Appeals Court deals blow to FEC

The Federal Election Commission seriously overstepped its bounds in applying laws aimed at curbing the influence of outside organizations in political campaigns, a U.S. District Court of Appeals panel ruled Friday.

The opinion, stemming from a suit brought by EMILY's List, the pro-abortion rights Democratic organization, leans heavily on First Amendment grounds in striking down FEC regulations covering political spending by outside organizations.

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The ruling strikes down regulations that governed how independent groups could pay for voter registration and get-out-the-vote drives, administrative costs and generic advertisements supporting one party or another. Previously, the FEC required groups to fund such activities with contributions from both so-called hard and soft money accounts.

Hard money is subject to campaign contribution limits, meaning that donors could only give $5,000 based on current limits. Soft money is subject to no such limits, meaning donors can give unlimited amounts but that the various committees can only use those funds in narrow ways.

But campaign finance reform advocates are most upset, and Bipartisan Campaign Reform Act opponents are most heartened, by language that strikes down the requirement that independent groups use hard money to pay the full cost of advertisements that refer to a federal candidate.

Instead, a two-judge majority ruled that nonprofit organizations like EMILY's List "are constitutionally entitled" to pay for the advertisements with soft money. That opens the door, election law experts say, to allowing far more independent expenditures than at any time since BCRA became law.

The FEC has the opportunity to appeal the ruling to an en banc panel of the D.C. Circuit Court, meaning that every judge on the court could hear the case, or directly to the Supreme Court. But many say the case is the latest indication that McCain-Feingold, as BCRA is commonly known, is crumbling under judicial scrutiny.

"It's another indication that independent speech could be a major factor next year," says William McGinley, an election attorney with Patton Boggs. The ruling means, he said, that "people can engage in independent speech without being regulated by the FEC."

Reformers argue that the controlling opinion went far beyond the question EMILY's List posed, giving them hope that the regulations may be upheld either before the full court or by the Supreme Court.

"The court went beyond the regulations and said that a group, whether it's a political committee or not, can use soft money for a number of independent purposes," said Tara Malloy of the Campaign Legal Center. "We like to use the term 'overreaching.'"

The ruling is the latest setback for reform advocates hoping to keep corporate money out of politics. Earlier this month, the Supreme Court heard a case that many fear threaten key sections of the McCain-Feingold law, including those that prohibit corporate money from campaign commercials and those that regulate whether an advertisement can be run within 30 days of a primary election or 60 days of a general election.

Arguments in that case disheartened many in the reform community, as at least four members of the Court expressed skepticism with the FEC over those sections of the law. A fifth justice, Clarence Thomas, has indicated previously that he is open to overturning the sections.

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