FEC Loopholes

Posted January 9, 2004 at 5:41pm

The Federal Election Commission is at it again, poking loopholes in the new Bipartisan Campaign Reform Act to permit federal officeholders and candidates to raise soft money, this time for so-called 527 political committees.

The FEC ruled last week that the president, vice president, Members of Congress and candidates can headline soft-money fundraising events for 527s, speak at the fundraisers and even ask for money — just as long as some notice is given that they are not soliciting money beyond the hard-money limits imposed by BCRA.

The FEC’s new regulation tracks with a previous one, handed down last year, narrowly defining the phrase “to solicit” as “to ask” directly and in public. That ruling is the subject of a lawsuit filed by BCRA’s House sponsors, Reps. Christopher Shays (R-Conn.) and Marty Meehan (D-Mass.), who charged that it would permit politicians to raise soft money — which they are prohibited from doing in BCRA — by a “wink and a nod.”

The previous ruling held that a federal candidate “will not be held liable for soliciting funds … merely by virtue of attending or participating in any manner in connection with a fundraising event at which non-federal funds are raised.” And, the commission said that it wouldn’t inquire into a politician’s “intent” when he or she makes a private fundraising call.

The Shays-Meehan suit was held up pending the Supreme Court’s ruling on BCRA’s constitutionality. Now it’s been scheduled for hearing, but there’s a dispute among lawyers over whether the high court’s language upholding BCRA also validated its narrow interpretation of “solicit.” Conservative FEC Commissioner Bradley Smith contends that the high court’s opinion “kicks a lot of the props out of the Shays-Meehan suit” and cites language that certainly seems to sustain that view. However, pro-reform lawyers have a different opinion and argue that Smith & Co. have written regulations that “subverted the law.”

The new FEC regulation, responding to an inquiry brought by the Republican Governors Association, is consistent with the earlier ruling. If a federal politician “makes a speech without asking for donations to the RGA,” it says, “he does not need to issue a disclaimer stating that he is not raising (soft money) … even though speeches by others solicit such funds.” If he or she asks for money but doesn’t mention an amount, written notice has to be displayed at the event indicating that the politician is only asking for hard money.

You can see where this is leading. Invitations will go out to soft-money events featuring the name of a major politician. He or she will speak. Others will ask for the soft money. And it won’t be difficult for the politician to find out who gave it — especially now that, in a meritorious ruling, a federal appeals court has held that 527s have to fully disclose their contributions and expenditures. Welcome to the new soft-money world.