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Political Law Update: FEC Coordination Rules Struck Down

June 18, 2008

On Friday, June 13, 2008, the U.S. Court of Appeals for the D.C. Circuit struck down the Federal Election Commission's coordination regulations and ordered the FEC to rewrite the rules as well as those regulations defining "federal election activity" and regulating fundraising at state political party events. Shays v. FEC, D.C. Cir. No. 07-5360 (June 13, 2008) (Shays III). The court did uphold the FEC's regulation providing for a coordination safe harbor for those organizations that establish an internal firewall - with an emphasis that the firewall must be actually implemented, not just a written policy. A copy of the court's opinion is available at: http://pacer.cadc.uscourts.gov/common/opinions/200806/07-5360-1121529.pdf.

In sum, the unanimous three-judge panel held the FEC's current coordination regulations "frustrate Congress's goal of 'prohibiting soft money from being used in connection with federal elections.'" p. 19. "[T]he FEC's rule not only makes it eminently possible for soft money to be 'used in connection with federal elections," but it also provides a clear roadmap for doing so." Id. "We remand these regulations in the hope that, as the nation enters the thick of the fourth election cycle since BCRA's passage, the [FEC] will issue regulations consistent with the Act's text and purpose." p. 3.

The FEC will now need to either rewrite its regulations or appeal the decision to the U.S. Supreme Court. Keep in mind, the FEC currently does not have a quorum to approve any new rules given that four of its six seats are unfilled at this time. Accordingly, the current FEC rules will remain in place for the time being and are unlikely to change until after November 2008. However, in this tumultuous regulatory environment, organizations engaged in independent activities should be extremely cautious when interacting with candidates and their agents. No individual or organization wants to be an example from the 2008 cycle mentioned during the promulgation of new federal coordination regulations or a brief to the U.S. Supreme Court.

As always, we are available to answer any questions and discuss the decision's application to your organization's current activities.

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