This week additional jurisdictions continued to move forward with bailouts from the preclearance provisions of the Voting Rights Act at a time when the U.S. Supreme Court is considering a challenge to the constitutionality of those provisions.  Yesterday, a three-judge court in Washington, DC approved a final consent decree exempting the City of Falls Church, Virginia (along with the Falls Church City Public School District) from the Act’s preclearance provisions.  Today, the Justice Department also announced that it had reached agreement on a bailout with Yuba County Water Agency in California and submitted a proposed consent decree for approval to a three-judge court in the U.S. District Court for the District of Columbia. 

The preclearance provisions, known as Section 5 of the Voting Rights Act, are being challenged in a case currently being weighed by the U.S. Supreme Court,Shelby County, AL v. United States,.  The covered jurisdictions, including all or parts of fifteen states predominantly in the Deep South with long histories of discrimination against minority voters, must seek preclearance before changing any election practice or procedure, such as moving polling locations or altering voting districts.  However, if jurisdictions, like Falls Church, the Yuba County Water Agency and others can demonstrate that they have maintained a clean record of voting practices for a decade and undertaken additional steps to ensure non-discriminatory voting procedures, they may “bail out” of this preclearance requirement.

In the Shelby County case, which was argued before the Supreme Court in February, critics of Section 5 argued in a number of briefs that the process to achieve a bailout is far too arduous and cost-prohibitive.  That claim is just flat wrong.  In addition to Falls Church and the Yuba County Water Agency, the City of Wheatland, California bailed out last month, the State of New Hampshire bailed out in March and California’s Browns Valley Water District bailed out in January.  On top of dozens of previous bailouts, a number of other jurisdictions are currently awaiting court approval of their bailouts, including Hanover County (Virginia) and Linda County Water District in California.  Since 2009 (the year of the Supreme Court’s decision in the NAMUDNO case), more than twice as many political subdivisions have bailed out (140) than in the entire period from 1982 to 2009 (69).

“As more and more of these bailouts are cleared by the court, the argument that the process is too arduous and too expensive rings more and more hollow,” said Campaign Legal Center Executive Director J. Gerald Hebert, who serves as legal counsel to both Falls Church and the Yuba County Water Agency in his capacity as a solo practitioner.  “There could be no more convincing argument than this ever-growing list of successful bailouts to prove that the coverage formula self-tailors, and therefore Section 5 coverage adjusts to current needs required to protect the franchise.  The Voting Rights Act is not just a page torn from the history books; it remains today a vital safeguard of every citizen’s right to vote.  The City of Falls Church and the Yuba County Water Agency, like other bailed out state and local governments before them, have shown to the courts that these additional safeguards are no longer necessary to protect the franchise in their jurisdictions, which sadly cannot be said of some covered jurisdictions as has been proven time and again in the courts in recent years.”

To read the consent judgment and decree for Falls Church, Virginia, click here.

To read the Joint Motion to Enter a Consent Judgment and Decree in the Yuba County Water Agency case, click here. 

To read a proposed Consent Judgment and Decree in the Yuba County Water Agency case, click here.

The Campaign Legal Center filed a friend of the Court brief in Shelby County v. United States.  To read the brief, click here.

The Campaign Legal Center joined Democracy 21 today in urging the Chairman and Ranking Member of the House Committee on Appropriations Subcommittee on Financial Services and General Government, not to undermine the IRS’s ability to enforce existing tax laws as they seek to address the agency’s targeting of certain groups filing for 501(c)(4) tax status.

The letter to Chairman Ander Crenshaw (R-FL), and Ranking Subcommittee Member Rep. Jose Serrano (D-NY), and copied to the full Subcommittee, urged them “not to adopt any measures that would prevent or undermine the ability of the IRS to enforce the tax laws against groups that claim to be “social welfare” organizations under section 501(c)(4) of the tax code, but primarily engage in campaign activities and use their improper claim of “social welfare” status in order to keep secret the donors funding their campaign expenditures.”

“It is vitally important that Congress strengthen the IRS’s ability to rein in the widespread abuses of this privileged tax status and not hamstring the agency’s enforcement capabilities when it comes to those groups that abused the 501(c)(4) status as a means to hide the identities of their funders while spending tens of millions of dollars attempting to pick winners and losers in federal elections,” said J. Gerald Hebert, Legal Center Executive Director. “IRS targeting of organizations because of their names or political leanings is absolutely unacceptable but any attempt to curb the practice must not turn into a witch hunt that leaves the agency unable or afraid to enforce the restrictions on political activity by 501(c)(4)s. The other part of this scandal that must not be forgotten is that while the IRS was improperly picking on Mom & Pop Tea Party groups they turned a blind eye to those organizations abusing their privileged tax status on a colossal scale.”

The letter was written in response to published reports that stated the subcommittee’s hearing next on June 3 is intended to examine “how the upcoming appropriations bills can help prevent the targeting” of conservative groups by the Internal Revenue Service. (B. Becker, “New IRS chief’s first hearing is Monday,” The Hill, May 28, 2013).

To read the full letter, click here.

In a letter sent today to the Treasury Inspector General for Tax Administration (TIGTA), Democracy 21, joined by the Campaign Legal Center, forwarded fifteen letters that the watchdog groups had sent to the IRS beginning in October 2010 urging IRS action against groups improperly claiming 501(c)(4) tax status and calling for a rulemaking proceeding.

The letters to the IRS that had been sent by the watchdog groups called on the IRS to investigate and take appropriate action regarding groups that were improperly claiming tax status as section 501(c)(4) “social welfare” organizations in order to keep secret from the American people the donors financing their expenditures in federal elections.

The letters also petitioned the IRS for a rulemaking to replace flawed IRS regulations adopted more than a half century ago that conflict with the statute and that have been wrongly interpreted to allow section 501(c)(4) groups to conduct far more campaign activities than are permitted by the law.

According to the letter to the TIGTA:

The IRS rules, their lax interpretation and the absence of IRS enforcement, all combined to play a central role in the blatant abuses of the tax laws by groups improperly claiming section 501(c)(4) tax status to hide the sources of the funds being spent by the groups to influence federal elections.

The letter from the watchdog groups to the TIGTA followed his testimony on May 21, 2013 in which the Inspector General said that his office is undertaking an audit to determine how the Internal Revenue Service “monitors I.R.C. §§ 501(c)(4)–(6) organizations to ensure that political campaign intervention does not constitute their primary activity.”

According to the letter from the watchdog groups to the TIGTA, which called the audit essential, improper claims to tax status under section 501(c)(4) “have deprived citizens of basic information on the source of funds that were spent to influence their votes.” The letter stated:

More than $250 million of this “dark money” was spent in the 2012 presidential and congressional elections by groups claiming tax status as section 501(c)(4) “social welfare” organizations, making this evasion of disclosure requirements a major scandal in its own right.

The letter to the TIGTA stated:

Our letters have presented documented cases to the IRS regarding the abuse of section 501(c)(4) by pro-Republican, pro-Democratic and independent candidate groups – including Crossroads GPS, Priorities USA, Americans Elect and American Action Network. These groups claimed section 501(c)(4) tax status to shield their donors from disclosure, even though the groups appear to be engaged primarily in campaign activities, in contravention of the eligibility requirements for section 501(c)(4) tax status. 

Our IRS letters presented specific evidence regarding the extent of the campaign activities by these groups and called for an IRS investigation into their campaign activities. To date, however, no public action has been taken by the IRS against these groups and they have been improperly allowed to continue to function as section 501(c)(4) “social welfare” groups.

According to the letter to the TIGTA:

During this same period, Democracy 21,  joined by the Campaign Legal Center, also filed a petition with the IRS in July 2011, calling on the IRS to institute a rulemaking to replace its deeply flawed regulations implementing section 501(c)(4) of the tax laws. Attached are copies of the petition and the subsequent letters we sent in regard to it.

As the petition sets forth, the existing IRS rules, which are more than a half century old,  provide that in order to be eligible for section 501(c)(4) tax status an organization must be “primarily engaged” in social welfare activities. The petition explains that the rules are contrary to the statutory language of section 501(c)(4), which provides that such groups must be “exclusively” engaged in social welfare. The petition further explains that the rules are also contrary to court cases construing the statute, which conclude that such groups may engage in no more than an “insubstantial” amount of non-social welfare activity. 

The letter concluded:

We strongly urge you to fully investigate the failure of the IRS to properly enforce the requirements of section 501(c)(4), which we believe resulted in the improper spending of hundreds of millions of dollars of secret money in the 2010 and 2012 federal elections.

To read today’s letter to Inspector General in its entirety, click here.

To read the letters to the IRS from 2010 to 2013, click here.

To read the petition for rulemaking, click here.

Today, reform groups called on Congress to investigate and address both of the scandals at the IRS in order to prevent the same abuses from occurring in the future. The letter, sent to the full House and Senate, stressed the need to investigate the improper targeting of conservative groups and also emphasized that Members have a responsibility to investigate the abuses of the tax laws by some organizations in order to keep secret the donors financing their campaign activities.

At the heart of both current scandals, the letter stresses, are flaws in the existing IRS rules defining eligibility for section 501(c)(4) tax-exempt status. Those rules have been interpreted to permit 501(c)(4) groups to engage in substantial campaign activities, while the statute governing such groups explicitly states that they are required to engage “exclusively” in social welfare activities.

The organizations sending the letter included Americans for Campaign Reform, the Campaign Legal Center, Citizens for Responsibility and Ethics in Washington, Common Cause, Democracy 21, Demos, Public Citizen and Sunlight Foundation.

The read the letter sent to Senators, click here.

To read the letter sent to Representatives, click here.

The Campaign Legal Center and American University’s Washington College of Law will jointly launch a new Voting Rights Law Institute this summer to help train the next generation voting rights litigators.  The four-night Institute will be held June 24 - 27, to train and update law students and practitioners on enforcement of voting rights law, particularly cases brought to enforce Section 2 of the Voting Rights Act, and the Fourteenth and Fifteenth Amendments to the Constitution.   The Voting Rights Institute is believed to be the first of its kind. 

Experts in the field will provide background on the Voting Rights Act and relevant Supreme Court cases and will then focus on teaching participants the litigation mechanics of voting rights litigation.  Participants will gain detailed knowledge of the Voting Rights Act and how it impacts voting rights laws state-by-state.  Institute instructors will teach the skills needed to litigate voting rights cases.  J. Gerald Hebert, the Legal Center’s Executive Director will serve as the Institute’s lead instructor and each night he will be joined by seasoned voting rights litigators, appellate advocates, and scholars in the field.

“Regardless of the Supreme Court’s decision on the Voting Rights Act next month in Shelby County v. Holder, there has never been so great a need for new voting rights litigators and this program is designed to help teach the next generation how to bring and successfully litigate voting rights cases,” said J. Gerald Hebert.  “The Shelby County decision could have a profound impact on the voting rights field, but even if it leaves the Voting Rights Act’s preclearance provisions undisturbed, recent elections have witnessed an unprecedented spike by states to restrict the franchise, especially  in ways that disproportionately impact the racial and language minorities."

The Institute’s expert faculty will include: Gilda R. Daniels (Associate Professor of Law at the University of Baltimore School of Law), Armand Derfner (Attorney, Derfner, Altman & Wilborn), Chad W. Dunn (Partner, Brazil & Dunn), Allan J. Lichtman (Distinguished Professor of History at American University), Nina Perales (Director of Litigation, Mexican American Legal Defense and Education Fund [MALDEF]), David Richards (Attorney, Richards, Rodriguez & Skeith), Paul M. Smith (Attorney, Jenner & Block), Bruce V. Spiva (Founding Partner, The Spiva Law Firm) and Brenda Wright (Vice President of Legal Strategies, Demos).

Support from the Rockefeller Brothers Fund (rbf.org) for the Voting Rights Institute is anticipated.  An overview of the Institute’s schedule follows below. Lawyers and law students can register online for CLE, certificate or academic credit.  For more information in the Voting Rights Institute, including detailed biographies of faculty members, or to register, click here.

Voting Rights Institute

Four Evenings—June 24 – 27, 2013 from 6:00pm-9:00pm

Understanding the Voting Rights Act

First Evening (6/24):  Overview of Voting Rights Act

A synopsis of the Voting Rights Act, with a focus on Sections 2, 4 and 5; an overview of the issues and arguments in Shelby County, Alabama v. Holder (which will either have been decided by then or will be decided that week). 

Second Evening (6/25):  A Look at Section 2, Prohibition on Voting Discrimination

Regarding Section 2, the following cases/legislation will be highlighted and discussed: the 1982 amendments to the Voting Rights Act (overruling City of Mobile v. Bolden and establishing a totality of circumstances “results” test); Thornburgh v. Gingles; Johnson v. DeGrandy; and LULAC v. Perry; Growe v. Emison proving racially discriminatory intent under Village of Arlington Heights v. Metropolitan Housing Corp.; the Texas redistricting cases (still pending) where the Court found intent; differing proof in Section 2 results cases and intent constitutional cases; and the First Amendment and proving partisan gerrymandering (in light of Vieth v. Jubelirer); Larios v. Cox (winning a political gerrymandering case by bringing a one-person, one-vote claim).

Bringing Voting Rights Cases to Court

Third Evening (6/26): Where and When to File

Mechanics of bringing lawsuits to enforce voting rights:  whether to file in state court or federal court; how to ensure that plaintiffs have standing to sue (including associational standing issues that may arise); how to develop proof of discriminatory intent in discovery;  overcoming claims of legislative privilege; how to prepare and keep under control expert witnesses in Voting Rights Act cases, including a primer on how to conduct an analysis of whether voting patterns are racially polarized (as required under Section 2 of the Voting Rights Act).

Fourth Evening (6/27):  Best Litigation Practices

Mechanics of bringing lawsuits to enforce voting rights: examination of best litigation practices in all stages of a case, both pre-trial and at trial: review of model pleadings, review of sample depositions, review of trial transcripts demonstrating best techniques of examining and cross-examining witnesses, and presenting evidence.

Wrap-up of all four classes with concluding overview of lessons from the week.

The more details that emerge about the conduct of the IRS in regard to applications by groups for 501(c)(4) status, the more clear it becomes that congressional hearings should be held.  The IRS’ Exempt Organizations Division appears to have been overwhelmed by the rapid increase in 501(c)(4)  applications in the last election cycle, and some of its employees were either poorly trained or improperly directed.  Congressional hearings should be held expeditiously in order to determine what went wrong, and to hold those responsible accountable.  The hearings must also examine the wholesale failure of that same Division to enforce the laws concerning political activity by existing 501(c)(4) organizations.  If the initial reports are verified, it is breathtaking that the IRS seems to be harassing mom & pop tea party organizations while ignoring what appear to be blatant abuses of the 501(c)(4) tax status right under its nose by groups pumping tens of millions of dollars into partisan political advertising.

The IRS needs to enforce the laws on the books in a completely nonpartisan manner, but it must enforce the law rather than turning a blind eye to widespread abuses.  This scandal must not be used as an excuse by the IRS to back away from enforcing existing restrictions on political activity by tax exempt 501(c)(4) groups.  Congressional hearings must serve as a reminder to the IRS that maintaining a ‘see no evil, hear no evil, speak no evil’ stance on illegal political activity by tax-exempt groups is completely unacceptable. 

 Congress should consider where a new “bright line” standard is needed to provide clear guidance to both the IRS and tax exempt entities of permissible political activity by “social welfare” organizations, rather than relying on the current multi-part subjective test that has apparently led to widespread political abuse. 

Today, the Campaign Legal Center expressed strong support for Sen. Jon Tester’s (D-MT) and Sen. Thad Cochran’s (R-MS) Senate Campaign Disclosure Parity Act(S. 375), to require electronic filing of campaign finance disclosure reports by Senate candidates, as House and Presidential candidates have done for more than a decade.

Candidates for the U.S. House of Representatives and for the office of President, and nearly all federal political committees, currently file their campaign finance disclosure reports electronically with the FEC.  This data is typically uploaded onto the FEC website for public access within 24 hours.  By contrast Senate filings generally take weeks to become publicly available and the cost of converting them for FEC purposes costs taxpayers hundreds of thousands of dollars annually. 

“Through its insistence on clinging to this time consuming and expensive process of paper-based filing, the U.S. Senate succeeds only in denying voters vital information about who is bankrolling campaigns until after the votes have been counted, but that is precisely the goal of opponents,” said Meredith McGehee, Campaign Legal Center Policy Director. “The U.S. Supreme Court and the majority of the Senate have long recognized the importance of timely disclosure to allow the electorate to make informed decisions at the polls but a small minority of obstructionists has held back progress for too long. It is high time the U.S. Senate moved forward on this and dragged reluctant colleagues into the 21st Century.”

The bill currently has 34 cosponsors, including a number of Republicans. 

To read a PDF of the letter, click here.

Today, the Campaign Legal Center (CLC) joined Citizens for Responsibility and Ethics in Washington (CREW) in filing a complaint with the Federal Election Commission (FEC), asking it to investigate 32 political donors for excessive contributions to federal candidates during the 2012 election cycle. The complaint follows a Huffington Post report revealing these individuals contributed more than the biennial limit of $46,200 to federal candidates during 2011 and 2012, in violation of the Federal Election Campaign Act and FEC regulations.

“For decades the Supreme Court and Congress have recognized contribution limits as a critical means of preventing corruption,” said Paul S. Ryan, Campaign Legal Center Senior Counsel. “The FEC should move swiftly to investigate these seemingly blatant violations of federal law.”

“Some campaign finance laws can be confusing, but the contribution limits are black and white,” said CREW Executive Director Melanie Sloan. “Sophisticated donors don’t need legal counsel to tell them doubling, much less tripling, the limit is illegal.”

Some of the overages are so high they seem unlikely to be accidental. For example, Jeffrey Hurt, the president of Diversified Resources, Inc., contributed $144,300 to federal candidates, more than three times the legal limit of $46,200 per election cycle. Following closely behind him is David Wallace, president and CEO of Wallace Electrical Systems, with $127,700, and John Canning, chairman of Madison Dearborn Partners, with $119,400. All contributed nearly exclusively to Republicans. The most significant Democratic over-contributor was trial lawyer Thomas Fay, who donated $97,450.

When confronted about their contributions, some donors claimed they mistakenly failed to attribute a contribution to a spouse. Yet Donald Simms, CEO of United Mining Company, donated $102,300, while his wife, Susan Simms, contributed $91,300. The Simms contributions went to Republican candidates.

The FEC isn’t likely to crack down hard on someone who mistakenly steps just over the contribution limits. Those who deliberately bound across the line, however, may find themselves in the crosshairs of the Department of Justice as knowing and willful violations of campaign finance law are subject to criminal prosecution. Sloan and Ryan agreed, “If the FEC expects anyone to adhere to contribution limits in the future, commissioners have no choice but to hold these donors accountable.”

To read the complaint, click here.