A three-judge federal appeals court panel ordered the Federal Election Commission yesterday to rewrite and toughen the regulations instituted under the 2002 McCain-Feingold campaign finance law to make it much harder to raise money for independent political groups and to restrict the ability of those groups to run "issue ads."
The court upheld a challenge by two of the law's sponsors, Reps. Christopher Shays (R-Conn.) and Martin T. Meehan (D-Mass.), who said the FEC rules undermine the law's limits on the amount that political parties and outside groups can raise from individual donors.
The law's major goal is to prevent federal candidates and parties from raising large, unregulated sums of campaign contributions, known as soft money, from corporations, unions and wealthy individuals.
FEC Chairman Scott E. Thomas, a Democrat who tried unsuccessfully to establish strict regulations in 2003, said yesterday's order could prove quite significant. "On virtually every regulation, the FEC will have to take a tougher approach and not be so permissive," he said.
Michael E. Toner, the Republican vice chairman, warned that the court's call for broad, inclusive regulations "jeopardizes the ability of the FEC to establish bright line rules so that people involved in politics will have clear notice of what their obligations are."
Perhaps the most significant part of the decision by the U.S. Court of Appeals for the D.C. Circuit, according to both critics and supporters, was a determination by Judges David S. Tatel and Harry T. Edwards that Meehan and Shays have the standing to bring a lawsuit challenging the regulations. The third member of the panel, Judge Karen LeCraft Henderson, dissented.
If the ruling is not overturned on appeal, it will open the door to many other judicial challenges to FEC decisions, experts say.
Fred Wertheimer of Democracy 21 noted that Meehan and Shays are among the plaintiffs in another suit challenging the failure of the FEC to regulate the activities of "527" independent political committees -- including America Coming Together and Swift Boat Veterans for Truth -- that spent millions of dollars in unregulated contributions in the 2004 presidential campaign.
Tatel's majority opinion was sharply critical of the FEC. He wrote that the FEC used overly narrow definitions when detailing when it would be illegal for a federal candidate or national political party to "solicit" or "direct" prospective donors of large, unregulated contributions to "527" organizations and similar groups.
"In effect, the Commission has interpreted both terms to mean 'ask.' . . . The FEC's definitions fly in the face of [the purpose of the law] because they reopen the very loophole the terms were designed to close," Tatel said, thus allowing candidates and parties to "rely on winks, nods and circumlocutions to channel money in favored directions -- anything that makes their intention clear without overtly 'asking' for money."
The court ruled that the FEC failed to adequately justify its limitation of a ban on the use of "soft money" issue ads to the final 120 days before an election.
In a statement, Meehan praised the ruling. "The FEC does not have the power to interpret the laws it enforces," he said. "Today, the appellate court confirmed that the FEC has been acting as a rogue agency and not an executor of the law."