Judge Strikes Down 15 FEC Rules on Campaign Finance

By Carol D. Leonnig, Washington Post Staff Writer

A federal judge has struck down rules governing campaign fundraising, concluding that the regulations undermine a two-year-old campaign finance law and allow political activists and candidates to dodge it.

Under the 2002 McCain-Feingold campaign finance law, Congress generally prohibited candidates for federal office from becoming involved in raising "soft money" -- unlimited amounts of cash from corporations, labor unions and wealthy individuals. But U.S. District Court Judge Colleen Kollar-Kotelly concluded that Federal Election Commission regulations designed to implement the law had the opposite effect.

She found that the regulations created "an immense loophole" that allowed candidates and friendly political organizations to coordinate their efforts to raise and spend soft money.

Kollar-Kotelly said the commission defied logic, used creative new definitions of common words and so narrowly interpreted Congress's 2002 law that some of its rules would "foster corruption" and "invite circumvention of the law."

Kollar-Kotelly struck down 15 of 19 regulations challenged by two congressmen who sponsored the law, Reps. Christopher Shays (R-Conn.) and Martin T. Meehan (D-Mass.). The law's other sponsors, Sens. John McCain (R-Ariz.) and Russell Feingold (D-Wis.), supported the legal challenge.

Her decision, signed Saturday but made public yesterday, comes six weeks before the presidential election but will probably not change the activities of political organizations in the contest between President Bush and Sen. John F. Kerry (Mass.), the Democratic presidential nominee, or other federal campaigns, analysts and attorneys in the case said.

But the ruling was a rebuke of the FEC, which is already under fire from government watchdog groups for not adequately policing the campaign finance system. It could ultimately result in firm limits on how independent political groups function and the amount of money they can raise in future campaigns.

Kollar-Kotelly's decision stems from a lawsuit Shays and Meehan filed in October 2002. Shays said the FEC erred in trying to accommodate opposing sides in the heated battle over campaign spending.

The Supreme Court upheld the 2002 campaign finance law in December 2003 and simultaneously chastised the FEC for helping cause the soft-money problem by adopting flawed regulations that "invited widespread circumvention" of previous laws. Last week, another federal judge criticized the FEC for responding to alleged election violations at "a glacial pace" in a case brought by the Bush campaign.

Shays said he and colleagues battled for eight years to pass the law in Congress and defend it before the Supreme Court, then watched with amazement as the FEC wrote regulations that bear little resemblance to their law.

"We began to wonder what law they were implementing," Shays said. "They were simply trying to rewrite the law to weaken it and put in loopholes."

FEC Chairman Bradley A. Smith defended the regulations as written and predicted the FEC would appeal the decision. "I think we would have strong grounds for appeal, and I think it's likely the commission would vote for the appeal," he said.

Michael E. Toner, a Republican on the six-member commission, said he was "very disappointed in the court's ruling" and argued that "the commission sought to provide clear, bright-line rules" to carry out Congress's intentions.

Smith said that it would be impossible to write new regulations in the 42 days left before the election and that he expects existing regulations to remain in effect through Nov. 2.

In her decision, Kollar-Kotelly frowned on the FEC for its creative new definitions of common words. For example, the commission defined the verbs "direct" and "solicit" as meaning "to ask directly." That interpretation meant that federal candidates could be held in violation of the law only if they specifically asked donors for soft money -- but not if they suggested contributions or provided ways for donors to give them.

She struck down another FEC rule that concluded candidates' campaigns could not be held responsible for violations by agents who did not have formal authority from them.

Although the law banned coordination between a campaign and groups able to raise unlimited amounts of money, the FEC rule allowed campaigns and groups to coordinate on ads and messages as long as they did so 120 days before an election. Kollar-Kotelly ruled that such a regulation "runs completely afoul" of basic campaign finance law.

She wrote that another FEC rule, which would allow a campaign and friendly groups to coordinate advertising on the Internet, would "foster corruption" of the regulatory system.

"Here you have evidence the Federal Election Commission has gotten it wrong again," said Fred Wertheimer, president of Democracy 21, a campaign finance watchdog group. "The FEC is supposed to be the sheriff, and the sheriff here is on permanent vacation."

Richard B. Bader, the FEC associate general counsel, said the commission worked diligently to adopt rules quickly. He noted that Kollar-Kotelly struck some of the regulations solely because they were not explained well or the public wasn't given a chance to comment on them.

"Clearly the commission wasn't on vacation," Bader said. "It adopted extremely complicated regulations on very difficult issues under extreme pressure."

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