Washington - Today, Campaign Legal Center (CLC) and Center on Science & Technology Policy (CSTP) at Duke University filed a rulemaking petition with the Federal Election Commission (FEC) asking the agency to close transparency loopholes that have allowed campaigns and PACs to disguise millions of dollars in political spending.

Although campaigns, PACs, and other political groups are required to report payments to vendors over $200, the FEC has created a loophole: if the vendor then subcontracts with a third party, payments to that subcontractor need not be disclosed.

This loophole is not absolute — a vendor cannot lawfully act as a conduit to disguise a campaign's spending. Although there are recent examples of campaigns violating the law by routing spending through LLCs controlled by senior officials, other campaigns and PACs have stayed within legal lines while nonetheless obscuring the ultimate recipients of their spending.

As a result, transparency suffers and voters, donors, and researchers are denied essential information. The effect of this loophole is that voters are deprived of basic information about how candidates and committees are operating and donors are left in the dark about how their contributions are being spent. It disguises whether campaign funds are being routed to the candidate’s businesses, to the candidate’s family members, or to firms owned by a “scam PAC’s” operators.

Moreover, as CSTP has described, this loophole makes it nearly impossible for academics and researchers to track digital political advertising, because FEC reports routinely only disclose a committee’s digital advertising payments to a consulting firm, without separately itemizing that firm's “subcontracted” payments to digital advertising platforms on the committee’s behalf.

Increased transparency means less influence for wealthy special interests and less political corruption, allowing for increased opportunities for academics and researchers to follow the money and more ways to identify bad actors.

The petition from CLC and CSTP asks the FEC to adopt rules making clear that all expenditures or disbursements made on behalf of or for the benefit of a campaign, PAC, or other reporting entity must be disclosed in full, regardless of whether they are made via an agent, independent contractor, vendor, or subvendor.

“Voters have a right to know where campaign money is coming from, as well as how it is being spent.” said Brendan Fischer, director of the federal reform program at the Campaign Legal Center. “The FEC created this transparency loophole decades ago, and it is about time that they close it.”

“Our recent report estimated that 94% of advertising money in the last month of the 2020 election passed through communication consultancies, making this less of a loophole and more of a black hole in the middle of our election oversight system,” says Scott Babwah Brennen, Senior Policy Associate with CSTP.

Earlier this year, CLC and CSTP hosted a panel discussion featuring FEC Chair Shana Broussard on the regulations that govern federal reporting of political sub-vendor spending. The panelists offered insight on current and potential reforms of political ad regulations and highlighted how those regulations could increase public transparency.

Increasing disclosure around subvendors is an excellent example of an easily achievable transparency increase.

At Campaign Legal Center, we are advancing democracy through law. Learn more about our work.

Failure to pass For the People Act is not an option

WASHINGTON — Yesterday, the leadership of the U.S. Senate brought the For the People Act to the floor for a vote on whether to begin debate – an event that marked just the beginning of the battle to pass the bill in the Senate. Although there were 50 votes in favor yesterday, with the Vice President on hand to break the tie and provide the 51st vote, current Senate rules require a supermajority of 60 votes to end the Republican filibuster and begin debate.

While opening debate on the bill was therefore blocked yesterday, Rules Chairwoman Klobuchar announced a series of hearings on critical voting, campaign finance, and ethics reforms, which will demonstrate the need for this critical legislation. Senator Joe Manchin, who voted in favor of beginning debate on the House-passed For the People Act, had previously stated he would not support the House bill as written but would support many crucial elements of it and wanted to work with Republicans to find bipartisan support for amendments. No Republicans voted with him to start the debate and amendment process yesterday.

Trevor Potter, president of Campaign Legal Center (CLC), and a Republican Former Commissioner of the Federal Election Commission issued the following statement urging the Senate to pass this legislation, which enjoys 83% support among Americans – including 74% of Republican voters and 73% of Independent voters:

“The fight has just begun to pass needed election reform. The basis for a compromise has to maintain the key features of the For the People Act, as Senator Manchin and Democratic Leader Senator Schumer have stated. Inaction is not an option when it comes to protecting Americans’ fundamental freedom to vote. The need for action on this landmark legislation becomes clearer each day, especially in light of the For the People Act being blocked from receiving an up or down vote.

Not only will this bill ensure everyone’s voice is heard and everyone’s vote is counted by creating national standards for voter accessibility, it will shine a light on dark money to prevent billionaires and foreign actors from secretly buying elections and guarantees that congressional districts will be drawn to give fair representation for all. We all deserve a government that is responsive and accountable to voters.

The popularity of reforms contained within the For the People Act cannot be ignored. A resounding majority of voters across the political spectrum support this legislation because it puts voters before politicians. The Senate must hear from constituents about the importance of the For the People Act so we have the momentum needed to pass this bill and combat the crisis of confidence in our government.”

According to a CLC analysis, this bill draws on provisions that have long garnered the support of Democrats and Republicans.

WASHINGTON - Today, Campaign Legal Center Action (CLCA) and End Citizens United (ECU) sued the Federal Election Commission (FEC) over the Commission’s lack of action on former President Donald Trump’s campaign’s violation of campaign finance law. 

In May 2019, Campaign Legal Center (CLC) and End Citizens United (ECU) filed a complaint with the FEC to hold President Donald Trump accountable for coordinating with a super PAC that would go on to raise $150 million in the 2020 election cycle. Although the FEC’s General Counsel recommended finding that there was reason to believe the Trump campaign had violated the law, the Commission deadlocked 3-2 and closed the case. Four votes are required for the FEC to act on a complaint. 

End Citizens United is now filing a lawsuit challenging the decision of the two FEC commissioners who voted to dismiss its complaint and is asking the court to direct the FEC to take action to determine whether the Trump campaign unlawfully solicited contributions to America First Action.

This is another example of the gridlock at the FEC undermining its ability to enforce anti-corruption campaign finance laws and why we need to enact the For the People Act (H.R.1/S.1) to reform the FEC. The For the People Act would restructure the FEC, making it a more effective watchdog that enforces the law. It would also put in tougher rules to prevent corporate-funded Super PACs like America First Action from operating as campaign arms for politicians.  

“We should not have to sue the FEC repeatedly to make it do its job,” said Adav Noti, Senior Director of Trial Litigation and Chief of Staff at CLC Action, and former Associate General Counsel of the FEC. “Yet here is another example of the FEC refusing to enforce key laws that protect the rights of American voters. We are confident the courts will once again force the FEC to act, but ultimately Congress must pass the For the People Act to overhaul the FEC and permanently break its cycle of lawlessness.”

“Throughout his disastrous presidency, Donald Trump showed a blatant disrespect for the laws of this country–it is why he was the first president in American history to be impeached twice. This case is no different. By declaring America First Action as his campaign’s approved outside group - alongside his own campaign and party committees--Donald Trump broke campaign finance laws restricting coordination between candidates and Super PACs,” said ECU/LAV President Tiffany Muller. “This incident further highlights glaring breakdowns in our campaign finance system and why there’s an immediate need for the anti-corruption provisions in the For the People Act.”

Federal law and FEC regulations prohibit campaigns from soliciting contributions to super PACs unless certain critical measures are taken to ensure that the solicited contributions comply with federal contribution limits and prohibitions. The Trump campaign took no such measures in its solicitation, instead issuing a blanket endorsement of contributions to the “approved” super PAC – contributions that would include corporate and unlimited funds, which federal candidates are prohibited from soliciting. By not acting in this case, the FEC is showing, yet again, that it is not the effective watchdog this country needs.

At Campaign Legal Center, we are advancing democracy through law. Learn more about our work.