In advance of the 2016 presidential elections, a super PAC called Ready for Hillary used six-figure and corporate contributions to create a valuable list of an estimated 4 million potential Clinton supporters. Then, the super PAC passed this list to another super PAC, which in turn passed the list directly to Hillary Clinton’s campaign.
Clinton’s campaign never disclosed receiving the super PAC’s list on its Federal Election Commission (FEC) reports. And it never reported paying for the list, either.
Incredibly, the FEC allowed it to happen.
Campaigns and PACs must disclose all receipts and disbursements. Yet through a series of advisory opinions, the FEC has taken the extraordinary position that a committee need not report the receipt or disbursement of a mailing list of supporters—even if that list is worth six or seven figures—if the committee asserts that the list was provided or received in exchange for another of purportedly equal value.
That’s how the Clinton campaign managed to avoid reporting the receipt of 4 million new email addresses from a super PAC. The campaign gave the super PAC an old email list that it declared was of equal value (even though the circumstances suggested otherwise). According to the FEC, this swap was a “non-reportable event.”
Disclosure is a cornerstone of our federal campaign finance regime, but the FEC has effectively ceded its responsibility to review these insider transactions.
List-swap transactions are just as valuable to political committees as other receipts and disbursements. Indeed, the FEC has long recognized that PAC mailing lists are valuable assets that are frequently sold, rented, or exchanged, and federal law explicitly identifies membership lists and mailing lists as examples of “goods or “services” that may qualify as in-kind contributions or expenditures.
Although a membership list that is received or provided as part of a good-faith, an equal-value commercial exchange may not be reportable as a contribution or expenditure, the receipt or disbursement must nevertheless be disclosed. Without such disclosure, the public and FEC cannot independently assess whether the exchanged lists are, in fact, of equal value, or whether, instead, the exchange resulted in a contribution, expenditure, or both.
The FEC’s list-swap loophole undermines transparency and makes it easier for other violations to go undetected.
To prevent continued abuse of the FEC’s made-up disclosure exemption, CLC has filed a Petition for Rulemaking with the FEC, calling for a regulatory amendment to clarify that list swaps must be reported.
The petition asks that the FEC promulgate a regulation clarifying that a political committee’s receipt or disbursement of a membership list or other valuable list must be reported, even when the list is received or disbursed as part of a purported equal-value list swap.
This correction would be a simple step toward greater transparency in our elections.
This post was written by Sophia Mills, a summer intern at CLC and a rising 3L at The Ohio State University Moritz College of Law.