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Posted January 20, 2010 by Paul S. Ryan

A “Regulatory” Agency Expeditious Only in Deregulation

A nearly eight-year battle with the FEC over the agency’s ineffective implementation of the Bipartisan Campaign Finance Reform Act of 2002 (BCRA) “coordination” provision continued yesterday with rulemaking comments filed by the Legal Center, together with Democracy 21.  The heel dragging, obstruction, and unwillingness of the agency to adopt effective coordination regulations stands in stark contrast to its rapid action to repeal contribution regulations recently struck down by the courts.

Yesterday’s filing came in response to the Commission’s Notice of Proposed Rulemaking (NPRM) 2009-23, published at 74 Fed. Reg. 53893 (October 21, 2009), seeking comment on proposed revisions to federal regulations regarding communications that have been coordinated with federal candidates under 11 C.F.R. § 109.21.

Previous BCRA coordination regulations adopted by the FEC have led to two lawsuits resulting in two federal district court decisions and two D.C. Circuit Court of Appeals decisions holding that the FEC coordination regulations are arbitrary, capricious, an abuse of discretion and contrary to law.  Shays v. FEC, 528 F.3d 914 (D.C. Cir. 2008) (“Shays III Appeal”) aff’g in part 508 F. Supp. 2d 10 (D.D.C. 2007) (“Shays III District”); Shays v. FEC, 414 F.3d 76 (D.C. Cir. 2005) (“Shays I Appeal”) aff’g in part 337 F. Supp. 2d 28 (D.D.C. 2004) (“Shays I District”).

Yet these illegal, ineffective coordination regulations remain in effect to this day.

To be clear, the regulation of coordinated expenditures didn’t begin with BCRA.  Instead, the regulation of coordinated expenditures is vitally important to maintaining the integrity of candidate contribution limits, which have existed at the federal level for more than three decades.  The Supreme Court in Buckley v. Valeo, 424 U.S. 1 (1976), distinguished for constitutional purposes between limitations on “contributions” to a candidate’s campaign, and limitations on “expenditures” by an independent outside spender in support of, or opposition to, a candidate’s campaign.  Buckley also recognized that, to be effective, any limitations on campaign contributions must apply to expenditures made in coordination with a candidate, so as to “prevent attempts to circumvent the Act through prearranged or coordinated expenditures amounting to disguised contributions.”  Id. at 47.  Coordinated expenditures amount, in practical effect, to “disguised contributions” and should be viewed that way by the Commission.

Amendments to the Federal Election Campaign Act (FECA) in 1976 codified Buckley’s treatment of coordinated expenditures.  FECA was amended to provide that an expenditure made “in cooperation, consultation, or in concert with or at the request or suggestion of a candidate, his authorized political committees, or their agents, shall be considered to be a contribution to such candidate.”  Pub. L. No. 94–283, § 112, 90 Stat. 475 (codified at 2 U.S.C. § 441a(a)(7)(B)(i)).

BCRA’s coordination provisions were, in fact, a response by Congress to the FEC’s ineffective regulation of coordinated expenditures—directing the FEC to promulgate new coordination rules that do not require “agreement or formal collaboration” before the FEC can conclude that an expenditure is coordinated.

As required by BCRA, the FEC promulgated new coordination rules in 2002—but did little to improve the rules.  The Commission’s 2002 rules provided that, more than 120 days before an election, an advertisement had to contain express advocacy or constitute the republication of the candidate’s own campaign materials in order to fall within the scope of the rule.  This rule was challenged in the Shays I lawsuit and invalidated.

After the D.C. Circuit in Shays I invalidated the Commission’s coordination regulations in 2005 for (among other reasons) providing only an inadequate express advocacy content standard outside the pre-election windows set by the rule, the Commission waited a full year, and then readopted the same inadequate express advocacy standard—indeed it made matters worse by shortening the pre-election window from 120 days to 90 days in the case of congressional elections.

The Commission’s re-promulgation of its ineffective coordination rules prompted the Shays III lawsuit.  After the D.C. Circuit in Shays III invalidated these rules for a second time in 2008, again because (among other reasons) it found the express advocacy test to be inadequate as the sole guard against coordination outside the windows, the Commission waited 16 months to even begin this present rulemaking in response.  And in this rulemaking, the Commission proposes (among its alternatives) to adopt two minor variations of the same express advocacy standard that the D.C. Circuit has already twice rejected.

By contrast to the Commission’s long delay in effectively regulating coordinated expenditures, both with respect to the 2002 command by Congress and the 2008 command by the D.C. Circuit in Shays III, the Commission expedited implementation of the D.C. Circuit’s recent decision in EMILY’s List v. FEC, 581 F.3d 1 (D.C. Cir. 2009), a decision issued only four months ago.  In that case, as soon as the government’s time for appeal lapsed, the Commission immediately initiated a rulemaking to conform its regulations to the D.C. Circuit opinion, in order to ensure that compliant rules would be in place for this election cycle and, further, on the same day in December, announced an “interim final rule” effective that very day, because the public needs “immediate guidance” and normal rulemaking notice and comment procedures “may be contrary to the public interest.”  See FEC Notice 2009-30, 74 Fed. Reg. 68661 (Dec. 29, 2009).

It is obvious from these proceedings that the Commission is far more eager to deregulate than to regulate money in politics.  But the Commission is not at liberty to pick and choose which federal court decisions it will comply with and which it will put on the back burner for election cycle after election cycle.  In the face of two district court decisions and two D.C. Circuit opinions invalidating the coordination rules, we have gone through four election cycles since BCRA was adopted, and are now in the midst of a fifth cycle, without the FEC yet having provided the nation with lawful regulations to implement these critically important BCRA provisions.

With this background in mind, and for the reasons detailed in the written comments we filed yesterday, we support the Commission’s adoption of proposed Alternative 1—which would regulate public communications outside of the existing 90/120-day pre-election time periods when those communications promote, attack, support or oppose (“PASO”) a federal candidates and meet the existing “conduct” standards, which dictate the degree of interaction between a candidate and an outside spender that triggers regulation.  However, we oppose (as unnecessary) the promulgation of a regulatory definition of the component terms of the PASO standard.  The PASO was used in another part of BCRA and was challenged and upheld by the Supreme Court in McConnell v. FEC, 540 U.S. 93, 170 n.64 (2003), where the Court stated that the PASO words “‘provide explicit standards for those who apply them’ and ‘give the person of ordinary intelligence a reasonable opportunity to know what is prohibited.’”  If, contrary to our views, the Commission decides to adopt a regulatory definition of the PASO terms, we strongly oppose the Alternative B definition—because the Alternative B definition of PASO would largely gut the regulation—but we do not oppose the Alternative A definition of PASO.

An effective federal coordination regulation is long overdue and the Commission has been under attack for some time now because of its failures to enforce the law.  They have the chance this time to finally get it right and they must do so or face the consequences.  It would be a dereliction of duty of the highest order for the Commission to yet again fail to adopt lawful regulations to implement the BCRA coordination provisions—eight years after the agency was mandated by Congress to do so—and thereby require yet a third lawsuit to be brought against the agency to obtain lawful coordination regulations.

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