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FEC to Consider Political Payroll Deductions for Trade Groups

The Federal Election Commission is considering a rules change that could make it much easier for trade associations to raise money for their political action committees and, according to proponents of the change, would finally put trade association PACs on a level playing field with corporate and union PACs.

The proposed amendment — which was addressed at today’s year-end FEC meeting — would allow trade association PACs to collect contributions through a system of payroll deductions from member company employees. The move reflects Americans’ increased reliance on electronic methods for making financial transactions.

The draft notice of proposed rulemaking, as it is technically called, was approved in a 4-1 vote, with Vice Chairwoman Ellen Weintraub, a Democrat, dissenting.

The FEC will publish the proposed changes in the Federal Register and accept comments on the proposal for 30 days. If the agency receives enough requests to testify, it may hold a hearing on the matter before putting the proposal to final vote.

Trade association advocates argue that the proposed rule change is long overdue and could greatly reduce trade associations’ fundraising expenses, as well as make it easier for smaller trade associations to develop effective PACs.

“It’s a very big deal for trade associations,” said Brett Kappel, an attorney with Vorys, Sater, Seymour and Pease who specializes in campaign finance and PAC law.

“Unlike corporate PACs, trade association PACs have never been able to collect contributions from member company employees by payroll deduction,” Kappel said. “That means higher costs for trade association PACs who have to solicit contributions more frequently. It also means that trade association PACs have an uncertain stream of income, which makes PAC planning more difficult.”

The proposed change was prompted by a petition filed in 2003 by America’s Community Bankers and its PAC. The trade association argued that the prohibition on payroll deduction and check-off systems was inconsistent with other FEC regulations and agency guidance.

“It’s an antiquated rule that needs to be changed,” said Michael Briggs, chief legal officer for America’s Community Bankers.

He said that with the ease of payroll deductions, employees likely would contribute more to their industry PACs.

Kurt Pfotenhauer, senior vice president for government affairs with the Mortgage Bankers Association, said it would be “hard to quantify” the impact of the change, but added, “I definitely feel it will have a positive impact on our ability to raise funds.”

“It’s a good way to institutionalize PAC giving in your corporate culture,” said Pfotenhauer, treasurer for the MBA’s PAC, which raised more than $1 million in the last election cycle. The MBA is one of 29 groups that wrote the FEC in support of the change

The proposed rules change has also garnered support from Rep. John Doolittle (R-Calif.), who promoted the idea in a June 2004 letter. Doolittle said the change would bring the FEC’s regulations “more in line with today’s reality.”

“Because electronic transactions are so widespread, I believe that the Commission should amend its regulations to allow contributors to make use of this simple technology,” Doolittle wrote. “Equally important, the change advocated by ACB would enable more individuals, including small business owners, to participate in the electoral process.”

The California lawmaker also argued that the change would make it easier and more affordable for contributors to be able to spread their contributions across a number of pay periods.

Supporters of the change said so far they have not encountered any opposition, and a spokeswoman for the AFL-CIO said the labor group does not have a position on it.

Weintraub, the only FEC commissioner who objected to going forward with the rulemaking process, said she voted against the motion because there are a “million things on our agenda which are pressing.”

“I just don’t think this is our priority right now, or ought to be our priority right now,” Weintraub said.

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