The draft opinion does not attempt to answer two of the three most
important questions in the current 527 debate:
(i) what makes an organization a "political
committee" (ABC implicitly conceded that it is such a committee,
by noting that it has federal and nonfederal "accounts" pursuant
to 11 CF.R. 106.6 -- which I think makes sense only if it is a
"political committee"); and
(ii) whether FECA's $5000 limit on contributions to
political committees is constitutional as applied to a nonparty
committee that does not make contributions to, or coordinated
expenditures with, federal candidates or parties.
The opinion is, instead, concerned almost exclusively with the
legality of political committees' own conduct - in particular,
with how a committee may use so-called "non-Federal funds." With
respect to that question, the draft opinion will, I predict, be
deemed inadequate or unsatisfying by many observers on all sides
of this debate. As I understand it based on a very quick read,
the draft's analysis proceeds in the following steps:
1. The draft presumes the validity of 11 C.F.R.
102.5(a)(1)(i), which provides that all "expenditures" by a
political committee "in connection with any Federal election" must
be "Federally funded," i.e., not paid for by union and corporate
treasury funds, or by individual contributions over $5000. (See
page 5.)
2. In determining whether a particular committee activity is an
"expenditure," the draft assumes that, in accord with 2 U.S.C.
431(9)(A)(i), any "purchase, payment, distribution, loan, advance,
deposit, or gift of money or anything of value, made . . . for the
purpose of influencing any election for Federal office"
constitutes an "expenditure."
3. The draft then takes a page out of BCRA in crafting a new
bright-line rule for committees' communications that mention
federal candidates. The draft assumes that communications
"promoting, supporting, attacking or opposing" federal candidates -
- communications that are, for entirely separate purposes, deemed
"federal election activity" pursuant to title I of BCRA, see 2
U.S.C. 431(20)(A)(iii) -- are necessarily "for the purpose of
influencing a federal election," and therefore constitute
"expenditures" by the committee (page 12). The "promote, support,
attack or oppose" standard, the draft reasons, is "appropriate as
the benchmark for determining whether communications made by
political committees must be paid for with Federal funds" (page
3).
4. With respect to voter registration and GOTV activities that do
not expressly promote, attack, support or oppose federal
candidates, the draft opinion simply assumes the continued
application of the allocation rules specified in 11 C.F.R. 106.6.
There are at least a couple of major problems with this analysis.
A. Most fundamntally, the draft opinion makes virtually no
attempt to tie any of its analysis to the language of FECA itself.
A person unschooled in the lacunae of the past quarter-century of
FEC regulation would, upon reading this, assume that FECA imposes
specific restrictions on political committees' "expenditures," as
such. But FECA does not impose any such expenditure limitations.
Instead, it prohibits two sorts of contributions to political
committees (and, in one case, the receipt by such committees of
the prohibited contributions).
First, corporations and unions may not use their treasury funds to
give any payment, or anything of value, to a political committee
"in connection with" any federal election, convention or caucus
(and political committees may not receive such payments). 2
U.S.C. 441b(a).
Second, no person may make contributions to nonparty political
committees "in any calendar year which, in the aggregate, exceed
$5,000." 2 U.S.C. 441a(a)(1)(C). For purposes of this
restriction, "contribution" is defined as "any gift, subscription,
loan, advance, or deposit of money or anything of value made by
any person for the purpose of influencing any election for Federal
office; or the payment by any person of compensation for the
personal services of another person which are rendered to a
political committee without charge for any purpose." 2 U.S.C.
431(8)(A).
The FEC has, over the years, declined to apply these two
restriction limitations with regard to a contributor's actual
intent or purpose in making the donation. Instead, it has simply
presumed that funds contributed in excess of these two statutory
limitations are not, in fact, "in connection with" federal
elections (in the case of corporate and union treasury funds) or
"for the purpose of influencing" federal elections (in the case of
individual donations above $5000) -- a presumption that apparently
is based on the fiction that such so-called "non-Federal" funds
are contributed to political committees only in order to
influence, and only "in connection with," state and local
elections. Thus, according to the FEC, if the recipient of such
an contribution spends it in a way that is intended to influence
both state and federal elections, the portion of the expenditure
that was paid by "non-Federal" funds is presumed to have been
applied "only" to influence (and in connection with) the state-
election "portion" of the expenditure. For example, a GOTV
campaign that does not mention federal candidates can be paid for
in part using corporate and union treasury funds, on the
assumption that those funds are being used - and were intended by
the contributor to be used - only to influence state and local,
but not federal, elections.
The draft opinion continues in this vein. Indeed, the draft even
opines that a committee's expenditure is in part "non-Federal,"
and may be paid for with "non-Federal" funds, where the Committee
itself has the express purpose of electing or defeating particular
federal candidates (page 7). Perhaps, however, the FEC might
want to reconsider whether it should abide by the allocation
scheme and by its "objective"-use/recipient-expenditure-based test
for determining whether FECA contribution limits are exceeded, in
light of the Supreme Court's rebuke of such practices in
McConnell. The McConnell majority noted (in the context of
expenditures by party committees) that a "literal reading" of the
FECA would have required activities intended to influence both
federal and state elections to be paid for entirely with funds
subject to FECA restrictions. 124 S.Ct. at 648-49 ; see also id.
at 660 n.44 ("the FEC regulations permitted more than Congress, in
enacting FECA, had ever intended"); id. at 660 FEC's allocation
regime "subverted" the FECA scheme that was approved in Buckley).
Justice Thomas, dissenting, similarly reasoned that if donations
are in fact made for the purpose of influencing federal elections,
then the "alleged soft-money donation is in actuality a regular
'contribution' as already defined and regulated by FECA." Id. at
732. I think it is fair to say that virtually no one believes
that corporations and unions give treasury funds to political
committees solely "in connection with" nonfederal elections, or
that individuals give more than $5000 to such committees solely
for the purpose of influencing nonfederal elections. And, if that
is correct, then it should mean that all such donations are
"Federal," and FECA-restricted.
On the other hand, perhaps it could be argued that, even if the
FEC should never have embraced such a "nonfederal purpose" fiction
back in the 1970s, by overturning the FEC's allocation scheme in
certain respects, but by leaving it untouched in other respects -
including with regard to contributions to nonparty committees -
the Congress in enacting BCRA in effect ratified the FEC's
longstanding construction of FECA, and approved the permissibility
of the FEC's basic allocation/recipient-use-test scheme. (On the
other, other hand, that FEC scheme was, as applied to nonparty
committees, anything but clear under FEC law even before BCRA -
see, e.g., the SG's brief for the FEC in Akins and the FEC's
proposed regulatory amendments in March 2001, 66 Fed. Reg. 13681;
therefore, it would be difficult to identify precisely what BCRA
could be said to have ratified.)
In any event, the draft opinion does not join this debate;
instead, it is predicated on the FEC's longstanding fiction about
contributors' "nonfederal" intent, on the existing allocation
scheme, and on the assumption that the FEC should look to the
manner in which the funds are spent, rather than at the objective
for which they were contributed. Indeed, the draft goes so far as
to refuse to answer questions concerning whether certain donations
to political committees are lawful when the donator's stated
purpose is to influence federal elections (see pages 22, 7 n.6.) -
even though it is precisely such donations, and not committees'
expenditures, that FECA directly regulates! The draft defends
this refusal on the ground that requests pertaining to the
activities of "third parties" do not qualify as advisory opinion
requests. This is, I think, a cheat. The entire statutory basis
of the draft opinion is FECA's restrictions on contributions to
political committees. To be sure, the FEC regulations address the
committees' expenditures, but only as an administratively
manageable way of enforcing the statutory restrictions on
contributions by corporations, unions, and individuals. Moreover,
at least as to corporate and union donations, the draft could
easily have opined as to whether the committees' receipt of such
donations is unlawful. See 2 U.S.C. 441b(a) (separately
prohibiting committees' receipt of corporate and union treasury
funds donated "in connection with" federal elections).
B. Even assuming that the FEC should continue to regulate FECA's
contribution limitations based upon the purposes of the subsequent
expenditures by the recipient political committees, the draft
provides very little explanation for its new bright-line rule that
a communication promoting, attacking, supporting or opposing a
federal candidate can be financed entirely with "Federal funds."
The draft simply reasons that such communications are "for the
purpose of influencing a federal election," and thus are
"expenditures" within the meaning of 2 U.S.C. 431(9). (See page
12.) But there are at least a couple of problems with this theory.
First, for better or worse, rightly or wrongly, "expenditure"
under 431(9) and similar FECA provisions has been construed to
include only "magic words" express advocacy, a narrower category
than BCRA's "federal election activity' definition. BCRA did not
amend the definition of "expenditure." To the contrary - that
more recent statute established new categories of communications,
including "electioneering communications" and "federal election
activity," precisely because it wanted to reach communications
that were not regulated as "expenditures" under FECA. Thus,
insofar as committees' use of "non-Federal" funds is (or should
be) governed by what constitutes an "expenditure" under FECA, the
draft opinion appears to construe that statutory term more broadly
than might be warranted.
On the other hand, why should the permissibility of a committee's
use of "non-Federal" funds be governed by whether the committee's
activity is an "expenditure" under FECA? The statutory tests are
whether the funds were donated to the committee "in connection
with" a federal election (for union and corporate treasury funds),
and whether the funds were given to the committee "for the purpose
of influencing any election for Federal office" (for individual
donations above the $5000 cap). In light of those statutory
criteria, perhaps it does make sense to presume that funds
contributed for communications that attack, support, oppose or
promote a federal candidate are subject to FECA limits -- not
because such communications are necessarily "expenditures," and
not because of BCRA, but instead simply because such
communications presumptively are, at least in part, "in connection
with," and "for the purpose of influencing," federal elections.
If so, then perhaps the draft opinion has reached the right
result, but for the wrong reasons. (This conclusion would not, of
course, resolve how such funds should be treated where the
communication in question is intended to affect both state and
local elections, or are, e.g., "in connection with" both federal
elections and federal legislative debates.)
C. Finally, the draft does not question or reexamine the adequacy
of the existing FEC regulation (11 C.F.R. 106.6) concerning
political committees' expenditures for GOTV and voter
registration. Nor, more broadly, does the draft address the
broader questions of regulatory amendment that the FEC raised in
March 2001, see 66 Fed. Reg. 13681, but that the Commission has
yet to answer. (In fairness to the GC, this is probably not the
proper procedural context for such reevaluation of the existing
regulatory structure - although the GC does use the draft opinion
to adopt a brand-new bright-line rule regarding communications
that attack, support, oppose or promote a federal candidate.)