Posted May 5, 2010 by Paul S. Ryan

8 Years, 2 Lawsuits, and 3 Rulemakings for FEC to Get ‘Soft Money’ Provision Right

It only took eight years, two lawsuits and three rulemakings for the FEC to properly implement a BCRA provision banning ‘soft money’ fundraising by federal candidates and officeholders.  While this final rule is a good one, it’s unfortunate that it took eight years to get it.  And it’s even more unfortunate that there are other BCRA implementing rules the Commission still hasn’t gotten right eight years after passage of the law. 

On April 29, 2010, the Federal Election Commission adopted a final rule and “explanation and justification” on "Participation by Federal Candidates and Officeholders at Nonfederal Fundraising Events."  The Legal Center filed written comments in this rulemaking in February and testified at the hearing held March 16.  The adoption of this rule is the Commission’s latest and perhaps final action in an eight-year battle over the agency's ineffective implementation of a provision of the Bipartisan Campaign Finance Reform Act of 2002 (BCRA).

BCRA provides that federal candidates and officeholders may not "solicit, receive, direct, transfer or spend" soft money (i.e., funds that do not comply with federal law contribution restrictions).  Notwithstanding this restriction, BCRA also states that federal candidates and officeholders are permitted to "attend, speak, or be a featured guest” at a state or local political party fundraising event.  Despite clear congressional intent to prohibit—and clear statutory language prohibiting—federal candidate and officeholder soft money fundraising, the FEC in its 2002 rulemaking to implement these provisions concluded that the latter provision "was a total exemption from the general solicitation ban" and adopted a regulation permitting federal candidates and officeholders to attend, speak, and appear as featured guests at State, district, and local party committee fundraising events "without restriction or regulation."

This FEC regulation was challenged in the “Shays I” and “Shays III” lawsuits, with the CLC representing Senators McCain and Feingold as amici curiae in both cases.  In Shays I, the federal district court held that the FEC had failed to adequately explain and justify the rule.  And in Shays III, the U.S. Court of Appeals for the D.C. Circuit invalidated the regulation, concluding that the FEC-created regulatory exemption from the general soft money solicitation ban" allows what BCRA directly prohibits."

In the new rule adopted April 29, the FEC repealed the provision permitting federal candidates and officeholders to speak “without restriction or regulation” (i.e., solicit soft money) at nonfederal fundraising events.  Under the new rule, the FEC makes clear that though federal candidates and officeholders can attend, speak and be featured guests at nonfederal fundraising events, they may not solicit soft money at such events, nor in the pre-event publicity materials for such events, and they must make clear using disclaimers that they are not soliciting soft money.