FEC's Petersen Hints Interest in Foreign-Money Rules

By Kenneth P. Doyle

April 14 — Republicans on the Federal Election Commission have hinted for the first time in more than five years that they may be ready to write new rules governing corporate campaign money in the wake of the Supreme Court's pivotal 2010 ruling in Citizens United v. FEC.

Matthew Petersen, the FEC's Republican chairman, proposed that the FEC sponsor a forum and call in outside legal experts to receive advice about how to proceed. The FEC forum is expected to take place in June.

Petersen's suggestion responded to a proposal from a Democratic FEC colleague, Ellen Weintraub, who had urged the commission to begin writing new rules to prevent corporations from being used to disguise illegal contributions to super PACs and other political spending groups (4236 Money & Politics Report, 4/13/16).

Weintraub's proposal focused on a certification process to prevent corporations from being used to funnel money from foreign nationals and government contractors into U.S. campaigns. Rather than rejecting Weintraub's plan, as FEC Republicans have done with past Democratic proposals for post-Citizens United regulations, Petersen indicated he was prepared for a serious examination of possible new rules.

‘Issue of Great Importance.'

Restrictions on foreign nationals and contractors have been upheld by the courts even after Citizens United decision, which allowed corporations and unions to spend unlimited amounts on federal elections.

Weintraub and others have raised concerns that foreign-controlled corporations could be used to influence elections without the FEC and the public even knowing about it.

“It's an issue of great importance,” Petersen said during an April 14 FEC open meeting, referring to Weintraub's concerns about foreign campaign money. “We can benefit by educating ourselves” about it, he added.

Petersen told Bloomberg BNA after the FEC meeting that he was “withholding judgment” on what the results would be. He said, however, that there was a clear need to examine “the interplay” of the Citizens United decision with the continuing ban on foreign campaign money.

The two other FEC Republicans, Caroline Hunter and Lee Goodman, did not comment on Petersen's forum proposal during the commission meeting but indicated no opposition to it.

Weintraub and the other two commissioners holding Democratic seats on the FEC hailed the development.

“I'm very excited at the opportunity to convene a forum” to highlight the foreign-money issue, Weintraub said. She said Petersen's proposal was “an offer I couldn't refuse.”

Long Push for New Rules

FEC Vice Chairman Steven Walther, a political independent who holds a Democratic FEC seat, also welcomed the forum idea, saying it was a mistake for the FEC “to pretend there's no opportunity” for illegal money to enter campaigns under current rules.

Democratic Commissioner Ann Ravel said the planned forum was a “really, really good idea” and told Petersen “you are to be commended” for being willing to listen to advice about whether new rules are needed.

FEC Democrats have pushed ever since the Citizens United decision was handed down five years ago to have the FEC follow up with new rules for the millions of dollars in corporate and union campaign money unleashed by the court ruling. Past proposals have focused mainly on strengthening disclosure requirements to ensure that sources of independent campaign spending are revealed to the public.

These regulatory efforts have been stymied by FEC Republicans, who argued it was up to Congress to decide whether new rules are need in response to the court ruling. Democrat-backed legislation in Congress, known as the DISCLOSE Act, has been debated repeatedly but never adopted due to solid Republican opposition.

Enforcement Cases Addressed Disclosure

The possible easing of Republican opposition to new FEC regulations came in the wake of recent commission rulings in a series of enforcement cases dealing with corporate contributions to super PACs. In some of these cases, Republican commissioners hinted they were willing to support new standards to ensure contributions to a super PAC could not be “intentionally funneled through a closely held corporation or corporate LLC for the purpose of” evading FEC disclosure requirements, according to a statement signed by all three FEC Republicans.

The Republican commissioners' statement did not suggest, however, that they would support writing any new regulations to spell out detailed disclosure requirements for super PAC contributions. Their statement was issued regarding four enforcement cases recently made public by the FEC, which involved corporate contributions to super PACs that supported President Barack Obama and Republican challenger Mitt Romney in the 2012 election.

The Republicans' position on these enforcement cases was criticized by FEC Democrats Ravel and Weintraub, who issued a response noting that resolution of the enforcement cases was delayed for years. The cases were dismissed on deadlocked votes, with Republican commissioners voting against enforcement action because they said the public had no notice of what the rules were for corporate contributions to super PACs.

“Our colleagues' sudden belief in the importance of public guidance on this topic rings hollow when there were so many opportunities over the course of almost four years to provide that guidance,” Ravel and Weintraub wrote.

Other FEC Actions

In other action at the April 14 FEC meeting, the commissioners unanimously approved an advisory opinion (AO 2016-01) declaring that a proposal by a company called Ethiq would comply with campaign finance rules. The company said it plans to distribute political news and commentary, including information about candidates, through a website that allows users to submit preferences and opinions.

The advisory opinion said Ethiq's plans to produce and distribute journalistic content qualified for the “media exemption” under campaign finance laws, which exempts news coverage and commentary from being counted as a campaign contribution or expenditure. The ruling noted that Ethiq would not be owned or controlled by a candidate or political party and would be “engaged in a legitimate press function in providing content to its users.”

The commissioners also approved unanimously a procedural change to a little-used legal appeal process. The FEC stalled, however, on another agenda item proposing “technical amendments” to a list of aging FEC regulations.

Two alternate drafts of the proposed technical amendments indicated there was a disagreement about clarifying current requirements for reporting “independent expenditures” in campaigns. One draft called for changing a current reporting provision referring to “the calendar year” to instead say “a calendar year.”

This draft noted that “some reporting entities” have cited the current provision to question reporting requirements in non-election years, though the FEC said when it promulgated the current regulation following passage of the 2002 Bipartisan Campaign Reform Act, that the reporting requirements apply “at any time” when independent campaign expenditures reach $10,000 or more.

Goodman said during the commission meeting that he backed an alternative draft leaving out this proposed reporting clarification. He indicated, however, that he might support a rule to further clarify exactly what the reporting requirement is. The commissioners agreed to take more time and consider a possible redrafted proposal in the future.

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