CAP Calls for Administration to Take Action through IRS, SEC, Federal Contractors

Center for American Progress: “”Specifically, CAP is calling on the executive branch to act in the following three areas:

  • IRS rulemaking on political activity by nonprofit organizations: Current regulations enable so-called dark-money groups to masquerade as 501(c)(4) “social welfare” organizations, thereby avoiding campaign finance disclosure laws. The IRS should clarify the rules for 501(c) organizations and should also tackle the problem of undisclosed political spending more directly by amending the regulations for Section 527 of the tax code. Rather than simply regulating dark money groups out of Section 501(c), the IRS should regulate those groups into Section 527 and thereby mandate public disclosure of donors.
  • Political activity by federal contractors: The executive branch should mandate further disclosure of political spending by federal contractors and should furthermore require those contractors take steps to ensure that they are not making impermissible federal political contributions.
  • SEC rulemaking: Currently, there is no rule requiring corporations to disclose political activity expenditures to their shareholders. The SEC should prioritize the development and implementation of a political activity disclosure rule. This corporate transparency would not only help to ensure that corporate spending is in line with shareholder interest, but it would also combat the problem of dark money.”

More information here.

FEC to Consider Loosening Rules on PACs to Draft Candidates

National Journal: “The current interpretation of the rules allows draft groups to raise funds for a specific prospective candidate, which would then be given to that candidate if he or she decides to run before the filing deadline for the race the draft group identified.

“Under the guidelines expected to be approved Thursday, the groups will have more options on what to do if their candidate doesn’t run. The rules would allow a draft group to promise would-be donors that if their preferred candidate doesn’t enter the race, the money would then go to a second candidate. For example, they could say that if Warren doesn’t run, the money would instead go to Sen. Bernie Sanders. The new rules would also give the groups more leeway to set deadlines for their candidates to enter the race.

“The new rules would also allow groups to raise money for a candidate who fits certain criteria. Specifically, a group could raise funds for ‘the first female president,’ which would go to the eventual party nominee should the nomination go to a woman.”

FEC Chair Pushes Effort to Limit FEC’s Enforcement Abilities

Election Law Blog (12/8): “Federal Election Commission Chairman Lee Goodman apparently is endorsing a controversial proposed FEC enforcement manual, which would sharply circumscribe the authority of staffers in the agency’s Office of General Counsel to investigate alleged campaign finance violations and share information with other government agencies, including the Department of Justice.”

FEC Has Received only 300 Comments on Campaign Disclosure Rules

News Observer: “The six-member Federal Election Commission is asking the public to comment about rules governing whether voters can know which interests are spending how much to win over their votes.

“The Federal Election Commission long has been one of the more dysfunctional agencies in Washington. It splits 3-3 on virtually all issues of any significance related to campaign disclosure. But in a moment of clarity in October, the commission agreed to ask the public to weigh in on the most pressing issue before it: campaign finance disclosure.

“The deadline for filing comments is Jan. 15. A hearing on is set for Feb. 11 in Washington. This being the Federal Election Commission, nothing is particularly easy. Finding the location on the website where you can file comments is no small feat.

“Commissioners Steven T. Walther, Ellen L. Weintraub and Ann Ravel are going out of their way to encourage public comment, including traveling the country trying to generate interest.”

Federal District Court Rules (Again) Against FEC Rule Limiting Disclosure Requirements

First, some background from Find Law:

“The challenge grew out of FEC rules promulgated under the Bipartisan Campaign Reform Act (BCRA), also known as the McCain-Feingold Act.

“The BCRA requires that every person who ‘makes a disbursement’ for the costs to produce and air more than $10,000 of “electioneering communications” file certain disclosures with the FEC. The challenged rule, 11 C.F.R. § 104.20(c)(9), states if the disbursements were made by a corporation or labor organization, the disburser must disclose the name and address of each person who donated $1,000 or more to the corporation or labor organization for the purpose of furthering electioneering communications in a calendar year.

“Rep. Chris Van Hollen argued that the rule violated the BCRA, which plainly requires every ‘person’ who funds ‘electioneering communications’ to disclose ‘all contributors.’ Van Hollen claimed that there were no terms limiting that requirement to the names of those who transmitted funds accompanied by an express statement that the contribution was intended for the purpose of funding electioneering contributions.”

“A district judge agreed with Van Hollen in March, concluding the McCain-Feingold Act ‘spoke plainly’ in preventing the agency from limiting the disclosure requirement.

“Tuesday, the D.C. Circuit reversed that ruling, finding that the BCRA language wasn’t so plain after all. The appellate court concluded, “The statute is anything but clear, especially when viewed in the light of the Supreme Court’s decisions in Citizens United v. FEC and FEC v. Wis. Right to Life, Inc.”

ElectionLawBlog provides the opinion:

“The Court now concludes that the promulgation of 11 C.F.R. § 104.20(c)(9) was

arbitrary, capricious, and contrary to law and that the regulation is an unreasonable interpretation
of the BCRA for several reasons. First, the Commission initiated the rulemaking process for the
stated purpose of responding to the decision in WRTL II, but nothing the Supreme Court did in
that case provides a basis for narrowing the disclosure rules enacted by Congress. WRTL II dealt
solely with the question of whether the statutory ban on corporate and labor organization funding
of electioneering communications could withstand an as-applied constitutional challenge. And
in answering that question, the Court did not find any need to address the BCRA’s disclosure

“Second, there is little or nothing in the administrative record that would support the
Commission’s decision to introduce a limitation into the broad disclosure rules in the BCRA.
Neither the petition for rulemaking nor the original notice of proposed rulemaking proposed
altering the disclosure requirements for corporations and labor unions. None of the commenters
asked the agency to amend the disclosure rules to include a purpose requirement, and the
Commission did not incorporate the purpose requirement in the new rule until after the notice
and comment period and the hearing had been concluded. The only post-hearing comment
received in response to the newly incorporated language strongly opposed its inclusion.

“Finally, the regulation’s purpose requirement is inconsistent with the statutory language
and purpose of the BCRA. Congress passed the disclosure provisions of the BCRA to promote
transparency and to ensure that members of the public would be aware of who was trying to
influence their votes just before an election. The added purpose requirement in section
104.20(c)(9) thwarts that objective by creating an easily exploited loophole that allows the true
sponsors of advertisements to hide behind dubious and misleading names. Based on these
considerations, the Court will vacate 11 C.F.R. § 104.20(c)(9), and it will grant plaintiff’s motion
for summary judgment.”

Note: I removed some numbers for clarity

FEC Member Call to Consider Requiring Disclosure for Internet-Based Campaign Media Generates Conflict

Sacramento Bee: “We have a regulation that I find very frustrating, that essentially exempts anything that’s web-based from the regulations” that require disclosure of who pays for other kinds of political advertising,” [Commissioner Ann] Ravel said Thursday in a meeting with the Sacramento Bee Editorial Board to discuss a variety of federal election issues. Ravel becomes chairman of the commission early next year.”

“It would mean if a campaign is going to put something on a different medium than on TV that there are ways that those things could be exempted… from disclosure,” she said. “If campaigns are moving into the Internet, as they are, we need to be thoughtful about those distinctions. We need to be informed.'” [Brackets added]

“It’s an idea that hasn’t sat well with Lee Goodman, the Republican who chairs the FEC.”

Note: the text here has been rearranged from the original article.

Anti-Reform Group Accuses Mayday PAC of Failing to Use Required Disclosure Language in Ads

Free Beacon: “‘Paid for by Mayday PAC. Not affiliated with any candidate or campaign,’ the group disclaimed in eight of its New Hampshire radio ads. A compliant disclaimer would’ve said that the group “is responsible for the content of this advertising.”

“Small changes to disclaimers in ads also allowed MAYDAY to reduce the time in 30 or 60-second spots devoted to satisfying the FEC’s disclaimer requirements. That allowed the group to devote more airtime to the actual contents of the ad.

“‘Mayday PAC saved approximately 10 percent of its advertising costs compared to other non-candidate speakers’ by illegally abridging disclaimers on two New Hampshire television ads, CCP said. ‘This amount is not trivial.'”

“After publication, Lessig directed inquiries about the complaint to this statement on his website: ‘To be clear: Every Mayday.US ad fully identified Mayday.US as its sponsor. And unlike Super PACs that accept dark money, Mayday.US discloses every contribution (over $200) as well. None could be confused about whom the ad was from, and anyone who cared could identify whom the PAC was funded by.'”

My take: appears that Mayday may have made some mistakes here, but hypocrisy is a bit far – Lessig doesn’t support the current disclosure rules, he wants to eliminate the need for them altogether.