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Transcript of FEC Public Hearing: Prohibited and Excessive Contributions Non-Federal Funds or Soft Money
UNITED STATES FEDERAL ELECTION COMMISSION (FEC)
PUBLIC HEARING:
PROHIBITED AND EXCESSIVE CONTRIBUTIONS
NON-FEDERAL FUNDS OR SOFT MONEY
Washington, D.C.
Wednesday, June 5, 2002
FEC COMMISSIONERS:
DAVID M. MASON
Chairman (Republican)
KARL J. SANDSTROM
Vice Chairman (Democrat)
DANNY LEE McDONALD
Commissioner (Democrat)
BRADLEY A. SMITH
Commissioner (Republican)
SCOTT E. THOMAS
Commissioner (Democrat)
MICHAEL E. TONER
Commissioner (Republican)
FEC STAFF:
LAWRENCE H. NORTON
General Counsel
JAMES A. PEHRKON
Staff Director
* * * * *
C O N T E N T S
SESSION: PAGE
First Morning Panel 357
Second Morning Panel 465
* * * * *
P R O C E E D I N G S
(9:35 a.m.)
CHMN. MASON: The hearing of the Federal Election Commission on Prohibited and Excessive Contributions, Non-Federal Funds and Soft Money will come to order.
This is the second day of our rule-making hearing on the Bipartisan Campaign Finance Reform Act, and we're going to hear from two separate panels this morning, though the two panels will consist of some overlapping witnesses.
Before we start on the panels, I want to make one general announcement that I know will be of interest to the panelists and others and that is that the Commission has revised its tentative schedule for the remaining five portions of the rule making, which will comprise the complete BCRA rule making.
The revised schedule is available outside and I think back at the press table. It will still allow us to complete all of the portions of the rule making within the 270 days provided under the act.
The principal reason for the reorganization is something that doesn't appear on that new schedule which is the Commission does have on circulation for tally vote now the proposal to reorganize the current Sections 100.7 and 100.8 of our regulations defining "contribution" and "expenditure" with the intention of making it easier to do subsequent rulemakings in which we're going to have to cross-reference those definitions.
I think you'll all appreciate that those sections have become somewhat cluttered over the years and we're going to have to be cross-referencing quite a bit and so we're going to try to get that reorganization done prior to the other rule making. So you'll see all of that forthcoming.
I see puzzlement from Mr. Bauer.
My microphone is on. We had some issues with sound yesterday for people who were trying to record and so on so I'll try to talk louder if you're not hearing me well.
So that schedule is available.
Our first panel this morning is witnesses representing the national party committees. We'll have Bob Bauer, representing the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee, Tom Josefiak and Charlie Spies representing the Republican National Committee, Joe Sandler and Neil Reiff representing the Democratic National Committee, and Don McGahn representing the National Republican Congressional Committee.
I understand we're going to hear from Mr. Bauer, Mr. Josefiak and Mr. Spies are going to split their time, Mr. Sandler and Mr. McGahn in that order. You'll each have five minutes for an opening statement. We do have a light system which will give you a green light for four minutes and a yellow light for your last minute.
Please complete your thoughts. The ejection seats aren't fully wired yet. When you get to the end of your five minutes do try to finish on time, and since the first panel is 90 minutes we'll probably try to do a five-minute question period for Commissioners and the General Counsel to stick to that schedule. We may have room for a second round at that point.
Mr. Bauer?
MR. BAUER: Thank you, Mr. Chairman, and thanks to the Commission for proceeding on this expedited schedule in obviously a complicated exercise of making rules under the new statute.
I have prepared an opening statement, which I provided copies of to Ms. Smith. It is much longer than five minutes allows or than I need to go orally here so I would ask --
CHMN. MASON: It will be included.
MR. BAUER: Included in the record, I would appreciate that. But let me tell you fundamentally what I'd like to stress here today. We have made extensive comments along with the Democratic National Committee in jointly filed statements on very specific issues raised under the rules in responding to very specific questions that the Commission put to us.
I will not repeat our position there. Rather, what I would like to do briefly here and what is reflected in the statement that I prepared and asked to be distributed and inserted in the record is discuss some of the questions that have been raised about the overall approach, the regulatory theory, if you will, that the Commission would use to approach the task, to address the task, of construing and creating, implementing rules, under this statute.
These questions have been raised in part by communications to the Commission from the principal sponsors of the bill and they have advised the Commission in their comments on May 29 that this statute has what they refer to as a unique legislative history for which reason they say their views ought to carry special weight.
As I say in the hearing statement at some greater length than I will repeat here, this is a striking claim. It isn't clear what is meant by saying that the legislative history of the statute is unique. I take it to mean that there isn't actually much legislative history by some peoples' standards and because of that I think we need to address the question of whether against the background of this limited legislative history there are some commenters, particularly legislators, involved in developing and leading the enactment of the statute whose views receive more weight than other legislators or for that matter other commenters.
In my view this position, while it goes not to the merits of their views on various issues, those views are to be obviously weighed very carefully and very respectfully but in my view their views, the views of principal sponsors or of any legislators, are not entitled to weight on that basis alone; that is to say, Congress intended for this Commission to make the rules and it is well established in the federal law, citing, for example, cases like {IOn}Chrysler Corporation v. Brown{IOff}, that the remarks of legislators, even sponsors, are not controlling in analyzing the legislative history of the statute.
Certainly post-hoc declarations of intent do not carry matters of legislative or rather do not carry matters of regulatory interpretation. As a matter of fact, if you examine the statute itself it's fairly clear that Congress did not intend to involve itself except in one limited instance in specifying the criteria for the shaping of particular rules under this statute.
There is one such instance where Congress delineated the factors that this agency should taken into consideration in creating a rule on coordination. It directed the repeal of the current rule when a substitute rule was created in its place and it directed the Commission to consider certain factors in developing that rule.
That is the only instance in this statute that Congress sought specifically to involve itself in the rule making process by specifying particular criteria. It otherwise directed the agency to do what regulatory agencies do all the time which is they take the statute in applying conventional tools of statutory construction, legal analysis, consideration of the real legislative history, policy integration with the existing statute, to make a judgment about what rules most appropriately implement the statute before them.
So I think this is a critically important point I want to stress here today.
The yellow light approaches fast. The only other point I would make very quickly here is that some of the language used by some of the commenters to direct the agency to legislative history, to focus the agency on particular goals, doesn't really answer any particular questions about any of the rules under discussion.
For example, one commenter says it's clear the rules should be informed by an understanding of a goal in the statute to ban soft money completely from the federal elections process. We must ban soft money completely.
So in looking at any given rule that's the question, that's the guide, and that addresses in their view, many, many questions before the agency at this time, but that doesn't really answer the fundamental question before this agency because the statute itself does not completely eliminate soft money.
In fact it uses the term only once. It provides for exceptions for the continued raising of certain kinds of soft money under the Levin amendment for state party building funds, for leadership PACs, soliciting from charitable organizations, and so it's simply not enough. It may be rhetorically satisfying but it's not enough to say that the issue is one simply of banning all soft money because it doesn't address fundamental definitional issues and it frankly ignores how the rest of the statute is constructed.
Now, knowing that Commissioner Mason will not gavel me down instantly, let me just say one last thing. He's a very genial gentleman; he won't do that to me, I'm sure.
I'm sure the Vice Chair will not gavel me down.
COMM. SANDSTORM: I'm certainly not putting my hand over there.
MR. BAUER: If I may, and then I'm happy to lop it out it out of the Q&A. Constitutional issues, one commenter says the constitutional issues that are raised here are already in the hands of the courts. Well, the constitutional issues in the hands of the courts are constitutional issues that pertain to the statute itself. The courts will decide whether the statute itself is unconstitutional or constitutional.
The rules, however, that the Commissioner frames may raise constitutional issues and it is wrong to say that this agency should be insensitive to constitutional questions raised by options put before it for various rules.
And last but not least there are other considerations that the agency should attend to. They're set out in the hearing statement, questions of fairness, are we treating our participants fairly by in effect providing for them rules that they can reasonably be expected to follow; flexibility, are we providing them rules that make it possible for them to run their business; reasonable completeness, are we providing them rules that if they follow them will lead them fundamentally to a position of compliance or are we going to be continuously counseling them that in order to act they should seek an advisory opinion?
Last but not least, common sense. I won't give examples. Some of them will come up but it seems to me some rules are going to simply fall by the application of a standard of common sense.
I thank you for your patience and for your slow gavel.
CHMN. MASON: Commissioner Josefiak?
MR. JOSEFIAK: Thank you, Mr. Chairman, members of the Commission.
I appreciate this opportunity to have a discussion with you this morning regarding your proposed regulations to the new law.
There's no question you've got a formidable task ahead. Anything that we can do to assist, please don't hesitate because it is going to be a difficult process. But as you go through this process I would respectfully submit that you keep three overriding themes in mind: First, the Commission rely on the clear language of the statute and as best it can formulate a bright-line standard as it attempts to regulate core First Amendment rights.
Where the statute's not clear my suggestion is before you go to the legislative history go to your own experience. Go to your own regulations and see where your regulations already take care of an issue. Go to your own policies where you've already discussed this issue.
Certainly there's been a lot of discussion about legislative history and it can be helpful and Charlie's going to give you some brief overview legally as to what that all means for you but, having been where you are, from my experience I can tell you that legislative history is at best a double-edged sword.
Certainly from my experience when you're looking at the history through the eyes of one member whether they're the author or not it's very difficult to figure out where the majority was on that position. All you have is a clear statutory language so I would suggest that you not put too much weight on one particular person if there is another system to use and that system is the clear statutory language. If you don't have that you can look at it but it's not controlling.
The other point on that situation from my experience is we've had situations where most of these bills come through a legislative process with a committee report. At least when you rely on a committee report you know a majority of the committee has sanctioned what the legislative history is and I can tell you from my own experience, after the Commission the Commission has in fact ignored that history as well, and particularly those of you who've been involved with the skirmish on best efforts can realize that, where my good committee took your good agency to court and you won based on deference even though I argued until I was blue in the face that the legislative history was very clear and I could argue that because I was the author of that legislative history when I was working on the Hill. So there are times where the Commission has in fact ignored documented legislative history and has been upheld by the court in doing so based on its own experience and expertise. So that is really the first point.
The second theme of these regs should be prospective. You're looking forward so when you're looking at an organization or looking at activity it's post-November 5th.
The Commission has in fact allowed for disaffiliation so I think you've got to look at what organizations are doing, what activity is conducted post-November 5th. You cannot penalize people for doing things that were legal and probably encouraged under the old law.
The third point I'd like to make here is that the Commission should try as best it can under this new law to maintain federalism, let the local folks regulate their own elections. I'm sure that the Dems would agree with me on this point, that if this were in effect this year in California I can guarantee you that the Democratic and Republican parties of California would not be interested in any congressional race going on. They're interested in the gubernatorial races.
So if this were in effect right now the concept of all of this being viewed as federal election activity is nonsense and you have an obligation and a responsibility as best you can under this new law with your regs to clarify what that means based on these kinds of situations.
We've talked a lot about agency in our formal presentation. I just would like to say it should be a bright-line standard and you should make sure it's express, not implied, and that the committee control the actions of its agent and the agent is acting within the scope of authority.
RGA: RGA would not meet your standard of established, financed, maintained, and controlled as you have it now, and you should not change that standard. With regard to the host committees, these are 501(c)(3) and (4) organizations. They're established, unlike Mr. Noble said yesterday, by the business people within the cities, not by the party committees, and they should be able to continue as they are and office holders should be able to solicit them just like any other 501(c)(4) that's not involved in election activity.
Having said all that, I'll turn it briefly over to Charlie.
MR. SPIES: Well, I actually see the flashing light so I will defer to Tom's wisdom.
MR. JOSEFIAK: And also on this point what we'll do is submit Charlie's statement for the record. Thank you.
CHMN. MASON: Without objection the statement of Deputy Spies will be included in the record.
Mr. Sandler?
MR. SANDLER: Thank you very much, Mr. Chairman, members of the Commission. We appreciate the opportunity to appear before you today on behalf of the Democratic National Committee. We very much appreciate the extraordinary effort that has been made the Commission and its staff and particularly staff of the Office of General Counsel in developing these proposed regulations.
We just wanted to make a couple of brief points in opening. First of all, I want to associate myself with the views, of course, of Bob Bauer and Tom Josefiak and with the views of those commissioners yesterday who expressed skepticism about the assertion of some of the so-called sponsors of the legislation that their views should be given special weight in discerning legislative intent.
The interpretations of this Commission of the law will be given {IOn}Chevron{IOff} deference by the courts to the extent that the agency is relying on its own expertise, special expertise in this area of interpreting the law, and, of course, the comments of the sponsors should be taken seriously because of their stature and expertise in this area as well, but to the extent that the Commission relies on the post-hoc comments of the sponsors as a means of discerning legislative intent it would indeed be treading on shaky grade and in addition to the authority cited by Bob Bauer I would just cite such cases as {IOn}Quern v. {IOff} {IOn}Mandley{IOff}, where the U.S. Supreme Court stated that post-hoc observations by a single member of Congress carry little if any weight, and {IOn}United States v. Monsanto{IOff}, in which the court reiterated that, "as we have noted before, post-enactment views," talking about post-enactment views of individual legislators, "form a hazardous basis for inferring the intent behind a statute."
Secondly, I want to emphasize and associate myself with the views of my colleagues with respect to the need for clarity in in these regulations.
Some of those who testified before you yesterday suggested that some of these definitions, "agency", solicitation," so forth, "finance, establish, maintain, and control," some of these definitions critical to the operation of national parties should be left to examination of particular facts and circumstances, to some kind of fact-intensive case by case inquiry or possibly the advisory opinion process, and I would suggest that that approach would be extraordinarily ill-advised for two basic reasons.
First of all, were the Commission to adopt that approach it would be totally contradictory to the representations made by its own attorneys, Mr. Hershkowitz, to the three-judge court in saying that the issues aren't right for adjudication because the rule making's going to provide clarification. I don't think the Commission can on one hand make that representation to the court and then on the other fail to provide such clarification.
And secondly we have to remember that this is a criminal statute, that if you step over anybody, whether it's a local party chair, volunteer, officer, any of the tens and hundreds of thousands of people who are involved in one way or the other in Democratic Party activity at the national, state, or local level, they step over the line, it involves more than $25,000, asked the wrong person the wrong way, said the wrong thing at the wrong time, it's a felony and consequently the lack of guidance in this area is in itself constitutionally problematic and I would just throw this out possibly for later discussion without getting into it now. Just consider the issue of agency as it applies to the vice chairs of the Democratic National Committee.
We have a chairman, five vice chairs, secretary, treasurer, national finance chairs. Those are the elected national officers of the DNC. Of those five vice chairs one is a state party chair and chairman President of the Association of State Democratic Chairs. Of course, he raises soft money for state parties and state local candidates.
A second is a member of the Los Angeles County Board of Supervisors, elected state official. Obviously she has to raise money for her own campaign. She happens to be at this moment by coincidence Chairman of the Southwest Voter Project, which is an organization that engages year-round in registering members of the Latino community to vote.
And we have a third vice chair who is Executive Vice President of the AFL-CIO so, I mean, again, without getting into it I think you can see the need for clarity in this area.
One last comment as the light approaches and this is on the issue of host committees. Nothing in the BCRA refers in any way to the Fund Act or to the financing of conventions. We have noticed that some of the so-called reform groups have implied or suggested that possibly these host committees should be treated as federal committees or that possibly the scope of their spending on convention activity is somehow affected by BCRA, and in this regard we just want to note that this is not an issue that can be postponed to another rule making at least as far as the DNC is concerned. We have put out requests for proposals and received bids from all cities under consideration for the 2004 conventions. Our site visits start in three weeks and negotiation of most major terms with all the various contenders and we don't know when the decision will be made or who will be in contention but certainly most of that will be worked out over the summer among the two, three, four, whatever, who are still left in the mix and so we urge you to make clear at this juncture that this issue is off the table. Thank you very much, Mr. Chairman.
CHMN. MASON: Mr. McGahn?
MR. McGAHN: Thank you, Mr. Chairman. I'd like to thank you and the Commission, General Counsel, and the staff director for having me here today on behalf of the NRCC, which is a national party committee. We like to emphasize the word "national," not a federal party committee, because there may prove to be a distinction. One assumption that seems to have come out of the commenters yesterday is that all national parties somehow are only concerned with federal elections.
I'd like to begin briefly on the constitutional issues that are present and also echo the comments that have already been made by my colleagues. It is true that this agency is not a court. That point was made clear yesterday time and time again. That being said, however, it is well within this Commission's authority to rule on constitutional issues for really two reasons, one, it's well established that whether it's the legislative branch or the executive branch of government those branches can make independent constitutional decisions so there is nothing particularly innovative about an agency deciding that something may be unconstitutional and taking a more constitutional approach. The second reason is a practical one. You really can't avoid the constitutional issues and I'm simply not talking about the obvious First Amendment issues that you hear so much about oftentimes in the papers I file with the Commission on behalf of my clients.
There's Fifth Amendment issues, Tenth Amendment issues, even preemption is a constitutional issue at its core. That was discussed yesterday quite a bit, so the idea that the Commission can simply avoid constitutional issues at this juncture, I think, is folly.
The second reason, though, is as a practical matter I think the Commission would want to promulgate regulations that would prove to be enforceable at some point, and not only for the sake of clarity in providing the regulated community with notice but simply as a use of Commission resources and as a practical matter the regulations ought to be such that they're not going to be challenged in court time and time again and end up in litigation for the next 20 years which is unfortunately what has happened on some of the past regulations of the Commission where we've seen innovative legal theories go to court time and time again and be rejected. So I don't think this is the time to embark upon that path. I think succinct regs, clear regs, constitutional regs, make a lot more sense.
The second issue I'd like to talk about is the intent of the act, the legislative history, comments that have been filed, and the like. The fact of the matter is, and I can go into this in greater detail in a minute, there really is no legislative history with this bill.
As counsel to the NRCC I represent not only the NRCC but every member of the Republican conference. Some of them use my services more than others but by default I was intimately involved with much of the gyrations of this process, this debate, the rule that allowed the vote to occur, and the like.
The fact is the bill that actually passed the House was not produced in its full form until about 1:00 o'clock in the morning the day of the debate. I didn't see it until 2:00 a.m. the day of the debate. So the idea that there's some seamless theory that underlies this bill is folly. It was cobbled together to get votes and there's no other way to get around that when you read the news clips and you see how the bill every month seemed to change.
Almost two years ago there was supposed to be a vote and the rule did not pass. They brought the rule down because again they weren't sure if they had the votes. So we finally do get a vote and the bill comes at 2:00 o'clock in the morning and there's a debate with a King of the Hill and a Queen of the Hill and all sorts of parliamentary tactics, which were brilliant on behalf of the sponsors and I have to applaud their efforts, but at the end of the day did not provide a robust debate that was unscripted. It was very controlled.
Now sponsors want to come in with comments and say they ought to be given great weight when they wrote the bill, in theory, controlled the debate, cut off debate, and rigged the system. It simply doesn't make sense that they get, not only as Mr. Ginsberg said, the third bite of the apple. This is probably the fifth or sixth bite of the apple that they've had.
The fact is that the bill came out so early on the morning of the debate I had trouble getting through it once to read it and figure out what it meant even with the cross references, which I obviously am familiar with. The idea that every member who voted for this read the bill cover to cover and understood what they were voting for is absurd and I mean that with all respect to them.
It's the legislative process. It's the way it works. But the fact is don't assume that there's some great theory here driving this. What you do have are statements in the press, many of which don't match what the actual bill says. The two statements you hear in the press are we want to reign in issue ads. Okay, that's nice. There are really constitutional issues there. I think we all agree with that in some form but all these other details, the other 90-some pages of the bill, there really was never discussion on.
So ultimately I'm going to ask that you don't give the sponsors' comments all that much deference. Obviously they need to be considered. Obviously they're very thoughtful and quite lengthy but at the end of the day they're easily refuted.
The set I read had very little citation to the actual Congressional Record. I think they cited Mr. Feingold's statement about how this bill bans soft money. As Mr. Bauer said already, this bill does not ban soft money. It does not get rid of all soft money in federal elections. It doesn't touch restricted-class communications, for example, in either corporations or unions. There are the Levin accounts, which, of course, are soft money accounts. We also see that Mr. McCain had a statement that we can now raise non-federal hard money, as Mr. Noble called it yesterday, which we used to call personal softs but now all of a sudden that's hard money, for leadership PACs. This bill does not ban soft money. These commenters continuously say every chance you get ban soft money. The bill doesn't do that itself.
I see the red light's on so I'm going to quit while I'm ahead and answer any questions you have. Thank you.
CHMN. MASON: If indeed you are. I want to remind my colleagues the panelists have actually done a pretty good job on this panel of focusing on the national party issues and Tom did mention the California gubernatorial race and I know the list of questions that I have. There are a number involving Levin funds and so on like that but if we are able to postpone those until the next panel I think we'll get a better focus on the national party issues the first part of this morning.
The first questioner this morning will be Commissioner Toner.
COMM. TONER: Thank you, Mr. Chairman. Mr. Josefiak, you were mentioning in terms of the directly/ indirectly establish, finance, maintain control the need for clarity, and I take it from your comments you urge us to draw upon our established affiliation criteria in fleshing out that statutory phrase?
MR. JOSEFIAK: That's correct, Commissioner. We had said in our formal comments that we don't necessarily agree with some of the interpretations of that the Commission's had in the past but the Commission has a history of dealing with that terminology and we think under the circumstances that's the best way to approach it and give some clarity, some consistency, to this process, and I think the standard that is in place now is a standard that people are using pre-November 5th to determine whether their particular organizations would fall under the rubric of being considered part of some sort of other entity. So I think for the purposes that we say in our comments and what I said today it would be best to keep the status quo.
COMM. TONER: And I think that raises an interrelated point that you touched on and that is the effective date of BCRA is this November and obviously organizations have been operating for a long time under settled law and now we have a new regime. We're going to have to come to grips with whether we should create a safe harbor or other type of protections for organizations that are separate and apart prior to the effective date of BCRA. Is it essentially a situation where if we don't do that we're retroactively applying this new law to activities that were legal under the current situation?
MR. JOSEFIAK: That certainly is what we're arguing and that's our position, that you really don't want to penalize organizations and individuals for doing certain things when they could and that we're dealing with core First Amendment right issues here and that it's got to be a prospective analysis of what you have here. So anything that transpires before November 6 where people try to disaffiliate if they have been affiliated or try to set up a different system and they're not controlled or they're not financed or they're not established at that point by any other organization they should have the right and should be free to change their organization as they see fit. And I think that is what we're proposing and I think that's the only standard that you should be thinking about.
COMM. TONER: So in your view we should evaluate their activities after the effective date of BCRA in terms of what they're doing at that time?
MR. JOSEFIAK: That's correct and then you can look at the interrelationships at that time but you cannot penalize individuals and organizations for what went on when it was legal to do so.
COMM. TONER: Mr. Sandler, in your papers you write extensively about the building fund and the legislative debate that transpired in the Senate and House side.
Is it your view, after looking at that history, that essentially there's just no indication that Congress meant to restrict in any way the scope of permissible building fund activities?
MR. SANDLER: This is with respect to state parties?
COMM. TONER: With respect to state and local committees.
MR. SANDLER: The building fund has been eliminated by national parties for all the national party committees. It's with respect to state parties.
Well, first of all, let me just say quickly that, like Mr. McGahn, my experience with this goes back a long way. In fact it goes back to 1986 in the Byrd-Boren bill. Every version of campaign finance reform, every version, preserved the building fund exemption per se for national and state parties until the McCain-Feingold bill that passed the Senate in 2001.
Even then the Shays-Meehan bill, that Shays-Meehan bill that passed originally was in '98 and then again it came up in 2001 and was defeated when the rule went down, made it clear that state parties could pay for buildings and equipment, with 100 percent non-Federal funds because that was a defined term specifically as non-federal election activity, and indeed when Shays and Meehan introduced the bill the morning of the debate that provision was still in there.
It wasn't until 2:00 o'clock in the morning that it was knocked out by the Kingston amendment, which only went through because the so-called reform groups, which had characterized it as a poison pill, secretly signaled members it was okay to vote on it anyway in an act of extraordinary bad faith and treachery and therefore it's impossible to conclude other than that the true congressional intent, and none of the members realize that this state party aspect was in there, is that state parties can continue to pay 100 percent non-federal money for buildings and equipment, as provided in every version of McCain-Feingold and Shays-Meehan to the bitter end.
COMM. TONER: In quick summation then as a matter of law it would be your view that the agency should preserve the scope of permissible building fund activities for state parties under current law?
MR. SANDLER: Absolutely, Commissioner. That is our view.
COMM. TONER: Thank you, Mr. Chairman.
CHMN. MASON: Commissioner McDonald.
COMM. McDONALD: Mr. Chairman, thank you. I want to thank the panel. It's a very distinguished panel. I was sitting here thinking if we could use the same formula in Pakistan and India we might be able to resolve the dispute. I see some rather divergent parties normally appearing together and I find that impressive.
I've got several questions. Obviously yesterday I grappled with this issue about the deference to the members and so on and so forth and I'm a little surprised because all of you work intimately with members. I see my old friend Tom Josefiak who used to represent the Senate. I'm a little puzzled when people tell me really that the members should in essence be afforded very little deference in these matters.
Let me ask about the prevailing side a minute. Some of this debate is about the bill and what came out of the bill and the prevailing side. I've not seen any comments from those that were on the prevailing side that raise the kind of concerns you have. I'm not saying they're not legitimate and that every concern you raised isn't legitimate but it seems like to me that based on what I've heard in the last two days that you shouldn't take the authors of the bill because, as was pointed out yesterday, there were only four that would be authors up front, as opposed to other members who voted for the bill.
Don made the point that the bill passed in the middle of the night. That's not unusual. There are a number of bills that pass in the middle of the night. There are a number of deals, if you will, that are made in the middle of the night.
So I'm just trying to understand if the theory is that the prevailing side had many divergent points of view, and I suspect that's right. I'm just wondering why we haven't heard from others to clarify that?
Does anyone have any insight into that, why we haven't heard --
MR. BAUER: If I may I just want to clear up one thing. By the way, I completely agree with Mr. McGahn. I mean, one has to recognize that this is a complicated bill. It passed with little legislative history. It passed with significant changes and was produced under hurried conditions, so we shouldn't have illusions about how well digested, if you will, some of the provisions of the bill were but even if it had been passed at 11:00 o'clock in the morning and even if it had been passed after three and a half months of debate the point would remain the same, which is the sponsors do not have a privileged position as a matter of law.
COMM. McDONALD: I understand that.
MR. BAUER: Do not have a privileged position and, secondly, their own statute indicates an intention to commit to you with one exception the kind of discretion typically delegated to agencies to make rules. This argument that we're presenting you here today is not a particularly creative or controversial argument. It's black-letter law and it goes to the heart of what agencies like this are expected to do.
COMM. McDONALD: Bob, I appreciate that and I'll ask you about {IOn}Chrysler v. {IOff} {IOn}Brown{IOff} in just a second but let me follow up.
You work with the Members continually. You know them all very well and I'm just wondering what your thought process is. I'm wondering why others who voted for the bill and clearly did vote for the bill didn't submit comments saying no, no. We didn't mean this or we didn't really mean that; this is what we meant.
MR. BAUER: I'll make two points about this. First of all, I think it's fair to say, and you're correct, I do work with a lot of members and for the record I want to say I love every last one of them, but, secondly, they're busy and they're spreading their efforts over a wide range of issues and therefore one cannot count or expect legitimately members to involve themselves deeply in comments on technical issues under this particular statute.
COMM. McDONALD: Even those that affect them directly like the campaign finance bill?
MR. BAUER: Even those that affect them directly and, secondly, I will tell you again, drawing on my own experience, much like Mr. McGahn's, many of them in fact assumed and were told that some of the ambiguous and difficult issues presented by the statute would indeed be addressed by this agency and that's what they're assuming is going to happen and they're going to be addressed, as Mr. Sandler said, on the basis of this agency's understanding of the statute and expertise.
COMM. McDONALD: Well, I appreciate that. It's an interesting position to be in because what's really before us, and everyone knows it's one of the worst-kept secrets in America, is whether we're debating the bill again in lots of ways.
I mean, some of the comments that are made, and I'm not taking the position one way or the other, I'm anxious to see what the commenters have to say, but in some respects it seems that there's a debating of the bill and the bill, quite frankly, in one form or another was before the Congress for seven years and I would be the first to say that numerous changes have happened over the course of time, as they do here whether it's in the advisory opinion process or in the regulatory process, but it puts us in an interesting position.
I think you're right. I concur with your point, Bob, as a matter of law and then we get down to the practical aspects of it because I just can't imagine members, who take this very seriously and if there's one thing I've learned in 20 years they take rulings by the Commission pretty seriously and I think that's fair to say, that they wouldn't come forward and say no, that's not what we meant, and I'm speaking of those on the prevailing side. I'm not critical of those on the other side but obviously we're trying to figure out what the intent was in relationship to the prevailing side because that's what our assignment is.
MR. SANDLER: Commissioner, just briefly to follow up on that point, it is not surprising to us that the Democratic members on the prevailing side haven't come forward with comments. This whole business, this whole idea, that individual members of Congress get to make up the legislative history after everybody's voted on the bill is in itself extraordinary. It is not the way that business can be done under our Constitution. Congress passes a bill --
COMM. McDONALD: Well, I agree with that but that's not the issue. You all are coming forward after the bill to make your presentation of what you think the Congress meant or what we should do. I'm just trying to walk through it with you. I don't have a position.
That argument I'm fine with. I'm a little bit more unclear, however, about you're all coming forward after the fact to tell us what it means. Is that not the case? I mean, we're all doing it now.
MR. SANDLER: But we're not members of Congress purporting to represent the congressional intent. That's the critical difference.
MR. JOSEFIAK: Commissioner, if I may, I think on that point what I was trying to say early on is that where the language in the statute is clear whether we like it or not because we are in court challenging the constitutionality of the language, which I didn't even raise today, that's a whole different ball game.
What you have to do where it's not clear in the statute to devise regulations to implement the statute. That's your responsibility as a Commission and I think we're here today to give you our best advice as to what we think you should do in those areas where the statute is not clear or the statute gives you the flexibility to make choices because, as Joe said early on, a lot of these provisions got through with the understanding that it would be fine-tuned here at this agency and so there would be some meat put on these bones before it actually was implemented in November or now in December.
COMM. McDONALD: Well, I'm heartened that the Congress understood it that way. That's the first time I've known Congress to defer to us with such enthusiasm. I'm delighted to hear that, Tom.
MR. JOSEFIAK: Not that they did not do it reluctantly, though.
COMM. McDONALD: Thanks, all of you. I appreciate it very much.
CHMN. MASON: Commissioner Smith?
COMM. SMITH: Thank you, Mr. Chairman.
I just want to note, Mr. McGahn, I'm really impressed that you thought that after reading the bill one time maybe you should have understood it. Most people I know have read it 20 or 30 times and these are some of the best lawyers in the country and are still wrestling with how the parts fit together.
MR. McGAHN: Every time I read it I learn something new but we do what we can in a limited time allotted under the rules of the House.
COMM. SMITH: Well, I appreciate that. We seem to be spending all our time talking about how much attention we have to pay to the post-hoc comments of four Congressmen. I think our time is better spent getting on to some other items, but I will point out that I noted yesterday that I take all of the commenters seriously. I give great weight to all of their views. I do not believe that there's any one commenter who can tell me if I don't follow his views then the will of the country will not be done and therefore I should just ignore everybody else who appears before us. So I'm glad that you're here and we'll consider your comments carefully as I will with those of the NAACP and the various groups that appeared before us yesterday, submitted written comments, and so on, and the legislators who have submitted comments.
Mr. Sandler, I remember last fall Terry McCauliffe was after the fall elections triumphing the Democratic performance in mayoral elections. Are mayoral elections important to the Democratic National Committee?
MR. SANDLER: They have been so far, absolutely, yes, that was a new and particular emphasis that was put in in 2001 by the DNC. Our chairman made it clear that it's not just a presidential or even congressional shop any more. We're really going to put special emphasis in supporting candidates up and down the ticket and without in any partisan way. We're obviously very, very proud that the efforts, together with our state parties and others resulted in two of the three --
COMM. SMITH: Well, I didn't want to give you a chance to tout your success. I just wanted to say yes, we will.
COMM. McDONALD: No reading those stats.
COMM. SMITH: Because it's a lead-in to my question, particularly given this new emphasis. Do you anticipate that the party may do in the future get out the vote activity or voter identification activity in connection with mayoral elections?
MR. SANDLER: Well, no, of course not. I mean, the national party, in other words?
COMM. SMITH: Right.
MR. SANDLER: No, the national party cannot directly raise any money in connection with mayoral elections for any purpose. I mean, it can transfer federal money to its state parties. Not a single penny of that, of course, can be used for get out the vote under the Levin Amendment we'll turn to at the next panel. So I think the answer, thinking out loud, Commissioner, is I don't see any way.
COMM. SMITH: Well, I guess we're coming at it a bit differently. Well, let's put it differently. The point I'm raising is the nation's 20 largest cities, I believe, all elect mayors in odd-numbered years and that leads me to wonder about the definition put in the act about federal election activity includes get out the vote activity, generic campaign activity, and voter identification that occur in connection with any election in which a federal candidate is on the ballot and it's been suggested to us that that means the full two-year cycle except in five states where they elect governors in odd-numbered years.
And I have a real question as to whether that would be far too broad a construct that would kill voter identification activities and so on in a majority of the states' mayoral elections. According to the Web site of the American Conference of Mayors, more than half the nation's mayors are elected in off-numbered years plus there are school board elections, all kinds of other local elections, county elections, in off-numbered years. I'm wondering are these issues of concern to the national parties? Do you care who wins these elections and do other groups that you know of care who wins these elections?
MR. JOSEFIAK: Of course, we care and this becomes a very complicated issue, Commissioner, because then you have to look at not only the ability of using federal dollars to pay for nonfederal elections but whether that particular state or municipality will allow that without coming under their definition of soft money. There are a lot of states and municipalities that would view federal dollars as soft because the federal dollar limits are much higher than the state limits.
Most of the New England states we couldn't even compete and I think you have some comments from the State of Connecticut Republican Party. We couldn't even compete in a gubernatorial election with federal dollars because it's against the law in the State of Connecticut. And I think when I talked about trying to do whatever you can as a Commission to preserve federalism and to allow state and local activity run by state and local parties to be conducted outside of the FEC jurisdiction would be the direction to go because it is a complicated matter and we would have to use under this law federal dollars but the question is could we spend it at all.
COMM. SMITH: Right, and it strikes me that there are a lot more nonfederal elections held in off-numbered years than just in those five particular states and I would agree with you that deference to federalism would suggest that if the states have stricter rules they should go with those but we should not automatically consider all those to be elections in which a federal candidate is on the ballot.
MR. JOSEFIAK: Correct.
COMM. SMITH: Well, I see my time is up.
MR. SANDLER: And there are special elections in four state legislative races all the time, you're absolutely right, and with respect to state parties, therefore, the idea that federal election activities should be defined at any point before the beginning of the federal election year is inappropriate for exactly the reasons that you've articulated, Commissioner.
CHMN. MASON: Commissioner Thomas.
COMM. THOMAS: Thank you, Mr. Chairman. Thank you all for being here. Let me start, if I may, with one of the issues that Joe Sandler raised, the host committee issue. You're urging that we clarify it now rather than later. What would you have us do? Would you have us somehow, I gather in your view, clarify by rule that in essence the provisions that restrict the ability to fund-raise on behalf of (c)(3)s and (c)(4)s and so forth explicitly would not apply to raising money on behalf of the host committees because of what you view is their nature?
MR. SANDLER: No, I think it's possible that the provisions that relate to national party fund-raising for nonprofit organizations generally could apply to host committees by virtue of the fact that host committees are such organizations. I was talking more about whether BCRA in any way addresses the affiliation of these committees with national parties or addresses the kind of money the host committee itself can accept or the way it can be spent.
Of course, BCRA doesn't address any of those, in any way restrict any nonprofit organization in those respects, and as to those issues, therefore, we're asking the Commission to instruct the Office of General Counsel that this issue is off the table, this issue being the scope of permissible expenditures by host committees, what host committees can themselves raise, and how they do their business under the current regulations, not whether national parties can raise money for host committees, which, again, that may be caught up in a restriction of a more general application that the act does speak to.
COMM. THOMAS: That's helpful. I wasn't quite following.
With regard to the comments that have been made about legislative history I tend to agree that it was a rather difficult process to follow. I think there was a comment made that there was no legislative history. I think there is legislative history. It goes way back if you want to look at it one way but you're right, it was changing fast, and it was changing late at night and early in the morning. So I agree with you that it was a difficult process to follow.
But I would also make as a general comment that from my own perspective if I have a choice as to whether I'm going to try to figure out the intent of the legislation between the comments of those who supported the legislation and those who opposed the legislation. I suppose on balance I'm going to tend toward the comments of those who supported the legislation.
That's just me. Maybe that's the wrong approach to take but I view what's going on in the mind of those who were involved in drafting the language that got into the legislation as perhaps more indicative of what was behind that language.
With regard to another question I wanted to get something cleared up. Some press has been made of the issue of maybe the national party committees having the opportunity to raise some nonfederal monies like the leadership PACs apparently are going to be allowed to raise. I gather what you're talking about is a suggestion that the national party committees ought to be able to raise up to $20,000 per year from any individual for non-federal election purposes in addition to the 20,000 per year they can take from an individual for federal purposes and then in addition every PAC in America could give $15,000 for a non-federal account of the national party committees, each one of them, the DNC, DCCC, and the DSEC. So that's what you're suggesting that we adopt? I want to be clear on what you're urging.
MR. BAUER: Yes. The limit, of course, goes up to 25 after November 5 for individuals but that is correct on the same, it seems to me, perfectly legitimate and supportable theory that motivates Senator McCain's statement on the floor of the Senate, that the leadership PAC that he directs and others that are directed by members of Congress or associated with members of Congress ought to continue to be able to raise a pool of money limited in amount, restricted as to source, for the support of state and local candidates. That cannot be soft money.
Number one, it's not soft money because Senator McCain and others in contemporaneous legislative history defined it as not soft money and. Secondly, because it is indeed subject to federal law limits and source restrictions and, thirdly, because in fact it will not be used, by definition, for federal election-related activities. By definition it is for the support of state and local candidates.
And the parties certainly no less than the leadership PACs and members want to continue to be involved in state and local election activities for a whole host of reasons that people will understand both historically and from the literature. The key here is that there isn't any rational distinction to be drawn as a matter of legislative history, statutory construction, or policy between a member's leadership PAC and a member's political party organization.
COMM. THOMAS: Now, as I understand, the good senator's argument based on the comment he submitted he's saying that the language in the statute in BCRA that deals with restricting what the national parties can accept is governing and that that would override any other allowance that might be available with respect to some sort of nonparty committee. You don't buy that?
MR. BAUER: No, I must say I don't because with all due respect I'm not picking a quarrel with any U.S. senator even of the other party --
COMM. THOMAS: That would be wrong, of course.
MR. BAUER: But I don't believe it has any merit at all. It is not rooted in the statutory language. It's not rooted in the policy of the act. If you look at the legislative history, and we cite in our comments a statement by Congressman Shays, one of the principle sponsors, who says the regulation we are directing toward national parties is being directed toward them because their activities are intertwined, the word he uses is "intertwined," with the activities of federal officeholders and federal candidates, and it is soft money fund-raising by federal office holders and federal candidates that the national party prohibition is meant to address.
They want to break the link between unregulated soft money and federal officials and candidates whose actions may reflect quid pro quo influences, if you will, and they want to break that connection between that soft money and the use of that money to influence federal elections. Senator McCain is exactly correct that when the money is raised under federal law limits and source restrictions for state and local candidate support only none of these concerns with soft money which underlie Mr. Shays' statement are implicated. There's no reason to prohibit them from doing it. None of the policy goals of the statute will be frustrated by allowing them to do so.
And it is impossible to understand how it is okay for federal candidates and officeholders to raise this limited state and local candidate support money to a leadership PAC and not into a party committee. Why would that be? Why would Senator McCain be able to do it and a senator who directs the Republican Senatorial Campaign Committee, Senator Frist, could not do it?
COMM. THOMAS: Well, it may be that if we can't buy your argument that the best option is to work with all of these other groups that will be out there and will be technically not the party committees but they might be (c)(3)s or (c)(4)s that could perform roles much similar to the leadership PACs.
MR. BAUER: Well, if I may say so, and I'll yield to my other colleagues, I don't know that we're going to be satisfied by being invited potentially at great legal risk to accomplishing indirectly what the statute does not prohibit us from doing directly.
COMM. THOMAS: Well, I know it may be awkward but, I mean, we may have a bit of a stretch going with the interpretation you're suggesting. That's all I'm suggesting. So we may have to invite you to work with whatever else is left.
MR. BAUER: Thank you.
CHMN. MASON: I just also wanted to address the host committees a little bit and suggest how I had understood it and if that's not satisfactory to the national committees let us know but I had understood the exclusion of the host committees from this rule making to in essence represent a substantive conclusion that there were no BCRA provisions affecting the host committees with the possible exception that was discussed with Commissioner Thomas that the fund-raising restrictions on what national party committee officers and so on could do might apply in the same way that those would apply to any other (c)(3) or (c)(4).
So, I mean, if we clarify that the fact that we're not addressing the host committees here essentially means there's no unique effect that that satisfies your media concerns.
MR. JOSEFIAK: Mr. Chairman, that was certainly my understanding. I think what confused the situation were comments yesterday about national parties establishing these groups which then led to the issue if you're getting into the establish, finance, maintain, and control then you have automatic affiliation and therefore all these rules apply. And in the proposal that the commission put out the suggestion that somehow perhaps solicitations by officeholders to these kinds of organizations could be implicated but would be taken care of at a later date left us the impression that sometime in late summer or early next year we would have a regulation that would somehow prohibit or restrict activities that were currently being negotiated with the cities under the understanding that we're operating under the rules that had been promulgated in the past with regard to conventions and host committees. And I think if the statement is that by not taking any action we can assume that there is no BCRA connection at least for this cycle I think that satisfies certainly the RNC's position at this point.
CHMN. MASON: I'd also note just in terms of the way the legislation itself is set up that the legislation explicitly exempts a state or local political convention from the definition of federal election activity and so on like that. And so it would be an odd result indeed to say suddenly well, the national conventions are now covered. National conventions weren't exempted because they're generally funded, at least for the major parties, through public funding.
MR. JOSEFIAK: For the record what Joe said, that we are negotiating with a number of cities currently, just as Joe is, and they run the gamut. And so to say that somehow they're affiliated with us now when they establish host committees and they may never actually have a convention is another issue because in order to even bid they set up the structure to be able to use city resources to actually fund their bidding process. And to say that even if you weren't having a convention somehow you were an affiliate of a national organization or people from your local district, congressmen and senators, couldn't help raise money to get the city at least in the bidding process seems a little absurd. So thank you for that clarification.
CHMN. MASON: You mentioned affiliation. I particularly wanted to ask Joe because he gave us a good example regarding the Association of State Democratic chairs. It strikes me that even if we just take the current affiliation rules as I understand it something like a quarter or a third of the members of the Democratic National Committee are also members of the Association of State Democratic Chairs, in other words all the state chairmen are on whatever the governing board you call of your national committee.
And so if we looked at a corporate board or something like that and we said well, gee, we have a corporation here and one-quarter or one-third of the members of the corporate board of directors are directors of this other corporation out here and nobody else, by the way, there's complete overlap in that sense, that I think there'd be a reasonable possibility under the existing affiliation approach that we'd say those two organizations are affiliated. So help me out with how you're thinking through this in terms of how you can have a structure where these essentially largely overlapping boards are nonetheless not affiliated.
MR. SANDLER: Well, the membership of the Democratic National Committee, of course, is different than its board. We have the nationally elected officers. There's also an executive committee of the DNC, but, of course, their members take party chairs who are members of the executive committee as well.
I think that with respect to any organization, as we suggest in the comments and I think also on behalf of the state Democratic chairs, that any organization ought to be measured by the traditional and established affiliation criteria as of the time after the law becomes in effect to determine whether that organization is in fact currently established, maintained, controlled, or financed by the putative sponsoring organization. And I think if we have that approach that that will provide a reasonable and workable analytical framework for dealing with these issues in the future.
CHMN. MASON: It wasn't quite a direct answer but my time is up. Vice Chairman Sandstrom.
COMM. SANDSTROM: Will Rogers once remarked that he wasn't a member of an organized political party, he was a Democrat, and it strikes me that talk about organized political parties is almost an oxymoron, that they organize essentially like tropical storms over warm political waters, often reaching hurricane proportions in the months of July through November, consisting of random elements of volunteers thrown together, and that control outside of your ability to navigate within the eye of the storm is about the ability of a meteorologist who charts and predicts the course of that hurricane.
In testimony yesterday we had a panelist suggest that vagueness and overbreadth concerns with respect to the rights and duties of political parties and the reporting obligations are essentially lessened by the fact that they already have to report. It strikes me that maybe they're even greater when it becomes the activities of large numbers of volunteers engaging in activity essentially outside the actual control of officers of the party, that those overbreadth and vagueness concerns are more pronounced. Would any of the panelists like to respond?
MR. SANDLER: In terms of volunteers all of the officers of the Democratic National Committee and all of its lay leadership in the fund-raising area, they're all volunteers, nobody's paid, and that includes the chairman. So other than the staff everyone's a volunteer and that goes all the way down the line. There's a handful of state party chairs who are full-time, paid, but other than that the tens and tens of thousands of people involved with the state and local parties are obviously also volunteers.
COMM. SANDSTROM: Do you have any ability to control what they do on a daily basis and private conversations that they have? Do the people who raise money for you or the Democratic National Committee raise money for candidates typically?
MR. SANDLER: Well, absolutely, and a lot of the people who raise money, some of the biggest donors and raisers for the Democratic National Committee are extremely active in philanthropy, also, and raise money for all kinds of 501(c)(3) and (c)(4) organizations ranging from universities, churches, and synagogues to think tanks to voter registration and get out the vote organizations, the advocacy groups.
COMM. SANDSTROM: How would they respond to a request from you that because you're raising money for a national party you shouldn't raise any money for any state candidate or any 501 organization?
MR. JOSEFIAK: They'd ignore you. This is the one thing, the concept that's missing here, that when you're dealing with individuals who affiliate either with a Democrat, Republican, or any other party they're activists. As Joe said, they're political activists. If they're raising money they're fund-raising activists. They raise money for lots of different organizations and for anyone from Washington, D.C., to tell them they can't go raise money for their gubernatorial candidate just like they couldn't raise money for the Race for the Cure or any other program that they may be involved in that's why I'm saying the term "agency" becomes so important because it does impact on how you treat these folks.
And party organizations by their very nature are volunteer organizations unlike under our rules the only paid individuals other than employees of the committee are the chairman and co-chairman. Everyone else is a volunteer.
COMM. SANDSTROM: Thank you. How about terms like "solicit"? Do they need to have some definite boundaries? I mean, if you were limiting what people go out and try to garner support for somebody how about a term like "solicit"? Do you believe it needs to be defined?
MR. BAUER: Well, it clearly does and let me say one thing that completely complements what Tom Josefiak said and that is it is not only that you're going to encounter defiance. People are going to say they don't understand what you're talking about, you can't be right. But I'll go back to my first point. They don't understand what you're talking about.
I mean, one of the things that you try to do as an attorney is you try to convey to people an understanding of what is it that you're telling them means, what does it mean, so it can comport somehow with their view of how the world works and what they're legitimately being asked to do and why it is that the law prohibits some activities and permits others and we've now heard this distinguished group talk. These are some of the best lawyers here on my right in the country and know this stuff better than 99.999 percent of the rest of the world. And they just said they learn something different every day by reading the statute.
It's terribly complex. It was rushed. There are parts of it that don't fit particularly well together. The rules are going to complicate it further. And now we're going to be trying to explain all this complication to people who are just trying to conduct basic political activity and who have to be able to grasp what it is that they are supposed to do and not to do. So along with defiance comes, frankly, fatal incomprehension.
COMM. SANDSTROM: Thank you.
MR. SANDLER: In terms of just, Commissioner, your reference to agency, that underscores the need for the commission to reflect in its regulations and be very clear in defining both elements of what the statute says, not only that someone is an agent but that they're not implicated unless they're acting on behalf of the entity in question and it's very, very important to preserve that element and define its meaning.
CHMN. MASON: Larry Norton?
MR. NORTON: Thank you, Mr. Chairman. Thank you, panel. To follow up on the vice chairman's questions, the suggestion was just made by Mr. Sandler and is in the RNC comments that an appropriate definition for "agency" is found in the Restatement of Agency and that defines it as a relationship which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to control. With that definition it would seem to me that it would exclude this vast cadre of volunteers and philanthropists we're talking about but that there wouldn't be any particular reason why either an express or an implied agency wouldn't suffice.
In other words the reach of that definition wouldn't encompass the volunteers in the field but it could encompass those in the office or who worked more directly with the campaign. Is there any reason for drawing a distinction between "express" and "implied" so long as we build into the definition the concept of control and acting on behalf?
MR. SANDLER: Well, if there's built into the definition the concept acting on behalf of with respect to the activity in question, whether it's solicitation, fund-raising, whatever, yes, that would work. But the problem with implied agency I think is illustrated by the situations I mentioned at the outset. Don't vice chairs of the Democratic National Committee have implied authority? And yet does that automatically mean they're precluded when they're acting on behalf of their own state parties or themselves as state candidates or a labor union from raising money in those organizations or engaging in activities that would be prohibited to an agent of a national party under the act?
MR. JOSEFIAK: That's also within the scope of, too, and it was brought up yesterday you're wearing two hats. A chairman of a party committee at the state level has a totally different function when they're acting as chairman of the state party than when they come to the National Committee meeting and they're voting on a national resolution. And there's a conflict in that same person based on what their goal is for a particular election. There could be a conflict with what the national committee target goal is versus what that particular state wants to do within its election. There are two different regimes there.
And the implied agency theory I think not only do you have activists that are volunteers but you have activists, and I know this happens on the DNC side, too, who are employees of the DNC who in their own time will go out and volunteer in a race in Virginia, the Virginia gubernatorial race and just because they work for the RNC or DNC there's an implied agency arrangement there. And I guess that's where it becomes important to talk about within the scope of their employment because what they do on a Saturday afternoon in Northern Virginia, handing out leaflets for someone or raising soft dollars for someone is totally different than what they do Monday through Friday working for the RNC and DNC in a different capacity.
So our position is that if you can avoid the implied, please do so because we need some clarity here. But there is a whole range of types of individuals like that that are intertwined within the party structure and the clearer you can be as to what "agency" means the better off you are. Even with people you have that have authority go off on their own and do strange things but they're not acting within the scope of their authority to do so and I think that becomes very important.
MR. NORTON: I mean, one of the obvious questions this raises is who is covered if the definition is limited to express authority orally or in writing and we talked yesterday about how this plays out in the real world and how funds are solicited and maybe you, Mr. McGahn, could help on this point.
In a typical congressional campaign how many people are expressly authorized orally or in writing to raise funds for the campaign? Do they hold certain positions or titles with the campaign?
MR. McGAHN: Generally yes, you'd hired probably a finance director. You'd probably hire an outside fund-raising consultant, and they're the ones responsible for raising funds. In my experience you tend to have those who raise the money and those who spend the money, meaning you have the political operatives who control the message and what not and those folks do not go out and raise money and I don't think anyone in their right mind thinks that they're authorized to do so.
MR. NORTON: Of those who raise the money, whether they're in the right mind or not, how many of those are expressly authorized either by contract or orally, expressly authorized, not implied, to solicit funds on behalf of the candidate?
MR. McGAHN: It depends on the campaign, at least the two I mentioned, and they probably expressly put together a finance committee or a group of people who can help them raise money. So I think in my experience the people who are able to raise money tend to know they can raise money but that doesn't mean that there are also people who raise money on their own and aren't necessarily authorized by the committee.
In my experience there are many times where activists will want to do events or put up ads or do things on their own and they may have had some contact with the campaign. So you get into this very gray area, this implied authority, and to me that's very dangerous because the one thing as a lawyer for campaigns I always try to maintain some sort of control over what's going on both for compliance matters with the Commission but also dealing with outside entities. If you get into implied agency, to me that was a concept that was designed to protect people who maybe contract with the campaign.
Someone goes out and says I can bind this campaign and enters into a deal, you shouldn't stick somebody with an unpaid bill because they thought they were contracting you in faith. But to take that and extend it to binding the campaign in our context to me is very, very dangerous.
MR. NORTON: Thank you. I see my time is up.
CHMN. MASON: Jim Pehrkon.
MR. PEHRKON: Mr. Chairman, since you had requested the question concerning the Levin provision be held for the next panel that's exactly what I'll do. I'll wait for the next panel.
CHMN. MASON: If we have an urgent desire for a second round we can do that but if we want to be able to take a break and stay on schedule we don't have time for a second round. Commissioner Toner, at least, is anxious. It is a strong suggestion but Commissioner Toner.
COMM. TONER: I'll just ask one question, Mr. Chairman, and I think the General Counsel raised a critical issue yesterday and we've talked about it a little bit today. And that is "agent" under this new statute is not defined and obviously there are other agencies in this city and elsewhere where that is also the case where they implement statutes that contain agent concepts that are not defined in their organic statute and they have to come to grips with that. And the question is how have these agencies implemented agency and whether we are dealing with different sets of issues from other agencies because, number one, we're dealing with First Amendment interests that are acute, number two, it's been alluded to here this morning that the aspect of volunteerism that I think everybody agrees is a good thing in American politics and probably not enough of it. But I think another element actually that the RNC touched on and I don't think we've talked about at pages 8 and 9 of their comments is this idea that apparent authority, which other agencies may or may not use within their regime whether it's appropriate here because apparent authority to a certain extent grew out of the fact that innocent third parties reasonably relying on representations made by agents often in a commercial or monetary setting suffer damages and whether that same policy concern is at issue here with regulations of elections.
And the question is is it, and I take it, Mr. Josefiak, in your comments on pages 8 and 9 what you're stressing is that it is not?
MR. JOSEFIAK: That's correct.
COMM. TONER: And that's because we're not dealing with commercial transactions. We're not dealing with fraud. We're not dealing with some of the other issues that other agencies focus on where maybe there is a much stronger argument for apparent authority concept. Is that accurate?
MR. JOSEFIAK: Exactly. What we're dealing with here and the comment stresses is that we're dealing with First Amendment issues and I think that creates a whole different ball game for us in that we agree that the apparent authority language should not apply in this case. You've got to be more specific to that. You've got to have clarity here for people to understand who has authority and what's going on and not rely on apparent authority.
COMM. TONER: And what I think is interesting about this discussion is in addition to the First Amendment need for clarity, the fact that we have fundamental rights at stake, is this idea that apparent authority in other settings may have grown out of the commercial settings in which these agencies are regulating and the fact that innocent third parties suffer monetary damages through no fault of their own.
MR. JOSEFIAK: That or other personal damages where you don't have that kind of situation with this fundamental First Amendment issue that we're dealing with, the right to say and do what we think and advocate the election of who we think should win.
COMM. TONER: Mr. Bauer?
MR. BAUER: Yes, if I may, Commissioner, I just wanted to emphasize the national party committees on the Democratic side in their comments have strongly suggested, strongly recommended, that the commission proceed off of the definition of "agency" that it already uses in Part 109.
We speak here of legislative intent. Congress certainly, presumably those who sponsored the bill and are familiar with the legislation, knew that there was such a definition. It is focused and this is a critical point and it relates to the point you just asked of Tom Josefiak. It's focused on raising and spending money, which is, after all, what the statute is concerned with, and therefore it raises less the danger that this entire agency analysis is now going to cause us to roam out into the countryside and sweep up all sorts of other people engaged in other activities that ought not have to worry about whether they are or are not agents and that that definition coupled with the "acting on behalf of" formulation, it seems to us, provides both some clarity because it relies on a definition already in the rules and also some appropriate limitations so that it is not a definition that winds up creating either problems for volunteers or, frankly, limiting the number of people who are prepared to volunteer in political activity because they're afraid of becoming legally liable agents.
COMM. TONER: In your view is 109.1, our existing "agent" definition limited to individuals who hold substantive decision- making authority within an organization?
MR. BAUER: Or have been authorized. I don't have the definition in front of me, but who can authorize the making of expenditures or hold a position with the campaign organization which would suggest that indeed they have that authority.
COMM. TONER: To either raise or spend funds.
MR. BAUER: To raise or spend funds, which seems to be critical. Oh, excellent, thank you.
COMM. TONER: And I take it that in your view --
MR. BAUER: This is good agency- regulatory community cooperation. I appreciate it.
COMM. TONER: Exciting stuff. And in your view that's the appropriate way to draw the line?
MR. BAUER: It is, absolutely.
COMM. TONER: Thank you, Mr. Chairman.
MR. JOSEFIAK: Mr. Chairman, as long as you define that to exclude the commercial relationship because these regs that we're referring to with independent expenditures automatically taint the independent expenditure if you're using a common vendor and I think that we talked about yesterday in some of these situations where we're not dealing with independent expenditures just by using a common vendor isn't going to make you an agent thereof for all practical purposes and that's when you got into the discussion of it's within the scope of your authority and I think you've got to be very careful about using that without some sort of a clarification or modification as a difference between a commercial operation versus so-called political operations.
CHMN. MASON: I have requests for a second round from Commissioner Thomas and Commissioner Sandstrom. Commissioner Thomas.
COMM. THOMAS: I just want to be clear. Are you all here today telling us that we should use January 1 as the start date for defining most of the activity as federal election activity, for example, in the areas of voter ID efforts, GOTV efforts, and generic campaign activity, and that in essence everything that the party committees, the state party committees, do in the off-year, the odd year, in those areas could be paid for 100 percent with whatever soft money the state party allows and that likewise all administrative expenses should be paid for 100 percent with totally unregulated soft money? Do you all take that position?
MR. BAUER: First of all, I should mention, by the way, state law does regulate campaign funds. When you say totally unregulated you're talking about the reach of federal law.
The position of the national party committees on the Democratic side has been that January 1 of the even-numbered year ought to be the starting point. And we also believe that parties while they might have the option of allocating administrative expenses, for example, ought to have also the option of paying for them under state law with 100 percent state-regulated money.
COMM. THOMAS: This would be even in the even-numbered years as to administrative expenses?
MR. BAUER: That's correct. Correct, for those that fall outside of those that are expressly made subject as federal election activity to allocation.
MR. JOSEFIAK: We looked at the definition of "federal election activity," and what we argued for, that if it doesn't meet the definition of federal election activity therefore it is not regulated by federal law and therefore you could use 100 percent non-federal funds, and that would go for administrative expenses and then I believe we did not take the position that the federal election activity automatically starts on January 1st of an election year for anything. We left that open.
We looked at the actual conduct of the activity as to whether it would qualify as federal election, and I believe Mr. Sandler in his comments when we talked about the difference between voter registration and voter identification programs and basically referred to the fact it's only when you're actually contacting the voters that that should even be viewed as federal election activity raised a whole other issue on how you deal with those within the election year process.
So I think what we suggested is that we take the position it's not federal election activity, it's not regulated, but in the alternative at the very least if the Commission didn't accept that theory then you could still allocate like you could now but not have to use Levin funds to do so. But our position was that if it's not federal election activity then it's not regulated by this law or by the Commission.
MR. SANDLER: This issue was raised by the Commission itself in the notice of proposed rule making which states the NPRM that was approved unanimously by the Commission, "BCRA requires certain federal election activities, fund-raising costs, and certain salaries to be paid with federal funds. As a result, significant amounts of activity that were once allocable will have to be paid for exclusively with federal funds.
"BCRA also delineates which federal election activities may be allocated between federal funds and Levin funds. The Commission seeks comments on whether administrative expenses that are not identified in BCRA have a significant enough impact on industry elections to require continued allocation."
It was the Commission that posed the question and the answer is no and therefore that is our position.
COMM. THOMAS: Thank you.
CHMN. MASON: Vice Chairman Sandstrom?
COMM. SANDSTROM: It's unfortunate but I think it's true that political parties have been subject to lawsuits, investigations, investigations by this agency, and the cost of responding to those can be very, very significant. In the notice the Commission sought comment on whether those they should be able to pay for funds raised outside the act. What are your views on that issue?
MR. BAUER: We gave examples of some contingencies parties face like, for example, expenses for redistricting that we believe we ought to be able to pay for, as existing law provides and indeed the legislative history does not suggest Congress intended to change, exclusively with non-federal funds.
I'm not certain, Commissioner Sandstrom, I understood the specific case that you're asking us to address.
COMM. SANDSTROM: I can imagine a congressional investigation that might cause a political party and did cost millions of dollars. I can imagine people filing complaints knowing that parties have limited hard dollars to deplete the resources so that complaints and litigations become part of a political strategy because an advantage can be gained by the filing of a suit no matter how frivolous because lawyers cost money, and I'm sure it's all well earned, and other resources, the use of accountants and bookkeepers, to respond to a suit.
You could have some being sued for age discrimination. As parties have to downsize you're going to have to come up with who stays there and who doesn't. It's not uncommon in this country for disgruntled employees who believe that an improper standard was used to let them go and they might sue.
Again, if it had to be paid out of hard dollars it would deplete what everyone would recognize as limited sums. I'm just wondering even though as some have suggested the sponsors wanted to completely eliminate national parties raising soft money whether the examples I've used and those that have been recognized by the Commission as exemptions through the advisory opinion process and such should continue.
MR. JOSEFIAK: Commissioner, you're raising a very good point and it's not only that issue. I mean, members of Congress are allowed to have legal defense funds that are outside the limitations and prohibitions of the act. That's a very good point and you have to look at it from two issues, one from the state party situation which I think is a lot easier, and then also the national committee perspective.
You touched on it at the very end. It goes beyond just that example of paying lawyers and accountants because some people don't like to pay lawyers and accountants. But there are a number of situations in the advisory opinion process where the Commission viewed various activities as noncontribution activities, for example, the purchase of a mailing list, whereas in the past as long as you're paying fair-market value you can go and purchase a political committee mailing list and it can even be from a corporate entity and as long as it's viewed as a fair-market value that's not viewed as a corporation contribution and therefore you can put it in a federal account. You have those kinds of examples all over the place.
Are these kinds of receipts now are they banned under the law if they're legitimate actions that are not viewed as contributions and it's not the raising of soft money? Or are you going to take the position that this is a total ban of accepting any non-federal funds into a federal account, and are those classified under this law as non-federal funds? Or are they federally regulated non-federal funds? I think those are the kinds of issues that are going to confront you as you go through this process.
COMM. SANDSTROM: Is there a serious due process concern when the government is limiting the funds available to someone to defend itself from the government?
MR. JOSEFIAK: We certainly think so.
MR. McGAHN: We certainly think so. If I could cut in, Tom makes a good point about the members being able to have defense funds, the idea that an individual member could set up a defense fund but as soon as the members get together and form, say, the NRCC they couldn't have a common defense fund to defend that entity simply doesn't make sense.
It's not funds that are ever going to be used for federal elections, state elections, or any elections, so to me it's completely outside of the purview of what we're talking about here today. But the due process concern is very much there, associational rights are there, and that's why I agree with my colleagues that those funds are really not what the so-called ban is all about.
CHMN. MASON: I have requests from Commissioner and Commissioner McDonald. Commissioner Smith?
COMM. SMITH: Mr. Bauer, I want to direct one question at you because I know you won't be here for the afternoon panel. Along the lines of what we're talking about there are certain other things that the parties have spent money for in the past such as redistricting, recount funds, and things like that which don't seem to be directly related to federal elections.
On the other hand the statute seems to be pretty clear in saying parties may not accept contributions outside the limits of the act despite the due process concerns that we've just heard raised. I just wonder if you would address that and would it be your sense that parties ought to have the ability to raise money for those types of activities as well as the types of legal defense funds we were just talking about and if so is that something that this Commission has the power to do?
MR. BAUER: I believe it does. Again, here is where you would look normally to legislative history for the clear intent by Congress to take a position very, very different than for years it took and the Commission enforced.
A good example of that is redistricting activity. That's a very expensive activity. It's constitutionally mandated that the parties address it. And the Commission has taken the position that as a matter of law it is not activity for the purpose of influencing a federal election; it's something different.
There is nothing in the statute that passed the Congress in BCRA that suggests that that ought to be treated now as prohibited to the national parties. In fact there was some attempt to have language to that effect in an earlier version of McCain-Feingold and it was stripped out.
So I believe the Commission absolutely does have the authority to maintain in place absent congressional intent to repeal it specific types of allowances and exemptions that were meant to support activity that the Congress believed promoted a variety of political values.
We take that position, for example, with respect to the maintenance of the exempt activities in 100.8 and 100.7, and we make an argument there that there is no reason to believe Congress intended to repeal them because they were introduced for a reason, they've been implemented for a reason, and they remain just as valid today as when Congress first enacted them and the Commission began enforcing them.
COMM. SMITH: Thank you.
CHMN. MASON: Commissioner McDonald?
COMM. McDONALD: Mister Chairman, thank you. Just very briefly on the point about a date certain, and the more popular date appears to be January 1 of the even-numbered year, but me just ask Bob or any of you who want to respond. In relationship to that we have been told repeatedly that we should be for clarity, which I think is an admirable goal. At the same time the issue of fairness has been raised this morning and out of fairness and clarity might come consistency.
The question is obviously states have different days for their primary process, very different. Some are very early in the season. I think Illinois is one of the first if memory serves me right. Maryland, on the other hand, is decidedly down the road, about September. I believe that's right.
Would another option be, and what would you think about it based on your experience, that we use not necessarily a date certain but a time frame certain, whatever that might be? I don't know the answer to that, six months prior to or whatever. Yesterday the question whether the candidate was actually on the ballot, as an example, was one of the discussions.
Obviously, again, the problem there is the ballots take different shape at different times. I'm wondering on the consistency side if we should have, which is a normal regulatory tool, a time certain that might aid and assist all states equally at least in relationship to this kind of question.
MR. BAUER: I'll let my colleagues respond, too. My response is that I think you're going to wind up with obviously a lot of difficulties, anomalies, inconsistencies, in pegging, for example, dates to the variable primary season. For that reason I believe the one choice that you can make that presents the least complication and produces the fewest inconsistencies and anomalies is the date of January 1st of the even-numbered year.
MR. JOSEFIAK: Commissioner, the proponents yesterday took the position that it should be a two-year cycle. My colleagues on the Democratic side said a year and it shouldn't be less than that for sure, the year before the election, January 1st of election year.
But you have other options as well and one of them is if you look at the law itself when they try to take a project that would normally be viewed as a party-building project, a voter registration program that parties constantly do for a whole two-year cycle, four-year cycle, whatever it is, constantly registering people to vote, BCRA took the position that that becomes a party-building operation up until 120 days before an election.
The reason they looked at that versus everything else is because that was always going on. But the other kinds of activities, voter identification, get out the vote activities, you're not going to be doing that necessarily in an off-election year. So one other approach that you could take is say well, there is a clear indication of what they meant to take something that was normally a party-building operation and put it into an election setting. You could use the 120-day period.
Again, I'm not necessarily promoting that but there are those kinds of options where you can come up with a date certain based on other kinds of criteria that certainly indicate to the world that this now becomes a federal election activity.
So the proponents are saying two years, my colleagues are saying January 1st, and there may be other options like the 120 days where you could say the get out the vote activity at 120 days is definitely going to be 100 percent federal versus before that or whatever and deal with it that way.
Again, I'm not proposing that. It's just a matter of coming up with something across the board, and that's just another option for you to consider if you're not going to look at the activity itself as generating the problem.
CHMN. MASON: Thank you. We will take a 10-minute recess and I would beg the indulgence of my colleagues and the panelists to be back at 11:20 to start round two.
(Recess)
CHMN. MASON: The hearing of the Federal Election Commission on prohibiting excessive contributions will reconvene. This is our last panel in this portion of the meeting, and this panel represents state party committees so that we have several of the same members of the panel, a little different topical focus, Joe Sandler and Neal Reiff representing the Association of State Democratic Chairs, Mark Brewer, welcome, from the Michigan Democratic Party, and Tom Josefiak and Charlie Spies representing the Republican state parties.
We'll have the same format roughly as this morning though we may extend the Commissioners' question periods a little bit. We'll first hear from Joe Sandler.
MR. SANDLER: Thank you, Mister Chairman. I'll be extremely brief because I want to turn it over to Chairman Brewer, just to say that there's a couple of issues that affect the state and local party committees that particularly require clarification in this rule making.
First of all, as you've discussed and touched on in the earlier panel, federal election activity, the question of voter identification, what constitutes voter identification particularly as it applies to voter files and voter lists, the question of timing and nature of generic activity, clear lines as to what constitutes get out the vote activity, and also clarification of get out the vote that takes place in proximity to an election mentioning only state and local candidates.
If the law went into effect this fall and in Maryland in an area where we have in most of the state there are no contested congressional elections and the Maryland Democratic Party spends from its state account as required to do under Maryland law the day before an election for a communication or whatever get out and vote tomorrow for Kathleen Kennedy Townsend for governor are we to understand that that is federal election activity? That is an issue we need to know the answer to, yes or no.
I mean, obviously if the answer is yes then it will be up to the courts to take it from there. But I would point in that regard that Maryland has lower limits than the federal but different sources, and if there's any deference to be given whatsoever to the views in the Maryland General Assembly and the people of the State of Maryland as to what constitutes an appropriate regulation of funds that get spent directly specifically promoting their candidates for governor.
Secondly, the issue of local party committees, the issue of whether federal election activity counts towards the $1,000 threshold in the statutory definition of local parties is critical because even assuming that a local party uses and has on hand permissible funds for any generic activity, voter identification, or registration that it undertakes if it's the case that if it spends $1,001 on just get out and vote Democrat or registering Democratic voters in a year that has to register and report with this Commission that would sweep in thousands and thousands and thousands of local party committees into the ambit of registration and reporting with the FEC that aren't currently covered which is obviously a step that requires a lot of deliberation. We think the statute does not require that, it's clearly not the case, but it needs to be answered.
Thirdly, we've talked about the allocation ratio. We very much support the proposed idea of a unified federal, non- federal ratio for anything that remains subject to allocation and we also would point out that the regulations do not specify what allocation ratio applies to local parties. That's probably an oversight. It may be that the same one was intended but it doesn't address those.
And finally with respect to state party building funds, as we noted, there is nothing in the legislative history of this act in any way that suggests that the scope of permissible building fund activity for state parties is to be narrowed if they spend funds permissible under state law. Secondly, the Commission should allow a state party to spend 100 percent federal money without being preempted by state law if it so chooses on a party facility.
Finally, the Commission should provide a transition rule so that state parties can spend funds on hand under the current rule even raised under the federal preemption going forward. Thank you, Mister Chairman.
CHMN. MASON: Thank you. Mister Brewer?
MR. BREWER: Thank you, Mister Chairman. My name is Mark Brewer. I'm the chairman of the Michigan Democratic Party, and I've spent over seven years in that position, and I think in the eye of Commissioner Sandstrom's hurricane. That is one way of looking at it.
Prior to that I was president of my local Democratic club. I have been the treasurer of my county party committee. I've been chair of a congressional district party committee and active in many caucuses in the Michigan Democratic Party. I have been a volunteer prior to my current job in Michigan for over 20 years.
I want to thank the Commission for the opportunity to testify. The Michigan Democratic Party previously submitted written comments, and I simply would like to supplement those comments in my opening statement and then I look forward to taking questions.
My comments are divided into several parts. First let me talk about our local party structure in Michigan and the impact of the Commission's current regulations as well as what will be the impact of the regulations we're anticipating.
In Michigan we have 82 county parties, 16 congressional district parties, 40 to 50 local Democratic clubs organized on a city and township basis, and 30 caucuses representing various constitutes in the Michigan Democratic Party, all of which are affiliated with the party.
All of the officers and members of these various organizations are volunteers and they do this work because they believe in the party, they believe in its principles, and they believe in our candidates. Of these 160 to 180 organizations only three of them have paid part-time staff, and I indicate and stress that those staff are not responsible for compliance matters, nor are they qualified to deal with compliance matters. So the overwhelming bulk of the work done by these local party committees is done by volunteers.
Very few of these local party committees have federal committees. As a matter of fact not even all of our congressional district committees, which would be where any federal activity would likely occur, have federal committees. One of the chief reasons for that is the complexity of the current law.
I am told frequently by local party officials that they will not engage in federal activity because of the complex regulations that they already have to comply with. We have great difficulty recruiting people particularly to serve as local party treasurers when they look at the daunting regulations and complexities that they face.
We have tried to cope with this by doing training with local party officials, and I can tell you that not a day goes by that I don't get at least one phone call and my staff does not get similar phone calls from local party people asking about and trying to figure out how to comply with these complex regulations.
The materials that the Commission has produced over the years are excellent. You produce a wonderful set of manuals that are close to plain English as I think is possible. But you'll have to understand I think that from a lay person's perspective, somebody who is a volunteer in party activity, if I hand them a manual, as well written as it is and as easily read as it is, it's simply intimidating to them to even comprehend the prospect of having to deal with those kinds of regulations.
There is no question in my mind that as a result the current regulations and the current law are deterring local party activity in the State of Michigan, and based on my conversations with other state party chairs they're deterring and chilling local party activity all over the country. Therefore we strongly urge the Commission to add as little as possible to this complexity, to this burden, and to the chilling effect that is already occurring at the local party organizations. We also urge you that the regulations be as clear and simple as possible and be used to encourage and not discourage state and local party activity.
Let me now turn to a brief discussion of grass-roots activity in general. We've heard a lot of testimony, a lot of comments, about concerns about corruption and the appearance of corruption but I think there are other important considerations for the Commission in considering these regs.
For example, educating voters and increasing voter turnout are certainly compelling government interests which are deserving of consideration by the Commission as it looks at these regulations. There are many studies which have indicated that door to door canvassing, direct mail, phone contact, and all the traditional types of party activities that we normally associate with political parties fulfill these compelling government interests. They educate the voters and they encourage turnout.
Such activities and funding them pose no actual or threat of corruption because funding them takes far less money than the infamous issue ads about which there has been so much publicity. But ultimately these activities do require resources so we urge the Commission to encourage local parties, state parties, to be able to do voter education and turnout by encouraging these activities.
We ask that you make the rules as simple and clear as possible, avoid unnecessary or excessive registration and reporting requirements, make fund raising for these activities as simple as possible. Please don't choke off this important activity by making fund raising for that difficult.
These principles apply particularly to the Levin Amendment. Carl Levin, a Michigan senator, practices and is knowledgeable in grass-roots politics. He believes in it. Based on my discussions with him his amendment is intended to encourage these activities and should not be interpreted to hinder them.
With that I see the red light is on and I'll stop, but I'm eager to talk with the Commission and answer your questions. Thank you.
CHMN. MASON: Thank you. Commissioner Josefiak?
MR. JOSEFIAK: Thank you, Mister Chairman. In addition to the comments we've already presented regarding state parties I'd like to make just two quick points. First, the Commission's regulations should allow for flexibility and to the extent possible under this new law federalism. I want to address the flexibility issue briefly and then turn the federalism issue over to Charlie Spies.
There are a couple places in here where the Commission is asking whether the Commission should establish specific fixed rules and percentages, for example, in the allocation. I think that is a fine idea but I don't think it should be mandatory. I think that a party committee at the beginning of a cycle should be allowed the opportunity to continue the ballot composition formula because it may more reflect the activity within its state or if it desires to go for the fixed percentage but I don't think it should be one or the other. I think it should be at the beginning of the cycle the party committee, just like it does now, submits its form and could decide to submit a form that says we're going to go with the fix or we're going to go with our ballot composition formula and here is what it is.
The second point on flexibility is a mandatory Levin account. I don't think it should be mandatory; however, just like I strongly advise state parties now dealing with the exempt activities to segregate funds, I would strongly advise them to do so but there are some states, for example, where state law may prohibit a dual accounting system at the non-federal level. I think it should be left up to the state party to decide whether it wants to take the responsibility or whether it has to take the responsibility of having just one account.
Again, those briefly, Mister Chairman, are some of the points where the more flexibility you can build into the state and local party level I think the better the state and local parties will be. Just like the good chairman from Michigan said, it's difficult enough to deal with these issues, and the more flexibility they have based on their own situation politically and legally within their state they should have that opportunity and we shouldn't try to hamstring them any more than this new law already does.
So thank you, Mister Chairman. I will now turn it over to Charlie.
MR. SPIES: Thank you, Tom. Mister Chairman, the Commission has been put in the strange position of having the obligation to promulgate regulations that stem from statutory language the Commission knows in many places is almost certainly unconstitutional while at the same time that language does not in its plain language do exactly what the congressional sponsors of that legislation now claim that they wish or intended or now wish that they had intended that it would do. This reality places a statutory interpretation burden on all commissioners whether you're supported, opposed, or claimed to remain silent under the underlying merits of the BCRA.
As you look at the statute, if the language is plain, if the meaning is clear, then the question doesn't arise; however, if even arguably the language of the statute is not clear then I urge you to turn to federalism. A key canon of statutory interpretation is the Supreme Court's super-strong rule against federal invasion of a core state function. As the court explained in {IOn}BFP v. Resolution Trust{IOff}, "Federal statutes impinging upon important state interests cannot be construed without regard to the implications of our dual system of government. When the federal government radically readjusts the balance of state and national authority those charged with the duty of legislating must be reasonable explicit."
In other words the Commission has an obligation to be respectful of the federalism issues inherent in our American system of federal regulation of federal campaigns and state and local regulation of state and local campaigns. For over 200 years states and localities have regulated their own elections; therefore, when there is a close call of statutory interpretation the Commission has an obligation to promulgate regulations that respect this federalist division of power and allow continued state and local regulation of their respective elections. Thank you.
CHMN. MASON: Thank you. Commissioner McDonald?
COMM. McDONALD: Mister Chairman, thank you, and again let me thank the panel members, Mark, you in particular because you were quite extensive in your comments, and I thought they were extremely helpful because you're at the local level and you're having to deal with the day to day activities.
Your description of the Michigan Democratic Party, by the way, sounds a great deal like the Oklahoma Democratic Party except I think maybe we had one person last I checked that was on somebody's payroll.
Before I ask a question or two I do want to say that the comments that Joe made at the outset I thought were outstanding in terms of some of the things we are going to have to grapple with here fairly soon because it is right that there's not much time in some of these areas, and some of these are very, very fundamental questions that it will be imperative that we try to resolve as quickly as we can.
Mark, let me just ask a couple of questions. I suppose if I wanted to be the devil's advocate, which I always want to be, by the way, because otherwise it makes it a rather boring meeting, let me start with would you dismiss out of hand Senator Levin's comment since he didn't have any legislative history in terms of what he conveyed to you about the intent of the amendment that he put forward or should we give a little more weight to what he had to say since it is the Levin Amendment?
MR. BREWER: Well, I'm not here to testify here as a lawyer, first of all, in terms of what the legal standards are.
COMM. McDONALD: I'm not a lawyer. You and I will get along fine.
MR. BREWER: And I certainly would never be one to say that anything Senator Levin should be discounted.
COMM. McDONALD: I see why you're the head of the party.
MR. BREWER: But, as I indicated, Commissioner, in all seriousness, I mean, I have spoken with Senator Levin and his brother Sandy was a former chair of the Michigan Democratic Party. They are practitioners of grass-roots activity in every election cycle. There is no finer practitioner than Carl as he travels the state and works with local party organizations.
And it's my understanding from talking to him that the purpose of his amendment was to preserve and encourage, protect, the ability of state and local party organizations to perform these grass-roots activities. He is as much an enemy of issue ads and that kind of corrupting influence as anybody who voted for this bill but he was very clear with me in numerous discussions that he wants to be sure that state and local parties are able to do these traditional grass-roots activities.
COMM. McDONALD: How do you see breaking out in terms of the organizations you mentioned at the outset, Mark? I think you said are there what, between 160 to 180 different organizations in the state?
MR. BREWER: Yes, from time to time. Obviously, we have clubs that come and go, caucuses that come and go, but at any given time 160 to 180 local party organizations.
COMM. McDONALD: In relationship to the Levin Amendment what does that mean in terms of from your perspective or what should it mean, maybe, in terms of which ones can accept the Levin money and can they all accept it? Do you see a difference between state and local, or is there some criteria that you would look at?
MR. BREWER: I believe that they all should be able to accept the Levin money under the restrictions that are set out there, $10,000 per donor per year, because, again, going back to the hurricane analogy, there's an enormous amount of party activity in any state that's not controlled or directed by the state party. I constantly learn after an election about the local pamphlets or the newspaper ads or whatever it was that the local party folks did without any prompting, encouragement, or direction from me, and I think that's to be commended and encouraged, not discouraged.
Again, I think being able to finance that and have each of these parties raise that kind of money or obtain that kind of money would be very helpful in that regard.
COMM. McDONALD: So under your example, just roughly, how much money would that be for the state then that an individual could give?
MR. BREWER: Well, if every one of those local party organizations receives that it would be 150 or 160 times $10,000, I suppose, in that particular instance. It's inconceivable to me that that would happen, Commissioner, but it's theoretically possible.
COMM. McDONALD: One of the things that have interested me from the outset in terms of thoughts that the commenters have and I appreciate very much is we want to be clear and we want to be concise but at the same time we want a lot of flexibility. And it's a little bit confusing for people I think who are trying to follow this, at least it's confusing for me, and let me give you the classic example, the Levin funds, if you will. Is it your position, and I gather that it's Joe's, that the various states and I assume these organizations within the state could all handle the Levin Amendments in a flexible manner in terms of accountability?
MR. BREWER: They certainly could but that would also depend on the regulations. The regulations can make it more or less difficult.
COMM. McDONALD: No, no, I understand but I gather one of the things that strike me is that because the issue relates to at least partial federal funds whether you would be uncomfortable taking a different position, say, than the State of Illinois in terms of how they handle their business in terms of reporting requirements, et cetera.
MR. BREWER: I think in general the regulations should be sufficiently flexible so that that is done. I mean, I'll point to one example now where I believe, and my lawyer can correct me, local party organizations can engage into about $1,000 worth of activity before they have to register and report. That's a terrific kind of safe harbor provision for these local folks, and many of them don't spend beyond that and so they're okay.
But if you start to say that all these activities add up and all of a sudden you're over the $1,000 threshold we're going to have less and less federal election activity and less and less party activity in general as a result.
COMM. McDONALD: On the voter I.D. matter for just a moment, do you have a position on whether there ought to be a date certain? I'm just looking here at Michigan real quickly. I gather you have actually a fairly maybe kind of standard. It's a little more than, say, in Oklahoma, but you have a filing deadline of May 14th, I gather, for the primary?
MR. BREWER: Yes.
COMM. McDONALD: Then on the 6th of August you would have your primary date. What's your feeling about the date certain as opposed to months out from the primary itself or out from the filing date?
MR. BREWER: I support the position that's been taken by the state chairs association and the DNC about using January 1 of the election year as a cut- off and I would particularly add in response to this that in Michigan we have no party registration, so as an ongoing effort which we think should be regarded as administrative and not have to be paid for with 100 federal funds we have an ongoing effort to try to identify party adherents and we think it would be very unfair to us as a state which does not have party identification to all of a sudden federalize and require us to pay for that kind of work with 100 percent federal funds when other states which have party identification would not have to do so.
COMM. McDONALD: You have an open primary system?
MR. BREWER: Open in the sense of that when you go into the booth you can choose which party to participate. Once you make the choice you cannot cross over.
COMM. McDONALD: Thank you. It's very helpful and thanks for coming.
MR. BREWER: Thank you, Commissioner.
CHMN. MASON: I am next in the question order. I wanted to ask first about the issue of federal election activity and voter I.D. and get out the vote because this discussion of dates in my mind is a little off the point and I had said yesterday in looking at the sorts of activities involved there's 120 days on the voter register. That's easy but voter identification and get out the vote in my mind as I had actually practiced it in the past had focused on particular elections and getting people to vote for a particular candidate or for the candidates of a party at a particular election.
So it seemed to me those phrases had a natural meaning as they were laid out. In other words this would involve typically in my experience a local party conducting a phone bank and calling people and saying if the election were held today would you vote for and going through the list and sometimes it varied as to whether they would ask two names or five names. In other words they might not always ask all the names on the ballot and then they would have a list. So that was voter identification. And then the get out the vote was the people who gave the desired answers would get a postcard the week before and a phone call the day before and so on like that.
It strikes me that that might be a more appropriate way to try to regulate this activity, to focus on the activity and not on the date. Commissioner Smith's staff has come up with a nice list of municipal election dates and so we were told well, there are just these five states that have odd-year elections. Well, it turns out that all of the big cities, virtually all of the big cities, elect mayors in odd-numbered years and even some that elect mayors in even-numbered years have spring municipal elections.
I can't imagine a situation in which Congress intended that efforts focused on a municipal election in March of an even- numbered year would all of a sudden get roped in. So I'd like the counsels to address the concept of focusing a definition of voter identification and get out the vote on particular activities, asking particular voters to vote in a particular election, and whether that would perhaps work better than trying to establish dates.
MR. SANDLER: Yes, that's exactly the approach we think makes sense, Mister Chairman. The definition definitely should focus in a clear and objective way on the activity and not the date on which it's conducted subject to anything before January 1st should not be regarded as federal election activity.
It's true absolutely that there are elections happening all the time and it is not just a matter of these five states. In 2001 I believe there were three special elections for state legislative races where control of a chamber was at stake. Two of those states very tightly regulate the funds that can be spent on promoting candidates for state office. I believe one was Maine and one was Wisconsin.
I think you might want to consider what those states would think about saying guess what, you can't spend 500 it now, you can 1,000, not from this source but that source, and the federal government gets to say what kind of money you spend in those races. That's extremely problematic.
MR. JOSEFIAK: I think there are really two points and they're overlapping. One is when automatically are you going to think of things as federal election activity, and that's when Joe was talking about January 1st of the election year, and then looking at the activity of it itself to see whether it qualifies under the definition of federal election activity.
Even in the voter I.D. program there may be situations like you've discussed where you're saying if the election were held today who would you vote for but, more problematically, the further away you are from the election it's probably just identifying who is a Republican and who is a Democrat.
Then you get into this situation of are you talking only about the general election in November or are you talking about the primary election where that's more apt to be the case, where if you're a registered Republican or Democrat you're going to be encouraged to get out and vote for a Republican or Democrat in that primary. So there are those kinds of issues even within that election year as to what election you're talking about.
And I think that there are two different considerations. One is when does this automatic date of everything being per se federal election activity, and the other is when by definition is the activity itself federal election activity and that's where I think there's a lot of confusion.
MR. BREWER: Mr. Chairman, if I may? Your characterization of this process and the data is absolutely accurate. Increasingly voter identification is very candidate-specific, very election-specific, so much so that much of the data isn't really even useful after that election passes for subsequent elections in which the issues are different, the candidates are different, and so forth.
So I just want to indicate to you that from a practical perspective what you have described is absolutely accurate.
CHMN. MASON: Well, I'm glad things are still done the same way. I wanted to go to this question about a vote for Kathleen Kennedy Townsend or whoever it might happen to be because my reading of the plain language of the statute is not what you want to hear and so I'll posit it and let you tell me if there's some way out.
In most states in the off- presidential years such as the elections coming up the gubernatorial candidates are the top of the ticket and very typically parties focus on the top of the ticket. Now, as I read the new statute it says get out the vote efforts in connection with an election at which a federal candidate is on the ballot. And so in a lot of states this year we have hot gubernatorial races and, of course, we have House candidates and in some states Senate candidates.
As I read it, what Congress apparently intended was that if a state party makes a phone call and says we urge you to come out Tuesday and vote to reelect Governor Jones that that would be covered as federal election activity because there are also federal candidates on the ballot.
Tell me how I'm wrong there. I understand there may be constitutional issues, federalism issues, so on, but focus on the statute and tell me if that reading is incorrect?
MR. JOSEFIAK: Well, I think it's incorrect because I think there's an exemption for 100 percent non-federal election activity and we would urge the Commission to accept that concept that if you're putting out anything that is saying Vote for X for Governor and that's all you're saying that that would be viewed as a non-federal election activity.
Now, if you said something like not only vote for her but for the rest of the Republican team then there's a generic message there that I think would be covered under the statute. But if you strictly relate it to vote for the governor and maybe the state legislative candidates it's my view, anyway, the Commission could take the position in the regulations that that would be exempt and that would not be viewed as federal election activity.
CHMN. MASON: So what's the meaning of the focus as to when a federal candidate is on the ballot? I'm concerned not about vote-for messages but about get out the vote.
MR. JOSEFIAK: It's in the generic sense. When you say vote Republican or vote Democrat in a federal election --
CHMN. MASON: I understand that. I'm concerned about the call, though, that says come out Tuesday and vote to reelect Governor Jones. So it's not a generic campaign message. It is a get out the vote appeal --
MR. JOSEFIAK: For a non-federal candidate.
CHMN. MASON: For a non-federal candidate but there's a federal candidate on the ballot.
MR. JOSEFIAK: Right, but, again, we would urge you to look at the exemption and come to the conclusion --
CHMN. MASON: What exemption?
MR. JOSEFIAK: That something that's 100 percent geared toward a non- federal candidate is exempt from being viewed as