CLC and D21 File Comments Supporting Rulemaking on 2014 Party Accounts, Opposing Proposal to Open Soft Money Loopholes


WASHINGTON –The Campaign Legal Center and Democracy 21 filed two letters with formal comments to the FEC: one supporting a rulemaking petition defining how parties may use the new accounts created in the 2014 “cromnibus,” and the other opposing an effort to open loopholes for state and local parties which would allow more unregulated soft money into federal elections.

CLC Supports FEC Rulemaking Defining the Proper Uses of Party Accounts Created in 2014

CLC and Democracy 21 filed formal comments supporting a proposal that the agency enact rules directing how parties may use the high-dollar accounts created in the 2014 Omnibus Appropriations “cromnibus” bill. 

In late 2014, Congress snuck a last-minute rider into an appropriations bill that created three new separate party accounts for the DNC and RNC. Each account is authorized to receive huge contributions of up to $100,200 per donor, per year, thereby allowing a single donor to give more than $300,000 to these national party committee accounts.

The use of the money in each of these new accounts is supposed to be restricted: one account is to pay for the presidential nominating conventions, a second account is to pay for the legal costs of election recounts and other legal proceedings and the third account is to pay for party headquarters buildings.

But, because the FEC has yet to write rules defining how parties can use these accounts, it appears the parties have used them as a slush fund to fund a wide range of election-related activities. Last election cycle, one Republican campaign finance attorney told the Washington Post, “I think both political parties will find many creative ways to use the quasi-soft money accounts to support their presidential candidates. . .We are in an environment in which there has been virtually no enforcement of the campaign finance laws, so it would arguably be political malpractice not to make maximum uses of these accounts.”

CLC and Democracy 21’s comments supported a petition for rulemaking to write rules describing the appropriate uses of funds raised for these accounts and to crack down on abuse.

Read: Comments: REG 2013-10 - on Notice 2016-10: Implementing 2015 Omnibus Appropriation Act


CLC Opposes Proposal to Deregulate State Party Use of Soft Money

CLC and Democracy 21 also filed comments opposing a rulemaking petition from Minnesota’s Democratic Farm-Labor Party asking the FEC to loosen regulations on how state and local parties can use “soft money” – meaning large (often unlimited) contributions not subject to federal law—on federal election activities.

From the late 1970s through the 1990s, the FEC created a series of loopholes opening the door for state and local parties to use soft money, in many cases raised by federal candidates, on a range of activities that supported federal candidates. Soft money spending by the two major parties skyrocketed from five percent ($21.6 million) in 1984 to 42 percent ($498 million) in 2000—and a Senate investigation found that both parties were selling access to candidates in exchange for large soft money contributions.

The McCain-Feingold Bipartisan Campaign Reform Act was enacted in 2002 to close these soft money loopholes—and CLC and D21’s comments urge the FEC not to open them once again.

In their petition, the state parties argue that the rise of largely unregulated super PACs mean parties should also be deregulated so they aren’t drowned out. But CLC and D21’s comments note:

“state parties—like most Americans—may have legitimate concerns about the growing role of independent expenditure-only organizations like super PACs that are working closely with the candidates they support. The proper way to address this issue is not by creating new campaign finance loopholes for party committees in the name of “rebalancing” the system—which would open the door to the corruption that BCRA was enacted to prevent—but instead for the Commission to enforce its own coordination rules against candidate-specific super PACs and to undertake a rulemaking on strengthening those regulations.”   

Read: Comments: Notice 2016-11: "Rulemaking Petition: Political Party Rules"