Election and Political Law

June 25, 2008

The Federal Election Commission is Back in Business What Can We Expect From the Agency Between Now and Election Day?

On Tuesday, June 24th, the Senate confirmed five nominees to the Federal Election Commission (“FEC”), reviving the agency responsible for regulating the raising and spending of money in federal elections. The FEC has been without a quorum and unable to act since January of this year. With confirmation of the new Commissioners, the FEC once again has the authority to pursue enforcement actions for violations of the campaign finance laws and to issue guidance to campaigns, political committees, and other participants in this year’s elections. The question is: What will the FEC do in the run up to Election Day?

Who Are the Commissioners? The FEC is made up of six members appointed by the President and confirmed by the Senate. Each member serves a six-year term, with two seats subject to appointment every two years. By law, no more than three Commissioners may be members of the same political party, and at least four votes are required for any official Commission action. The Chairmanship of the Commission rotates among the members each year. After yesterday’s Senate vote, the six Commissioners are:

Republican Nominees:

• Donald McGahn, former election law attorney • Caroline Hunter, Election Assistance Commission member • Matthew Petersen, Senate Rules and Administration Committee staff member

Democratic Nominees:

• Ellen Weintraub, sitting Commissioner since December 2002 • Cynthia Bauerly, legislative director for Senator Charles Schumer (D-NY) • Steven Walther, Commissioner in 2006 and 2007, formerly a lawyer in private practice in Reno, Nevada

The Commission’s Priorities

With a six-month backlog of work, and less than five months until Election Day, the new Commissioners have a full plate of work waiting for them. Covington’s Robert Lenhard, former Chairman of the Federal Election Commission, shares his thoughts on the actions the new Commissioners are likely to take in the coming months.

Existing Enforcement Matters. Respondents with pending enforcement matters should expect to hear from the Commission in the near future. Although the FEC has been without authority to act on pending enforcements matters over the last six months, the statute of limitations clock has continued to tick. Doubtlessly, a number of these matters have already reached or are nearing the end of the period in which the FEC may take enforcement action. One priority for the new Commission, therefore, will be to

vote on how to proceed with these pending cases: whether to approve settlement, continue an investigation (perhaps through a statute of limitations tolling agreement), or bring an enforcement action in federal court. Because the cases that take the longest to resolve can be the most complex -- in terms of facts, law, or proposed penalty -- the new Commissioners will likely face an initial set of difficult votes.

New Investigations. FEC enforcement matters most often begin with a complaint filed by a citizen or outside group. Those individuals or organizations named in a complaint are given the opportunity to explain why the FEC should take no action on the matter. The FEC’s Office of General Counsel (“OGC”) reviews both the complaint and the response and prepares a recommendation to the Commission as to whether to dismiss the case or to further investigate (the Commission votes on whether there is “reason to believe” a violation of the campaign finance laws has occurred). The FEC’s attorneys cannot begin an investigation until four Commissioners have voted to find “reason to believe” a violation of the law has occurred.

The new Commissioners will face a stack of OGC recommendations on complaints filed during the first six months of this year. It is likely that the OGC attorneys have identified the cases they believe warrant immediate attention -- whether a particular matter presents a long path of discovery, involves an important question of law, or encompasses a high profile dispute. The OGC will likely encourage the new Commissioners for early votes on these matters, so that the FEC’s investigation may begin. A respondent may therefore get some sense of the FEC’s initial thoughts on a complaint by how soon a reason-to-believe finding is made in the particular matter.

One pending complaint comes from the Democratic National Committee (“DNC”) against Republican presidential candidate John McCain, challenging McCain’s decision to opt-out of public financing for the presidential primary campaign after he initially opted-in. The DNC initially filed a complaint with the FEC in February, then filed a federal lawsuit asking a judge to act on the matter in the absence of a functioning agency. A federal judge dismissed the DNC’s lawsuit in May, but the DNC filed another court action yesterday. With the arrival of the new Commissioners, this case is likely to be transferred back to the FEC, where the investigation and negotiations over the law and facts will likely extend the resolution of this matter well past Election Day, especially given the huge backlog of other cases on the FEC’s docket.

Rulemakings. In addition to enforcing the law, the FEC is charged with issuing regulations. Currently, the Commission has seven ongoing rulemaking projects. Given the proximity of the election, only two of these proposed rulemakings (already close to completion) are likely to move this year: rules governing disclosure of “bundled” contributions and rules implementing the new travel regulations.

• Bundling. The Honest Leadership and Open Government Act (“HLOGA”), signed into law in September 2007, now requires candidates, leadership PACs and political parties to disclose the identity of lobbyists or registrants under the Lobbying Disclosure Act (“LDA”) who have provided two or more “bundled” contributions aggregating more than $15,000 during a semiannual reporting period. HLOGA also requires the FEC to issue regulations implementing this section by March 2008. Given the congressionally-mandated deadline and the political pressure to have bundling regulations in place before the November election, the FEC is likely to act on this rulemaking.

• Travel Regulations. HLOGA also amended the rules on federal candidate travel: candidates for President, Vice President, and Senate are now required to pay the fair market value for travel in non-commercial aircraft, while candidates for the House of Representatives are generally prohibited from paying for non-commercial travel. The final rules implementing these new provisions were approved by the FEC in December 2007, but cannot go into effect until

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the Commission approves the “Explanation and Justification” (“E&J”) for those rules.1 If the FEC does not wish to revisit the previous Commission’s judgments relating to these travel rules, a vote to approve the E&J could happen quickly.

While the Commissioners will have a chance to review the other pending rulemakings, given the press of other business, it is hard to imagine them completing any of them before Election Day.

As part of the nearly endless litigation over the FEC’s implementation of the Bipartisan Campaign Reform Act of 2002 (known as the McCain-Feingold law), the U.S. Court of Appeals for the District of Columbia recently struck down the FEC’s revised regulations on coordination of activities between candidates and outside groups, the definitions of voter registration and get-out-the-vote activities, and soft money solicitations by federal candidates at state-party fundraising events. The FEC must decide whether to appeal the court’s decision or to attempt yet another rewrite of these rules. These difficult and obscure legal issues are likely to be put off until next year by an agency that will be reluctant to change the rules of the game late in the fourth quarter.

Public Financing. Major-party presidential candidates opting for public funding of the general election campaign are entitled to $84.1 million in funding. Democratic candidate Barack Obama has announced that he intends to forego public funding, relying instead solely on funds raised by his campaign, while Republican candidate John McCain has stated that he intends to take general election campaign public funding. Later this year, we can expect the FEC to certify payment of federal funds to Senator McCain, after ensuring that the requirements for payment are met.

Advisory Opinions. The FEC issues written advisory opinions on how the law applies in specific situations. Five advisory opinion requests are currently pending before the FEC, none of which raise issues of immediate importance to most participants in the political process.2 Now that the FEC is back in business, it is likely that additional requests for advisory opinions will be made, many of which may raise issues of more general applicability. The agency is required by statute to answer these requests within 60 days. The agency may face a series of deadlines on advisory opinion requests in the weeks before the November election.

If you have any questions concerning the material discussed in this client alert, please contact the following members of our election and political law practice group: Robert K. Kelner 202.662.5503 [email protected] Robert Lenhard 202.662.5940 [email protected] Scott Gast 202.662.5533 [email protected]

This information is not intended as legal advice, which may often turn on specific facts. Readers should seek specific legal advice before acting with regard to the subjects mentioned herein. Covington & Burling LLP is one of the world’s preeminent law firms known for handling sensitive and important client matters. This alert is intended to bring breaking developments to our clients and other interested colleagues in areas of interest to them. Please send an email to [email protected] if you do not wish to receive future alerts. © 2008 Covington & Burling LLP. All rights reserved.

1 In fact, presidential candidate John McCain has operated under the old travel rules permitting a campaign to pay the equivalent cost of a first class commercial airline ticket when using non-commercial means of travel. 2 One of the more interesting pending advisory opinion requests comes from Senator Chris Dodd, who seeks guidance as to whether he may ask contributors to his presidential campaign to redesignate those contributions to his Senate campaign. The answer to this question will also be of significance to Senator Clinton.

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