Bill to Rein in 527s Introduced

Posted September 21, 2004 at 6:50pm

The Federal Election Commission’s toughest Congressional critics will introduce legislation today cracking down on independent political organizations known as 527s — a move that comes as legal experts continue to assess the impact of a federal judge’s recent decision tossing out numerous FEC regulations.

Sens. John McCain (R-Ariz.) and Russ Feingold (D-Wis.) and Reps. Christopher Shays (R-Conn.) and Marty Meehan (D-Mass.) will introduce the 527 Reform Act. The legislation is aimed at making sure that 527 groups engaging in political activity are treated as political committees under the law and thereby registered with the FEC and subject to the same reporting requirements and contribution limits. This comes on the heels of a lawsuit that Shays and Meehan recently filed in U.S. District Court challenging the agency’s failure to crack down on the groups.

Meanwhile, some of the nation’s foremost election lawyers were burning up the blogosphere Tuesday as they debated the impact of District Judge Colleen Kollar-Kotelly’s decision, released over the weekend, to overturn 15 campaign finance rules put in place by the FEC.

At the center of the dispute is whether the FEC’s regulations implementing the Bipartisan Campaign Reform Act — which affect everything from soft-money solicitations to coordination — remain in effect pending the agency’s likely appeal of the controversial ruling, or whether those in the campaign arena ought to rely on other standards when deciding how to behave.

Not all the players found common legal ground in their analysis of the situation.

“Given that Judge Kollar-Kotelly found that specific rules adopted by the FEC were arbitrary and capricious and contrary to law … I do not see how those rules can be said to remain in effect,” Trevor Potter, head of the Campaign Legal Center, concluded in an Internet chat forum frequented by campaign finance experts.

“If they were invalid exercises of FEC authority, then they are invalid rules, and the FEC cannot now apply them,” continued Potter, a champion of the Bipartisan Campaign Reform Act and a Republican who once served as FEC chairman.

Absent a stay, he argued, the FEC would seem to have to fall back on the language of the statute itself.

That sparked an impassioned reply from Joseph Sandler, a Democratic campaign finance attorney with the firm Sandler, Reiff & Young, who wrote that simply instructing political actors to “follow the statute” without implementing regulations was “absurd.”

“From the standpoint of those of us who actually have to advise the people now out in the field whose every move is governed by this law, 18 hours a days 7 days a week, such statements are breathtakingly reckless and irresponsible,” Sandler retorted.

Referring to BCRA’s “foreboding vagueness and impossible complexity,” Sandler pointed to the case of the coordination rules, noting that there is in fact “no statute to follow” — that Congress merely repealed the then-existing regulations and simply required the FEC to issue new rules.

“It could not be clearer — could NOT be clearer — that the current FEC regulations stay in effect, and that everyone is entitled to follow them without fear of prosecution or complaint, UNTIL the FEC comes up with new rules,” Sandler wrote.

Indeed, Kollar-Kotelly’s surprise decision, released on Saturday afternoon, seemed to leave massive confusion in its wake, as it confirmed many of the challenges to the regulations posed by Shays and Meehan.

The judge tossed out more than a dozen regulations she deemed were contrary to Congress’ intent and in some cases “severely undermined” the nation’s campaign finance law.

But Kollar-Kotelly stopped short of granting the specific relief requested by Shays and Meehan. While the lawmakers had asked for an injunction, a 15-day deadline for commencing a new rulemaking and court oversight of that process, Kollar-Kotelly simply remanded the rules back to the FEC, ordering the agency to “take action consistent with these findings.”

Various lawyers interpreted Kollar-Kottelly’s decision differently.

“The Judge concluded that the rules are unlawful,” Potter argued on Loyola Law School Los Angeles professor Rick Hasen’s Web site. “She did not want to become involved in monitoring how the FEC responds to that conclusion and did not want to ‘devise a particular remedy.’”

That said, Potter concluded, “there is no way” the FEC can continue to enforce its existing rules — without a stay from the court, of course — while taking steps to comply with the judge’s ruling.

At least four FEC commissioners have said they will seek to appeal Kollar-Kotelly’s decision and indicated they would likely seek a stay so as not to upset the regulated community in the last six weeks of the election cycle.

Brian Svoboda, an attorney with the law firm Perkins Coie, which provides campaign finance and election advice to numerous Democratic campaigns, also disputed Potter’s notion, arguing that the judge could have “vacated” the FEC’s rules if she had so wished, but that she chose not to do that.

“Faced with a choice of having no rules on the one hand, and leaving doubtful rules in place pending rewrite on the other, a court can opt for the latter course — especially when the consequences of vacatur would be extremely disruptive for the agency and the regulated community,” Svoboda wrote. “Certainly, that would be the case here, with little more than 40 days to go before a presidential election.”

With criminal penalties for certain campaign finance violations written into BCRA, some lawyers focused on the question of whether individuals could face penalties or prosecution if they relied on the FEC’s regulations.

“It is virtually inconceivable, as a practical matter, that the FEC or [Justice Department] would ever take enforcement action against a person who acted in conformity with the regulations during this election cycle, if the conduct was undertaken while the regulations are still ‘on the books,’” predicted SCOTUSblog’s Marty Lederman, a former Justice Department lawyer.