Allison R. Hayward*
1. You just THINK Youre a Federalist
The regulatory mill turns slowly and grinds increasingly fine.
The FEC is attempting once again to define what the word "member"
means. See 627 Fed. Reg. 66.882 (Dec. 22, 1997). This is an important
definition, since incorporated organizations may only solicit contributions
of and make political communications to their "members."
The FECs previous definition was declared unconstitutional
in Chamber of Commerce v. FEC, 69 F.3d 600, 605 (D.C. Cir. 1995),
amended, 76 F.3d 1234 (1996).
In a quest for overregulation, the FECs proposed rule, instead
of respecting a groups ability to declare the qualifications
of membership, attempts to catalogue all acceptable membership criteria.
Even if this were possible, it is an unseemly course of action for
a federal agency to pursue. Whats more, the FECs proposals
betray an unsympathetic view of politically active groups. The FECs
Notice even contends that membership requirements must provide a
sufficient barrier to differentiate members with a "financial
or organizational attachment" from those who merely demonstrate
"political support indistinguishable from such support from
the general public." The Notice uses this logic to justify
setting an annual dues threshold of $50 or even $200
to ensure that mere "supporters" arent treated as
Our $25 Federalist dues wouldnt cut the mustard. To be sure,
the FEC proposes also considering whether the member has voting
rights or authority over the organizations policies. But since most
Federalist officers are chosen by divine calling rather than conventional
majority vote, this element would be of little help. While I doubt
that the Federalist Society would ever consider political activity
(for tax reasons), the FECs regulations apply to any membership
organization, association, or corporation without capital stock
many of whom may be in a position to engage in political
activity. These groups no doubt would assume that they could communicate
with the people they understood were members and would unwittingly
violate federal law in the process
2. FEC Coordination Enforcement Against
Matter Under Review ("MUR") 3918, released last September,
is significant because of the reasoning it contains regarding the
legal consequences of "coordinating" expenditures with
candidates. As many readers know, the FEC releases enforcement files
once a mattar is closed. These files, called "MURs," contain
the memoranda, correspondence, and other documents related to the
FECs conduct of the enforcement action.
In MUR, 3918, Joel Hyatt of Hyatt Legal Services, who was the unsuccessful
Democrat candidate for U.S. Senator from Ohio in 1996, was investigated
for running advertising for his law firm while a candidate. Despite
the fact that the advertisements contained no express advocacy and
no message soliciting contributions, the FEC determined that they
were illegal corporate in-kind campaign contributions. According
to the General Counsels Report in MUR 3918 (at 20):
In short, because the Firms advertisements were crafted
by the Committees paid media advisor and were under the
ultimate editorial control of the candidate; because they indirectly
referred to the candidate and his qualifications; and because
several of them referred to health care and crime, which were
"issues raised in the campaign," this Office, consistent
with Advisory Opinion 1990-5, concludes that the advertisements
were in part "for the purpose of influencing" Hyatts
election. Because the advertisements were coordinated between
the expenditor [sic] and the Committee, we conclude that they
Mr. Hyatt settled with the FEC for $11,000. Although this reasoning
is probably unconstitutional, celebrities or business personalities
who pursue elective office must now be wary about commercial advertising
during the campaign. Given the broad analysis used in MUR 3918,
the FEC may construe advertising that includes "indirect"
references to the candidate and vague issue content to be campaign
3. Californias Proposition 208:
Dead for Now
U.S. District Court Judge Lawrence K. Karlton in Sacramento has
issued a ruling declaring unconstitutional core provisions of Californias
recent campaign reform initiative, Proposition 208. California Pro-Life
Council PAC v. Scully, No. CIV S-96-1965 (Jan. 6, 1998) (to be published).
This decision prevents California state regulators from enforcing
any provisions of Proposition 208 provisions, pending reformation
of the law by the California Supreme Court.
In California Pro-Life Council, the court determined that the effect
of Proposition 208s candidate contribution limits "is
not only to significantly reduce a California candidates ability
to deliver his or her message, but in fact to make it impossible
for the ordinary candidate to mount an effective campaign for office."
The court thus held the candidate limits unconstitutional. The court
also found that the limits on contributions to and from political
parties, to and from PACs, and the aggregate limits were only justified
to prevent subversion of the candidate contribution limits, and
"cannot stand if the justifying provision is itself unconstitutional."
As for other Proposition 208 provisions -- in particular the provisions
regarding surplus campaign funds, office accounts, advertising disclosures,
and slate mailers -- the court noted that they "appear to have
separate justifications and conceivably are constitutional if the
limitation provisions are severable." The court then referred
the reformation of Proposition 208 to the California Supreme Court.
Additionally, Proposition 208 contained an extreme restriction
on independent expenditures that will be stayed by the courts
order. Under Proposition 208, any donor of $100 or more to a candidate
could not make an independent expenditure. Rather, any such expenditures
would be treated as in-kind contributions subject to the Propositions
contribution limits. (California regulators have interpreted "independent
expenditure" using federal judicial decisions, in particular
Federal Election Commission v. Furgatch, 807 F.2d 857, 864. (9th
4. Disclosure v. Regulation of Campaign
Activity A Historical Perspective
As the debates on campaign finance reform continue into 1998, we
should remember that the arguments for regulation and/or disclosure
are not new. The following passages are from Prof. Louise Overackers
Money in Elections, published in 1932:
In the United States the earlier movement for control of campaign
funds was a demand for publicity. Very soon, however, "publicity"
laws became "corrupt practices" laws . . . with the unhappy
result that the real aim of publicity has been lost sight of and
the raising and spending of all campaign funds has become associated
in the public mind with corruption.
Money in Elections at 378. Overackers solution:
[A]ny effective program of control must make it possible to bring
into the light the sources and amounts of all funds used in political
campaigns, and the way in which those funds are expended . . .
. Negatively, it must not attempt to place legal limitations upon
the size of contributions or expenditures.
Such a program places the emphasis upon publicity rather than
upon prohibition. This is in the firm conviction that there can
be no fair test of popular government until the voters have a
chance to know who is paying their political bills and how the
money is spent. Those who scoff at publicity as a solution should
remember that if we cannot compel publicity it is obviously impossible
to secure compliance with a law which attempts to go further.
They should remember too that although we have talked much about
publicity and passed a great many so-called "publicity"
laws, we have had little real publicity. Like Christianity and
democracy, publicity of campaign funds has not been tried and
found wanting, but being found hard has not been tried at all.
Id. at 380. For readers interested in more Overacker, her books
are available by special order through the Web.
*Allison R. Hayward is an attorney at Wiley, Rein & Fielding
in Washington D.C. She can be reached at AHayward@wrf.com.
None of the views expressed here are necessarily the views of the
Firm or its clients.