Of What Use is "Major Purpose" Absent Corruption?

Published on March 3, 2008 06:45 AM
by Steve Hoersting

File Under: Enforcement, Faulty Assumptions, Political Committees & 527s

Of What Use is "Major Purpose" Absent Corruption?: The Pernicious Nature of the "Political Committee" Process--and What the Courts Can Do About It.

It seemed simple enough.  The American Leadership Project (ALP), an organization touting issues associated with Sen. Hillary Clinton, would rely on a recent Supreme Court opinion to run constitutionally protected ads in vote-rich Ohio.  The ads urged Ohioans to call Sen. Clinton and tell her to “keep on fighting” for certain issues. The ads didn’t contain express advocacy or even the “functional equivalent of express advocacy.”  To most every compliance practitioner, ALP’s ads were “genuine issue ads” fully protected under the First Amendment, recently reinforced by the Supreme Court’s ruling in WRTL II.  Legally, however, it shouldn’t have mattered whether ALP’s ads fit within the protection of WRTL II for ALP would fund its messages with money from individuals, not corporations, and would report the names of donors who funded the communications according to the provisions of BCRA itself.

But on word of the group’s sighting, Obama for America counsel, Bob Bauer, fired off a memo to “Interested Parties” and staged an ominous conference call.  "There’s going to be a reckoning here," he warned. "It’s going to be rough — it’s going to be rough on the officers [of ALP], it’s going to be rough on the employees, it’s going to be rough on the donors….  Whether it's at the FEC or in a broader criminal inquiry, those donors will be asked questions," Bauer said. 

Bauer’s claim?  ALP is a political committee; couldn’t anyone see that in the surrounding circumstances?   Bauer asserted what was obvious to all: ALP’s major purpose (emphatically denied by ALP counsel Karen Getman) was to elect Hillary Clinton in the Ohio primary elections and ALP had made expenditures or raised contributions of more than $1000 in the effort.

Bauer knew going in that, if pressed, he would have to concede that ALP made no “expenditures.”  While a 2004 FEC rulemaking on political committee status called the ads express advocacy, a 2007 FEC rulemaking on electioneering communications, issued after the Supreme Court handed down WRTL II, would treat the ads as protected issue advocacy.  The ads contained no “express advocacy” and it is no answer to say that the while the ads were not expenditures the production costs incurred to create them were.

But no matter, for even if his arguments for express advocacy failed in the testing, Bauer could employ other egregious rules to have the FEC fish for an improper “major purpose” and to establish as “contributions” the donations made to ALP by its fellow issue advocates.  If Bauer could get the Commission to establish both contributions and major purpose, or maybe only hang up ALP in the enforcement process, then ALP would have to register as a political committee, report all of its activity, and be limited to taking funds in $5000 increments.  In other words, ALP would be dead in the water until well beyond March 4^th, presumably the soonest anyone at Obama for America wants outside organizations touting issues tied to Sen. Hillary Clinton.  Bauer had done his job: ALP’s attempt to avail itself of rights protected by the WRTL II opinion would go for naught.

This is stunningly unfortunate, however, for ALP would operate completely independently of candidates and could not corrupt them.  There is no evidence anywhere that ALP would coordinate its activities with candidates, political parties, or other committees and no evidence it would make contributions to the same.  ALP has not taken the corporate form and would spend only funds from individuals.  ALP’s activities, therefore, could not “corrupt” candidates or officeholders in any known sense of the term.

Bauer’s entire case against ALP lay in a 2004 FEC rulemaking on political committee status.  See Political Committee Status, Definition of Contribution, and Allocation for Separate Segregated Funds and Nonconnected Committees, 69 FR 68056 (Nov. 23, 2004); Political Committee Status 72 FR 5595 (Feb. 7, 2007) (hereinafter “Rulemaking”).  This was a rulemaking that Bob Bauer, to his credit, criticized with others at nearly every turn.  Once it was the law in effect, however, he, like others, had to act accordingly.

Introduction.  In matters of campaign finance, the First Amendment means that in the absence of corruption there can be no regulation.  The Federal Election Campaign Act of 1971, as amended, (FECA) is constitutional only insofar as it furthers any of three interests:

To prevent the corruption that stems from “large contributions [that may] secure political quid pro quo's from current and potential office holders”, or the “appearance of [such] corruption.”  Buckley, supra, at 27-28;

To prevent the “corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and … have little or no correlation to the public’s support for the corporation’s political ideas”  Austin v. Michigan Chamber of Commerce, 494 U.S. 652 (1990); or

To “provide the electorate with information … to aid the voters in evaluating those who seek federal office”; “deter actual corruption and [its] appearance … by exposing large contributions and expenditures to the light of publicity,” and “gather[] the data necessary to detect violations of the contribution limitations.”  Buckley at 66-68.

The FECA defines a “political committee” as “any … group of persons which receives contributions aggregating in excess of $1,000 during a calendar year or which makes expenditures aggregating in excess of $1000 during a calendar year.”  2 U.S.C. 431(4)(A).  To address constitutional concerns raised when FECA was adopted, the Supreme Court added two additional requirements that affect the statutory definition of political committee.  First, the Supreme Court held that the term “expenditure” includes only “expenditures for communications that in express terms advocate the election or defeat of a clearly identified candidate for federal office.”  Buckley at 44, 80.  Second the Supreme Court mandated that only organizations whose “major purpose” is the nomination or election of a Federal candidate can be considered “political committees” under the Act.  Id. at 79.  Interestingly, particularly in light of the jeopardy facing ALP, the court deemed this necessary to avoid the regulation of activity “encompassing both issue discussion and advocacy of a political result.” Rulemaking at 5597 (internal citations omitted).

There is no getting around it; the Commission’s 2004 rules on political committees were an attempt to reach with regulation organizations the Commission was forbidden to reach by statute.  Applied to a well entrenched committee, a political party committee, for example, the results flowing from the regulations can seem unremarkable in their effect.  When one considers the type of organizations the Commission would hunt with its new regulations, however -- organizations speaking short of express advocacy and independently of candidates -- the regulations are monstrous in most every particular.

Expenditures.  First, the Commission expanded “expenditure” by resuscitating a discredited definition of “express advocacy” at 11 CFR 100.22(b). 

Bauer rightly points out that the discredited definition is one the Commission said it would apply for the 2008 cycle, yet wrongly asserts that because WRTL II is a corporate-source case and not a case addressing the spending of individuals’ funds, WRTL II cannot affect the political-committee rules promulgated by the Commission or its definition of express advocacy.  There aren’t dueling express-advocacy doctrines, however.  Corporate-source cases, like MCFL, address the same express-advocacy doctrine that protects individuals in cases like Buckley.  It denigrates logic and syntax to suggest that “express advocacy,” even under a discredited definition, can sweep more broadly than the “functional equivalent of express advocacy,” provided in McConnell and refined in WRTL II.  If express advocacy is the broader concept, what is its functional equivalent? 

Chairman David M. Mason is only the latest to give the lie to this argument and point up the error in his Commission’s expansion.  This definition of express advocacy, 11 CFR 100.22(b), is unconstitutional on its face, that is, as-applied to any organization, irrespective of the organization’s form or independence from candidates.

Contributions.  Second, the Commission stretched a Second Circuit Court of Appeals opinion, FEC v. Survival Education Fund, Inc., (SEF) to parlay donor understanding into “contributions;” one of two alternate roads to “political committee” status.  A solicitation-disclaimer case stretched beyond context, SEF holds that written solicitations that indicate that money received will be spent to defeat a candidate must carry disclaimers informing the public of whether the organization is coordinating its activity with a candidate or his agents.  The Second Circuit says in three places that its interpretation is tied to interests in preventing the corruption of candidates.  See SEF at 295-97.  Indeed, the Second Circuit was careful not proceed in the absence of a nexus to candidates, and specified the limits of its holding by noting that “[s]ection 441d(a)(3) … does not require direct disclosure of what an individual or group contributes or spends [the very essence, by the way, of political committee reporting] but only disclosure of who paid for the particular communication at issue and that it was not authorized by a candidate or his agents.”  SEF, supra, at 297. (Emphasis added).

The Commission went far beyond disclaimers, using SEF to write 11 CFR 100.57.  “Section 100.57(a) states that if a solicitation ‘indicates that any portion of the funds will be used to support or oppose the election of a clearly identified candidate,’ then all money received in response to that solicitation must be treated as a contribution under FECA.”  Rulemaking at 5602.  The Commission then concludes: “An organization that receives more than $1000 of such funds is required to register as a political committee,” id. at 5602, and concludes further: “An organization that triggers political committee status through the receipt of such contributions is required to register the committee with the Commission, report all receipts and disbursements, and abide by the contribution limits and source prohibitions.”  Id. at 5602.

The problem with 11 CFR 100.57 is that it forces an organization to register with the Commission no matter the organization’s output or end product.  The organization could spend its entire budget on ads about greenhouse gases, but if the organization told its donors the greenhouse-gas ad campaign would defeat clearly-identified federal candidates, the Commission would have a foothold for regulation.

This provision is unconstitutional as-applied to independent, unincorporated organizations using individual funds; or ought to be.  If an independent, unincorporated organization has a right to run independent expenditures with individual funds – the definition of which subsumes express advocacy – then don’t those organizations have the right to solicit donors for that purpose, and don’t the donors have a right to know it?

The provision is equally unconstitutional as applied to issue advocates, corporate or individual, particularly after WRTL II.  There the Court said that the ability of a corporation to run genuine issue advocacy cannot turn on questions of the organization’s intent or the ad’s effect.  Post WRTL II, who cares what might be proved about ALP’s solicitations or the understanding of its donors?  ALP’s product was neither express advocacy nor the functional equivalent of express advocacy.  “Under well-accepted First Amendment doctrine, a speaker’s motivation is entirely irrelevant to the question of constitutional protection.”  WRTL II at 2666.

-- The rest of this post is continued in a second part --