Legal Defense Funds Not Subject To New Campaign Law, FEC Rules

Posted August 29, 2003 at 5:33pm

House Members facing legal difficulty will still be able to collect $5,000 checks from corporations and labor unions despite the new campaign finance law’s ban on soft money, under a Federal Election Commission ruling last month.

The FEC declared in a 5-0 decision that legal defense funds, which are regulated by the House ethics committee, are independent of federal elections and are not subject to the restrictions of the Bipartisan Campaign Reform Act.

The FEC action came in response to a request from Rep. Denise Majette (D-Ga.) to continue to be allowed to accept corporate and union donations to a legal defense fund set up in response to a lawsuit filed by former Rep. Cynthia McKinney, whom Majette had defeated in a primary contest. McKinney alleged in the federal court suit that “malicious crossover voting” by Republicans in the Democratic primary caused her defeat. Majette’s name was eventually removed from the lawsuit and a federal judge in Atlanta last month threw out the case.

Members of Congress have long turned to raising money through defense funds to defray legal costs when faced with civil or criminal litigation. In numerous rulings under previous campaign finance regulations, the FEC has consistently held that such donations fall outside the agency’s scope of regulation.

But advocates for the new campaign finance law contended that the prohibition on soft money to federal elected officials extended to legal defense funds in cases dealing with elections.

Wrong, said the FEC. “There is no indication in the legislative history of BCRA that Congress intended to change an area that is both well-familiar to members of Congress and subject of longstanding interpretation through statements of Congressional policy and Commission Advisory Opinions,” the FEC wrote in its advisory opinion.

Even though the lawsuit involving Majette was about the conduct of a federal election, the campaign finance restrictions do not apply in this case, the FEC ruled.

The message to the FEC from Capitol Hill was quite clear. A memo from FEC Commissioner Bradley Smith’s executive assistant, Evan Rikhye, disclosed a July 18 telephone call with Brian Lewis, an aide to Sen. Mitch McConnell (R-Ky.).

Lewis and Rikhye discussed another FEC advisory opinion but then turned to the pending Majette matter, according to the memo. “According to Mr. Lewis, a decision by the Commission denying Congresswoman Majette the ability to raise non-federal funds for her legal defense fund (which is permitted by Congressional rules) could be viewed, by some Senators and staff, as trampling on the House and Senate Ethics Committees’ sole jurisdiction in this area,” Rikhye wrote.

“I told Mr. Lewis that Senators and Members of Congress who are interested in this matter should be encouraged to file comments for the public record,” Rikhye added.

While no one from the Senate filed formal comments, the bipartisan leadership of the House and the chairman and ranking member of the Committee on Standards of Official Conduct wrote to support Majette’s request.

“In short, the mere fact that a particular lawsuit arises out of or relates to federal campaign or election matters does not establish that funds raised or spent to defend that lawsuit are in connection with an election for Federal office,” the House general counsel’s office wrote on behalf of the bipartisan leadership.

“Legal expense funds do not present problems analogous to those associated with soft money. The expenses incurred by a defendant in a lawsuit (or the target of other legal proceedings) are essentially involuntary and beyond his or her control,” the general counsel added.

The letter also said that “there is simply no reasonable possibility” for a legal defense fund to circumvent the contribution limits of election law. And while there may be concern over the corrupting influence of such donations to lawmakers, the House has taken steps to closely regulate defense funds and requires disclosure of all contributions and disbursements.