Legal Defense a Loophole in Campaign Fund-Raising?

WASHINGTON – Setting new rules to govern fund-raising starting next year, federal regulators Thursday discussed the possibility of letting national political parties continue to raise large union and corporate donations to defend themselves from lawsuits.

The discussions came as the Federal Election Commission spent a second day trying to craft rules to implement a new campaign law passed by Congress and signed by President Bush that generally outlaws the large donations, known as soft money.

Commissioner Karl Sandstrom, a Democrat, said he was concerned that the national parties would face frivolous lawsuits filed simply to force them to spend cherished hard money -- donations from individuals that are limited in size and can be spent to help candidates.

Sandstrom said, however, that he needed more time to ensure his proposal is constitutional before introducing it.

Several commissioners said they shared Sandstrom's concerns that parties would be left vulnerable, but that they were uncertain the new law would allow national parties to raise soft money for that or any other purpose.

Republican Commissioner Bradley Smith said he considered it blatantly unfair that the law's sponsors, including Sens. John McCain and Russ Feingold, could accept soft money to finance their efforts to defend their laws against lawsuits while as of November the national parties that think the law is unconstitutional won't be able to.

"The good guy never hid the bad guy's bullets and then challenged him to a duel in the streets. That's what the bad guys always do," Smith said.

Don Simon, general counsel for the citizens' group Common Cause, which supports the new law, said allowing national parties to raise soft money for legal defense would open a major loophole.

"That opens the door precisely to what Congress intended to prevent," he said."

Sandstrom has crossed over to join the three GOP commissioners on a series of votes that supporters of the law fear may be loosening the ban on soft money.

On Wednesday, the FEC decided on a 4-1 vote that the only way a federal candidate or officeholder could violate the ban on raising soft money would be to explicitly ask for such contributions.

The FEC's chief attorney, Larry Norton, warned commissioners that adopting so narrow a test would open the door for lawmakers to continue raising such contributions.

It doesn't take a "great deal of cleverness" to phrase a solicitation to elicit donations without flat-out asking for them, he said.

"I think this definition has the potential for great mischief," said Norton, whose office said the commission should rule that either requesting, suggesting or recommending a soft-money contribution be counted as a solicitation. "I am concerned that this language creates a definition so narrow that it would frankly be very easy to evade."

Sandstrom acknowledged his proposal "indeed runs that risk" but said he wanted such a strict test to protect free-speech rights.

"I am not into policing private conversations," said Sandstrom. "Everybody's out there soliciting support from everybody" and support could mean different things to different people, he said.

Voting with Sandstrom for the strict solicitation test were the FEC's three GOP members, chairman David Mason, Smith and Commissioner Michael Toner. Democrat Danny McDonald voted against it and Democrat Scott Thomas abstained in protest.

"The magnificent foursome strikes again," he said, referring to votes by Sandstrom and the three Republicans throughout the day to narrowly interpret the law.

Among the other 4-2 votes, the commission decided to let state and local parties use soft money to finance activities on the Internet -- an increasingly important avenue for campaign contributions, grass-roots organizing and promotion. The commission made it clear that state and local parties can pay for e-mail distributions or telephone calls placed through the Internet entirely with soft money as long as they go to fewer than 500 people.