Playing Chicken with the FEC

About Steve Klein

serves as Staff Attorney and Research Counsel for the Wyoming Liberty Group.

Since the United States Supreme Court denied certiorari in our case Free Speech v. Federal Election Commission (that is, declined to hear the case), one of the issues raised in the case has only become more pressing. We argued that three men in Wyoming who wanted to spend as little as a few thousand dollars on ads criticizing the President and other federal officeholders for their positions on certain issues should not have to register and report as a political committee (“PAC”) with the FEC. This was because Free Speech, though criticizing federal candidates, was not expressly advocating for their election or defeat and, furthermore, did not have the major purpose of electing or defeating candidates.

Unfortunately, both the Wyoming federal court and the United States Court of Appeals for the Tenth Circuit basically ruled as the attorneys for the FEC asked them to, essentially saying the standards aren’t that important because it’s just disclosure.

The latter issue in our case, the major purpose test, was prompted by the Supreme Court’s ruling in Buckley v. Valeo (1976) as part of a saving construction of federal law to prevent the FEC from making every political group a PAC. Unfortunately, the Court did not—and has not since—actually considered a case about how the FEC determines major purpose, which was exactly what part of our case asked it to do. As a result, the FEC’s legal office and certain commissioners have worked to nullify the very purpose of the major purpose test. Instead of a fail-safe to keep groups like Free Speech out of the FEC’s purview, the test is now little more than a check box on the road to regulatory capture.

There’s only one thing standing in the way of all this “campaign finance reform”: three of six FEC commissioners who still believe the major purpose test protects free speech. In order to bring enforcement actions against anyone, the commission must have a majority vote, and on many matters relating to PAC status the commission continues to deadlock.

Last month, the FEC did not find reason to believe that the American Action Network failed to register as a PAC, and made the same determination for Americans for Job Security, both by votes of 3-3. Yesterday, both groups of commissioners released statements of reasons behind their votes in both cases, which are starkly different.

The speech-friendly statement of reasons from Chairman Lee Goodman and Commissioners Caroline Hunter and Matthew Petersen carefully analyzes the major purpose test and applies it to both matters. Following the traditional test, the commissioners note that the majority of these groups’ advertisements discuss issues, and that both groups hold themselves out as being concerned with issues. The statement also notes the burdens of PAC status (recognized by the Supreme Court in Citizens United) and critiques the ever-evolving standards utilized by the FEC’s legal staff that always seem to come up on the side of imposing PAC status upon a particular group.

Parroting reform rhetoric about “dark money,” the statement of reasons from Vice Chair Ann Ravel, Commissioner Steven Walther and Commissioner Ellen Weintraub ignores legal precedents these commissioners don’t like to justify expanding the major purpose test. It is no longer about groups that expressly advocate for the election or defeat of candidates, but rather those that speak out and merely mention a candidate. Ultimately standards mean little, however, since—this may sound familiar—“the entire purpose of the political committee status boils down to a single, compelling policy interest: disclosure.”

Despite the rhetoric of “reformers” and the reform-minded commissioners, so-called disclosure continues to be a tool of red tape and dirty politics, not transparency or cleanliness. Complying with PAC reporting would have cost these organizations (as well as Free Speech) a good chunk of their budgets, and nevertheless opened them up to all sorts of liability. Groups like the Center for Public Integrity use FEC forms to play “gotcha” with certain groups, threatening them with civil—even criminal—penalties when they do not properly fill out the forms. (Read their latest exposé, published this morning.) If groups that are well-funded and have “‘sophisticated counsel’” can’t keep up, what does that mean for grassroots groups like Free Speech?

It’s not just disclosure; it’s censorship by red tape.

For the moment, well-funded groups can continue to play chicken with the FEC and reasonably rely on the three speech-friendly commissioners to keep standing against aggressive disclosure on a complaint-by-complaint basis. If there’s a shift on the commission, well-funded groups can afford to fight back. But grassroots groups that cannot afford counsel and accountants can only rest easy if they don’t speak out at all, for even just enduring an FEC investigation will likely eat up their budgets. The major purpose test (along with the definition of “express advocacy” and the like) needs to be addressed by Congress or the Supreme Court and made clear, objective and narrow. There is no reason groups should have to disclose their donors and spending when their influence on elections is speculative. The cost of compliance and risk of punishment are both far too high in a society built on free speech.

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