Friday, August 15, 2008, 2:52 PM

Political GPS: New Cops on the Beat: How Turnover at the FEC Can Change the Regulation of Politics

Until about a month ago, the Federal Election Commission was paralyzed by an impasse over the appointment of new Commissioners. New bundling regulations, which Congress mandated be adopted by March 2008, remained in limbo. Investigations were stalled. The advisory opinion process – critical in a Presidential election year – ground to a halt.

Five new Commissioners have now taken their seats on the Commission, one of whom previously served for a couple of years as a recess appointee. Today we take a brief look at the matters that await the Commission’s attention and the inevitable fight over policy and priorities.
  • Enforcement: For over six months, the Commission was unable to open an investigation, approve a settlement, or authorize litigation. The “new” Commission thus inherits a substantial backlog. Whatever Commission votes may have been taken in pending matters, such as opening investigations or finding probable cause, at least some of those votes will undoubtedly be revisited by the new members. There will also be an issue of timing. Will controversial matters be acted upon and announced in the coming weeks or will final action be delayed until after the election?
  • Supporting Political Advocacy by Non-Profits: A new lawsuit was recently filed against the FEC, challenging prior Commission action to prevent 527s and other non-profits from evading contribution limits and source prohibitions. Among other things, the suit challenges new FEC rules that allow the agency to regulate groups that raise money by telling donors that their funds will be used to support or oppose a clearly-identified federal candidate. The “old” Commission touted these rules as a serious response to what some considered to be circumvention of campaign finance laws. Will the “new” Commission defend these rules as vigorously? There are major implications here, not just for the non-profits, but also for wealthy donors and corporations that are prohibited under these rules from contributing money in response to solicitations of this kind.
  • Coordinating with Candidates and Political Parties: A few weeks ago, the District of Columbia Court of Appeals struck down key aspects of FEC regulations dealing with coordination between campaigns and parties, on the one hand, and independent spenders, on the other. The purpose of coordination rules is to prevent campaigns and parties from evading contribution limits by having donors finance campaign activity directly – for example, paying for television ads crafted by the campaign. For years the FEC has struggled to find a balance that gives meaning to this prohibition, but that also avoids ensnaring in lengthy investigations candidates, parties, media buyers and other vendors, and third-party groups. The “new” Commission will need to respond to the court order and adopt new rules.
  • Coordination and the Internet: The new FEC has, however, already closed an enforcement matter that recognizes the breadth of the so-called Internet Exception and its interaction with the coordination rules. The FEC found that the former State Chairman of the Iowa Democratic Party and his wife did not make an illegal in-kind contribution to the Obama campaign by operating a political blog that supported his campaign. The FEC noted that such uncompensated individual internet activity is specifically permitted by FEC regulations and that a campaign may coordinate with such an Internet website about communications as long as no fee is charged for placing information on the website. (MUR 5949)
  • Hiring a New Staff Director: Sounds mundane, but the FEC “Staff Director” exercises a lot of clout. The person that fills this vacant position will direct the agency’s Audit Division, which pours over committees’ records; the Reports Analysis Division, which examines reports and issues RFAI’s (“Requests for Further Information”); the Office of Administrative Fines, which slaps PACs and other filers with penalties for late submissions; and the Office of Alternative Dispute Resolution, a favorite of Commissioners for handling alleged violations they believe are less egregious. Not that they always agree on what those are.

More PACS Filed with the FEC

Business may be slumping, but the FEC announced that the number of PACs has increased over the first six months of 2008. Since January 2007, roughly 550 new PACs registered with the Commission. Corporate PACs remain the largest category, with 1,578 committees.

More on Numbers – the LDA Contribution Reports

Lobbyists and organizations that employ them disclosed nearly 100,000 contributions and other payments under the semi-annual report required by the lobbying and ethics reform law. The vast majority were campaign contributions that are separately reported to the FEC. The reports reflect a great deal of confusion about what other donations and payments had to disclosed, a situation that was exacerbated by new guidance published by Congress just two weeks before the reports were due.

Pay-to-Play on Steroids

We have reported in earlier editions of Political GPS about existing and pending pay-to-play laws around the country. In New York City, lobbyists and persons doing business with the city are limited in their ability to make political contributions (e.g., only $400 for mayoral candidates). Because of the expansive definition of “doing business,” over 12,000 people are already on the “blacklist” of limited donors, including officers of corporations and not-for- profits, and even leaders of churches and synagogues. You can search the list of limited contributors at this link.

If you have any questions or would like more information, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429) or Jim (JKahl@wcsr.com, (202) 857-4417).

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