(McCain-Feingold-Cochran)

Section by Section Analysis
 

Title I: Reduction of Special interest Influence
 

Sec. 101(a). Soft Money of Political Parties. Creates new Section 323 of the Federal Election Campaign Act (FECA) to prohibit soft money in federal elections.

Sec. 323(a). National Committees. Prohibits national party committees and entities controlled by the parties from raising, spending, or transferring money that is not subject to the limitations, prohibitions, and reporting requirements of the FECA (i.e., soft money).

Sec. 323(b). State, District and Local Committees. Requires any money spent on "Federal election activities" by state or local parties, and entities controlled or acting on behalf those parties or one or more state or local candidates to be subject to the limitations, prohibitions, and reporting requirements of the FECA (i.e., hard money.) This will close the state party loophole. "Federal election activities" are defined in Section 101(b) of the bill.

Sec. 323(c). Fundraising Costs. Requires national, state, and local parties to use hard money to raise money that will be used on Federal election activities, as defined by the bill.

Sec. 323(d) Tax-Exempt Organizations. Prohibits national, state, and local parties or entities controlled by such parties from making contributions to 501(c) or 527 organizations (other than entities that are political committees under the FECA). This provision will prevent the parties from collecting soft money and laundering it through other organizations.

Sec. 323(e) Candidates. Prohibits federal candidates or individuals holding federal office and any entities established, financed, controlled, or acting on behalf of such candidates or officeholders from raising or spending soft money in connection with federal, state, or local elections. These restrictions do not apply to federal officeholders who are running for state office and spending money on their own elections, as long as they do not mention other federal candidates who are on the ballot in the same election. The restrictions also do not prevent a federal candidate or officeholder from attending, speaking at, or appearing as a featured guest at a fundraising event for a state or local political party.

Taken together, these soft money provisions are designed to shut down the soft money loophole as comprehensively as possible. By including entities established, maintained, controlled, or acting on behalf of federal and state officeholders and candidates, they also prohibit so-called "leadership PACs" or "candidate PACs" from raising or spending soft money and are designed to prevent the evasion of the law by federal or state candidates or officeholders using 501(c)(4) or 527 organizations.

Sec. 101(b). Definitions. Provides definitions for certain terms used in the soft money ban.

Federal Election Activity means voter registration activities within 120 days before a federal election, get out the vote activity and generic campaign activity in connection with an election in which federal candidates are on the ballot (even if state candidates are also on the ballot), and public communications that refer to a clearly identified federal candidate and support or oppose a candidate for that office (regardless of whether those communications expressly advocate the election or defeat of a candidate.) These are the activities that state parties must pay for with hard money.

Generic Campaign Activity means activities like general party advertising that promotes a political party but not a candidate.

Public Communication means a communication to the general public by means of broadcast, cable, satellite, newspaper, magazine, outdoor advertising, mass mailing, telephone bank, or any other general public political advertising.

Mass Mailing is a mailing of more than 500 identical or substantially similar pieces within any 30 day period.

Telephone Bank means more than 500 calls of an identical or substantially similar nature within a 30 day period.

Sec. 102. Increased Contribution Limits For State Committees of Political Parties and Aggregate Limit For Individuals. Increases the amount that individuals can give to state parties from $5,000 to $10,000 and the annual amount that individuals can give in the aggregate to parties, PACs, and candidates from $25,000 to $30,000.

Sec. 103. Reporting Requirements. Requires national political party committees, including congressional campaign committees to report all receipts and disbursements and state party committees to report all receipts and disbursements for Federal election activities. Requires itemized reporting of receipts or disbursements of over $200. Eliminates the building fund exception to the FECA's definition of contribution. Accounts to raise money for office buildings were one of the original soft money accounts before the loopholes exploded in the 1996 election.
 
 

Title II: Non-Candidate Campaign Expenditures

Subtitle A – Electioneering Communications

This is the provision that has become known as the "Snowe-Jeffords amendment."

Sec. 201. Disclosure of Electioneering Communications. Requires anyone who spends over $10,000 in a calendar year on electioneering communications to file a disclosure statement within 24 hours after reaching that amount of spending and again within 24 hours of each additional $10,000 of spending. Electioneering communications are defined as broadcast, cable or satellite communications that mention the name or show the likeness of a clearly identified candidate for Federal office within 60 days of a general election or 30 days of a primary election, convention, or caucus. Electioneering communications do not include news broadcasts or communications that constitute independent expenditures because they contain express advocacy.

The disclosure statement must identify the person or entity making the disbursement, the principal place of business of that person if it is not an individual, the amount of each disbursement of over $200 and the identity of the person receiving the disbursement, and the election to which the communication pertains and the candidate or candidates who are identified.

If the disbursement is made from a segregated account to which only individuals can contribute, the disclosure statement must also reveal the names and addresses of the contributors of $1,000 or more to that account. If the disbursement is not made from such a segregated account then all donors of $1,000 to the organization making the expenditure must be disclosed. Money in the segregated account can be used for purposes other than electioneering communications, and the spending on other activities need not be disclosed, but all contributors to the account must be informed that their money might be used for electioneering communications.

Sec. 202. Coordinated Communications As Contributions. Makes clear that electioneering communications that are coordinated with candidates or with political parties are deemed to be contributions to the candidate supported by the communication. Because contributions to candidates are limited in the case of individuals, or prohibited in the case of groups (other than through a PAC), this provision essentially prohibits electioneering communications from being coordinated with candidates or parties.

Sec. 203. Prohibition of Corporate and Labor Disbursements For Electioneering Communications. Bars the use of corporate and union treasury money for electioneering communications. Corporations and unions are prohibited from spending money on electioneering communications, and groups and individuals may not use corporate or union treasury money for such ads. The provision includes a number of special operating rules designed to prevent evasion of this prohibition through pass-throughs, laundering, or contribution swaps. 501(c)(4) organizations, which are technically corporations, are permitted to make electioneering communications as long as they use individual money and make the disclosures required by Section 201. If they derive income from business activities or accept contributions from corporations or unions they must pay for electioneering communications from a separate account to which only individuals can contribute.
 

Subtitle B – Independent and Coordinated Expenditures
 

Sec. 211. Definition of Independent Expenditure. Clarifies the statutory definition of independent expenditure to mean an expenditure expressly advocating the election or defeat of a clearly defined candidate that is not made in coordination with a candidate.

Sec. 212. Reporting Requirements for Certain Independent Expenditures. Requires any person, including a political committee, who makes independent expenditures totaling $10,000 or more until the 20th day before the election to file a report with the FEC within 48 hours. An additional report must be filed with 48 hours of any additional independent expenditures of $10,000 or more. In the last 20 days before the election, a report must be filed within 24 hours of each independent expenditure totaling more than $1,000.

Sec. 213. Independent Versus Coordinated Expenditures by Party. Requires political parties to choose between making the limited expenditures permitted to be coordinated with a candidate under 2 U.S.C. § 441a(d) and making unlimited independent expenditures. Before making a coordinated expenditure, a political party must file a certification with the FEC that it has not and will not make an independent expenditure with respect to the candidate to whom the coordinated expenditure will pertain. This certification must bind all committees established and maintained by the national and state political parties of the candidate who is the beneficiary of the coordinated spending.

Sec. 214. Coordination with Candidates. Provides that activity coordinated with a candidate will be considered a contribution to that candidate and states a new statutory definition of coordinated activity. Recent FEC regulations have limited the concept of coordination to situations where there is substantial negotiation and discussion between a candidate and an outside group or party that results in virtual control of the group's activities by the candidate. In this provision, coordinated activity means anything of value provided to a candidate who is or has previously during the same election cycle acted in coordination with a candidate on campaign activity.

Coordinated activity need not be express advocacy, and includes any of four types of payments:

A payment made at the candidate's request or suggestion or pursuant to a general or specific understanding with the candidate. This would cover a case where a group agrees to buy an ad or purchase supplies for a candidate.

A payment made to distribute or republish a candidate's broadcast or written campaign materials. This would cover reprinting and distribution of campaign brochures. Not covered are news broadcasts that use candidate ads, ads that replay a candidate's ad in order to advocate the candidate's defeat, or materials from a candidate's website republished at a cost of less than $1,000. (This last exception is intended to protect people who simply link to a candidate's website.)

A payment made by a person who in the same election cycle has served as a employee, fundraiser, or agent of the candidate in a policymaking position, or has participated in more than incidental discussions with the candidate or a political party that is coordinating with the candidate about the candidate's campaign strategy or the operations. This would prevent people who have worked with the campaign or participated in significant strategy discussions from doing "independent" expenditures. • A payment by a person who retains the professional services of someone who has provided those same services to a candidate during the same election cycle, where the person providing the professional services is retained to work on activities related to the candidate's campaign. Professional services are defined to include polling, media advice, fundraising, campaign research, political advice, or direct mail services (except for mailhouse services), but not lawyers or accountants. This provision would assure that pollsters, media advisors, fundraisers, etc. who do work for a candidate cannot become conduits for inside information about the candidate's strategy to outside groups. Without this prohibition, it will be very difficult to ensure that independent expenditures, or electioneering communications under Snowe-Jeffords, will be truly independent.

The provision also specifies that when a political party committee makes an expenditure that refers to a clearly identified candidate that expenditure is presumed to be coordinated with the candidate of that party unless the party certifies under penalty of perjury that there has been no coordination.
 
 

Title III: Miscellaneous

Sec. 301. Use of Contributed Amounts for Certain Purposes. Codifies FEC regulations relating to the personal use of campaign funds by candidates. Contributions will be considered converted to personal use if they are used for an expense that would exist irrespective of the campaign or duties as an officeholder, including home mortgage or rent, clothing, vacation expenses, tuition payments, noncampaign-related automobile expenses, and a variety of other items.

Sec. 302. Prohibition of Fundraising on Federal Property. Amends 18 U.S.C. § 607 to provide controlling legal authority that it is unlawful to solicit or receive a campaign contribution from a person who is located in a federal room or building. It is also unlawful to solicit a campaign contribution while located in federal room or building.

Sec. 303. Strengthening Foreign Money Ban. Prohibits foreign nationals from making any contribution to a committee of a political party or any contribution in connection with federal, state or local elections. This clarifies that the ban on contributions to foreign nationals applies to soft money donations.

Sec. 304. Codification of Beck Decision. Amends the National Labor Relations Act (NLRA) to require unions to implement a specified objection procedure for nonunion members who don't wish the agency fees they pay in lieu of dues to be used for political purposes. Unions must provide annual notice of the objection procedure and allow nonunion members to file their objection by mail. If an objection is filed, the fees that the nonunion member is required to pay shall be reduced by an amount that reflects the ratio between the union's spending on political activities unrelated to collective bargaining and the union's total expenditures. Political activities unrelated to collective bargaining includes spending on federal, state, or local elections and lobbying activities on legislation unrelated to collective bargaining. The provision is intended to codify the Supreme Court's decision in Communication Workers of America v. Beck, 487 U.S. 735 (1988). Like that decision, the provision does not apply to union members.
 

Title IV: Severability; Effective Date

Sec. 401. Severability. Provides that if any provision of the bill is held unconstitutional, the remainder of the bill will not be affected.

Sec. 402. Effective Date. Provides that the amendments to the FECA made by the bill will take effect 30 days after enactment.