Entreaties Lead to Flood of 527 Input

Posted April 6, 2004 at 6:00pm

An intense battle over the future of so-called 527 groups reached a fevered pitch this week as more than 97,000 individuals across the country deluged the Federal Election Commission with their thoughts on the controversial committees.

FEC spokesman Bob Biersack said Tuesday that comments were flowing in at a rate of about 500 per hour, one day after President Bush’s re-election campaign sent an e-mail to supporters asking them to “Take action to overcome John Kerry’s special interests!” by writing to the watchdog agency.

“As you know, special interest groups called ‘527s’ have been spending millions in unregulated soft money to defeat President Bush,” Marc Racicot, the chairman of Bush-Cheney ’04, wrote in his e-mail message. “We need you to write a letter TODAY to the Federal Election Commission asking that John Kerry’s soft money special interest groups obey the law.”

The April 5 e-mail instructed Bush supporters to go to a section of www.GeorgeWBush.com to sign a form letter outlining their concerns “about the illegal spending of hundreds of millions of dollars in unregulated soft money by so-called ‘527’ organizations to effect this year’s presidential election” and to urge the FEC to “move forward quickly with its rulemaking on ‘527 groups’ to prevent more of this illegal money from being spent in this year’s federal elections.”

Liberal-leaning anti-Bush groups such as MoveOn.org, meanwhile, have also been mobilizing voters, asking them to write to the FEC “opposing the rule change.”

Proposed rules circulated by the FEC feature alternative approaches for determining when a group has reached a certain threshold to qualify as a “political committee.” The various approaches differ with respect to how it is determined that the group has a “major purpose” of seeking to elect or defeat federal candidates.

As the overwhelmed agency struggled to manage the onslaught of responses to its upcoming rulemaking Tuesday, Biersack was unable to quantify whether the bulk of the e-mails — which he predicted would easily top 100,000 by day’s end — were in favor of or against the FEC’s proposed rulemaking.

“I don’t know if there’s any way to attribute the volume to any one source anymore,” said Biersack, who called the outpouring of comments both “impressive” and unprecedented.

GOP Commissioner Michael Toner said Tuesday that he’d already begun reviewing the comments and thought it was critical for the agency to hear from the public.

Toner said the “extraordinary outpouring of comments” was a “reflection that this is the most important issue facing the campaign finance system today and is a stark indication of the institutional need for this agency to resolve these issues.”

“I’m personally very pleased that this rulemaking is clearly on the radar screen of a lot of Americans, and rightly so,” Toner added.

As thousands of Americans unleashed their own thoughts on a subject that has rapidly moved from the insular world of arcane regulations to the forefront of the nation’s popular political dialogue, key operatives inside the Beltway have also been exerting pressure on the FEC as it prepares to make critical decisions on the touchy issue.

In what could be a more significant development in the 527 debate, Michael Berman, an influential Democratic lobbyist and president of the Duberstein Group, called Democratic Commissioner Danny McDonald last week and told McDonald that he “hoped the Commission would delay the effective date of the regulations ultimately adopted until after this election cycle.” McDonald was required by law to publicly disclose his conversation with Berman as an “ex parte communication.”

A prodigious campaign contributor, Berman has made donations to the campaigns of several Democratic Senators this cycle and in December made a $5,000 contribution to America Coming Together, a prominent 527 group that has generated considerable controversy by raising unlimited donations to try to defeat Bush and his GOP allies at the polls this fall.

Republicans are eager to see the FEC clamp down on groups like America Coming Together and the Media Fund, which they contend are violating a federal ban on soft money by raising unlimited funds and spending that money to influence federal elections.

Collectively dubbed the “shadow Democratic Party,” American Coming Together, the Media Fund and a handful of other groups work on different key objectives to try to boost the Democratic election machine. While ACT focuses on grassroots voter turnout, the Media Fund, headed by former Clinton administration official Harold Ickes, is focused exclusively on advertising. Overseeing their activities and making sure the two groups don’t duplicate their efforts is a third and smaller 527 group known as America Votes.

ACT, which has a federal PAC in addition to its soft-money accounts, raised $13 million through the end of 2003 alone, and the group has publicly set its fundraising goal at $85 million. The Media Fund, meanwhile, has a budget of roughly $80 million and brought in $3 million in the last six months of 2003 through a transfer from a separate fund known as Joint Victory 2004.

ACT officials, such as spokesman Jim Jordan, contend that the group’s activities are absolutely permissible and chalked up Republican efforts to stop ACT as “slanderous nonsense.”

Last week, the Republican Party and the Bush campaign filed a complaint with the FEC, accusing ACT and others of illegally coordinating their activities with Sen. John Kerry’s (D-Mass.) presidential campaign.

Jordan told The Associated Press that the allegations were ridiculous and “typical Republican politics of intimidation.”

Dozens of groups on both ends of the political spectrum also weighed in on the controversial issue.

The Chamber of Commerce — a 501(c)(6) group that represents businesses through lobbying electoral and litigation activities — argued against the FEC’s proposed changes on the basis that the agency is exceeding its authority, that the rulemaking is inconsistent with recently enacted reforms by Congress and that the proposal is overly broad and will “chill grassroots efforts to encourage voter participation.”

In a 25-page filing, lawyers representing Democracy 21, the Campaign Legal Center and the Center for Responsive Politics urged the FEC to “focus and prioritize” its rulemaking on the “most apparent and serious problems that have become manifest in this election cycle.”

Their comments focused on the manipulation of “flawed” allocation rules that allow 527 groups to spend “virtually unlimited amounts of soft money to influence federal elections” and the “spending of millions of dollars of soft money on broadcast ad campaigns for the clear purpose of influencing the presidential election by 527 political group” that haven’t registered with the FEC.

Public Citizen also called on the FEC to expand its definition of “political committee” to include Section 527 groups whose major purpose is to influence federal elections, but the group cautioned the FEC “not to adopt an overly broad definition of political committee that could falsely capture legitimate advocacy organizations, such as 501(c) non-profit groups.”

MoveOn.org Voter Fund, a 501(c)(4) organization, vehemently argued against an FEC rules change.

“The prerogative to decide that belongs to Congress, not the FEC; and in no event should the FEC make such a fundamental change in its rules on short notice in the middle of an election season,” stated the group’s lawyers, who also noted the “potentially devastating impact” that the FEC proposal could have on all tax-exempt nonprofits that engage in public policy advocacy or have voter participation programs.

In an April 2 “Dear Colleague” letter, Sens. John McCain (R-Ariz.) and Russ Feingold (D-Wis.) condemned that argument, stating that certain 501(c) groups and labor unions were perpetuating that myth as “a cover in an effort to derail the FEC’s review of 527 political activity.”

“As you know, some 527s are in a different legal position than traditional interest and issue groups because, under the tax laws, their major purpose is election-related activity, and they have already declared publicly that their principal goal is to affect the outcome of this year’s Presidential election,” their letter stated. “Because these organizations are poised to spend millions of dollars in soft money in the upcoming election, it is imperative that the FEC address the serious questions about their political committee status.”

The FEC will hold hearings on the pivotal and potentially explosive issue on April 14 and 15 and the commission said its objective is to adopt any new regulations by mid-May.

While it is unclear whether the agency will be able to reach a consensus within that tight time frame, if it does, the regulations won’t immediately go into effect.

Once newly-approved regulations are printed in the Federal Register, Congress has 30 legislative days during which it may choose to rescind the regulations. Moreover, regulations that are determined to have a major impact on economic entities are subject to a 60-day waiting period before going into effect.