Battle Over FEC Awaits Next Year

Off BCRA Victory, Backers Refocus

Posted December 12, 2003 at 5:49pm

As supporters of the McCain-Feingold law savored last week’s Supreme Court victory, both sides were readying for the next battleground in the struggle over campaign finance reform — the Federal Election Commission.

“This is just the beginning and not the end. The beginning of a renewed administrative process to write [regulations] via the FEC and the litigation that follows,” Thomas Mann, a senior fellow at the Brookings Institution, observed last week while moderating a panel discussion on the impact of the court’s decision.

The watchdog agency responsible for enforcing the law will play a key role in the evolution of the Bipartisan Campaign Reform Act as it creates precedents through early enforcement decisions and responds to specific questions from campaigns, candidates and other political actors.

Members of the so-called “regulated community” are already testing the limits of the new law by seeking advisory opinion requests asking the FEC to spell out just how far lawmakers can go, in the wake of the soft-money ban, in raising money for outside groups like 527s — and some BCRA backers seem worried that the FEC could open a whole new set of loopholes in the law.

“The commission currently has before it an advisory opinion request that says, ‘Can we involve federal candidates and officeholders in raising money for our 527s?’” noted Seth Waxman, the former solicitor general who represented McCain and other authors of the law before the Supreme Court.

“I don’t know how the commission will rule on it and what those facts will be,” Waxman warned, “But that’s the sort of thing that could get us back into the problem we have but needn’t.”

Trevor Potter, a former Republican appointee to and chairman of the FEC who is now a leading campaign finance attorney and supports BCRA, is watching the developments closely.

“I think it’s very important that the FEC not allow the recreation of officeholder solicitation of soft money through these 527s,” Potter said.

Potter said the FEC would also need to reexamine several of its regulations that employ the term “express advocacy” and rewrite those rules. The Supreme Court unequivocally threw out the so-called “magic words” test for determining express advocacy of a candidate and said Congress had other options at its disposal in its interpretation of what constitutes campaign-related speech.

Legal experts who opposed the new restriction on fundraising and electioneering are promising more legal action of their own down the road.

“It is quite likely that various aspects of the law will now be subject to ‘as applied’ challenges, in which plaintiffs seek relief based on their particular circumstances,” Kenneth Starr, a lead attorney for Sen. Mitch McConnell (R-Ky.) and other plaintiffs, said last week during an online chat with The Washington Post.

“I would also anticipate that there will be challenges to the Federal Election Commission’s regulation implementing BCRA,” Starr continued. “In fact, some of BCRA’s own sponsors have already commenced such litigation.”

Within the next several days, U.S. District Judge Colleen Kollar-Kotelly will have to determine how to proceed with that lawsuit, which Reps. Christopher Shays (R-Conn.) and Marty Meehan (D-Mass.) filed against the FEC last year. The lawmakers are challenging the FEC’s interpretation of the new soft-money ban.

The suit alleges that regulations issued by the FEC undermined the soft-money ban and created loopholes through which soft money could continue to be raised and spent. Their complaint argues, among other things, that the FEC too narrowly defined the terms “solicit” and “direct” to allow a “wink and nod” request for soft money to be made by federal candidates and officeholders.

But Bradley Smith, a Republican sitting on the six-member FEC, said he believes the Supreme Court’s majority opinion actually strengthens the FEC’s hand in this lawsuit in that it affirmed certain aspects of the FEC’s rulemaking process.

In a section of the majority opinion authored by Justices John Paul Stevens and Sandra Day O’Connor, the court debunks the assertion of plaintiffs that the new law created “associational burdens” and seizes on the FEC’s definition of those terms to do so.

“We are not persuaded by this argument because it hinges on an unnaturally broad reading of the terms ‘spend,’ ‘receive,’ ‘direct,’ and ‘solicit,’” their opinion stated.

Moreover, the judges referred to the FEC’s current definitions of “solicit” and “direct” as “straightforward” in not interfering with the ability of national committees to associate with state and local committees.

“We feel very good about that aspect of the decision and feel it really kicks a lot of the props out of the Shays-Meehan suit and really shows that there’s a lot of heat and noise, but if they really look at what’s in the regs, it’s really faithful to what’s in the statute,” Smith said.

Potter said he disagrees with Smith’s assessment of the opinion and the message it sends.

“I did not get that impression …” Potter said, adding that he “didn’t see anything in the majority opinion suggesting the commission should be writing regulations that subverted the new law.”

To the contrary, Potter said he believed that court’s opinion was a stinging indictment of the FEC for creating the loopholes that developed into the “corrupt” soft-money system.

Smith — who is expected to serve in the rotating position of chairman of the FEC in 2004 — defended the agency’s recent performance and contends that the court’s decision was a sort of triumph over those who’ve been “harping about what an awful job the FEC has done.”

“What we’re trying to do is effective enforcement of the statute without overreaching,” Smith said, noting that the watchdog agency has also managed to streamline a lot of its enforcement processes — thereby substantially reducing the amount of time it takes to deal with enforcement matters, while at the same time assessing some of the stiffest civil penalties in the agency’s history.

Advocates of BCRA insist that the bottom line is that the entire six-person agency needs to be ditched — and they’re doing everything they can to try to make that happen in 2004.

“Even Chief Justice Rehnquist acknowledged the obvious when he wrote that many of the abuses we’re concerned about involved “donations that were made for the ‘purpose of influencing a federal election’ and thus are already regulated,” said Mark Glaze, associate counsel for The Campaign Legal Center. “The problem is that the FEC can’t, or won’t, enforce the law. That’s the threshold problem we need to deal with.”

To that end, McCain, Feingold, Shays and Meehan have already introduced a bill to replace the FEC with a new three-member agency.

Feingold confidently told the AP last week that it’s “full speed ahead” on that measure and that they have the “wind at our back.”

Glaze said the Supreme Court decision handed down last week supports that viewpoint.

“One of the most striking things about the Supreme Court decision was the way it placed the blame for soft money squarely at the doors of the FEC. The justices quite bluntly said that it didn’t have to be this way — the commission systematically subverted FECA, and that’s why we’re back in court,” Glaze explained. “At this point there’s ample evidence, to say the least, that no campaign finance reform is going to live up to its potential until we have a real enforcement agency.”

The battle between reformers and Democratic Congressional leaders to replace longtime Democratic Commissioner Scott Thomas with labor lawyer Robert Lenhard could also get ugly next year.

Senate Minority Leader Tom Daschle (D-S.D.) and House Minority Leader Nancy Pelosi (D-Calif.) recommended AFSCME lawyer Lenhard’s name to President Bush earlier this year — a move that infuriated groups such as Democracy 21 and Common Cause, who say Thomas is the most faithful proponent of BCRA and should be reappointed.

“That clearly heats up,” Potter said, adding that “it would be very strange after this opinion for the Democrats to insist on the president appointing somebody who has said the new law is unconstitutional and taken that position in litigation.”

Lenhard, however, has said that his participation in the lawsuit on behalf of the AFL-CIO was nothing more than a lawyer representing his client and doesn’t necessarily reflect his personal views on BCRA. He withdrew from participating in the lawsuit when his potential nomination was announced.

That fight may drag on, however, because FEC nominations are usually handed down in pairs, and Republicans are said to be in no rush with regard to filling an open GOP slot on the panel, which is currently occupied by Dave Mason. While it’s not a done deal, several sources said they expect GOP Commissioner Mason will be renominated for another term.