House Committee Repeals Parts of Campaign Finance Law

The House Administration Committee approved an amended version of the 527 Fairness Act (H.R. 1316) on June 8 in a straight party line vote. The bill would repeal some parts of the Bipartisan Campaign Reform Act of 2002 (BCRA) by increasing limits on individual and PAC contributions and removing restrictions on electioneering communications by some nonprofits. It would not put limits on contributions to independent 527 groups, but would require them to report to the Federal Election Commission (FEC) as well as the IRS. Internet communications would also be exempt from regulation. A competing bill that would restrict contributions to 527 groups was not considered. H.R. 1316, sponsored by Reps. Mike Pence (R-IN) and Albert Wynn (D-MD), is intended to counter the influence of 527 groups by making it easier for parties and candidates to raise money and coordinate their activities with outside groups. Democrats opposed the measure, noting that the parties raised record amounts of money after BCRA passed. They also oppose efforts to limit independent 527s, saying they are constitutionally protected. Committee chair Robert Ney (R-OH) proposed several amendments to the original bill. Nonprofits would be most impacted by repeal of the “Wellstone Amendment” to BCRA, which would remove restrictions on “grassroots” organizations making paid broadcasts that refer to federal candidates during the period before an election (electioneering communications). Although the Wellstone Amendment specifically refers to groups exempt under sections 501(c)(4), (5) and (6) of the tax code, charities, which are exempt under 501(c)(3), would still be prohibited from funding these “electioneering communications” unless the Federal Election Commission (FEC) exempts them by regulation. Current FEC rules do exempt 501(c)(3) groups, but that rule will be re-considered later this summer as a result of a legal challenge filed by BCRA sponsors Reps. Chris Shays (R-CT) and Marty Meehan (D-MA). The case challenged several FEC rules implementing BCRA, and a federal judge struck down a dozen rules in September 2004. (See the September 21, 2004 OMB Watcher for details.) The FEC has appealed that ruling. One of Ney’s amendments would require independent 527 groups to report to the FEC in the same manner as regulated federal political committees, even though contribution limits would not apply. These groups already report to the IRS, but the FEC requires more frequent reports. State and local political committees would be exempt from this requirement. The Ney amendment would result in duplicative reporting for many 527 organizations. Another Ney amendment would exempt Internet communications from the definition of regulated public communications. This mirrors a provision in the 527 bill approved by the Senate Rules Committee in late April. (See a summary of the Senate bill.) The Shays-Meehan lawsuit overturned the FEC rule exempting Internet communications, and the agency is currently conducting a rulemaking process to re-write the rule. OMB Watch has submitted comments calling for a hands off approach. The Senate 527 bill has provisions that conflict with H.R. 1316, since it would limit contributions to 527s. Since neither bill has been scheduled for floor consideration, it is unclear how they would be reconciled in conference if they pass their respective houses.
back to Blog