Just when it seemed the embattled Federal Election Commission couldn't get any less popular, the agency has come under renewed attack for a string of controversial stalemates and rulings.
Recent FEC actions undermine a new bundling disclosure law and invite fresh abuses by so-called 527 groups, reform advocates say. The controversies could pave the way for a congressional lawsuit and prompt Barack Obama's incoming administration to take a critical look at FEC commissioners and operations.
The agency's been through a rough patch following a six-month hiatus last year that effectively shut down operations due to a prolonged Senate squabble over who should serve on the commission.
The six-member FEC, which is divided evenly between Republicans and Democrats, reopened for business in July with a huge enforcement backlog and four brand-new commissioners. Since then, the agency has repeatedly stalemated 3-3, and newly installed Chairman Steven Walther, a Democrat, recently acknowledged [PDF] "some sharp elbows" thrown "on matters of procedure as well as policy."
"There are very sharp ideological splits on this commission," said election lawyer Brett Kappel, of counsel with Vorys, Sater, Seymour and Pease. "And that's causing them to re-examine some of the legal theories that the general counsel's office has used in the past."
Two controversies stand out from the many now dogging the FEC. The first involves a 527 group funded by the U.S. Chamber of Commerce accused of spending unregulated money on campaign ads attacking Democratic vice presidential nominee John Edwards in 2004. The group's organizers actually signed a conciliation agreement with the FEC, but the three GOP commissioners last month refused to accept it, contrary to the agency general counsel's advice.
Democratic commissioners Cynthia Bauerly and Ellen Weintraub publicly decried [PDF] their GOP colleagues' action as a "dramatic departure... from the Commission's prior enforcement efforts and the law itself." The 527 group's actions in this case were indistinguishable from those of some half-dozen other 527s fined more than $1 million by the FEC following the 2004 election, they said. Many analysts credited those fines with tamping down 527 activity in 2006 and 2008.
The watchdog group Citizens for Responsibility and Ethics in Washington, which originally prompted the FEC's investigation with a complaint in 2004, has now asked the Justice Department to investigate. "If the FEC's not going to do its job, maybe the Justice Department will do it," said CREW executive director Melanie Sloan.
The FEC action is "immensely troubling in that it represents a 180-degree turn against everything the agency has done to regulate 527 groups since the 2004 election," said Paul Ryan, an attorney with the nonpartisan Campaign Legal Center.
Reform advocates are also up in arms over FEC rules issued last month implementing a key bundling disclosure provision of the new lobbying and ethics law enacted in 2007. The measure requires members of Congress to report the names of lobbyists who round up, or bundle, contributions on their behalf.
But the recently adopted FEC rules require disclosure only when a lawmaker has a formal tracking system that records bundled donations, or gives the lobbyist a tangible reward, such as a signed photo. The FEC rules also would allow lobbyists who bundle money collectively to evade the minimum disclosure threshold simply by hosting events in groups, critics complain.
Yet the law's authors, including then-Sen. Obama and Sen. Russell Feingold, D-Wis., explicitly spelled out that the law captures all bundled contributions, even those that aren't formally tracked, and that collective bundling is not exempt. "We believe that any time an elected official knows that a lobbyist has bundled for them, they should have to report it," said Ryan. "That's not what the rule requires."
Aggravating the disputes has been the FEC's failure to explain or even disclose many of its recent actions. In recent months, the agency has failed to issue standard press releases announcing most of its closed cases and failed to post explanatory statements for deadlocked enforcement cases, the BNA Money & Politics Report has noted (subscription).
The FEC also has failed to issue the required explanation and justification for its bundling disclosure ruling, and even expunged from its Web site an admission of guilt by a Democratic party operative who was accused of embezzlement but was not penalized by the FEC. "It's ironic that the very agency created for transparency in campaign contributions is itself not very transparent," said Sloan.
To its credit, the FEC has embarked on an exhaustive review of its policies, practices and procedures, the first since 2003. The agency has invited and received extensive public comments, and will hold a public hearing on its operations Wednesday. President-elect Obama will also be scrutinizing the FEC: He installed Mark Alexander, a professor at Seton Hall Law School, to review the agency as part of his transition team.
Reform advocates have been lobbying Obama to change the often-bitter FEC appointments process, which effectively shut down the agency last year. At a minimum, Obama is likely to take a hard look at the commission's makeup when the terms of two commissioners -- Democrat Walther and Republican Donald McGahn -- expire on April 30. A third commissioner, Weintraub, is a holdover and could be replaced at any time. Predicted Ryan: "I envision some turnover on the commission in 2009." That alone guarantees more controversy ahead for the troubled FEC.