WASHINGTON - March 31 - From: COALITION TO PROTECT NONPROFIT ADVOCACY

Alliance for Justice

Leadership Conference on Civil Rights

League of Conservation Voters

NAACP National Voter Fund

NARAL Pro-Choice America

People For the American Way

Planned Parenthood Federation of America

Sierra Club

I. Introduction

As you are probably aware, the Federal Election Commission (“FEC”) proposed in February additional rules for enforcing the Bipartisan Campaign Reform Act (“BCRA”), also known as the McCain-Feingold law. The vast majority of recent news media attention has thus far focused on the narrow issue of the rules’ potential effects on the 2004 election activities of a small handful of “527” groups (named for entities registered under Section 527 of the federal tax code).

In fact, the far-reaching implications of the rules are little-known and would drastically impair the free speech of all nonprofits and their ability to engage in vigorous democratic debate. This loss of free speech and public debate would cripple the entire political spectrum - right, center and left, and all forms of organizations, regardless of their purpose or organizational strategy, including corporations, charities, informal associations of friends, advocacy organizations, and labor unions. A vast number would be essentially silenced on the issues that define them.

We represent a diverse coalition of hundreds of nonprofit organizations, including 501(c)(3)s, 501(c)(4)s, 527s - religious, secular, social service, charitable, progressive, educational, issue-oriented, large, and small. Already, we have voiced opposition to the FEC’s efforts to restrict advocacy by such groups in the name of campaign finance reform. Even groups that supported McCain-Feingold (such as the Sierra Club) firmly oppose these efforts.

Although members of our coalition may disagree on some issues, we all agree that:

1. The FEC should not rush in the middle of an election year to decide these issues, which Congress previously had the opportunity to consider and rejected.

2. Given the profound impact these proposed rule changes pose to the First Amendment, Congress – and not the FEC – is the proper body to consider such changes.

This memo briefly outlines important points that have been lost in the media coverage of the FEC’s actions. We would very much appreciate the opportunity to discuss the foregoing and any other related issues of interest to you either in person or via telephone. Please contact Julie Bernstein at the Alliance for Justice at 202-822-6070 or Peter Montgomery at People For the American Way at 202-467-4999 if you have any questions or to schedule an appointment for a discussion about these issues.

II. The Core Issues

Below are examples of the kinds of speech that would be severely restricted or outright prohibited by the FEC’s proposed regulations:

• Ironically, the kind of analysis of campaign contributions and political outcomes that led to the passage of the McCain-Feingold law would be treated as a prohibited corporate “expenditure.” For example, if Democracy 21 wished to mail to 500 of its supporters a series of reports that criticized members of Congress running for reelection for changing their votes on Medicare reform after receiving contributions from the health insurance industry, it could not do so.

• The American Red Cross could not run newspaper ads soliciting contributions to a fund for victims of a major flood in Louisiana if the ads also presented in a favorable light a message from a U.S. senator from Louisiana who was running for re-election requesting assistance for his state.

• The National Rifle Association could not send letters to a list of activists urging them to call their members of Congress to oppose a bill banning all guns if the letter could be read as criticizing those members of Congress and they were standing for reelection.

• A “good government” organization like Common Cause would become a “political committee” by launching a campaign costing more than $50,000 to promote a report criticizing members of the House of Representatives for taking junkets to the Bahamas as guests of the hotel industry.

• The Club for Growth could not use corporate contributions to provide information to the public regarding federal candidates’ voting records on budget issues.

• The NAACP would have to stop its 2004 non-partisan voter registration campaigns on July 5.

• The Concord Coalition could not communicate its message of fiscal discipline and opposition to federal spending increases to the public as part of a fundraising and recruitment campaign if it identified specific members of Congress as favoring such spending increases and those members of Congress were running for re-election.

• The League of Women Voters would become a “political committee” by spending more than $50,000 during 2004 to send letters to all registered voters in a community urging them to vote on November 2, 2004, because “it is your civic duty.”

• The Methodist Church could not publish a legislative report card during an election year covering all members of Congress on a broad range of issues highlighting specific votes as good or bad.

• Rock the Vote, an organization that primarily encourages voter registration and voting among young people, could be required to recreate itself as a federal political action committee (“PAC”), and would be prohibited from accepting any foundation contributions.

• A state right-to-life group that accepts contributions from local businesses could not use its general funds to criticize an incumbent federal candidate’s position on abortion rights after the candidate had officially declared himself for reelection - even if this announcement took place more than a year before the next election.

• Chinese for Affirmative Action could not hold its annual fundraiser at a corporate-donated facility or accept contributions from donors who have already given $5,000 for that year, if it urges members of the Senate running for re-election to oppose a nominee for a federal judgeship and informs the public of where these members stand on the nomination.

• Indeed, if the nation were to experience again a tragedy like the attack on the World Trade Center, Macy’s would not be allowed to convert its pre-paid ads in the newspapers into expressions of national solidarity if the ads said: “Mr. President, America stands behind you.”

III. The Effect of the Rule Changes on Nonprofit Groups

The proposed rules would transform overnight many nonprofit groups (including charities, civic organizations, religious groups, labor unions, and fraternal organizations) into federally regulated political committees – faced with draconian restrictions on how they raise and spend money - for merely expressing an opinion about a federal officeholder’s policies or views. The potential chilling effect on free speech cannot be overstated. Many nonprofits would be forced to choose between ceasing normal operations or facing crippling restrictions on fund raising.

”Political Committees”

The proposed rules would convert many nonprofit groups into federally regulated political committees because they dramatically expand the definition of a “political committee.” Under the proposed rules, a group would be forced to become a “political committee” if it spends or spent merely $50,000 (or, in the alternative, 50% of total disbursements) in the current year or any one of the past four years on voter mobilization work or on communications that “promote, support, attack, oppose” the positions of a federal officeholder running for reelection or on voter mobilization work. This amount is not at all substantial for many important organizations that advocate for or against policy views and yet do not consider electoral politics its major purpose.

“Expenditures”

Another proposed rule would expand the definition of a federally regulated “expenditure” to include communications that “promote, support, attack, or oppose” a federal candidate or policy position of a candidate. This inclusion of policy positions is a fundamental threat to the heart of the First Amendment.

Corporations, non-profits, and labor organizations are currently prohibited from engaging in “expenditures.” If such activity were to fall under that definition, then much of their current work educating the public about various public issues would become impossible.

The current, tightly drawn FEC definition of regulated and restricted “political speech” would suddenly be expanded to include all speech about anyone who is a candidate for federal office at the relevant moment.

In addition, nonpartisan voter registration, voter identification, and get-out-the-vote activity would be restricted and, in some cases, prohibited from using messages that express views about a candidate or political party. Even if a group did not express views about a political committee or party in conducting this activity, it could also qualify as a federally regulated political committee merely by spending $50,000 on nonpartisan voter registration. It would also be prohibited from using foundation funds to support even nonpartisan voter registration and turnout activity. In effect, the pool of funds available for voter participation work would be radically reduced, ultimately resulting in diminished voter participation.

“Look Back” Rule

Under the most draconian proposal, the FEC would “look back” at a nonprofit group’s activities over the past four years - before McCain-Feingold was ever passed and long before the FEC ever proposed these rules – to determine whether the group qualifies as a federal political committee. If so, the FEC would require the group to raise hard money to repay prior expenses that are now subject to the new rules. Any and all further work would be halted until debts to the “old” organization were repaid. This rule would jeopardize the survival of many groups.

IV. The FEC should not rush to decide an issue in the middle of an election year that Congress considered and rejected and that would have such a significant impact.

Importantly, it should be remembered that Congress considered the role of 527s three times in the last several years – twice through the Internal Revenue Code, and once during the BCRA debate.

In 2000, before BCRA’s passage, Congress decided 527s should register and file with the Internal Revenue Service and disclose information on their donors. During the BCRA debate, Congress could have decided – but never did – to outlaw 527s or even authorize the IRS or FEC to limit their activities. In fact, BCRA contemplates the existence of soft-money 527s that are not PACs. And, in 2002, after BCRA was enacted, Congress decided to ease the registration and reporting requirements for 527s.

Indeed, in the landmark McConnell opinion that upheld McCain-Feingold, the U.S. Supreme Court clearly stated that McCain-Feingold’s limits on unregulated corporate, union and large individual contributions apply to political parties and not interest groups.

The FEC should first monitor the operation of the new campaign finance law under its already enacted regulations, and only afterward explore adding new rules. There has not been enough time to build a record assessing BCRA and its existing rules. If the record demonstrates the need for reform, Congress is the body that should consider it.

Hundreds of nonprofit organizations have worked for months to make major adjustments to comply with the McCain-Feingold law and the Supreme Court’s decision upholding it, and thousands of donors have contributed to these groups. Changing the rules mid-course is unjust to all nonprofits.

As FEC Vice-Chair Ellen Weintraub said in testimony before before the U.S. Senate Rules and Administration Committee on Wednesday, March 10: “[R]edefining a political committee would be unprecedented in the middle of a political year ... I'm prepared to enforce the law now as written ... What we are talking about is making a new regulation, and that is not something we ought to do in a rushed fashion that does not give us time to consider all the ramifications.” (Thomas Edsall, “McCain Says FEC Is Not Enforcing Law,” A4, Washington Post, March 11, 2004).

IV. Conclusion

The FEC’s rule changes would have a devastating impact on the Constitution’s guarantees for free speech not only in elections but profoundly beyond them. They would impoverish political debate and could act as a de facto “gag rule” on public policy viewpoints.

Under the proposed rules, nonprofit organizations that advocate for cancer research, gun and abortion restrictions or rights, fiscal discipline, tax reform, poverty issues, immigration reform, the environment, or civil rights or liberties – all these organizations could be transformed into political committees if they criticize or commend the official actions or policy positions of members of Congress or the President. .

New rules should not be implemented in the midst of an election year, and, given their threat to First Amendment guarantees, Congress needs to consider them first.

KEY QUOTATIONS

“...BCRA imposes numerous restrictions on the fundraising abilities of political parties, of which the soft-money ban is only the most prominent. Interest groups, however, remain free to raise soft money to fund voter registration, GOTV activities, mailings, and broadcast advertising (other than electioneering communications).”

- McConnell v. Federal Election Commission, 540 U.S. ____ (2003)(slip op. 80).

“Unfortunately, the casual observer could get the impression that this is a partisan dispute – the liberal community defending themselves against efforts by the Republicans to apply legal restrictions on them ... This is simply not the case. The application of limits on political parties to non-party groups would have effects throughout the political process on liberal, conservative, and nonpartisan groups alike – dramatically limiting the activities of all unincorporated organizations, corporations, and labor unions. Advocacy groups under § 501(c)(4); educational groups, charities, and churches under § 501(c)(3); and political organizations under § 527 would all be equally subject to the draconian limits on ‘federal election activities.’”

“Thus, the issue is democracy, not political or ideological advantage. As a matter of principle, all voices should be heard and not reduced to silence by overly burdensome restrictions on association, speech, participation in the core activities of our system of government, and criticizing incumbent politicians who happen to be candidates.”

- Letter of James Bopp, Jr. and Richard E. Coleson on behalf of National Right to Life Committee, NRL Educational Trust Fund, Priests for Life, America21 Inc., Americans for Tax Reform, and Club for Growth, Inc., Comment to FEC on AO 2003-37, Feb. 17, 2003.

“... [R]edefining a political committee would be unprecedented in the middle of a political election year.”

“I’m prepared to enforce the law now as written ... What we are talking about is making a new regulation, and that is not something we ought to do in a rushed fashion that does not give us time to consider all the ramifications.”

- FEC Vice Chair Ellen Weintraub in testimony before the U.S. Senate Rules and Administration Committee, as reported in “McCain Says FEC Is Not Enforcing Law,” Thomas Edsall, A4, Washington Post, March 11, 2004.

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