Advocates And Activists Across Political Spectrum Converge On Fec To Oppose Rules Restricting Nonprofit Advocacy

PFAWF VP & Legal Director Elliot Mincberg Set to Testify

The Federal Election Commission on April 14 opened two days of hearings on proposed regulations that would drastically restrict the ability of nonprofit organizations to comment on public policy issues, and could silence criticism of public officials’ actions by imposing new rules on political speech in the midst of an election year. Advocacy groups spanning the political spectrum will be testifying in opposition to the proposed restrictions. People For the American Way Foundation Vice President and General Counsel Elliot Mincberg will testify on April 15.

“Advocates and activists of all political stripes agree that the proposed rules would be a disaster for free speech and for the nonprofit sector,” said People For the American Way Foundation President and Coalition to Protect Nonprofit Advocacy Co-chair Ralph G. Neas. “Getting such a diverse set of groups to agree on anything, especially during an election year, takes some doing. That’s how draconian these proposed restrictions are.”

According to Mincberg, “The proposed rules go far beyond the authority that Congress has granted the FEC, and they represent a radically unfair attempt to change the rules for political advocacy in the middle of an important election year.” Mincberg called on the FEC to reject the proposed rules outright.

Mincberg’s prepared testimony (see attached) notes that more than 670 nonprofit organizations have joined PFAWF in support of comments submitted by the Coalition to Protect Nonprofit Advocacy. His testimony also rebuts claims by some proponents of new FEC restrictions that the concerns raised by nonprofit organizations would be taken care of if the FEC would restrict the new rules to political advocacy by so-called 527 groups and exempt other nonprofits. Among the fallacies in that approach, says Mincberg’s testimony, is that allowing the FEC to exceed its authority regarding 527 groups would set a precedent for future restrictions on other nonprofits.

PREPARED STATEMENT OF ELLIOT M. MINCBERG
VICE PRESIDENT AND GENERAL COUNSEL
PEOPLE FOR THE AMERICAN WAY FOUNDATION

FEDERAL ELECTION COMMISSION
April 15, 2004

On behalf of People For the American Way Foundation, as well as more than 670 nonprofit organizations that have joined in comments submitted by the Coalition to Protect Nonprofit Advocacy to the FEC, I call upon the FEC to withdraw the notice of proposed rulemaking and not adopt the proposed rules on political committee status. An incredibly diverse collection of nonprofit groups have opposed these proposed rules, including People For the American Way Foundation and Americans for Tax Reform, the Chamber of Commerce and the League of Conservation Voters, Planned Parenthood and the National Right to Life Committee. We all agree that the proposed rules would be devastating to freedom of speech and to the nonprofit community and should be rejected.

As others have already testified, the proposed rules would seriously impede issue advocacy, nonpartisan voter participation activity, and even communication by nonprofit groups with their own members. For example, the NAACP and other civil rights groups would have to stop non-partisan voter registration campaigns on July 5. The NRA could not urge its members to oppose a gun control bill being sponsored by a member of Congress running for re-election. People For the American Way and the Leadership Conference on Civil Rights could not criticize President Bush if he makes another recess appointment of judge who is hostile to civil rights principles. Americans For Tax Reform could not praise Republican congressional leaders for pushing tax cuts. These intolerable restrictions on civic participation and public debate – and many more – would result if the proposed rules were adopted.

The proposed rules would have these effects primarily because they would redefine two key terms in federal election law: “political committees” and “expenditures.”
The rules would convert many nonprofit groups into federally regulated political committees because they dramatically expand the definition of a “political committee.” Under the proposed rules, a group would be forced to become a political committee if it spends or spent merely $50,000 (or, in the alternative, 50% of total disbursements) in the current year or any one of the past four years on voter mobilization work or on communications that “promote, support, attack, oppose” the positions of a federal officeholder running for reelection or on voter mobilization work. This amount is not at all substantial for many important organizations that advocate for or against policy views and yet do not consider electoral politics its major purpose.
The proposed rules would also expand the definition of a federally regulated “expenditure” to include communications that “promote, support, attack, or oppose” a federal candidate or policy position of a candidate. This inclusion of policy positions is a fundamental threat to the heart of the First Amendment. Corporations, non-profits, and labor organizations are currently prohibited from engaging in “expenditures.” If such activity were to fall under that definition, then much of their current work educating the public about various public issues would become impossible.

In addition, nonpartisan voter registration, voter identification, and get-out-the-vote activity would be restricted and, in some cases, prohibited from using messages that express views about a candidate or political party. Even if a group did not express views about a political committee or party in conducting this activity, it could also qualify as a federally regulated political committee merely by spending $50,000 on nonpartisan voter registration. It would also be prohibited from using foundation funds to support even nonpartisan voter registration and turnout activity. In effect, the pool of funds available for voter participation work would be radically reduced, ultimately resulting in diminished voter participation.

Some advocates of new FEC regulations on political advocacy have wrongly suggested that restricting the proposed rules to so-called 527 groups and exempting (for the time being) other nonprofit 501(c) groups would resolve the concerns that so many organizations have raised. In reality, this approach fails to address many concerns.

1. Central to the protections of the First Amendment is freedom of speech concerning public policy issues, a core activity engaged in by many types of nonprofit groups across the ideological spectrum. For the FEC to restrict freedom of speech for 527s, without specific congressional authorization based on a careful and extensive record, would clearly be improper and would threaten all other nonprofit groups. The rationale that 527s are allegedly being used to “evade” legal limits placed on political parties by the Bipartisan Campaign Reform Act could then be applied to 501(c) groups. The only restriction on non-party and non-candidate speech in BCRA was the ban on “electioneering communications” in the period shortly before elections. If there is to be consideration of any additional restriction on free speech by nonprofits, it should be by Congress.

2. 527s cannot be completely separated from 501(c) groups. An FEC rule “limited” to 527s would in fact harm many 501(c)(4) groups that have set up “connected” 527 funds . Such 527 funds engage in activities that are perfectly legal for 501(c)(4) groups (e.g. production of some types of voter guides and legislative scorecards and some kinds of voter registration and GOTV work) but are done through 527 funds in order to better comply with the Internal Revenue Code. For example, a 501(c)(4) with substantial investment income would risk charges of tax evasion if it attempted to conduct such activities other than through a 527 fund without paying taxes. But if the proposed rule applied to all 527s, the result would be to prohibit 501(c)(4)s from directly funding such activity through connected 527s, since 501(c)(4) funds would be considered “soft” money. This “Catch-22” would seriously harm many 501(c)(4) groups that have such 527 funds.

3. As Vice Chair Weintraub has suggested, a rule limiting only 527s could well result in attempts to fund many of the same activities through 501(c)(4) groups. This would not only put pressure on the FEC to improperly regulate and restrict all 501(c)(4)s, but would also produce less disclosure of campaign-related contributions and expenditures than at present, since 527 groups are required by Congress to disclose all their contributions of at least $200 and expenditures of $500 or more, while 501(c)(4)s are not.

It should be noted that Congress has repeatedly considered and rejected proposals to adopt new restrictions on 527 organizations. The McCain-Feingold campaign legislation did not apply new restrictions to 527s or other nonprofits, but to political parties, as the Supreme Court has explicitly recognized. In short, the proposed rules threaten First Amendment rights, usurp the role of Congress, and would create chaos by dramatically changing regulations on political advocacy in the middle of an already active election year. We respectfully urge the commissioners to withdraw the proposed regulations.

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