Today, the Campaign Legal Center urged Rep. Heath Shuler (D-NC) and Rep. Jo Ann Emerson (R-MO) to resign from Congress or at the very least recuse themselves from all official matters related to the issues of energy or the environment and broader matters like the “fiscal cliff” due to conflicts of interest created by the jobs they will start when they leave office.

In January, Rep. Shuler will join Duke Energy as its vice president of federal affairs and Rep. Emerson will become President and CEO of the National Rural Electric Cooperative Association (NRECA). Both organizations have high-profile lobbying operations in Washington and spend millions of dollars annually lobbying Congress.

“It is hard to imagine a more clear cut conflict of interest.   Representative Shuler and Representative Emerson, in their waning days in office, face issues that will impact their future employers,” said Meredith McGehee, Campaign Legal Center Policy Director. “Out of respect for the institution and their constituents, Representative Shuler and Representative Emerson should resign immediately. If they don't resign, they should, at a minimum, recuse themselves from voting. Landing lucrative jobs based on lobbying former colleagues sadly has a long tradition in Washington. But at the very least Members leaving public service to cash in through the revolving door should not be in the business of serving two masters while still holding office.”

To read the letter to Representative Emerson, click here. To read the letter to Representative Shuler, click here.

The State of New Hampshire and the United States Attorney General reached an agreement today that would grant a bailout for the ten towns and townships in the State that are subject to the preclearance requirements of the Voting Rights Act.  The agreement was submitted to a three-judge court in Washington, DC, and asks the court to wait thirty days to enter it, so that the towns can publicize the proposed settlement.  Campaign Legal Center Executive Director J. Gerald Hebert serves as legal counsel to the State of New Hampshire in his capacity as a solo practitioner.  New Hampshire becomes the first state to bailout since Congress changed the bailout requirements under the Voting Rights Act in 1982.

To read the joint motion to enter consent judgment and decree, click here. To read the proposed consent judgment and decree, click here.

Today, the Campaign Legal Center, joined by Democracy 21, asked the Federal Election Commission (FEC) and Department of Justice (DOJ) to investigate possible violations of campaign finance law by two companies that appear to have been created for the purpose of funneling $12 million to the Super PAC FreedomWorks for America, while hiding from the public the source of the funds. Specialty Group Inc. and Kingston Pike Development LLC were both created by William S. Rose of Knoxville, Tennessee in late September 2012 and over the six weeks leading up to Election Day funneled more than $12 million to FreedomWorks.

“Federal law prohibits making contributions ‘in the name of another person.’ This law is essential to providing voters with accurate disclosure regarding the true source of funds contributed to political committees such as FreedomWorks,” said Paul S. Ryan, Campaign Legal Center Senior Counsel. “These companies appear to have been created to hide the identities of one or more donors that pumped millions of dollars into a Super PACs anonymously in the final weeks before an election. If these laws are not enforced and donors are allowed to contribute millions of dollars to Super PACs in the name of straw companies, not only will campaign finance disclosure laws be rendered useless, but the door will be left wide open to the possibility of foreign campaign contributions helping determine election outcomes in the United States.”

To read the FEC complaint, click here. To read the letter to the Department of Justice, click here.

Last night, Stephen Colbert announced on the Colbert Report that the Ham Rove Memorial Fund had made a grant of more than $135,000 to the Campaign Legal Center. A condition of the grant requires that the Legal Center name its conference room The Ham Rove Memorial Conference Room. The staff at the Legal Center is already referring to the room by its new name and look forward to dedicating the conference room and bringing the space into full compliance with the condition as soon as the plaque arrives.

“We vow to do our best to ensure that groups like Americans for a Better Tomorrow, Tomorrow and Colbert Super PAC SHH will not be able to get away with their anonymous shell game shenanigans in future election cycles,” said Legal Center President Trevor Potter. “We are also delighted that the Ham Rove Memorial Fund made a similar contribution to our friends at the Center for Responsive Politics for the invaluable service they provide in tracking money in our political system.”

The Ham Rove Memorial Fund was created by Mr. Colbert with money he raised though his Colbert Super PAC. The Colbert Report was awarded with a prestigious Peabody Award for the segments of the show related to the Super PAC and the nation’s completely dysfunctional campaign finance system in the wake of the Supreme Court’s controversial Citizens United decision and a series of failures by regulatory agencies, including the Federal Election Commission and the Internal Revenue Service (IRS).

Through his private law practice, Legal Center President Trevor Potter was a frequent guest on the show serving as Mr. Colbert’s attorney and explaining the intricacies of campaign finance and tax law to the show’s national audience. Mr. Potter helped create the Colbert Super PAC, the related 501(c)(4) Colbert Super PAC SHH and ultimately the Ham Rove Memorial Fund where the hundreds of thousands of dollars from Colbert Super PAC had vanished last month without a trace, courtesy of loopholes in the IRS regulations.

To watch Mr. Colbert’s announcement of the grant on last night’s show, click here.

Groups of various political persuasions joined together today calling upon House Speaker John Boehner (R-Ohio) and Minority Leader Nancy Pelosi (D-Calif.) to reauthorize and appoint new board members to the Office of Congressional Ethics (OCE), and for President Barack Obama finally to step up to the plate and appoint to the Federal Election Commission (FEC) new commissioners who will pull the campaign finance agency out of its moribund state.

Enforcement of congressional ethics rules and the nation’s campaign finance laws are at dire risk if these two watchdog agencies are allowed to go defunct.

The terms of four of the six board members of the OCE expire at the end of the month. If these board members are not promptly replaced, the critical work of this agency in overseeing enforcement of congressional ethics will come to a halt in the 113th Congress. Speaker Boehner and Minority Leader Pelosi have exclusive authority to appoint a new OCE board.

Meanwhile, the deadlocked FEC has become so dysfunctional when it comes to enforcing the nation’s campaign finance laws that it is incapable of fulfilling its mission. The terms of five of the six FEC commissioners have long expired, providing President Obama with an ideal opportunity to replace the feuding commissioners with appointees dedicated to enforcing the campaign finance law.

Eleven watchdog groups from various ideological persuasions – Americans for Campaign Reform, Campaign Legal Center, Citizens for Ethics and Responsibility in Washington (CREW), Common Cause, Democracy 21, Judicial Watch, League of Women Voters, National Legal and Policy Center, Public Citizen, Sunlight Foundation and U.S. PIRG – today signed on to letters either to the congressional leaders and/or President Obama calling upon them to replace the members of the OCE and FEC whose terms have expired with people dedicated to making these agencies function responsibly and effectively.

Several of the groups noted that the very existence of the OCE, a semi-independent watchdog agency run by people who are not members of Congress, has helped encourage the House Ethics Committee to become more active and accountable. In the short four years of its existence, the OCE has prompted the Ethics Committee to issue more than three times the number of disciplinary actions than it has done in the entire previous decade.

In the letter to Speaker Boehner and Minority Leader Pelosi, the groups wrote:

“The terms of four members of OCE’s board will expire at the end of this year, leaving just the two chairmen – Porter Goss and David Skaggs – as sitting board members. OCE cannot function without an active board of directors…. It is the responsibility of solely your two offices to agree upon and appoint board members for the expired terms in the 113th Congress … We urge you to proceed in a timely fashion to consider and appoint qualified and responsible members to OCE’s board of directors so that the agency’s useful work is not interrupted as we enter the 113th Congress.”

At the same press conference, many of the groups appealed to President Obama to breathe life back into the FEC by replacing the commissioners whose terms have expired. In all four core mission areas – enforcement, audits, regulations and advisory opinions – the number of official actions taken by the FEC has plummeted to all-time lows in the past few years, and the percentage of deadlocked votes on the reduced number of actions it has voted on have spiked to incapacitating levels. In enforcement actions alone, the percentage of deadlocked votes has increased about eight-fold annually since prior to 2008.

In the letter to President Obama, the groups wrote:

“Today’s Federal Election Commission is a broken agency that has itself become a national campaign finance scandal. … The immediate future of the FEC will follow one of two paths: either federal campaign finance laws will continue to be largely unenforced by a moribund agency, or new commissioners will be appointed who are committed to carrying out the agency’s mission. … We encourage you to take the latter path of nominating and seeking the final appointment of responsible commissioners who will fulfill their statutory duties – and we encourage you to make these appointments soon.”

To read the letter to Speaker Boehner and Minority Leader Pelosi, click here.

To read the letter to President Obama, click here.

To read the comments delivered at the press conference by Legal Center Policy Director Meredith, McGehee, click here.

Today, the Campaign Legal Center, joined by Democracy 21, filed an amici curiae brief in the U.S. Court of Appeals for the Second Circuit, defending the disclosure provisions and contribution limits of the State of Vermont’s campaign finance law in Vermont Right to Life Committee (VRLC) v. Sorrell. The suit is part of a long string of challenges to state disclosure laws.

“This is suit is just the latest case to ask yet another federal court to ignore legal precedent in order to gut the type of disclosure law that has repeatedly been upheld by the Supreme Court and appellate courts,” said Tara Malloy, Legal Center Senior Counsel.  “In recent years there has been a concerted and well-funded litigation campaign aimed at undermining federal, state and local disclosure laws. The clear goal is to keep anonymous the buying of selling of influence with elected officials. Fortunately, the courts have long recognized that disclosure laws serve the vital public interest in preventing corruption of public officials and ensuring that voters can make informed decisions at the polls.”  

In recent years the disclosure laws in nearly two dozen states have been challenged, and the vast majority of these challenges have been turned away by the courts. More than half of these challenges have been brought by groups represented by James Bopp, the former Republican National Committeeman from Indiana who originally brought the Citizens United case exclusively as a challenge to federal disclosure laws. Despite other aspects of the controversial decision, the Supreme Court in Citizens United turned away the disclosure challenge by an overwhelming 8-1 majority.

In addition to challenging disclosure requirements, VRLC asks the court to invalidate the state contribution limits as applied to its fund that allegedly makes only independent expenditures. The district court, however, found that the “independent” fund was anything but independent, citing evidence that there was a “fluidity of funds” and “no clear functional divide” between the allegedly “independent” fund and VRLC’s political committee making contributions directly to Vermont candidates.

To read the brief filed by the Campaign Legal Center and Democracy 21, click here.

Today, the Campaign Legal Center urged Members to support The Empowering Citizens Act (ECA), introduced in the 112th Congress by Representatives David Price (D-NC) and Chris Van Hollen (D-MD) to overhaul the way federal campaigns are financed.  In a letter to the House of Representatives, Legal Center Executive Director J. Gerald Hebert and Policy Director Meredith McGehee, touted the bill as the best measure currently pending in Congress that uses federal matching money to encourage small contributions to presidential and Congressional candidates.   The legislation also contains comprehensive reforms to reign in Super PACs.
 
The full text of the letter follows below.
 
December 4, 2012
 
Dear Representative:
 
The millions of dollars that Super PACs and so-called “dark money” groups poured into the 2012 federal elections raise serious questions about the health of our election system and the vitality of our democracy.  The Campaign Legal Center strongly urges you to support efforts to significantly overhaul the current federal campaign finance system by enacting new, meaningful incentives for smaller individual contributions. 
 
The Empowering Citizens Act (ECA), introduced in the 112th Congress by Representatives David Price (D-NC) and Chris Van Hollen (D-MD), is a vital reform and is the best measure currently pending in Congress that uses federal matching money to encourage small contributions to presidential and congressional candidates.  Equally important, the ECA contains the first comprehensive reform proposals to deal with Super PACs. 
 
Regardless of how you feel about the sheer magnitude of the money spent to influence the outcomes of the elections, there is no doubt that a system in which just one quarter of one percent (0.26%) of all Americans make a campaign contribution of $200 or more falls woefully short of engaging its citizens in a critical component of the democratic process – helping support the campaigns of the candidates they support.
 
Instead, the current system relies on – and is dominated by – large donors.  Only five percent of one percent (0.05%) of Americans give the maximum contribution to congressional candidates and only 0.01% give $10,000 total.  The rise of Super PACs has exacerbated the problem.  Some 200 individuals were responsible for 80% of all Super PAC contributions.  Moreover, “dark money” groups -- the (c)(4) social welfare organizations and the (c)(6) trade associations that do not disclose the sources of the funds – reportedly spent more than $200 million in the elections. 
 
The American people understand what is going on.  A recent poll found that one in four Americans say they are less likely to vote because big donors to Super PACs have greater influence over elected officials.  Nearly 70 percent of Americans believe Super PAC spending will lead to corruption.  As TheWashington Post recently editorialized, “Both the remarkable size of the checks written by big contributors in 2012 and the fact that a sizable chunk of the contributions was not publicly reported nurture a climate ripe for corruption.”
 
Democracy is strongest when citizens are informed and can more easily become engaged voters; and when public policies strengthen the principle of “one person, one vote” rather than undermine it as the current system does.  Criticizing the current process does not necessarily imply a belief that money is evil, or that money buys elections or that candidates for President or Congress are inherently corrupt.  Rather, as the Courts have repeatedly found, it recognizes that campaign contributions have the potential to corrupt and to create the appearance of corruption, as the evidence submitted to the Supreme Court in the McConnell v. FEC case demonstrated.  
 
The best way to achieve a healthier balance in our campaign finance system is to change the incentives for both candidates and donors.  The vast majority of incentives in the current system guide candidates to pursue large donations. In the last few months of the presidential campaign, candidates Romney and Obama were doing as many as five fundraisers a day.  Compare that to 1984 when President Ronald Reagan, who participated in the presidential public financing system, did zero fundraisers for his own reelection. There are few incentives for an individual who cannot afford to give thousands (or now millions) to contribute and feel, as the poll showed, that their contribution will make a difference in a system dominated by large money. 
 
The ECA addresses these issues head on. It is the most comprehensive campaign finance bill pending in Congress. The ECA provides new incentives focused on smaller donations. It is a system modeled on the successful matching system used to finance New York City elections.  Matching systems have a proven track record of success, and are notable for creating a system to leverage individual donations while allowing the political marketplace to continue to operate throughout the election period.
 
The ECA contains the first comprehensive proposals to deal with Super PACs, especially the candidate-specific Super PACs such as the ones that supported presidential candidates Mitt Romney and Barack Obama.  By defining such PACs to be coordinated parts of the campaign of specific candidates, they would be subject to candidate contribution limits.  The ECA also strengthens the law governing other outside groups’ coordination with candidates, prohibits federal candidates and campaigns from raising money for Super PACs while strengthening the ability of national parties to make coordinated expenditures with their candidates to respond to spending by Super PACs and other outside groups.
 
The Supreme Court’s Citizens United decision – which created a constitutional right for corporations to spend unlimited amounts independently of federal candidates or party committees – has been rightly criticized for its legal incoherence, judicial activism, naiveté of disclosure requirements for campaign spending, and equating of corporations with individuals.  It is therefore understandable that there is some support for efforts to overrule the decision through a constitutional amendment. Yet, the process for an amendment is arduous and long, and such an amendment is extremely difficult to write so that it indeed achieves its goals. 
 
In contrast, the ECA can be enacted quickly to address some of the most egregious problems in the system – both those created by the Court decision and those that have existed for years.
 
The Empowering Citizens Act deserves your support and provides an important starting point for the conversation – and action – that is so clearly called for after the 2012 elections.  Addressing a campaign finance system out of control must be a priority for both parties in the 113th Congress.
 
Sincerely,
                                                                        
J. Gerald Hebert                                             Meredith McGehee
Executive Director                                          Policy Director
 

The Campaign Legal Center today joined Democracy 21 in sending a letter to the IRS questioning why the agency’s lengthy list of priorities for the coming year does not include any reference to addressing the widespread abuse of privileged 501(c)(4) tax status by organizations that spent hundreds of millions of dollars on attack ads during the 2012 campaign.

“The see no evil ‘enforcement’ stance assumed by the IRS during the 2012 election with regard to 501(c)(4)s was shameful enough but now that the dust has settled the agency’s continued inaction would amount to a gross dereliction of its duties,” said J. Gerald Hebert, Legal Center Executive Director. “The agency must act to clarify its regulations and bring them into line with the laws passed by Congress which they are charged with enforcing. If the agency does not act, and act quickly, the outrageous abuses of the tax laws perpetrated by these shadow party committees masquerading as ‘social welfare’ groups will only grow and spread and further undermine public faith in our democratic process.”  

The Legal Center and Democracy 21 have jointly sent more than a dozen letters to the IRS outlining abuses of 501(c)(4) tax status by organizations like Crossroads GPS, and urging the agency to take action against them and also to initiate a rulemaking proceeding to clarify and bring into compliance with the law the IRS regulations governing campaign activities by groups claiming status as “social welfare” organizations. Today’s letter echoes those calls and requests a meeting with the Acting Commissioner and the Director of the Exempt Organization Division.

In a July 17, 2012 letter to the Legal Center and Democracy 21, the agency announced that it would consider proposed regulatory changes in the area of political activity by 501(c)(4) organizations.

To read the full letter sent today to the IRS, click here.