FEC reins in 527s, starting next cycle

The Federal Election Commission yesterday voted — starting in the next election cycle — to regulate more of the new brand of political groups known as 527s.

“We have accomplished something significant here,” said Commissioner Ellen L. Weintraub, a Democrat, noting that while it may not go as far in regulating 527s as some had wanted, “it’s an effort to meet halfway.”

The new rule, which goes into effect for the next election cycle, was adopted 4-2, with FEC Chairman Bradley A. Smith, a Republican, joining with Ms. Weintraub and Republican commissioners David M. Mason and Michael E. Toner to support it.

Commissioners Scott E. Thomas and Danny L. McDonald, both Democrats, voted against it.

The tax-exempt “527 groups,” which take that name from the section of the tax code that regulates them, seek to influence the selection, nomination, election or appointment of candidates to federal, state or local office — often through unlimited soft money contributions.

Those 527s that have a political action committee are already regulated by the FEC, prompting complaints to the FEC that this unfairly helps those 527s that do not have PACs, but still run ads advocating the defeat of a candidate and collect unlimited money from donors for that purpose.

Supporters said that under the new regulations, if a group solicits funds — through ads or other efforts — by saying the money will be used to elect or defeat a federal candidate, then once the group raises $1,000, it will be considered a “political committee” and must register with the FEC and face fund-raising limitations.

In addition, the new rules would require groups that qualify as political committees to use more “hard” money — federally regulated donations that must be collected in smaller increments — as opposed to “soft” money, which can be raised in large amounts from such wealthy donors as George Soros.

Under the new rule, if such a group runs an ad that mentions a federal candidate, it must use at least 50 percent hard money.

“This would dramatically increase the amount of hard dollars they’d have to use,” Ms. Weintraub said. “One should not underestimate the number of groups that would be brought in under this proposal.”

Some commissioners complained that the proposal adopted by the commission yesterday hardly goes far enough. Mr. Thomas, who was “very disappointed,” said he fears it is little more than “tinkering” with existing rules and “will prove inadequate.”

If Congress agrees, Mr. Thomas said, it must act since the commission cannot agree on anything broader. “Congress, it’s your turn,” he said.

Mr. McDonald opposed yesterday’s rule because he wanted more time for the public to comment on all of the various proposals. He said it seemed like the commission was forced to act, “because we’re under attack” from people unhappy with 527s.

Meanwhile, Rep. Bob Ney, Ohio Republican and chairman of the Committee on House Administration, said the fact that the commission had to clarify the new campaign finance law is further evidence that the law is an “utter failure.”