Open for Business: The FEC’s Public Meeting on Thursday, June 18

Tomorrow, the FEC will hold its first open meeting since last August, now that Commissioner James Trainor III has been sworn in.  The agenda will consist of four reasonably routine matters, consisting of three advisory opinion requests and a request for comments on whether the Commission should begin a rulemaking.

As of this morning, all of the advisory opinion requests had only one draft, which often indicates at least preliminary consensus among the Commissioners as to the outcome.  Because only four of the six Commission seats are filled, and all items on the agenda require the affirmative vote of four commissioners, unanimity is required to approve each agenda item.  This will be an early public window into how Commissioner Trainor will approach his role on a Commission that has often seen contentious exchanges among the Commissioners and more than the traditional level of deadlocked votes on important questions of law. This agenda should be tailor made to avoid such conflict.

Can a PAC that serves as a conduit for earmarked contributions take a percentage fee, and if so, how is that reported?  FEC AO 2019-15 (NORPAC).  Like its more famous predecessors, Act Blue and WinRed, NORPAC would like to solicit, process, and forward earmarked contributions to candidate committees.  To pay the credit and debit card vendors, and cover its administrative and solicitation costs, NORPAC would like to deduct and retain a percentage of the contributed amount, (the “Convenience Fee”).  In addition to routine overhead, the fee would help pay staff costs associated with organizing and attending fundraising events for candidates, and to collect and distribute contributions received at these events.

The draft opinion permits NORPAC to do all that it asks, noting that the Convenience Fee would constitute a contribution to NORPAC (which like Act Blue and WinRed, is registered with the FEC as a non-connected committee) from the original contributor, and the entire amount given would count against the candidate-recipient’s limits, even though a portion had been deducted by NORPAC.  The FEC also provides explicit guidance as to how NORPAC should report these transactions.

Can a PAC’s name include a candidate’s initials?  FEC AO 2019-16 (Philip Shemanski).  Mr. Shemanski wants to start a PAC that encourages citizens to vote against Donald Trump.  To help achieve this end, he would like to use the letters “DT” in the PAC’s name, such as “The Defeat DT Campaign” or “The Campaign Committee Against DT’s Re-election.”  Because there is a statute that prohibits a political committee that is not a candidate’s authorized committee from including a candidate’s name in its name, he asks if the use of initials is permitted.  The draft opinion concludes that Mr. Shemanski’s proposal is permissible, because the initials are an abbreviation, rather than a full first or last name or nickname, and are not commonly used to refer to President Trump. The FEC staff is also comforted that at least two other federal officeholders up for re-election this year share those initials.

Some may recall that last year a district court enjoined the Commission from enforcing its regulation that implements a similar aspect of this restriction.  Pursuing America’s Greatness v. FEC, 363 F. Supp. 3d 94 (D.D.C. 2019).  The draft opinion takes the position that the court’s decision did not address the validity of the statute, just the regulation that implemented it, and did not enjoin the agency from enforcing the statute.

Is commercial political speech for the purpose of influencing a federal election?  FEC AO 2019-18 (IDF International Technologies, Inc.).  IDF, a for-profit corporation, operates an online political discussion forum on various topics, including a political discussion forum.  IDF does not communicate with or take a public position on any political party, candidate, or issue, though the users of its forum do.  IDF sells advertising on the forum to generate revenue, and buys online advertising from companies such as Google, in the form of banner ads, pay-per-click ads, and display ads, to help draw traffic to its site.  To attract customers, IDF would like those ads to discuss candidates.  Examples it gives are: “Do You Hate [Candidate]? Read it before it’s taken down. This is what they aren’t telling you.” IDF tracks click-through rates, and will use the names of those candidates that generate the most traffic to its site in these ads.  IDF states the ads will not espouse a public position on any candidate or political party or contain express advocacy.

The draft opinion concludes that IDF is engaged in purely commercial activity and not activity for the purpose of influencing a federal election.  As a consequence, it escapes the FEC’s regulatory clutches, and need not comply with the agency’s restrictions on the source and amount of revenue, disclosure or disclaimers.

Should the FEC open rulemaking on a candidate campaign committee’s transfers to a party committee? Citizens United and Citizens United Foundation petitioned the FEC to begin rulemaking to amend 11 CFR 113.2(c) so that federal candidates can no longer make unlimited transfers of funds to party committees.  Instead, candidates would share the same limit as individuals, which is now $35,500 to a national party’s general account.  Note: additional contributions up to $106,500 can be made to party committees sub accounts, which, depending on the party committee, may pay for convention, legal and building expenses.  The existing rule caught notice when the Bloomberg campaign gave $18 million to the Democratic National Committee’s general account at the end of its presidential run.  The FEC’s sole decision here is whether to open the question to public comment.

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