McCain Urges G.O.P. Chair to End Distortions About Reform Law

MCCAIN URGES G.O.P. CHAIR TO END DISTORTIONS ABOUT REFORM LAW

Washington, DC - U.S. Senator John McCain sent the following letter today to Governor Marc Racicot, Chairman of the Republican National Committee, regarding attempts to distort the facts about the implementation of the campaign reform law. The text of the letter follows:

"Recent attempts by the Republican National Committee to present distorted information about the effect of the Bipartisan Campaign Reform Act on state party officials are a disservice to our party, whose members have a sincere interest in abiding by its provisions.

"I know the Republican National Committee is taking every available opportunity to contest the Reform Act in court and to challenge the implementation of its provisions at the Federal Election Commission. But the effort underway, through the RNC's sponsorship, to spread disinformation among party members whose sole interest is to live within its provisions is the height of cynicism. This law was passed by the Congress and signed into law by the President in an effort to rebuild confidence in our political system among the American public.

"At the recent RNC meeting in Washington, lawyers representing the views of the RNC were invited to brief the assembled state party chairs and national committee persons. These lawyers refused to provide any materials in writing, but orally stated, among other distortions, that the new law requires every local and county committee to register with the FEC and pay for local expenses out of a FEC account. They also stated that the law for the first time imposed criminal felony penalties on state party officials, and that as a result, everyone was severely at risk of going to jail for engaging in local political activity. This is likewise an outrageous distortion that creates unnecessary fear among state and local party officials. In my own state of Arizona, this misinformation caused enormous distress and confusion. As a result, I have sent out a fact sheet to the state party and every county chair rebutting these distortions (A copy of this communication, debunking these silly exaggerations, is attached for your reference).

"I understand that the RNC has a litigation-related interest in making the Reform Act appear unworkable. It is a terrible mistake, however, to adopt scorched earth tactics which may scare local party volunteers out of politics in order to achieve some perceived short-term litigation advantage. It is simply wrong to present one-sided opinions of the new law, rather than a more balanced factual presentation of its provisions, to the whole national leadership of the Republican Party, and moreover, to refuse to put that misinformation in writing.

"This misguided action by the RNC was apparently repeated at the recent Republican Congressional retreat at the Greenbriar resort. I understand that lawyers who are attacking the new Reform law in court were brought in to repeat many of the same falsehoods to the assembled Members of Congress.

"As you are well aware, many Republican Members and Republican voters support the new law. More importantly, now that it is the law of the land, Republican state parties are responsible for understanding and following its provisions. The irresponsible effort by the RNC and other party groups to distort the Reform Act's provisions threaten to scare local volunteers out of party politics at great cost to our democracy.

"I call on you, as party chairman, to ensure that when advice about the new law is provided to state and local party officials it is done in a professional, accurate manner. Advice should be in writing, and should be balanced. You might choose to use my attachment sent to the Arizona party officials as a model."

Some Facts About State and Local Political Parties and the New Federal Campaign Finance Law

1. Types of Funds Used by State and Local Political Parties for Campaign Activities

A. The new federal campaign finance law does not impose limits on non-Federal donations to state and local parties. State and local parties can continue to receive non-Federal donations in amounts and from sources permitted under state law.

B. The new campaign finance law restricts state and local party spending of non-Federal donations on campaign activity in certain circumstances. These restrictions apply only to payments for (i) a limited set of activities termed "Federal election activity"; and (ii) the costs of raising funds ultimately used to finance these "Federal election activities."

C. "Federal election activity" is limited to the following activities:

· voter registration undertaken within 120 days of a regularly scheduled Federal election;

· get-out-the-vote activity, generic campaign activity, and voter identification activity undertaken in connection with an election where a Federal candidate appears on the ballot;

· public communications (i.e., TV, radio, mass mailings, phone banks, other general public political advertising) promoting or attacking clearly identified Federal candidates; and

· payments for the salaries of state or local party employees devoting more than 25 percent of their time to activities in connection with a Federal election.

D. "Federal election activity" does not include:

· contributions to state and local candidates;

· party administrative costs like rent, utilities, and office supplies;

· payments for the salaries of state or local party employees devoting less than 25 percent of their time to activities in connection with a Federal election;

· voter registration activity more than 120 days before a regularly scheduled Federal election;

· get-out-the-vote activity, generic campaign activity, and voter identification activity undertaken in connection with elections where Federal candidates do not appear on the ballot (e.g., elections held in odd-numbered years);

· advertisements mentioning only state or local candidates (that do not constitute get-out-the-vote activity or voter registration activity);

· payments to purchase or construct state or local party office buildings; · payments for state or local party conventions;

· payments for grassroots campaign materials, including buttons, bumper stickers, and yard signs, that name or depict only state or local candidates;

· the costs of raising funds not used to finance any of the specified "Federal election activities;"

· "exempt party activities" (see discussion below) that do not constitute one of the specified "Federal election activities"; and

· any other activity that does not constitute one of the specified "Federal election activities."

State and local party spending on these activities is not covered by the new law's financing restrictions. Under FEC allocation requirements that long preceded the new law, state and local parties may be required to use a mixture of Federal "hard money" funds and non-Federal funds (i.e., funds raised under state law) for certain of these activities (e.g., party administrative costs; voter registration more than 120 days before a Federal election). In other cases, the use of 100 percent non-Federal funds is permitted (e.g., payments to construct or purchase a party office building, contributions to state or local candidates).

E. In general, state and local parties are required to use Federal "hard money" funds to finance any activity that constitutes "Federal election activity." However, there is an exception to this rule. State and local parties may pay for the costs of the following "Federal election activities" with a combination of federally regulated and certain state- regulated funds (commonly known as "Levin funds," named after the U.S. Senator who sponsored the amendment creating this exception).

· voter registration undertaken within 120 days of a regularly scheduled Federal election; and

· get-out-the-vote activity, generic campaign activity, and voter identification activity undertaken in connection with an election where a Federal candidate appears on the ballot; if

· no Federal candidate is mentioned; and

· the activity does not constitute a broadcasting, cable, or satellite communication (except insofar as it mentions only state or local candidates).

Specifically, state and local parties may allocate these particular activities between Federal "hard money" funds and non-Federal donations received in accordance with state law of up to $10,000 per donor per year. For example, if a corporation provides a $15,000 non-Federal donation to a state party in a given year, and this donation was permissible under state law, the state party could use $10,000 of that amount in the non-Federal component of allocated spending on the "Federal election activities" specified immediately above.

F. If state and local parties wish to proceed under this exception to allocate the costs of the specified "Federal election activities," they must raise the non-Federal component (Levin funds) on their own (i.e., no joint fundraising or use of transfers for, or national party or Federal candidate raising of, these non-Federal funds) and not use any funds transferred from other party committees as the Federal "hard money" component. These requirements (and the new campaign finance law more generally) do not prohibit state and local parties from:

· using Federal candidates to raise the Federal "hard money" component of this allocated spending on certain "Federal election activity";

· working with other state and local parties to spend these allocated funds;

· receiving transfers of non-Federal funds from other state and local party committees to be spent on activities other than "Federal election activity" (e.g., administrative costs, contributions to state and local candidates);

· jointly raising non-Federal funds with other state and local party committees to be spent on activities other than "Federal election activity;

· participating in campaign strategy discussions and coordination with national party committees concerning permissible allocated hard money/Levin fund spending on certain "Federal election activity" (provided that national parties do not control the spending of Levin funds);

· receiving unlimited hard money transfers from other party committees (including national party committees), which could be used for other purposes than allocated hard money/Levin fund spending on certain "Federal election activity" (see immediately below, for example).

State and local parties may instead choose to finance certain or all of the specified "Federal election activities" exclusively with Federal "hard money" funds. In that event, their ability to engage in joint fundraising for the hard money used to finance those activities is not restricted in any way, and they may use hard money transferred from other party committees (including national party committees) in unlimited amount.

2. Fundraising for State and Local Parties by State and Local Party Officers

A. The new federal campaign finance law prohibits the raising of non-Federal funds by national party officers and agents only when such individuals are "acting on behalf of" a national party.

B. The FEC's regulatory explanation of the concept of "acting on behalf" clearly embraces the principle that members of national party committees can "wear multiple hats." Thus, state and local party officers who are also national party officers may raise non-Federal funds for their respective state and local parties, so long as they are not "acting on behalf" of national parties.

3. Fundraising Support from Federal Officeholders for State and Local Parties

A. The new federal campaign finance law does not in any way limit the ability of Federal officeholders to raise Federal "hard money" contributions to state and local parties.

B. Additionally, the new campaign finance law permits Federal officeholders to raise non-Federal funds for state and local parties, provided:

· these non-Federal funds comply with the source prohibitions and amount limitations of Federal law (e.g., a Federal candidate may ask an individual to donate up to $10,000 to a state party's Federal account and up to an additional $10,000 to a state party's non-Federal account); and

· these non-Federal funds raised by Federal officeholders cannot be used as Levin funds.

C. Federal officeholders may attend, speak at, and be a "featured guest" for a state or local party fundraiser (including an event which raises Levin funds and other non-Federal funds).

4. Local Political Party Registration as Federal "Political Committees" A. The new federal campaign finance law does not change the statutory threshold for triggering the requirement that local parties register with and report to the FEC as "political committees." As under previous law, local parties must register with the FEC only when:

· they raise more than $5,000 in "contributions" (i.e., amounts given for the purpose of influencing any election for Federal office) during a calendar year;

· they make "contributions" or "expenditures" (i.e., payments made for the purpose of influencing any election for Federal office) in excess of $1,000 during a calendar year; or

· they spend more than $5,000 on "exempt party activities" (see discussion below) during a calendar year.

B. Local parties do not need to register as Federal "political committees" in order to preserve the ability of local party officers who are also national party committee officers to raise funds for these organizations. As indicated above, the new campaign finance law does not preclude local party officers who also serve as national party officers from raising non-Federal funds for their local parties. The new law's national party soft money fundraising ban applies only to national party officers or agents when "acting on behalf" of the national party.

C. Under FEC regulations, local party spending of hard money or Levin funds on the defined "Federal election activities" does not automatically count towards the $1,000 "expenditure" threshold for triggering "political committee" status. Rather, only that local party spending on "Federal election activity" which the FEC considers to fall within the definition of an "expenditure" (i.e., spending "for the purpose of influencing any election for Federal office," not counting disbursements for "exempt party activities" - see discussion below) will count against this $1,000 threshold. In other words, under the FEC rules, not all local party spending on "Federal election activity" (even to the extent hard money is used, and even to the extent such activity is not "exempt party activity") will be considered "expenditures" and thus count towards the $1,000 trigger for "political committee" status. The FEC adopted this interpretation specifically to address concerns about the prospect of local parties having to register as Federal "political committees."

D. For more than 20 years, Federal law and FEC regulations have exempted certain state and local party activities from the definition of an "expenditure in a Federal election." These are the "party-building exemptions" adopted by Congress in 1979. In general, these activities include:

· slate cards, sample ballots, palm cards, or other printed listings (though no general public political advertising) of three or more candidates running for election to any public office;

· pins, bumper stickers, handbills, brochures, posters, and yard signs distributed by volunteers; and

· voter registration or get-out-the-vote drives conducted on behalf of the party's Presidential and Vice Presidential nominees.

Note, however, that the FEC regulations defining the scope of party activities falling within this exemption are intricate and contain a number of conditions (requiring the use of volunteers, funds raised pursuant to Federal limits, etc.). Accordingly, these regulations should be consulted to ascertain whether a particular party activity qualifies.

If a party exempt activity constitutes "Federal election activity" as defined in the new campaign finance law (see discussion above), the local party must comply with the new rules specifying what type of funds (i.e., either hard money, or instead a combination of hard money and Levin funds) could be used to finance such activity. However, spending on these activities - whatever the makeup of the funds used -- continues not to be subject to the $1,000 "expenditure" threshold for triggering Federal "political committee" status. It is instead subject to a $5,000 spending threshold. Moreover, even if the "exempt party activity" must be paid for entirely with hard money (under the rules for financing "Federal election activity"), only the portion attributable to Federal candidates or Federal elections (based on percentages contained at 11 C.F.R. 106.7) counts towards the $5,000 threshold.