FEC Confusion

Last week was a busy week at the FEC, with important decisions regarding 527 organizations, fundraising by PACs and a little attended to policy statement that could get a lot of committees in trouble. But the take away from all of these disparate actions is that the FEC is an agency struggling to provide coherence for the regulated community and failing miserably at the task.

But, I must be fair to the Commission and it staff because Congress has not made their job very easy. But that confusion from Capitol Hill is commonplace in the regulatory environment, so the FEC only gets partial credit for their effort.

On Wednesday, the FEC issued a press release announcing conciliation agreements with three prominent 527 organizations, the Swift Boat Veterans, Move.org and the League of Conservation Voters, agreeing to fines of $630,000. After looking through the documents associated with each case, one is left scratching their head about the underlying facts leading the General Counsel's office to recommend the Commission's action. All three groups had made public statements regarding one or more canddiates in the 2004 elections that the Commission interpreted as public communications intended to influence electoral outcomes. The trouble is that some of the statements may not have been "public," even as defined by the FEC. The factual basis and legal anaylsis done by the FEC includes references to several statements by Swift Boat leadership made on "news programs," and even cites the personal opinion of the Chairman of the group as violative of the law.

There is little to deny that many of the actions by the Swift Boat Veterans, Moveon.org and LCV actually lead to their classification as political committees subject to FEC regulations under current FEC law. The groups did make public statement supporting or opposing federal canddiates for office and those should have been paid for with hard money subject to the regulations. But as far as announcing a "standard" for 527 groups as to whether or not their actions would be subject to FEC regulation, there are no clues in these cases and no statement by the FEC as to what should be the standard.

On Thursday, the FEC considered an Advisory Opinion for the National Association of Realtors. I have commented on the matter here, and the CCP has an excellent analysis of the matter. The outcome was positive for the Realtors and that is good news, since had the decision gone the other way, the Realtors and the regulated community would have been stuck with a scenario where two actions, normally legal when done separately, would have been impermissible when done together or too closely together. Then the Commission would have been dealing with some rather arcane and frankly inane requests for guidance relating to how close is too close.

But like the 527 decision, the regulated community and the political world at large are still left with a situtation where common sense and logic are not nearly enough to deal with the campaign finance regulatory regime. If there are questions regarding similar factual scenarios, there is no guarantee that the average person would be able to figure out what is legal and what is not. Even gifted campaign finance attorneys like Jan Baran needed an Advisory Opinion. Why should something like campaign finance be so complicated that normal people can't decipher it?

Finally, the FEC issued a new "policy statement" relating to the the purposes of disbursements on disclosure reports. While it is nice to provide clarification on this topic, the fact that the list needed to be distributed at all indicates a lack of consistency of thought among the Commission and it staff.

For those who have never filed an FEC report, the policy statement sounds an awful lot like inside baseball. To a certain extent it is simply inside baseball, matters that involve only those people involved in dealing with FEC reports. But it goes beyond simply clarifying a policy, it clarifies a regulation that in itself was vague. If one were to simply look at the regulations, and why wouldn't a person do that, then under the regulation 104.3(b) common disclosures would be enough, but they are not enough, so a policy statement.

For those more familiar with administrative law, a policy statement is not subject the normal notice and comment procedures that a change in regulation is subject to follow. There is also the political aspect, issuing a policy statement is not necessarily subject to review and approval by Congress, who are afterall the most common violators or the lack of information for purposes of disbursements.

As I have noted many times, one of the purposes of the law, any law, is to provide clear and predictable standards for action. The FEC is stuggling mightily with this task and the actions of the past week are not helping matters. When does a 527 organization cross the line into political committee-hood? When can certain actions that are nomrally legal, suddenly become illegal due to proximity? What is a clear regulation and what is not? The actions of the past week are not isolated incidents either. It is easy to blame McCain-Feingold for complicating campaign finance law and it does deserve the lion's share of the blame, but that does not mean the FEC can make it a little clearer for the average guy to understand.

Campaign fince is not rocket science or quantum physics, but the FEC seems to be trying very hard to make campaign finance as complex as sending a rocket to Jupiter and the cost is to the American people. Most Americans are not sending a rocket to the moon, but they are voting for people for office on a regular basis and the law surrounding how campaigns are financed should be simple, clearly understood and above all, reflect a certain common sense and predictability.