McCain, Feingold press for disclosures in FEC rule

A bipartisan group of lawmakers that helped pass campaign finance reform is strongly advocating for a proposed Federal Elections Commission (FEC) rule change that would allow corporate and labor organizations to use their general funds for electioneering communications, but still require disclosure of donors.

{mosads}Sens. John McCain (R-Ariz.), Russ Feingold (D-Wis.) and Olympia Snowe (R-Maine) and Rep. Christopher Shays (R-Conn.) last week filed a joint comment letter on the proposed rule change to the FEC, which will hold a public hearing on the issue on Oct. 17 and 18.

The rule change would implement a Supreme Court decision in FEC v. Wisconsin Right to Life that found campaign finance laws cannot bar nonprofit organizations, corporations or labor unions from using their general funds to pay for broadcasts that refer to federal candidates during the period before an election if the broadcast cannot reasonably be interpreted as an appeal for votes for or against the candidates.

The FEC offered two alternatives for its proposed new rule. In Alternative 1, the FEC would create an exemption that would allow corporate and labor organizations to use their general funds for electioneering communications. Current rules require the creation of a separate account. However, they would also be required to file disclosure reports once they spend more than $10,000.

In Alternative 2, the FEC would change the definition of an electioneering communication so that corporate and labor organizations could use their general funds. They also wouldn’t be subject to the FEC’s electioneering communication reporting requirements.

McCain, Feingold, Snowe and Shays argued Alternative 1 would keep intact the reporting requirements they laid out in Title II of the Bipartisan Campaign Reform Act (BCRA) in 2002.

“One of the main purposes of Title II of BCRA was to make sure that the public was informed of the identity of persons making expenditures on electioneering communications,” the comment letter stated.

Alternative 1 preserves the reporting exemptions for grassroots lobbying ads, which the lawmakers argued was an essential part of the Supreme Court ruling. They also urged the FEC to “craft an exemption for genuine issue ads that do not completely swallow Title II’s prohibition on electioneering by corporations and unions.”

The FEC received more than two dozen comment letters from a variety of organizations, including: the AFL-CIO, OMB Watch, the American Association of Advertising Agencies, the Democratic Senatorial Campaign Committee and the Democratic Congressional Campaign Committee, the U.S. Chamber of Commerce and the Thomas Jefferson Center for the Protection of Free Expression and the Media Institute.

The AFL-CIO, along with the American Federation of State, County and Municipal Employees, the National Education Association and the Service Employees International Union, jointly supported a version of Alternative 2. They argued, among other reasons, that the disclosure provision goes against congressional intent.

According to the organized labor comment letter, it was Congress’s “explicit design that a union or a corporation acting in compliance with FECA [Federal Election Campaign Act] would never have occasion to report an EC [electoral communication] since it could never lawfully undertake one; unlawfulness for union and corporate speakers and reportability by other non-registrants went hand in hand.”

The Democratic Congressional Campaign Committee and the Democratic Senatorial Campaign Committee jointly backed Alternative 1, but cautioned the FEC to tailor its new regulations to the Court’s holding.

For example, those committees argued, the FEC should “avoid crafting ‘safe harbor’ provisions for so-called ‘common types of communications’ … that the Court did not reach at all.”

They said the task of creating “safe harbors” that fall outside the provisions of FECA lies with the courts, and not the FEC.

OMB Watch, a nonprofit organization that promotes government accountability, argued against provisions of the first alternative, saying the safe-harbor exemptions for grassroots lobbyists are too restrictive and the proposed general rule is too vague.

“In the absence of concrete guidance in regulations, safe harbors have a tendency to become de facto rules,” their comment read.