The FEC decisions managed to keep alive some mystery about the material questions:  what did they mean, and what effect will they have?  Reform groups naturally huffed about the inadequacy of it all, but in complaining about absence of clear standards, they found themselves keeping the company of reform critics such as the Center for Competitive Politics.  On the election law listserv, and as later noted by Rick Hasen, there were disagreements about the controlling legal theory, and one of the issues there—a fairly major one—is whether the FEC has launched the era of looking into the “purpose” of organizations that finance public communications critical of candidates. 

      Here are one proposed set of answers to some common questions. 

      Did anything at all happen yesterday?

      Yes.  The FEC set out by a unanimous vote a view of the law relevant to any effort to operate outside the federal campaign finance laws in advertising commentary, critical or positive, about candidates for Federal office. 

      Does this end “527” activity in federal elections?

      No:  because the FEC did not rule that organizing as a “527” was sufficient in and of itself to compel application of the federal restrictions.  But the FEC  seems agreed that where 527s are organized for the major purpose of influencing federal elections—judged by their public statements, fundraising and communications—the federal law must be observed. 

      Is there a specific rule in play here?

      No, not one rule, which is what the reform community is demanding that the FEC, or the Congress, produce.  The FEC has, in effect, constructed an enforcement initiative out a mixture of rules and standards.  These are:

(a) the statutory provision defining a political committee as an association or group that makes “contributions” or “expenditures” in excess of $1,000 in a calendar year (contributions and expenditures being spending for the “purpose” of influencing an election). 

(b) rules defining what constitutes “express advocacy” of an election:  one looks to “magic words” (like “vote” or “defeat”) and the other to “context” and the conclusion that a reasonable person would draw from the communication “taken as a whole,” with “limited reference” to external events.

(c) A related standard, of uncertain scope, that provides that even where an organization has exceeded the $1,000 threshold, it does not become a political committee unless it has the “major purpose” of influencing federal elections.

(d) A rule, adopted in 2004 (11 C.F.R. § 100.57), that treats as a contribution any amount solicited with the indication that it will be used to support or oppose a specific federal candidate.  Because the rule was technically not in effect in 2004, and thus not available to the agency to enforce against violations committed in that year, the agency relied on the case out of which the rule effectively grew:  Survival Education Fund.   Same difference.

      So are the Center for Competitive Politics, the Campaign Legal Center, Democracy 21 and others right to say that there is no clear standard?

      Perhaps it is better to say that there are all sorts of rules and standards, but not much clarity:  the cases will be decided on their facts within the framework erected by these rules and standards. 

      How in the particular case would this work?

      The FEC would in theory (see below) go through the following steps:

1. It would consider whether the organization had made contributions and expenditures exceeding the $1,000 threshold.  In doing so it would

(a) examine public communications under one of the two “express advocacy” standards;

(b) determine from solicitations whether contributions had been received because they were solicited with the indication that they would be used to support or oppose a clearly identified candidate.

2. Then it would consider whether the organization’s activities, including contributions received or made in excess of this threshold, constituted the “major purpose” of the organization, such that it becomes a “political committee.”

      What is the basis for a finding of “major purpose”?

      This is unclear.  The FEC did not adopt the view that 527 status itself demonstrated “major purpose.”  

      But it did look beyond fundraising to self-description:  in the case of the League of Conservation Voter, for example, to “organizational planning documents and public statements.”   In the case of Move On, the agency examined spending for advertisements critical of President Bush as a proportion of its total budget: 

MOVF dedicated more than $14 6 million of its $21,346,380 in total
disbursements reported to the IRS during the 2004 election cycle to the production costs and media expenses related to the advertisements…. During the entire 2004 election cycle, the only other disbursements made by MOVF were for fundraising, administrative expenses, and $724,000 in grants to other political organizations. MOVF made no disbursements in connection with state or local elections during the 2004  election cycle.

     In the case of Swift Boat, the agency also considered statements made to the media:  “Finally, On August 6, 2004, a Steering Committee member was asked on a news program whether SwiftVets’ advertisements were produced and made to influence the Presidential election and responded, “Yes, of course.”

      How is” purpose” judged in relation to the content of communications:  do communications prove “purpose” or is stated “purpose” used to judge communications?

      The FEC might say that it does not consider major purpose, determined from public statements and internal communications, unless and until it has concluded in the first instance that an organization has raised and spent more than $1,000 in “contributions” and “expenditures.”  Its focus, in other words, is money:  not speech.  This is why the cases stress fundraising communications. 

      But this suggestion can only be taken so far.  These 527s were brought before the agency precisely because they were believed (by the complainants and their sympathizers) to have the purpose, overall, of influencing a federal election.  This was the starting point, and it is hard to credit the possibility that the agency disregarded this overriding charge of “purpose” in reviewing the facts of the case. 

      Consider also the example of an organization that cautiously avoids any suggestion, in raising money, that it will use the funds received for or against a particular candidate.  If that organization in “organizational planning documents and public statements” suggests the purpose of challenging the record or fitness of a candidate, and its public advertising performs on this commitment and includes “express advocacy” under the more elastic (reasonable person) standard, it seems unlikely that the FEC would not enforce the law on a “major purpose” theory.  Also, the determination of whether contributions or expenditures are made is based on “purpose.”  Purpose—intent—looms large over this inquiry.

      What is the most revealing finding in the settlements yesterday:  the one that tells us where the law is going?

      This sentence, from the MoveOn settlement:

The advertisements opposed George W. Bush regarding his record on campaign issues and criticized his leadership.

     This is a crucial element of the case brought by the Government.  Organizations with strong views to express about public elected officials and candidates will now know better and think twice.

Bob Bauer