FEC Deadlocks on Curbing Foreign Campaign Money

Stay current on changes and developments in corporate law with a wide variety of resources and tools.

By Kenneth P. Doyle

Sept. 15 — The Federal Election Commission deadlocked Sept. 15 on a proposal by Democratic Commissioner Ellen Weintraub to begin writing new rules to prevent foreign campaign money from influencing U.S. elections.

The 3-3, party-line FEC vote stalling Weintraub's proposal to draft a new notice of proposed rulemaking (NPRM) followed a similar party-line deadlock over a new proposal by Republican FEC commissioners for a new policy statement to guard against foreign campaign money.

The Republicans' proposed policy contained a new call for corporations donating to super political action committees and other campaign spending groups to certify that their decision about campaign contributions are made by U.S. citizens with money earned in the U.S.—not foreign money, which has been outlawed in U.S. campaigns for decades.

Weintraub suggested a similar certification mechanism in FEC meetings several months ago, but she and other Democrats said at a Sept. 15 FEC meeting that the Republican proposal was not broad enough and would not have the force of an agency regulation.

During a lengthy debate at the open commission meeting, Republican commissioners repeatedly said current FEC rules to block campaign money from foreign nationals are adequate and are being enforced, while Democrats insisted the agency needs to at least consider strengthening current rules to guard against foreign influence.

Weintraub framed the issue as a matter of “national security” and said the FEC was not doing enough to deal with it.

FEC Republicans, on the other hand, said moves against foreign money could have the effect of curbing political involvement by U.S. companies and their employees.

More Than a Dozen Enforcement Cases

The extent of the threat of foreigners trying to influence U.S. elections through campaign spending remains unclear, though recent reports of possible Russian involvement in computer hacking of political party committees and other incidents have heightened concerns about possible foreign influence.

Republican Commissioner Lee Goodman said at the Sept. 15 FEC meeting that the agency currently has 13 pending enforcement cases involving allegations related to foreign money. Details of these cases are unknown because FEC enforcement matters are handled in strict secrecy until they are resolved.

A flashpoint in the long-running FEC debate over foreign campaign money has been how to handle U.S. subsidiary companies owned by foreign parent companies or even foreign governments. Domestic subsidiary companies were granted permission by the FEC to establish corporate political action committees in a series of years-old advisory opinions that have been cited more recently as allowing these companies to make direct contributions to super PACs and other outside organizations that spend money to influence campaigns.

In yet another deadlock at the Sept. 15 meeting, the commissioners voted 3-3 on a proposal by another Democratic commissioner, Ann Ravel, to rescind a key 2006 advisory opinion granted to Canadian company Trans-Canada Corp., allowing the establishment of PACs by two of the company's U.S. subsidiaries.

Comments Sought on Party Rules

The FEC commissioners were able to agree on two items at the Sept. 15 meeting, which had a crowded agenda of long-debated issues (11 WCR 798, 9/16/16).

The commissioners voted unanimously to seek public comment on rulemaking petitions asking for new rules for political parties. Comments would not be due until after the November elections.

One rulemaking proposal centered on rules for national political party accounts for party conventions, party headquarters and election recounts. These new accounts—with drastically increased contribution limits—were established by congressional legislation passed in late 2014.

Another proposal advanced for public comment was a request to roll back FEC regulations for financing state and local party committees.

FEC Chairman Matthew Petersen announced during the commission meeting that the commission approved a staff proposal to give new operating leeway to three companies—American Target Advertising Inc., ConservativeHQ.com and the Viguerie Co.—that serve as vendors for conservative political organizations.

The proposal would nullify a settlement agreement between the FEC and the three companies, which stipulated they could not absorb costs related to fundraising services they performed for a conservative PAC or use third-party, non-banking lenders to finance the costs of postage for fundraising mailings. A memo by FEC staff attorneys said the provisions of the 2005 settlement, which resolved Matter Under Review (MUR) 5635, were no longer required because of the changed legal landscape resulting from the 2010 Supreme Court decision in Citizens United v. FEC and other court rulings.

Debate Over Foreign Money

Most of the Sept. 15 commission meeting, however, was taken up by the sometimes heated debate between Republican and Democratic commissioners about whether the FEC is doing enough to ensure compliance with a long-standing legal prohibition on foreign money in U.S. campaigns.

In advisory opinion rulings, the FEC long allowed U.S. subsidiaries of foreign companies to have PACs, as long as contributions to the PAC came from U.S. employees and U.S. employees controlled the PAC decision-making process. After the 2010 Supreme Court decision in Citizens United allowed direct corporate spending in elections, these advisory opinions were cited as permitting these companies to make contributions to super PACs and other campaign spending groups.

Weintraub has maintained, however, that there has been “no consensus” at the FEC since 2010 regarding whether campaign spending by U.S. subsidiaries of foreign-owned companies is allowed. She reiterated that view in a recent Washington conference on corporate political law sponsored by the Practising Law Institute, where she cited news reports that Russia may be planning to disrupt U.S. elections to bolster her case that stronger FEC rules are needed following the Citizens United court ruling.

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

Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Corporate on Bloomberg Law