FEC Commissioners release statement on The November Fund

In a statement released today, three FEC commissioners explained why they decided not to pursue further enforcement action against The November Fund, an independent group that received donations from the U.S. Chamber of Commerce.

The central issue in the matter was whether The November Fund was a "political committee" as defined in the Federal Election Campaign Act (FECA). The November Fund is an issue advocacy group registered with the IRS as a 527 organization. Citizens for Responsibility and Ethics in Washington, a left-leaning watchdog group, filed a complaint about The November Fund soon after it was established in 2004.

In a "Statement of Reasons" (SOR) commissioners Donald McGahn, Matthew Petersen and Caroline Hunter laid out a clear rationale for determining that The November Fund is not deserving of "political committee" status under FECA and should not be subject to any penalties as a result.

"There is nothing bold in the Commissioners’ statement," said Center for Competitive Politics Vice President Stephen Hoersting. "The statement is a clear explanation of current constitutional law and goes further to explain how the November Fund committed no violation even under the Commission’s recent and flawed precedents."

"The November Fund’s August 16, 2004 request to the U.S. Chamber of Commerce for funds did not even reference a Federal election, let alone a Federal candidate," the commissioners wrote. "Second, The November Fund’s public communications did not contain express advocacy… and were not ‘expenditures.’ In fact, almost two-thirds of its funds were spent on overhead and on advertising that did not reference a Federal candidate; the remaining funds were spent on what all concede was independent issue advocacy."

In late December the three commissioners effectively overruled a recommendation by FEC counsel to fine the group, which was accused of illegal spending for attacking John Edwards, the Democratic vice presidential nominee in 2004.  In March 2005, the commission initially found that The November Fund illegally accepted contributions in excess of the $5,000 limit for political action committees and that the chamber made illegal corporate contributions. In Nov. 2007, the commission authorized its counsel to negotiate a settlement, including a fine. Four new members joined the commission in 2008, and in Oct. 2008 the three Republican commissioners — McGahn, Petersen and Hunter — declined to approve the final agreement with a deadlocked 3-3 vote.

The trio took to task other FEC commissioners for ignoring cases the FEC has lost in pursuing excessive regulation and not recognizing recent court cases defending constitutionally-protected speech such as FEC v. Wisconsin Right to Life and FEC v. Davis.

The commissioners also explained how this matter was different than past cases against 527 groups under the ‘case-by-case’ approach and because commission has previously ruled that not all 527s are political committees. They noted that this case was the only matter where the commission decided a donor to a 527 violated FECA.

"We declined the invitation to engage in after-the-fact freelancing by creating a legal theory that would ensnare The November Fund," the commissioners wrote. "We do not view Buckley and its progeny as inconveniences to be overcome, nor do we view the First Amendment as a ‘loophole’ to be sewn shut by stricter regulation of our participatory democracy. Instead, the analysis in this, and any other matter in this area, both begins and ends with the First Amendment, which is the written embodiment of our ‘profound national commitment to the principle that debate on public issues should be uninhibited, robust, and wide-open.’"

The commissioners conclude with a cautionary note about the dangers of runaway FEC enforcement chilling free speech:

"Ultimately, this matter is about political speech. The Commission should not have initiated an investigation in this matter. As soon as the Commission determined, as it did in its initial review of the complaint, that The November Fund did not engage in express advocacy, or any coordination, this matter should immediately have been closed. Instead, The November Fund and the Chamber were subjected to an unwarranted multi-year investigation that was both burdensome and intrusive. Such enforcement activity can, and does, chill the free speech of citizens exercising their First Amendment rights. Thus, we voted both to take no further action in this matter and to close the file."

The Center for Competitive Politics is now the Institute for Free Speech.