Court: No New 527 Rules Needed

The Federal Election Commission does not have to write new regulations to deal with 527 groups, a federal court ruled Thursday.

The ruling by the D.C. District Court Judge Emmet G. Sullivan is the latest development in a lawsuit brought by Rep. Christopher Shays (R-Conn.) and reform groups working to reduce the role of money in politics. The suit charged that the commission failed to apply existing laws to the independent political groups known as 527s that exploded onto the political scene during the 2004 elections.

In the decision, Judge Sullivan agreed with the commission that it should be able to decide on a case-by-case basis whether a 527 is subject to FEC rules. And he noted that the FEC has penalized 527s that tried to influence federal elections outside of FEC rules.

The ruling comes a day after the commission slapped a George Soros-backed 527 with a $775,000 fine for its unregulated spending during the 2004 election on behalf of Democrats, including presidential candidate John F. Kerry. The fine against America Coming Together was the third biggest enforcement penalty in FEC history.

But campaign finance reform advocates point out that the ACT fine, like those against other 527s, came years after the violations – and Election Day – and was a fraction of the total spent illegally by the group.

“We have a pattern of cases where we get decisions three years after the violations occurred for small fines. That simply does not work to enforce the law,” said Fred Wertheimer, one of Shays’ lawyers in the case. Wertheimer, who is president of the nonprofit campaign finance reform group Democracy 21, said he was unsure about whether the decision would be appealed.

“We will press in Congress for legislation to make clear that 527 groups have to comply with the law,” he said. “And we will press the FEC to start providing some teeth for its enforcement of the law.”

FEC vice chairman David Mason said if fines his agency has issued “have the effect of driving [527s] into compliance, then that’s what we want. That would be a big success.”

And he said the agency will start issuing larger fines for similar 527 violations now that there is precedent.

“Part of the reason for the fines being relatively small in comparison to the amounts raised is that the rules of the road were not as obvious a couple years ago,” Mason said.

Additional regulations wouldn’t only impact big-money 527s airing expensive ads, said Bradley Smith, a former FEC chairman who heads the Center for Competitive Politics. If the ruling went the other way, he said it could have silenced citizens’ groups seeking to make their voices heard.

“The First Amendment expressly guarantees citizens the right to join together and petition their government,” he said, hailing the ruling as a “victory for the First Amendment.”
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