Today, the Campaign Legal Center filed an amicus brief urging the Texas Supreme Court to uphold a lower court decision affirming numerous provisions of Texas campaign finance laws in Texas Democratic Party v. King Street Patriots.  The Campaign Legal Center filed amicus briefs in both the district court and the Court of Appeals defending the constitutionality of Texas’s law.

“The King Street Patriots are attempting to misapply recent U.S. Supreme Court decisions to unrelated provisions of Texas campaign finance law and we trust the Texas Supreme Court will recognize this absurdity and reject this challenge, as did the lower courts,” said Tara Malloy, Campaign Legal Center Senior Counsel.  “The decisions in Citizens United and McCutcheon, cases that the King Street Patriots claim support their challenge, in fact have nothing to do with the laws that this group is challenging.  This lawsuit is just one of a long list of cases nationwide attempting to overturn state and local campaign finance laws in the wake of Citizens United.”   

This case began when the Texas Democratic Party filed an action against the King Street Patriots, alleging that the non-profit 501(c)(4) corporation made in-kind contributions to the state Republican Party in violation of Texas’s restriction on corporate political contributions, and failed to register as a “political committee” and comply with state disclosure laws.  The King Street Patriots, in response, filed a broad counterclaim challenging the constitutionality of numerous provisions of Texas campaign finance law.

The lower court dismissed the counterclaim in its entirety, and the Texas Court of Appeals affirmed.  The original Texas Democratic Party action seeking damages and declaratory and injunctive relief for the alleged campaign finance law violations has remained on a different track.

The Legal Center was aided in the filing of the amicus brief by Kelly G. Prather of the Greenwood Prather Law Firm in Houston.

To read the amicus brief filed today, click here.

To read the opinion of the Appeals Court, click here.

House Speaker Paul Ryan should suspend privately-funded foreign travel by House members and staff and launch a formal review of the rules governing it, the Campaign Legal Center and other advocacy organizations said today.

In a letter to the newly-installed Speaker, the groups said private trips “are not being appropriately scrutinized” by the House Ethics Committee and warned that the foreign governments and corporate interests sponsoring them may be gaining inappropriate access to lawmakers and staffers.

The groups called on Ryan to create a bipartisan task force, including the chairs and ranking members of the House Ethics and House Administration Committees and the two co-chairs of the Office of Congressional Ethics, the House’s independent ethics watchdog agency, to study the problem.

“The amount of privately-sponsored travel, once slashed by the Honest Leadership and Open Government Act (HLOGA) to one-third its previous levels, is again rising to near the level of the Jack Abramoff travel junket era,” the groups asserted.

The letter, signed by the Campaign Legal Center, Common Cause, Democracy 21, the League of Women Voters, Prof. James Thurber, the Project on Government Oversight and Public Citizen, cited a spate of recent media reports concerning questionable, privately-financed trips by lawmakers.

“The Office of Congressional Ethics recently issued a report laying out how the sources of funds and sponsorship of Members’ and staff travel to Azerbaijan were purposefully obfuscated and that obvious red flags of the deception, such as multiple groups claiming sole responsibility for sponsoring the trip and none of these groups had sufficient funds to pay for the trip, were ignored by the House Committee on Ethics,” the letter added.

Speaker Ryan’s task force should consider a possible rewrite of the current rules governing privately-financed travel and whether the House should use public funds for all official travel, the groups said. They also urged a review of House Ethics Committee procedures for investigating whether shell companies are providing resources to the purported sponsors of overseas trips.

To read the full letter, click here.

In a letter sent today to the Tax Division of the Justice Department, the Campaign Legal Center joined Democracy 21 in calling for an investigation of the Conservative Solutions Project (CSP), an organization claiming tax-exempt status as a social welfare organization under section 501(c)(4) of the tax code.

According to the letter, “The investigation should determine whether CSP is improperly conferring a “private benefit” on Senator Marco Rubio’s presidential campaign in violation of federal tax law by engaging in excessive campaign activity on Senator Rubio’s behalf that is not permitted for a section 501(c)(4) organization.”

According to Campaign Legal Center Executive Director J. Gerald Hebert:

The publicly available facts indicate that Conservative Solutions Project is little more than a single-candidate 501(c)(4), with no other mission than to advance the presidential aspirations of Marco Rubio and as such in clear violation of the tax code.  501(c)(4) “social welfare groups” by statute must “[promote] the common good and general welfare of the people of the community as a whole” rather than an individual candidate for political office.  In promoting the Rubio candidacy, to the apparent exclusion of all else, Conservative Solutions Project would seem to be in clear violation of the tax exempt status it claims but for which it has yet to even apply.

If these apparent violations are left unchallenged, they will quickly be emulated by candidates for Congress and soon by candidates for state and local office as well. The victims of this type of apparent lawbreaking will be the American people who will not only be cheated out of tax revenue, but more importantly robbed of any information about the special interests seeking to buy influence with public officials.

The IRS has been cowed into inaction by a series of congressional hearings intended to intimidate the agency and keep it from enforcing tax laws as they apply to political active nonprofits like Conservative Solutions Project.  However, the laws passed by Congress remain the laws of the land and as the nation’s law enforcement agency, it falls to the Department of Justice to enforce those laws when agencies do not or will not.  The Tax Division of the Justice Department should promptly open an investigation into the millions of dollars spent to advance the candidacy of Marco Rubio to determine if tax laws have been broken and take appropriate action against the group.

According to the letter from the watchdog groups;

CSP was formed by a former aide to Senator Rubio and is spending large sums of money on television advertisements that are being aired in support of Rubio’s presidential campaign.  This campaign activity by a social welfare organization  violates the statutory requirement that a section 501(c)(4) organization be devoted “exclusively” to social welfare purposes—which do not include intervention in campaigns—and  also violates the requirement that a social welfare group serve general community purposes, and not provide a private benefit to any individual or political group.

The letter stated:

CSP was “formed by allies of Senator Marco Rubio.”[1]  It “shares a name and some staff” with the individual candidate Super PAC supporting Rubio’s presidential campaign, the Conservative Solutions PAC.[2]  The CSP nonprofit and the Super PAC also share a spokesman.[3]  CSP was established by Warren Tompkins, who is now on its board and who is also the head of the Rubio Super PAC, which shares fundraising consultants with CSP.[4]  Tompkins is a Republican consultant who was once a business partner with Rubio’s campaign manager.[5]  CSP is now run by Pat Shortridge, who was an adviser on Rubio’s 2010 Senate campaign

CSP has been airing television advertisements supporting Rubio’s presidential campaign. The group’s commercials “all focus on Mr. Rubio.” As one report states about CSP’s television ad campaign:

Every single one of the group’s thousands of television ads, in fact, has featured Rubio, and nobody else—perhaps unsurprisingly, given that the group coordinates with a pro-Rubio super PAC and that its leader co-founded a political consulting firm with the manager of Rubio’s presidential campaign.

According to the letter:

According to The New York Times:

Of all the television advertisements aired in support of the Florida Senator so far this year—$5.5 million worth—none have been paid for by Mr. Rubio’s own campaign.  Even the “super PAC” supporting him has not yet spent a dime on ads.

Instead, the money has flowed through a political nonprofit group called the Conservative Solutions Project, formed by a former Rubio aide and now overseen in part by a Republican strategist who is close to Mr. Rubio’s campaign manager.

According to AP:

Every pro-Rubio television commercial so far in the early primary states of Iowa, New Hampshire and South Carolina has been paid for not by [Rubio’s] campaign or even by a super PAC that identifies its donors, but instead by a nonprofit called Conservative Solutions Project.  It’s also sending Rubio-boosting mail to voters in those same states.

According to the letter:

Section 501(c)(4) provides tax-exempt status to “[c]ivic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare.”  26 U.S.C. §§ 501(a) and 501(c)(4).  IRS regulations make clear that, in order to be tax-exempt under section 501(c)(4), an organization must be “operated exclusively for the promotion of social welfare” and that an “organization is operated exclusively for the promotion of social welfare if it is primarily engaged in promoting in some way the common good and general welfare of the people of the community.”

The requirement that a section 501(c)(4) organization be primarily engaged in promoting “the common good and general welfare of the people of the community” and not, by contrast, primarily engaged in promoting the good of a private individual or organization is a clear requirement with regard to section 501(c)(4) status—often referred to as the “private benefit” doctrine.

The letter further stated:

In American Campaign Academy v. Commissioner of Internal Revenue, 92 T.C. No. 66, 92 T.C. 1053, 1063 (1989), the Tax Court considered application of the “private benefit” doctrine to an organization that the IRS had concluded operated to “benefit Republican Party entities and candidates more than incidentally” and therefore operated to “serve the private interests of Republican Party entities rather than public interests exclusively[,]” in violation of the “private benefit” doctrine.

According to the letter:

As a practical matter, CSP is operating as an arm of the Rubio presidential campaign.  As such, it is providing a “private benefit” for a partisan campaign purpose, and is accordingly in violation of its asserted status as a section 501(c)(4) social welfare organization.

The fact that “[e]very pro-Rubio television commercial so far in the early primary states of Iowa, New Hampshire and South Carolina has been paid for” by CSP, and that “[e]very single one of [CSP’s] thousands of television ads, in fact, has featured Rubio, and nobody else,” shows the integral and exclusive role that CSP is playing in the Rubio presidential campaign.  In playing this role, CSP has spent millions of dollars on ads promoting the Rubio campaign in the key early primary states.

The fact also that CSP shares a name, and staff, and a founder with the Rubio Super PAC reinforces the tightly integrated role that CSP plays in the larger Rubio campaign operation.

There can be little doubt that CSP is providing an impermissible “private benefit” under applicable judicial and IRS precedent.

The letter stated:

This position is consistent with the series of recent IRS letter rulings applying the “private benefit” doctrine.  Just as the IRS found that “an organization which conducts its educational activities to benefit a political party and its candidates serves private interests,” Determination Letter 201128032, supra, so too CSP serves a private interest in spending millions of dollars to assist the presidential campaign of a single candidate.

The letter concluded:

There is an important reason that this matter has special urgency.  The impermissible use of social welfare organizations to conduct campaign activities has the purpose and effect of defeating the donor disclosure requirements of federal tax law that are applicable to “political organizations.”  26 U.S.C. §527.

Social welfare groups organized under section 501(c)(4) are not required by tax law to disclose their donors to the public.  By contrast, a “political organization” under section 527 of the tax code is required to disclose its donors.  By engaging in campaign activity (and in so doing, by conferring a “private benefit” on the candidate supported), but doing so under a claim of section 501(c)(4) status, a group such as CSP is frustrating the requirement of the tax code that there be public disclosure of donors who are funding efforts to influence elections.

CSP presents an especially clear-cut and egregious example of flaunting of the tax code.  By electing not to file an application for recognition of exemption, the group seeks to avoid any scrutiny of its activities until its first tax filing and thus to continue to serve as a conduit for undisclosed money through the 2016 election cycle.

The Tax Division has the authority to intervene to stop this abuse of the tax laws. Given the extraordinary public interest in combating CSP’s effort to deprive the public of timely disclosure about its efforts to influence the 2016 election, the Tax Division should act promptly to investigate and take appropriate action against CSP. 

To read the full letter, click here.

Today, the Campaign Legal Center filed an amici brief in the U.S. Supreme Court in Harris v. Arizona Independent Redistricting Commission on behalf of former Justice Department attorneys in support of the Commission and its redistricting plan. 

The brief emphasizes that the state commission was fully justified in drawing districts, with minor population deviations, that complied with Section 5 of the Voting Rights Act.  The plan at issue was drawn by the Commission at a time when the state was required to preclear any voting changes with the Justice Department or the D.C. District Court, and ensure that the plan did not decrease the opportunity of minority voters to elect their candidates of choice.  The brief also stresses that the holding urged by those challenging the plan would unnecessarily cause substantial disruption and upset political stability in states and municipalities nationwide.

“When the Commission drew the map, the State of Arizona was required to preclear its redistricting plan.  That was the law of the land and the Commission was justified in drawing the plan to comply with Section 5.  Our brief also notes that notwithstanding the decision of the Court in Shelby striking down a key provision of the Voting Rights Act, the Commission could still draw a map to avoid harming minority voting strength and such a decision would be  rational and legitimate,” said J. Gerald Hebert, Executive Director of the Campaign Legal Center.  “If the Arizona redistricting plan is overturned on these grounds, more than 1,100 redistricting plans submitted to the Justice Department for preclearance in the post-2010 redistricting cycle would be open to potential constitutional challenge.  The Court in Shelby County held that preclearance is no longer required but it did not suggest that prior compliance with the Voting Rights Act was illegitimate or that a state is not allowed to comply with the Voting Rights Act in the future. ”

The constitutionality of the Arizona Independent Redistricting Commission was before the Supreme Court last term after state legislators challenged the state constitutional amendment passed by voters giving the Commission responsibility for the state’s congressional redistricting after a series of blatant political gerrymanders by the legislature.  The Legal Center filed a brief in support of the amendment and the Commission and the Supreme Court rejected the legislators’ challenge to the Commission’s existence.

Former U.S. Solicitor General Charles Fried, a CLC Board member, and Mark Posner, a former DOJ official, co-authored the brief.

 To read the brief and the appendix filed today in the challenge to the Commission’s redistricting plan, click here and here. 

Today, the Campaign Legal Center, joined by Common Cause, Democracy 21 and Public Citizen urged the Committee on House Administration to adopt new rules making clear that expenditures from Members’ Representation Allowances (MRAs) are subject to review and approval by the Committee.  Lax oversight of Members’ expenses has led to a series of scandals, the most recent leading to the resignation of Rep. Aaron Schock.  The letter also urged the Committee to allow MRA budgets to be periodically audited for compliance with the Members’ Congressional Handbook and House ethics rules.

“The current process of relying on Member discretion simply does not work," said Meredith McGehee, Campaign Legal Center Policy Director.  “Time and again it has led to scandals that have reflected badly on the Congress and eroded public confidence in the institution. At the end of the day, these Members are ill-served having their travel and expense requests rubber stamped. Having set rules and actual oversight of the spending of taxpayer dollars would be invaluable service to the institution.”

Earlier this month, the Committee adopted new regulations governing permissible reimbursements for automobile mileage, private aircraft use, and office decoration and instructing the Chief Administrative Officer (CAO) of the House of Representatives to submit a proposal to create a “searchable, sortable” online database of Members of Congress’s expense reports.  The Committee also directs the CAO to develop proposals by November 21 to improve “the internal processes, procedures, and training for compliance with the Voucher Documentation Standards.”

The groups commended the Committee for taking these actions and urged a closer review of the provisions concerning MRAs.  The letter stated that “it is our understanding that the Committee on House Administration has taken the position that they provide “guidance” to Member offices on the use of the MRA, but the Committee and its staff are not empowered, under current rules, to formally approve or reject specific expenditures.”

“It is our understanding” the letter continued, “that the House Finance Office (the office to which vouchers are submitted) takes the same position. This approach of deferring to Members played a role in creating the House Bank scandal of the 1990s when Members were permitted to overdraw their accounts without penalty.  Further, the House Ethics Committee frequently is too accommodating to Members’ wishes, focusing more on helping Members to fit what they want to do within—and  around—the  rules than promoting and encouraging high ethical standards.  The Ethics Committee’s timidity played a significant role in the creating the need for the Office of Congressional Ethics.  Saying “yes” to Members is also embedded in the DNA of the CAO and the House Finance Office.  The CAO should be empowered to review Members’ expenditures, raise questions, and refer a proposed disapproval to the House Administration Committee for final disapproval.”  

The letter concluded by noting the importance of the creation of a searchable, sortable database containing information on how taxpayer money is being spent by Representatives.

To read the letter, click here.

Today, the Campaign Legal Center joined the Sunlight Foundation and Common Cause in urging the Federal Communications Commission (FCC) to take immediate action to enforce the public file and sponsorship identification requirements of Sections 315 and 317 of the Communications Act.  Enforcing the broadcaster mandate would require stations to disclose the funders behind political ads run by Super PACs and ‘dark money’ groups. Section 315 outlines the requirements for what is included in a broadcast television station’s publicly available political file regarding advertisements run by candidates as well as advertisements “relating to any political matter of national importance.”  Section 317 requires broadcasters to disclose to their listeners or viewers the “true identity of the person or persons, or corporation, committee, association or other unincorporated group, or other entity” paying for the ad.

The groups are represented by the Institute for Public Representation at Georgetown University Law Center.   

“With the 2016 elections looming, viewers need meaningful information to make up their own minds regarding the messages they are hearing from candidates and outside groups,” said Meredith McGehee of the Campaign Legal Center.  “These statues have been on the books for decades, and are entirely congruent with the Supreme Court’s decisions in Citizens United and subsequent cases that upheld robust disclosure requirements.  However, the FCC’s failure to update the implementing regulations combined with the agency’s weak enforcement mean the FCC’s disclosure regime is woefully inadequate and ill-serves the American people by leaving them completely in the dark with regards to hundreds of millions of dollars in political ads being broadcast over the public airwaves.”

As of 2014, all broadcasters are required to post the political files required under Section 315 of the Communications Act on the FCC website.  As for the “sponsorship identification” rules in Section 317, the FCC has not updated the implementing regulations to ensure that those individuals and interest groups funding political ads, especially those paid for by dark-money groups, are in fact being disclosed.

As the Supreme Court in Citizens United stated, disclosure is “justified based on a governmental interest in ‘providing the electorate with information’ about the sources of election-related spending.”   The decision went on to note “that there was evidence in the record that independent groups were running election-related advertisements ‘while hiding behind dubious and misleading names.’”

“These sections of the Communications Act are crucial to protecting voters’ right to know by whom they are being persuaded,” added McGehee.  “Viewers have more information about what ingredients are in their favorite soft drink, than they do about those trying to influence their vote.”  

To read the letter, click here.

The Campaign Legal Center and Democracy 21 sent a letter today to the FEC Commissioners urging them to reject a proposal to be offered at the agency’s October 29 meeting by Commissioner Lee Goodman to provide “regulatory relief for political parties.”

According to the letter:

The most alarming suggestion in this proposal is to exempt from the definition of “coordinated” spending any public communication that refers to a candidate unless the communication contains express advocacy or republished campaign materials.  Agenda Doc. at 1.  While this proposal is made in the limited context of spending that would tally against the party coordinated spending limits, it is an approach to the concept of “coordination” that is invalid and discredited ….
 

As the Supreme Court has said, “the line between express advocacy and other types of election-influencing expression is, for Congress’ purposes, functionally meaningless.” McConnell v. FEC, 540 U.S. 93, 217 (2003). By using a “functionally meaningless” standard to draw the line between coordinated spending and independent spending (even if, in the first instance, just for parties), the Commission would be opening the door to the general evisceration of the coordination standard of the law.
 

In today’s letter, Democracy 21 and the Campaign Legal Center strongly objected to the Commission making any decision to initiate a rulemaking on these matters now, in light of other, far more pressing, rulemaking obligations the Commission has failed to fulfill. 

According to Campaign Legal Center Senior Counsel Paul S. Ryan,

If there is anything the FEC does not need to do it is to undermine one of the few regulations the agency is actually enforcing.  There is a long list of regulations the agency should fix first in order to stem the unprecedented circumvention of the laws passed by Congress and which the agency is charged with enforcing.  Commissioner Goodman’s proposal is yet another indication of the degree to which the agency has lost its bearings and how far it has strayed from its mission.

According to the letter from the watchdog groups:

The Commission has been derelict in failing to revise its rules for disclosure of electioneering communications and independent expenditures, a failure that has resulted in the lack of disclosure of the source of hundreds of millions of dollars that is being spent to influence federal elections.  This is a major and growing problem, for which the Commission’s inability to muster a majority to even begin a rulemaking is a national scandal.

The letter further stated:

So too, the Commission’s failure to even begin a rulemaking on the agency’s inadequate and overwhelmed coordination rules is an equal dereliction of duty.  While some Commissioners may believe that the many blatant and direct dealings between candidates, their aides, their agents, their former aides, their Super PACs and their Super PAC donors do not technically trigger the existing, flawed coordination rules, few people in this country take seriously the claim that the individual candidate Super PACs established by virtually every presidential candidate are really independent of the candidates who established them

Although this is now the second presidential cycle in which this problem has been utterly apparent—and which results in the spectacle of presidential candidates raising and benefiting from multi-million dollar contributions—the Commission has yet to undertake a rulemaking to investigate the problem or to consider a solution.  Again, the Commission’s passivity in the face of an obvious crisis at the heart of its jurisdictional responsibility is a national scandal.

To read the full letter, click here.

The Campaign Legal Center joined Democracy 21 in filing comments today in support of a Public Citizen rulemaking petition seeking revisions of the FEC’s flawed disclosure and coordination regulations.

The comments noted that the two organizations also filed comments last January, in a similar rulemaking proceeding, also seeking new disclosure and coordination rules.  The comments filed today noted that over the past eleven months, the Commission has done nothing to advance the other rulemaking.   

According to the comments filed today by the watchdog groups:

We are under no illusion that the current rulemaking petitions will yield a different result.  There is no reason to believe that any Republican Commissioner would provide a fourth vote to initiate a rulemaking, either to improve the agency’s patently inadequate disclosure rules or, certainly, to examine (much less, improve) the Commission’s plainly overwhelmed coordination regulations.  The Republican Commissioners have resisted such efforts for years, preferring instead to sit on an inert agency that has lost all purpose, all credibility, and indeed, all relevance.

We wish we thought that the current Notice of Availability was the start of a serious inquiry that poses serious questions about whether the agency should engage in a serious rulemaking.  But that would require believing that the three Republican Commissioners are suddenly going to take seriously the law and their responsibilities as Commissioners.  And there is no serious reason to believe that.

According to Paul S. Ryan, Campaign Legal Center Senior Counsel, “The current disclosure and coordination regulations are deeply flawed but this has been the case for a number of years and the FEC’s Republican Commissioners have been perfectly content to leave them that way resulting in widespread abuses.  Sadly there is little reason to believe that those Commissioners will make even a token effort this time around to fix these grossly inadequate rules and reign in the abuses but we nonetheless encourage them to do so.” 

To read the comments click here.

Today, the Campaign Legal Center, joined by Democracy 21, strongly urged the Federal Election Commission (FEC) to reject the request from Senate Majority PAC and House Majority PAC to follow the lead of a number of GOP Super PACs in breaking a variety of laws through coordinated activities with candidates.  The watchdog groups filed comments on the Advisory Opinion Request 2015-09, where the Super PACs outlined a number of proposed interactions with candidates that the requestors admit are illegal but state they will undertake themselves in the event of an FEC deadlock on the request. 

“These Super PACs are seeking FEC permission to break the law, as other candidates and committees have done, knowing full well that the Commission will deadlock on the questions, and announcing that they will break the law if they do not get a yes or no answer from the FEC,” said Paul S. Ryan, Campaign Legal Center Senior Counsel.  “Requestors are mistaken, however, in implying that an FEC deadlock amounts to approval of their proposed lawbreaking.  The laws passed by Congress are the laws of the land despite the complete breakdown of campaign finance law enforcement at the FEC and we will not hesitate to urge the Department of Justice to criminally investigate what would be knowing and willful violations of the law if these groups proceed with their plans.”

The twelve questions submitted by the Super PACs involve pre-candidacy activities, the conduct triggering federal candidacy and post-candidacy activities.  Many of these proposed activities have already been undertaken by current candidates and Super PACs and have drawn numerous complaints with the FEC and the Department of Justice from the Campaign Legal Center, Democracy 21 and other groups.    

The comments filed today emphasize that the Advisory Opinion Request is not valid because it outlines only theoretical acts by unnamed future candidates and Super PACs while FEC regulations require requestors of advisory opinions to set forth a “specific transaction or activity” that they, themselves, plan to undertake. 

To read the comments filed today by the Campaign Legal Center and Democracy 21 click here.