FEC Deadlock Signaled by Rival Drafts on Super PACs

By Kenneth P. Doyle

Oct. 29 — The Federal Election Commission appeared to be moving toward a deadlocked vote in a ruling over the legality of activities by single-candidate super PACs in the 2016 campaign.

Commissioners postponed a final vote following a discussion at a commission meeting Oct. 29 of a key advisory opinion (AO 2015-09). The vote on the ruling, requested by prominent Democratic election lawyer Marc Elias, was delayed until the next scheduled FEC meeting Nov. 10.

But, discussion at the FEC meeting indicated that the commissioners were unlikely to reach consensus on some, if not all, the questions raised in the Elias request.

The FEC's Democratic chairwoman, Ann Ravel, told Bloomberg BNA during a break in the commission meeting that she did not believe the FEC ultimately would reach consensus on any of a dozen questions raised in the Elias request, including whether a candidate can help set up a supportive super PAC before declaring candidacy and how closely a candidate can cooperate with super PAC fundraising both before and after becoming a candidate.

The six-member FEC is split evenly along three commissioners recommended by Democrats and three Republicans, while a four-vote majority is required for any enforcement action or legal ruling. The commissioners have been deeply divided along party lines on questions concerning super PACs and other campaign spending groups.

FEC Democrats pushed for new regulations in the wake of the Supreme Court's 2010 decision in Citizens United v. FEC and other rulings, which led to an explosion of non-candidate campaign spending. Republicans on the commission have resisted any new rules and said it was up to Congress to decide whether and how to regulate.

Debate Over Party Rules

In addition to a contentious discussion of the role of super PACs at the Oct. 29 meeting, the Republican and Democratic commissioners also debated whether to launch a new rulemaking to ease regulations on political parties. A proposal offered by Republican commissioner Lee Goodman would allow greater coordination of campaign spending between a party and its candidates and roll back many FEC regulations impacting state and local political parties (See previous story, 10/26/15).

Democrats responded to Goodman at the commission meeting by saying they supported strong political parties but believed any move to ease the requirements for parties should be accompanied by stricter rules regarding candidates' coordination with super PACs and other outside groups.

Party regulations “can't be looked at in isolation” from the other questions faced by the FEC, said Democratic Commissioner Ellen Weintraub, indicating she would support considering a new rule that combined easing restrictions on parties with strengthening the rules for non-party groups.

Sports Network AO Approved

In other action at the meeting, the FEC commissioners unanimously approved an advisory opinion (AO 2015-10) requested on behalf of 21st Century Fox by attorneys Ki Hong and Charles Ricciardelli of the firm Skadden Arps Slate Meagher & Flom.

The ruling stated that reporting requirements for “electioneering communications” don't apply to communications on a regional sports network that refer to a presidential primary candidate but would be seen by fewer than 50,000 network subscribers in a primary state.

The FEC commissioners deadlocked over another advisory opinion request (AO 2015-08) from a start-up company known as Repledge that wants to establish a Web-based platform as “a virtual meeting place,” through which supporters of opposing presidential candidates can agree to give money to charity instead of making contributions to the candidate they support.

Much of the discussion at the meeting, however, focused on the high-profile super PAC advisory opinion request from Elias, an attorney with the law firm Perkins Coie who represents presidential candidate Hillary Clinton and congressional Democrats.

Elias: Democrats Will Follow Suit

In the request itself, Elias accused Republican candidates of operating illegally by coordinating their activities too closely with super PACs supporting their campaigns. He indicated, however, that Democrats will follow suit if the FEC cannot muster a majority ruling to declare close coordination between candidates and their super PACs illegal.

“This is a very live issue” for Democratic super PACs and the House and Senate candidates they support, Elias said at the meeting. He noted that he made the advisory request on behalf of two of the largest super PACs backing Democrats, the Senate Majority PAC and House Majority PAC. The request asked about candidates' relationships to these existing super PACs, as well as possible new single-candidate super PACs that may be set up to support individual Democrats.

While most of the attention in the current campaign is focused on presidential candidates and the PACs supporting them, congressional candidates also need to know how closely they can cooperate with supportive super PACs, Elias said, noting that he asked the FEC to expedite its response to his advisory request.

Given the divisions at the FEC over regulating super PACs, the main effect of the Elias request may be to reassure Democrats that they can participate freely in super PAC activities without risking enforcement action.

Two Drafts Released

The FEC on Oct. 28 released two draft advisory opinions responding to the request for an advisory opinion that Elias filed with the agency in September.

At their meeting the next day, commissioners indicated they needed more time to study the drafts, both of which were nearly 30 pages long. Some commissioners also indicated they may draft additional possible responses to the questions raised by Elias.

According to Ravel, the drafts released so far included one prepared by staff attorneys in the FEC's Office of General Counsel—designated “Draft A”—and another prepared by Ravel's office—designated “Draft B”—which essentially is an edited version of the counsel's draft. The two drafts appeared to be largely similar on 10 of the 12 specific questions raised by Elias, but they contained important differences even on these questions, Ravel noted.

For example, the staff draft appeared to indicate that many of the activities related to the current crop of presidential super PACs might be illegal, such as a candidate's involvement in setting up a single-candidate super PAC before declaring candidacy. Yet a close reading of the staff draft indicated that this would be the case only if the a undeclared candidate gives “consent to the [super PACs'] receiving contributions and making expenditures on the prospective candidates' behalf.”

Ravel's draft, on the other hand did not include this language about a candidate's explicit consent.

The staff draft also had more lenient language regarding when a prospective candidate becomes an actual candidate. It contained two paragraphs explaining how someone might not be considered a candidate even after public statements indicating he or she has decided to run.

“Although an individual's statement that he or she is running for office indicates that he or she has decided to become a candidate, … that indication may be negated if the individual can show that the statement did not accurately reflect the individual's decision,” the staff draft said.

Ravel's draft eliminated these paragraphs, though it included a footnote saying the FEC “may recognize that a demonstrably inadvertent misstatement does not necessarily indicate that the individual has decided to become a candidate.”

Answers Diverge on Agents, Fund-Raisers

On two of the questions raised—whether candidates' “agents” can help in super PACs' fund-raising and whether a candidate can appear at a super PAC fund-raising event with as few as two donors—Ravel's draft parted ways completely with the staff draft.

The staff draft said candidates' agents could participate in fund-raising if they state that they are not representing the candidate. The staff draft also said candidates can appear at a super PAC fund-raiser no matter how few donors are there.

Ravel's draft, on the other hand, said these questions are not covered by current FEC rules and that new rules would have to be written before they can be answered.

Despite their subtle language, the thrust of both drafts appeared to reinforce doubts about the legality of super PAC activity that appears to be commonplace in the current presidential campaign. For example, the staff draft said that “active participation of the ‘prospective candidates' in the formation and operation of the Single-Candidate Committees [super PACs] indicates that those individuals would have decided to become candidates and would not be merely testing the waters.” In addition, the draft said, super PACs established by someone who has decided to be a candidate would be subject to “hard money” federal contribution limits.

Contributions to federal candidates are limited to $2,700 per election, while there are no limits on contributions to super PACs. In the first half of this year, super PACs supporting the presidential candidates have raised nearly $300 million, according to fund-raising reports filed with the FEC and analyzed by the nonprofit Center for Responsive Politics. Individual contributions, so far, have ranged as high as the $11 million given by hedge fund executive Robert Mercer to a super PAC supporting the Republican presidential campaign of Texas Sen. Ted Cruz, called Keep the Promise.

The biggest presidential super PAC, Right to Rise, which supports Republican candidate and former Florida Gov. Jeb Bush, raised more than $100 million through the end of June, much of it collected with the help of Bush before he officially declared his candidacy.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com