection with,” the Commission described the process as a search for whether the communication
contained an “electioneering message.” [14] The Commission then cited a Supreme Court decision for further guidance as to what was meant by “electioneering message.”[15] There, the Court simply described its view of the reach of the corporate and union prohibition at 2 U.S.C. § 441b: whether a communication is “designed to urge the public to elect a certain candidate or party.”[16] This phrasing, of course, is virtually indistinguishable from the “for the purpose of influencing any election for Federal office” language at the heart of any “contribution” or “expenditure” inquiry. Thus, at most, the Commission in Advisory Opinion 1985-14 was paraphrasing the statutory language underlying any coordinated party expenditure analysis.

Our colleagues grossly overstate the significance of the “electioneering message” phrase and then gyrate into an inappropriate constitutional hypothesis regarding the vagueness of that phrase and other phrases used in Advisory Opinions 1984-15 and 1985-14. Along the way, they grumble about perceived improper rulemaking through the advisory opinion process.

Dealing with the last ‘red herring’ first, to our knowledge no commissioner has been confused about the legal effect of advisory opinions. While advisory opinions clearly have binding consequences, the statute is clear that general rules of law have to emanate from the statute or from regulations of the Commission.[17] Nonetheless, our colleagues seem convinced that the Commission’s use in Advisory Opinions 1984-15 and 1985-14 of paraphrases and synonyms for the statutory test was, in fact, the creation of a new substantive rule of law.[18] The reality, of course, is that there are only so many words in the English language, and after citing the underlying statutory provisions, the Commission simply attempted to explain the legal test in other helpful ways.[19]

Thus, our colleagues have felled a demon they didn’t need to imagine in the first place. The regulated community has had notice of the underlying statutory provisions at 2 U.S.C. §§ 431(8) and (9) and 441a(d) all along. Advisory Opinions 1984-15 and 1985-14 neither expanded nor diminished those underlying rules of law.

Interestingly, our colleagues do not purport to supersede Advisory Opinions 1985-14 and 1984-15, but rather disagree with the phrasing of the legal analysis therein. We take that to mean the Commission’s conclusions regarding specific proposed ads in those opinions still serve as valid legal precedent in terms of the underlying statute. For example, a party committee that ran ads under materially indistinguishable circumstances could ‘rely upon’ the conclusions reached by a majority of commissioners in those opinions in determining whether the ads would be a coordinated expenditure or not.[20] This rightly diminishes the negative impact of our colleagues’ statement and suggests only that the Commission cease using the pesky “electioneering message” phrase when explaining its interpretations under the statute.

We must address our colleagues’ suggestion that an advisory opinion may not be used as a “sword of enforcement.” Sandstrom et al. Statement at 3. Apparently, they disregard the statutory language quoted in the previous footnote. Someone who receives an advisory opinion that certain conduct would be illegal, as well as anyone in materially indistinguishable circumstances, surely may ‘rely on’ that legal conclusion to file a complaint against someone else engaging that conduct. Essentially, that is what happened when Democratic Party representatives received a response in Advisory Opinion 1985-14 that certain targeted communications attacking a likely opponent would be coordinated expenditures subject to limit. Other Democratic Party representatives then filed a complaint against the Colorado Republican Party regarding certain ads that attacked the likely Senate nominee, Tim Wirth. That enforcement case became the subject of the Supreme Court’s decision in Colorado I, supra.

Our colleagues may have missed the fact that the 10^th Circuit in that case upheld the FEC’s use of Advisory Opinion 1985-14 (even its “electioneering message” phrase) to bolster its claim.[21] Although the Supreme Court vacated the 10^th Circuit’s opinion on other grounds, Colorado I, this is a strong indication advisory opinions can be used as a “sword.”

This proposition is supported by a 9^th Circuit decision, a case our colleagues cite but misconstrue.[22] There, in a successful enforcement action against a committee that accepted excessive contributions, the FEC used its advisory opinion precedent as a “sword,” and the court specifically sanctioned this approach.[23]

The courts have strongly indicated the Commission is bound to apply its advisory opinion precedent consistently.[24] We caution our colleagues not to get so agitated over the use of paraphrases and shorthand references in prior advisory opinions that they issue statements undermining the ability of the agency to enforce the law.

Our colleagues go well beyond their role as commissioners by opining about the possible unconstitutional vagueness and overbreadth of the words “electioneering message.”[25] First, as just explained, everyone should agree that “electioneering message” is not a rule of law and, hence, it is not the proper focus of any constitutional debate. Second, even if it were, Commissioners are not members of the judiciary entitled to render their own rules unconstitutional.[26] It is one thing to interpret the statute in an advisory opinion, or to interpret the
statute through a clarifying regulation.[27] It is altogether different to opine that a mere shorthand reference used to paraphrase the statute is unconstitutional.[28]

That said, we believe it important to note a fundamental flaw in our colleagues’ ‘judicial detour.’ Their reliance on Supreme Court analysis of independent spending provisions is simply inapposite. In the area of coordinated expenditures, there is no basis for applying the “express advocacy” standard created in Buckley[29] and FEC v. Massachusetts Citizens for Life[30] where independent disbursements were at issue. Indeed, Buckley could not have been clearer that its “express advocacy” test did not apply to coordinated expenditures. When analyzing former 18 U.S.C. § 608(e), the independent expenditure limit struck down by the Court, the per curiam opinion noted:

The parties defending § 608(e)(1) contend that it is necessary to prevent would-be contributors from avoiding the contribution limitations by the simple expedient of paying directly for media advertisements or for other portions of the candidate’s campaign activities. They argue that expenditures controlled by or coordinated with the candidate and his campaign might well have virtually the same value to the candidate as a contribution and would pose similar dangers of abuse. Yet such controlled or coordinated expenditures are treated as contributions rather than expenditures under the Act. [footnote omitted] Section
608(b)’s contribution ceilings . . . prevent attempts to circumvent the Act through prearranged or coordinated expenditures amounting to disguised contributions. By contrast, § 608(e)(1) limits expenditures for express advocacy of candidates made totally independently of the candidate and his campaign.[31]

Similarly, in MCFL, the Court made clear that its “express advocacy” construction need only apply to the provision in 2 U.S.C. § 441b “that directly regulates independent spending.”[32]

We can only hope our colleagues’ statement does not get misconstrued by the regulated community and the courts. We note with interest, for example, that one business day after our colleagues’ statement was circulated at the Commission, counsel for the defendant in FEC v. Christian Coalition[33] filed a pleading suggesting its relevance to the issue in that case: whether a corporation made in-kind contributions or independent expenditures prohibited under 2 U.S.C. § 441b. In fact, no allegation in that case involves a claim that depends on the phrase “electioneering message.”[34]

The confusion generated by our colleagues is regrettable. While the Commission’s efforts to apply the in-kind contribution and coordinated expenditure provisions in the statute must focus, as always, on the words of the statute, surely a great deal of energy now will be expended on what to make of the banning of the innocuous “electioneering message” phrase. The answer is, “not much.” Sadly, a lot of explaining will be required to get there.

[1] Statement of Reasons of Vice Chairman Wold and Commissioners Elliott, Mason and Sandstrom issued June 24, 1999 (hereinafter “Sandstrom et al. Statement”).

[2] Fed. Elec. Camp. Fin. Guide (CCH Transfer Binder), ¶ 5819.

[3] Pub. L. 93-443, 88 Stat. 1263, § 101.

[4] Currently codified at 2 U.S.C. § 441a(a)(2)(A).

[5] 11 C.F.R. § 110.7(a)(3), (b)(3). Codified at 2 U.S.C. § 441a(d), the coordinated expenditure allowance provides:

Notwithstanding any other provision of law with respect to limitations on expenditures or limitations on contributions, the national committee of a political party and a State committee of a political party, including any subordinate committee of a State committee, may make expenditures in connection with the general election campaign of candidates for Federal office, subject to the limitations contained in paragraphs (2) and (3) of this subsection.

Subsections (2) and (3) set forth formulas that in the last presidential election permitted a national party committee to spend over $12 million on behalf of its presidential candidate, and that in the 1998 congressional elections permitted a national and state party committee each to spend $32,550 for a House candidate and each to spend amounts ranging from $65,100 in small states like Wyoming to over $1.5 million in California for a Senate candidate.

[6] 2 U.S.C. § 431(8).

[7] 2 U.S.C. § 431(9).

[8] FEC Campaign Guide for Party Committees (1996) at 16. The FEC for many years operated with a presumption that all party spending was coordinated with the parties’ eventual nominees. 11 C.F.R. § 110.7(a)(5), (b)(4) (1996). The Supreme Court invalidated that presumption in Colorado Republican Federal Campaign Committee v. FEC, 518 U.S. 604 (1996) (hereinafter “Colorado I”). As a result, only party spending that can be shown to meet the legal test of ‘coordination’ can be subjected to the limits at 2 U.S.C. § 441a(a)(2)(A) and (d). The legal test for coordination is set forth at 2 U.S.C. § § 431(17) and 441a(a)(7)(B) and at 11 C.F.R. § 109.1(b)(4) and (d)(1).

[9] 11 C.F.R. § 104.3(a)(3)(iii).

[10] 11 C.F.R. § 106.5.

[11] 2 U.S.C. § 431(8).

[12] 2 U.S.C. §§ 431(9) and 441a(d).

[13] Fed. Elec. Camp. Fin. Guide (CCH Transfer Binder), ¶ 5766

[14] Fed. Elec. Camp. Fin. Guide (CCH Transfer Binder), ¶5819 at 11,185.

[15] United States v. United Auto Workers, 352 U.S. 567 (1957) (hereinafter “UAW”).

[16] Id. At 587.

[17] 2 U.S.C. §437f(b).

[18] At one point our colleagues call the phrases used a “test” and at other times they refer to them as an “amalgam.” Sandstrom et al. Statement at 2 and 4.

[19] Lest our colleagues be struck down by a bolt of lightning for insinuating they would never stoop to helpful descriptions of the underlying statutory and regulatory provisions, they should concede that only recently in Advisory Opinion 1999-11, they engineered a description of the statute’s reach that depended on whether there was “any campaign activity” at the event in question. See Memorandum from Commissioner Sandstrom, Agenda Doc. No. 99-61-A; Advisory Opinion 1999-11 (unpublished) at 3.

[20] The statute provides that any advisory opinion rendered by the Commission “may be relied upon” by the person to whom the opinion is issued or by “any person involved in any specific transaction or activity which is indistinguishable in all its material aspects . . . .” 2 U.S.C. § 437f(c)(1).

[21] FEC v. Colorado Republican Federal Campaign Committee, 59 F. 3d 1015 (10^th Cir. 1995).

[22] FEC v. Ted Haley Congressional Committee, 852 F.2d 1111, 1115 (9^th Cir. 1988) (hereinafter “Haley”) (“interpretation of FECA by the FEC through its regulation and advisory opinions is entitled to due deference and is to be accepted by the court unless demonstrably irrational or clearly contrary to the plain meaning of the statute”).

[23] We cannot fathom our colleagues’ attempt to distinguish Haley. They appear to argue the court’s reliance on advisory opinions is insignificant because there happened to be a relevant regulation to apply as well. Sandstrom et al. Statement at 4, n. 9. As our colleagues well know, the existence of a regulation is not essential to the legal value of an advisory opinion. The law, 2 U.S.C. § 437f(a), specifically contemplates advisory opinions applying the statute as well-- just as was the case in Advisory Opinions 1984-15 and 1985-14. As precedent, such opinions may be “relied upon” just as much as advisory opinions applying a regulation. 2 U.S.C. § 437f(c).

[24] See Common Cause v. FEC, 676 F. Supp. 286 (D.D.C. 1986) (certain FEC commissioners, including Commissioner Elliott, ordered to issue statement of reasons in dismissed enforcement case where advisory opinion precedent seemingly inconsistent); Common Cause v. FEC, Fed. Elec. Camp. Fin. Guide (CCH Transfer Binder), ¶ 9263 (D.D.C. 1988) (related case noting, “The importance of respect for the Rule of Law . . . requires that courts be vigilant to ensure that in the process ‘prior policies and standards are being deliberately changed, not casually ignored.’”).

[25] Sandstrom et al. Statement at 4.

[26] Commissioners have an obligation to seek compliance with the statute passed by Congress. 2 U.S.C. § 437c(b)(1). The D.C. Circuit has stated, “[A]dministrative agencies . . . cannot resolve constitutional issues.” American Coalition for Competitive Trade v. Clinton, 128 F.3d 761, 766 n. 6 (D.C. Cir. 1997). See also, Gilbert v. National Transportation Safety Board, 80 F.3d 364, 366-67 (9^th Cir. 1996) (“challenges to the constitutionality of a statute or a regulation promulgated by an agency are beyond the power or the jurisdiction of an agency”).

[27] The D.C. Circuit has noted that the advisory opinion process provides an opportunity “to reduce uncertainty or narrow the statute’s reach” and that “the susceptibility of the [Federal Election Campaign Act] to challenge on the grounds of vagueness has consequently been reduced.” Martin Tractor Co. v. FEC, 627 F.2d 375, 386 (D.C. Cir.), cert. denied, 449 U.S. 954 (1980).

[28] This would apply, as well, to our colleagues’ constitutional analysis of other phrases used at one time or another by the Commission to explain the application of the underlying statutes, such as whether the communication would “tend to diminish support for one candidate and garner support for another candidate.” Sandstrom et al. Statement at 4, n. 11, discussing Advisory Opinion 1984-15.

We are baffled by our colleagues’ suggestion that the Supreme Court’s phrase in UAW (“designed to urge the public to elect a certain candidate or party”) is but “charming” and of little “practical use” because it dates back to the days of a ’57 Chevy. Sandstrom et al. Statement at 5, n. 13. That might explain why the old case of Marbury v. Madison, 5 U.S. 137, 178 (1803) (It is for Article III judges to consider constitutional disputes and “say what the law is.”), is of little value to them. More importantly, because the phrasing used in UAW is so close to the current language of the statute governing coordinated expenditures (“for the purpose of influencing any election for Federal office”), we hope our colleagues are not suggesting the latter is unconstitutionally vague. In Buckley v. Valeo, 424 U.S. 1(1976), the Court made crystal clear that it viewed the phrase “for the purpose of influencing” in the context of coordinated expenditures to be free of constitutional vagueness concerns (“We construed [the term ‘contribution’ which relies on a ‘for the purpose of influencing’ test] to include . . . expenditures placed in cooperation with or with the consent of a candidate. . . . So defined, ‘contributions’ have a sufficiently close relationship to the goals of the Act, for they are connected with a candidate or his campaign.”). 424 U.S. at 78, referring back to n. 24 at 23.

[29] 424 U.S. at 42-44, 76-82.

[30] 479 U.S. 238, 249-50 (1986) (hereinafter “MCFL”).

[31] 424 U.S. at 46,47. See also Buckley at 78-80 (defining coordinated expenditures as “contributions” and defining non-coordinated “expenditures” covered by former 2 U.S.C. § 434(e) to reach only communications containing ‘express advocacy’).

[32] 479 U.S. at 249.

[33] No. 96-1781 (D.D.C., filed 1996).

[34] Interestingly, the Commission passed a regulation in 1995 that implements 2 U.S.C. § 441b as it relates to certain voter guides. It uses the phrase “electioneering message.” Specifically, for voter guides prepared with the candidates’ cooperation and participation, the regulation specifies that such guides “shall not score or rate the candidates’ responses in such way as to convey an electioneering message.” 11 C.F.R. § 114.4(c)(5)(ii)(E). As it post-dates the activities at issue in FEC v. Christian Coalition, supra, it should not enter the debate there, but that has not stopped the defendant’s counsel. For activities properly subject to this regulation, we can only ponder what our colleagues will say.