Federal Election Commission Main Page
August 22, 2005
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 2005-10
Judith L. Corley, Esq.
Brian G. Svoboda, Esq.
Perkins Coie LLP
607 Fourteenth Street, N.W.
Washington, D.C. 20005-2011
Dear Ms. Corley and Mr. Svoboda:
We are responding to your advisory opinion request on
behalf of United States Representatives Howard L. Berman and
John T. Doolittle, concerning the application of the Federal
Election Campaign Act of 1971, as amended (the "Act"), and
Commission regulations to fundraising activities by
Representatives Berman and Doolittle for independent ballot
measure committees that support or oppose initiatives on the
November 8, 2005, California statewide special election ballot.
Background
The facts of this request are presented in your letter
dated June 24, 2005, and in your e-mail communication dated July
15, 2005.
Representatives Berman and Doolittle are United States
Representatives from California. They are also candidates for
re-election to the House of Representatives in 2006 and holders
of Federal office under the Act and Commission regulations. See
2 U.S.C. 431(2) and (3); 11 CFR 100.3 and 100.4.
A statewide special election will take place on November 8,
2005, that will present several ballot initiatives to California
voters. The deadline for a ballot initiative to qualify for the
special election was June 30, 2005. Neither Representative
Berman nor Representative Doolittle, nor any other candidates
for Federal office, will be on the November 8, 2005, ballot.
The ballot initiatives represent major issues facing the
constituents of Representatives Berman and Doolittle, and touch
on matters frequently before Congress. Accordingly,
Representatives Berman and Doolittle would like to undertake
certain activities to support or oppose certain ballot
initiatives.
Specifically, Representatives Berman and Doolittle propose
to raise funds for ballot measure committees that have been
formed solely to support or oppose the initiatives on the
November 8, 2005, ballot.1 The ballot measure committees are
not and would not be directly or indirectly established,
financed, maintained or controlled by either Representative
Berman or Representative Doolittle, or by anyone acting on their
behalf, or by a national, State, district or local committee of
a political party. Representatives Berman and Doolittle would
undertake fundraising in their individual capacities, and not on
behalf of any political party committee. They would not raise
funds for any public communications that would refer to either
of them and that would be distributed in their respective
congressional districts.
Question Presented
Do the restrictions on Federal candidates and officeholders
in 2 U.S.C. 441i(e)(1)(A) or (B) apply to Representatives Berman
and Doolittle when they raise funds for ballot measure
committees formed solely to support or oppose ballot initiatives
on the California special election ballot, where the ballot
measure committees are not directly or indirectly established,
financed, maintained or controlled by either Representative
Berman or Representative Doolittle or by anyone acting on their
behalf, or by any political party committee?
Conclusion
Under the Act, as amended by the Bipartisan Campaign Reform
Act of 2002, Public Law 107-155, 116 Stat. 81 (2002), Federal
candidates and officeholders may not raise or spend funds in
connection with an election for Federal office, unless the funds
are subject to the limitations, prohibitions, and reporting
requirements of the Act. See 2 U.S.C. 441i(e)(1)(A); 11 CFR
300.61. Federal candidates and officeholders may not raise or
spend funds in connection with an election other than an
election for Federal office, unless the funds do not exceed the
amounts permitted with respect to contributions to candidates
and political committees under 2 U.S.C. 441a(a)(1), (2), and
(3), and do not come from sources prohibited under the Act.2
See 2 U.S.C. 441i(e)(1)(B); 11 CFR 300.62.
The Commission concludes that the restrictions on Federal
candidates and officeholders in 2 U.S.C. 441i(e)(1)(A) and (B)
do not apply to the fundraising activities of Representatives
Berman and Doolittle in the circumstances that you describe.
The Commission expresses no opinion regarding the
application of State law or the
Internal Revenue Code to the proposed activities, because those
questions are not within the Commission's jurisdiction.
This response constitutes an advisory opinion concerning
the application of the Act and Commission regulations to the
specific transaction or activity set forth in your request. See
2 U.S.C. 437f. The Commission emphasizes that, if there is a
change in any of the facts or assumptions presented, and such
facts or assumptions are material to a conclusion presented in
this advisory opinion, then the requestor may not rely on that
conclusion as support for its proposed activity.
Sincerely,
(signed)
Michael E. Toner
Vice Chairman
DISSENTING OPINION
OF
CHAIRMAN SCOTT E. THOMAS
ADVISORY OPINION 2005-10
At issue in Advisory Opinion 2005-10 was whether federal
officeholders could "freely raise" soft money for a November 5,
2005 California statewide special election involving several
ballot initiatives. Under the Federal Election Campaign Act
("FECA" or "the Act"), there are certain restrictions placed on
the ability of federal officeholders to solicit funds regarding
not only an election for Federal office, but also "any election
other than an election for Federal office." 2 U.S.C.
441i(e)(1)(emphasis added). Applying this statutory language as
well as Federal Election Commission precedent, the General
Counsel concluded in a draft response that the federal
officeholders could not raise funds without regard to source or
limit (`soft money') for the California special election. Under
the law, the General Counsel's draft found that the federal
officeholders could raise funds for the November special
election only so long as the fundraising was subject to the
limitations and prohibitions of the Act.
I supported the General Counsel's legal analysis and
conclusion. A vote to approve the General Counsel's draft
response failed, however, by a vote of 1-5.3 In view of the
plain statutory language and Commission precedent, I continue to
believe that federal officeholders should not be allowed to
raise unlimited soft money for the November, 2005 California
special election.
I.
The Act generally "regulates the raising and soliciting of
soft money by federal candidates and officeholders." McConnell
v. Federal Election Commission, 540 U.S. 93, 181
(2003)("McConnell") citing 2 U.S.C. 441i(e). Federal
candidates and officeholders "shall not solicit, receive,
direct, transfer, or spend" any soft money in connection with an
election for Federal office. 2 U.S.C. 441i(e)(1)(A). Of more
relevance, the Act also broadly limits the ability of federal
candidates and officeholders to raise or spend soft money in
connection with "any election other than an election for Federal
office." 2 U.S.C. 441i(e)(1)(B)(emphasis added).
Specifically, federal candidates and officeholders may raise and
spend funds in connection with "any election other than election
for Federal office" only if such funds comply with the Act's
contribution limits for candidates and political committees
under 2 U.S.C. 441a(a)(1), (2), and (3) and the Act's various
prohibitions.4 In upholding these broad restrictions on
solicitations, the Supreme Court in McConnell explained:
Large soft-money donations at a candidate's or
officeholder's behest give rise to all of the same
corruption concerns posed by contributions made
directly to the candidate or officeholder. Though
the candidate may not ultimately control how the
funds are spent, the value of the donation to the
candidate or officeholder is evident from the fact
of the solicitation itself.
540 U.S. at 182.
On June 13, 2005, the Governor of California called for a
statewide special election to be held on November 8, 2005 to
decide the fate of various ballot initiatives. On June 24,
2005, Representatives Howard Berman and John Doolittle filed an
advisory opinion request with the Commission asking whether
"they may freely raise funds for committees that are formed
solely to support or oppose initiatives on the November 8, 2005
California statewide special election ballot." AOR 2005-10 at 1
(June 24, 2005). In essence, their request boiled down to
whether the November 8, 2005 California special election falls
within the "any election other than election for Federal office"
provision of 441i(e)(1)(B). If it did, the requestors could
raise funds only to the extent the funds complied with the Act's
contribution limitations and prohibitions.
In my view, the clear phrase "any election" means just
that-any election. This broad statutory language includes
elections to decide ballot initiatives as well as elections to
select public officials. I do not believe the statutory phrase
"any election" is limited only to "candidate" elections.5
Indeed, if that was Congress's intent, it would have so stated.
Significantly, though, 441i(e)(1)(B) does not say "any election
for state or local office" or "any election other than ballot
initiatives or ballot referenda." These words of limitation
simply are not present in the statutory text. Instead, Congress
plainly and clearly stated that the 441i(e)(1)(B) restrictions
on the solicitation of soft money broadly applied to "any
election."6 There is no need to plumb legislative history to
see if Congress specifically mentioned ballot measure activity
or to further opine what Congress intended. 7
Only two years ago, the Commission considered the plain
meaning of 441i(e)(1)(B) in Advisory Opinion 2003-12 (Flake),
Fed. Elec. Camp. Fin. Guide (CCH) 6396 (July 29, 2003). In
that Advisory Opinion, the Commission specifically found that
certain planned ballot initiative activity was covered by the
"any election" language of 441i(e)(1)(B). Unlike Advisory
Opinion 2005-10, the Commission explained its reasoning in
considerable detail:
As used in subparagraph (B) of section 441i(e)(1),
the term, "in connection with any election other
than [emphasis in original] an election for Federal
office" is, on its face, clearly intended to apply
to a different category of elections than those
covered by subparagraph (A), which refers to "an
election for Federal office." This phrasing, "in
connection with any election other than an election
for Federal office" also differs significantly from
the wording of other provisions of the Act that
reach beyond Federal elections. Particularly
relevant is the prohibition on contributions or
expenditures by national banks and corporations
organized by authority of Congress, which applies
"in connection with any election to any political
office." 2 U.S.C. 441b(a). Where Congress uses
different terms, it must be presumed that it means
different things. Congress expressly chose to
limit the reach of section 441b(a) to those non-
Federal elections for a "political office," while
intending a broader sweep for section 441i(e)(1)(B)
which applies to "any election" (with only the
exclusion of elections to Federal office).
Therefore, the Commission concludes that the scope
of section 441i(e)(1)(B) is not limited to
elections for a political office, and that the
activities of [an organization that qualifies a
referendum for the election ballot] as described in
your request (other than its Federal election
activities and electioneering communications) are
in connection with an election other than an
election for Federal office. 2 U.S.C.
441i(e)(1)(B).
Id. at 12,787 (emphasis added)(footnotes omitted). Just as the
Commission concluded by a 5-1 vote that "the scope of section
441i(e)(1)(B) is not limited to elections for political office"
in Advisory Opinion 2003-12, so too, I believe, the Commission
should have found that "the scope of section 441i(e)(1)(B) is
not limited to elections for federal office" in Advisory Opinion
2005-10. Just as the Commission concluded by a 5-1 vote in
Advisory Opinion 2003-12 that "once a ballot measure committee
qualifies an initiative or referendum for the ballot, its
subsequent activities will be deemed to be `in connection with
any election other than an election for Federal office' under 2
U.S.C. 441i(e)(1)," id. at 12,788, so it should have reached
the same result in Advisory Opinion 2005-10.8
II.
During the Commission's consideration of Advisory Opinion
2005-10, a motion was made "to direct the General Counsel's
Office to prepare an advisory opinion indicating that because
ballot initiatives and referenda are not in connection with an
election under Section 441i(e), Section 441i(e) does not apply
to the activities identified by the requestors and
Representatives Berman and Dolittle may solicit funds for such
activities outside the amount limitations and source
prohibitions of the Act." See Draft Minutes for Meeting of
August 18, 2005, Agenda Document No. 05-38 at 5-6. This motion
failed to pass by a vote of 3-3. Because the Act "clearly
requires that for any official Commission decision there must be
at least a 4-2 majority," a position adopted by less than four
Commissioners is not "binding legal precedent or authority for
future cases," Common Cause v. FEC, 842 F.2d 436, 449 n.32
(D.C.Cir. 1988)(emphasis in original), and thus is not a
statement of Commission policy. Indeed, given the failure of
four Commissioners to agree on any reasoning in Advisory Opinion
2005-10, the significance of this Advisory Opinion is greatly
limited. Clearly, it cannot be said that this opinion
supersedes Advisory Opinion 2003-12 or other opinions construing
the statutory solicitation restrictions.
I voted against the motion to generally exempt ballot
initiatives for several reasons. As discussed above, the motion
runs contrary to the plain meaning of 441i(e)(1)(B). In
addition, the Commission has taken a similar position in another
area of the law where there is no limiting language suggesting a
narrow focus on elections to office. Specifically, it is clear
that the foreign national prohibitions found at 2 U.S.C. 441e
are not limited to candidate elections. For years, the
Commission had taken the opposite position and held that
"contributions or expenditures relating only or exclusively to
ballot referenda issues, and not to elections to any political
office, do not fall within the purview of the Act." Advisory
Opinion 1989-32, Fed. Elec. Camp. Fin Guide (CCH) 5989 at
11,629 (July 2, 1990).
In BCRA, however, Congress "revised 2 U.S.C. 441e to
delete references to `elections' and `candidates' for `any
political office,' and substituted the broader phrase `Federal,
State, or local election.' 2 U.S.C. 441e(a)(1)(A)."
Commission Final Rules and Explanation and Justification on
"Contribution Limitations and Prohibitions," 67 Fed. Reg. 69928,
69944 (November 19, 2002). "Congress left no doubt as to its
intention to prohibit foreign national support of candidates and
their committees and political organizations and foreign
national activities in connection with all Federal, State, and
local elections." Id. (emphasis added). In Advisory Opinion
2003-37, supra, the Commission recognized congressional intent
and made clear that the prohibitions of 441e are not limited to
candidate elections: "The Act, as amended by BCRA, prohibits
foreign nationals from, among other things, directly or
indirectly making a contribution or donation of money or other
thing of value, or to expressly or impliedly promise to make a
contribution or donation, in connection with a Federal, State,
or local election (this prohibition is not limited to elections
for political office)." Id. at 12,881(emphasis added).9 The
failed motion to generally exempt ballot initiatives from
441i(e)(1)(B) would have clashed with the clear congressional
intent behind the comparable statutory language of 441e and
signaled acceptance of the solicitation of foreign national
money in ballot initiative elections.10
I also voted against the motion to exempt ballot
initiatives from 441i(e) because the dangers of `quid pro quo'
that motivated Congress to adopt the BCRA solicitation
restrictions are present even in the situation at hand. In
McConnell, the Supreme Court upheld Congress' effort, through
the Bipartisan Campaign Reform Act, to "plug the soft-money
loophole." 540 U.S. at 133. The Supreme Court found that
"there is substantial evidence . . . that large soft-money
contributions . . . give rise to corruption and the appearance
of corruption." Id. at 154.
Federal candidates asking for huge soft money donations for
a ballot measure effort do so to promote their favored political
result. In the process they get voters who think like they do
to register and to vote. An organized army of sympathetic
voters in 2005 will surely have some residual benefits in the
federal races of 2006. Donors surely know that helping federal
candidates/officeholders in these circumstances can expect the
latter to be very thankful. This is particularly so where, as
here, one of the ballot measures may significantly affect future
election boundaries. The mere fact that federal candidates are
not on the ballot in November of 2005 does not mean that the
effort to fund and win a ballot measure will not have a dramatic
impact on the federal elections that will be underway almost
immediately thereafter. Thus, I disagree with the notion that
somehow the activity at issue in Advisory Opinion 2005-10 will
not affect federal elections because it is occurring in a "non-
election" year.11 Federal candidates/ officeholders soliciting
huge soft money donations in 2005 would be subjecting themselves
to the very situations that Congress sought to eliminate.
It also was argued that the Commission must, in essence,
`level the playing field.' Of course, that isn't the role of
the Federal Election Commission. Even if it were, the Office of
General Counsel's draft would have left federal
candidates/officeholders, on both sides of the ballot measure,
free to solicit substantial sums from virtually every individual
and PAC in America -- $5,000 per year. Further, federal
candidates/ officeholders, under current advisory opinion
interpretations, can be featured guests at ballot measure
fundraising events for which soft money is otherwise solicited.
See Advisory Opinion 2003-36 (Republican Governors Association),
Fed. Elec. Camp. Fin. Guide (CCH) 6417 (Jan. 12, 2004). The
FEC also has made it clear that even though someone may be an
agent of a federal candidate/officeholder for raising hard
money, he or she can nonetheless solicit soft money for some
other effort. Finally, there is nothing to prevent other
political luminaries-like former Presidents, former Vice
Presidents, and former and present non-federal government
officials, as well as corporate officials, union officials,
movie stars and famous athletes -- from soliciting whatever
funds are permissible. It would be truly surprising if
opponents of Governor Schwarzenegger's position on these ballot
measures cannot find people other than Federal candidates or
officeholders to make a soft money pitch to every potential
donor. In sum, there is no demonstrable `need' for the FEC to
"level the playing field" and carve yet another loophole in
BCRA.
III.
One important issue was raised in Advisory Opinion 2005-10
but left unresolved: in what way do the solicitation
restrictions apply where an officeholder is soliciting funds on
behalf of a 501(c) group. One of the commenters suggested that,
for tax reasons, ballot measure groups might find themselves in
this classification rather than in the 527 classification.
Compare 26 U.S.C. 501(c) and 527. In the Act, Congress
chose not to apply the solicitation restrictions to certain
solicitations on behalf of 501(c) groups. Congress at 2 U.S.C.
441i(e)(4) excepted: (1) general solicitations on behalf of
501(c) groups whose primary purpose is not certain types of
"Federal election activity"; and (2) specific solicitations
limited to $20,000 on behalf 501(c) entities whose primary
purpose is these certain types of "Federal election activity."
These certain types of "Federal election activity" are: voter
registration within 120 days of a Federal election and voter
identification, get-out-the-vote and generic campaign activity
in proximity to a Federal election. The statute could be read
to mean that Federal candidates/officeholders can solicit soft
money for a 501(c) ballot measure group as long as it can steer
clear of the timeframes and definitions regarding voter
registration, etc. See 2 U.S.C. 431(20)(A)(i) and (ii); 11
CFR 100.24(a)(1)-(4).
On the other hand, the Commission's regulations appear to
take a somewhat more restrictive approach. The regulations
implement the overall statutory scheme by only applying an
exception for a group that can further establish its primary
purpose is other than "activities in connection with an
election." 11 CFR 300.65(a)(2)(i). In other words,
under the regulation the 501(c) exception to the solicitation
ban does not apply if it could be said the group's primary
purpose is in connection with an election. This would make
sense in the situation at hand where a 501(c) ballot measure
group - clearly focused on election activity - would raise the
potential for all the problems that underlie the broad
solicitation restriction language at 441i(e)(1)(B).
The Commission did not resolve the apparent tension between
the statute and the regulation in Advisory Opinion 2005-10.12 In
any event, there is some uncertainty in the attractiveness of
the 501(c) general solicitation option given the statutory
restriction that the solicitation may "not specify how the funds
will or should be spent." 2 U.S.C. 441i(e)(4)(A).
Nevertheless, the applicability of restrictions on 501(c) groups
remains uncertain.
IV.
Recently, two federal courts held invalid a number of the
Commission's post-BCRA implementing regulations because the
Commission's interpretations conflicted with or undermined the
clear language of BCRA. See Shays v. FEC, 337 F.Supp.2d 28
(D.D.C. 2004), aff'd, 414 F.3d 76 (D.C.Cir. 2005), petition for
rehearing en banc filed (August 29, 2005). In Shays, the
district court observed that one of the Commission's
interpretive regulations "would create an immense loophole that
would facilitate the circumvention of the Act's contribution
limits," 337 F.Supp.2d at 65, another "severely undermines
FECA's purposes" and "would permit rampant circumvention of the
campaign finance laws and foster corruption or the appearance of
corruption," id. at 70, while yet another "would render the
statute largely meaningless." Id. at 79. Similarly, the Court
of Appeals commented regarding one set of invalidated
regulations that "it seems hard to imagine . . . Representatives
and Senators voting for BCRA would have expected regulations
like these." 414 F.3d at 98-99. With respect to another set of
invalidated regulations, the Court observed: "Congress has
clearly spoken to this issue and enacted a prohibition broader
than the one the FEC adopted." Id. at 107. Regarding another
regulation held invalid, the Court of Appeals found "the FEC's
rule again conflicts with Congress's unambiguous intent" and
"contradicts BCRA's plain text." Id. at 109.
By reading the broad statutory language "any election," 2
U.S.C. 441i(e)(1) (emphasis added), to mean `only an election
of a candidate to office,' the Federal Election Commission in
Advisory Opinion 2005-10 once again has disregarded the plain
language of the statute and wrongly narrowed the reach of BCRA.
Instead of `plugging the soft money loophole,' the Commission
has created a new soft money loophole. As a result, federal
office holders are back in the business of soliciting soft
money. Because I do not believe this is the result Congress
intended, I supported the General Counsel's conclusion that
federal officeholders could not raise soft money for the
November 8, 2005 California special election.
9/2/05 / s /
____________________
______________________________
Date
Scott E. Thomas
Chairman
CONCURRING OPINION IN ADVISORY OPINION 2005-10
OF
VICE CHAIRMAN MICHAEL E. TONER
AND COMMISSIONER DAVID M. MASON
We joined the Commission's ruling today because the
activities presented by the requestors do not implicate the ban
on soft-money fundraising under Section 441i(e).
The threshold legal question in deciding whether Section
441i(e)'s fundraising restrictions apply is whether the
activities in question are in connection with an election.
Sections 441i(e)(1)(A) & (B) prohibit Federal officeholders and
candidates from soliciting, receiving, directing, transferring,
or spending funds outside the prohibitions and limitations of
the Act, but only in connection with an election for Federal
office or in connection with any election other than an election
for federal office. Both statutory provisions are expressly
limited to elections for office. The plain meaning of the
statute is that the soft-money ban applies to federal and non-
federal elections for public office, but does not apply to non-
candidate political activity, such as ballot initiatives and
referenda. Any other interpretation would render the statutory
reference to "office" in Sections 441i(e)(1)(A) & (B) a nullity.
Commission regulations likewise define election as limited to
candidate elections. See 11 C.F.R. 100.2(a) (defining election
as the "process by which individuals.seek nomination for
election, or election, to Federal office"). In light of the
foregoing, ballot initiatives and referenda are not elections
for office as a matter of law under Section 441i(e) and,
therefore, the statute's soft-money fundraising restrictions do
not apply to ballot measure activities.
Furthermore, the legislative history supports this
interpretation of Section 441i(e). In debating the Bipartisan
Campaign Reform Act of 2002 ("BCRA"), not a single Member of
Congress, including the legislation's sponsors, indicated that
the soft-money ban would apply to initiatives and referenda.
Moreover, Members of Congress who voted for BCRA, including
House Minority Leader Nancy Pelosi (D-CA), filed comments in
this proceeding indicating that it was not their understanding
that 441i(e)'s soft money restrictions would apply beyond
candidate elections to ballot measure activities.
The Supreme Court has historically applied strict scrutiny
to restrictions on the financing of ballot initiatives and
referenda and has determined that the same potential for
corruption that exists with respect to candidate elections for
public office does not exist with respect to ballot measure
activities. See First National Bank of Boston v. Bellotti, 435
U.S. 765, 790 (1978) (holding that "[r]eferenda are held on
issues, not candidates for public office. The risk of
corruption perceived in cases involving candidate elections.is
not present in a popular vote on a public issue"); Citizens
Against Rent Control/Coalition for Fair Housing v. City of
Berkeley, 454 U.S. 290 (1981) (holding that in contrast to
contributions made to candidates, "there is no risk of
corruption.[from] contributions to committees favoring or
opposing ballot measures"). In light of the Supreme Court's
admonition that the danger of corruption, or the appearance of
corruption, is not present in ballot initiatives and referenda,
applying Section 441i(e) to such activities serves no
justifiable policy rationale and would serve only to federalize
purely state and local activity.
The upshot of today's decision is that initiatives and
referenda are not in connection with an election for office
under Section 441i(e) as a matter of law and therefore the
statute's soft-money fundraising restrictions do not apply to
ballot measure activities; there is no other plausible statutory
basis for today's ruling. At the very least, Section 441i(e)'s
fundraising restrictions do not apply to referenda and
initiatives where, as here, no federal candidate appears on the
ballot along with the referendum or initiative, and no ballot
measure organization is
established, financed, maintained or controlled by any federal
candidate. Either way, today's ruling will significantly
broaden the ability of federal candidates and officeholders
across the country to raise funds outside the source
prohibitions and limitations of federal law in connection with
initiatives and referenda.
August 29, 2005
_______(signed)___________________
Michael E. Toner, Vice Chairman
________(signed)____________________
David M. Mason, Commissioner
ADVISORY OPINION 2005-10
CONCURRING STATEMENT OF
COMMISSIONER ELLEN L. WEINTRAUB
COMMISSIONER DANNY LEE McDONALD
In the Bipartisan Campaign Reform Act ("BCRA"), Congress
prohibited federal officeholders and candidates from raising and
spending funds, outside the limits and prohibitions contained in
the Act, "in connection with an election for Federal office" or
"in connection with an election other than an election for
Federal office." 2 U.S.C. 441i(e)(1). This request presents
the question of whether a federal officeholder's activities in
support of or opposition to a ballot measure are in all
instances limited by this restriction. We conclude that while
the Commission in other circumstances has appropriately
restricted such fundraising activities, they are not per se
limited, and need not be limited in the circumstances presented
by the requestors.
The request was submitted by Representatives Howard Berman
and John Doolittle and pertains to ballot measures to be decided
through a special referendum in November of 2005. Although
Reps. Berman and Doolittle are candidates for reelection to the
seats they currently hold, neither they nor any other federal
candidate will appear on the November 2005 ballot.
The law has long distinguished between efforts related to
ballot measures and those intended to influence candidate
elections. Advocacy related to ballot measures is generally
seen as issue-, rather than candidate-driven, and the funding of
such efforts has been acknowledged to present less potential for
corruption. This distinction has been recognized by the Supreme
Court,13 the IRS,14 and in a series of opinions by this agency.15
This was the backdrop against which BCRA was enacted.
There is no legislative history identifying ballot measure
activity as a source of corruption that BCRA aimed to remedy.
BCRA did not direct any change to the Commission regulation
defining an "election" as the process by which individuals seek
office,16 nor did the Commission make any change to that
regulation in its post-BCRA rulemakings. Despite heavy scrutiny
by the law's sponsors of all of the Commission's rulemakings
implementing BCRA, the sponsors never challenged that omission.
The foregoing merely establishes that a federal
officeholder's efforts to support or oppose a ballot measure are
not per se restricted under BCRA. It does not end the analysis.
As has been noted, the risks of corruption may be minimized in
the ballot initiative context, but preventing corruption (or the
appearance of corruption) was only one of the goals of BCRA.
The second animating philosophy of the law is to prevent
circumvention.
In BCRA, Congress made a conscious decision to limit
certain non-federal activity that had the potential to influence
federal elections.17 The concern was that without such limits,
federal candidates could circumvent the law by raising non-
federal funds for State party or candidate activities that would
benefit all the party's candidates, federal and non-federal.
Where a federal candidate proposes to establish, finance,
maintain, and control a ballot measure committee that will raise
and spend non-federal funds to promote (or oppose) an initiative
that is on the same ballot on which he is running for election,
that anti-circumvention purpose is implicated. That is the
circumstance that was presented to the Commission by
Representative Flake in Advisory Opinion Request 2003-12, and
our analysis of the instant request requires some discussion of
that earlier opinion.
When considering Rep. Flake's request, Commission consensus
developed around a compromise ruling with which perhaps no
Commissioner was completely satisfied. While we continue to
believe that the result in AO 2003-12 was substantially correct,
we believe that the reasoning was faulty. In that opinion, the
Commission concluded that much of what Rep. Flake proposed to do
should be regulated because it was "in connection with an
election other than an election for Federal office."18 We
believe that the better analysis, and one more reflective of the
real issues presented by Rep. Flake, would have rested on a
conclusion that where a federal candidate establishes,
maintains, finances or controls a ballot measure committee, on
an issue with which that candidate is closely identified, and
the committee raises and spends soft money to influence voting
on a day on which that candidate is himself on the ballot, then
the candidate and the committee's activities are "in connection
with an election for Federal office," that is, the candidate's
own election.
Representative Flake's proposal to use the money he raised
to air ads that would prominently feature him during the height
of his reelection race underscores the common sense of the
rationale that we are advocating. Such a rationale would have
been consistent with Commission precedent establishing that
while ballot measure activities are not generally regulated
under the Federal Election Campaign Act ("FECA"), a ballot
measure committee can be subject to that law when it is
inextricably linked to a candidate who is running on the same
ballot.19 Such a conclusion would have been consistent with
Congress's determination in BCRA that proximity in time to a
federal election can support an inference that what would
otherwise be considered non-federal activity may be deemed to be
"federal election activity."20 And such a conclusion would have
been consistent with the result then urged upon the Commission
by prominent campaign finance reformers. During the
Commission's consideration of Rep. Flake's request, the Center
for Responsive Politics, for example, submitted comments that
affirmed:
[W]e first emphasize two things that the FECA and
BCRA do not regulate. First, these statutes do not
limit Representative Flake's ability to publicly
express his support for the ballot referendum,
which he has the right to do without limitation.
Second, FECA and BCRA generally do not impact the
activities of a ballot initiative and ballot
referenda committee, so long as the committee is
not established, financed, maintained or controlled
by a federal candidate of officeholder.21
Our analysis also draws directly on the Supreme Court's
reasoning in McConnell v. FEC. In that opinion, the Court
upheld the candidate and officeholder solicitation restrictions
of section 441i(e) as "valid anti-circumvention measures."
Focusing on the practical impact on federal elections, the Court
stated:
Without some restriction on solicitations, federal
candidates and officeholders could easily avoid
FECA's contribution limits by soliciting funds from
large donors and restricted sources to like-minded
organizations engaging in federal election
activities.22
What are the ramifications for the current request of such
an analysis? The current request differs from AO 2003-12 in two
key respects: (1) Neither the requestors, nor any other federal
candidate, will appear on the November 2005 ballot. (2) The
ballot measure committees that the requestors propose to support
have not been established, financed, maintained, or controlled
by a federal candidate or officeholder. Thus, there is no nexus
to an "election," as historically and currently defined under
FECA. In light of these facts, we supported the conclusion
adopted by the Commission that the activities proposed by the
requestors are permissible in that they are neither "in
connection with an election for Federal office" nor "in
connection with an election other than an election for Federal
office."23
It has been suggested that BCRA generally prohibits federal
officeholders from raising money outside the scope of the Act,
regardless of whether that money would be used to influence
federal elections. While some may believe this is consistent
with the spirit of BCRA, it is not consistent with the plain
language. For example, nothing in BCRA or FECA limits an
officeholder in raising contributions for foundations,
educational institutions, or policy institutes from sources that
are otherwise prohibited from contributing to campaign
committees. In 2 U.S.C. 441i(e)(4), BCRA expressly permits a
federal candidate or officeholder to raise unlimited funds for a
501(c) organization as long as its principal purpose is not to
carry out voter registration and GOTV activities for a federal
election and the solicitation does not specify how the funds are
to be spent.
This is one of the ironies of the current request and the
heat it has generated. Most ballot measure committees are
organized under section 501(c)(4) of the tax code.24 Thus, BCRA
explicitly authorizes most of the activity in which the
requestors seek to engage.
The Commission received comments from a number of strong
supporters of BCRA, both within and outside of Congress,
supporting the result that the Commission reached in this
opinion and finding it fully consistent with the letter, spirit,
and intent of BCRA. As pointed out by Professor Daniel H.
Lowenstein (a former chair of the California Fair Political
Practices Commission and a former Common Cause board member):
[M]ost of the specific concerns of BCRA are
far removed from the activities at issue here.
Members of Congress who raise money for their side
of the controversial ballot questions will not
realize the sort of advantage to their campaigns
that BCRA restrictions aim to limit. This is not a
federal election year; the monies raised for these
ballot initiatives will not be devoted to "Federal
election activity," . . . that will enhance any
federal candidate's competitive position if he
chooses to run for reelection a full year later. .
. .
Congressmen Berman and Doolittle do not seek
to control either the campaigns or the committees
that will be running the campaigns on these issues.
They are not running for office and cannot, in
theory or practice, derive electoral benefit from
the campaign activity they seek to support.25
We believe it is important to emphasize that in our view,
this Advisory Opinion is fairly narrow in scope. Its import is
limited to those circumstances where a federal candidate seeks
to raise funds for a ballot measure committee that he or she
does not establish, maintain, finance, or control; where no
federal candidate appears on the same ballot; and where the
ballot measure committee is not (as most are) a 501(c)
organization for which federal candidates are already explicitly
authorized to raise funds under
2 U.S.C. 441i(e)(4).
September 2, 2005
_______(signed)_____________________
_______(signed)_____________________
Ellen L. Weintraub, Commissioner Danny Lee Mc
Donald, Commissioner
_______________________________
1 Although not directly stated in your request, the Commission
assumes that the ballot measure committees are not political
committees under the Act.
2 Prohibited sources include corporations, labor organizations,
national banks, foreign nationals, and government contractors.
See 2 U.S.C. 441b, 441c, and 441e.
3 Although I later voted to refer the matter back to the Office
of General Counsel for the drafting of a "bare bones" advisory
opinion, I viewed that vote as simply a procedural vote to move
the matter after several votes indicated that the General
Counsel's recommendation had only the support of one
Commissioner. My vote to refer the matter back to the General
Counsel's office for further drafting should not be viewed as an
endorsement of the eventual result produced by that redraft. As
this Dissenting Opinion makes clear, I disagree with that
result.
4 2 U.S.C. 441i(e) provides in its entirety:
"(1) A candidate, individual holding Federal office, agent of a
candidate or an individual holding Federal office, or an entity
directly or indirectly established, financed, maintained or
controlled by or acting on behalf of 1 or more candidates or
individuals holding Federal office, shall not-(A) solicit,
receive, direct, transfer, or spend funds in connection with an
election for Federal office, including funds for any Federal
election activity, unless the funds are subject to the
limitations, prohibitions, and reporting requirements of this
Act; or (B) solicit, receive, direct, transfer, or spend funds
in connection with any election other than an election for
Federal office or disburse funds in connection with such an
election unless the funds -(i) are not in excess of the amounts
permitted with respect to contributions to candidates and
political committees under paragraphs (1), (2), and (3) of
section 315(a) (2 U.S.C. 441a(a)); and (ii) are not from
sources prohibited by this Act from making contributions in
connection with an election for Federal office." (emphasis
added).
5 This definition of "election" is consistent with its common
definition which includes a "public vote upon a proposition
submitted." Random House Dictionary (Second Edition, 1987) at
627.
6 Some of my colleagues indicated during discussion that they
found the reference to "office" in the statute to have
significance. Indeed it does. It helps emphasize the statute's
broad reach to any election other than an election for Federal
office. If anything, the use of the word "office" in this way
undermines my colleagues' argument.
7 At the table during discussion of Advisory Opinion 2005-10,
legislative history appeared to be created three years after the
fact based upon the ex parte contacts of several Representatives
commenting on this Advisory Opinion. Ironically, the same
enthusiasm and deference accorded those comments was not shown
to the timely comments filed by BCRA co-sponsors Senators McCain
and Feingold when they commented in 2002 regarding the various
deficiencies in the Commission's rulemaking implementing the
BCRA legislation passed earlier that same year.
8 The FEC should not lurch back and forth on legal issues such
as this. The approach laid out in AO 2003-12 was reasonable.
It reflected a difficult consensus. It drew lines that were
understandable and that applied to federal
candidates/officeholders from all quarters. Changing course
abruptly, when the interested parties have been operating for
some time under settled principles, reflects poorly on the
agency. If there is a perceived need to change the
interpretation of the statute, it should be done in a regulation
proceeding. This is the course we took regarding the ABC
Advisory Opinion (2003-37), Fed. Elec. Camp. Fin. Guide (CCH)
6418 (February 19, 2004), and it is the approach that should
have been pursued by my colleagues here.
9 Advisory Opinion 2003-37 was superseded on other grounds.
When the Commission promulgated final rules in the Political
Committee Status rulemaking, it created new allocation rules
replacing the allocation rules established in Advisory Opinion
2003-37: "The final rules are simpler than the approach taken in
Advisory Opinion 2003-37 and proposed in the NPRM at proposed 11
CFR 106.6(f) and (g). These required a combined application of
the time/space allocation method under 11 CFR 106.1 and the
funds expended method under former 11 CFR 106.6 for public
communications that refer to a party and to specific Federal
candidates. Advisory Opinion 2003-37 is hereby superseded."
Commission Final Rules and Explanation and Justification on
"Political Committee Status," 69 Fed. Reg. 68056, 68063
(November 23, 2004)(italics omitted). Any intent to affect the
opinion's conclusions regarding the reach of 441e is
noticeably absent.
10 Interestingly, the Commission specifically declined to create
an exemption from the definition of "electioneering
communications" for communications that promote a ballot
initiative or referendum:
The Commission believes that communications
qualifying for a ballot initiative or referendum
exemption could well be understood to promote,
support, attack, or oppose Federal candidates. As
ballot initiatives or referenda become increasingly
linked with the public officials who support or
oppose them, communications can use the initiative
or referenda as a proxy for the candidate, and in
promoting or opposing the initiative or referendum,
can promote or oppose the candidate.
Commission Final Rules and Explanation and Justification on
"Electioneering Communications," 67 Fed. Reg. 65190, 65202
(October 23, 2002).
11 The Commission has never adopted an election year/non-election
year rule suggesting that a campaign does not begin until
January 1 of an even-numbered election year. To the contrary,
both the Act and the Commission's regulations specifically
recognize that activity occurring in a non-election year will
have an effect on the election year. For example, the
limitations on contributions to candidates apply on a `per
election' basis rather than an `election year' basis. 2 U.S.C.
441a(a)(1)(A), (2)(A); 11 C.F.R. 110.1(b). With respect to
non-election year activity, the law reflects the reality we all
know, namely, that considerable federal election activity occurs
in non-election years. Recently, on July 27, 2005 (the middle
of a non-election year), the Commission reinforced this very
point when it issued a press release entitled "2006
CONGRESSIONAL CAMPAIGNS UNDER WAY." In pertinent part, the
Press Release reported that, "[c]andidates seeking election to
the 33 Senate seats up for election in 2006 have reported
raising $84.8 million and spending $20.2 million during the
first six months of 2005." Id. at 1. The Press Release found
that the mid-year reports by these candidates "indicate more
fundraising activity than the first six-month filings by
candidates in the recent past." Id. Similarly impressive non-
election year fundraising totals were shown by the House where
567 candidates raised $130.8 million during the first six months
of 2005. Id. Obviously, considerable federal activity occurs
during a non-election year.
Moreover, it is clear that Congress did not intend
441i(e)(1)(B) to hinge on whether the activity was occurring in
an even year, whether a Federal candidate was on the ballot, or
whether "federal election activity" was involved. The statutory
language includes no such qualifiers. By contrast, e.g., where
Congress has wanted to tie a restriction to "federal election
activity," it has done so expressly. See 2 U.S.C. 441i(d)(1);
(e)(1)(A). Further, the Commission itself has made clear that
the 441i(e)(1)(B) solicitation restrictions apply to nonfederal
elections that occur when there is no "Federal election
activity" and no federal candidate on the ballot. The
Commission recently approved language in AO 2005-2, Fed Elec.
Camp. Fin Guide (CCH) 6472 (April 22, 2005) stating: "Unlike
other sections of BCRA specifically dependent upon the
appearance of a Federal candidate on the ballot (see, e.g., 2
U.S.C. 431(20)(A)(i) and (ii)), the limitations and prohibitions
in 2 U.S.C. 441i(e)(1)(B) apply to a Federal officeholder at any
time, regardless of whether any Federal candidate appears on the
ballot for the relevant election." Id. at 17, 131.
12 Although the Commission in Advisory Opinion 2003-12, supra,
did indicate that the exceptions at 2 U.S.C. 441i(e)(4)
operate as a "total exclusion" from the solicitation
restrictions at 2 U.S.C. 441i(e)(1), it nonetheless indicated
that a federal officeholder could not solicit soft money on
behalf of a 501(c) group that he established, financed,
maintained or controlled. The only way the Commission could get
to the conclusion it reached was by applying the general
solicitation restriction language in 441i(e)(1). Thus, as it
did with its regulation, the Commission read the exception at
441i(e)(4) so it did not make 441i(e)(1) superfluous and did
not undermine the broad reach of the general solicitation
restrictions.
13 See First National Bank of Boston v. Bellotti, 435 U.S. 765,
790 (1978) ("The risk of corruption perceived in cases involving
candidate elections . . . simply is not present in a popular
vote on a public issue."); accord Citizens Against Rent
Control/Coalition for Fair Housing v. City of Berkeley, 454 U.S.
290, 298 (1981).
14 See Private Letter Ruling 99-25-051 (June 25, 1999); 26 C.F.R.
56.4911-2(b)(1)(iii), 56-4911-2(d)(1)(ii).
15 See Advisory Opinions 1989-32; 1984-62, n.2; 1982-10; and 1980-
95.
16 See 11 C.F.R. 100.2.
17 See 2 U.S.C. 441i(b).
18 For the sake of compromise, the Commission drew a distinction
between activities that occur before the initiative qualifies
for the ballot (which were not regulated under the opinion), and
those that take place after the initiative so qualifies (which
were regulated). We would have preferred to have regulated the
pre-qualification activities as well.
19 See Advisory Opinion 1989-32.
20 See 2 U.S.C. 441i(b), 431(20)(A).
21 Comment on AO 2003-12, submitted by Lawrence Noble on behalf
of the Center for Responsive Politics and Paul Sanford on behalf
of CRP's FEC Watch, at 2 (April 21, 2003), available at
<http://ww.fec.gov/aos/2003/aor2003-12com-b.pdf>.
22 McConnell v. FEC, 540 U.S. 93, 182-83 (2003) (emphasis added).
See also id. at 167 (tailored restrictions on federal election
activity by state parties upheld based on the direct benefit
that such activity confers on federal candidates).
23 2 U.S.C. 441i(e)(1).
24 See comment submitted by Joseph E. Sandler on behalf of the
Ballot Initiative Strategy Center, Inc. (August 17, 2005),
available at <http://ww.fec.gov/aos/2005/aor2005-
10exparte4.pdf>.
25 Comment submitted by Professor Daniel H. Lowenstein, at 3
(August 16, 2005), available at
<http://ww.fec.gov/aos/2005/aor2005-10comments2.pdf>.