OBSTACLES TO EFFECTIVE ENFORCEMENT OF THE FEDERAL ELECTION CAMPAIGN ACT

Commissioner Scott E. Thomas*
Jeffrey H. Bowman**

Table of Contents

Introduction..............

     I. Process Problems.

          A. Budgetary Constraints

          B. Cumbersome Enforcement Procedures

          C. The Structure of the Commission

    II. Problems With the Lower Courts..

          A. What Is “Express Advocacy”?

          B. What Is “Coordination”?

          C. FEC v. Christian Coalition

Conclusion

Introduction

The Federal Election Commission (FEC or Commission) is the independent agency of the United States Government established by Congress to “administer, seek to obtain compliance with, and formulate policy”[1] with respect to the Federal Election Campaign Act (Act or FECA).[2]  In order to provide centralization and uniformity, Congress provided the Commission with exclusive jurisdiction for civil enforcement of the Act.[3]  As the Supreme Court recognized in Buckley v. Valeo,[4] Congress vested the Commission with “primary and substantial responsibility for administering and enforcing the Act.”[5]  The Commission has “the ‘sole discretionary power’ to determine in the first instance whether or not a civil violation of the Act has occurred.”[6]  Under the FECA, the FEC has the authority to conduct investigations, authorize subpoenas, administer oaths, receive evidence, and initiate civil actions to enforce the statute.[7]

When the Commission was created as part of the Federal Election Campaign Act Amendments of 1974[8] a quarter century ago, not all Members of Congress were supportive of placing such authority and power in an agency that would directly regulate their campaign activities.  Representative Dawson Mathis warned: “We are going to set up a bunch of headhunters down here who are going to spend their full time trying to make a name for themselves persecuting and prosecuting Members of Congress. . . . Members had better watch their heads once the Commission is established.”[9]  Likewise, Representative Bill Burlison feared that “with this amendment we are setting the stage for making it impossible for an incumbent to get a fair shake before [the Commission].”[10]

Despite the reluctance of some, Congress passed the 1974 Amendments and created the Federal Election Commission by wide margins.[11]  In so doing, Congress emphasized the need for strong and vigorous enforcement of the campaign finance law it had just passed.  Speaking in support of the bill, Representative Dante Fascell argued that “[t]he credibility of Congress is at stake” and “[u]nless we make adequate provision for the independent and vigorous enforcement of the limitations we enact, we will remain open to charges of conflict of interest and public distrust will continue.”[12]  Similarly, Representative Frenzel concluded that “[t]he establishment of an independent Commission is the key provision in the bill.  It will assure the judicious, expeditious enforcement of the law, while reversing the long history of nonenforcement.”[13]

Through the years, the Commission has received a great deal of criticism for allegedly not satisfying its enforcement mandate.  Critics charge that the Commission has failed to provide strong and timely enforcement of the campaign finance laws.  The FEC has been called, among other things, “a lapdog,”[14] a “toothless watchdog,”[15] a “toothless dog,”[16] a “dithering nanny,”[17] a “toothless tiger,”[18] a “watchdog without a bite,”[19] “feckless,”[20] “beleaguered,”[21] “a self-licking ice cream cone,”[22] “pathetic,”[23] and “nuts.”[24] 

Is the FEC simply a demented, dentally-deprived agency, or is it an underfunded agency, saddled with an awkward enforcement process, attempting to make sense of a law largely shredded by the lower courts?  This Article sorts through the rhetoric and considers the FEC enforcement process in light of the current statutory scheme and judicial interpretations.  In particular, Part I discusses and recommends changes with respect to FEC funding by Congress, statutorily imposed enforcement procedures, and the decisionmaking structure of the FEC.  Part II considers the uncertainty created by the lower courts regarding major campaign finance issues and reviews the recent district court decision in Federal Election Commission v. Christian Coalition.[25]  After discussing the findings of a recent audit authorized by Congress and conducted by PricewaterhouseCoopers, this Article concludes that congressional and judicial action is needed if the Act is intended to be enforced in a meaningful manner.

I.    Process Problems

The Federal Election Campaign Act regulates the campaign financing of elections to Federal office.  It is “by far the most comprehensive reform legislation [ever] passed by Congress.”[26]  For example, the statute sets the requirements for the organization and registration of political committees supporting federal candidates.[27]  In addition, the Act requires the reporting and public disclosure of political contributions and expenditures to and by candidates for federal office and political committees supporting them.[28]  The law places limits on the making and acceptance of political contributions for federal candidates and political committees.[29]  The FECA also restricts the source of campaign funds in federal races.[30]

Laws are effective only when they are enforced. There are several impediments, however, to timely and effective enforcement of the FECA.  First, the FEC must have adequate resources.  Second, even if the Commission had adequate resources, the Act’s enforcement procedures make difficult any attempt to resolve a matter within the same election cycle.  Third, the requirement that at least four members of the six member Commission must agree to open an investigation makes decisionmaking in important matters difficult.

A.   Budgetary Constraints

The Federal Election Commission is charged with the primary responsibility of enforcing the Federal Election Campaign Act.  Yet, it cannot effectively carry out its statutory responsibilities without adequate resources.  Through the years, the Commission has struggled to keep up with its enforcement and administrative responsibilities. One of the key reasons for this is that the Commission’s annual budget has not kept pace with the growth in campaign finance activity and the Commission’s workload.  Indeed, the explosion of campaign activity over the last two decades threatens to overwhelm the Commission’s resources.

Spending on federal elections has risen to record levels.  In the 1980 presidential year election cycle, there were total disbursements in federal elections of $768 million.[31]  For the 1996 presidential year election cycle, total disbursements had increased nearly threefold to $2.738 billion.[32]  Similarly, spending for off-year congressional elections has dramatically increased.[33]  In the 1978 election cycle, there were total disbursements of $386 million.[34]  For the 1998 election cycle, total disbursements had increased nearly six-fold to over $2.2 billion.[35]

Despite this explosion in campaign finance activity, FEC staff levels have remained relatively steady.  In 1980, the FEC had 270 full-time equivalent staff (FTE).  Sixteen years later, in 1996, the FEC had an FTE level of only 308.5.  In other words, from the 1980 to 1996, total election disbursements increased by 256.5%, yet the FEC staff increased by only 14%.  Nor did matters improve for the 1997-1998 election cycle when the FEC staff levels actually decreased from its 1996 level to 302.7 FTE.  The chart below sets out the increases in total campaign disbursements by election cycle and offers a comparison with the total Commission FTE for the election year:

The ever-growing spending translates into a dramatic increase in workload for the FEC.  Obviously, the increase in spending means there are more reports filed with the Commission detailing a greater number of transactions on both the receipt side and the disbursement side.  For example, the number of itemized transactions processed by the Commission increased from 507,461 in the 1984 election cycle to 1,974,091 for the 1996 election cycle.[37]  Not only is the FEC responsible for implementing a public disclosure program that makes these reports available to the general public in a timely and accurate manner, but the Commission must review these reports for compliance with the requirements of the Act.  From 1988 to 1996 alone, the number of Requests for Additional Information (RFAI’s) sent out by the Commission to clarify reported transactions increased from 12,786 to 21,500.[38]  In addition, the increase in financial activity results in an increase in the number of complaints filed with the Commission alleging violations of the statute.  Of course, while the Commission reviews and processes the reports, publishes the subsequent statistical analyses, and ensures enforcement of the FECA, it is also expected to maintain the informational and educational programs and services it provides to assist federal candidates and committees.

The FEC has sought to handle the increase in workload with an increase in its efficiency.  For example, productivity has significantly increased in data coding and the entry of disclosure information despite the increase in size and complexity of reports.  The number of itemized transactions coded per person during the course of the year has increased from 73,699 during the 1988 election cycle to 119,386 during the 1996 election cycle.[39]  Indeed, since 1985, productivity gains have resulted in a more than 200% increase in the number of transactions coded per FTE.[40]

Moreover, in order to better use its limited staff resources, the Commission has developed a system to prioritize its caseload so that it can focus its efforts on the more significant cases, and more quickly dispose of less important matters.  In the past, the Commission automatically assigned all complaints that it received to enforcement staff regardless of whether those staff already carried a full enforcement caseload.  This is no longer possible.  Over the past several years, the Commission’s enforcement caseload has expanded both in the number of cases and the scope of the cases.  As of January 1, 2000, the FEC’s docket included 2,841 respondents in 198 cases, and many of those cases involve complicated factual and legal issues.[41]  Reflecting the increased complexity of FEC cases, the monthly average number of respondents per pending case in FY 1996 was 5.0 respondents;[42] for FY 1999, the figure had more than tripled to 15.6 respondents per case.[43]  Not only does the higher number of respondents per case dramatically increase the complexity of a case, but it also impacts the Commission workload. 

Under the Commission’s Enforcement Priority System (EPS), new cases are not immediately assigned to staff and activated but instead go into a Central Enforcement Docket (CED).  Notification letters are sent and, once responses are received, an initial determination is made as to whether the case appears significant enough to warrant use of Commission resources.  Some factors employed in making this determination include the presence of knowing and willful intent, the impact of the alleged violations on elections, the amount of money involved, and whether certain areas of the law require special attention.  Significant matters that appear to warrant the use of Commission resources remain in CED until they can be assigned to a staff person who is available to actively work on them or until, after an internal deadline, the case becomes “stale.”  Cases that are less significant and do not warrant the use of the Commission’s limited resources are closed without investigation soon after being rated, pursuant to the Commission’s prosecutorial discretion.  In FY 1998 and FY 1999 combined, the FEC had to dismiss 119 cases for low ratings and 104 cases for staleness.[44]  The average number of active cases during that time frame ranged from 93 to 117.[45]

Despite its attempts at efficiency and programmatic changes, the fact remains that investigating and pursuing the many allegations of multi-million dollar violations requires extensive resources.  Analyzing records, taking depositions and drafting reports, interrogatories and briefs takes investigators, auditors and lawyers.  In FY 1999, the FEC was able to assign only about 24 FTE to the line attorney function of handling enforcement cases.[46]  Throughout the Commission, the FEC projects for FY 2000 that it will be able to assign 109.4 FTE or about 31% of its FTE to the compliance function.[47]

By comparison, the Department of Justice reportedly has assigned some 125 staff just in its investigation of criminal transgression arising out of the 1996 election cycle.[48]  This amount of staff is more than the Commission has working in its entire Office of General Counsel.   Similarly, press reports indicated that the requested budget for the Senate Governmental Affairs investigation into some of the 1996 campaign finance violations was over $6.5 million and included a request for 80 full-time employees.[49] Noting that the proposed budget called for the hiring of 28 lawyers on the majority side and 20 lawyers on the minority side, Senator Dianne Feinstein observed that “this is the size of a large Washington law firm.”[50]  Senator Fred Thompson defended the proposal by saying, “[i]f you’re not willing to pay the freight, don’t load the wagon.”[51]  Senator Thompson added, “[w]e are about serious business . . . [i]t will take serious money.”[52]  The argument applies with equal force to the Federal Election Commission.

Absent additional funding for the FEC, a change in the FEC appropriation process to a multi-year authorization would be helpful in the budget process.   In asking Congress (unsuccessfully) for a multi-year authorization years ago in a legislative recommendation, the Commission explained the advantages of such a system:

The Commission should be given a multiyear authorization of appropriation in order to increase its ability to engage in long-range planning and on implementation of the law.  The present scheme drains valuable staff resources each year in attempts to justify an authorization and frustrates intelligent management of the agency.[53]

A biennial authorization makes a great deal of sense in light of the cyclical nature of the Commission’s planning in terms of two-year election cycles.  Moreover, to the extent that there is a potential for intimidation of the Commission through the budget process[54] — something not easily subject to proof[55] — a multiyear authorization would provide a degree of insulation to the Commission from both the Congress and the White House. 

B.      Cumbersome Enforcement Procedures

To implement the Commission’s enforcement authority, Congress enacted detailed enforcement procedures.  This administrative process was designed to offer procedural protections to respondents and allay congressional fears that the Commission would turn into “a bunch of headhunters.”[56]  These procedural requirements and their attendant time allowances make it difficult — if not impossible — for the Commission to resolve a complaint in the same election cycle in which it is brought.

Although the timetable for processing external complaints varies depending on a number of factors unique to each case, there are a number of procedural prerequisites and statutory time constraints common to the disposition of most MURs (Matters Under Review).  Under the Act, any person who believes a violation of the statute has occurred may file a complaint with the Commission.[57]  When a complaint arrives in the Office of General Counsel, it is immediately given a MUR  number.  Pursuant to the statute, letters are sent within five days of the Commission’s receipt of the complaint, notifying the respondents that a complaint has been filed and providing them with fifteen days to respond to the allegations in the complaint.[58]

Once the time to respond to the complaint has expired, the MUR’s significance is rated under the Commission’s Enforcement Priority System (EPS).   This rating is based upon the complaint and any response filed with the Commission.  The Office of General Counsel then considers the matter for assignment at its monthly docket meeting.  Enforcement managers and Central Enforcement Docket Staff meet on a monthly basis to assess staff availability and match that availability with unassigned cases.  If available, an enforcement staff member is assigned to the matter.  Due to lack of staff and resources, however, MURs eligible for activation often must “wait their turn” for assignment behind complaints filed earlier with the Commission.

Once a member of the Commission’s enforcement staff becomes available to be assigned to a case, the Office of General Counsel prepares a report for the Commission and recommends whether the Commission should find reason to believe a violation of the Act has occurred.  Based upon the complaint and response, the General Counsel’s Report analyzes the facts and applicable legal issues.  In those instances where one or more respondents have requested an extension of time (a request for a twenty day extension of time is ordinarily granted) in which to respond to the complaint, or where the complaint involves complex legal issues or numerous respondents, preparation time for this report is often extended to permit adequate analysis of the issues.

After reviewing the complaint, responses, and the Office of General Counsel’s recommendation, the Commission may vote on whether there is “reason to believe” a violation has occurred.[59]  If the Commission finds that “reason to believe” exists, the Act states that the Commission “shall make an investigation of [the] alleged violation.”[60]  Under the Act, there must be four affirmative votes to find “reason to believe” and initiate an investigation.[61]

Once the Commission finds there is reason to believe a violation has occurred, the statute requires that respondents be notified of the finding.[62]  This notification must provide the respondents with a factual and legal analysis of the basis for the Commission’s finding.[63]  The Act provides a full range of investigative powers to enable the Commission to secure sufficient information and evidence.[64]  Depending upon the complexity of the facts and issues, the investigation may be conducted through informal contacts or more formal measures.[65]  Such an investigation might include requests for documents and written answers to interrogatories, taking depositions, or in some instances, referring the matter for an investigative audit.[66]

Upon completion of the investigation, the General Counsel prepares a brief stating his or her position on the factual and legal issues in the case and provides the respondent and the Commission with a copy of the brief.[67]  Under the statute, a respondent has fifteen days after receipt of the General Counsel’s brief in which to file a response brief explaining its position to the Commission.[68]  Respondents often request and usually are granted a twenty-day extension of time to prepare a response.   The General Counsel then prepares a report to the Commission recommending what action should be taken.[69]  Under a best case scenario, the Office of General Counsel attempts to make probable cause to believe recommendations based on the General Counsel’s brief and the respondent’s within thirty days of receipt of the respondent’s brief.

The Commission’s regulations provide a means to avoid the briefing process and a finding of probable cause to believe if the respondent expresses a willingness, in writing, to conciliate a violation prior to a finding of probable cause.[70]  Upon the receipt of this letter, the General Counsel will prepare a conciliation agreement for Commission approval if the General Counsel’s investigation is complete.  The Commission will not consider requests for pre-probable cause conciliation if the General Counsel’s Office already has submitted its probable cause briefs on a matter to the Commission.  Although a time frame for this conciliation period is not specified, efforts are made to keep it to thirty days in that a failure to conciliate at this stage will lead to the briefing process and further statutorily mandated conciliation.[71] 

Upon consideration of the briefs and responses and the General Counsel’s Probable Cause Report, the Commission determines whether or not there is “probable cause to believe” a violation has occurred.[72]  Again, a finding of probable cause to believe that a violation has occurred requires the affirmative vote of at least four Commissioners.[73]  Should the Commission find probable cause to believe a violation has occurred, it is required to attempt, for at least thirty days, to resolve the matter by “informal methods of conference, conciliation, and persuasion, and to enter into a conciliation agreement” with the respondent.[74]  The Commission sends a proposed conciliation agreement to the respondents and, pursuant to the statute, attempts for a period of thirty to ninety days to reach a mutually acceptable agreement.[75]  During this process, the Office of General Counsel makes periodic reports on the progress of conciliation and, makes recommendations concerning the acceptance of proposed agreements.  If the Commission is unable to resolve the matter through conciliation, it can vote to authorize a civil suit to enforce the FECA in United States District Court.[76]  Once again, four votes are required.[77]

To recap, the time flow for a hypothetical enforcement matter can look something like this:

As illustrated by the above chronology, a fairly routine matter can easily take one year if the matter proceeds to probable cause under the procedural requirements of the Act.  Of course, if a matter is factually complex and requires an extensive formal investigation, the resolution of the case can take much longer.  In addition to the normal time that occurs while awaiting responses to questions or requests for documents sent during an investigation, there is often added delay because of the necessity of seeking judicial assistance to enforce Commission subpoenas when respondents fail to comply voluntarily.  For example, one subpoena enforcement case lasted three and one half years.[78]  Moreover, in those instances where an investigative audit is required, the timetable is also extended by the time it takes to complete the audit.

Under the enforcement procedures mandated by the Act, it is virtually impossible for the Commission to resolve a complaint during the same election cycle in which it is filed.  Indeed, a factually complex case with extensive discovery and investigation may take three or four years.   Such delays are not only frustrating to complainants but they decrease confidence in the Act as well.

Recognizing how time consuming the enforcement process can be, the Commission recommended in early 1998 “that Congress consider whether the Act should provide for expedited enforcement of complaints filed shortly before an election, permit injunctive relief in certain cases, and allow the Commission to adopt expedited procedures in such instances.”[79]  With respect to the enforcement procedures, the Commission explained:

[T]he Act mandates extended time periods for conciliation and response to recommendations for probable cause.  Under ordinary circumstances such provisions are advisable, but they are detrimental to the political process when complaints are filed immediately before an election.   In an effort to avert intentional violations that are committed with the knowledge that sanctions cannot be enforced prior to the election, and to quickly resolve matters for which Commission action is not warranted, Congress should consider granting the Commission some discretion to deal with such situations on a timely basis.[80]

The Commission asked Congress to consider “whether the Commission should be empowered to promptly initiate a civil suit for injunctive relief in order to preserve the status quo when there is clear and convincing evidence that a substantial violation of the Act is about to occur.”[81]  With injunctive relief authority, the Commission would be authorized “to initiate such civil action in a United States District Court, under expressly stated criteria, without awaiting expiration of the 15-day period for responding to a complaint or the other administrative steps enumerated in the statute.”[82]  Congress did not adopt on the Commission’s legislative recommendation.

C.   The Structure of the Commission

In order to ensure that the Commission would not become a vehicle for partisan purposes, the Congress created an unusual conflict within the FEC.  Safeguarding against the domination of the six member Commission by one political party, the Act provides that “[n]o more than 3 members of the Commission . . . may be affiliated with the same political party.”[83]  Moreover, a plurality of at least four votes is required for the Commission to exercise any of its central powers.[84]  These provisions were specifically designed to ensure that formal action on a matter before the Commission could go forward only on the affirmative vote of a mixed majority of Commission members:

[E]lection campaigns are the central expression of this country’s democratic ideal.  It is therefore essential in this sensitive area that the system of administration and enforcement enacted into law does not provide room for partisan misuse or for administrative action which does not comport with the intent of the enabling statute.  At the same time it is recognized that the authorities charged with administering and enforcing the law must have the independence required by the tripartite system of government created by the Constitution.  To mediate between these conflicting concerns, [the bill] provides that the Commission shall initiate investigations, bring judicial actions, and take other steps of comparable importance only upon the affirmative vote of four of its six voting members.  The four-vote requirement serves to assure that enforcement actions, as to which Congress has no continuing voice, will be the product of a mature and considered judgment.[85]

In addition, unlike other regulatory agencies that have an odd number of members, one of whom is designated as permanent chairman, the Act provides for a rotating chairmanship with a new chairman to be selected by the Commission members each year.[86]  In fact, sensitivities regarding partisanship are such that, even though the chairmanship and vice-chairmanship have little in the way of actual powers, the Act further requires that “[t]he Chairman and the Vice Chairman shall not be affiliated with the same political party.”[87]            

As can be expected, the four-vote requirement has produced some Commission deadlocks.  It must be said, however, that on the vast majority of votes, the Commission is able to muster four votes and agree on a particular course of action.  Last year, the Commission conducted a study which indicated only about 2.56% of Commission votes resulted in some sort of split vote or deadlock.[88]  The votes on which the Commission has deadlocked, however, sometimes have been important matters.  For example, in recent years the Commission has deadlocked on whether to appeal certain crucial matters lost in litigation.[89]

The six-member structure of the Commission and the four-vote requirement has prevented the Commission from reaching decisions on several significant matters over the years.  Undoubtedly, this failure to act has resulted in considerable frustration for the regulated community which expects the Commission to comply with its statutory mandate: “[t]he Commission shall administer, seek to obtain compliance with, and formulate policy with respect to, this Act . . . .”[90]  Yet, this inaction is presumably outweighed by the understandable congressional concern that a Commission decision be the product of a vote enjoying at least some apparent measure of multi-party support.

In at least one area, however, perhaps an exception to the four-vote requirement might be considered.  There have been a number of instances where the Commission has deadlocked on even a reason to believe finding that a violation of the Act may have occurred.[91]  These deadlocks have occurred even though the Commission has unanimously acknowledged that a “reason to believe” finding is a very low threshold:

Under the present statute, the Commission is required to make a finding that there is “reason to believe a violation has occurred” before it may investigate.  Only then may the Commission request specific information from a respondent to determine whether, in fact, a violation has occurred.  The statutory phrase “reason to believe” is misleading and does a disservice to both the Commission and the respondent.  It implies that the Commission has evaluated the evidence and concluded that the respondent has violated the Act.  In fact, however, a “reason to believe” finding simply means the Commission believes a violation may have occurred if the facts as described in the complaint are true.  An investigation permits the Commission to evaluate the validity of the facts as alleged.[92]

Despite this low standard, a Commission deadlocked at “reason to believe” will not even ask questions and may not get to the bottom of some very serious allegations.

Congress has addressed the problem of deadlocks for the only other administrative agency with an even number of members.  The United States International Trade Commission, like the FEC, has six members, no more than three of whom may be of the same political party.[93]  Unlike the FEC, however, Congress has directed that when the ITC is equally divided as to whether a particular investigation should be carried out, “such investigation shall thereupon be carried out.”[94]  Thus, in the case of the International Trade Commission, “Congress has clearly recognized the possibility of a deadlock resulting from the provision for an equal number of commissioners from each major political party, and the tie vote provision has been one answer to that problem.”[95]

Similarly, the Congress could direct that an investigation would proceed in those instances where the Commission deadlocks on a General Counsel (who is chosen by the six members of the Commission)[96] recommendation to find reason to believe and investigate a matter.  This would only apply where the Commission deadlocks on a General Counsel recommendation to proceed; it would not apply to a deadlock on a General Counsel recommendation not to proceed on a matter.[97]  Moreover, the tie-break provision would only apply at the reason-to-believe stage; it would not apply to the exercise of any other Commission duty or power.  For example, if an investigation proceeded from a deadlocked reason to believe stage, the procedural protections of the statute would still require four votes for the Commission to find probable cause to believe that a violation occurred.   At the very least, however, an investigation would allow the facts of a matter to be uncovered and publicly disclosed.

II.   Problems With the Lower Courts

In Buckley v. Valeo,[98] the Supreme Court upheld numerous provisions of the Act, including the disclosure provisions[99] and contribution limitations,[100] against constitutional challenge.  In its decision, the Buckley Court also discussed two major issues which greatly impact these and other provisions of the Act a quarter of a century later: “express advocacy” and “coordination.”  In the years since Buckley, the Supreme Court has touched upon these issues, but has failed to provide a definitive ruling on their reach.  Absent Supreme Court resolution, various lower courts have weighed in with their views on these issues.   By and large, their rulings threaten to create large loopholes in the disclosure provisions, the contribution limitations, as well as other provisions such as the prohibitions of the Act.  The “express advocacy” and “coordination” issues illustrate well the difficulty which the Commission regularly faces in providing for effective enforcement in an area filled with complex legal issues and significant constitutional concerns.

A.   What Is “Express Advocacy”?

What constitutes “express advocacy” is a very important issue in campaign finance law.[101]  The Buckley Court developed the express advocacy standard when it upheld the constitutionality of disclosure requirements on independent expenditures made by individuals and groups who were “not candidates or political committees.”[102]  In order to ensure that the Act’s reporting requirements applied only to “advocacy of a political result” and not pure “issue discussion”[103] protected by the First Amendment, the Court construed the FECA’s independent expenditure disclosure provisions “to reach only funds used for communications that expressly advocate the election or defeat of a clearly identified candidate.”[104]  Unfortunately, the Buckley Court left unclear what constituted express advocacy.  The Court only indicated that express advocacy would include communications containing certain magic words such as “‘vote for,’ ‘elect,’ ‘support,’ ‘cast your ballot for,’ ‘Smith for Congress,’ ‘vote against,’ ‘defeat,’ [or] ‘reject.’”[105]

The definition of express advocacy took on particular importance in the aftermath of FEC v. Massachusetts Citizens for Life, Inc. (MCFL).[106]  Section 441b of the Act prohibits corporations and labor organizations from using their general treasury funds to make any “contribution or expenditure in connection with any [federal] election . . . .”[107]  Decided ten years after Buckley, the Court in MCFL found that expenditures for communications not coordinated with a candidate “must constitute ‘express advocacy’ in order to be subject to the prohibition of §441b.”[108]  In so doing, the Court reaffirmed Buckley’s understanding that “the ‘express advocacy’ requirement [is meant] to distinguish discussion of issues and candidates from more pointed exhortations to vote for particular persons.”[109]

In the wake of Buckley and MCFL, the courts of appeals have been divided over whether a “magic words” test or a “read as a whole” test should apply.  Under the “magic words” test, a communication contains express advocacy only if it includes certain buzzwords such as those mentioned by the Court in Buckley.  Absent those specific words or phrases — magic words — the communication is considered issue discussion and outside the jurisdiction of the FECA.   In such cases as the Fourth Circuit’s opinion in FEC v. Christian Action Network, Inc.[110] and the First Circuit’s decision in Maine Right to Life Committee, Inc. v. FEC,[111] a number of lower courts have embraced the narrow “magic words” test.

On the other hand, the United States Court of Appeals for the Ninth Circuit has recognized that the magic words test creates a gaping loophole in the Act.  In FEC v. Furgatch,[112] the Ninth Circuit warned:

A test requiring the magic words “elect,” “support,” etc., or their nearly perfect synonyms for a finding of express advocacy would preserve the First Amendment right of unfettered expression only at the expense of eviscerating the [Act].  “Independent” campaign spenders working on behalf of candidates could remain just beyond the reach of the Act by avoiding certain key words while conveying a message that is unmistakably directed to the election or defeat of a named candidate.[113]

Rather than relying on the inclusion or exclusion of certain words or phrases for determining the presence of express advocacy, the Ninth Circuit concluded that for a communication “to be express advocacy under the Act . . . it must, when read as a whole, and with limited reference to external events, be susceptible of no other reasonable interpretation but as an exhortation to vote for or against a specific candidate.”[114]  Under this common sense approach, a communication obviously appealing to voters to support or oppose a particular candidate would be recognized as such.  Simply avoiding certain magic words would not keep a candidate advocacy advertisement outside the definition of express advocacy and, hence, the FECA.

So then, should the magic words test or the read as a whole test govern in deciding what constitutes express advocacy?  There is no easy answer.  As the Seventh Circuit recently observed: “Appellate decisions such as Furgatch and Christian Action Network give different answers not because they disagree about whether Buckley and MCFL ‘apply’ but because these decisions do not give unambiguous answers to the myriad situations that arise.”[115]  Writing for the Court, Judge Easterbrook found the simplistic admonishment “follow Buckley!” provides no effective guidance because such an instruction “would not dictate one outcome rather than another.”[116]

In view of this uncertainty and absent further guidance from the Supreme Court, the Commission has incorporated the Furgatch test into its regulations.[117]  As the administrative agency charged with the “primary and substantial responsibility”[118] for enforcing the Act, the Federal Election Commission has little choice.  Without Supreme Court direction on what it meant by “express advocacy,” the FEC cannot responsibly adopt a view of the law that sanctions the easy circumvention of core statutory provisions.[119]  On this latter point, there is little debate.  To our knowledge, no one has seriously questioned the Ninth Circuit’s conclusion that a magic words test would “eviscerate” the Act.  Indeed, under the magic words test, it is very clear that foreign nationals, corporations, and labor unions could spend unlimited sums of soft money on advertisements that unambiguously advocate the election or defeat of federal candidates.  All of this money would fall outside of the Act’s prohibitions so long as certain words or phrases are avoided.  Moreover, none of this financial activity or the identity of the sponsors of these advertisements would have to be disclosed to the voting public under the reporting requirements of the Act.  To conclude that this significant activity somehow escapes the reach of the Act requires more than the split opinions of the lower courts.  It requires resolution by the Supreme Court which, to date, has declined to give an “unambiguous answer”[120] to the matter.[121]

B.   What Is “Coordination”?

Just as the definition of “express advocacy” has very serious consequences under the Act, so too does the definition of “coordination.”[122]  In Buckley, the Supreme Court upheld limits on contributions to federal candidates but ruled that a similar limitation on independent expenditures was unconstitutional.[123]  The Court recognized, however, that its ruling created many opportunities for evading the contribution limitations.  If a would-be spender was able to pay for a television advertisement provided by a candidate, for example, this “coordination” would convert what is supposed to be an “independent” expenditure into nothing more than a disguised contribution.[124]  Indeed, the Buckley Court warned that contribution limitations would become meaningless if they could be evaded “by the simple expedient of paying directly for media advertisements or for other portions of the candidate’s campaign activities.”[125]

In order to “prevent attempts to circumvent the Act through prearranged or coordinated expenditures amounting to disguised contributions,”[126] the Buckley Court treated “coordinated expenditures . . . as contributions rather than expenditures.”[127]  Thus, the Buckley Court drew a specific distinction between expenditures made “totally independently of the candidate and his campaign” and “coordinated expenditures” that could be constitutionally regulated.[128]  The Court defined “contribution” to “include not only contributions made directly or indirectly to a candidate, political party, or campaign committee . . . but also all expenditures placed in cooperation with or with the consent of a candidate, his agents, or an authorized committee of the candidate.”[129] Reacting to these judicial concerns, Congress enacted as part of the Federal Election Campaign Act Amendments of 1976[130] a definition of “independent expenditure” now codified at 2 U.S.C. section 431(17).[131]  Concerned that independent expenditures could be used to circumvent the contribution limitations,[132] Congress preserved the distinction drawn by the Supreme Court between those expenditures that were “totally independent” of the candidate’s campaign and those that were not.[133]

The current language of the Act reflects the judicial and legislative concern that independent expenditures are not turned into disguised contributions through coordination with a candidate or his campaign.  The Act squarely states that an expenditure made “in cooperation, consultation, or concert, with, or at the request or suggestion of, a candidate, his authorized political committees, or their agents, shall be considered to be a contribution to such candidate” and subject to the contribution limitations.[134]  Moreover, section 431(17) of the statute defines “independent expenditure” as:

[A]n expenditure by a person expressly advocating the election or defeat of a clearly identified candidate which is made without cooperation or consultation with any candidate, or any authorized committee or agent of such candidate, and which is not made in concert with, or at the request or suggestion of, any candidate, or any authorized committee or agent of such candidate.[135]

Section 109.1(b)(4)(i) of the Commission’s regulations “clarif[ies] this language”[136] and explains that an expenditure will not be considered independent if there is “[a]ny arrangement, coordination, or direction by the candidate or his or her agent prior to the publication, distribution, display or broadcast of the communication.”[137]  The regulations further state that an expenditure is presumed not to be independent if: 

(A) Based on information about the candidate’s plans, projects, or needs provided to the expending person by the candidate, or by the candidate’s agents, with a view toward having an expenditure made; or

(B) Made by or through any person who is, or has been, authorized to raise or expend funds, who is, or has been, an officer of an authorized committee, or who is, or has been, receiving any form of compensation or reimbursement from the candidate, the candidate’s committee or agent.[138]

The statute and the Commission’s regulations recognize that a narrow view of coordination would open a large loophole in the law.  If, for example, a finding of coordination required some sort of “agreement” between a candidate and a spender, an organization could meet with a candidate’s campaign, discuss campaign strategy and the development of issues crucial to the campaign, and then make “independent” expenditures based on this detailed knowledge and information.  The only apparent restriction would be that a campaign could not approve the final finished ad or actually authorize a buy for the timing and placement of the ad.  Obviously, such a limited approach would render the coordination standard meaningless.

Recent court decisions, however, have effectively ignored the Commission regulations on what constitutes “coordination.”[139]  In a burst of judicial activism, the lower courts have begun to create their own definition of coordination.   These judicially-imposed definitions of coordination bear little semblance to either the “totally independent” approach of Buckley, the language of the statute, or the words of the Commission’s regulations.  As a result, the Commission’s enforcement of an already difficult issue[140] has become even more complicated as it must anticipate future judicial theories.

C.   FEC v. Christian Coalition

The inherent difficulties which face the FEC in enforcing a statute filled with constitutional concerns are perhaps best illustrated by the recent district court decision in FEC v. Christian Coalition.[141]  The Christian Coalition case involved an FEC enforcement action that raised both the coordination and express advocacy issues.[142]  The court’s decision illustrates well not only the need for further Supreme Court guidance on the coordination and express advocacy issues, but also the penchant of the lower courts to fashion their own definitions and standards at the expense of those established by the Congress in the Act or by the Commission in its regulations.

In its lawsuit, the Commission charged that on several occasions the Christian Coalition spent large amounts of its corporate treasury funds to influence federal elections in violation of the FECA.[143]  Based on the record evidence, the Commission alleged the Christian Coalition’s leadership and its staff repeatedly cooperated and consulted about campaign strategy and activities with several different Republican candidates, their campaigns, and the National Republican Senatorial Committee.[144]  The Commission alleged these coordinated expenditures constituted in-kind corporate campaign contributions made in violation of title 2, section 441b of the United States Code.[145]  The Commission also detailed, based on the record, numerous instances where it believed the Christian Coalition unambiguously advocated the election or defeat of specific clearly identified candidates in violation of the Act’s prohibition on independent corporate campaign expenditures.[146]

With respect to coordination, the district court ruled against the Commission on five of the six coordinated expenditure allegations and found a contested issue of fact on the sixth.[147]  In the opinion of the district court, the Supreme Court in Buckley did not address “the First Amendment concerns that arise with respect ‘to expressive coordinated expenditures.’”[148]  The district court speculated: “It can only be surmised that the Buckley majority purposely left this issue for another case.  In many respects this is that case.”[149]  As a result, the district court felt free to ignore the section 441a(a)(7)(B)(i) standard of coordination as well as the Commission’s regulations. 

Instead, the district court created its own standard of coordination and applied it to a new concept, which it also developed, known as “expressive coordinated expenditures.”[150]  The district court concluded that “the First Amendment requires different treatment for ‘expressive,’ ‘communicative’ or ‘speech-laden’ coordinated expenditures, which feature the speech of the spender, from coordinated expenditures on non-communicative materials, such as hamburgers or travel expenses for campaign staff.”[151]  The district court then defined an “expressive coordinated expenditure” as an expenditure “for a communication made for the purpose of influencing a federal election in which the spender is responsible for a substantial portion of the speech and for which the spender’s choice of speech has been arrived at after coordination with the campaign.”[152]  The court then developed its own test for coordination:

In the absence of a request or suggestion from the campaign, an expressive expenditure becomes “coordinated[ ]” where the candidate or her agents can exercise control over, or where there has been substantial discussion or negotiation between the campaign and the spender over, a communication’s: (1) contents; (2) timing; (3) location, mode, or intended audience (e.g., choice between newspaper or radio advertisement); or (4) ‘volume’ (e.g., number of copies of printed materials or frequency of media spots).  Substantial discussion or negotiation is such that the candidate and spender emerge as partners or joint venturers in the expressive expenditure, but the candidate and the spender need not be equal partners.  This standard limits §441b’s contribution prohibition on expressive coordinated expenditures to those in which the candidate has taken a sufficient interest to demonstrate that the expenditure is perceived as valuable for meeting the campaign’s needs or wants.[153]

Based upon this analysis, and not the statute or the Commission’s regulations, the district court found that there was no improper coordination between the Christian Coalition and Bush-Quayle ’92, Helms for Senate, Inglis for Congress, Hayworth for Congress, or the National Republican Senatorial Committee.[154]

Applying the district court’s test for coordination, let us suppose that Candidate Smith is slightly behind in the polls, low on money, and needs help.   It is the week before the election and he knows that a wealthy contributor is planning to run an independent expenditure advertisement to assist the Smith campaign.  Smith contacts the contributor and complains that no one has focused on an important matter in the campaign: various problems in the personal life of his opponent, Congressman Jones.  Because of this oversight, candidate Smith believes that the electorate views Congressman Jones in a better light.  Candidate Smith, however, does not want to run such an advertisement himself for fear of being accused of negative advertising.[155]

During his meeting with candidate Smith, the wealthy supporter says, “That’s a great idea!  Thanks for the information.”  After the meeting, the wealthy supporter changes the advertisement to say: “Congressman Jones is a liar, tax cheat and a wife-beater — keep that in mind on Tuesday.”  The advertisement runs on the weekend before the election.   Is this a coordinated expenditure?  Would it make a difference if the wealthy contributor said nothing during his meeting with the candidate?  As we understand the district court’s opinion, there would be no coordination between the candidate and the spender since there was no “substantial discussion or negotiation” such that they appeared to be “partners or joint venturers.”[156]  This is particularly true if the spender said nothing in response to the candidate’s entreaty.   Under the Commission’s regulations, however, it would appear that this expenditure was a disguised contribution and coordinated because it was “based on information about the candidate’s plans, projects, or needs provided to the expending person by the candidate’s agents, with a view toward having an expenditure made.”[157]  This would appear to be the more appropriate result given the ease with which “coordination,” and thus, the contribution limits can be so easily evaded under the district court’s test.

The Christian Coalition case also demonstrates the need for a definitive Supreme Court ruling on what constitutes express advocacy.  For example, it is difficult to understand why the district court found express advocacy in a 1994 mailing by the Christian Coalition of Georgia, but found no express advocacy in a 1994 nationwide mailing known as “Reclaim America.”  The Georgia mailing identified a candidate by name, emphasized the special importance of his primary race, indicated the Christian Coalition supported his candidacy by labeling him a “Christian Coalition 100 percenter,” and told the reader that the purpose of the mailer was to “help you prepare for your trip to the voting booth.”[158]  Similarly, the Reclaim America mailing exhorted “Christian voters” to “get to the ballot box” in order to make “Washington feel the power of the Christian vote,” and then explicitly identified in a scorecard which incumbent candidates were “GOOD” and which were “MISGUIDED.”[159]  Yet, the district court found no express advocacy with respect to the Reclaim America mailing.  Given the similarity of facts yet the disparate results yielded by the district court, appellate review was plainly warranted.

To its credit, the district court recognized the difficulty of its task and virtually invited the Commission to file an interlocutory appeal on the matter to the United States Court of Appeals for the District of Columbia Circuit: “This Court is of the opinion that this Order in relation to Counts I, II, and III involves controlling questions of law as to which there is substantial ground for difference of opinion and that an intermediate appeal from the order may materially advance the ultimate termination of the litigation.”[160]  Commissioners Sandstrom, Elliott, Mason and Wold, however, voted to end the Commission’s enforcement litigation against the Christian Coalition and not appeal the matter.

It is unclear why these Commissioners decided to drop a significant enforcement action such as the Christian Coalition case and wrest resolution of these important issues away from the Article III courts.   The decision of a single district court certainly cannot resolve these important issues.[161]  Perhaps, as one of them suggested, they were driven by a desire to “try and fail” at addressing these issues in yet another regulation project—a failure that will come at great expense in time, effort and energy to the Commission, the regulated community, and the courts.  There is little doubt that whatever regulatory standard the Commission develops, it will be subject to some future challenge and litigation.  Indeed, one member of the regulated community has reviewed the latest efforts at creating a regulatory definition of coordination based on Christian Coalition and already “predicted. . .that there would be negative comments on the new Commission proposal from business, labor and other groups.”[162]  And, when this new regulation is found infirm as either too narrow or too broad by some lower federal court in the country, the Commission may be forced, once again, to begin anew.

In Nixon v. Shrink Missouri Government PAC (Shrink PAC),[163] the Supreme Court recently affirmed the importance of contribution limitations.   Upholding a Missouri statute’s state contribution limits against a First and Fourteenth Amendment challenge, the Court cited “the prevention of corruption and the appearance of corruption”[164] as the basis for its decision.  The Court explained the significant interests served by the contribution limits in this way:

We spoke in Buckley of the perception of corruption “inherent in a regime of large individual financial contributions” to candidates for public office, id., at 27, 96 S. Ct. 612, as a source of concern “almost equal” to quid pro quo improbity, ibid.  The public interest in countering that perception was, indeed, the entire answer to the overbreadth claim raised in the Buckley case.  Id., at 30, 96 S.Ct. 612.  This made perfect sense.  Leave the perception of impropriety unanswered, and the cynical assumption that large donors call the tune could jeopardize the willingness of voters to take part in democratic governance.  Democracy works “only if the people have faith in those who govern, and that faith is bound to be shattered when high officials and their appointees engage in activities which arouse suspicions of malfeasance and corruption.”  United States v. Mississippi Valley Generating, 364 U.S. 520, 562 (1961).[165]

Having just upheld and emphasized the importance of contribution limitations in Shrink PAC, would the Supreme Court countenance the easy circumvention of those very same limits through a narrow definition of “coordination”?

Until the important and recurring issues of what constitutes express advocacy and coordination have been decided by the Supreme Court, the uncertainty and conflict created by the lower courts will continue.  These issues will not be settled without future word from the Supreme Court.[166]  Because the fully-developed factual record in this case would have presented these issues squarely before the Court,[167] the Christian Coalition case would have been the perfect vehicle for a definitive resolution of the express advocacy and coordination issues.  Through the years, there have been a number of important cases the Commission has lost in the lower courts but has won on appeal.[168] Would the Commission similarly have prevailed on appeal in the Christian Coalition case?  If the matter had been appealed, what would the court of appeals or the Supreme Court have said about “express advocacy” and “coordination?”  Because the Commission voted not to appeal the district court’s decision in Christian Coalition, we never will know. 

Perhaps no other federal administrative agency has the difficult task of enforcing a law so filled with constitutional concerns as the Federal Election Commission.   As it carries out its enforcement responsibilities, the Commission recognizes, as the Ninth Circuit did in Furgatch, that:

Although we may not place burdens on the freedom of speech beyond what is strictly necessary to further the purposes of the Act, we must be just as careful to ensure that those purposes are fully carried out, that they are not cleverly circumvented, or thwarted by a rigid construction of the terms of the Act.[169]

At some point, though, the Supreme Court must decide where this “delicate balance”[170] rests and eventually rule on such issues as what constitutes express advocacy and coordination.  It is, after all, the ultimate responsibility of the Supreme Court to resolve constitutional disputes and “say what the law is.”[171]  Indeed, if constitutional concerns demand that express advocacy and coordination be interpreted in such a way as to effectively dismantle the FECA, so be it.  Such a weighty decision, however, should be based on a definitive Supreme Court ruling and not on a sampling of lower court decisions or the constitutional musings of Federal Election Commissioners.  Until such a decision is made by the Supreme Court, an enforcement agency such as the Federal Election Commission has little choice but to enforce the law as written and not allow its provisions to be circumvented and its effectiveness riddled by loopholes.

Conclusion

On January 29, 1999, PricewaterhouseCoopers LLP (PWC) announced the conclusion of an independent audit of the Commission it had undertaken at the request of the House and Senate Appropriations and House Oversight Committees.[172]  The audit carried out a detailed and comprehensive examination of how fairly and effectively the FEC carries out its statutory functions.  The audit was mandated by Congress in 1997 with an earmarked allocation of $750,000 from the FEC’s FY98 election year budget.  This extensive audit of the Commission’s operations began in June 1998 and lasted eight months.[173]

Perhaps most importantly, the PWC audit report recognized that the Commission’s “[d]isclosure and compliance activities are executed without partisan bias”[174] and that “high ethical standards are espoused throughout the organization.”[175]  The report gave an “unqualified yes” to the question: “Are FEC programs conducted in a non-partisan, ethical, and independent manner?”[176]  The audit report determined that “[t]he agency operates in a fair, impartial manner, maintaining strict confidentiality and a low tolerance for errors.”[177] 

The audit also questioned whether, in light of the dramatic increase of campaign finance activity, the FEC has the budget and staff resources necessary to meet its statutory responsibilities.  The audit determined that “the FEC has increased the productivity of its disclosure, audit, and enforcement activities in the face of escalating workloads.”[178]  The report found, however, that “[b]ecause of limited staff resources and increasing case complexity, current volumes of enforcement cases appear to exceed FEC disposition capacity.”[179]  The PWC audit warned that “[b]ecause of case complexity and the increasing number of respondents, important enforcement actions may not be activated in the future or may be dismissed for lack of resources.”[180]  The audit recommended that “the Congress and the FEC need to initiate actions that will eventually allow the FEC to shift some resources from its disclosure activities to its compliance programs.”[181]

Finally, the report found that the FEC is “basically a competently managed organization with a skilled and motivated staff.”[182]  As with any organization, however, there is room for improvement.  The report set out a number of  “steps the FEC can take on its own to streamline operations, enhance management practices, and redesign business processes to leverage technology initiatives.”[183]  The Commission is currently working on implementation of most of the PWC recommendations and is regularly reporting its progress to Congress.  With respect to improvement of Commission operations, the report also found that “several actions, such as the authorization for mandatory electronic filing, the establishment of an administrative fine system [for simple reporting violations], and the institution of a single point-of-entry for all registered committees, will require Congressional action.”[184]  The report stressed that “[w]ithout these authorizations, it will be difficult for the FEC to capitalize on the many opportunities identified.”[185]

The PWC report recognizes the many positive qualities of the FEC and the difficulty of its mission.  The report also recommends a number of changes that will plainly improve the efficiency of the Commission’s operations.  At the end of the day, however, an underfunded agency with its hands tied by awkward procedures and structure, will continue to struggle to administer a law made even more complex by lower court litigation that has confused the legal landscape.