Subject: Re: Prejudging the 527 issue before the FEC?
From: Roy Schotland
Date: 1/30/2004, 8:08 AM
To: "J. J. Gass" <jj.gass@nyu.edu>
CC: Rick Hasen <Rick.Hasen@lls.edu>, election-law <election-law@majordomo.lls.edu>

Whatever one thinks of the merits of Toner's letter, may an Ad Law prof express surprise at the thought that since a judge shouldn't do as the Cmr did, the Cmr may be doing something wrong?
    If the agency were doing sheer rule-making (the usual notice-and-comment), Toner is completely OK.  If the agency were doing adjudication, probably not OK-- but is an AO in an agency which has no adjudicative authority, "adjudicative"?  Toner even wrote about the need for rules.  And did he show he's made up his mind?
    Even in rulemaking, cmrs should keep open mind.  But the law and the view of, I believe, all familiar with agencies, would say that what Toner's done here is not only OK it's the kind of airing that is appropriate and more constructive than not.  (See 1979 DC Circuit upholding FTC Chair Mike Pertchuck's participation after he went light-years farther toward "closed mind" than Toner has gone.  I'm one of the minority who thought Pertschuck went too far; his conduct was such that after he won the case, he withdrew from the matter.)
    In short, let's focus on the merits/demerits of the substantive issues.  Thanx,  r
"J. J. Gass" wrote:
I was interested in Rick's comment about how a judge wouldn't (or shouldn't) make comments like this about issues raised by a pending case.  The same thought had occurred to me--besides election law, the other stuff I spend my days thinking about revolves around the functioning of the courts, where judges' taking public positions on controversial issues is a hot topic in the wake of Republican Party of Minnesota v. White. For what it's worth, if this were a judicial matter and if Michael Toner were a judge, his comments would be improper and would clearly require his recusal.  An somewhat analogous case (though not completely, because the case was not yet pending before the Court when the remark was made) was Justice Scalia's criticism of the Ninth Circuit's Pledge of Allegiance decision.  As most of you probably know, the plaintiff requested Justice Scalia to recuse himself, which he did, when the Court considered (and granted) the cert. petition. On the other end of the spectrum, it's clearly proper for a legislator to express views on policy questions that are likely to arise in the current legislative session.  In the agency rulemaking context, one might view commissioners as similar to legislators; on this view, there's nothing wrong with Toner's letter.  But there's a bit of an odd feel to it (at least to me).  Perhaps this is because the FEC performs both quasi-legislative and quasi-adjudicative functions.  Responding to the request for an advisory opinion on the 527 issue at least feels more like what a judge does (the article III ban on advisory opinions notwithstanding) than what a legislator does.  And notice-and-comment rulemaking would seem kind of pointless if the agency decisionmakers had already made up their minds; just as a judge must have a sufficiently open mind to give a fair hearing to the litigants' arguments and evidence, one might argue, a commissioner ought to be "persuadable" by public comments. I'm curious as to what folks who have dealt more intimately with the FEC think about whether there's anything troubling about the tone (no pun intended) of Mr. Toner's letter.
----- Original Message -----
From: Rick Hasen
To: election-law
Sent: Thursday, January 29, 2004 3:02 PM
Subject: Prejudging the 527 issue before the FEC?
 In a recent post to his website, Bob Bauer referred to a letter that Republican FEC commissioner Michael Toner sent to Roll Call and published on Tuesday. The letter is apparently not on the Roll Call's website, but here it is:
    Now that the Supreme Court has upheld the constitutionality of the McCain-Feingold campaign finance law, a key question remains to be decided: With the national parties strictly barred from raising and spending soft money, can tax-exempt outside groups, organized under Sections 527 and 501(c) of the tax code, legally take the parties' place and spend unlimited soft money on election-related activities that could directly affect the 2004 presidential and Congressional elections?

    The Federal Election Commission has an obligation to decide this critical legal question as soon as possible. If the answer is yes, almost all campaign finance observers agree that the McCain-Feingold law will be severely undermined, and that at least as much soft money will be spent on electoral activities in 2004 as was spent before the new law was enacted.

    The stakes are very high. Published reports indicate thatDemocratic-oriented tax-exempt groups plan to spend hundreds of millions of dollars of corporate, union and other soft-money funds to air advertisements attacking President Bush and to conduct voter-mobilization activities in targeted states. Press accounts indicate that a group called America Coming Together is aiming to spend at least $95 million on Democratic voter identification and get-out-the-vote activities in key states. Billionaire currency trader George Soros has reportedly pledged more than $15 million to ACT and MoveOn.org to help underwrite these efforts. Moreover, an outside entity named the Media Fund, headed by Harold Ickes, a former aid to President Bill Clinton, reportedly plans to spend nearly $100 million to finance television and radio advertisements critical of President Bush.

    All told, published reports indicate that Democratic-oriented outside groups are planning to spend at least a quarter of a billion dollars on election-related activities. This year alone outside spending by Democratic groups could exceed the $245.2 million of soft money that the Democratic Party's national committees spent during the entire 2000 election cycle.

    Although Democratic-oriented Section 527 and 501(c) groups have received more media attention to date, there is little doubt that Republican groups are poised to also spend vast amounts of soft money prior to Election Day if it is determined to be legally permissible.

    The FEC is scheduled to rule in early February on an advisory opinion sought by a Republican tax-exempt group known as Americans for a Better Country. However, in order to comprehensively address the legal ability of outside tax-exempt groups to spend soft money on election-related activities, the commission needs to issue binding regulations as soon as possible.

    The FEC issued final regulations implementing the national-party soft-money ban 90 days after McCain-Feingold became law. I believe the commission should issue rules governing outside groups with similar expedition. If the FEC issues final rules by mid-April, it would ensure, no matter what the agency decides, that the rules are effective for the 2004 presidential election.

    I do not prejudge what legal rules the FEC should issue. However, in upholding the constitutionality of the McCain-Feingold law, the Supreme Court repeatedly indicated that the government has the power to prevent circumvention of the campaign finance laws. Outside tax-exempt groups are seeking to essentially replicate, with soft-money funds, much of the issue advertising and voter-mobilization activities that the national parties financed with soft-money funds before the new law was enacted. At the very least, serious questions exist whether outside groups are circumventing the McCain-Feingold law, and these questions must be addressed.

    In the weeks ahead, it will be critical that the sponsors of the McCain-Feingold law indicate whether they believe outside tax-exempt groups can legally spend unlimited soft money on election-related activities in the place of the national political parties under the new law. I believe the FEC should decide this important question as soon as possible, before the outside groups spend the millions of dollars they are currently amassing.

    The future effectiveness of the new campaign finance law may largely hang in
    the balance.

    Michael E. Toner
    Commissioner
    Federal Election Commission


The letter is very interesting and confirms the fears I expressed in this Slate article yesterday that the 527 issue is getting enmeshed in a partisan battle between Democrats and Republicans. Though the commission is split between three Democrats and three Republicans, this Washington Post article explains where the fourth vote for regulation of 527s may come from:

    Democrats are privately worried that one of the three Democratic appointees to the FEC, Scott E. Thomas, could vote that the "independent" Democratic groups are illegal.

    Thomas is a strong supporter of hard-line regulation and has devoted much of his adult life to working for the FEC. He has been angered by the decision of Democratic congressional leaders not to appoint him to another term. He is serving until a replacement is confirmed.


I also think it is very interesting that Toner would send such a letter. Despite the statement that he has not "pre-judged" the issue, note the other things he says:

1. If 527s are not regulated as political committees, "almost all campaign finance observers agree that the McCain-Feingold law will be severely undermined."

2. "[I]n upholding the constitutionality of the McCain-Feingold law, the Supreme Court repeatedly indicated that the government has the power to prevent circumvention of the campaign finance laws. Outside tax-exempt groups are seeking to essentially replicate, with soft-money funds, much of the issue advertising and voter-mobilization activities that the national parties financed with soft-money funds before the new law was enacted."

3. "The future effectiveness of the new campaign finance law may largely hang in the balance."

Certainly no judge would make such statements about a matter that is pending, or might soon be pending, before him or her. But apparently the rules for FEC commissioners' public statements are considerably more lax.
In any event, it hardly seems "critical that the sponsors of the McCain-Feingold law indicate whether they believe outside tax-exempt groups can legally spend unlimited soft money on election-related activities in the place of the national political parties under the new law." That statement may be important for public relations purposes, but the views of Sens. McCain or Feingold would have no bearing on resolution of the difficult constitutional question whether McConnell's footnote 48 reference to California Medical Association changed the apparent rule from CMA that seems to bar limits on contributions to political committees that engage solely in independent expenditures.

-- 
Rick Hasen
Professor of Law and William M. Rains Fellow
Loyola Law School
919 South Albany Street
Los Angeles, CA  90015-1211
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rick.hasen@lls.edu
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