A group of election-reform advocates fear that a Federal Election Commission (FEC) decision Tuesday could lead to an onslaught of corporate and union-funded attack ads on the eve of the presidential primaries.

The FEC is scheduled to vote on rules interpreting a Supreme Court decision rendered earlier this year in FEC v. Wisconsin Right to Life (WRTL). The decision held that the Bipartisan Campaign Reform Act of 2002 (BCRA) cannot ban corporate and union money from paying for election ads and communications 30 days before a primary and 60 days before a general election, as long as the ads do not directly advocate for the election or defeat of a candidate or engage in the “functional equivalent” of doing so.

Advocates for upholding the BCRA were disappointed with the ruling, but they took heart that WRTL’s ads focused only on a legislative issue, not an election or candidate.

Now the FEC is under pressure to apply the decision to its rules, given that they need to be in place by early December ahead of the first presidential primaries in early January.

But two different proposed FEC draft rules are raising serious red flags among reform groups such as the Campaign Legal Center (CLC), Democracy 21 and Common Cause. Also joining the critics are James Bopp, a free-speech advocate who argued on behalf of WRTL, as well as Bob Bauer, the current counsel to Obama for President and the national Democratic senatorial and congressional campaign committees.

Bopp and Bauer agree that the draft rules are confusing and difficult to enforce, while the reform groups contend that they go much further than the court required. If implemented, critics say, the rules could gut the BCRA’s electioneering communication provision.

“Sham issue advocacy is coming back in a big way (and potentially we won’t even know which corporations and unions are bankrolling it),” Richard Hasen, an election law professor at Loyola Law School, wrote on his blog on Friday, after the alternative draft rules were posted on the FEC website.

Hasen also provided hypothetical examples of ads that he thinks would “be just fine” under the FEC’s new rules:
“Call Sen. [Hillary Rodham] Clinton [D-N.Y.] and tell her to stop coddling illegal aliens and terrorists by supporting the N.Y. drivers’ license plan.

“Call Mitt Romney and tell him more of our soldiers shouldn’t die in an unnecessary war in Iraq.”

“Call Rudy Giuliani and tell him that his support for gay rights is ruining the moral fabric of this country.

Paul Ryan, who heads the CLC’s FEC program, agrees. He argues that both drafts of the new rules appear to carve out a loophole in BCRA’s electioneering restrictions by exempting any ad that includes a public policy issue or urges the public to contact the candidate about an issue. As such, they could encourage character attacks as groups aggressively test the new law’s boundaries without any repercussions from the FEC, which usually rules on violations of the law only after the election is over. In addition, one of the drafts of the new rule would eliminate disclosure requirements for corporations or unions funding the ads.

“I hope that’s not how they read it, but it seems like so long as the focus of the ad is on an issue, the commission doesn’t care what else is in the ad,” he said. “The question is how will they define the ‘focus’ of the ad.”

Ryan said he also doesn’t understand why the two new alternative draft rules are so different than the original proposed rule, which appeared to follow the Supreme Court’s decision and included “safe harbors,” or strong express advocacy tests, in cases when the ads would trigger BCRA rules. Examples include an ad’s mentioning an election or candidacy, or taking a position on a candidate’s character.

“I was really surprised to see the new draft rules,” Ryan said. “It is really rare to see the draft rules so different from the [original proposal]. If they had included this earlier, we would have hammered them.”

Bopp expressed his concern by filing to the FEC on Monday an ex parte communication, which by law goes on the public record. His letter included changes to the draft copy aimed at fixing “some serious flaws” in the proposed rule.
But advocates for fewer limits on campaign speech say the debate over the draft rules is overblown hype.

“All they’re doing is codifying [Supreme Court] Justice Roberts’s decision,” said Mike Schrimpf, a spokesman for the Center for Competitive Politics.

He said he doesn’t believe the version of the draft rules that would eliminate disclosure is going to pass.

“We believe that would be an overstep by the FEC,” he said. He added he did not know what the impact on the 2008 elections would be, but said the FEC action could lead to freer speech.

“More speech is always good,” he said. “Even with this rulemaking, some issue ads are going to be chilled. But we’re better off than we were pre-WRTL.”

In a separate matter, the FEC late last week entered into a settlement with the Media Fund, a Democratic 527 group, finding that the group made illegal soft-money expenditures of more than $50 million during the 2004 election
Under the settlement, the Media Fund agreed to pay a $580,000 civil penalty, a tiny fraction of the $50 million it spent to influence the 2004 election.

In response to complaints filed in 2004 by Democracy 21, the Campaign Legal Center and the Center for Responsive Politics, the FEC has found that two pro-Democratic 527 groups, the Media Fund and America Coming Together, made more than $150 million in illegal soft-money expenditures in the 2004 presidential campaign, while two pro-Republican groups, the Progress for America Voter Fund and Swift Boat Veterans for Truth, made more than $50 million in illegal soft-money expenditures in the election.