Posted December 23, 2008 by Paul S. Ryan

The FEC Reaches a New Low

For years the CLC has been critical of the FEC’s weak enforcement of federal campaign finance laws against law-breaking 527 groups.  The FEC’s weak enforcement has now devolved into non-enforcement.  In the words of FEC Commissioners Cynthia L. Bauerly and Ellen L. Weintraub published in a December 19 statement, their three Republican “colleagues’ refusal to accept the signed conciliation agreement with the November Fund amounts to a refusal to enforce the law.”  The FEC has lost its stomach even for the wrist slap fines paid by other 527 lawbreakers in the 2004 election cycle.  Unable to muster a fourth vote for a signed conciliation agreement, Commissioners Bauerly and Weintraub have taken their complaint with their colleagues public.  Yet again, the FEC is up to the task of providing endless evidence for the case that the agency must be replaced by an entity willing to enforce the laws on the books.  The FEC has transformed itself from a merely dysfunctional agency to one that now openly thumbs its nose at the law.

This matter arose from a complaint filed by Citizens for Responsibility and Ethics in Washington (CREW) against the U.S. Chamber of Commerce and a 527 group named the November Fund, which was set up by the National Chamber of Commerce to influence the 2004 presidential election.  The complaint alleged that the U.S. Chamber of Commerce violated federal law by making a $3,000,000 corporate contribution to the November Fund, which, in turn, likewise violated federal law by failing to register and report as a political committee and by accepting the illegal corporate contribution.

CREW’s complaint was functionally identical to complaints the CLC filed in 2004 against several other 527 organizations, including America Coming Together (ACT), the Media Fund, Progress for America Voter Fund and Swift Boat Veterans and POWs for Truth.  The Commission resolved these complaints by concluding that the 527 organizations had broken federal law—and the 527 organizations entered settlement (i.e., “conciliation”) agreements, paying the FEC fines that amounted to millions of dollars, but less than 2% of the funds illegally raised and spent.  At the time, we viewed the fines as too little, too late.

We didn’t imagine the FEC’s anemic initial response to hundreds of millions of dollars of illegal 527 activity could get even weaker, but it has.  Despite the willingness of the U.S. Chamber of Commerce and its November Fund to enter a conciliation agreement with the FEC, and a recommendation by the FEC’s Office of the General Counsel that the Commission accept the agreement—all based on the same legal reasoning underlying all of the other 527 group conciliation agreements since 2004—the three Republican Commissioners simply refused to accept the agreement and enforce the law.

What was the reasoning of these Commissioners for refusing to accept the conciliation agreement?  It’s hard to tell, because they haven’t issued statements explaining themselves.  But according to Commissioners Bauerly and Weintraub, some of their “colleagues have suggested that The November Fund’s major purpose was issue advocacy focused on trial lawyers rather than campaign activity to defeat John Edwards.”  This is laughable.  In addition to all of the facts cited by Commissioners Bauerly and Weintraub in their statement, the group’s name itself makes clear the group’s purpose.  But equally telling is the fact that the group self-identified as a 527 group under the federal tax code—the tax exempt status for organizations with the primary purpose of influencing the “nomination, election, or appointment of any individual to any Federal, State or local public office.”  So-called issue advocacy groups are exempt from federal income tax under section 501(c)(4) of the tax code, not section 527.

The position taken in this matter by the three Republican Commissioners is completely indefensible.  To those not familiar with the inner workings of the FEC, it is akin to a local district attorney announcing she will no longer prosecute a certain category of crime even in cases where the defendant has signed a confession of guilt.

Commissioners Weintraub and Bauerly felt compelled to write their statement because of their “concern about the dramatic departure this result represents from the Commission’s prior enforcement efforts and the law itself.”  This how bad it is at the FEC.  The New York Times this week editorialized that President-elect Obama will soon have an opportunity to make an important change in this failed agency by changing the long-standing and flawed appointment process that has resulted in Commissioners who refuse to enforce the law.  President-elect Obama will have a chance soon after taking office to fill three seats on the six-member Commission.  Hopefully, he will revise the appointment process so that Commissioners can be chosen who will enforce, not ignore and undermine, the law.  And in the longer term it is time for Congress to muster the fortitude to pass previously introduced legislation to replace the Commission altogether with a Federal Election Administration willing and capable of enforcing federal campaign finance laws.