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FEDERAL ELECTION COMMISSION

PUBLIC HEARING ON

THE DEFINITIONS OF \"SOLICIT\" AND \"DIRECT\"

Tuesday, November 15, 2005

9:35 a.m.

9th Floor Hearing Room

999 E Street, N.W.

Washington, D.C. 20463

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PRESENT

Chairman Scott E. Thomas

Vice-Chairman Michael E. Toner

Commissioner David M. Mason

Commissioner Danny Lee McDonald

Commissioner Ellen L. Weintraub

Lawrence H. Norton

General Counsel

Robert J. Costa

Acting Staff Director

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C O N T E N T S

PAGE

Opening Remarks

Chairman Thomas 4

Commissioner Weintraub 6

Commissioner McDonald 10

PANEL 1

Marc Elias, Perkins Coie, on behalf of the

Democratic Senatorial Campaign Committee and

the Democratic Congressional Campaign Committee 12

William J. McGinley, General Counsel, on behalf

of the National Republican Senatorial Committee 20

Joseph E. Sandler, Sandler, Reiff & Young, P.C.,

on behalf of the Democratic National Committee 28

Donald J. Simon, Sonosky, Chambers, Sachse,

Endreson & Perry, LLC, on behalf of

Democracy 21 32

PANEL 2

Donald F. McGahn, General Counsel, on behalf

of the National Republican Congressional

Committee 123

Lawrence M. Noble, on behalf of The Center for

Responsive Politics 130

Paul S. Ryan, on behalf of The Campaign Legal

Center 136

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P R O C E E D I N G S

CHAIRMAN THOMAS: The special session of

the Federal Election Commission for Tuesday,

November 15, 2005, will please come to order. I

would like to welcome everyone to today\'s hearing.

Today we will discuss the Notice of

Proposed Rulemaking on the definitions of \"solicit\"

and \"direct\" which was published in the Federal

Register on September 28, 2005. The NPRM explored

several possible modifications to the definitions

of \"to solicit\" and \"to direct\" so that they would

be consistent with the District Court and Court of

Appeals decisions in Shays v. FEC.

Thank you to all of the people who took

the time and effort to comment on the proposed

rules, and in particular those who have come here

today to give us the benefit of their practical

experience and expertise on issues raised by the

proposed rules. I would like to briefly describe

the format we will be following today.

This morning we have a total of seven

witnesses who have been divided into two panels.

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The first panel will have four witnesses and will

last for an hour and a half. We will have three

witnesses on the second panel, and that panel will

last an hour and 15 minutes. We will have a short

break between the two panels.

Each witness will have 5 minutes to make

an opening statement. We have a light system at

the witness table to help you keep track of your

time. I am told, after some debate, that there

will be a yellow light that goes on when you have

30 seconds left, and the red light means that your

time is up and we would like you to wrap up

quickly.

The balance of the time is reserved for

questioning by Commissioners and our Staff Director

and General Counsel. There will be a second round

if time permits. I would like to remind my

colleagues that we are not required to use our

entire questioning time, although it is brief in

each case, given that we have a need to go through

everyone. We have a busy morning ahead of us. I

would appreciate everyone\'s cooperation in helping

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us to stay on schedule.

With that, I will open it up for any

opening remarks. Commissioner Weintraub?

COMMISSIONER WEINTRAUB: Thank you, Mr.

Chairman. I just wanted to make three points.

As you all know, I wasn\'t here in 2002, so

I really have no stake in promoting, supporting,

attacking, or opposing the regulation that\'s

currently on the books. Having said that,

obviously I have read and I will try to comply with

the Court\'s order.

I never personally, speaking as somebody

who was outside the process, read the word \"ask\" as

narrowly as the Court did. The particular

hypotheticals that were thrown out in the

litigation, about a Senator who would go up to a

donor and say, \"The party needs you to make a

\$100,000 donation,\" I just don\'t know in what

universe both the donor and the Senator wouldn\'t

understand that the Senator was asking for money.

That was my intent in interpreting the

rule. That\'s how I understood it. I understand

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from the comments we received that a lot of the

folks in the regulated community understood it that

way, and that\'s probably why we haven\'t had much of

a problem. I don\'t think we\'ve seen any complaints

posing that kind of scenario.

And it\'s a little bit frustrating because

in a sense I feel like we\'re having a hypothetical

argument over hypothetical scenarios, and in fact

there is probably substantial agreement amongst all

the stakeholders over what the rule would cover.

Obviously there are differences around the edges,

but it seems to me that part of what the Court was

trying to convey to us was that if your definition

doesn\'t cover these kind of scenarios, then it\'s

not worth the paper that it\'s written on, and I

would completely agree with that statement. It\'s

just that I always thought that it was covered.

So having said that, however, that brings

me to point three, and this is really the kicker.

I don\'t think that we\'re writing on a blank slate

here today. I don\'t think we can pretend the last

three years never happened. I don\'t think that we

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can just have a do-over and say, \"Okay, you know,

start fresh.\"

I think that if we were to reissue the

same regulation or substantially the same

regulation that we issued in 2002, it would be

challenged in court, and I believe that Judge

Kollar-Kotelly would strike it down, probably with

some fairly uncomplimentary things to say about us

in the process, and I think that it would probably

be upheld, her decision would be upheld on appeal

if that happened.

And given that, that that\'s my belief, I

think it would be irresponsible of me as a

regulator, as an administrator, to commit this

agency to another year or two, or however long it

would take, of relitigating the definition of one

word. I would really like us to move on and be

able to get to some of the agency\'s other

priorities.

And I think that we can do it. I think

that we can write a definition that will withstand

judicial scrutiny, and I\'m hopeful that we can do

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it in a way that is clear and specific enough to

provide guidance to the regulated community so they

will know what we\'re talking about, and that is

where I hope the commenters will focus their

comments, on the real world. Let\'s try to bring it

back from the world of hypotheticals to the real

world of actual concerns that people have about the

way the new proposed rule would work, if you have

any, and help us make it better if it needs

improving.

Obviously my mind is open. I am willing

to listen to what anybody has to say here today,

but that\'s what I would find most helpful. I don\'t

fault the commenters who said, \"Go back to the old

rule and just re-do the explanation.\" I think that

we put that out for comment. I personally don\'t

think there is anything that we could put in the

explanation and justification that would satisfy the

Court that that particular definition of the word

\"solicit\" as \"ask\" was sufficient, not after

everything else that we\'ve been through.

So I thought that since I might be

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perceived as a wild card up here, since I haven\'t

voted on this before, it would only be fair to the

witnesses to let them know sort of where I was

leaning going in the door and what I would find

most helpful. I appreciate the opportunity to have

done so, Mr. Chairman.

CHAIRMAN THOMAS: Thank you.

Commissioner McDonald?

COMMISSIONER McDONALD: Mr. Chairman,

thank you. I just want to be fair to the witnesses

as well, because actually Commissioner Weintraub

reminded me she wasn\'t here in 2002, I will not be

here when this is moved forward, I have a

suspicion, in 2006. So I am eager to hear what the

witnesses have to say, but I think in some of these

rulemakings it\'s a little awkward for some of us.

CHAIRMAN THOMAS: Any other opening

remarks?

Very well. The first panel I would like

to step forward. We have Marc Elias. He is

representing the Democratic Senatorial Campaign

Committee and the Democratic Congressional Campaign

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Committee. We have William McGinley who is

representing the National Republican Senatorial

Committee. We have Joseph Sandler who is

representing the Democratic National Committee, and

Donald Simon who is representing Democracy 21. I

would suggest you go in the alphabetical order,

which would put Mr. Elias first.

Before we have anyone say a word, we do

have to note that we have an opportunity today. It

happens to be one of the panelist\'s birthday, and

I\'m told that Joe Sandler decided to come here and

spend his birthday with us.

COMMISSIONER McDONALD: It just doesn\'t

get any better than this, does it, Joe?

\[Laughter.\]

CHAIRMAN THOMAS: So we have an entire

morning where we can berate him for reaching the

grand age that he has reached.

VICE-CHAIRMAN TONER: Mr. Chairman, which

is?

CHAIRMAN THOMAS: Well, that\'s going to be

after the first\--

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VICE-CHAIRMAN TONER: That will probably

be the first question.

CHAIRMAN THOMAS: We\'re not going to put

him under oath.

COMMISSIONER WEINTRAUB: Mr. Chairman, I

have to admit that I was desperately trying to get

here through the traffic, and I almost ran over Mr.

Sandler, who was walking down the middle of the

street to avoid the construction. Now that I know

it\'s his birthday, I\'m so glad that I didn\'t.

\[Laughter.\]

CHAIRMAN THOMAS: Well, it may not seem

like a happy birthday by the end of this, but we

wish you a happy birthday.

MR. SANDLER: Thank you.

CHAIRMAN THOMAS: Mr. Elias, please

proceed.

MR. ELIAS: Mr. Chairman, members of the

Commission, thank you for hearing us out on this

today. Commissioner Weintraub, thank you for

giving us a sense of where you\'re leaning, at

least.

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I am here today speaking on behalf of the

Democratic Senatorial and Congressional Campaign

Committees, and I want to seize initially upon

something that both you, Mr. Chairman, and

Commissioner Weintraub both emphasized is important

in this rulemaking, which I agree, is the

opportunity for people with, to use Ms. Weintraub\'s

words, \"real world experience,\" and to use the

Chairman\'s words, \"practical experience,\" to sit

before you and give you an assessment of (a) how

the current rule has worked and (b) what the

obstacles are that the Commission has going

forward.

So at least just speaking for myself,

rather than having this be a discussion of the law

and various rules of construction and dictionary

definitions and what the Article I power is versus

the Article III power and all of those other things

that these hearings so often devolve into, I really

today want to speak and make a clear factual

record, one that you can understand and one that

hopefully, if this does wind up in litigation, the

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courts can turn to.

As someone who is here representing 44

United States Senators and several hundred members

of the Congress through their organizing campaign

committees, the Democratic Senatorial Campaign

Committee which has a membership of U.S. Senators,

and the DCCC which has a membership of House

members, I want to take the opportunity to say that

the current rule has worked.

Members of the House and Senate do not

raise or spend soft money, and however you define

that, they don\'t do it. They don\'t raise it, they

don\'t spend it, they don\'t touch it, they don\'t

transfer it. They don\'t even know what some of the

terms mean. They just know they don\'t do it. They

don\'t have anything to do with soft money.

That has been my experience on the

Democratic side, and it has been my experience,

frankly, watching the Republican side. And no one

watches Republican lawmakers and whether or not

they are raising and spending soft money more

closely than the Democratic Senatorial and

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Congressional Campaign Committees.

Because if there was an epidemic of soft

money raising or soliciting or directing, or

whatever terms of art you want to use for today\'s

hearing, I would know about it. And in fact you

would know about it, because I would have brought

it to your attention with great fanfare. And I am

sure Mr. McGinley can speak at least for the Senate

side, and Mr. McGahn later today for the House

side, that if there was an epidemic on the

Democratic side, of raising or spending or

directing or transferring or otherwise having too

much to do with soft money, you would be hearing

about it from them.

So I\'m here to say that just as a factual

matter, not telling you what your obligations are

under court, not saying whether the slate is clean,

that right now the system works. The members of

the House and Senate don\'t understand every nook

and cranny of McCain-Feingold, but they understand

this much: They may not solicit soft money.

And they don\'t know, most of them, whether

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\"solicit\" includes \"suggest\" or involves an

objective standard or a subjective standard. They

don\'t understand any of that. They just know one

thing: They don\'t have anything to do with raising

soft money. Okay? And I don\'t know how much

clearer a factual record this Commission needs.

The hypotheticals that were presented in

court I think frankly represented a

misunderstanding on someone\'s part. Maybe it was

on the part of the Commission, maybe it was on the

part of the Court. Maybe it was frankly on the

part of my clients. But I can tell you one thing:

Our clients wouldn\'t have done, the members of the

DSCC and the DCCC wouldn\'t do anything close to

what is in those hypotheticals the Court suggested.

It simply doesn\'t happen.

In fact, many of this Commission\'s

toughest Advisory Opinions over the course of the

last two years have involved members putting before

the Commission the outer reaches of raising and

spending soft money. Inez Tenenbaum wanting to

know what can she do with her former state campaign

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account. Jon Corzine, for goodness sake, wanting

to know if he can spend his own money, or whether

spending his own money would somehow violate

McCain-Feingold. And I hate to bring up an open

sore for many of you on the Commission, the various

Advisory Opinions that have dealt with the issue of

ballot initiatives and initiative or referendum

committees.

So the fact is, the regulated community

has been extremely cautious and has moved very,

very gingerly in this area, and has avoided doing

anything that could be constituted to be raising or

spending soft money.

Now, with that sort of background, let me

just add a couple of other points. Number one, the

Advisory Opinions that you all have issued, Cantor

and the others that have been asked about, have

been extremely helpful, because one of the things

that has clearly troubled many members of the House

and Senate Democratic Causes have been the rules

that govern, the complicated rules that govern

their ability to attend\--not solicit, but to

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attend\--events for state candidates. And also the

rules that govern their ability to solicit for

state PACs, state parties, and state candidates.

I note with no glee, but simply as a point

of information, that Allison Hayward\'s blog

recently noted that Senator McCain, of all people,

had sent out an e-mail solicitation, soliciting

money without a Cantor disclaimer for a state

candidate in South Carolina whose web site accepts

corporate money. Now, I\'m sure that Senator McCain

did not intend to violate McCain-Feingold or the

Cantor Advisory Opinion, and I\'m sure that he

probably, in his subjective mind, was only

soliciting hard money. Under an objective standard

maybe he was doing something else. I don\'t know.

My guess is, since he was soliciting only a list of

individuals and soliciting low dollars, it probably

only raised hard money, so it was probably all

fine.

But my point is that it\'s important that\--these

rules are very complicated, and to the extent

that as part of the rulemaking you can simplify some

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of these by codifying the Cantor disclaimer or by

codifying other types of things that make it clear

how our members can still do politics, they can

still go to events, they can still send out e-mails, they

can still do basic grassroots politics

in their states and their districts without running

afoul of McCain-Feingold, it would be very helpful

to get that kind of clarification.

So I\'m not going to use all of my time,

but I just wanted to make those points, that I

think having clear rules on the state and local

candidate and state and local party and PAC piece

of this would be incredibly helpful, very, very

useful for the regulated community, but that on the

basic question of whether or not there is mass non-asking

soliciting going on in the regulated

community, it isn\'t happening, or if it\'s

happening, I\'m not seeing it and the House and

Senate Democrats are not seeing it.

Thank you.

CHAIRMAN THOMAS: Thank you.

Mr. McGinley?

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MR. McGINLEY: Thank you, Mr. Chairman,

Mr. Vice-Chairman, Commissioners. The NRSC

appreciates the opportunity to provide some

comments today on the Notice of Proposed

Rulemaking. Initially what I would like to do is,

I would like to cover some thematic points, and

then talk, as Commissioner Weintraub asked, about

some practical impacts of the definitions that we

are discussing today and possibly proposing to

amend.

As I stated, I am here on behalf of the

National Republican Senatorial Committee, which was

established by the Republican members of the United

States Senate and is registered with the Commission

as a political committee. All monies raised by the

NRSC must comply with the amount limitations and

source prohibitions of the Act, and we disclose our

receipts and disbursements to the Commission in its

periodic reports.

I say this to note that we are inside the

bubble with these definitions. We are the ones who

have to live with these definitions and must comply

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with the Commission regulations. These are not

comments that are proposed, by Mr. Elias or myself

or Mr. Sandler, on the outside looking in, weighing

in on hypotheticals. These are practical, real

world experiences that we\'ll be discussing today

about how federal candidates, federal

officeholders, political party officials have to

live with the rules that you are thinking about

changing today.

The NRSC opposes any changes to the

regulations that create new ambiguities or

unnecessary restrictions that may chill the

interaction between Republican Senators, federal

candidates, and constituent or grassroots

organizations. Any changes to the definitions that

the Commission makes today should provide the

regulated community with clear notice about the

communications and activities that constitute a

solicitation.

Federal candidates and officeholders

should be permitted to communicate with community

organizations and engage in community activities

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without fear that someone could misinterpret their

speech or attendance at an event, particularly a

state or local event, as an impermissible

solicitation. Determining what constitutes a

solicitation should be governed by the plain words

of the request, even for indirect or implied

requests.

Attendance at an event, in our view, is

not a solicitation. Gestures should not be a

consideration in determining whether a solicitation

has been made. Making policy speeches at issue

conferences should not be considered solicitations,

even if the organization that sponsors the issues

conference later on, at a separate date, at a

separate time, as a separate component of the same

event, holds a fundraising event.

Federal officeholders and candidates and

party officials should be held accountable for the

words they speak. They shouldn\'t be held

accountable for somebody\'s misinterpretation of the

words that they have said, or the fact that they

have attended an issues conference where they may

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not have asked anybody to make a donation or

directed anybody to make a donation.

For this reason, the NRSC urges the

Commission to adopt Alternative Two. You should

retain the current wording of the definition but

clarify the explanation and justification to make

clear that indirect and implied requests are

covered by the definition.

The NRSC agrees with Commissioner

Weintraub. Nobody believed or nobody interpreted

the current definition to preclude that a

solicitation was made in the examples in the

Court\'s opinion. And I agree with Mr. Elias that

whether it was a misunderstanding on somebody\'s

part or somebody just got it wrong, I don\'t know,

but nobody interpreted\--in the regulated community

we are not aware of anybody interpreting the

definition of \"solicitation\" to mean what it said

in the Court opinion.

The NRSC also urges the Commission to

approach this rulemaking with the goal of

preserving stability in the regulatory regime.

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There have been so many changes over the past three

years. The regulated community has operated under

the current rules for an election cycle and is

finally becoming familiar with how they work.

For example, candidates and party

officials are becoming accustomed to the new rules

governing state and local candidate fundraisers or

events and state and local party committee events.

As stated in prior testimony, in most instances the

money for the state and local election fundraising

events has already been raised before the event

takes place.

So when a candidate or an officeholder or

somebody else shows up, appears at the event, it\'s

not a solicitation in functional terms. Typically

what they are doing is, the federal officeholder or

the candidate is interacting with the grassroots

activists of the party or the grassroots or

constituent activists at an officeholder event.

These appearances simply energize the

grassroots. They are not an effort to evade the

soft money prohibitions. They are not an effort to

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get corporate money into federal elections. They

are not an effort to flood the system with shadow

groups or any type of stealth PACs.

Rather, what they are is, they are an

opportunity for federal candidates or officeholders

and in some instances party officials to interact

with the people who actually make elections work,

the people who stuff envelopes, who make phone

calls, who volunteer for campaigns, who volunteer

for party committees. Or it may be an opportunity

to hear the side of constituent or grassroots

organizations and what they feel about a particular

issue: a chamber of commerce, a union meeting,

something else where an officeholder or a candidate

can get down there and actually mingle and interact

with the people whose lives are affected by the

laws they pass.

And in many instances they also hold

fundraisers in connection with those types of

events. They have policy conferences, they have

panel discussions, they educate people about issues

that affect them, but maybe later on in the same

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conference, as a separate component, there is a

fundraiser. The candidates or the officeholders

should not be held to, should not be deemed to have

made a solicitation simply because they showed up

and talked about a particular issue. They should

only be held accountable for the words they speak.

Vague and overly broad definitions will

have a disproportionate impact on low-dollar

grassroots events and activities, not on high-dollar

events. The ultimate victims of an overly

broad and vague definition in the regulations will

be the low-dollar events. It will be the

grassroots events. It won\'t be the large meetings

with the large corporate donors or (c)(6) or a

union or some large (c)(4).

No, what it\'s going to be is, it\'s going

to hurt the grassroots, because at the end of the

day what the candidates and the officeholders are

going to do is, they are going to come to counsel

and ask, \"Can I go to this event?\" And people are

going to have to ask, \"Is this a fundraising

event?\"

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And if it is, and we don\'t know what the

solicitation is going to be, then we\'re going to

have to follow the Advisory Opinions. And if you

rescind the Advisory Opinions, as I\'m about to

discuss, that\'s going to chill the activities of

federal officeholders and candidates at the state

and local level.

For these reasons, the NRSC believes that

the Commission should not disturb Opinions 2003-3

and 2003-36, that it should keep them in place.

These AOs provide specific guidance for federal

candidates and officeholders and their agents, and

provide them with the legal protections they need

to continue to participate in state and local

election events. In fact, the NRSC favors

incorporating the guidance in these AOs into the

Commission regulations to make them uniform.

Each state\'s contribution limits for state

and local parties or candidates are different.

Some states have lower limits than those under

federal law, while others permit higher limits.

Federal candidates and officeholders need a uniform

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rule on solicitations for state and local events.

And, as stated in prior testimony I would

encourage you to take a look at the state and local

caucus committees. In some instances those are

part of the party committee structure. In other

instances they are not; they are considered a state

and local PAC. Codifying the RGA Advisory Opinion

will give the federal officeholders and candidates

the protections they need to continue to engage in

these grassroots activities.

I\'m sorry. I see my time is up.

CHAIRMAN THOMAS: There will be time later

on, I\'m sure. Thank you very much.

Mr. Sandler?

MR. SANDLER: Thank you very much, Mr.

Chairman and members of the Commission. We

appreciate the opportunity to testify today in this

rulemaking on behalf of the Democratic National

Committee. With me today is Amanda LaForge, also

the Chief Counsel of the DNC.

The DNC generally supports the proposed

rule, and we commend the Commission for developing

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and Mr. Norton and his staff for developing the

proposal, which we believe does strike the proper

balance between meeting the requirements of the

Shays-Meehan litigation and creating a workable and

practical standard for party committees and their

offices and staff.

In keeping with the request of

Commissioner Weintraub, our principal concern is a

practical one, as explained in our comments.

Governor Dean and other national party officers\--we

have five vice-chairs, secretary-treasurer,

national finance chair\--and our staff appear

frequently at two kinds of events.

They appear at fundraising events for

state and local party committees, obviously all

kinds of fundraising events, including fundraising

events at which non-federal money is being raised,

which would necessarily be the case with local

party committees, few of whom are registered with

the FEC. Secondly, they appear at non-fundraising

events, non-fundraising events for a wide variety

of nonprofit organizations, political

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organizations, advocacy groups, state and local

candidates and the like.

We basically want to be sure of two

things: Number one, that the mere expression of

support for the work or activities of an

organization, a nonprofit organization or a local

party committee or a state or local candidate is

not construed as a solicitation of funds in these

circumstances. Secondly, that the mere appearance

of a national party officer at a state or local

party event is not automatically construed as a

solicitation.

We think there are four, I want to make

just four quick points about the specific

rulemaking proposal in that regard. We believe the

proposal should be adopted as proposed, except that

in Alternative Two, the language that the

Commission\--that appears in the Notice of Proposed

Rulemaking, that says, requires that the E & J, I

guess, would make clear\--explanation and

justification\--would make clear that solicitation

requires an actual request for funds and does not

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in any way apply to other types of political

speech, such as statements of political support for

an organization. That is a useful and, we believe,

important and necessary clarification, and should

be included as proposed in the, I guess, second

half of Alternative Two.

Secondly, the examples provided in the

Notice of Proposed Rulemaking of both what would

and would not constitute a solicitation, we believe

are extremely useful and accurately illustrate what

should be the proper scope of the proposed rule,

and we urge that those be included either in the

explanation and justification or in the language of

the rule itself.

Third, we do not support the addition of

an open-ended conduct element, the idea of the

language that is suggested, of just throwing the

word \"conduct\" in there and we just don\'t have any

idea what that means and how it would be applied,

or whether the party counsel are supposed to start

coaching our national party officers on their body

language, or what in the world that is supposed to

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mean.

And, finally, we would not support any new

rule, and there is nothing that is proposed but

there is a reference to it in the comment of some

of the reform groups, that would automatically deem

any appearance at a fundraising event as a featured

speaker to be a solicitation. In the case of state

and local party fundraising events, obviously that

is not possible. In terms of national party

officers, it is not what the law says. It\'s

clearly not what the law means, and we would urge

that such a presumption not be included in any new

rule.

And with that, I thank you for the

opportunity to present these views, and certainly

look forward to answering your questions at the

appropriate time.

CHAIRMAN THOMAS: Thank you very much.

Mr. Simon, please proceed.

MR. SIMON: I appreciate the opportunity

to testify on behalf of Democracy 21, and let me

join in wishing Joe a happy birthday.

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In the 2002 rulemaking on this issue, the

General Counsel proposed a definition of the term

\"solicit\" to include any statement that requests or

recommends that a contribution be made. The

Commission rejected that proposed rule, with

Commissioners saying that it was too broad and too

subjective. As a result, the Commission adopted a

rule that defines \"solicit\" to mean only to ask

that a donation be made.

This deliberate narrowing of the

definition obviously caused concern among

supporters of the law. It raised the question, for

instance, of whether the Commission would treat as

a solicitation a statement by a federal

officeholder to a potential donor, \"I suggest that

you contribute \$100,000 to the state party.\" Now,

while this may seem absurd, what other meaning

could there have been to the Commission\'s

deliberate decision to excise the word \"suggest\"

from the proposed definition? So the sponsors

brought suit.

Although the Commission subsequently made

34

efforts to reinterpret its deliberate narrowing of

the definition and to claim it was not in fact

intended to be so narrow at all, it lost this point

with the Shays court, which held that the rule did

have a narrow meaning and covered only an explicit,

direct request for money, and thus did not cover

what the Court called more nuanced forms of

solicitation, such as indirect statements, coded

statements, or in the words of the D.C. Circuit,

\"winks, nods, and circumlocutions.\"

The Circuit Court called the Commission\'s

narrow definition an absurdity that violated

Congress\' language and intent in BCRA under the

Chevron step one test, and therefore held the

regulation invalid, as had the District Court.

Given this, I believe the Commission has no option

but to adopt a new rule. There is no saving

interpretation to be made of a rule that flunked

the Chevron step one test.

I think the Commission is very much on the

right track with the rule proposed in the NPRM,

which would make clear that \"solicit\" does include

35

indirect as well as direct, implicit as well as

explicit requests. We also support the approach

taken in the proposed rule that whether something

is a solicitation is a question that should be

judged in context.

Now, most of the context obviously does

depend on the language used, but conduct is as much

a part of context as the language itself, and it\'s

artificial to exclude considerations of conduct

from this determination. Now, by conduct we don\'t

mean that the Commission should look for

solicitations done by pantomime. Rather, the D.C.

Circuit expressly noted\--expressly noted\--that

winks and nods can be part of how solicitations are

made, and the Commission should not by rule disable

itself from even considering such cues in an

appropriate case simply because they might be

nonverbal.

Now, let me also point out this is not a

radical concept to the Commission. In both the

Cantor AO, 2003-3, and 2003-36, the RGA AO, the two

major AOs that deal with the solicitation rule, the

36

Commission said in both of them, the scope of a

covered individual\'s potential liability under

Section 441i(e)(1) must be determined by his or her

own speech and actions in asking for funds, and

those of his agents, but not by the speech or

actions of another person outside of his or her

control.

So even under the existing rule the

Commission considers actions or conduct, as well

you should. So words of general support for a

candidate or party in one context, a fundraising

event, for instance, might very well convey a

different message than the same words in another

context, such as at a policy forum or seminar.

Again, the Commission should be free to judge the

meaning of the words by considering all elements of

the context.

Now, finally, the Commission should not be

dissuaded from adopting such a rule by an argument

that candidates and officeholders will be unduly

restricted from speaking or even attending events

for fear of slipping over some sort of indistinct

37

line. The key point I think is this:

Federal candidates and officeholders are

not prohibited from soliciting. They are

prohibited from soliciting non-federal funds.

Federal candidates and officeholders can solicit

for state candidates and state parties. They just

must make clear that their solicitations are

limited to asking for donations subject to federal

rules.

In the rules developed by Advisory

Opinion, the Commission has provided a safe harbor

to ensure compliance with the law. Federal

candidates need only make clear by disclaimer that

their solicitations are so limited. The disclaimer

can be oral or written, preplanned or spontaneous.

Given this, it should be relatively simple

for Federal candidates and officeholders to ensure

compliance with the solicitation rules simply by

making clear to their audience that any

solicitation they might make is limited to Federal

funds. If they follow the guidelines set out by

the Commission in the disclaimer Advisory Opinions,

38

they should have little to fear from the

Commission\'s redefinition of the term \"solicit.\"

Thank you.

CHAIRMAN THOMAS: Thank you very much, one

and all. Well, we will move into the questioning

phase. I will start off the first panel here.

I guess first off I\'m most intrigued with

this issue of whether or not to incorporate

conduct. I think if we were to borrow the Court\'s

language and incorporate the word \"circumlocution\"

in a regulation, we probably would be the first and

only government agency to use that word anywhere in

a regulation, so that has some appeal to me.

But I think I\'ll focus just on whether or

not maybe it would be helpful for us to incorporate

in the list of examples perhaps something that

would demonstrate what we might mean if we were to

include the concept of conduct. I\'m thinking of

something where we say that the words used would

be, \"I would never think of asking you for a

corporate check,\" and then there would be the wink,

wink, suggesting that actually I mean just the

39

opposite. Another example might be, \"Would I be

asking you for a corporate check?\" followed by a

nod.

I mean, that type of conduct it seems to

me we all in daily life see, joking comments or

conduct like that. but we understand the meaning.

So I\'m just curious whether the panel would find it

appropriate if we were to focus our reference to

conduct on a couple of examples like that, and put

those into that list of examples that we already

have crafted. Any or all. Mr. Simon?

MR. SIMON: Well, I\'ll start it out. I

mean, I do think one way or the other, the

Commission should enable itself to take into

account conduct, in making the determination called

for by the proposed rule about whether in context a

reasonable person would understand that there is a

solicitation being made. And I think that conduct

may not often be part of the situation, but I think

it occasionally could be part of the situation.

I think it is important that the D.C.

Circuit expressly flagged this issue for the

40

Commission, and I think it would be very

questionable under the ruling for the Commission to

simply disown that concept or not take account of

the Court\'s decision.

CHAIRMAN THOMAS: Anyone else?

MR. SANDLER: I think that the example

that you cite, Mr. Chairman, is clearly covered by

the language of the proposed rule as proposed. It

is, you know, construed as a reasonable person

would understand it in context and would be covered

without throwing in an open-ended term like

\"conduct.\"

It should be noted in the Shays District

litigation the plaintiffs offered a whole host of

examples, and I think this was impressive to the

Court, of situations that they believed were not

covered by the Commission\'s then existing

regulation. Not a single one of those examples

involved physical, nonverbal conduct. To the

contrary, they were all communications that clearly

referenced contributing or amounts of money or

something that a reasonable person would understand

41

is solicitation.

So I just can\'t see throwing in an open-ended

concept like \"conduct\" when the current

situations you\'re talking about I think are

embraced by the language of the rule as proposed.

MR. ELIAS: If I can just expand on that,

just for one quick second, I think there is a

reason. Although I was not privy to the

plaintiffs\' motives or strategy, I suspect there

was a reason for that, which is that the

hypothetical, with all due respect, Mr. Chairman,

that you lay out simply doesn\'t happen. I mean,

members of the House and Senate simply don\'t do

that.

And the concern that I have, and those of

you who have worked on Capitol Hill are familiar

with the practice, there is a common practice now

where members will not meet alone, without staff

present, with lobbyists, not uniformly but

generally. And the reason is that in the era of

scandals and ethical allegations, you always want

to make sure you have a witness present, to make

42

sure that there was not something that went on

behind closed doors with the members that no one is

privy to.

I can imagine your scenario where you have

a member who solicited hard money, actually told

someone, \"I can\'t solicit corporate money,\" but the

donor is insisting on giving a corporate check and

the member is saying, \"No, no, really, I can only

solicit hard money. I can\'t solicit corporate

checks.\"

And then we have the member who is

beholden to whether or not the person who is

insisting on making the corporate contribution

thinks that the member really meant it or didn\'t

really mean it, or they saw a flicker in their eye

or they thought that they nodded their head. I

mean, at some point a member has to be able to say,

\"I told them I don\'t raise corporate money,\" and

that that\'s good enough.

And it can\'t be that it becomes this kind

of he said, she said, of \"Well, did you really mean

it when you said you couldn\'t take corporate money,

43

or was there an intonation in your voice? Did you

sort of glance the other way when you said it? Did

you give less emphasis to that than you gave to

other things?\"

I mean, the conduct standard is fraught

with turning what are genuine\--there are a lot of

confused people out there about McCain-Feingold.

There are a lot of people out there who don\'t know

they can\'t give corporate money to national party

committees. They gave corporate money to national

party committees for years and years.

And when our chairmen say, \"No, no,

really, we only take hard money, I can\'t take money

from a corporation,\" my golly, I don\'t want them to

have to have a witness present to make sure that

there is someone who saw that there was no wink,

there was no nod, it was just an honest-to-God

statement.

MR. McGINLEY: The only thing that I would

add to what Mr. Elias and Mr. Sandler said is that

I think that your struggle to come up with an

example of where conduct would constitute a

44

solicitation kind of illustrates the problem. I

mean, it becomes too subjective of a standard.

And really what we\'re saying there is that

even though your words said \"No, I\'m not going to

take soft money,\" what you\'re doing is, you\'re

interpreting what they did based upon the actions

of somebody else, because if somebody does give

soft money, then you\'re asking the question, \"Well,

why did they?\" Even though the person was saying

no, was there a wink or a nod or anything like

that?

I mean, federal officeholders should be

governed by what they say. They should be governed

by what they say, not what somebody else interprets

them to do through their actions or anything else.

We don\'t need a subjective standard. What we need

is some clear guidance as to what the Commission is

going to look at as a solicitation.

CHAIRMAN THOMAS: We\'ll move on. I have

other questions, but I\'ll get to those later.

Thank you.

Vice-Chairman Toner?

45

VICE-CHAIRMAN TONER: Thank you, Mr.

Chairman. I appreciate all the witnesses coming in

today, particularly Mr. Sandler on your birthday.

Happy birthday. I won\'t ask you how old you are,

but I don\'t think you look at day over\--well, I

won\'t finish the sentence.

\[Laughter.\]

But thank you for coming. I appreciate

very much Commissioner Weintraub\'s thoughts at the

outset in terms of the key issues from her

perspective in terms of this rulemaking. I just

want to briefly note sort of where I\'m going to

come from on it.

My view is that we have an obligation to

interpret the law as we think is right, as we think

is appropriate. And for me, I\'m not really going

to be guided by what I think Judge Kollar-Kotelly

may think we\'re required to do or the federal

courts are required to do. I\'m going to be guided

by what I think is right, in reading the statute,

and come to the conclusions that I think are

appropriate.

46

There is no question that people in this

country then have a right to go to federal court

and litigate that, and that\'s fine. It\'s the way

the system works. But I think I\'m just not going

to focus on whether whatever we do may lead to

additional litigation, because if we did that

around here, there really wouldn\'t be much we could

accomplish.

So for me, I really do take it as a de

novo review, particularly when Congress did not

define the statutory term \"to solicit,\" which I

think is extremely important. They clearly could

have defined the term. They did not. Instead,

they delegated that important issue to this agency.

So for me it really is a de novo assessment about

what is the appropriate way to interpret the

statute.

With that, I\'ll have some questions. I

want to focus on one thing that Mr. Sandler

indicated, which was that he thought it was

important that whatever we do, we make clear that

the regulation, or in the explanation and

47

justification indicate that the solicitation

restrictions do not apply to speech that has no

relationship to fundraising, political statements

that have no relationship to fundraising. And I

just want to establish first whether we have

agreement on that.

Mr. Simon, do you agree that if you\'ve got

other types of political statements that do not

relate to fundraising, in no way restricted by the

soft money solicitation ban?

MR. SIMON: It depends. I think a policy

speech, a pure policy speech at a non-fundraising

event, is not a solicitation. If a candidate or

officeholder gives a speech as part of the program

at a fundraising event, I think that is a

solicitation. I think being part of the program at

a fundraising event, where the message of the

event, the purpose of the event is to raise funds,

being part of the program constitutes a

solicitation. Now, that doesn\'t mean\--

VICE-CHAIRMAN TONER: No matter what is

said?

48

MR. SIMON: No matter what is said. Now,

that doesn\'t mean that the candidate or

officeholder can\'t do that. It just means that

they have to touch the bases laid out in the

Commission\'s Advisory Opinions about how to make

the proper disclaimers.

VICE-CHAIRMAN TONER: But if I understood,

I thought your view was, and please correct me if

I\'m wrong, that the Advisory Opinions, the Cantor

AOs and others, were wrongly decided and that we

should repeal those.

MR. SIMON: No. We said in our comments

that we agree generally with the framework of the

disclaimer provisions in the AOs. There are

certain rulings made in the AOs that I think are

grounded on the Commission\'s unduly narrow

definition of \"solicit\" that it was working with at

the time.

But the concept of allowing candidates to

make solicitations at events where non-federal

funds are raised, but to clarify, by the disclaimer

mechanism laid out in those advisory opinions, that

49

he is only soliciting for money complying with

federal rules, is a process that I think, as I said

in my opening remarks, provides a clear and readily

available safe harbor, such that candidates can go

to non-federal fundraising events, can participate

in those events, can speak at those events, but

still do so in a way that complies with the

statute.

VICE-CHAIRMAN TONER: Mr. Sandler, do you

agree with that assessment?

MR. SANDLER: Well, in the case of

national party officers and staff acting in that

capacity, the mere appearance at a fundraising

event for a state or local party committee clearly,

you know, should not be considered a solicitation.

VICE-CHAIRMAN TONER: Should not be?

MR. SANDLER: Should not be. We don\'t

believe that\'s what the law says, and we don\'t

believe that\'s what the law could possibly mean.

That doesn\'t mean\--it means they don\'t solicit

funds there. They don\'t ask for money. They

comply with the definition of the proposed rule,

50

not suggest or recommend or in any way indicate

that people there should give money, unless it was

a completely federal hard money event. But the

mere appearance of a national party officer at a

state or local party fundraiser is not a

solicitation. I think the law is clear on that,

and that\'s how the sponsors interpreted it.

MR. SIMON: Could I just interject in

response to Joe\'s comment? I don\'t want to use up

more than my fair share of time. But state party

fundraising events are different because there is a

specific provision of the law that governs state

party fundraising events.

VICE-CHAIRMAN TONER: For federal

candidates and officeholders. What about national

party officials that are not covered by that

statutory provision?

MR. SIMON: Okay. Well, fair point. Then

I would say that party officials going to such

events would be subject to the disclaimer

provisions in the Advisory Opinions.

VICE-CHAIRMAN TONER: Mr. Elias, you

51

indicated in your comments that you supported

Alternative Number Two that we had in the NPRM,

which basically would reaffirm the current

regulation but would add language in the reg making

clear that it relates to, it applies to indirect

pitches for money as well as direct ones. Could

you explain the rationale for your position on

that?

MR. ELIAS: Yes, and I think it goes back

again to my opening statement, which is that I\'m

not going to get baited into a discussion of what

the Court can or can\'t require you to do, or what

the Court did or didn\'t. I mean, that\'s\--

VICE-CHAIRMAN TONER: Reasonable on your

part.

MR. ELIAS: I think way too often, and I

think this case was a good example of it, way too

often you all wind up in a situation where the

factual record of the hearing on the rulemakings is

a bunch of lawyers bickering about what the law is.

And I want to be here today, and I want to be very

clear about this, I am here today to help flesh out

52

a factual record for you.

So the reason why we supported that

alternative is based on the experience of the

Democratic Senatorial Congressional Campaign

Committee, which, may I point out, consists of a

number of the sponsors and cosponsors of the

legislation, obviously not all of them, including I

assume Congressman Meehan. And I assume Senator

Feingold would agree with all of the comments that

I offer today, or perhaps many of the comments.

But understand that when Mr. Simon says

that the current rules cause \"concern\" among the

supporters of the law, my caucuses are the

supporters of the law. This law passed with the

overwhelming support, and the cosponsors and

support of the Democratic House and Senate, and of

the DCCC and the DSCC and its members.

So when we say we support Alternative Two,

it is not because we\'re looking for a loophole in

the law, but it is rather because we have seen a

provision of the law that has frankly worked, that

has prevented Republicans from raising and spending

53

soft money, that has stepped our members back from

a line of raising and spending soft money. And it

is place that they are, right now they are familiar

with the rules, they understand the Cantor

disclaimers, they understand what they are allowed

to do and not to do, and clarity in a very complex

regulatory regime is something that this Commission

ought to seek to promote.

VICE-CHAIRMAN TONER: Thank you. Thank

you, Mr. Chairman.

CHAIRMAN THOMAS: Commissioner Weintraub?

COMMISSIONER WEINTRAUB: Thank you, Mr.

Chairman.

Well, I love clarity. I wish I could find

some. Maybe you can help me. Let me start with

Marc and Bill. Joe thinks our proposed rules\--

MR. ELIAS: You\'re very informal today.

COMMISSIONER WEINTRAUB: Well, we\'re all

friends, right? If you prefer, I\'ll refer to you

as Mr. Elias, just to show you how much I respect

you.

Joe thinks that the proposed rule provides

54

him with workable guidance and he understands what

it means, and you two say it doesn\'t. What does he

know that you don\'t know? I mean, how come he

understands it and you don\'t?

MR. McGINLEY: Marc, go ahead.

\[Laughter.\]

MR. ELIAS: I have learned over time to

never disagree with Joe, so let me just say that it

might be a slight difference in perspective. The

House and Senate committees have a large number of

members who are covered by this rule, and who have

agents who are covered by this rule.

So I think some of it may be that what is

workable for a national party committee, what is

workable frankly for the DSCC\'s own staff, where

they have lawyers like me who can provide regular,

ongoing training and monitoring and compliance, is

maybe a little different than when we get down to

the membership level of these committees, which I

think is something that Bill and I also have to

contend with, where you have large numbers of

members of the House and Senate who are being asked

55

on a weekly, and sometimes more often, basis to be

involved in doing drop-bys of state candidate

events or, you know, swinging into a state PAC

event.

So I think that some of the differences

may just be a difference in perspective; that the

DNC, which has an institutional set of concerns as

a national party committee, the primary candidate

that it worries about is the presidential

candidate; that generally has its own legal staff

that is able to also make sure that that campaign

is hopefully obeying the law.

It\'s a little bit harder\--these changes I

think will have a greater negative impact at the

House and Senate level than it will\--and frankly at

the candidate level, the first-time candidate

level\--than it will at the\--

COMMISSIONER WEINTRAUB: But why? What is

it about the proposed rule that you don\'t

understand or that you don\'t think is clear?

MR. ELIAS: Bill, I took the first one.

COMMISSIONER WEINTRAUB: Real world

56

examples, remember. What kind of scenarios do you

envision that, you know, just befuddle you?

MR. McGINLEY: Well, I think that the

reasonable person standard, if I remember

correctly, is the proposed\--you know, who is the

reasonable person? Is it going to be the six

Commissioners judging? Is it going to be the OGC

staff investigating? Is it going to be us

advising? Or is it going to be the candidate who

shows up?

MR. ELIAS: Is it a reasonable candidate

or is it a reasonable donor?

MR. McGINLEY: Right.

COMMISSIONER WEINTRAUB: Well, what\'s the

alternative? I mean, if we don\'t have a reasonable

person standard, which is put in there to try and

guarantee some sense of objectivity, surely you

don\'t want us to go and interview every donor and

every candidate and say, \"Now, what did you really

mean by this?\"

And what are we supposed to do, give them

lie detector tests to find out what they really,

57

really intended, or what they really, really

understood, if we don\'t just sort of look at their

face and say, you know, \"What would somebody

normally understand these words to say?\" What\'s

our alternative here?

MR. McGINLEY: Well, this also gets into

the problem of context and conduct, in that, you

know, for example\--you wanted a real world

example\--there are local Republican clubs all

across the nation, I mean. And many times, as Marc

said, Senators and Congressmen operate closer to

the ground than sometimes the presidential

candidates, and will receive more frequent

invitations to go to these types of events.

These types of events don\'t pay for

themselves. Many of these clubs aren\'t registered

with the Commission as a political committee.

They\'re not a federal PAC. So when a federal

officeholder or candidate shows up at local club

events where they ask for donations to help pay the

cost of the meals, is that a fundraising event?

And if the federal candidate or officeholder shows

58

up, is that a solicitation at those events? What

if it\'s in the State of Virginia, where you have a

\$12 meal and somebody writes it out of their

business account? I mean, it\'s these types of

situations.

Now, the officeholder or the candidate may

not believe that they just made a solicitation by

simply showing up at this low-dollar event. What

they\'re doing is, they just want to get together

and talk to people who may be precinct captains or

women, and find out what\'s happening on the ground

in their district or state.

But when somebody gives money in

connection with that event, we want the

officeholders to be judged by the words they speak.

In other words, if they didn\'t go out and ask

businesses to sponsor the event, if they didn\'t go

out and ask for people to pay for the lunches or to

support the organization, but instead just showed

up to have a conversation with constituents or

grassroots activists, and they say, \"This is a

great organization, thank you for all you do,\" we

59

don\'t want that to be misinterpreted as some type

of solicitation simply because, you know, an

impermissible source sponsored the event without

any connection to the officeholder\'s activity.

COMMISSIONER WEINTRAUB: But that really

goes to something that Mr. Simon has asked us to

put into the proposed rule. I\'m asking about the

proposed rule as it is, you know, as we put it out

there. What is it about that that you find\--

MR. ELIAS: Let me take a shot at an

example, and it\'s something that we face, probably

Bill and I at least face every week or at least

every month, which is what to do when some over-eager state

candidate has sent out a solicitation

that includes a federal candidate without their

permission. Now, I now have a flyer for a

fundraiser raising corporate money\--okay?\--for a

state candidate, and it\'s got a federal

officeholder\'s name on it.

Under an objective standard, a reasonable

person\--well, depending on who the reasonable

person is, it may be that my candidate just

60

unwittingly violated McCain-Feingold solicitation

rules. Now, if the reasonable person is the

reasonable candidate, to me solicitation has a

volitional component to it. It is\--

COMMISSIONER WEINTRAUB: Suppose we put

that in? Suppose we said you\'ve got to have some

kind of participation in it?

MR. ELIAS: Well, more than some kind of

participation. It has to be a volitional act. One

should not be able to do an inadvertent

solicitation, and inadvertent solicitations happen

all the time now, because candidates just pluck the

names of federal candidates and they stick them on

their flyers and they send them out, saying that

so-and-so is\--

COMMISSIONER WEINTRAUB: Suppose we put an

E & J that if the candidate had nothing to do with

it and didn\'t approve it, didn\'t consent to it, and

his name shows up somewhere and it\'s totally beyond

his control, that we\'re not going to hold him

responsible for it. Does that solve your problem?

MR. ELIAS: Well, it solves that

61

particular problem, but it goes to the question of

what a reasonable person is. If you want to say

that it is a reasonable officeholder, a reasonable

candidate, a reasonable person covered by McCain-Feingold,

that\'s something to talk about. But if

the reasonable person is a reasonable third person

who is hearing the solicitation, that\'s a very

different kettle of fish.

MR. McGINLEY: That\'s right.

COMMISSIONER WEINTRAUB: Well, it seems to

me that you are\--I\'ll stop in one second because I

see my time is up\--but it seems to me that you are

imposing a subjective test on top of an objective

test; that you\'re saying that the problem with the

reasonable person standard is that the reasonable

person standard would be interpreted subjectively,

and what we\'re trying to do is come up with an

objective test.

MR. ELIAS: But, Commissioner, Weintraub,

with all due respect, that\'s inevitable. As you

probably know, I don\'t practice much outside of the

political law context, but my understanding is, in

62

other areas of the law like employment

discrimination this has actually been the source of

some considerable litigation.

In sexual harassment cases, is it conduct

that\'s offensive to a reasonable woman or a

reasonable man, or a reasonable boss or a

reasonable subordinate? And there becomes a lot of

litigation about exactly from whose perspective it

is reasonable.

And I\'m just saying that if you\'re going

to put a requirement of reasonableness into the

law, it ought to be from the folks who are being

regulated by it. It ought to be a reasonable

person who is running for office, a reasonable

person whose name is being used all the time and

they don\'t know about it, a reasonable person who

is being jerked from one event to another during a

night, a reasonable person who is being handed

remarks as they walk on stage that say, \"Support

the Democrats,\" a reasonable person who doesn\'t

know what the state law is in the state about how

much a city councilman can\--

63

COMMISSIONER WEINTRAUB: All right.

MR. ELIAS: That should be the reasonable

person.

COMMISSIONER WEINTRAUB: Okay. Could I

just ask Mr. Simon? I know I\'m over my time, but I

would be very curious to know whether Mr. Simon

would be willing to go along with a reasonable

candidate standard.

MR. SIMON: No.

COMMISSIONER WEINTRAUB: I didn\'t think

so.

CHAIRMAN THOMAS: Let\'s move to

Commissioner Mason.

COMMISSIONER MASON: I want to start with

a question for Mr. Simon because there were a lot

of\--the terms \"objective\" and \"subjective\" were

thrown around in the opinion, and to a certain

degree in our proposal, and some in your testimony,

and as Commissioner Weintraub suggested, there is a

little confusion about what that means.

But as I understand it, the principal

difference in the law is as to whether we can go to

64

someone\'s state of mind. The subjective standard

goes to state of mind, and therefore the potential

donor, for instance, could file a complaint with us

saying, \"The officeholder did X, Y and Z, and I

felt like I was being asked for a corporate

contribution,\" and his statement that \"I felt like

I was being asked\" by itself would carry weight.

Now, obviously a complaint is going to

come in with other descriptive elements, but I want

to see first if you agree with that being the

principal distinction between an objective and a

subjective standard, and assuming you do, if you\'re

comfortable with us adopting an objective standard,

however it might be expressed, \"reasonable person\"

or whatever.

MR. SIMON: I think it\'s not an issue of

what that one individual subjectively thought, in

terms of whether that particular individual thought

he or she was being solicited. I think it\'s a

question of whether a reasonable review of the

situation, of the context, of the words, would lead

the Commission to conclude that there was a

65

solicitation. Let me just point out one\--

COMMISSIONER MASON: As you understand it,

in legal terms, does that mean an objective test?

MR. SIMON: Yes, that\'s my understanding.

Let me just point out one other thing

which I think is also somewhat helpful to

Commissioner Weintraub. In the E & J on the 2002

rule, the Commission said, and this was quoted by

the D.C. Circuit, \"The definition of \`solicit\' is

intended to include a palpable communication

intended to and reasonably understood to convey a

request for some action.\"

So, you know, this debate about whether to

include a reasonable person test in the rule or

not, I think it\'s a little bit of a kind of false

dilemma, because I think inevitably the Commission

is going to construe its regulations by a

reasonable understanding of what the words mean,

and I think it said that about the 2002 rule. And

whether you put it in the rule or not, I think

that\'s essentially the only sensible way to go

about it.

66

COMMISSIONER MASON: I suspect

Commissioner Toner has attended the Foxfield Races.

VICE-CHAIRMAN TONER: Oh, very fondly.

It\'s an old tradition.

COMMISSIONER MASON: It is, and

occasionally the Albemarle County Republican

Committee will hold a fundraiser in connection with

the Foxfield Races, and this is where I want to get

to this dilemma for federal candidates. I\'ve

worked for federal candidates who attended that

fundraiser.

There is no program. I suppose we could

have tried to maneuver a federal candidate up to

the head of the table while people were picking the

ribs. It wouldn\'t have been a very popular way to

proceed. And so I\'m wondering, if we impose this

disclaimer requirement, what do we do there? I

think that becomes the practical issue.

You\'ve got this local party event. I

understand there\'s a big problem with events that

may not be advertised as fundraisers, but funds end

up being raised. But, you know, are we going to

67

extend our disclaimer requirements there and say

just because the federal candidate dropped by,

didn\'t make a speech, we\'re going to have to put

out the cards that say, \"Hey, I\'m not asking for

federal money.\" Is that the way we should construe

the rule?

MR. SIMON: Are you asking me?

COMMISSIONER MASON: Sure.

MR. SIMON: No, I don\'t think\--I mean, I

guess where I would draw the line is that for a

federal officeholder to attend an event is not, in

and of itself, a solicitation. Just attending an

event is not a solicitation.

MR. ELIAS: Finally, a point of agreement.

MR. SIMON: Maybe we can build on that.

COMMISSIONER MASON: But you said being

part of the program, so for instance if the federal

officeholder is listed somewhere, and the program\--it won\'t

consist of the invitation. I think we\'ve

made it fairly clear that if the federal

officeholder\'s name is on the invitation, that

would bring in the requirements of the law. But

68

what if there is a poster at the event that simply

lists some of the notable attendees?

MR. SIMON: Well, then, I think if non-federal

money is being solicited, I think the

poster has to have a written disclaimer on it for

that federal officeholder.

COMMISSIONER MASON: I want to ask\--well,

I\'ll go ahead and wait and hope we have a second

round. I want to get into a different topic.

Thank you, Mr. Chairman.

CHAIRMAN THOMAS: Thank you.

Commissioner McDonald?

COMMISSIONER McDONALD: Mr. Chairman,

thank you.

First of all, Joe, how old are you? Or

how young are you?

MR. SANDLER: Well\--

COMMISSIONER MASON: Joe is not answering,

on the grounds that it might\--

MR. SANDLER: \--I\'m old enough to remember

in 1986 when our Chairman of the DNC, on the

occasion of the introduction of the Byrd-Boren

69

bill, asked, \"What is this soft money, and what do

we care about it?\" We won\'t get into that.

\[Laughter.\]

COMMISSIONER McDONALD: Well, however old

you are, you\'re a lot younger than I am, so be

grateful, for gosh sakes.

I thank all of you for being here. This

is, in some sense it\'s almost kind of a\--I don\'t

know how to describe it\--almost an odd rulemaking

in a way. I mean, we are confronted with the fact,

the results of what the Court said, and we cannot

kid ourselves about that, and we\'re going to have

to have some resolution.

Let me just go back and pursue a minute,

and then I\'m going to kind of yield the balance of

my time to\--well, I\'ll start with that, and then

I\'ll ask a question. Bill, you in your opening

remarks indicated that you had more to say. Would

you like to say more at this juncture?

MR. McGINLEY: Sure.

\[Laughter.\]

COMMISSIONER McDONALD: I never knew a

70

lawyer that would turn down time, as a general

rule.

MR. McGINLEY: Never pass up an

opportunity. What I wanted to say is that part of

the NPRM is whether the Commission\--and the Court

also highlighted this\--whether the Commission

should go the route with these definitions that

they do in the corporate and union political

activity context. And I was just going to say our

position is that we advise against that.

We don\'t think that these definitions

should be developed through the Advisory Opinion

context or through the enforcement process, and

that the definition of \"solicit\" in the corporate

political context is very broad because it serves

different purposes. I mean, there you have issues

of coercion, and you don\'t want reprisal, the

employment reprisals for superiors who may be

approaching subordinates about contributing to a

political action committee or another context.

Whereas here what we\'re talking about is

the context of fundamental First Amendment rights.

71

Here what we\'re talking about is, we\'re talking

about officeholders operating in a representational

capacity, candidates and party officials going out

and seeking to build grassroots support at low-dollar

events by giving speeches to constituent

organizations or grassroots organizations.

And so in that context I think we need to

have a bright line definition of \"solicit\" and

\"direct,\" and we urge the Commission to avoid

referring to or going to the corporate political

context for the definition of \"solicit,\" as the

Court raised, and that was also raised by the

Commission in the NPRM.

COMMISSIONER McDONALD: Thank you. Anyone

else have any other comments they want to make on

my time? Joe?

MR. SANDLER: I did want to just follow up

Commissioner Weintraub\'s question about the

difference between the comments of the national

party committees and the national congressional

campaign committees. Keep in mind that the rules

under BCRA for officers of national party

72

committees acting on behalf of the national party

are much stricter than for federal candidates and

officeholders. Usually these ambiguities don\'t

come up.

The Chairman of the DNC cannot appear at a

fundraising event for a state candidate. Period.

End of story. No disclaimer cures it. It doesn\'t

come up. Or a fundraising event for another non-federal

organization, you know, as a speaker acting

on behalf of the party. These situations and some

of the ones that Marc raised, where state

candidates are putting federal candidates on

invites, don\'t even come up for national parties.

COMMISSIONER McDONALD: Anyone else?

Well, then, let me go back to the issue

about the party officials a minute, and the issue

of disclosure, because I know Don was indicating

that he felt like that there needed to be a

disclosure for party officials, and Joe was very

vigorously nodding his head \"no\" earlier. Did

either one of you want to comment on that or pursue

that for just a minute?

73

MR. SANDLER: With respect to party

events, state and local party events, we just don\'t

believe\--well, we believe that clearly the law does

permit, and has been interpreted to permit, and the

sponsors have said it permits national party

officers to appear as featured speakers at hose

events, even though non-federal money may be

raised. It\'s not a question of a disclaimer.

Remember that technically national party

officers acting on behalf of the national party

cannot solicit any funds that are not subject to

the reporting requirements of the Act, and

consequently it doesn\'t matter if it\'s for the

American Red Cross, if they\'re acting on behalf of

the party, they cannot solicit one time

technically. And that\'s clear enough in the case

of nonprofit organizations, be it the Red Cross or

anything else.

But with respect to state and local party

committees, we just do not believe that was\--even

though you could technically read it that way, it\'s

clear that wasn\'t the intent of the law, and I

74

don\'t think it\'s necessary for the Commission to

address this. We just don\'t believe\--it\'s clear

that the national party officer, even acting on

behalf, was intended to be allowed to speak at, for

example, a local party fundraising event.

COMMISSIONER McDONALD: Don, do you want

to pursue that a minute?

MR. SIMON: Well, you know, the term

\"solicit\" I think has a common meaning throughout

441i, so I don\'t know that you can interpret the

term \"solicit\" different in the two sections. To

the extent Congress treated national party officers

and agents differently than federal candidates and

officeholders, I think you have to give effect to

that and follow the lines drawn by Congress.

COMMISSIONER McDONALD: Thank you. Thank

you, Mr. Chairman.

CHAIRMAN THOMAS: Thank you. Mr. General

Counsel, Larry Norton?

MR. NORTON: Thank you, Mr. Chairman.

Good afternoon, or good morning, Mr.

McGinley. It feels like afternoon. I\'d like to

75

start with you, if I can. In your opening remarks

you said that our regulation ought to turn on the

plain words, and that candidates or officeholders

should only be held accountable for the words they

speak, or write, I guess.

I was interested in your reaction to our

Example No. 9 in the Notice of Proposed Rulemaking,

which I\'ll read to you, I won\'t make you find. The

example is a written communication that provides a

method of making a contribution or a donation

regardless of the text of the communication, for

example, providing an addressed envelope and a

reply card, allowing contributors to select the

dollar amount of their contribution or donation.

In your view, should that be covered by

our regulation? And do you think it is covered by

the current regulation?

MR. McGINLEY: Well, what\'s interesting

about this is that most donor reply cards actually

contain a solicitation. I mean, at the top it\'s

not simply, you know, a dollar amount in a vacuum

with give us the best efforts information or give

76

us whatever information is required by state law.

I mean, most donor reply cards are going to have a

top line that says, \"Yes, I will support you by

making out a check payable to,\" blank, blank,

blank, and then gives the options of the dollar

amount.

So actually I would add some text to No. 9

to clarify that donor reply cards typically do

contain a solicitation. I mean, typically when a

fundraising package goes out, you\'ll have the cover

letter that makes an explicit ask, and then you\'ll

have a donor reply form that at the top is going to

make a second solicitation.

So really what you have here, then, is you

have a federal officeholder or a candidate making

statements in connection with a solicitation.

There, if the federal candidate, as you said in

2000-3 or 2000-36, if the federal candidate is

reviewing this package, if they\'re taking a look at

the letter that the people are asking them to sign,

it has a donor reply card that contains a

solicitation on the top, then yes, that is a

77

solicitation.

But if it\'s simply going to be, you know,

a federal officeholder or a candidate gives

somebody a quote to put in a letter that they are

drafting, and without the knowledge of the federal

officeholder or candidate somebody puts a donor

reply card in there, then no, I mean, because

that\'s not something that\'s done in connection.

MR. NORTON: Mr. Simon, in your written

testimony you indicated that you didn\'t prefer one

of the alternatives, which was to repeal the

current regulation and provide no replacement

definition for the term. Just to clarify, though,

if the Commission were to take that course, would

it be consistent with the Circuit Court ruling in

Shays?

MR. SIMON: Well, I don\'t think\--in other

words, leave the term \"solicit\" completely

undefined?

MR. NORTON: Through regulation. On a

case-by-case basis, through Advisory Opinion and

enforcement.

78

MR. SIMON: I think that would not be

inconsistent with the court ruling.

MR. NORTON: Not be inconsistent?

\[Laughter.\]

MR. NORTON: Mr. Simon, let me stay with

you for a moment. You have testified that the

Commission ought to, and indeed is obligated to

require a conduct component, or at least not to

take conduct off the table through regulation. And

all the examples we have discussed today are in

connection with fundraising events, with the

exception I think of a couple of the hypotheticals

that the Chairman mentioned.

Are there circumstances that the

Commission ought to concern itself with as it works

its way through considering a conduct standard,

outside of the context of participating in a

fundraising event? Are there examples? I don\'t

see any examples in your written testimony. Are

there circumstances you\'re concerned about?

MR. SIMON: Well, first of all I think

it\'s the best, fairest reading of what the D.C.

79

Circuit said. Secondly, I think it\'s consistent

with what the Commission itself has said in the

Advisory Opinions, that it does consider actions or

conduct by the candidate. Thirdly, I think, you

know, there are the, perhaps admittedly unlikely,

but there are possibly the situations that the

Chairman laid out before, where conduct could in

context be part of a solicitation.

So I think for all those reasons, by far

the better course is not to, as I said in my

opening remarks, not to disable the Commission from

taking those kinds of potential non-verbal cues

into account in the contextual determination it

makes about whether something constitutes a

solicitation.

MR. NORTON: Thank you very much. Thank

you, Mr. Chairman.

CHAIRMAN THOMAS: Mr. Acting Staff

Director? No questions?

MR. COSTA: No.

CHAIRMAN THOMAS: Well, let me start again

here, see if we can clear up one thing that has me

80

somewhat puzzled, this idea of possibly utilizing

the Cantor Advisory Opinions and the law that has

been established through that line of opinions,

about solving some of these concerns about federal

officials or perhaps even national party officials

being in a situation that could be deemed a

solicitation because of their attendance and

perhaps being a featured guest. And you can get

around that by incorporating some sort of notice

that\'s distributed at the event, that would

indicate in essence the candidate or federal

official or national party official is only there

soliciting monies that would be federally

permissible, and I guess in the case of the

national party officials if they went this way,

money that is in some fashion going to have to be

federally reported, I guess through some federal

account.

I wanted to sort of get clear whether

there is a consensus that we would only apply that

in the context where it\'s apparent that the person

was sort of invited there in advance. I keep

81

hearing the hypothetical, \"What if someone just

kind of drops in without having had any sort of

preplanning or formalized invitation?\" Is that a

valid distinction for us to try to build in, if we

want to work in these rules?

COMMISSIONER McDONALD: Yes. I\'m not sure

it\'s the only distinction, but I think it gets at\--I\'m not

sure if that\'s the right line, but it gets

at a line that I think has to be drawn. The fact

is that candidates campaigning for president in

Iowa are not going to drive around with a placard

in the back seat, so that when they go to the local

VFW hall for local County Commissioner Smith\'s

fundraising barbecue, they haul it out and they

have a staffer who stands there and follows the

candidate around with a little Cantor sign. It

just doesn\'t make any sense.

I mean, the fact is, very often in these,

whether it\'s presidential races or competitive

House and Senate races, you literally have

candidates who are going event to event to event.

They\'re going to a labor picnic. They\'re going to

82

a candidate\--probably, Mr. Toner, your candidates

never went to a labor picnic.

\[Laughter.\]

VICE-CHAIRMAN TONER: We\'ll work on that

for 2008.

MR. ELIAS: They go to, they may go to a

local horse race, less often in my experience, but

touche. And you\'re not going to have staffers with

these signs walking around, because the fact is the

members or the candidates in that case aren\'t

soliciting anything. They\'re working the crowd.

They\'re shaking hands.

And frankly, to have those signs or have

those disclaimers I think would not only be a bit

odd, but it might actually be a bit jarring to the

contributors, because most of these people have

already given their contribution. They\'ve already

given their corporate check. They\'ve already given

their labor check. They\'ve given their non-federal

contribution. And now all of a sudden they see

some guy who they probably don\'t even recognize,

walking around with some guy behind him with a

83

sign. I mean, it\'s nonsensical.

So the Cantor disclaimer makes sense in a

situation where you have an invitation, where the

draw is the elected official or the candidate,

where they are, as you say, part of the program

that there is advertisement for. But to have it be

that anyplace the candidate goes where someone else

may be raising money, it just doesn\'t make any

sense.

MR. SIMON: Let me disagree with that. I

don\'t think that\'s a valid line, you know,

distinguishing the application of the Cantor rules

only to situations where there is a kind of

preplanned invitation, versus a candidate showing

up more spontaneously, getting up in front of the

crowd and, in effect, soliciting money.

I think under the AOs the disclaimer can

be either written or oral, and I think if a

candidate is going to get up in front of a crowd at

a non-federal fundraiser and make a solicitation,

you know, \"Give whatever you can, help this

candidate out,\" then I think he has got to make

84

clear in his oral remarks, if there is no written

disclaimer, in his oral remarks he has to make

clear that he is soliciting only federally

compliant funds.

MR. ELIAS: Commissioner, I know this

would be a bit unorthodox, but could I just pose a

hypothetical to Mr. Simon that maybe will help

clarify this?

Let\'s assume, though, that the candidate

goes and does a drop-by and stands up in front of

the crowd and says, you know, \"I\'m glad to be here

today. This a great county. You are great people.

We love you.\" You know, \"Smith is going to make a

great city councilman. I hope everyone here is

helping Smith. Go out and support Smith.\" And

then he gets back in his car and he drives off to

the next event.

Now, it would be bizarre for him to end it

by saying, \"Everyone support Smith, and by the way,

when I say that, what I mean is everyone should

contribute not more than \$2,100 per election from

federally permissible funds, which means no funds

85

from corporations, labor unions, or\"\--I mean, would

you require it in that circumstance?

MR. SIMON: Yes.

CHAIRMAN THOMAS: I\'m out of time, but I

want to be clear because I think this is very

important. Mr. Sandler, at some point I hope you

can come back to this issue of what about the

national party officials going, say, to local party

events. You seem to have interpreted the law to,

in essence, allow them to do that without Cantor

type notifications, and I\'m just wondering why you

take that approach, and also how imposing a Cantor-type

notice requirement would affect that.

MR. SANDLER: The Cantor disclaimer is

irrelevant to the national party committees because

you can\'t disclaim something into being the federal

reporting requirements. I\'ll give the example of

New York City.

An officer of the DNC, acting on behalf of

the DNC, could not solicit one thin dime for the

nominee for Mayor of New York City, Fernando

Ferrer, even though it\'s the strictest public

86

financing system in America and you can\'t give more

than \$4,900 from an individual and so forth, and

it\'s all matched publicly, and reformers love it.

Doesn\'t matter. It\'s not a federal

account, and you can\'t have a federal account, and

they don\'t accept federal money, and not one time

of federal hard money is legal in New York City or

New York State. So the disclaimer is not relevant,

and consequently we do not\--and there is nothing

the Commission can do about it with respect to, you

know, state and local candidates, I mean, and

nonprofit organizations and the like.

Now, with respect to local party

committees, let me explain why I believe that the

law can\'t be reasonably interpreted to prevent a

national party officer from appearing at a local

party fundraiser, even though the vast majority of

the local parties are not registered with the FEC

and consequently, by definition, it\'s not subject

to the reporting requirements of the Act.

In his deposition in the McConnell

litigation, Senator McCain was asked this exact

87

question under oath. Counsel for the plaintiffs

said, \"There is a provision in the statute,

Senator, that allows federal officeholders and

candidates to appear at fundraising events for

state and local parties.\" There\'s the Lincoln Day

dinner receptions, there\'s the Jefferson-Jackson

Day in our case, if you will. \"Why can\'t Mark

Rosco,\" who was then chairman of the RNC, \"appear

at one of those dinners?\"

Senator McCain said, \"I think Mark Rosco

can appear at one of those dinners. He can\'t ask

for money.\" But a federal officeholder can\'t ask

for money. A federal officeholder can appear, but

the federal officeholder cannot solicit money. I

mean, that\'s the common\--that\'s how we interpret

it, just like Senator McCain.

CHAIRMAN THOMAS: Thank you. That\'s very

helpful. In light of your position and who you

represent, I thought it was important to make sure

we covered that.

Vice-Chairman?

VICE-CHAIRMAN TONER: Thank you, Mr.

88

Chairman. I would like to follow up because I

think it\'s an important issue, and as Mr. Sandler

points out, the safe harbor at 441i(e)(3) is not

available, on its face, anyway, to national party

officials, but only to federal candidates and

officeholders, so that the issue of what is

solicitation I think has a higher importance in

some respects for national party officials for that

reason.

I would like to work with a hypothetical.

Mr. Simon, I would like to get your thoughts on

this. The Chairman of the Democratic National

Committee appears at a widely attended political

event, not a fundraising event, a political event,

for the Virginia Democratic Party, which of course

is permitted under state law to accept soft money

donations as a legal matter for non-federal

purposes. Governor Dean is introduced as Chairman

of the DNC, so he appears in his official capacity

as party chairman.

During the course of the speech, Governor

Dean makes the following statement to the audience:

89

\"Thank you for your continuing financial support of

the Virginia Democratic Party.\" In your view, is

that a solicitation?

MR. SIMON: Yes.

VICE-CHAIRMAN TONER: Must be treated as a

solicitation by the FEC?

MR. SIMON: Yes.

VICE-CHAIRMAN TONER: So would that be,

then, across the legal line in terms of Governor

Dean saying that at that event?

MR. SIMON: I think so. You know,

Congress did make what may seem like an odd

distinction between 441i(a) and 441i(e), but there

is a distinction, and I think you have to give

effect to the distinction just as a matter of

statutory language. You know, that\'s up to

Congress to fix, if they want to give 441i(e)

rights to national party officers.

VICE-CHAIRMAN TONER: Mr. Sandler, in your

view, do you think the statement, \"Thank you for

your continuing financial support of the Virginia

Democratic Party\" is an illegal statement?

90

MR. SANDLER: No, but I don\'t think that\--

VICE-CHAIRMAN TONER: You don\'t?

MR. SANDLER: I don\'t, but\--

VICE-CHAIRMAN TONER: Why not?

MR. SANDLER: That\'s not really the issue

that you would confront. I mean, nobody is asking

for national party officers to be able to use words

of solicitation or asking for financial support.

We are asking that they be able to say the work of

the state party or the local party.

VICE-CHAIRMAN TONER: So thank you for

your continued support of those\--

MR. SANDLER: Support.

VICE-CHAIRMAN TONER: But I want to be

clear here. In your view, do you think it would

cross the line if the Chairman indicated\--which

would not be an unnatural thing to do, some of

these guys I think just are programmed to say some

of these things\--\"Thank you for your continuing

financial support\"? That in your view would not

cross the line?

MR. SANDLER: No.

91

VICE-CHAIRMAN TONER: Mr. Elias, your

thoughts on this?

MR. ELIAS: I don\'t think it would cross

the line.

VICE-CHAIRMAN TONER: Why?

MR. ELIAS: Because, first of all, it\'s a

statement that is looking back in time. It is a

retrospective statement, not a prospective

statement.

VICE-CHAIRMAN TONER: \"Thank you for your

continuing financial support of the Virginia

Democratic Party.\"

MR. ELIAS: It is not suggesting\--and we

no longer use the word \"ask\"\--that someone make a

contribution going forward. When I hear, \"Thank

you for your,\" it sounds like these are people who

already paid to be in the room.

VICE-CHAIRMAN TONER: Right.

MR. ELIAS: I mean\--

VICE-CHAIRMAN TONER: I said this is a

political event, not a fundraiser.

MR. ELIAS: Right. It\'s not a fundraising

92

event. No one is being asked for money. It\'s\--

VICE-CHAIRMAN TONER: There is that term

again.

MR. ELIAS: No one is being suggested to

give money, no one is being requested to give

money, no one is winking or nodding to give money.

They\'re in a political event, and he is\--

VICE-CHAIRMAN TONER: And he says this:

\"Thank you for your continuing financial support.\"

MR. ELIAS: Yes.

VICE-CHAIRMAN TONER: It shouldn\'t be

unlawful, in your view?

MR. ELIAS: I don\'t believe so.

VICE-CHAIRMAN TONER: Let me ask you, is

it your view that, given the potential penalties

that exist for federal candidates and officeholders

or national party officials for making soft money

solicitations, is it your view that if there is any

ambiguity whatsoever in terms of whether a

solicitation has occurred, that there should be no

such finding?

MR. ELIAS: It is.

93

VICE-CHAIRMAN TONER: That is your view?

MR. ELIAS: It is my view, and just to

amplify that, it is especially my view in light of

the agency rules.

VICE-CHAIRMAN TONER: Do you think that it

would be appropriate for the agency, in its final

rules, to incorporate in the rules a statement

along the lines that a solicitation must be clear

and unambiguous for it to be made?

MR. ELIAS: I would support that.

VICE-CHAIRMAN TONER: Mr. Simon, your

thoughts on that?

MR. SIMON: I think that the proposed rule

which encompasses both indirect and implied

solicitations is what is required by the Court\'s

ruling.

VICE-CHAIRMAN TONER: Do you think, on

balance, whatever standard we adopt, that it is

appropriate for us to make clear that the

solicitation has to be\--it has to be clear that a

solicitation has taken place; that any ambiguities

that may exist should cut against a finding of

94

illegal activity, or no? Do you think that

actually ambiguities should be resolved in favor of

finding a legal violation?

MR. SIMON: I don\'t know how to square

your suggestion with the language in the proposed

rule, that solicitations encompass implicit

requests or suggestions for money. I mean, it

seems to me those two statements are pulling in

opposite directions, and I think you\'re required to

go with something along the lines of the proposed

rule.

VICE-CHAIRMAN TONER: So is it fair to say

that in your view, if there are ambiguities,

actually we do have room to find that a

solicitation has taken place? In fact, we need to?

MR. SIMON: I think you have to apply a

test of whether the conduct and language in the

situation would reasonably lead you to believe that

it\'s a solicitation.

VICE-CHAIRMAN TONER: And ambiguities

resolve in favor of finding, making a finding\--

MR. SIMON: I don\'t know that I would put

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a presumption one way or the other on it.

VICE-CHAIRMAN TONER: Mr. Sandler, your

thoughts on this? Do you support the thought that

it needs to be clear and unambiguous?

MR. SANDLER: It does need to be clear,

and I want to emphasize that nobody is asking, at

least from the DNC, that national party officers be

allowed to solicit non-federal money at any event\--

VICE-CHAIRMAN TONER: I understand.

MR. SANDLER: \--at any time, in any

circumstances.

VICE-CHAIRMAN TONER: And I agree with

that. Duly noted.

MR. SANDLER: And we don\'t\--you know, the

\"reasonable person\" standard works for us in that

regard, that you not use language, the Chairman of

the DNC or any other officer acting on behalf

should not use language, will not use language

reasonably construed to be asking for non-federal

money.

The suggestions that we have go to making

this a clear and workable standard in terms of

96

general\--and not really your example, but general

support. You show up at a\--

VICE-CHAIRMAN TONER: \"Thank you for your

support of the Virginia Democratic Party.\"

MR. SANDLER: Yes, or the state candidate

is worthy of support, just campaigning for a state

candidate. There may be donors and others. Not a

fundraising event. Not a fundraising event, but

just saying, \"This candidate is worthy of support.\"

It should be clarified that that\'s not a

solicitation.

VICE-CHAIRMAN TONER: One final question,

Mr. Chairman. Thank you.

Since what is reasonable is a prominent

theme here this morning, in your view would it be

reasonable for the agency to require, for a

solicitation to be made, that it be unambiguous,

that it have taken place unambiguously? Is that,

in your view, within our discretion to do?

MR. SANDLER: Yes.

VICE-CHAIRMAN TONER: And do you support

that type of approach?

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MR. SANDLER: That is be unambiguous?

VICE-CHAIRMAN TONER: Yes.

MR. SANDLER: I think that\'s appropriate.

VICE-CHAIRMAN TONER: Thank you, Mr.

Chairman.

CHAIRMAN THOMAS: Commissioner Weintraub,

follow-up?

COMMISSIONER WEINTRAUB: The longer I

listen, the more confused I get. Joe, do you think

that something can be both implied and unambiguous?

MR. SANDLER: Yes, I think that, you know,

people\--and again, I think the suggestion that we

look to the specific audience who we\'re talking

about here, possibly, rather than the general

public, makes sense\--but people know when, and this

is what the reformers told the Court, people know

when people are asking for money. You know, it\'s

understood.

If there is such ambiguity that you\'re

really not sure, it\'s not a solicitation, and I

don\'t think it\'s a solicitation under the language

of the Commission\'s proposed rule. If a reasonable

98

person wouldn\'t understand it in context to be a

solicitation, it\'s not a solicitation.

COMMISSIONER WEINTRAUB: Well, I\'m sure

everybody at the table thinks they are reasonable

people, and we seem to have some differences of

opinions.

Don, if somebody shows up, either a

candidate or a party official shows up at\--well,

let\'s stick to candidates for the time being. A

candidate shows up at a fundraising event and says,

\"Thanks for being here\" to everybody who in order

to be there, they had to make a contribution, and

it\'s a soft money event. Is that a solicitation?

MR. SIMON: Yes. I mean, again, where I

would draw the\--

COMMISSIONER WEINTRAUB: Yes?

MR. SIMON: Yes.

COMMISSIONER WEINTRAUB: I mean, but\--

MR. SIMON: I was just going to say that I

draw the line, and the way I resolve these close

call questions in the context of a fundraising

event, not a non-fundraising event but in the

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context of a fundraising event, I think if a

candidate shows up, mingles with the crowd, shakes

hands, that\'s not a solicitation per se. I mean,

obviously in a one-on-one conversation he could be

making a solicitation, but just his presence there

is not a solicitation. If he gets up and addresses

the crowd, that\'s a solicitation.

COMMISSIONER WEINTRAUB: Anything he says?

MR. SIMON: Yes, in the context of a

fundraising event.

COMMISSIONER WEINTRAUB: So if he just

stands up and says, \"Hi. Thanks for inviting me.

It\'s really great to see you all.\"

MR. SIMON: Yes. I mean, you know, part

of this is, I think people frequently say they want

bright lines to resolve hard situations. I think

that\'s a reasonable line that separates out

behavior, that to me makes sense. Because once you

become part of the program, once you become part of

the kind of official list of speakers\--

COMMISSIONER WEINTRAUB: Well, what if

you\'re not? What if you just show up?

100

MR. SIMON: Once you get up in front of

the crowd and address the crowd, I think you\'re

part of the program, I think you\'re part of the

message of the event, and I think the message of a

fundraising event is to raise funds.

COMMISSIONER WEINTRAUB: So the candidate

could show up and talk to people individually and

not make a speech, and that would be okay?

MR. SIMON: Well, I mean, either one is

okay. One is making a solicitation and one is not

making a solicitation. He can make the

solicitation. He just has to use the disclaimers

under the Commission\'s rules.

COMMISSIONER WEINTRAUB: And honestly,

those disclaimers really make that big a

difference? I mean, don\'t you think that in some\--

MR. SIMON: Well\--

COMMISSIONER WEINTRAUB: I mean, to some

degree don\'t you think it\'s a distinction of form

over substance?

MR. SIMON: It is. It is, and I think the

Commission developed it in the context of the

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Advisory Opinions, to try to make the statutory

scheme work. You know, I said in the hearing that

was held on the state party fundraisers that there

is something of an awkward balance in this scheme,

but I think it\'s a not unreasonable approach, and

that officeholders can solicit in state party races

as long as they are soliciting for funds that

comply with federal rules. I think using the

approach laid out in the Cantor AO is a reasonable

way to give effect to that language.

COMMISSIONER WEINTRAUB: Marc, you\'re

leaning towards the mike. Are you\--

MR. ELIAS: Yes. You probably anticipate

that I don\'t agree with that, so for the record, I

don\'t. I am struck, and it may just be my own

limitations, but I don\'t understand how one can

solicit retrospectively.

I mean, if you have an event where

everyone has already given money, and they all gave

corporate checks to walk in the door, but all that

money is gone. It is bagged, it is tagged, it is

batched, it is deposited, it is gone. It\'s out of

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the room. So now the federal office holder walks

into a pristine, clean, no soft money, no corporate

money in the room environment, and he stands up and

says, \"Hey, everyone, great to be here today,\" and

then sits down, I don\'t understand how that can be

a solicitation. I mean, under just the\--I think

the Court, and I promised I wasn\'t going to talk

about the Court opinion, but didn\'t it talk about

dictionaries? I want to see a dictionary that says

that\'s a solicitation.

COMMISSIONER WEINTRAUB: Let me go back to

conduct. Outside of this issue of showing up at

events or being a featured guest at an event or

doing something at an event, what other conduct are

you trying to capture, Don, when you recommend that

we put conduct into the rule?

MR. SIMON: Well, that\'s actually most of

it. I mean, I do think, again, there are these odd

cases along the lines of what the Chairman

suggested, which the Court did reference, but my

major thinking about conduct is in the context of a

fundraising event.

103

COMMISSIONER WEINTRAUB: Despite the fact

that the Court did talk about winks and nods, my

sense from the expression on your face when you

were talking about it earlier is that you don\'t

actually think that we ought to literally

incorporate winks and nods into our rules and say,

you know, \"Don\'t wink, don\'t nod.\"

MR. SIMON: No, but I think you should

incorporate the concept of conduct, which would

encompass that.

COMMISSIONER WEINTRAUB: And if we did

that, if we could deal with it\--I\'m not convinced

that we can, actually, based on what happened

earlier this year, when you may recall I tried to

bring in some of that conduct and didn\'t have the

votes to do it, and I doubt if I have attracted any

more votes since then.

But putting that aside, if we could

somehow address that in the context of context, you

know, as a reasonable person would understand it in

context, including suggesting\--you know, the

language of this rule, if we\--let\'s say we were

104

able to get the votes to put that in the E & J,

that that would include being a featured guest at a

non-federal fundraiser. Would that solve the

problem for you?

MR. SIMON: Well, it\'s my less preferred

way of going about it, but it\'s better than nothing

at all. I worry about if the Commission expressly

considers putting conduct in the rule and votes not

to do so, then the interpretation that will be made

is that conduct is out and can\'t be considered.

Now, if you can ameliorate that by saying

in the E & J that conduct still will be considered

as part of context, you know, that\'s an

improvement. But I think the Commission in the

rule ought to be clear about what it\'s saying, and

if it thinks conduct should be considered as part

of context, it should put that in the rule itself.

COMMISSIONER WEINTRAUB: Thank you, Mr.

Chairman.

CHAIRMAN THOMAS: Commissioner Mason?

COMMISSIONER MASON: I just want to say as

a prelude that I think we got a very bad court

105

opinion. I disagreed with it. I didn\'t like it.

I think the plaintiffs got away with constructing a

straw man, and had this been brought in the context

of an actual Commission decision or refusal to make

a decision or something, then we could have played

some of this out.

But for Mr. Elias and Mr. McGinley, you

suggested we keep the regulation as it stands. I

would love to do that, but I do have difficulty

understanding how, given the Court\'s reading, we

would do that. So I want to go back to something

that counsel asked about, that would at least take

care of a lot of problems, and that is this written

solicitation.

When counsel asked about it, Mr. McGinley

immediately started elaborating, and I want to

caution you against that and suggest that that

proposal was an effort to avoid getting enmeshed in

somebody else\'s hypotheticals. What Mr. McGinley

is suggesting is, no one would write a fundraising

solicitation in certain ways.

In other words, there are articles in the

106

fundraising literature about the importance of the

\"ask.\" And you know what? It turns out if you

don\'t ask for money, you don\'t get money. All

right? And it\'s critical, it\'s an absolute

fundamental element of fundraising.

But we\'re beyond that, and so a lot of the

discussion in the court case, I think way too much,

was involved in hypotheticals, not actual

fundraising solicitations, because I think you

would have had very little difficulty, with real

direct mail fundraising solicitations, in

determining whether or not it was a solicitation,

but with hypothetical language that nobody would

have used.

And thus our suggestion that, hey, if

there is a reply device that is just the right size

for a check, and an address to send it back to, and

any kind of indication about financial support,

that\'s a solicitation. And the purpose of that

kind of a rule was to give something that was

easily reviewable for you guys, easily

understandable for federal officeholders, and so

107

on, and at least to try to put to one side a lot of

the hypotheticals.

And I am just wondering about your level

of comfort with that rule, because it seems to me

we\'re going to have to do something, and that that

would be a rule that was pretty easy to understand,

pretty easy to administer. And do you think it

would be a good idea, or at least an acceptable way

for us to proceed? This is for Mr. McGinley and

Mr. Elias, who don\'t want us to change the rule.

MR. McGINLEY: Getting into the\--I mean, I

think that your question is centering on the

\"reasonable person.\" Did I understand you

correctly?

COMMISSIONER MASON: No, no. My question

is centering on a reply device. Okay? If there is

a reply device, if there a piece of mail with a

reply device, which means something to send back a

check in, that\'s a solicitation. We don\'t have to

look at the text. Okay? It could say \"Please send

money\" or it could have pictures of starving

orphans. Okay? And nothing else, just pictures,

108

and a reply device. Okay? But the reply devices

makes it a solicitation.

COMMISSIONER McDONALD: I tried that in

college and didn\'t get any money.

\[Laughter.\]

MR. McGINLEY: Given that, okay, I will,

yes. If that\'s where the Commission needs to go,

then yes, that will be a solicitation, providing

the means to make the contribution or to make the

donation. Yes, a donor reply card with a letter

that may not explicitly ask for the donation would

be a solicitation.

COMMISSIONER MASON: Mr. Elias?

MR. ELIAS: I would agree with that. I

wouldn\'t want it to bleed into the provision that

allows someone to explain the law and not have it

be a solicitation, but that example, I agree with

you.

COMMISSIONER MASON: I want to ask Mr.

Simon about winks and nods, and I don\'t know if it

includes shrugs or pats on the wallet or other sort

of things, but specifically in this context the

109

concern that I have is that normally where that

sort of standard is applied is in criminal law,

where there is an underlying criminal activity. A

bribe is being paid and a public official is

present, and he\'s just present, and that sort of

would be enough.

Here we\'re in a situation where the

illegality is not the underlying activity, in other

words, not the contribution that may be made to a

local political party or a state candidate, but

rather is the federal candidate\'s participation in

that. And I\'m wondering if in that context you

think there is any difference or any way we ought

to treat this idea of winking and nodding to

account for the fact that the fundamental activity

is legal, it\'s just the inducement to it by the

federal officeholder that\'s illegal.

MR. SIMON: I guess that strikes me as not

an important distinction. I understand what you\'re

saying, but I just don\'t think that\'s a basis on

which to set aside winks and nods.

To me it\'s interesting that this concept

110

of winks and nods is starting to have a place in

the election law jurisprudence, in the sense that

in Colorado Two, I believe, the Supreme Court

specifically referred to winks and nods as a

mechanism of coordination, and now the D.C. Circuit

has referred to winks and nods as a method of

solicitation. It seems that courts, at least,

think that those kinds of non-verbal cues are

something the Commission should take into account

in administering this law.

MR. ELIAS: If I can just add just one

thing to that, and I don\'t want to fight court

opinion for court opinion, but my concern is not

with what Mr. Simon is suggesting. I go back a

little bit further than Colorado Two, to Christian

Action Network, where this Commission hired an

expert in subliminal messaging\--subliminal

messaging\--to determine whether or not an ad was

actually intended to influence voters, rather than

looking at the objective text of the ad. And the

4th Circuit not only found that subliminal messages

were not the standard that the agency ought to use

111

to judge these ads but, as I recall, awarded

attorney\'s fees to the Christian Action Network.

Now, whatever else you may think about the

jurisprudence of that case or the issue ads that

then spawned from there, there is something that is

mildly concerning once the Commission takes a step

down this road, that winks and nods become glances,

they become pauses, they become intonations. And

before long I\'ll be sitting in depositions\--it\'s

not going to decrease the number and the intrusion

of the enforcement process\--I\'ll be sitting in

depositions and there will be all kinds of, \"Well,

you know, did the candidate glance a certain way

when he said it? Did he seem to mean it when he

said it?\" And we\'ll be in litigation with experts

about, you know, voice tenor and how voice tenor

changes when someone actually means this versus

that. I just think it\'s a slippery slope that the

Commission ought to not go down.

CHAIRMAN THOMAS: Commissioner McDonald?

COMMISSIONER McDONALD: Mr. Chairman,

thank you.

112

Two quick questions, one for Marc and

Bill, maybe, and one for Don. Marc, you opened up

your comments by saying that what you really felt

like the Commission ought to come to grips with is

what goes on in the real world.

The example you just gave, of shrugs and

nods and whatever else, inflections, you\'ve been

around this Commission a long time. You cited the

Christian Action Network, but of course we\'re not

here because of that. We\'re here for a more

updated ruling. And lawyers sat at that very table

where you are and explained to us, in fact, that

McCain-Feingold, etcetera, clearly wasn\'t, surely

it wasn\'t going to be the law of the land, and it

turned out that that was not the case.

You don\'t genuinely think\--I had a

colleague who used to serve with me here, and he

would go on and on about we would be in the

churches monitoring what people said. Now, I\'ve

been here a while. I\'m just not familiar with any

circumstance in 24 years where these kind of

scenarios play out. So I think our problem\--and

113

I\'m not being critical of your examples\--but I

think our problem is a more fundamental problem

about what really goes on and what the Commission

really does.

We\'re not in churches. We don\'t run

around. We have a huge agency, as you know, of

about 400 people. It would be about the size of

one Pentagon closet, I suspect. So as a practical

matter, whatever we come up with in relationship to

what the Court has said to us, I don\'t think that

that helps us a great deal, being candid with you,

because that\'s not something we\'re going to be

doing either.

It\'s fair game, I\'ll grant you, to kind of

make fun of the process. But we\'re not in that

kind of a position. Our position is that we have

to resolve this in some way that we hope is both

practical and also lends itself to clear credence

in relationship to the court decision.

So just as a kind of a practical matter,

per se, you don\'t genuinely think we\'ll be out

there, and you don\'t really think you\'ll be

114

counseling people on those kinds of activities, do

you?

MR. ELIAS: Well\--

COMMISSIONER McDONALD: Based on the years

of experience with this agency? We\'ve not been

noted for proceeding vigorously in a lot of areas,

as you may know.

MR. ELIAS: Well, a few observations. The

first is, you\'re right. I prize, in this process,

the Commission to focus on the real world, and as I

said before, the shrugs and winks and nods simply

do not happen, in my experience. Candidates are

quite concerned. Officeholders are quite

concerned.

As I pointed out, the DSCC and the DCCC

and its membership were both overwhelmingly

supportive of this law. They remain overwhelmingly

supportive of this law. They are not looking for

loopholes. They are here because they believe in

this law, and they believe that they are not to

raise soft money, and they don\'t raise soft money.

They don\'t wink about soft money, they

115

don\'t nod about soft money. They have nothing to

do with soft money. They don\'t spend it, they

don\'t raise it, they don\'t transfer it, they don\'t

solicit it, they don\'t direct it. They don\'t know

what all those individual terms necessarily mean,

but they know one thing. They don\'t have anything

to do with soft money. When they have a question,

they come to this agency and ask for an Advisory

Opinion.

So let me just start with the real world

by laying that predicate. My concern is that we do

live in a world in which, as you know,

unfortunately a lot of FEC complaints get filed for

partisan reasons. Okay? They get filed because

one side believes that they can gain the advantage

over the other side.

And unfortunately, although the General

Counsel deserves a tremendous amount of credit, I

think he\'s doing a wonderful job in moving the

docket and weeding out frivolous complaints, the

fact is, McCain-Feingold for the first time means

that I tell a candidate, \"It\'s not your treasurer,

116

it\'s not your committee, it\'s you. When the

complaint gets filed, if soft money was solicited,

you broke the law. Your treasurer didn\'t break the

law, your committee didn\'t break the law, you broke

the law.\"

So whether it is a short administrative

MUR process or a long administrative MUR process,

it\'s an unwelcome process, and the fact is\--with

all due respect to the General Counsel\'s office

because, like I said, I think they\'re doing a

fabulous job, and I do think they\'re moving the

docket and they\'re moving the\--you know, the MUR

process does move more quickly, and we don\'t bog

down in some of these things.

It is still, nevertheless, an unwelcome

situation for an officeholder to find themselves

in, where he has to explain whether someone else in

the room thought that what they heard or what they

saw was different from what he actually said.

COMMISSIONER McDONALD: Thank you, Marc.

Do you want to comment? I do want to

ask\--

117

MR. McGINLEY: I\'ll just say I agree with

what Marc said. I mean, as he was saying on the

Democratic side, Republicans aren\'t in the soft

money business either. We\'ve been precluded, and

as Marc said in the beginning of his statements,

we\'re happy to do the compliance function of

monitoring their activities, and they\'re happy to

let the Commission know when that does happen.

However, that being said, you know, there

is a process penalty for getting into politics, and

as Marc said, complaints are filed for political

reasons, not necessarily by candidates and

committees, but others in the process as well. You

know, when people get bogged down in the discovery

process and the MURs aren\'t dismissed right away,

even though there is an ambiguity in the law, that

does have an impact on the political process. It

chills participation.

And so what we\'re trying to do today by

saying these are the real world examples, the local

clubs where a candidate may stop by, you know,

state and local events where they may be raising

118

non-federal funds, you know, the Chamber of

Commerce or some of the other issue organizations

where a candidate or a party official may want to

stop by, attendance at the event should not create

a violation of the law.

I mean, that\'s what we\'re trying to

prevent, because we don\'t want people to be held to

a standard because of what other people think about

what they did. We want people to be held

accountable for what they actually did and the

words that they speak. So whatever clarity we can

get on the front end is going to help the

enforcement process, clear the docket.

You know, people aren\'t trying to evade

the law. They\'re not trying to get out there and

find some way to get soft money into the system. I

mean, if you notice, a lot of the examples that

we\'re talking about is where a state candidate is

trying to raise money for his or her campaign, and

a federal candidate just wants to show up and lend

their support.

That money, by the rules, can\'t get into

119

the federal election process. And if the state

candidate tries to run an ad that PASOs\--promotes,

attacks, supports or opposes\--the federal candidate

who showed up, they have to use all federal funds

that are reported to the Commission.

So when you\'re talking about people

showing up at a state candidate fundraiser, they\'re

not evading the soft money ban. They\'re showing

support for state and local politics.

COMMISSIONER McDONALD: Well, that helps

me a lot. And I do want to ask Don one thing very

quickly, but let me just say one other thing,

because it has been said here all morning, and it

must be a different world than I grew up in.

Functions that are formal functions, I

have never known a federal candidate, and

particularly an officeholder, just to drop by.

They have the kind of clout that I can assure you,

if they want to be on the program, they can be on

the program. If they ask to say a few words,

they\'ll get to say a few words. As a practical

matter, I have spent time working for candidates,

120

as well as some of my colleagues, and I can assure

you that they have some pretty good clout, by the

nature of either who they\'re going to be or who

they are. I\'m talking about in the formal sense,

now.

But I want to go and ask Don a question

that has troubled me, that Marc raised earlier, and

I think maybe others as well. On the solicitation

end, Don, you go to an event. The money has

already been raised. As Marc points out, it is in

fact after the fact as a practical matter.

How do you reach the point that you\'re

getting a solicitation at that event, when in fact

the checks have already been turned in, the replies

are back, the money has been counted? In fact,

they may even tout how much money they have raised

at the event. You know, some do and some don\'t.

But it has always kind of troubled me when the

money is already there. What is your thought on

that?

MR. SIMON: Well, you know, in a sense the

program at the event, the speakers at the event are

121

what the donation was made for. They\'re part of

the inducement for the donation.

COMMISSIONER McDONALD: I understand.

MR. SIMON: And the federal officeholder

may be promoted as an incentive for making the

donation. You know, \"Give \$1,000, give \$5,000, and

hear Senator Smith speak.\" You know, I think in

that context the federal officeholder is part of

the fundraising message, part of the fundraising

appeal, and that should be considered a

solicitation.

COMMISSIONER McDONALD: And if they\'re not

part of the appeal for the solicitation, but in

fact become part of the program because of who they

are, what would you think on that, in that

relationship?

MR. SIMON: You know, as I said before, I

would treat that the same way because I just think

there is an important distinction at a fundraising

event, and an event where either money has been

raised in order to attend the event or an event in

which money is being exchanged at the event, at the

122

door. Once somebody gets up in front of the crowd

and addresses the crowd, they are part of the event

and the message of the event, and the Commission

should just treat that as a solicitation.

COMMISSIONER McDONALD: Thank you. I

thank all of you for coming.

CHAIRMAN THOMAS: Mr. Norton?

MR. NORTON: Nothing further.

CHAIRMAN THOMAS: Mr. Costa?

MR. COSTA: No.

CHAIRMAN THOMAS: Thank you, one and all.

I just want to say that I agreed with everything

that each one of you said, and for the record, I am

winking. Thank you very much.

COMMISSIONER McDONALD: Shouldn\'t we sing

to Joe?

\[Laughter.\]

CHAIRMAN THOMAS: We will take a shorter

break than we had planned, just because I\'ve got us

about 15 minutes behind. Let\'s try to take a 10-minute

break and we\'ll get underway at 20 minutes

before 12:00 Thank you.

123

\[Recess.\]

CHAIRMAN THOMAS: Let us get underway

again. We are going to start with the second panel

of our hearing for today. We have Donald McGahn,

who is here representing the National Republican

Congressional Committee. We have Lawrence Noble

here, representing the Center for Responsive

Politics. And we have Paul Ryan, representing the

Campaign Legal Center.

We will ask you to make a 5-minute opening

statement, and we have our little light system. I

gather than amber light will start going when you

have roughly 30 seconds left. So we appreciate you

helping us with time specifications.

We\'ll start with Mr. McGahn. Please

proceed when you\'re ready.

MR. McGAHN: Thank you, Mr. Chairman,

members of the Commission. I appreciate the

opportunity to be here to testify on behalf of the

NRCC. I had thought about attempting to testify

only through conduct, but I couldn\'t find the

words, so here we are. I thought about

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interpretive dance, perhaps pantomime was

referenced in the earlier thing. I could maybe

musically, we could have interpretive dance with

the music.

That being said, to put aside the very bad

humor, there seems to be quite a bit of agreement

in this rulemaking for two reasons. One, I think

the culture inside the beltway has changed to the

point where people realize BCRA is the law, post-McConnell.

The grand theories of what may happen

have kind of subsided.

And, two, there also seems to be

agreement, particularly from the Commission, that

the Shays court case is somewhat odd. From my

point of view it was odd in that the examples cited

as loopholes, non-solicitation things, to me, I

thought those were solicitations. I thought the

current rule covered that. The two cited

particularly in the notice are what I\'m thinking

of.

And it frustrates me because I didn\'t

realize that I had a chance to really advise my

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clients just to go to town and do all kinds of

things that I had been telling them for two, almost

three years now, was actually illegal and you\'re

probably going to get yourself in a lot of trouble

if you do that.

Ultimately, though, what I\'m here to say

on behalf of the Republican House members, the

NRCC, is that there is a need for a very workable

rule here, and I see the Commission\'s notice really

addresses that and hits many of the issues that

need to be addressed. There is not a lot of theory

in the notice. A lot of questions are asked.

They\'re very good questions, and they\'re questions

that maybe can be answered, maybe they can\'t be

answered. If they can\'t be answered, then that

maybe means that that\'s where the line will be

drawn.

But we really need workable rules really

for three reasons: One, so covered officials,

whether it\'s a federal candidate or a federal

officeholder or an agent thereof, knows what they

can and can\'t do, so they can plan accordingly.

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Second, so everyone else knows what\'s

legal and not legal: the general public; outside

groups; the media, who seem to be continually

confused about what the law is, whether it\'s House

ethics rules or whether it\'s campaign finance rules

or whether it\'s state election law rules. It would

be nice to be able to have them understand the law

without having to explain it 50 times over, and

then they still get it wrong half the time.

And then, third, so it can be enforced.

It does no one any good to have some subjective,

after-the-fact, if it feels like a solicitation,

kind of, sort of, then maybe we\'ll take some

depositions standard. It would be nice to have a

bright line. Really I would rather have a bright

line, if I had the choice between fighting over

where the line is versus having a line, I would

choose a line, which is somewhat odd until one

thinks of where this could go in the enforcement

context.

My clients are not concerned so much about

what the Commission may do with a reasonable person

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standard or what the Office of General Counsel may

do, but what if an elected official has himself in

trouble on the other side of the street? Which of

course is the federal prosecutor. So imagine

someone who is being accused of taking a bribe or

soliciting a gratuity.

Inevitably the soft money solicitation ban

will work its way into the vernacular at the

Department of Justice. This reasonable person

standard really as proposed, the way I read it,

could kick the decision as to whether or not it was

a solicitation to a jury, who will substitute

themselves as the reasonable person and create

essentially an issue of fact. It\'s not an

objective standard at that point.

This may sound like a doom and gloom

scenario, but it\'s very possible that when others

read what the Commission does, they may not read it

the way the Commissioners read it themselves. And

of course, although this Commission may understand

what it means, future Commissions may not. Future

General Counsels may not. Past General Counsels

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may disagree with current General Counsels. Who

knows? We\'re not going to put words in everyone\'s

mouth. But when you get into reasonableness,

there\'s a lot of different definitions of

\"reasonable.\"

A solicitation, this is something that

came up in the earlier sessions, I think we need\--our

position is that it needs to be about

fundraising. General political speech\--and the

Notice of Proposed Rulemaking does draw this

distinction, and it\'s a very important distinction

to draw, because I can say my clients do get

concerned about, \"What if I show up at some policy

thing, or I just give a speech about cutting taxes,

the usual stuff, is that going to be a

solicitation?\"

Other than some going off the tracks at

the end of the first hearing on hypotheticals, it

seemed like there was pretty much agreement that

showing up is not really the issue. It\'s how you

present the showing up, were you involved in

raising money in conjunction with the showing up,

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and that kind of thing.

But then that begs the question of what is

even a fundraiser. There is a difference between a

fundraiser where you show up, bring your checks and

hand them at the door, versus a fundraiser where

there is a solicitation that goes out ahead of

time, the money is collected, people show up, so

there is no solicitation at the time.

And then there are these fulfillment

events, where you may have major donors, say for a

political action committee or a state party

committee, where for a larger contribution level,

whether it\'s your own or because you have raised

money or you are on the finance committee or what

not, you go to other events where there is really

no money at all. There is not a fundraiser per se.

Now, this is an issue that really, unless

you\'re in the culture, you don\'t understand that

it\'s a fundraiser for House ethics rules purposes.

It\'s a political event but it\'s not really a

fundraiser, and that gets confusing as to whether

or not that\'s actually a fundraiser.

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So if a candidate goes to, a federal

candidate goes to say a state party fulfillment

event, the finance division of the state party does

that, but you ask them is it a fundraiser, they

will say no, it\'s a fulfillment event. So even

within the culture of fundraising, people draw

arbitrary distinctions.

I see the red light is on, so I will wait

for the questions and answers, and I thank the

Commission.

CHAIRMAN THOMAS: Thank you.

Mr. Noble?

MR. NOBLE: Thank you. Good morning, Mr.

Chairman, Vice-Chairman, members of the Commission,

General Counsel, Acting Staff Director. I am

pleased to be here with you today on behalf of The

Center for Responsive Politics.

We are here today because the Court did

reject your solicitation regulation, and I

understand the Vice-Chairman\'s comment and

frustration with the Court, having been in a

situation where I have often felt frustration with

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court rulings. However, the Court did say that

your solicitation regulation violated Chevron One,

and therefore you do have to do something about it.

I don\'t think you can just say, \"We can ignore the

Court,\" or you can ignore the Court. I don\'t think

it\'s the appropriate role for the agency to ignore

the Court. And I think you really do have to abide

by the Court\'s decision.

I don\'t think the solicitation rulemaking

is frankly one of the most complicated or difficult

that you\'re facing in BCRA, though it may be one of

the most important, because much of the Act hinges

around the solicitation of soft money and the

banning of the solicitation of soft money. And so

this is one of those cases where a relatively

simple rule carries a tremendous amount of weight.

Now, listening this morning was

interesting. I was very encouraged earlier this

morning when Mr. Elias started off by saying, \"We

have absolutely no intention of violating the soft

money rules. We don\'t plan to solicit soft money.

None of my people want to solicit soft money.\" I

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was really encouraged until then later on he

started talking about his definition of soliciting

soft money.

And I think that\'s really the whole issue

here, is that nobody wants to violate the law, of

course, as long as you narrow the law to the point

where they can do what in most contexts is seen as

a solicitation. And that\'s the problem that the

Court had, was that you were defining, you appeared

to be defining out of the word \"solicitation\" what

most people in most contexts in fact see as a

solicitation.

And let me say something here about this

frustration some Commissioners feel with the idea

that you didn\'t mean that \"ask\" meant just \"ask.\"

To quote our President, I think we have to be

careful of revisionist history here, because in

fact at the hearings there were comments made about

wanting a bright line, like we\'re hearing today.

There were comments made about not wanting to guess

at what somebody meant, like we\'re hearing today.

There were comments about anything that is

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ambiguous should not be considered as solicitation.

I think it\'s against that background, when

you then rejected General Counsel\'s proposal

broader than \"ask,\" and then end up with \"ask\" that

people, including the Court, fairly say that you

really intended to narrow this. This wasn\'t just a

misunderstanding here. You really did intend to

narrow this, though I am encouraged now by the fact

that people do feel that you do need a broader

definition of \"solicitation.\"

I\'m also hearing about nobody gets soft

money into the system, and we hear a lot about how

nobody has pointed out any problems in 2004. I

want to point out a couple of things.

One, I do remember in the late \'70s that

some people said there would be no problem with

certain soft money Advisory Opinions, though there

was one Commissioner who did raise the flags on

those. And for a long time we heard about how

there was going to be no problem with soft money,

though people and some organizations raised issues

with it, until we reached the point in the early

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2000\'s when approximately 50 percent of one

political party\'s money was soft money.

And so we do have a history here, and the

Court recognized this. We do have a history, a

very natural, human urge to try to push the lines

and try to see where you can go. And I think we

already did see some of that in 2004. Now, 2004

was somewhat of a unique year, but there were

stories.

And we haven\'t talked about 527s here

today, or really soliciting much for other groups,

but there were stories about officeholders showing

up at 527 events and looking like, at least from

the newspaper stories\--and we do have to be

careful\--looking like they were doing

solicitations. And so just by the fact\--also,

frankly, none of us know what complaints you have

in house about that type of thing.

But just because so far we haven\'t seen a

massive attempt or there doesn\'t seem to be any

evidence of a massive attempt to get around the

law, it doesn\'t mean that people aren\'t going to

135

try to push the limits. It doesn\'t mean that

people aren\'t going to try to gain every advantage.

And so that\'s where I think you have to be careful

here.

Now, I think fortunately the Notice of

Proposed Rulemaking, with some slight

modifications, as we say in our comments, does take

care of most of the problems. I do think that you

do need generally a broad definition of

\"solicitation.\" I think in many contexts with a

candidate or an officeholder, a disclaimer will

work. I do think there are going to be some odd

hypotheticals that come up, or odd situations that

come up in real life, and as always you will have

to deal with them, and that\'s just the nature of

the beast.

And I see the yellow light is on. My

final point is this: We all live under the laws.

We all have to make judgments about the laws. We

all have to make judgments about what a reasonable

person would do, how the law will be interpreted.

And I think that while we all are frustrated when

136

we have to do that, that\'s the nature of society,

and I think candidates and federal officeholders

have to do the same thing.

Thank you.

CHAIRMAN THOMAS: Thank you.

Mr. Ryan:

MR. RYAN: Good morning, Mr. Chairman, Mr.

Vice-Chairman, Commissioners, Commission staff.

It\'s a pleasure to be here this morning testifying

in this rulemaking on behalf of The Campaign Legal

Center. The Campaign Legal Center submitted

detailed written comments jointly with Democracy 21

and The Center for Responsive Politics.

As detailed in those comments, we urge the

Commission to adopt the proposed definition of

\"solicit\" presented in Section 2(a) of the NPRM,

incorporating the conduct element proposed in

Section 2(c) of the NPRM. We also urge the

Commission to reject the alternative proposals to

the definition of \"solicit\" and to adopt a modified

version of the proposed definition of \"direct\"

presented in the NPRM.

137

The Supreme Court in McConnell upheld BCRA

soft money provisions as a constitutionally

permissible means of preventing real and apparent

corruption and avoiding circumvention of

contribution limits. The Commission\'s NPRM and

several commenters on the NPRM raised questions

regarding the intersection of solicitation and

policy-making speeches.

The McConnell Court spoke directly to this

issue, finding that BCRA soft money provisions show

\"due regard for the reality that solicitation is

characteristically intertwined with informative and

perhaps persuasive speech seeking support for

particular causes or particular views.\" The Court

reasoned, \"The fact that party committees and

federal candidates and officeholders must now ask

only for limited dollar amounts or request that a

corporation or a union contribute money through its

PAC, in no way alters or impairs the political

message intertwined with the solicitation.\" And

the Court concluded that rather than chilling

speech, BCRA soft money restrictions tend to

138

increase the dissemination of information by

forcing parties, candidates and officeholders to

solicit from a wider array of potential donors.

The District Court and the Court of

Appeals in Shays invalidated the Commission\'s

regulations defining \"solicit\" and \"direct\" on

Chevron grounds, holding that the definitions of

the term should not be limited to the verb \"ask,\"

and ordered the Commission to rewrite the

definitions. In order to comply with District and

Appellate Court decisions, the Commission has

proposed to revise the definition of \"solicit\" to

include not only the verb \"ask\" but also the verbs

\"suggest\" and \"recommend.\" We support this

proposed definition of \"solicit\" with the addition

of the conduct element proposed in the NPRM.

As recognized by the Court in Shays,

solicitation includes not only verbal expressions

but also nonverbal expressions. The Commission

also proposes five alternatives to this definition

of \"solicit,\" and for the reasons detailed in our

written comments, which I won\'t get into here, The

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Campaign Legal Center believes the proposed

alternatives would not comply with the Shays court

order, and on these grounds we oppose all five

alternatives.

And, finally, the Commission proposes to

revise its definition of \"direct\" to mean \"to guide

a person who has expressed an intent to make a

contribution.\" The Campaign Legal Center believes

that the phrase \"who has expressed an intent\"

should be deleted from the proposed definition,

because including that phrase in the definition

impermissibly narrows it to apply only when the

person receiving the direction has affirmatively

stated a prior intent to make a contribution. The

Campaign Legal Center supports the proposed

definition of \"direct\" with this modification, and

opposes the alternative approaches described in the

NPRM.

I thank you for your attention, and I look

forward to answering any questions you might have

to the best of my abilities.

CHAIRMAN THOMAS: Thank you, Paul.

140

We\'ll start with Vice-Chairman Toner.

VICE-CHAIRMAN TONER: Thank you, Mr.

Chairman. I want to thank all the witnesses for

being here today. It seems like an endless number

of hearings that we\'ve been doing in this area, Mr.

Chairman, and I guess we just have one more after

this, so we are making progress.

I appreciate Mr. Noble\'s comments about

the Commission\'s obligations under the Shays

decisions, and I agree that we have an obligation

to take those rulings into account, that they need

to inform what we do here. But I want to make very

clear that in my view we, as an independent agency,

have not only the ability but the obligation to

independently interpret the law and to determine

what we think is appropriate in terms of the scope

of \"solicit,\" particularly where, as here, Congress

has not defined the term.

But I think your point is a good one, that

we are obligated to be cognizant of these rulings

and to have them inform our deliberations, but I

don\'t in any way view our hands as tied in terms of

141

how we interpret the statute. And of course people

are free, if they are dissatisfied with our

activities, to go back to court. That is

absolutely appropriate. But I don\'t think, in my

view, we should be in a position of acquiescing in

terms of our interpretive function. I think that\'s

a fundamental job for this agency.

I would like to begin, Mr. Noble, with

you, following up on a discussion from the earlier

panel, this idea, if you\'ve got a political speech

that doesn\'t in any way connect or touch on

fundraising, doesn\'t have a fundraising element,

are you comfortable with the view that, look,

solicitation only relates to fundraising speech,

fundraising activities? Purely political types of

expression, like \"appreciate your support of the

Virginia Democratic Party\" or something like that,

that that is in no way restricted? And if you do

agree with that, would you be comfortable with us

placing that in the regulations?

MR. NOBLE: As with Mr. Simon before me,

the answer is, it depends. I think I agree with

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the idea that if you are at a fundraiser, it is a

solicitation. If a federal officeholder attends a

fundraiser, it is a solicitation regardless of what

he or she says.

VICE-CHAIRMAN TONER: Per se.

MR. NOBLE: Per se, yes.

VICE-CHAIRMAN TONER: How about if it\'s

not a fundraiser, if it\'s a political\--

MR. NOBLE: A pure political speech\--

VICE-CHAIRMAN TONER: Let\'s just set aside

the donor maintenance events that Mr. McGahn

referenced, but let\'s just say a rally, a GOTV

rally, something of that nature.

MR. NOBLE: A pure political policy speech

at an event where no fundraising is taking place,

and it is not a fundraising event, is not a

solicitation, assuming they don\'t try to solicit

money.

VICE-CHAIRMAN TONER: And assuming that

the rest of their remarks do not in any way touch

on fundraising, it\'s purely political, statements

of political support, that kind of thing, you would

143

be comfortable making clear, look, that\'s not

restricted.

MR. NOBLE: Right. Again, you always have

to look at the context, but yes.

VICE-CHAIRMAN TONER: Mr. Ryan, do you

agree with that?

MR. RYAN: I do, reiterating Mr. Noble\'s

comments regarding context. Context and conduct

are critical elements of this regulation.

VICE-CHAIRMAN TONER: Mr. McGahn, there

was some debate in the earlier session about what

do we do if there\'s ambiguities? What do we do if

reasonable people disagree about whether

solicitation has taken place? And I think we\'ve

all been around the track long enough to realize

that that can occur, that can and does occur. My

question to you is, if reasonable people can

disagree about whether solicitation has taken

place, if at the margin it is somewhat ambiguous,

in your view should we make clear in these

regulations that that is not a solicitation?

MR. McGAHN: Yes.

144

VICE-CHAIRMAN TONER: Why?

MR. McGAHN: Because of what I alluded to

in my earlier opening comments. It\'s not, the

concern is not so much what the Commission does

down the road. It\'s what others will do down the

road. And if you leave things to be somewhat

loosey-goosey, you don\'t know where that\'s going to

lead. It would be very helpful for the Commission

to state something along the lines that you have

suggested, where it at least provides some sort of

buffer so that others do not read the regs in a way

that they were not intended to be read, which as

you know happens from time to time.

VICE-CHAIRMAN TONER: I understand from

your written comments that you support, Mr. McGahn,

Alternative Number Two, which would retain the

current rule but add regs language, regulations

language to make clear that it reaches implicit

statements, and there wouldn\'t be the \"suggest\" or

\"recommend\" regulations language, and there

wouldn\'t be the \"reasonable person\" standard. Why

do you support Alternative Number Two?

145

MR. McGAHN: It seemed to strike a balance

between addressing what the federal court ruled,

without doing violence to what the current

regulated community believes to be what they can and

can\'t do.

VICE-CHAIRMAN TONER: Is that because it

would make clear that it\'s covering indirect

statements, implicit statements?

MR. McGAHN: Right. It reaches the

indirect conduct, which is where the Court I think

had an issue, but it does not open up the rule to

all sorts of other interpretations and far-reaching

scope.

The flip side is, given BCRA has been in

place for three years, the folks covered by BCRA,

particularly the solicitation rule, they have it in

their head, so to speak, what they can and can\'t

do. And if you all of a sudden start throwing in

\"reasonable person\" terminology and other things,

it will only confuse people more than they already

are confused.

But to me, Alternative Two furthers the

146

goal of being true to the statutory language and

being true to the Court case, as opposed to the

other alternatives. I\'m not saying I necessarily

oppose some of the other alternatives. Just

Alternative Two seemed to be the balance that made

the most sense.

VICE-CHAIRMAN TONER: I would like to know

each of your thoughts, following up on what I asked

Mr. McGahn, in terms of situations where it is

ambiguous, and I recognize that can be at the

margins. But in your view, when statements are

made and it could be at the margins ambiguous or

uncertain about whether a solicitation has taken

place, in your view is that something we really do

need to capture?

MR. NOBLE: I don\'t think you should put

in the regulation anything that would say that if

it\'s ambiguous, it is not considered a

solicitation. I think the reasonable person test

gets you where you want to go.

I also think that ambiguous, using a

phrase such as \"ambiguous\" is going to really open

147

up a Pandora\'s Box in terms of everybody arguing

everything is ambiguous. There is a limitation in

the English language, and the Court has noted this,

to being exact and specific. And I\'m sure anybody

can say something is ambiguous.

CHAIRMAN THOMAS: Ambiguous is ambiguous.

MR. NOBLE: Thank you. Ambiguous is

ambiguous. There you go. And I just think you are

going to buy so many problems by adding that type

of provision into the regulation.

VICE-CHAIRMAN TONER: Do you agree that at

least on the margin, in difficult cases, reasonable

people, whoever they may be, can disagree?

MR. NOBLE: Absolutely, wherever you put

the line.

VICE-CHAIRMAN TONER: And if that is the

case, whether we view the reasonable person

standard as grounded around the eminently

reasonable people at this table or reasonable

people outside the agency, if reasonable people can

disagree about whether a particular utterance is a

solicitation, in your view is it most appropriate

148

for us to treat it as not being a solicitation

under those circumstances? Or no, is it to the

converse, that actually we do need to treat it as a

solicitation? That\'s what I meant.

MR. NOBLE: If you are around the edges,

so you\'re not in any\--

VICE-CHAIRMAN TONER: At the margins.

MR. NOBLE: If you\'re around the edges,

and you cannot say that a reasonable person would

find it is solicitation, then under that standard

it would not be a solicitation.

VICE-CHAIRMAN TONER: And is there another

way of concluding that, look, given the sanctions

of this law, given the importance of these issues,

that the rule in practical application requires it

to be unambiguously a pitch for money?

MR. NOBLE: No, I think they\'re two

totally different things.

VICE-CHAIRMAN TONER: In what respect?

MR. NOBLE: Because I think something can

be ambiguous, but given everything, people are\--a

reasonable person would say that\'s a solicitation.

149

Sure, somebody may raise some questions about

really what the subjective intent was or how people

understood it, but reasonable people looking at it

would say no, that was a solicitation. So I think

ambiguity and reasonableness are two different

things.

VICE-CHAIRMAN TONER: Thank you. Thank

you, Mr. Chairman.

CHAIRMAN THOMAS: Commissioner Weintraub?

COMMISSIONER WEINTRAUB: Thank you, Mr.

Chairman.

I can\'t wait to see the reasonable

decisions that will flow when we have Commissioner

Noble and Commissioner McGahn working together to

come up with a consensus.

MR. NOBLE: If you\'re placing bets, I\'d go

with that one.

COMMISSIONER WEINTRAUB: You never know.

Mr. Ryan, you could be next.

Mr. Noble, you talked about reading about

officeholders doing things that looked like they

were doing solicitations. Could you give me the

150

specifics? What are you concerned went on that

shouldn\'t have been going on?

MR. NOBLE: Yes. I think when an

officeholder shows up at an event\--and again I want

to be careful here, because these are newspaper

articles that I saw during the campaign, and I

would probably have to go back and research them,

but my impression was that you had situations where

officeholders were showing up at 527 events, where

fundraising was going on at the 527 events, and

they were speaking in part of the event. And I

think that\'s the type of problem that we have

already started to see creep into the system.

COMMISSIONER WEINTRAUB: And other than

this issue\--I\'ll ask you the same question I asked

earlier\--other than this issue of officeholders

showing up at events of one kind or another, what

other conduct are you worried about?

MR. NOBLE: I think conduct is a way of

saying, another way of saying context. I think it

is the showing up at the events. Again, this is

going to sound like what Mr. Simon said before. I

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think the Chairman raised some issues about how you may

get strange conduct in strange situations. The

real true wink and the nod, those are going to be

very unusual. But in most cases I think conduct is

really going to just be part of the context, this

type of thing of standing up at the event and

speaking at the event, if you\'re part of the event,

you know. But there may be other things.

COMMISSIONER WEINTRAUB: So if we have a

rule that says what would be understood reasonably

in context, why do we need to add the conduct

element?

MR. NOBLE: Because I think the conduct

element makes it clear that you\'re not just looking

at language. I think the conduct element makes it

clear that there may be situations where your being

there, the conduct that you have undertaken at the

event, is going to be considered a solicitation.

COMMISSIONER WEINTRAUB: Mr. McGahn, I\'ll

go back to reasonable people. You don\'t like the

reasonable person standard.

MR. McGAHN: I like it for negligence law,

152

but I don\'t like it in FEC regulations.

COMMISSIONER WEINTRAUB: As you

undoubtedly know, it was an attempt to ensure that

we would have an objective standard.

MR. McGAHN: I understand that.

COMMISSIONER WEINTRAUB: I assume that you

want us to have an objective standard?

MR. McGAHN: Yes, yes.

COMMISSIONER WEINTRAUB: But you think we

have an objective standard without saying that? We

would have a more objective standard if we didn\'t

incorporate it?

MR. McGAHN: When you introduce the

reasonable person standard in the way the proposed

rule has introduced it, it\'s not objective. It

could be, if it\'s rephrased, maybe. It depends how

you come at it, and I think as part of the earlier

discussion Commissioner Mason kind of raised the

point.

If you come at it from the point of view

where, \"Gee, whiz, we need some kind of

objectivity, because if one person in the room

153

somehow thinks it was a solicitation, therefore

that\'s a solicitation,\" the Commission seems to be

saying already in the proposed rule that that\'s not

a solicitation, that\'s not what we\'re worried

about. So how do we address that?

Well, we put a reasonable person standard

in there that sounds kind of objective. It gets

rid of the subjective people on the fringes saying,

\"I felt kind of like there was a solicitation. I

wasn\'t really sure.\" The problem, though, is if

you come at it from the other end, it doesn\'t

really get at any sort of objective bright line.

The reasonable person standard was

something really developed by courts way back when

in the negligence context, where the person who was

actually acting, who would be the defendant in the

modern, you know, lawsuit, whether or not that

person could conform his or her conduct to the

reasonable person standard. It wasn\'t the ordinary

person. It wasn\'t the average person who makes

mistakes. It was a reasonable person of prudent

conduct and all that. So the person who was being

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sued for negligence had a chance to control his or

her conduct, and the question is whether his or her

conduct comported with that standard.

By injecting the reasonable person

standard into the audience, that\'s not the same

thing, because the person who is making the alleged

solicitation cannot necessarily control what the

audience hears. So to insert a reasonable person

standard to be more objective, I would think you

would have to tie it to the person making the

solicitation, not the other way around.

COMMISSIONER WEINTRAUB: So a reasonable\--

MR. McGAHN: And that would make it

objective, because then\--

COMMISSIONER WEINTRAUB: \--a reasonable

person making that statement would have understood

that they were making a solicitation.

MR. McGAHN: Thought that they were making

a solicitation. Then to me that sounds a lot more

objective than putting it into the audience.

COMMISSIONER WEINTRAUB: And would we have

to narrow that to a reasonable officeholder or

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candidate?

MR. McGAHN: I think so, yes. I think you

would. I think you would have to put somebody in

similar situations, because as you know from your

experience, elected officials can say things\--on

the one hand they can say things without saying

them, but they can say exactly what they mean.

For example, when you go as a lobbyist to

meet with an elected official and he says, \"I

really would like to be with you on this bill,\"

half the people leave and think, \"Man, we got his

vote.\" But you know that that means uh-uh. That\'s

a no, but you came away thinking, \"That was a great

meeting. We really convinced him.\"

COMMISSIONER WEINTRAUB: And, Mr. McGahn,

I really would like to agree with you on this

rulemaking, and you can take from that what you

want, but\--

MR. McGAHN: Precisely, and I would love

to agree with you as well.

COMMISSIONER WEINTRAUB: I\'m sure we would

all love to agree with each other.

156

MR. McGAHN: I would say I want to agree

with Mr. Noble, but that may be deemed ambiguous.

\[Laughter.\]

COMMISSIONER WEINTRAUB: You know, we

haven\'t had enough humor at this Commission since\--

MR. McGAHN: Since the last time I was

here.

COMMISSIONER WEINTRAUB: So that is, you

know, a promising sign.

MR. McGAHN: So it\'s not the notion of

interjecting \"reasonable person.\" The objective

standard, we appreciate what you\'re trying to do.

And having listened to the morning session and read

the other comments, it seems like a lot of people

are saying\--they think they\'re saying the same

thing, but they\'re using different words.

If you look at Alternative Three, prong

two, \"must be reasonably understood in context to

be asking another person to make a contribution or

donation,\" that\'s different than a reasonable

person standard, even though the word \"reasonable\"

still appears there.

157

COMMISSIONER WEINTRAUB: Do you like it

better? Which one do you like better?

MR. McGAHN: It\'s all ambiguous.

COMMISSIONER WEINTRAUB: Well, we\'ll come

up with another formulation. It is terribly

ambiguous.

Recognizing it\'s not your first choice, do

you have anything you would like to improve, other

than the reasonable person standard, or clarify to

make it more helpful to your clients, in the

proposed rule?

MR. McGAHN: Well, the suggestion would be

the one we alluded to earlier, in which you tie the

objectivity to the person who is actually doing the

alleged solicitation.

COMMISSIONER WEINTRAUB: Putting that

issue aside\--

MR. McGAHN: Whether or not the person who

is accused of doing something wrong has some

control over\--

COMMISSIONER WEINTRAUB: No, no. The

words of the proposed rule.

158

MR. McGAHN: Okay.

COMMISSIONER WEINTRAUB: \"Request,\"

\"recommend,\" \"suggest,\" I think is what it says,

are you generally okay with that, other than this

reasonable person issue?

MR. McGAHN: Generally, I mean, you know,

but it\'s awkward for me because I thought the

current rule covered almost everything that the

plaintiffs in the Shays case said the rule didn\'t

cover.

COMMISSIONER WEINTRAUB: I agree with you.

MR. McGAHN: As do my clients.

COMMISSIONER WEINTRAUB: I completely

agree with you.

MR. McGAHN: To sort of invoke the specter

of Mr. Elias earlier, not all of my clients voted

for BCRA, but there are members of the NRCC who are

Republican, who did vote for it, and none of them

are here commenting, so we\'re the best you have

when it comes to what people may or may not think.

But I\'m not looking for subjective thought. I\'m

just\--the advice was not what the Court assumed it

159

was. That\'s just not the practice. So it\'s tough

for me to say what you should do to fix something

that I didn\'t think was necessarily broken.

COMMISSIONER WEINTRAUB: Okay. Thanks.

CHAIRMAN THOMAS: Thank you.

Next we go to Commissioner Mason.

COMMISSIONER MASON: Thank you.

Mr. Noble, just quickly I wanted to

clarify something. Mr. Simon seemed to be saying

that if you attended a fundraiser but didn\'t speak,

weren\'t part of the program I think was the term he

used, then that wasn\'t a solicitation. And I

thought I heard you say that just attending a

fundraiser constituted a solicitation.

MR. NOBLE: If I did, I misspoke.

Attending and participating in a fundraiser.

COMMISSIONER MASON: Attending and

participating?

MR. NOBLE: Yes.

COMMISSIONER MASON: So you are more or

less like Mr. Simon, that if you stand up to make a

speech\--that if you just show up and mingle, that

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that by itself wouldn\'t be a solicitation?

MR. NOBLE: Right.

COMMISSIONER MASON: Okay. I want to then

ask you about the disclaimer rule and how that

would work at a \$10,000 per person event.

MR. NOBLE: A \$10,000 per person event, to

a\--

COMMISSIONER MASON: This is for a 527

organization, a state party\--excuse me, a state

candidate. The \$10,000 might, depending on how we

interpret it, be within the national party limit.

But, in other words, the cost of the event is in

excess of any applicable federal contribution

limit. They pay \$10,000 to get into the VIP

reception.

MR. NOBLE: Then I don\'t think they can do

it. I don\'t think the disclaimer works, because I

think you run into a situation there where the

disclaimer cannot inoculate you against an obvious

solicitation for soft money. And that is\--

COMMISSIONER MASON: Well, there\'s a

question about whether it\'s an obvious

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solicitation, but that\'s what I wanted to clarify,

that in other words if\--I doubt somebody would have

a corporate-only event or a union-only event, but

they might well have an event\--

MR. NOBLE: Minimum paid, \$10,000.

COMMISSIONER MASON: \--at which the

minimum price of admission was higher than any

applicable federal limit, and so there would be no

way you could solve that with a disclaimer. I just

wanted to clarify that that\'s your position.

I would like to also ask that you maybe

come back to us, because it\'s important as a

factual matter, on this officeholders looking like

they were doing solicitations.

And let me specifically say I have a

recollection of 527 organizations that had federal

accounts and non-federal 527 accounts, and I read

accounts of the federal officeholders going to

raise federal money at the federal event and sort

of laying on their hands. And I thought that was

kind of cute, and arguably in violation of the

spirit of the law, but they were at a hard money

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fundraiser, raising hard funds. It was just that

90 percent of the organization\'s activity was

somewhere else.

So if there was actually conduct where

officeholders showed up at 527 events, not raising

federal funds, or spoke and so on, I would

genuinely be interested in seeing it, in part

because I don\'t recall. I was watching the way you

were, and I don\'t recall any such activity.

MR. NOBLE: I will go back and look and do

research, and see what I can come up with and

submit it to you.

COMMISSIONER MASON: Thank you.

Mr. McGahn, I asked about the reply device

rule in the previous panel, and I just want to get

your opinion about that. I mean, does that provide

sort of workable guidance for you, your committee,

your clients, and help? I mean, the aim here is to

just take the written solicitations, and while the

general rule would still apply, to essentially fix

it so that most of the written solicitations are

really not arguable, in terms of we don\'t have to

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get into the hypotheticals about what the language

would say. Does that work for you?

MR. McGAHN: It sounded fair to me.

COMMISSIONER MASON: Thank you.

And then, Mr. Noble and Mr. Ryan, you have

talked about, we have all talked about fundraising

events, and I\'m concerned about the real world

where candidates are going around, particularly

during their reelection periods but also at other

periods in the fall, and they do drop-bys, and

they have on the schedule a local candidate

fundraising event, a local candidate event or a

party event.

And in my experience with political

practice, there isn\'t quite as neat a distinction

between a fundraising event and an event where no

fundraising is going on. I\'m a little worried

about that. It would be one thing to submit a rule

where it\'s called a fundraiser and there is a gate

price and so on, but as I think you are aware, a

lot of times at a local party committee meeting,

just a regular monthly committee meeting, they may

164

do a treasurer\'s report and indicate that they are

had up for funds and pass the hat, and that may be

something spontaneous. And at local candidate

rallies, likewise.

So I want to get your thoughts on what

sort of rule ought to apply to a federal

officeholder or other covered official in a

situation like that, where it\'s not billed as a

fundraising event but where in fact some

fundraising takes place.

MR. NOBLE: I think there are always going

to be cases that are around the edges. There are

always going to be cases that you\'re going to have

to use prosecutorial discretion on, that you\'re

just going to say cut a certain way, and it\'s

really going to be very fact-dependent.

So if the federal officeholder just shows

up at a local party event and it\'s not billed as a

fundraiser, and somebody happens to stand up and

say, \"Listen, we really could use some money\"\--and,

by the way, it\'s not the federal officeholder who

is doing it\--then I think you can say that that was

165

not intended to be a fundraising event, it didn\'t

really become a fundraising event. On the other

hand, if it\'s standard practice and procedure at

those events that that is what goes on, then I

think you can consider it a fundraising event.

And as always, and I think everyone here

knows this, there will be times you will look at

ones that will be tough calls, and you\'ll exercise

prosecutorial discretion on, just say it\'s not

worth doing anything about. That always happens.

COMMISSIONER MASON: Thank you, Mr.

Chairman.

CHAIRMAN THOMAS: Thank you.

Commissioner McDonald?

COMMISSIONER McDONALD: Mr. Chairman,

thank you. I want to thank all the witnesses for

coming. It\'s a good discussion and it\'s a tough

discussion, I think, in lots of ways.

Let me ask\--I\'ll start with Don, if I may.

He might want to address this first. I gather you

had said one of the problems that you felt was that

it\'s real easy to get into kind of\--I think this is

166

paraphrasing you fairly close\--a loosey-goosey kind

of arrangement which is not very satisfactory, and

I think I join you. We have had some of those

arrangements, and I want to be clear I\'m for

clarity and opposed to ambiguity. I want to get

all this down.

But in that context for a second, that

being the case, what would be wrong with the

approach that Larry indicated earlier, and of

course Don had indicated before, where you did have

a bright line test? And in fact if a candidate

came, a federal candidate, and in whatever

circumstance there had been money raised, whether

he was formally part of the program or not, why not

have a bright line test and get away from, you

know, kind of the loosey-goosey problems that we\'ve

all alluded to, and rightfully so, that they are

hard to figure out? Would that not be more along

the lines of what would be helpful to candidates?

MR. McGAHN: Well, let\'s not confuse the

need for a bright line with simply saying, \"Let\'s

ban everything.\" I mean, you could obviously make

167

it all illegal, and that\'s pretty clear, make it

illegal just to show up.

But I think we may both agree that

regardless of what one may think of the subjective

intent, of whatever was going through the minds of

individual congressmen when they voted for BCRA, I

think it would be very tough to make the argument

that the House, the Senate, and the President

enacted something into law that would have

prohibited them from simply showing up at events.

There is absolutely no indication that that\'s the

case.

Even in the wild rhetoric of banning

negative ads or breaking the link between soft

money and elected officials, even if you take those

as the operating assumptions, saying you can\'t show

up doesn\'t further those goals. So it simply seems

implausible to go that far, although it certainly

would be a very clear rule. You\'re simply not

allowed to show up. It just defies any sort of

political\--

COMMISSIONER McDONALD: In terms of a

168

fundraiser. You\'re certainly allowed to show up to

numerous events. You just wouldn\'t be able to show

up to a fundraising event.

MR. McGAHN: Well, see, but how do you

know if it\'s a fundraiser until it\'s too late?

COMMISSIONER McDONALD: Can I ask you

about that? I\'m glad you brought that up. Again,

and my experience may be different than some of my

colleagues, I just never knew any of these folks

that did not know whether it was a fundraiser or

not. I\'ll grant you that Dave\'s point, that

Commissioner Mason\'s point is right, that I\'ve been

to places where they have passed the hat, and it

wouldn\'t get to the level we would worry about. I

can assure you of that.

But as a practical matter, in this day and

time, with communications being what they are, and

with every candidate measuring every minute, they

don\'t willy-nilly drop by, as you know.

MR. McGAHN: Correct.

COMMISSIONER McDONALD: It\'s not unusual

for a candidate to go to five events on the Hill,

169

for example, but they know exactly where they\'re

going, they know how long they\'ll be there, they

know who they\'re going to say hello to, and then

they leave. I mean, that\'s a fact.

And it\'s usually even more applicable

where the candidate has to spread themselves out.

That is to say, maybe they\'ll be up at the\--what

was that event called, the horse\--

VICE-CHAIRMAN TONER: Foxfield.

COMMISSIONER McDONALD: Yes. I haven\'t

been there, but I would love to go. But I have

been to Laurel. Is it kind of the same?

VICE-CHAIRMAN TONER: No.

COMMISSIONER McDONALD: That\'s what I was

afraid of.

But as a practical matter I think you

know, as a general rule, at least in my experience,

and it\'s much more limited than yours, but

candidates have a pretty good idea of how they\'re

going to spend and measure their time. Now, if

they inadvertently wander in, there is a good

chance they won\'t be a prominent player for long,

170

if they do it often, because my guess is\--

MR. McGAHN: If they\'re that clueless,

probably not, if they\'re not savvy.

COMMISSIONER McDONALD: I\'ll ask you a

different question. In relationship to Alternative

Two, and in relationship to this term \"ambiguous,\"

which I have decided that most terms are ambiguous

because lawyers are involved\--and I mean that with

respect, good lawyers are involved on all sides\--the term

\"indirect\" seems pretty ambiguous to me,

or at least I think you could make an argument it

is. What\'s your thought, any of your thoughts on

that? Don, you want to go first?

MR. McGAHN: I\'m actually still hung up on

the non-question, on whether people will know

they\'re in fundraisers or not. And what jumped

into my head was Al Gore and the Buddhist temple.

He said with a straight face he didn\'t know it was

a fundraiser. Maybe that\'s true.

But there are many situations, and in the

modern world you go to so many events, and because

there is so much detail and so much information,

171

the details get lost. And there are times where

people do go to events and they don\'t realize it\'s

a fundraiser. But we need to differentiate. I

think a critical thing, and this has been alluded

to even by Mr. Simon on the first panel, there is

nothing illegal about raising hard money.

COMMISSIONER McDONALD: That\'s right.

MR. McGAHN: So showing up shouldn\'t be a

problem. It\'s are you raising hard money or soft

money? And you don\'t necessarily know that

because, let\'s say you\'re in a state where you\'re

not sure what the local candidate limits are, or

let\'s say it\'s a place where an assembly candidate

has a different limit than a state senate

candidate. Not common, but it certainly happens.

COMMISSIONER McDONALD: Sure.

MR. McGAHN: So\--

COMMISSIONER McDONALD: \--and the law,

don\'t you think?

MR. McGAHN: Pardon?

COMMISSIONER McDONALD: I mean, you\'ll get

a shot at it. I mean, that\'s why we sit up here.

172

Those are fact-specific, and if we were so clear

and so well-reasoned and wise, we wouldn\'t have

Advisory Opinions.

We wouldn\'t have a multitude of MURs that

we very seldom ever find anyone knowing and

willful. You can count, probably on two hands,

knowing and willful violations over the years, so

you have to assume that there is ambiguity

involved, and that is why in fact those cases come

before us, because if they\'re not knowing and

willful violations\--I\'m just trying to get some

sense of how to attack it. I don\'t know the

answer, and I don\'t claim to know the answer, but I

do know that we have been kind of directed to

proceed.

MR. McGAHN: Well, cases do turn on their

own facts. I don\'t think anyone is going to

dispute that. Different facts mean different

results, but the rule ought to stay the same.

What my client is suggesting is, we don\'t

want a situation where it\'s an after-the-fact

analysis not only of the facts, but the rule kind

173

of changes depending on the facts. It maybe

depends on who the respondent may or may not be.

Now, we do know that within the Commission

there\'s different priorities, and just the whole

tracking system of the MURs. Certain things are

seen as more important than others. Those

judgments get made all the time, but the rule ought

not change.

COMMISSIONER McDONALD: Agreed.

MR. McGAHN: And this is why we encourage

the use of examples in the E & J. I would suggest

that some of the examples showing what is a

solicitation be clarified and put in factual terms

that actually make sense, i.e. distinguish between

a hard money solicitation and a soft money

solicitation.

Some of them are a little bit too broad to

really be helpful, because I think it will cause

more panic than it will solve. But the examples I

think are very good, because at least then you

have, as opposed to having to wait for 10 Advisory

Opinions to come down, you\'ve got 10 mini Advisory

174

Opinions, 9, rather, as to what you can\'t do.

COMMISSIONER McDONALD: I think it\'s an

excellent point. I know my time is up, and I

apologize, because I do think you have made an

excellent point there. One of the problems we have

had historically around the table\--all of us being

reasonable people, mercifully me more reasonable

than others\--but as a practical matter what has

happened to us is that if we in fact haven\'t

alluded to those examples, then what has been said

frequently in enforcement matters is, \"Well, we

don\'t give that example. Therefore, we shouldn\'t

be in that area.\"

So I am in total agreement with you, which

could well end your political career, I might say.

But I\--

MR. McGAHN: Or jump start it. You never

know how things play out.

COMMISSIONER McDONALD: Then you\'re in

pretty bad shape. I agree with you. I always

thought the more examples you had, the better, but

I also didn\'t think that those examples in and of

175

themselves were exhaustive of whatever the rule or

regulation might be.

MR. McGAHN: Not necessarily exhaustive,

but as a practitioner, when I see \"reasonable

person\" and the audience is the reasonable person,

the reasonable person becomes me as the lawyer

reviewing it, and then it puts me in a spot where

the Commission becomes the reasonable person and

second-guesses. Where at least the examples give

me, and Mr. Elias and Mr. Sandler or Mr. McGinley

and others who have to advise these folks,

something that we can rely on that provides some

sort of guidance, as opposed to\--

COMMISSIONER McDONALD: I agree with you.

I thank all of you very much.

CHAIRMAN THOMAS: Thank you. Let me ask a

couple of questions.

First of all, let me just start off again

with the hypotheticals that I threw out. We were

sort of interested, on the conduct side of things,

if we were to either include the reference to

conduct being a relevant consideration, or just

176

clarify that when we talk about context being a

relevant consideration, we could somehow clarify

that there are certain elements of conduct that

would satisfy the context approach.

The hypotheticals I raised were, what

about someone saying either, \"I would never think

of asking you for a corporate check?\" and then

winking, or alternatively, \"Would I be asking you

for a corporate check?\" and then an affirmative

nod. I just wanted to go down the panel quickly.

Would any of you have a problem with including

those as examples of something that would

constitute solicitation under whatever definition

you are recommending that we work with today?

MR. McGAHN: No. Those are solicitations.

MR. NOBLE: I agree.

MR. RYAN: Agreed.

CHAIRMAN THOMAS: Okay. Now let me move

to this area which, you know, we talked about it a

lot, but it really is an interesting and

problematic area for me. We have heard from

counsel for the DNC that national party committee

177

officers are stuck with what is in essence a

tougher solicitation rule than, say, federal

candidates and officeholders.

In essence, they can\'t be involved in

anything that is a solicitation unless the funds

not only would be subject to federal restrictions

but also would be subject to federal reporting

requirements, and so that puts them in a real bind,

they say. But it\'s interesting, they said the

approach they have taken is that they advise those

party officers not to attend non-federal candidate

fundraising events, but they say it\'s okay, I

guess, to attend party committee non-federal

fundraising events, as long as they stop short of

soliciting at the event.

And what I\'m trying to get at, and I know

we sort of hooted at the rationale from Mr.

Sandler, I was going to ask Mr. Noble and Mr. Ryan,

do you have some advice on how we can get out of

that?

Is it in your mind just sort of bottom

line, we have to tell the national party officials

178

that their only options are to either be involved

in a hard money solicitation when they\'re attending

something, and even in the context of a non-federal

candidate, they would have to work something out

with the non-federal candidate to actually require

that the money be reported to the Federal Election

Commission?

Or is the only alternative to just say,

\"In that situation you\'re going to have to make

sure that it\'s not a fundraising event,\" and the

solution is to basically ask in advance, \"Is this

event I\'m attending going to be a fundraising

event? If it is, I simply cannot attend.\" I mean,

in that range of options, I\'m curious where you two

think the Commission ought to go.

MR. RYAN: I think what you\'ve described

as the options are in fact the options, the

regulatory regime that\'s established by BCRA. BCRA

treats candidates and officeholders differently

from national party officials. They have more

restrictive actions because they have the reporting

requirement tacked on. It\'s not that they are

179

prohibited from engaging or attending the events,

but some arrangement for reporting of the funds

raised at that even would need to be somehow

arranged.

MR. NOBLE: I agree with that, and it is

interesting because the statute really does deal

with officeholders and party officials differently.

Because you do have for officeholders that

exception, if you will, that as long as the money

is raised under the limits and prohibitions of the

law, then it\'s okay, and you don\'t have that for

party officials. So I do think those are the

options that they now have.

CHAIRMAN THOMAS: Mr. McGahn, just to sort

of follow up, I was just curious. On your side of

the aisle, do you take a similar construction of

the law, that it\'s one thing for your national

party officials to be attending say a non-federal

candidate\'s event versus attending perhaps a party

event?

MR. McGAHN: I don\'t represent the RNC, so

I\'m not sure where they come down, although I know

180

there is some sort of distinction. I just don\'t

deal with them on a day-to-day. In my context, the

congressional committee, our chairman is also a

Member of Congress who is also a candidate, and

they get into the wearing different hats sort of

thing.

And I think the distinction that came to

my mind with what Joe Sandler said this morning

was, it\'s one thing to show up as the Chair of the

DNC. It\'s another thing to show up as the former

Governor. I think it depends how you\'re held out.

That\'s kind of how I think we are reading the

rules, but I don\'t really want to get into what the

RNC does because I really don\'t know.

CHAIRMAN THOMAS: Okay. Thank you. Now,

I didn\'t start my clock until late, so I\'ll pass on

to the next person. The General Counsel, Mr.

Norton?

MR. NORTON: Thank you, Mr. Chairman.

Mr. Noble, if I could start with you, you

mentioned earlier the scenario of federal

officeholders or candidates showing up at 527

181

events, but I\'m going to leave that aside for a

second because, as you know, 527 groups can and do

raise money other ways. In fact, some of the

largest amounts are not raised through fundraising

events.

And so I\'d like to talk about a private

meeting, and the meeting is attended by a potential

donor and two of the 527\'s principals and a federal

officeholder. This is a donor who has previously

given money to the federal officeholder, and is

known to be sympathetic to the group\'s causes and

has given money to similar causes.

And they sit down in a room and they talk

about what a great group this is, and that

conversation goes on for a while, and one of the

group\'s founders says to the donor, \"I\'d like to

talk to you about how you can help,\" and the

federal candidate says, \"Let me step out now.\" And

presumably what transpires is some discussion about

money. Is that a solicitation by the federal

officeholder?

MR. NOBLE: I will answer the question,

182

but I will say in one sense I really think these

hypotheticals are dangerous, because there are

always more facts around them than what we come up

with in the hypothetical. They rarely are that

clean.

But if in fact there was no discussion

prior or any understanding that there would be

fundraising going on\--I mean, \"I\'m shocked to see

there is fundraising going on here\"\--then there is

a possibility it would not be a solicitation. But

on the other hand, in most contexts if it was

understood that part of the meeting was about

raising funds, then I think the mere stepping out

of the officeholder may not then take him out of

the solicitation.

MR. NORTON: So potentially the conduct\--

MR. NOBLE: Right. Yes, that\'s where

conduct may come in, and you really want to know

what was the purpose of the meeting, how was it set

up. On the other hand, if they were told the

meeting is just really to discuss an issue and we

want to discuss an issue, and the federal

183

officeholder thought that, and the federal

officeholder then says, \"All right. Listen, I\'ve

got to get to the floor. I\'m leaving. Goodbye.\"

and then after he leaves somebody starts raising

funds, you may have a different situation there.

MR. NORTON: Mr. Ryan, those are the only

facts you know. What\'s your take on that?

MR. RYAN: I agree with Larry. And I

would attempt to define or identify that meeting as

a fundraising event, and I would identify or define

a fundraising event as an event in which either it

costs money to get in, funds are solicited as an

exchange for entry, or where solicitation is

planned.

And as Larry described, if going into this

meeting the federal officeholder knew well that

there was a plan to solicit a contribution or a

donation from this individual, then I think what

you have described would be a solicitation. If by

contrast there was no plan to ask this particular

individual for money, then you\'re dealing with a

different situation and perhaps a solicitation has

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not occurred.

MR. NORTON: So one of the things our

investigation would focus on would be whether the

federal officeholder knew well what would be

discussed at the meeting?

MR. RYAN: I think that\'s right, and I

think that a similar situation could occur in any

public event. So changing the facts of the

hypothetical slightly, a federal officeholder shows

up at a public event that for all that official

knows, was slated as being a policy sort of event,

a non-fundraising event. And after that elected

official leaves the event, someone asks for big

contributions, soft money contributions, non-federal funds.

That would not necessarily be a

solicitation. The event would not necessarily have

been a fundraising event, unless going in this

federal official knew that that was precisely what

was going to occur.

MR. NORTON: Mr. McGahn, I\'ll give you a

chance if you want to respond to the hypothetical.

MR. McGAHN: It\'s more of a question than

185

a response. When does the solicitation actually

occur, if it is a solicitation? What point in time

is there a solicitation? You would think time

moves at a continuum. At some point there is no

solicitation. All of a sudden there is, and then

from that point on, in the rear view mirror, I have

been solicited. Where is the solicitation there,

temporally?

MR. NORTON: Yes. You know, I think

you\'re right, that\'s the question, and part of what

I am attempting to address is this notion of

conduct being something the Commission needs to

take into account. And all the questions have

focused on fundraising events, but I wanted to move

into a realm where an awful lot of fundraising goes

on and the federal officeholder could have a role,

and determine whether that kind of participation,

limited as it was in my hypothetical, would

constitute conduct soliciting non-federal funds.

In other words, just being part of that meeting.

MR. McGAHN: It\'s not a solicitation, in

my view, and moreover it also needs the right

186

context, to put it into context. BCRA doesn\'t

prohibit solicitations in and of themselves. It\'s

just soft money. So again, it depends on what the

group is. And things do turn on their facts, but

based upon the facts that you laid out, that\'s not

a solicitation.

MR. NORTON: Yes. I should have said, you

know, let\'s assume that that\'s all the group

raises.

MR. McGAHN: A hundred percent soft money

group?

MR. NORTON: Yes.

MR. McGAHN: Still not a solicitation.

MR. NORTON: Okay. Thank you all. Thank

you, Mr. Chairman.

CHAIRMAN THOMAS: Mr. Costa?

MR. COSTA: I have no questions.

CHAIRMAN THOMAS: Follow-up? Anyone want

to go back through? Mr. Vice-Chairman?

VICE-CHAIRMAN TONER: Thank you, Mr.

Chairman. I just wanted to follow up. I think Mr.

Noble makes a very good point that federal

187

candidates and officeholders have a bit more

latitude than national party officials by virtue of

441i(e)(3), which makes clear in the statute that

federal candidates and officeholders can attend and

speak and be a featured guest at state party

fundraising events, but the statute does not speak

of that for national party officials.

So in some respects the scope of

\"solicit,\" the stakes are even higher for national

party officials when they\'re appearing in their

capacity as a national party chairman. I have to

be honest with you, I think that\'s going to be 99

percent of the time, particularly when they are

introduced as the Chairman of the RNC or Chairman

of the DNC.

But I want to follow up, Mr. Noble, with

you, because Mr. McGahn talked about donor

fulfillment events or donor maintenance events. I

think that is an important area of the law. These

are events where there is no fundraising that takes

place at the event. Not a dime is collected. But

at the same time it is part and parcel of the

188

broader fundraising program of the political party.

Specifically, major donors are permitted to go to

these kinds of events if they have given certain

ranges of money.

And so if we have a donor maintenance

event for a state party which is accepting soft

money, and donors are able to go to that event if

they have contributed \$100,000 or whatever it may

be, is it your view that a national party chairman

wouldn\'t be able to go to that type of event

because it is part and parcel of fundraising

activity?

MR. NOBLE: Yes, in most circumstances.

I\'m trying to think of where it wouldn\'t be. But

in most circumstances, if the donor maintenance

event is part of the fundraising, which it is\--

VICE-CHAIRMAN TONER: Which it is. That\'s

part of the framework.

MR. NOBLE: Yes. And you\'re raising money

that is not hard money.

VICE-CHAIRMAN TONER: Right.

MR. NOBLE: Yes, then I think that is the

189

answer.

VICE-CHAIRMAN TONER: So that the Howard

Dean or Ken Mehlman would be barred from even going

to an event, even though not a dime is being raised

there? I just want to be clear on that.

MR. NOBLE: Well, again we\'re going back

to the going to the event, what you asked or

Commissioner Mason asked me about earlier, the

attendance versus being part of the event. I mean,

a part of the donor maintenance event is that \"and

then the Chairman of the RNC or the DNC will be

there to talk to you, and you can talk to him about

your problems, etcetera.\"

VICE-CHAIRMAN TONER: Sure. Absolutely.

MR. NOBLE: Then yes.

VICE-CHAIRMAN TONER: About issues or

whatever may be.

MR. NOBLE: Whatever, right.

VICE-CHAIRMAN TONER: No matter what is

said at that event, no matter what the nature of

their participation?

MR. NOBLE: If in fact it\'s a donor

190

maintenance event and fundraising was done around

the event, yes.

VICE-CHAIRMAN TONER: Total prohibition?

MR. NOBLE: That\'s the way I read the

statute, yes.

VICE-CHAIRMAN TONER: Mr. Ryan, you agree?

MR. RYAN: I agree.

VICE-CHAIRMAN TONER: Okay. Thank you,

Mr. Chairman.

CHAIRMAN THOMAS: Thank you.

Commissioner Weintraub?

COMMISSIONER WEINTRAUB: Thank you, Mr.

Chairman.

Just one more conduct-related

hypothetical, drawn from today\'s headlines, and I

won\'t go into the details of the article because

I\'m quite sure there are some details missing. But

I am reminded of another popular fundraising

technique, and that is those \"grip and grins.\"

If a federal officeholder shows up at an

event\--and I\'m pretty sure I know what Mr. Ryan and

Mr. Noble are going to say about this, because by

191

definition he has already shown up, so there you

go\--but he shows up at an event, and at this event

let\'s say remarkably enough he has laryngitis. He

doesn\'t say a word, but people who have contributed

\$10,000 get their picture taken with the federal

officeholder. Is that kind of conduct, is that a

solicitation?

MR. NOBLE: Before I answer that, let me

clarify something, and I hoped I had clarified this

when Commissioner Mason asked me a question. I

have not said that just showing up is a

solicitation. If you walk in on an event and you

are not part of the event, you are not listed on

the fundraising material, and you just show up, no,

we\'re not saying that is a solicitation. That\'s an

important distinction.

COMMISSIONER WEINTRAUB: Okay. I

appreciate that clarification.

MR. NOBLE: But yes, if in fact\--and we\'ve

seen this, where part of the fundraising is, at a

certain level of giving you will get your picture

taken with the officeholder, yes, then I think

192

that\'s part of the solicitation.

COMMISSIONER WEINTRAUB: Mr. Ryan?

MR. RYAN: I agree.

COMMISSIONER WEINTRAUB: Mr. McGahn?

MR. McGAHN: Disagree.

COMMISSIONER WEINTRAUB: Because?

MR. McGAHN: I don\'t see the solicitation.

Again, let\'s say the idea of the \"grip and grin\" is

a picture line, for example. The public official

is wheeled into the picture line. He is not going

to know who gave hard money and who gave soft

money, unless he says\--

COMMISSIONER WEINTRAUB: Well, let\'s say

that he does. Let\'s say they tell him in advance.

They say, \"Mr. Senator,\" whoever it is, \"we would

like you to come to this event. We know you have

laryngitis, you can\'t talk to anybody, but we would

like you to come to this event because we would

like to advertise that people who give \$10,000 can

get their picture taken with you, and we think that

would bring in money.\" Do you think that\'s a

solicitation?

193

MR. McGAHN: Well, is that on the actual

solicitation for people to come to the event,

asking for money?

COMMISSIONER WEINTRAUB: Yes.

MR. McGAHN: Come and meet this person?

COMMISSIONER WEINTRAUB: Come and get your

picture taken.

MR. McGAHN: So the person\'s name is on

the solicitation itself?

COMMISSIONER WEINTRAUB: Yes. You get

your picture taken with Senator so-and-so if you

make this dollar level of contribution.

MR. McGAHN: Isn\'t that what Commissioner

Mason suggested with the idea of the response card?

If it says, \"Give us money,\" and the name is on it,

it\'s a solicitation at that point?

COMMISSIONER WEINTRAUB: I mean, I think

it is, but I\'m just\--

MR. McGAHN: Well, I think I have already

agreed with that.

COMMISSIONER WEINTRAUB: All right.

MR. McGAHN: That\'s different, though,

194

than your original hypothetical.

COMMISSIONER WEINTRAUB: Okay. So if it

just sort of happens without it being pre-advertised, then

you think it\'s not a solicitation?

MR. McGAHN: Right. I think there\'s a

distinction there.

COMMISSIONER WEINTRAUB: He sort of

wanders in and they say, \"Oh, great. Come on over

here. We want you to shake hands and get your

picture taken with some of our high donors.\" No

problem.

MR. McGAHN: No, that\'s not a problem.

Well, it\'s not a solicitation.

MR. NOBLE: I may have more of a problem

with that, not surprisingly.

COMMISSIONER WEINTRAUB: I suspected you

would.

MR. NOBLE: I also want to make a point.

In many of these situations, it has been said

before, in many of these situations disclaimers

will get them out of a problem. And so if you\'re

having a planned event and there is going to be\--and we\'re

195

talking about a federal officeholder, a

disclaimer about what the federal officeholder is

allowed to raise will get out of a problem and the

event can go on.

COMMISSIONER WEINTRAUB: Although, going

back to what Commissioner Mason suggested, you

know, if it\'s \$10,000, that is\--

MR. NOBLE: Right. That\'s where you can\'t

do it, correct.

COMMISSIONER WEINTRAUB: Like there is no

way you can disclaim that away, I think.

VICE-CHAIRMAN TONER: And there\'s no way

that a national party official can use the

disclaimer.

MR. NOBLE: Right.

VICE-CHAIRMAN TONER: They\'re done.

MR. NOBLE: And that\'s from the statute.

CHAIRMAN THOMAS: Commissioner McDonald,

do you want to jump in?

COMMISSIONER McDONALD: Well, I just want

to follow up on that, and maybe I should ask the

Vice-Chairman. I just want to incorporate it into the

196

question, but I wasn\'t sure when he was asking the

question that I had it totally in my mind.

In relationship to the party maintenance,

if you will, would the solicitation, for example,

say \"Meet Howard Dean,\" that would be one of the

gifts that you would get throughout the year. Say

you had \"Come four times to meet party officials.\"

Included would be Howard Dean, Chairman of the

Democratic Party, and then, you know, maybe\--I

wasn\'t sure. I just wanted to be sure I was

getting the\--

VICE-CHAIRMAN TONER: Sure. What I was

envisioning was a donor maintenance event at which

there is no such communication like that\--

COMMISSIONER McDONALD: There is not.

VICE-CHAIRMAN TONER: \--because the people

have already given whatever it takes to be a major

donor, and then they have the right, then, to go to

an event where Governor Dean is.

COMMISSIONER McDONALD: So the right to be

a major donor would be based on something else,

maybe generic party\--

197

VICE-CHAIRMAN TONER: Based on what they

have already given, you know, if you give \$100,000

or whatever it may be.

COMMISSIONER McDONALD: I got you. Thank

you. It\'s helpful.

CHAIRMAN THOMAS: Commissioner Mason?

COMMISSIONER MASON: I wanted to play with

the General Counsel\'s hypothetical a little bit,

Mr. Noble and Mr. Ryan. What if an officeholder

simply makes a call and says to their friend,

financial supporter, \"There\'s a new organization in

town you won\'t have heard about, but the people

organizing it are wonderful, and so-and-so is going

to call you soon, and I think you ought to meet

with them.\" And the organization has a federal

account and a non-federal account.

Does that constitute a solicitation on the

part of the officeholder?

MR. NOBLE: And if you want to say, you

know, what else he knows or might know. In other

words, does he have\--

COMMISSIONER MASON: That would have been

198

done by arrangement with the organization.

MR. NOBLE: Right.

COMMISSIONER MASON: So he knows there is

going to be fundraising going on. Now, does he

have to say, \"Well, if I call, are you only going

to ask for hard money, or are you only going to ask

for hard money at the first event?\" In other

words, what does he have to do in that circumstance

where he doesn\'t want to make the pitch? He

doesn\'t want to make the hard money or the soft

money pitch, you know, but he wants to issue a

generic endorsement of the organization.

VICE-CHAIRMAN TONER: Just say no.

MR. NOBLE: I think in that situation, if

he or she knows that it is part of a fundraising

effort, and that they have been asked to call to

raise funds, and they know\--and then you have to

ask what else they know about it.

If they in fact know that hard money is

also going to be raised there, then they can use

the disclaimer. They can say, \"Look, I want you to

call them. I want you to understand I\'m not asking

199

you to give, I cannot ask you to give any more

than,\" you know, blah, blah, blah, the limits.

If on the other hand they know that this

group does not have any\--is only raising money that

would not be permissible under the hard money

limits, then I would say they can\'t do it. It\'s a

solicitation. I think it\'s part of an element.

COMMISSIONER MASON: I don\'t think that\'s

likely. But, in other words, in that case you

would extend the disclaimer. And so if they\'re

making that introduction, I mean even if there is

no federal account, the officeholder still could

directly, himself, solicit up to \$5,000 per person,

and so that sort of disclaimer would get him there.

MR. NOBLE: I think that\'s right, yes.

MR. RYAN: Yes, I agree that the

disclaimer would be a requirement.

COMMISSIONER MASON: And I want to ask Mr.

McGahn about the disclaimer. Mr. Elias was very

funny with the placard and like that\--

MR. McGAHN: He\'s a funny guy.

COMMISSIONER MASON: \--but advance men are

200

pretty efficient, and I\'m sure the NRCC could print

up Cantor cards for all the Republican members to

carry around in their coat pocket, or have their

staffers carry around or whatever. But to talk

about that, in other words, what if we said, \"Okay,

if it\'s a fundraiser and if you speak, you\'ve got

to do the disclaimer.\" And so it will be like the

old police show where they pull out the Miranda

card.

MR. McGAHN: Right. Miranda rights for

donors.

COMMISSIONER MASON: Yes.

MR. McGAHN: You have the right to hold

onto your wallet. Anything that touches your

wallet will not be taken as\--

COMMISSIONER MASON: I\'m not advocating it

and I\'m sure you don\'t want it, but would that be

workable in the actual world?

MR. McGAHN: No, it would not, not in the

way you said it, because you\'re making the

disclaimer part of the affirmative case in chief.

What it sounds like, based upon what you actually

201

said there, if you didn\'t do a disclaimer it would

be a violation in and of itself. Our comments that

we filed\--

COMMISSIONER MASON: Well, that\'s the

case. I understand that, and I\'m saying you

disagree, but essentially what the other

organizations testifying here have said is that if

you show up at a fundraising event and make a

speech, then that\'s a solicitation.

And so I\'m asking, well, okay, if we

adopted that rule, would it be possible for you to

brief your members up and give them materials and

so on like that, and would it sort of work in the

real world, that they would just get used to saying

it and they would get up and near the beginning of

every pitch they would say, \"I\'m not asking.\"

MR. McGAHN: I don\'t think it would be

workable because it would become a joke in and of

itself, and it would become rote. And then you

open yourselves up from the other point of view,

where you\'re doing something that would then wink

and nod that you really are asking for soft money

202

because you\'re telling people you\'re not asking for

soft money. And it would get to the point where it

becomes high Catholic mass, and everybody kind of

knows, it becomes that kind of singsong\--

COMMISSIONER MASON: Careful.

MR. McGAHN: I\'m very experienced, as a

former altar boy, on how to drone on at length.

\[Laughter.\]

MR. McGAHN: But the point is, if you

force a disclaimer at every instance, even when it

doesn\'t fit, you\'re going to cause more mischief

than you solve, because you\'re going to confuse the

donor, and donors really then are going to think

they are being asked for soft money, which is

really going to frustrate the central purpose of

BCRA. So even though we mean well by saying we put

the disclaimer, you\'re going to end up swallowing

the rule that you\'re trying to enforce.

COMMISSIONER MASON: Mr. Noble, do you buy

that? In other words, you know, does it sort of

become like the cigarette warning label, which I

don\'t think ever persuaded anybody, that if they

203

stand up every time and\--

MR. NOBLE: I would.

MR. McGAHN: What about the mattress tag?

COMMISSIONER MASON: Actually I don\'t rip

it off.

MR. McGAHN: That figures.

COMMISSIONER MASON: But if we have this,

and then officeholders start standing up and

saying, \"Well, Federal Election Commission

regulations require me to tell you that\"\--

MR. NOBLE: I understand the problem, and

actually I was thinking, as you were going back and

forth on this, that the irony of it is you may very

well have a situation where an officeholder stands

up originally intending just to give a policy

speech at a fundraiser, and then figures, \"Oh, what

the heck, I might as well solicit money, since I\'m

going to give a disclaimer anyway.\"

And that\'s fine. I mean, that\'s the world

that we live in. The law has disclaimers in it.

We are seeing now, and this was in Virginia, but

we\'re seeing on the ads, \"My campaign paid for this

204

ad.\" We do live in a world of disclaimers in both

politics and outside of politics, and they do serve

a purpose. And yes, there\'s a possibility that

they will become rote, but I think given the

options, I think that having a disclaimer is a

better option.

Having said this, I would say this. The

Commission created the disclaimer, the Cantor

rights, if you will. You know, you have the right

to give money, but not above the federal limits.

But the Commission created it, and I guess you

could say, \"No, forget it. The disclaimer is not

going to work. You just can\'t do this.\" And so we

have said, \"All right, we think the disclaimers can

work.\" But it\'s not in the statute. You can just

say no.

CHAIRMAN THOMAS: Commissioner McDonald?

COMMISSIONER McDONALD: No mas, no mas.

CHAIRMAN THOMAS: I\'m trying to think of

which horse we haven\'t beaten to a pulp here.

COMMISSIONER McDONALD: That was \"mas,\"

not \"mass,\" by the way.

205

CHAIRMAN THOMAS: I\'m just curious about,

I guess in the world of solicitation there is still

a little bit of ambiguity about what role say a

Member of Congress can have in pre-event materials.

I think we have tried to say that it\'s okay to make

reference to the fact that a federal candidate will

be a featured guest, in a separate kind of mailing

that is not in itself a solicitation.

We have said that if the material sent out

is going to be used as a solicitation for funds,

then if the candidate\'s name is used and the

candidate has authorized use of the name, there

would have to be something that would specify that

the federal candidate\'s role is only seeking

federally permissible money. I\'m just curious.

But we have sort of gotten clogged up a

little bit about whether\--going beyond having a

federal candidate basically authorize their name

to be used as a host of an event, which we implied

would involve a type of solicitation\--merely

authorizing that their name be put on a

committee\'s, a non-federal candidate\'s letterhead

206

as say part of the ongoing financial steering

committee or finance committee, that we wouldn\'t

necessarily\--we haven\'t necessarily opined on

whether that rises to the level of a form of

solicitation.

I\'m wondering if any of you have any views

on where the lines ought to be there. Mr. Ryan?

MR. RYAN: Yes. My recollection of the

Cantor opinion is that the opinion explicitly

stated that the Commission could not reach any

agreement with regards to the latter scenario

described, meaning the federal candidate or

officeholder\'s name is on the letter, perhaps on

the letterhead, but not in a way that is clearly

affiliated with a fundraising event.

The Campaign Legal Center believes that

any time a federal official, a federal elected

officeholder or candidate\'s name appears on a

mailing in relationship to a fundraiser, regardless

of whether they are listed as part of the host

committee or simply as a candidate on the

letterhead of the committee that happens to be

207

hosting the fundraiser itself, a disclaimer is

required. So we would urge the Commission to

expand the disclaimer requirements as set forth in

the Cantor AO in this specific respect.

CHAIRMAN THOMAS: Any alternative

approach?

MR. McGAHN: I do not.

CHAIRMAN THOMAS: Any follow-up questions?

Mr. General Counsel?

MR. NORTON: I do not, Mr. Chairman.

CHAIRMAN THOMAS: Mr. Acting Staff

Director?

Well, we thank you, and we thank the other

panelists, and we certainly appreciate the time you

have taken to help us on this. We will attempt to

make sense out of this. We will attempt to come up

with a, shall we say, reasonable rule, and we will

do it with as much dispatch as we can. But again,

thank you for coming.

This special session is now adjourned.

\[Whereupon, at 1:00 p.m., the hearing was

adjourned.\]