The FEC and the Making of Law “Case-by-Case”

March 13, 2014
posted by Bob Bauer

A conflict—the latest in the series—has broken out among FEC Commissioners about whether they have made public all relevant material on the General Counsel’s  view of Crossroads GPS and whether it is a “political committee.”  In one report, the GC concluded that the evidence supported further investigation of the question, but the Commission deadlocked, and now a private lawsuit is looming.  Republicans seem to believe that the public record is incomplete and that the missing GC analysis would have a bearing on the legal merits of Crossroads’ position.   Whatever the facts of the matter, this ruckus reminds readers once again of the troubled condition of the Commission’s “case-by-case,” fact-specific approach to determining “political committee” status.

In 2007, the Commission adopted this approach because the alternative—a rulemaking with bright lines—could not attract the four votes needed to pass. Instead the agency, with nowhere else to turn, had to decide cases on unique facts after comprehensive inquiry, or invite organizations unwilling to gamble on the outcome to seek an Advisory Opinion before spending their money and running the legal risk of becoming a fully regulated “political committee.” Political Committee Status, 72 Fed. Reg. 5,595-02 (Feb. 7, 2007).  In litigation challenging its failure to promulgate a rule, the Commission defended itself by saying that a rulemaking was “inadvisable.”  See Shays v. Federal Election Commission, 424 F.Supp.2d 100, 112 (2006).  But it was not inadvisable.  It was simply impossible, for lack of a majority position on the Commission on the shape of the law.

The case-by-case adjudication the Commission fell back on meant that any organization, for varying reasons, could come within the agency’s investigative reach.  If an organization had chosen “527” IRS tax-exempt status, that would not be conclusive: it would all depend on the facts.  If a 501(c)(4) engaged most of the time, say, more than half of the time, in ordinary course social welfare activity, that too would not be conclusive on the question of its “major purpose”: it would depend on the facts.

And, given “the multitude of fact patterns” in enforcement matters, the Commission would not provide a comprehensive accounting of the facts on which it might rely in reaching a decision. Political Committee Status, 72 Fed. Reg. 5,595-02, 5,602 (Feb. 7, 2007).  Each case was different, and while the outcome of one case might be instructive for others like it, that would be true only up to a point. A difference in facts could mean a difference in result.  The Commission would also have to leave unspecified how it would evaluate specific facts. For example, an organization’s public statements could be relevant to a  finding of “major purpose,” but this judgment would depend on “a fact-intensive inquiry giving due weight to the form and nature of the statements, as well as the speaker’s position within the organization.”  Id. at 5,601.

This mode of adjudication amounts to a tall order for this agency so often attacked for being in the grip of partisans or ideologues or both. If by congressional design, or simply because something went terribly wrong along the way, the FEC cannot be relied upon to act assertively or without regard to political pressures, than it would seem that a case-by-case approach to defining its jurisdiction was certain to inspire mistrust.  And the mistrust could be counted on to deepen when, in 2004, the FEC chose the path of case-by-case adjudication—the “we know it when we see it” mode of adjudication—only after trying and failing to develop rules.

The ancillary legal standards the FEC uses in deciding particular case has added to the uncertainty, and suspicion, about its course. A finding of political committee status is built out of two parts—a finding that contributions have been received or expenditures made in excess of $1,000 and, if this threshold is reached, a determination of whether election-influencing activity within the scope of the law is its “major purpose.”  In deciding whether an expenditure reflects this activity, the agency is not bound by a bright line rule: in the absence of “magic words” of express advocacy, it can examine specific communications and decide whether these lend themselves to no other reasonable interpretation than an appeal to support or oppose particular candidates.  After this decision has been made, the agency then proceeds to consider “major purpose” on the basis of an open-ended, never “exhausted,” list of factors.

The agency points to a record of enforcement under these standards, which is what it did in explaining the case-by-case process in 2007.  But, of course, organizations settle with a regulatory agency for a host of reasons, not least of which is a calculation that it would cost less to settle than to fight, especially if the activity challenged is complete, their objectives have been satisfied and the public controversy is stale. The success of the agency in achieving settlement  in these circumstances is not necessarily a triumph of the enforcement process. It certainly has failed to contain the number and significance of live controversies over “outside groups” and their spending in relation to or with impact on an election. Of course, in fairness to the FEC, the constitutional and legal landscape has shifted against it in the wake of cases like Citizens United and SpeechNow.

The transformation of the law, however, is still more reason to suspect that the case-by-case approach will continue to prove divisive and unproductive. The current Court is signaling impatience with elements of the regulatory theory behind case-by-case.  It has registered its concerns with “complexity” in the law as a heavy weight falling on the exercise of First Amendment rights.  And it has been unsympathetic to the suggestion that organizations seeking guidance can seek an advance determination from the FEC in the form of an Advisory Opinion. See, e.g., Citizens United v. Federal Election Commission, 558 U.S. 310, 334-35 (noting “complexity” of the law, and questioning the Advisory Opinion process as “analogous to licensing laws implemented in 16th-century and 17th- century England, and governmental practices of the sort that the First Amendment was drawn to prohibit.”).  Both of these warnings are applicable to the world of case-by-case adjudications that result in decisions entirely dependent on specific facts, with no one case necessarily controlling the outcome of another, and that—as the FEC noted in 2007—offers a way out for wary organizations only through an advance ruling process.  Case-by-case does not rest easily within the constitutional zeitgeist.

This state of affairs also accounts for the heat around each and every case and how the Commission reaches and explains its decisions.  These decisions, in the aggregate, are “the law.” As the Commission stated in 2007, “any organization can look to the public files for … closed enforcement matters, as well as advisory opinions and filings in civil enforcement cases, for guidance as to how the Commission has applied the statutory definition of ‘political committee,’” including the “clarification of legal principle.”  72 Fed. Reg. 5,595-02, 5,604.  What is considered the “public record” of these deliberations assumes considerable significance.

Of course, there is no way without more information to sort out the actual merits of the Republican argument for the disclosure of the document. A deliberative process certainly requires some material or discussion to remain outside the public record. But it is not surprising that the conflict of this sort has arisen in an enforcement process built on “case-by-case” adjudications and the record they establish.

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