How a Mysterious Redacted Document Could Affect Money in Politics

Why have FEC lawyers locked away a potentially crucial bit of evidence that campaigns could use to craft election strategy?

National Journal
Shane Goldmacher
March 11, 2014, 1 a.m.

The Fed­er­al Elec­tion Com­mis­sion was dead­locked, and no one was sur­prised. Demo­crats had wanted to crack down; Re­pub­lic­ans didn’t. No mat­ter that it could have been among the most im­port­ant cam­paign fin­ance de­cisions in years. No mat­ter that the agency’s gen­er­al coun­sel had re­com­men­ded ac­tion. Di­vided equally and hope­lessly by ideo­logy, the six com­mis­sion­ers were at a stale­mate.

It was all per­fectly or­din­ary for this dys­func­tion­al agency. All ex­cept for foot­note 111.

The case in­volved com­plaints against Cross­roads GPS, a non­profit af­fil­i­ated with Karl Rove that burst onto the na­tion­al polit­ic­al scene in 2010 and had since spent tens of mil­lions of dol­lars on cam­paign ad­vert­ise­ments. For the FEC, the ques­tion was wheth­er all of that polit­ic­al spend­ing meant that Cross­roads was not, in fact, a non­profit — and thus en­titled to keep secret its list of donors and de­tails of its activ­it­ies. The out­come had the po­ten­tial to im­pact what polit­ic­ally minded non­profits every­where — from the Koch Broth­ers’ vast net­work to Or­gan­iz­ing for Ac­tion, the out­growth of Pres­id­ent Obama’s cam­paign — could and couldn’t do.

The FEC’s gen­er­al coun­sel, a non­par­tis­an of­fice in­side the agency, had con­cluded that Cross­roads should have re­gistered as a polit­ic­al com­mit­tee, not as a non­profit. But with the Re­pub­lic­ans on the com­mis­sion still un­con­vinced, all that was left in the case was the pro forma pub­lish­ing of par­tis­an state­ments and the gen­er­al coun­sel’s find­ings, a re­port that would be parsed by polit­ic­al at­tor­neys and strategists around the coun­try look­ing to know just how far their cli­ents could stretch the leg­al lim­its of elec­tion law without earn­ing an FEC re­buke.

Then came the con­tro­ver­sial foot­note.

In a move that in­furi­ated Demo­crats and stopped some elec­tion law­yers cold, the Re­pub­lic­ans on the com­mis­sion dropped a bur­eau­crat­ic bomb­shell. They re­vealed in a foot­note that the of­fi­cial re­port of the FEC’s leg­al team, known form­ally as the First Gen­er­al Coun­sel’s Re­port, was not the “first” re­port at all. There had been a pre­vi­ous re­port-a “first First Gen­er­al Coun­sel’s Re­port,” the GOP com­mis­sion­ers called it — and it had come al­most a year and a half earli­er.

In the name of trans­par­ency and be­cause it “in­formed our de­cision,” the Re­pub­lic­ans said they were pub­lish­ing that doc­u­ment. Ex­cept that each of the 76 pages they at­tached was blank, the con­tents re­placed by the gen­er­al coun­sel’s of­fice with one word:

“RE­DAC­TED.”

What’s in this re­port? Why have Re­pub­lic­ans pushed to pub­lish it? How did it get re­dac­ted over the ob­jec­tions of pres­id­en­tially ap­poin­ted com­mis­sion­ers?

The Re­pub­lic­ans aren’t talk­ing. And neither is the FEC’s staff. But elec­tion law­yers around the coun­try can ap­pre­ci­ate the re­dac­ted doc­u­ment’s po­ten­tial im­pact, should it ever be re­vealed: A roadmap for cam­paigns and their non­profit sup­port­ers to evade FEC en­force­ment.

HID­DEN TREAS­URE?

FROM DEAD­LOCK TO DARK­NESS

HIDDEN TREASURE?

The mag­nitude of this case is hard to over­state. Cross­roads col­lec­ted $255 mil­lion from 2010 to 2012, and used it to helped fund and shape the mes­sages of cam­paigns across the coun­try. So, not sur­pris­ingly, the re­dac­tion has sparked in­trigue out­side and fight­ing in­side the elec­tions agency.

While the FEC’s stated policy is to put “all First Gen­er­al Coun­sel’s re­ports on the pub­lic re­cord,” this one some­how was and re­mains fully blacked out. “I have been pay­ing pretty close at­ten­tion to the FEC for more than a dec­ade,” said Paul S. Ry­an, seni­or coun­sel to the Cam­paign Leg­al Cen­ter, “and I can­not re­call an­oth­er in­stance in which I’ve seen a com­pletely re­dac­ted doc­u­ment at­tached to a state­ment of reas­on, let alone such a lengthy doc­u­ment.”

Larry Noble, who spent 13 years as the FEC’s gen­er­al coun­sel and now ad­voc­ates for cam­paign fin­ance re­form, said the black­out was un­usu­al. “It shows the dys­func­tion of the agency that they get in­to this battle and re­lease a doc­u­ment that is re­dac­ted,” he said. He called the Re­pub­lic­ans’ de­cision to at­tach the re­dac­ted re­port “a bit of a stunt.”

For its part, the FEC isn’t talk­ing, either about what’s in the re­dac­ted re­port or how it got blacked out.

Ac­cord­ing to Noble, the coun­sel’s of­fice dur­ing his ten­ure had the power to re­dact doc­u­ments, even over the ob­jec­tions of com­mis­sion­ers. Only a ma­jor­ity vote of the com­mis­sion­ers can over­rule that de­cision.

In­deed, people in­volved in the Cross­roads de­lib­er­a­tions, who spoke on con­di­tion of an­onym­ity due to its sens­it­iv­ity and a sep­ar­ate-but-re­lated law­suit that’s pending, said the Of­fice of Gen­er­al Coun­sel had re­dac­ted its ini­tial re­port against the wishes of the GOP com­mis­sion­ers. Re­pub­lic­ans have yet to find that fourth vote needed to over­rule the agency’s law­yers.

Be­hind closed doors, com­mis­sion­ers are set to dis­cuss the doc­u­ment on Tues­day.

With the com­mis­sion­ers keep­ing si­lent, FEC-watch­ers are float­ing com­pet­ing the­or­ies for why Re­pub­lic­ans would try so hard to get the re­port pub­lished. Maybe the com­mis­sion­ers wanted to show that even the FEC’s leg­al team was torn over the reas­on­ing in this weighty case. Maybe the ini­tial coun­sel’s re­port was weak­er, more poorly ar­gued, or re­lied on more cir­cum­stan­tial evid­ence — all of which would bol­ster the GOP’s de­cision to dis­miss.

Whatever the mo­tiv­a­tion, the doc­u­ment mat­ters.. The FEC’s dead­lock doesn’t set leg­al pre­ced­ent but it means that, de facto, everything Cross­roads was ac­cused of do­ing would con­tin­ue to be al­lowed by the cur­rent com­mis­sion. Thus, if the re­dac­ted doc­u­ment was ac­tu­ally more sweep­ing in its scope and con­dem­na­tions of Cross­roads than the gen­er­al coun­sel’s fi­nal re­port, it could, coun­ter­in­tu­it­ively, broaden the kinds of activ­it­ies that polit­ic­al pro­fes­sion­als con­sider safe from pro­sec­u­tion.

“It’s cer­tainly not any­thing you can rely on in a court of law,” said Dan Back­er, a prom­in­ent Re­pub­lic­an elec­tion law­yer. But he said the stale­mate sug­gests “if my cli­ents en­gage in this activ­ity, in ex­actly the same man­ner, they are likely to avoid re­per­cus­sions for do­ing so,” as long as the makeup of the com­mis­sion re­mains the same.

In­ter­est­ingly, the Wash­ing­ton law firm that em­ploys the former FEC gen­er­al coun­sel who au­thored the agency’s pub­lished Cross­roads re­port de­scribed how cam­paigns and non­profits use such dead­locks to plan and jus­ti­fy their activ­it­ies.

“It will not be a path for the faint of heart, for a 3-3 dead­lock on an en­force­ment mat­ter is weak pre­ced­ent for those who later face an in­vest­ig­a­tion on some­what dif­fer­ent facts,” Cov­ing­ton & Burl­ing told cli­ents in a re­port pub­lished in Feb­ru­ary. “But we can ex­pect to find that the pub­lished state­ments of these three com­mis­sion­ers will re­sur­face as an ap­pendix to de­fense plead­ings ar­guing that due pro­cess pre­cludes the agency from en­for­cing rules that, for at least a peri­od in time, lacked the sup­port of a ma­jor­ity of the com­mis­sion.” The re­port was coau­thored by former FEC Gen­er­al Coun­sel Tony Her­man.

The law in the polit­ic­al non­profit area is no­tori­ously vague. For Cross­roads, or any oth­er non­profit, the leg­al ques­tion fa­cing the FEC is wheth­er its “ma­jor pur­pose” is to af­fect fed­er­al elec­tions. If so, then it must re­gister as a polit­ic­al com­mit­tee. The prob­lem is, there’s no de­tailed defin­i­tion of what con­sti­tutes “ma­jor pur­pose,” though it’s been widely in­ter­preted to mean wheth­er a group spends more than half its money on cam­paigns.

In the re­leased gen­er­al coun­sel’s re­port, FEC in­vest­ig­at­ors stud­ied Cross­roads’ 2010 spend­ing and said 53 per­cent went to­ward fed­er­al cam­paign activ­ity — enough, the FEC leg­al team ar­gued, to make the group a polit­ic­al com­mit­tee. (Cross­roads GPS dis­puted this ana­lys­is and noted it cre­ated a sep­ar­ate su­per PAC, Amer­ic­an Cross­roads, for polit­ic­al work.) The Re­pub­lic­an com­mis­sion­ers did their own cal­cu­la­tion, us­ing a dif­fer­ent time­frame, and de­term­ined that Cross­roads GPS spent only 25 per­cent of its money on cam­paigns between mid-2010 and the end of 2011.

The mys­ter­i­ous re­dac­ted re­port could give cam­paign law­yers a bet­ter un­der­stand­ing of how the cur­rent FEC coun­sel’s of­fice is in­ter­pret­ing these vagar­ies of “ma­jor pur­pose,” law­yers say.

For its part, the FEC isn’t talk­ing, either about what’s in the re­dac­ted re­port or how it got blacked out. “We are not au­thor­ized to com­ment,” FEC spokes­wo­man Ju­dith In­gram wrote in an email, “and there is no in­form­a­tion on the pub­lic re­cord to which we could point you to an­swer your ques­tion.”

FROM DEADLOCK TO DARKNESS

The ori­gin­al com­plaints against Cross­roads were filed in fall of 2010. The FEC’s law­yers pre­pared their re­port and sub­mit­ted it to the com­mis­sion­ers on June 22, 2011. The tim­ing was awk­ward. Only a week earli­er, the FEC had named Her­man its new gen­er­al coun­sel. That meant that, in the biggest case snak­ing its way through the agency, Her­man would be in­her­it­ing and de­fend­ing a pre­de­cessor’s work.

When Her­man form­ally began at the com­mis­sion, the com­mis­sion­ers were only days from an ex­ec­ut­ive ses­sion set to con­sider Cross­roads. That closed-door hear­ing would mark a turn­ing point. “The dis­cus­sion dur­ing that meet­ing ap­par­ently caused OGC to re­con­sider its leg­al the­or­ies,” wrote the Re­pub­lic­an com­mis­sion­ers in their state­ment about the case, at­tached to the fi­nal gen­er­al coun­sel re­port.

At the meet­ing, Her­man asked to with­draw his of­fice’s re­port, and the com­mis­sion­ers agreed, ac­cord­ing to the Re­pub­lic­ans’ state­ment and to people fa­mil­i­ar with the pro­cess. Craig Hol­man, a cam­paign fin­ance re­former with Pub­lic Cit­izen, who is among those who filed the ori­gin­al com­plaint against Cross­roads, pre­sumes the law­yers “pulled it back them­selves and came up with a stronger ar­gu­ment.”

Her­man won’t say. “It would not be ap­pro­pri­ate for me to dis­cuss this mat­ter,” he told Na­tion­al Journ­al in an email. Cross­roads at­tor­ney Thomas Jose­fiak, a former FEC com­mis­sion­er, also de­clined to com­ment.

The with­draw­al of the re­port in Septem­ber 2011 en­sured that the case would drag on past the 2012 pres­id­en­tial elec­tion. That year, Cross­roads would raise $179 mil­lion and spend nearly $75 mil­lion on polit­ic­al cam­paign­ing, ac­cord­ing to its tax re­turns, pos­ted on­line by ProP­ub­lica.

The FEC’s second and fi­nal coun­sel’s re­port was de­livered to com­mis­sion­ers in Novem­ber 2012, shortly after the elec­tion. The com­mis­sion took 13 months be­fore it form­ally dead­locked. The Of­fice of Gen­er­al Coun­sel pub­lished its re­port in Janu­ary 2014.

Don­ald McGahn, a former Re­pub­lic­an FEC com­mis­sion­er who has seen the “first First” re­port, thinks he knows what happened. “It seems that the Demo­crats can make things pub­lic as they see fit, and the Re­pub­lic­ans can­not,” said McGahn, who served on the com­mis­sion from 2008 through Septem­ber 2013.

While he would not dis­cuss the con­tents of the re­dac­ted re­port, McGahn ac­cused the FEC’s Of­fice of Gen­er­al Coun­sel of treat­ing com­mis­sion­ers dif­fer­ently based upon their ideo­logy. He con­tras­ted a blacked-out memo he had tried to at­tach to a state­ment in 2013 to a case in 2009 in which Demo­crat­ic com­mis­sion­ers had suc­cess­fully at­tached a sim­il­ar memor­andum. “Bot­tom line, there is a double stand­ard,” McGahn said.

El­len Wein­traub, a cur­rent Demo­crat­ic FEC com­mis­sion­er who feuded with McGahn throughout his ten­ure, de­fends the FEC staff. “I cat­egor­ic­ally deny that our staff plays fa­vor­ites in any way,” she said. “Some­times when people dis­agree with re­com­mend­a­tions, they take it per­son­ally,” she said of her former col­league. “It’s cer­tainly not per­son­al, and it’s not polit­ic­al.” Wein­traub also de­clined to dis­cuss spe­cific­ally the Cross­roads case or the re­dac­ted re­port.

Be­sides a vote of the com­mis­sion­ers, there re­mains one way the miss­ing doc­u­ment could go still pub­lic: as a res­ult of a fed­er­al law­suit filed by con­sumer groups against the FEC, ar­guing the com­mis­sion failed to en­force the law in the Cross­roads case. Those groups could de­mand that the FEC turn over its law­yers’ first re­port — but they would do so at their per­il, know­ing it is a doc­u­ment that the Re­pub­lic­ans they are bat­tling want pub­lic.

“We haven’t made any de­cisions what­so­ever along those lines,” said Ry­an, who is in­volved in the law­suit.

However the epis­ode is re­solved, or left un­re­solved, it is just the latest ex­ample of the agency’s para­lys­is. A Cen­ter for Pub­lic In­teg­rity study last year re­por­ted that 41 per­cent of the com­mis­sion’s votes in the first half of 2013 lacked the sup­port of four com­mis­sion­ers; that was up from only 7 per­cent in 2007. The gen­er­al coun­sel post — one of the agency’s most im­port­ant staff po­s­i­tions — has been va­cant since Her­man de­par­ted. Mor­ale is low and frus­tra­tion is high.

“They have six bosses, and three of them nev­er agree with the oth­er three,” Wein­traub said. “That makes their job very dif­fi­cult.”

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