Subject: RE: Tobin's thoughts on the GC's Draft Opinion in the ABC 527 Pro ceeding
From: Peter Overby
Date: 1/31/2004, 8:05 AM
To: "'election-law '" <election-law@majordomo.lls.edu>

 
Speaking as a member of the popular press, I'm not sure I care right now
that the what-if question isn't answered.

Seems pretty clear that the ABC request had two purposes: To define what ABC
could do, yes. But second & more important, to flush out & cripple the Media
Fund, America Coming Together & the other Democratic 527s that are already
operating. 

The Dem groups have made no secret of their political purpose.  And unlike
ABC, they've raised a significant amount of unregulated money. So it seems
to me that an FEC opinion putting soft money off-limits to self-declared
political committees would suit ABC just fine.

Peter Overby
NPR











-----Original Message-----
From: DONALD TOBIN
To: Marty Lederman
Cc: Rick Hasen; election-law
Sent: 1/30/2004 8:11 PM
Subject: Re: Some thoughts on the GC's Draft Opinion in the ABC 527
Proceeding

As Marty Lederman notes the ABC opinion does not answer the question
whether ABC is a political committee. (I am sure most of the popular
press will get that wrong).  He indicates that ABC implicitly conceded
that it is such a committee.  They not only implicitly conceded the
point, they explicitly stated it.  Their request states that they are an
unincorporated political committee.  There was, therefore, no need for
the opinion to address the issue.  ABC has also filed as a PAC with both
the IRS and the FEC.

Donald Tobin
Moritz College of Law
The Ohio State University

----- Original Message -----
From: Marty Lederman <marty.lederman@comcast.net>
Date: Friday, January 30, 2004 2:17 pm
Subject: Some thoughts on the GC's Draft Opinion in the ABC 527
Proceeding

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.)