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Judge Upends FEC Guidelines

Election Agency to Appeal

A majority of members of the Federal Election Commission are vowing to appeal a U.S. District Court decision striking down more than a dozen campaign finance regulations the agency authored in response to the Bipartisan Campaign Reform Act of 2002.

In the meantime, agency officials advised the regulated community not to panic and to continue to follow the rules they wrote two years ago — a suggestion that didn’t necessarily seem to sit well with those who challenged the rules in the first place.

“I would think we’d have very strong grounds to appeal,” Republican FEC Chairman Bradley Smith said Monday afternoon after reading the 157-page opinion issued over the weekend by Judge Colleen Kollar-Kotelly.

Smith and others at the agency suggested the FEC would seek a “stay” of the ruling, which would enable them to enforce regulations as they stand, until they’re rewritten.

“I think that we should appeal it,” said Ellen Weintraub, a Democrat and vice chairwoman of the FEC. “I personally have no investment in these regulations. I wasn’t here when the agency wrote them. I’d be happy to have the opportunity of weighing in, from an institutional perspective and at least get some input from the appellate court.”

But Weintraub added that she thought it was critical that the regulated community “not be left in a state of confusion, six weeks out of the election as to whether there are rules are or not” and she encouraged political actors to stay the course.

“I think our current regulations stand and people should not think there is a free-for-all in the last six weeks before the election. They stand until we rewrite them,” Weintraub said.

Kollar-Kotelly’s ruling struck down 15 regulations that the six-member FEC had crafted to implement BCRA after its passage in 2002, concluding that the FEC had acted contrary to Congress’ intent and “severely undermined” the nation’s campaign finance law.

Reps. Christopher Shays (R-Conn.) and Marty Meehan (D-Mass.) had challenged the FEC’s rules in court in late 2002, alleging that in its implementation of BCRA, the agency had created a web of loopholes that were “contrary to law.”

As the lawmakers’ supporters celebrated their court victory Monday, the defeated agency regrouped, most of its members planning to fight Kollar-Kotelly’s ruling.

“I disagree with the ruling. I think we should appeal,” Republican Commissioner Dave Mason said.

In all, four FEC members — three Republicans and one Democrat — confirmed on the record that they would support an appeal of the decision.

Democrat Scott Thomas, however, noted that the FEC “does not always appeal adverse decisions.

“We didn’t appeal adverse decisions in the Beaumont case, the Christian Coalition case, and the GOPAC case,” Thomas said. “Nonetheless, we will have to decide soon what course to take in order to minimize confusion at this stage of the election process.”

Mason also seemed concerned about potential confusion the ruling could cause, but suggested that the system should still provide a sense of order.

“As I read it, in the meantime our current rules remain in effect — in essence the judge concluded they are not strict enough — so this has no immediate effect on the elections,” Mason remarked. “Even if we did not appeal we would have to rewrite our current rules through a process that included more notice and justification, a process that would take a year or more, and surely no one would argue that there are no rules in effect during that process.”

However, Democracy 21 President Fred Wertheimer, who is part of the Shays-Meehan legal team, cautioned political actors against using the overturned FEC regulations as guidance in the campaign finance arena.

“Our view is these regulations were found to be unlawful … that what remains is the statute and in particular what people should not be doing is attempting to take advantage of various loopholes that undermine the statute and that a federal district judge has declared improper,” Wertheimer explained.

Added Wertheimer: “What the FEC should be doing at this point is moving as quickly as possible to follow what the judge said and confirm their regulations to the judge’s findings. … How many times is it going to take for this commission to start properly interpreting the campaign finance laws?”

Some party lawyers found the situation unsettling Monday afternoon, and suggested the judge’s decision left the regulated community in a tenuous position.

“What this judge has done in unconscionable,” remarked Don McGahn, general counsel for the National Republican Congressional Committee. “The case was filed almost two years ago, has been pending for six months, and now here we are, 43 days until the election, and the judge throws out the rules, without any sort of guidance as to what the FEC or the regulated community is supposed to do. I don’t care what side of the issue you’re on, no one in their right mind can think the chaos this will cause is good.”

On his Web site, Loyola Law School professor Rick Hasen, an expert on election law and campaign finance, suggested that tossing out the existing rules this late in the game would be a calamity.

“I certainly hope that the rules that were in effect at the FEC will continue to be in effect for this election cycle,” Hasen wrote. “With just six weeks before the election, it would be chaos for some of the basic fundraising rules to be changed now.”

In her opinion, Kollar-Kotelly largely agreed with Shays and Meehan, invalidating regulations the FEC had crafted to cover coordinated communications, a federal soft-money ban and soft-money rules for state parties.

Among the portions of the FEC’s regulations that came under the harshest fire from Kollar-Kotelly were the agency’s coordination rules.

In its rulemaking, the FEC had originally exempted from “coordinated-communications” rules communications made more than 120 days prior to an election, or those that

didn’t refer to a specific candidate or a political party. The agency also exempted Internet communications from the definition of a coordinated public communications.

Kollar-Kotelly — a member of the three-judge panel at the U.S. District Court for the District of Columbia that heard the original challenge to BCRA led by Sen. Mitch McConnell (R-Ky.) before it went to the Supreme Court — threw out both exemptions, concluding that the first of the two would “create an immense loophole that would facilitate the circumvention” of contribution limits and allow “potential for gross abuse.”

FEC Commissioner Smith expressed dismay that the judge had junked the agency’s exemption for Internet communications.

“I think most interesting part of the decision [is the section] that holds that the Internet cannot be exempted and that unpaid advertising cannot be exempted,” Smith remarked. “In that situation, what are unpaid political ads on the Internet? It’s called blogging. … It’s a very far-reaching decision that could bring in a lot of Internet activity.”

Wertheimer, however, rejected Smith’s suggestions as “classic scare tactics” and suggested that the reform community was taking a wait-and-see approach to the FEC’s next move.

“We’ll wait to see what they do. We very much want and believe that people participating in the 2004 elections should not attempt to exploit the FEC’s wrongful regulations to evade and circumvent the campaign finance law,” Wertheimer said.

In addition, the ruling rejected the FEC’s definition of the term “solicit” as it applies to the federal ban on party soft money. The FEC had chosen to read the term “solicit” as meaning only “to ask” — an overly narrow definition that would be easy to manipulate, Kollar-Kotelly wrote.

“The purpose of Title 1 of BCRA is to divorce national political parties, as well as candidates for federal office and federal officeholders, from the nonfederal money business,” the court wrote. “To permit such individuals and entities to funnel nonfederal money into different organizations by simply not ‘asking’ the donors to do so, but using more nuanced forms of solicitation, would permit conduct that would render the statute largely meaningless.”

Kollar-Kotelly also struck down regulations defining the term “agent,” as it applies to the coordination rules and the soft-money ban, and she threw out the FEC’s exemption of 501(c)(3) charity groups from electioneering-communications provisions. While the FEC had reasoned that the Internal Revenue Service prevents such groups from intervening in political campaigns, thereby negating the need for FEC action, Kollar-Kotelly rejected this approach.

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