Skepticseye.com

The DC District Court concluded yesterday that the FEC’s explanation of its 527 rulemaking was inadequate. The court remanded the case to the FEC to either better explain its decision to apply the “political committee” standard case-by-case, or write a new rule. The Campaign Legal Center has posted a copy of the decision.

Of course, if Congress enacts a new 527 statute, regulating more 527 activity as political committee activity, the FEC would need to write a new rule anyway. Another way of observing that a week’s time might have mooted this case.

Some aspects of the court’s opinion seem to treat 527s like some “other.” The court does not seem to understand that while all political committees are also 527s, not all 527s are necessarily political committees. In other summary passages, however, this confusion is less evident. Still, I really wonder if the court understood how the tax status and the FEC status work separately. This isn’t really about whether the FEC will regulate 527s - of course it does already (those 527s that also meet the threshold for being political committees, or parties, or candidate committees). This is about what “major purpose” means.

And, 30 years post-Buckley (where the Court gave us “major purpose” without also providing an owner’s manual for how to use it), no one knows.

Of course a rule to elucidate the scope of “major purpose” would be welcome. It would have been welcome 15 years ago. But I wouldn’t at this point in history get all excited about what the contours of such a rule should be, since Congress may very well shift the sand we stand upon in the next week.

Meanwhile, given the new “solicitation” fundraising rule and the minimum allocation percentage that were promulgated in 2004, there will never be another 527-fest like we saw in 2004.

And meanwhile, the cheers from the reform side of things seem a little premature. The court rejected pretty conclusively their contention that the failure to write a rule was an abuse of the FEC’s discretion:

Rather, their sole challenge is on the grounds that there is sufficient evidence on the record to require a rulemaking and, therefore, that FEC’s failure to promulgate a rule is arbitrary and capricious. This claim was rejected by the Common Cause court, and the Court is not persuaded that the circumstances of this case present the “exceptional situation” required to reach a different conclusion here.

Later, it does bother me that the court assumes that 527 enforcement cases are “languishing” sinply because there’s no public word about developments:

Cases arising from the 2004 campaign have languished on the Commission’s enforcement docket for as long as 23 months, with no end in sight, even as the 2006 election campaign has begun. Indeed, the Commission itself emphasizes that it has no legal obligation to bring a case to the close in an election cycle. See FEC Supp. Br. at 3 n.2. This merely demonstrates the patent inadequacy of the case-by-case approach. The FEC can take years to complete an administrative action, and penalties, if they come at all, come long after the money has been spent and the election decided.

The confidentiality provision of the Act prevent anyone except for the respondents to have a clue what is happening in enforcement matters. So cases could be “languishing” or they could be the object of industrious investigation - neither the plaintiffs nor the court knows. Litigants aren’t suppose to assume facts not in evidence, and judges shouldn’t either.

Furthermore, the time-consuming timeline for enforcement is dictated largely by statute - the court, for its part, doesn’t do a very good job of explaining why having a “major purpose” rule would speed the process up. Because if there was a standard there wouldn’t be enforcement actions? There won’t be any fewer steps, to be sure. Complaints will continue to be filed, and each claim will be evaluated “case-by-case” in enforcement. With or without a rule.

In short, I think the court is confused about how section 527 works, and about how FEC enforcement works. The court may also be infected with the “everyone knows” attitude. That is, “everyone knows” that 527s got off scott-free in 2004, “everyone knows” that reform was suppose to take care of them, so “everyone knows” that the FEC must have been the problem.

The trouble is that here, as in so many areas, what everyone knows is wrong.

The Goldwater Institute hosted a great event yesterday on the Arizona Clean Elections law. Yours truly presented her paper. Todd Lang, Executive Director of the Citizen’s Clean Elections Commission did a nifty Powerpoint, and Brad Smith did his thing, too. You can listen to audio from the event at the Goldwater site - I would link to it directly but I am blogging from an undisclosed location and the software isn’t cooperating.

No this isn’t about Red America. It’s about the twin stories in todays Washington Post about, respectively, lobbying and 527 reform and the FEC’s vote yesterday on the Internet rule, both written by veteran reporter Tom Edsall.

In the 527 story, Edsall uses (to good effect) a post Brad Smith made on RedState criticizing the Republican strategy for “shutting down” the 527s:

Former Federal Election Commission member Bradley Smith wrote on the RedState blog that restricting 527 political committees runs counter to conservative principles and would prevent such key pro-Republican groups as the Swift Boat Veterans and Progress for America from replicating in future elections the crucial role they played in 2004. While outspent, PFA and the Swift Boat Veterans ran ads that Democrats and Republicans agree were the most effective of the campaign.

“We’re so hung up on Soros, we’re not only betraying principles, freedom and good government, but we’re being politically stupid. Soros spent $25 million in 2004, and as the guys at National Review put it, all he got was a T-Shirt,” Smith wrote. “527 ‘reform’ doesn’t whack big labor, big liberal foundations, big Main Stream Media. . . . It does ‘cut off’ Swift Boat Veterans for Truth, Progress for America, and Club for Growth.”

As you can see, it is identified as a post from Redstate.

In the FEC rule story, adjacent on the page, Edsall quotes Mike the K, again to good effect, from a post of his:

Conservative blogger Mike Krempasky wrote: “This is a tremendous win for speech.”

It is not identified as a post from Redstate. Perhaps after all the Red America stuff, people just know that Mike the K is found at Redstate. Still, the inconsistency seems a little odd. But I am pleased that both stories include sources skeptical of “orthodox reform” thinking, as well as the usual suspects. I’m not complaining, just observing that it seems the Post is still working out how to identify blog sources in news stories.

Here’s the press release I just received from Democracy 21:

The following statement is being issued by the Campaign Legal Center, Common Cause, Democracy 21, the League of Women Voters, Public Citizen and U.S. PIRG:

Can we enact an affiliation rule that treats these groups as one entity for PR purposes . . . ?

Throughout this process, our organizations have supported both protecting the free speech rights of bloggers and other individual Internet users, and protecting the federal campaign finance laws against the opening of new loopholes that would return corrupting soft money to federal elections.

Yup. That why you supported the Shays suit, supported Rep. Shays’s HR 4194, made misleading statements about HR 1606, and so forth.

The regulation adopted by the FEC today strikes the right balance in advancing these goals.

The regulation makes clear that bloggers and other individuals communicating on their own Web sites are not covered by the campaign finance laws.

The regulation also makes clear that federal candidates and political parties buying campaign ads on the Internet to influence federal elections must comply with federal campaign finance laws and cannot use soft money to fund such ads.

We believe the FEC regulation settles these issues.

Great! So there won’t be any lawsuits, right? No inconsistent comments when the FEC starts drafting AOs interpreting the rule. No complaints against websites and their operators to test the contours of the press exemption, the individual exemption, or the notion of what is a “fee.” That’s wonderful.

I guess CREW will be busy, then.

The FEC regulation also makes clear that H.R. 1606, the Hensarling bill, is now completely unnecessary to protect bloggers and other individual Internet users, and that the only purpose it would serve at this stage is to open huge loopholes for federal candidates and political parties to spend unlimited, corrupting soft money to buy campaign ads on the Internet.

You can’t help yourselves, can you? Not true last month, not true last week, not true today.

In the event that the House goes forward with H.R. 1606 this week, we urge every House Member to recognize that the only purpose served by this legislation now is to gut the campaign finance laws and the soft money ban. We urge every Member to vote against H.R. 1606.

Actually, if you believe strongly that the Internet is “different” and shouldn’t be regulated like other media, you could still have very good reasons to support 1606. I’m not sure that at this juncture you can make that case convincingly, as I noted in the preceding post. But there is an honest position that can be taken here, and some will take it. It’s not necessarily because they’re interested in gutting the campaign finance law, however noble that misson might be.

The FEC passed Friday’s draft rule, with some errata and a section of E&J devoted to the corporate stuff, with a 6-0 vote. Good accounts of the morning are at Bob Bauer’s site and Rick Hasen’s Election Law blog.

Four Commissioners: Toner, Lenhard, Weintraub and Walther, seemed pleased. Two Commissioners: Mason and Von Spakovsky, seemed more like resigned, though I think everyone is decently content. Von Spakovsky said at the table that Congress should pass HR 1606 anyway; I think Mason may feel similarly. I understand Rep. Hensarling has already stated he wants his bill to come up for a vote this week as scheduled.

I believe that the original Internet exclusion was proper, and it is too bad that we had to go through all this. Having said that, what 1606 advocates may find is that they are in the tricky position of asserting dissatisfaction with a decent rule. They will have to make the case that paid Internet advertising is not “general public political advertising” and I think they will be vulnerable to the accusation that their “true” agenda - “allowing soft money into the system” blah blah blah, could be the only logical reason for their dissatisfaction.

I’m not saying that this accusation is fair or accurate, but it seems to me that’s how the argument unfolds in the face of today’s vote, and it puts the 1606 folks in a bad spot. The “perfect” can be the enemy of the “good” - and not just when it is the CDT doing the pushing. Maybe I am wrong and you should feel free to comment if I’m neglecting an important angle.

Now - on to April 7 and the final vote on the coordination rule!

(Wouldn’t you think just providing your birthday would be sufficient?) This photo was taken at the Post Ranch Inn, Big Sur, California. Can’t remember when, exactly.

Looking for posts about the FEC Internet Rule? Scroll through yesterday . . .

UPDATE: I plan to attend Monday’s FEC meeting where they are schedule to consider the Internet rule discussed below. I hope to update the site via Blackberry, but that doesn’t always work. If I’m unsuccessful, I will post Monday afternoon.

The following eight posts or so examine the FEC’s Draft Internet Final Rule, released yesterday evening. Not every post links to the 96-page PDF file. Since time runs backwards on a blog, the descriptions run from the end of the document back to the beginning. If you prefer, jump down about eight and read them “up” in order.

In general, I am pleased. I think the FEC rule is a better approach than the legislation before Congress - it takes on the scope of the CDT/HR4900 approach, but without the unnecessarily harsh consequences for parties. Bob Bauer seems to agree.

UPDATE: Brad Smith (not this guy) is pleased.

The FEC’s draft does not categorically exempt all blogging as “press,” but does specifically extend the exemption in the law for “news, commentary and editorials” to Internet communications:

The Commission has decided not to change its rules regarding the media exemption so as to exempt all blogging activity from the definitions of “contribution” and “expenditure.” The Commission believes that such an exemption for one technology specific category would be both too broad and too narrow: it would apply equally to blogging activity “that [is] not involved in the regular business of imparting news to the public” and communications that are not news stories, commentary or editorials within the meaning of the media exemption; at the same time, it would overlook other forms of Internet communication, such as publishing websites in other formats or podcasting, that are equally deserving of consideration under the media exemption. Moreover, given
that methods of communicating over the Internet “are constantly evolving and difficult tocategorize precisely,” the wholesale exemption of any particular method of Internet communication would be ill advised. Reno, 521 U.S. at 851.

Further, the Commission’s concludes that bloggers and others who communicate on the Internet are entitled to the press exemption in the same way as traditional media entities. This is in keeping with the roles that bloggers play in the way that the public receives their news and information. Bloggers were issued press credentials for the
National Nominating Conventions in 2004 and, more recently, a blogger was issued permanent press credentials as a member of the White House press corps. Bloggers who are covering and reporting news stories in the same way that traditional media entities have reported on news worthy events are entitled to the same media exemption
protection as applies to other media entities such as CNN, NBC, and other traditional media.

I think my stated concern about new entrants and the occasional political speech of non-political sites is still hanging, even with this. So, you have a site devoted to muscle cars, maybe as a part of your automotive business. A candidate for Congress says something you don’t like about “old gas guzzlers,” and you start railing against him - not just on the issue, but as is typical, telling people they shouldn’t vote for him. I don’t think you’re exempt under this exemption. Maybe that’s the intent.

This isn’t a “new” problem - its the old question of “who” is a press entity. If it isn’t “everyone” then there’s a line - somewhere.

From page 70 of the draft final rule:

[N]ew 11 CFR 100.94(d) and 100.155(d) provide that the exceptions in sections 11 CFR 100.94(a) and 100.155(a) apply to a corporation that meets three criteria: (1) it is wholly owned by one or more individuals; (2) it engages primarily in Internet activities; and (3) it does not derive a substantial portion of its revenues from
sources other than income from its Internet activities.

The Commission recognizes that incorporated bloggers and other similarly incorporated individuals often generate revenue primarily through the sale of advertising space on their own websites or through other Internet activities, such as providing subscription and membership services, and may also generate ancillary revenue from non-advertising sources, such as T-shirts, mugs, and similar merchandise. The third requirement is therefore added to preserve the exception for such incorporated bloggers and similar corporations, without creating an overly broad exception to the definitions of “contribution” and “expenditure” that would encompass the activities of any corporation engaged in online activities merely as a platform for other commercial activities. See, e.g., Advisory Opinion 2004-19 (concerning a forprofit corporation
that provided commercial services to both citizens and candidates via DollarVote.org website).

The exceptions in 11 CFR 100.94(d) and 100.155(d) are not limited to blogging activities or any other particular Internet activity. Rather, the language in new paragraphs 100.94(d) and 100.155(d) ensures that the Internet activities of individuals who choose to incorporate are exempt from regulation as “contributions” or “expenditures,” regardless of whether the individual chooses to “blog” or to engage in any other form of Internet activity.

In note 50 of the Draft Final Rule, the FEC deals with one source of existing blogger anxiety - the Leo Smith Advisory Opinion, and says farewell:

In Advisory Opinion 1998-22, the Commission concluded that even if an individual acting independently incurs no additional costs in creating a website that expressly advocates the election or defeat of a clearly identified candidate, at least some portion of the underlying costs of creating and maintaining that website is an expenditure under the Act and must be reported if it exceeds $250 in a calendar year. Later, in Advisory Opinion 1999-17, the Commission concluded that in the course of developing a website for a campaign, an individual could use “his or her personal property at home, i.e., a home computer” and incur “related costs (such as maintaining Internet service with a provider) that are part of the upkeep” of the website without making a contribution or expenditure, and without incurring any reporting obligations. Advisory Opinion 1998-22 is superseded to the extent that it treats as an “expenditure” an individual’s use of computer equipment and services for uncompensated Internet activity.

Italics mine.