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S. HRG. 109–374

INDIAN TRIBES AND THE FEDERAL ELECTION

CAMPAIGN ACT

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS

UNITED STATES SENATE

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

ON

OVERSIGHT HEARING REGARDING THE STATUS AND TREATMENT OF

INDIAN TRIBES UNDER THE FEDERAL ELECTION CAMPAIGN ACT

FEBRUARY 8, 2006

WASHINGTON, DC

(
COMMITTEE ON INDIAN AFFAIRS

JOHN McCAIN, Arizona, Chairman

BYRON L. DORGAN, North Dakota, Vice Chairman

PETE V. DOMENICI, New Mexico

CRAIG THOMAS, Wyoming

GORDON SMITH, Oregon

LISA MURKOWSKI, Alaska

MICHAEL D. CRAPO, Idaho

RICHARD BURR, North Carolina

TOM COBURN, M.D., Oklahoma

DANIEL K. INOUYE, Hawaii

KENT CONRAD, North Dakota

DANIEL K. AKAKA, Hawaii

TIM JOHNSON, South Dakota

MARIA CANTWELL, Washington

JEANNE BUMPUS, Majority Staff Director

SARA G. GARLAND, Minority Staff Director

(II)
(III)

C O N T E N T S

Page

Statements:

Allen, W. Ron, treasurer, National Congress of American Indians .............. 19

Dorgan, Hon. Byron L., U.S Senator fron North Dakota, vice chairman,

Committee on Indian Affairs ....................................................................... 12

Hogen, Philip N., chairman, National Indian Gaming Commission ............ 5

Inouye, Hon. Daniel K., U.S. Senator from Hawaii ....................................... 15

Johnson, Hon. Tim, U.S. Senator from South Dakota .................................. 14

Lenhard, Robert E., vice chairman, Federal Election Commission .............. 4

McCain, Hon. John, U.S. Senator from Arizona, chairman, Committee

on Indian Affairs ........................................................................................... 1

Noble, Larry, executive director, Center for Responsive Politics ................. 21

Thomas, Hon. Craig, U.S. Senator from Wyoming ........................................ 2

Thurber, James, director, Center for Congressional and Presidential

Studies, American University ...................................................................... 23

Toner, Michael E., chairman, Federal Election Commission ........................ 2

APPENDIX

Prepared statements:

Allen, W. Ron (with attachment) .................................................................... 38

Hogen, Philip N. (with attachment) ................................................................ 50

Lenhard, Robert E. ........................................................................................... 80

Noble, Larry ...................................................................................................... 73

Thurber, James ................................................................................................. 35

Toner, Michael E. ............................................................................................. 80

(1)

INDIAN TRIBES AND THE FEDERAL

ELECTION CAMPAIGN ACT

WEDNESDAY, FEBRUARY 8, 2006

U.S. SENATE,

COMMITTEE ON INDIAN AFFAIRS,

Washington, DC.

The committee met, pursuant to notice, at 9:30 a.m. in room 106

Senate Dirksen Building, Hon. John McCain (chairman of the committee) presiding.

Present: Senators McCain, Dorgan, Inouye, Johnson, and

Thomas.

STATEMENT OF HON. JOHN MCCAIN, U.S. SENATOR FROM

ARIZONA, CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS

The CHAIRMAN. Good morning. I hope that the Senate will soon

adopt lobbying reform that will help to dispel the public’s sense of

something rotten on Capitol Hill. We are embarked on that aspect

of the Abramoff issue and the number of situations that it has

brought to light.

But cleaning up our act in Congress is only part of what needs

to be done. There are two sides to the perception that Congress can

be bought, the receiver and the giver, and we should examine both.

Federal law has long recognized that restrictions on contributions are appropriate to remove the reality and the perception of

undue influence. While the majority of the 562 federally recognized

tribes make no political contributions or contributions that amount

to no more than a few $1,000 a year, there are a number of tribes

that contribute significant aggregate amounts to Federal candidates and committees. Before 2002, much of this money came in

the form of unregulated soft money, but the Bipartisan Campaign

Reform Act of 2002 ended this for tribes and others.

Still, hard money contributions from wealthy gaming tribes in recent elections have drawn attention. Certainly, when the Indian

Gaming Regulatory Act was enacted in 1988, nobody anticipated

that any tribe would make enough profit that it would donate hundreds of thousands of dollars to political campaigns.

Although I believe the tribes, most of which remain desperately

poor despite gaming operations, can apply tribal funds, including

gaming revenues, to better and more important uses than political

contributions, I understand that there is a widespread fear in Indian country of losing a seat at the political table. Tribes fear that

just as they are beginning to more fully participate in the political
2

process through campaign contributions, opposing interests have

proposed reforms that could effectively exclude them.

I understand these concerns, but feel it is appropriate to examine

how and why tribes, which truly are unique entities, are treated

the way they are under the Federal Election Campaign Act and

whether the law should be changed.

Over the years, I have been blessed with the support and friendship of many people from Indian country and I am committed to

ensuring that they are treated justly and fairly by this Nation. Indian tribes are part of the constitutional fabric of this country and

are uniquely impacted by congressional actions. They must be actively involved in the political processes that affect them. It is the

form of participation, however, with which we concern ourselves at

this hearing.

In the interest of protecting not just Indian tribes, but the perception of the integrity of our democracy, I intend to ask some hard

questions today and in the days ahead. I thank the witnesses for

appearing here today and look forward to their testimony.

Senator Thomas.

STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM

WYOMING

Senator THOMAS. Thank you, Mr. Chairman.

I am sorry. As you know, we all have two or three meetings

going on at the same time this morning. I do want to tell you that

I am very interested in this and appreciate your having this hearing. I think it is very important that we get some clarification on

the roles here and what the responsibilities are. From what I am

able to determine, there is some uncertainty as to how the various

rules apply here and they should apply fairly to the tribes. So I appreciate what you are doing and want to work with you on it.

The CHAIRMAN. Thank you very much.

Senator Dorgan is also at a meeting and he will be joining us

shortly. In the meantime, we will begin with our witnesses, who

are Michael Toner, who is the chairman of the Federal Election

Commission; Robert E. Lenhard, who is the vice chairman of the

Federal Election Commission; and Philip Hogen, who is the chairman of the National Indian Gaming Commission, a frequent witness before this committee.

Welcome to the witnesses. Mr. Toner, we will begin with you.

STATEMENT OF MICHAEL E. TONER, CHAIRMAN, FEDERAL

ELECTION COMMISSION

Mr. TONER. Thank you, Chairman McCain, for inviting Vice

Chairman Lenhard and me to testify today on behalf of the Federal

Election Commission regarding the status and treatment of Indian

tribes under the Federal Election Campaign Act.

Vice Chairman Lenhard and I have submitted joint written testimony to the committee which we request be made part of the

record.

Mr. Chairman, I want to emphasize three fundamental things

today. First, Indian tribes, as you indicated, are nowhere mentioned in the Federal Election Campaign Act of 1971, nor in any

of the subsequent amendments to the act. As a consequence, in its
3

decision making in this area, the FEC has been guided by its best

sense of how Congress intended the statutory provisions of the act

to apply to Indian tribes and to tribal activities.

In doing so, the Commission has drawn upon key statutory provisions in the Act, such as who is a person subject to the act’s prohibitions and limits, and who is an individual who is subject to additional restrictions under the law.

However, there is no question that the Commission’s task in applying the act in this area has been complicated by the fact that

Indian tribes, as the Supreme Court has noted, do occupy unique

status under our law. This unique status has created additional

complexities in applying the Nation’s campaign finance laws to

tribal activities and I suspect that will always be the case, at least

to a certain extent, regardless of what Congress and the Commission chooses to do in this area. Such complexities likely will always

be with us.

Second, although the Commission has confronted a number of

difficult issues in applying the act to Indian tribes, several things

are clear. Most importantly, the Commission has made clear that

the Nation’s campaign finance laws apply to Indian tribes and to

tribal activities. Over the years, a number of Indian tribes contended, due to their sovereign status, that they were exempt from

the act and from FEC oversight.

The Commission rejected that contention, noting that there was

no evidence in the legislative history of the Federal Election Campaign Act, nor in any of the subsequent amendments to the act,

that Congress intended to exclude Indian tribes from the Nation’s

campaign finance laws. These Commission decisions have not been

challenged by the tribes in court and I think it is fair to regard

them as settled law today.

In addition, the FEC has made clear that Indian tribes are subject to the same contribution limits that apply to what any other

entity or group of persons can contribute to Federal candidates, political parties, and political action committees. In making this determination, the Commission construed the act’s statutory definition of a person, which is defined, among other things, as an individual, partnership, committee, association, corporation, labor organization or any other organization or group of persons, as applying

to Indian tribes. Again, no Indian tribe has brought a legal challenge against the Commission on this key issue, and therefore this

area of the law is settled as well.

Third, beyond these settled areas of law, there do remain a number of difficult and complex issues in applying the act to Indian

tribes and to tribal activities. Our jointly submitted written testimony discusses some of these difficult interpretative issues, including the impact of various tribal business activities on the ability of

tribes to make contributions to Federal candidates, such as when

a tribe creates a business that is a Federal Government contractor.

In addition, another difficult issue has been whether the act’s aggregate biannual contribution limits that apply to individuals

should apply to tribal contributions as well.

With respect to these difficult legal issues in particular and to

applying the Act to Indian tribes in general, the Commission would

greatly benefit from a clear and definitive statement from Congress
4

on how the Nation’s campaign finance laws should apply to Indian

tribes and their activities.

A clear congressional declaration on how the act can best be applied to Indian tribes in particular circumstances, taking into account the unique status of Indian tribes in American society, would

be enormously helpful to the FEC and to the regulated community,

and the FEC is prepared to implement and enforce whatever statutory provisions Congress may choose to enact in this area.

Mr. Chairman, thank you again for inviting me to testify today.

I look forward to the committee’s questions.

[Prepared statement of Mr. Toner appears in appendix.]

The CHAIRMAN. Thank you very much.

Mr. Lenhard.

STATEMENT OF ROBERT E. LENHARD, VICE CHAIRMAN,

FEDERAL ELECTION COMMISSION

Mr. LENHARD. Chairman McCain, Vice Chairman Dorgan and

members of the committee, thank you for inviting us here today.

I would like to begin by noting that I concur with the remarks

made by my colleague, Chairman Toner.

I would also like to elaborate on two possible amendments to the

Federal Election Campaign Act of 1971 that have been proposed in

Congress or discussed in the press. While these proposals are examined in more detail in the written testimony we have submitted

to the committee, I wanted to take a moment to describe the effect

of these proposed changes on the legal status of Indian tribes under

the Federal Campaign Finance law.

Before beginning, I want to highlight that the FEC does not advocate any specific change to the law. Instead, we want to provide

the Committee with our assessment of the legal impact of these

proposals. The FEC stands ready to implement any future legislation in this area.

We are aware of only one bill that is currently pending in either

the House or the Senate that directly addresses the issue of Indian

tribes making contributions to influence Federal elections. The effect of that bill, which was introduced by Representative Mike Rogers, would apply the same restrictions to Indian tribes that exist

upon corporations, unions and national banks. As a consequence,

tribes would be barred from making political contributions or expenditures from their general treasury funds.

Like corporations or unions, tribes could sponsor a PAC, but

would have to register with and report its activities to the FEC.

The PAC would be free to make contributions in Federal elections,

but could only do so using money raised from tribe members. In

order to raise money to make contributions, the tribal PAC would

have to solicit voluntary contributions of up to $5,000 per year from

members of the tribe.

This proposal would not place an overall limit on how much

money the tribal PAC could contribute in a 2-year period because

the aggregate limit does not apply to PAC’s or other political committees. In addition, the tribe’s PAC, like most corporate or union

PAC’s, could contribute more to a single candidate than tribes can

now. This is because the contribution limit for a person under the

law, which is how tribes are now classified, is $2,100 per election.
5

Most PAC’s can give up to $5,000 per election to a candidate. On

the other hand, a tribal PAC could not contribute as much to political parties as a tribe can now.

What has not been discussed in considering whether to treat

tribes like corporations or unions is the very important question of

who qualifies as a member of a tribe under Federal campaign finance laws. This question is important because if this change is

adopted, a tribe’s PAC will only be able to solicit contributions from

members of the tribe. H.R. 4696 equates a tribe’s membership to

a corporation’s stockholders, but does not further define who would

be considered a member of a tribe. This may or may not be an appropriate analogy because tribal membership is more frequently a

question of one’s ancestry, rather than a commercial relationship of

a stockholder.

It is our understanding that the question of who is a member of

a tribe has been a topic of great concern to tribes and that tribes

have taken different views on what standard should apply to determine if an individual qualifies as a member of a particular tribe.

If Congress decides to amend Federal campaign finance law to

treat Indian tribes in a way that is analogous to corporations and

unions, it will be very helpful for Congress to use its expertise on

the history and culture of Indian tribes to set a standard for what

constitutes membership in a tribe in the context of Federal campaign finance law.

In addition to the pending proposal to treat Indian tribes like

corporations and unions, there have also been discussions in the

press implying that Indian tribes should have an aggregate contribution limit like the one imposed on individuals. For individuals,

that limit is $40,000 to all candidates and $61,400 to all PAC’s and

parties, for a total limit of $101,400 on all Federal campaign contributions in a 2-year cycle.

Currently, this limit only applies to individuals, which the FEC

has defined as actual human beings. Some have questioned why a

similar limit does not apply to Indian tribes. If Congress were to

adopt such a change, it would not prevent tribes from using the

proceeds from unincorporated gaming or other tribal moneys to finance political contributions, nor would it improve the current levels of disclosure. It would, however, limit the amount of money that

an Indian tribe could spend to influence Federal elections to a sum

equal to what an individual can spend.

In conclusion, Mr. Chairman, I would like to thank you for giving

us the opportunity to appear before the committee to discuss the

application of Federal campaign finance law to Indian tribes.

[Prepared statement of Mr. Lenhard appears in appendix.]

The CHAIRMAN. Thank you.

Mr. Hogen.

STATEMENT OF PHILIP N. HOGEN, CHAIRMAN, NATIONAL

INDIAN GAMING COMMISSION

Mr. HOGEN. Good morning, Chairman McCain, Senator Thomas,

Senator Johnson. I am Phil Hogen. I am an Oglala Sioux Indian

from South Dakota. I am proud to chair the National Indian Gaming Commission.
6

I want to just take a quick look at the history of Indian gaming.

I know you know this, but in the 1980’s tribes started playing highstakes bingo and it worked really well. States in some of those

places were perplexed that this was happening in their midst, inconsistent with State bingo laws. So they took the tribes to court.

The courts eventually said, well, States, you permit bingo; you do

not criminally prohibit it; you use your regulations; the tribe can

use their regulations. That was eventually crystallized as the law

of the land in the Cabazon decision decided by the U.S. Supreme

Court in 1987. Of course, that was followed by the Indian Gaming

Regulatory Act that I work under, which was adopted in 1988.

The CHAIRMAN. Could I interrupt you one second?

Mr. HOGEN. Certainly.

The CHAIRMAN. Many citizens understand that history as far as

it goes. What a lot of citizens do not understand is that in South

Dakota, they still allowed bingo on an occasional charity night

where gambling was allowed for the benefit of the local hospital,

et cetera. How did that transfer into allowing Indian tribes to open

full-blown casinos?

Mr. HOGEN. Well, the Indian Gaming Regulatory Act divided the

gaming into three categories.

The CHAIRMAN. Wasn’t it a judge’s decision that basically made

it that if they are allowing bingo, therefore the Indian tribe can

have roulette and crap tables?

Mr. HOGEN. Not in South Dakota. South Dakota law permits casino gambling in the historic gold-mining town of Deadwood. That

is the only place you can do that in South Dakota. IGRA says if

the State says somebody can do it someplace, then the State is obligated to negotiate a class III compact through the tribe so they can

do it on their reservation, and that is what has occurred.

We have gaming in 28 different States. We have 28 different

models of what the State permits and what the tribe is then able

to negotiate. So one size does not fit all, but that is kind of the

theory.

Tribes got into gaming not just to raise money, but to provide

jobs. There is a great diversity in Indian gaming. In South Dakota,

we have Bear Soldier Bingo up on the Standing Rock Reservation

near McLaughlin, where they play a few nights a week. In Connecticut, the Mashantucket Pequots have the largest casino in the

world. All of this gaming is done under the Indian Gaming Regulatory Act. This chart over here shows the revenues that have been

generated from this activity that this year will be over $20 billion.

It is on the rise. It is on the increase and it has worked better than

any other economic development that was brought to Indian country.

It is not divided up equally, so to speak. There is great diversity.

I have attached some charts to my testimony, which I hope will be

incorporated into the record. Most of this $20 billion is generated

by a small number of tribes; 15 percent of those some-225 tribes

generated over two-thirds of that $20 billion; 30 percent plus is responsible for less than 1 percent of that total. So you can see not

all tribes are making millions or billions of dollars.

The Indian Gaming Regulatory Act restricted what tribes could

do with their gaming revenues, but the categories that were cre-
7

ated were very broad: to fund tribal government operations; to provide for the general welfare of the tribe and its members; to promote tribal economic development; to donate to charitable organizations; or to help fund operations of local government.

In an effort to help tribes stay in these categories, NIGC last

year issued a bulletin entitled ‘‘Use of Tribal Gaming Revenues,’’

that we have attached to our testimony, that hopefully gives guidance to tribes so they can stay in those categories.

We are authorized to take enforcement when IGRA is violated,

when our regulations are violated, or when the tribe’s own gaming

ordinance is violated. So indirectly, I think it can be concluded we

have an oversight and enforcement responsibility with respect to

tribes that do not spend according to the act. We have investigated

a number of instances where it was alleged or we concluded or observed that the money was not being used properly. When dollars

were being used to benefit just tribal officials or tribal factions,

that we felt was not a proper use.

There were instances where tribal dollars were used to influence

tribal elections, or taking one side against another. We inquired

into that. There were dollars that were spent to secure contracts

that some of the insider tribal members had financial interests in.

We inquired into that. There were expenditures that were made inconsistent with what tribal law provided. We inquired into that.

There were payments made to management contractors that did

not have their contract reviewed and approved by the NIGC as

IGRA requires. We looked into that. In other instances, a group

wrested the leadership of the tribe from the recognized group without BIA recognition and we felt that that was not an appropriate

use, then, of the dollars.

Those are among the categories where mis-spending, so to speak,

has occurred and can occur.

With respect to the matter we are probably talking about today

that got started inquiring into huge expenditures for lobbying expenses, NIGC got wind of that and referred it to law enforcement

authorities not because we did not think money could or should be

spent on lobbying, but the way those particular monies were spent

did not appear to comport with what the tribe’s own requirements

were with respect to the expenditures of those dollars. IGRA does

not say specifically how NIGC ought to or does oversee the expenditures of these dollars.

If we could look at the next chart, tribes are not all set up the

same way, but typically the tribe and its membership will designate a tribal council that is responsible for the government. To

run businesses, they typically will set up a board of directors or an

enterprise board. So they try to separate the business from the government, so to speak. After the enterprise board gets set up, they

can start the business, a casino or a bingo hall, and they can do

it directly, hire a manager, kind of oversee it themselves, or they

can enter into a management contract. Typically, tribes will also

set up an independent tribal gaming commission that will have

independence from the manager, have independence from the tribal

council, but regulate, and then they will run the business.

Typically, if they run it well, they will have dollars to spend.

Those dollars will come back to that enterprise board and then the
8

enterprise board will send them back to the tribal government.

Typically, they will then go in to the treasurer’s office where they

will be commingled with the other moneys that the tribes might get

from grazing or oil or timber or whatever.

NIGC looks most closely as those dollars come into the casino,

and as they go through the vault and so forth, but we do not necessarily have a way to look at those dollars after they get back to

the tribe and how they are spent. So that is typically the way it

works. We do not allege that we follow every dollar that is generated by Indian gaming.

The Department of the Interior’s Office of Inspector General did

a report with respect to revenue allocation plans. Those are the

plans that tribes have to adopt if they are going to make per capita

payments. This report done in basically concluded that nobody was

watching the store. That is, these revenue allocation plans, although they had to be approved by the Secretary of the Interior,

were not then followed thereafter by the Department of the Interior

or NIGC.

In fact, we found as we now started looking at those, many of

those plans were obsolete. They did not comport with what the

tribe was actually doing with its revenues, and the Department of

the Interior is currently revising those regulations and we are participating in that.

We have never taken action against a tribe for making campaign

contributions or lobbyist payments based on the proposition that

those were not in compliance with those categories that IGRA provided for. We concluded that such expenditures were providing for

the general welfare of the tribe, promoting economic development,

or funding tribal operations.

Tribes, maybe more so than any other entities in the country, are

at the mercy of Congress. They need to watch very carefully what

happens in Washington, DC generally, and in this committee in

particular. They need professional assistance often to do that, not

only to report back to the tribes what is going on, but to provide

input. They hire lobbyists to do this.

In some instances, lobbyists probably will be paid above the line,

that is, so to speak, directly from the gaming operation. They will

be hired, and that money will not go back to the tribal treasury.

That I do not think is necessarily inappropriate. All businesses

have some government relations offices.

But is this to say that these expenditures cannot be abused? I

think they can be, and I think there have been some instances

where they have been. We have seen exorbitant payments made to

lobbyists and moneys contributed to causes that seem to have no

relationship to the direct interests of the tribe. I think there has

been a failure of due diligence on behalf of those tribes.

Having the economic wherewithal and having the prosperity to

make these contributions is relatively new to tribes, because before

Indian gaming, they just did not have the dollars to do this. So

they are learning how to do it. But as they do this, you would think

that it would be appropriate to look at other industries, look at

similarly situated organizations. How much do they spend to do

this sort of thing? And be guided in part by that.
9

So we have a wake-up call here and I think all tribes, as well

as regulators like myself, need to exercise greater due diligence

with respect to how this works.

Indian gaming is a very competitive industry. Gaming is a competitive industry. Sometimes tribes will spend dollars to protect

their market share. Sometimes they want to protect that from sister tribes. That is not wrong, but if it is going to be done, it needs

to be done fairly.

So tribes need to look before they leap when they spend dollars

like this. They need to expend due diligence and they need to fully

inform their tribal membership with respect to what they are doing

with those tribal resources. There are going to be trade secrets.

There are going to be political strategies that need to be closely

guarded, but the tribal members are the shareholders, so to speak.

I do not want to confuse my use of ‘‘shareholders’’ with Mr.

Lenhard’s explanation there, but they are the owners, so they

ought to have a right to know what is going on and they have a

responsibility to hold tribal leadership to account, account to give

them the information about where the money is going, and if it appears it is not going into the right place, to demand compliance or

replace that leadership.

If tribes operate with this transparency, I think they can continue to do right things with their dollars. It is extremely important to remember that Indian gaming is not a Federal program.

These are not dollars that somebody gave the Indians. These are

hard-earned dollars that they have produced themselves, and they

were doing it long before the Indian Gaming Regulatory Act came

along. The Indian Gaming Regulatory Act I think accommodated

how it would work, but you cannot ignore the fact that these are

their dollars.

We want to play an effective role in providing oversight. If Congress wants us to watch every dollars, we are going to need some

different tools than we have right now.

I appreciate the opportunity to share this with the committee. I

would be happy to respond to any questions.

[Prepared statement of Mr. Hogen appears in appendix.]

The CHAIRMAN. Thank you very much, Mr. Hogen.

Mr. Toner, the FEC determined in 1995 that tribes do not need

to register with the FEC and report their contributions because,

like some other entities, they are not ‘‘political committees’’ since

campaign activity is not a ‘‘major purpose’’ of tribes. Do you think

there is value in having tribes register and report their contributions?

Mr. TONER. Mr. Chairman, you are correct that that was the

judgment the Commission made in applying Supreme Court precedent in terms of organizations and under what circumstances the

Government can require them to be political committees. As you indicated, the touchstone that the Supreme Court has focused on is

whether their major purpose is to influence elections. The Commission reached the conclusion that Indian tribes, given that they have

a lot of other purposes totally removed from electoral politics, did

not have as their major purpose was not influencing elections, and

therefore, at least under existing law, it would not be appropriate

to require them to register as political action committees.
10

Clearly, Congress could decide to broaden the political committee

provisions under our law.

The CHAIRMAN. My question, Mr. Toner, was do you think there

is value in having tribes register and report their contributions?

Mr. TONER. One of the big values for any entity that reports is

that you have a more uniform reporting regime, because any entity

that is a political committee is assigned.

The CHAIRMAN. Mr. Toner, in all respect, I would like, do you

think there is value, and this is the third time now I have asked

the question, do you think there is value in having tribes register

and report their contributions?

Mr. TONER. Mr. Chairman, as I was saying, I think there could

be value because there would be improved reporting if they were

registered as political committees because they would then be provided a unique identifier number. Like any political committee,

they would have independent reporting obligations to the government, as opposed to only having their activities reported by the entities that receive their contributions?

The CHAIRMAN. I see.

Mr. Lenhard, do you share that view?

Mr. LENHARD. I do, sir. I think that there is value. It would provide more easily accessible records as to the kinds of contributions

the tribes were making. I think it lies within the discretion of Congress whether they choose to add that requirement or not. The

tribes are like a number of other different kinds of entities. Individuals, for example, do not have to report their overall contributions,

partnerships. I think the question for Congress is, has the level

and kind of tribal political activity risen to the point where it is appropriate to have them register and report.

The CHAIRMAN. Thank you.

Mr. Toner, how are municipal and State governments treated

under FECA?

Mr. TONER. Mr. Chairman, in terms of the coverage of FECA, the

only entity that is clearly excluded from the Federal campaign finance laws in this respect is the Federal Government and the arms

of the Federal Government. The Commission has concluded that

State governments are subject to FECA’s contribution limits. There

has been an advisory opinion that made that clear.

It is also true that State governments have not been in the business of contributing to Federal candidates, but the agency has

made clear that as a matter of Federal law, State governments are

part of the Federal campaign finance laws.

The CHAIRMAN. So in theory, they could make contributions.

Mr. TONER. In theory, they could. What would be interesting is

to see whether or not, apart from Federal law, are there any independent prohibitions under State law for State funds being used for

those purposes.

The CHAIRMAN. Can I get back to the larger question for a second? Mr. Toner and Mr. Lenhard, are tribes being treated appropriately under Federal election campaign law? I understand this is

not an easy question for either one of you. Go ahead.

Mr. TONER. Mr. Chairman, there is no question that Indian

tribes have been very active in Federal elections. Press reports

have indicated the broad ranges of contributions that have been
11

made by Indian tribes and by Native Americans. There is no question they are fully engaged in the political process. But as my opening statement indicated, there are also some difficult legal issues

in terms of how to treat them. So the Commission has ruled that

Indian tribes are not subject to the biannual aggregate limits that

apply to individuals, and made that judgment based on the view

that Indian tribes are not individuals. They are a distinct entity,

recognized by Supreme Court case law and otherwise.

But I am the first to acknowledge that there is an anomaly in

the law, and the Congress could take a hard look at that judgment.

Another key issue is the sense that the Congress may be looking

at is whether to essentially amend section 441(b) of our statute,

which is what the Rogers bill on the House side would do, and basically say unincorporated Indian tribes would be subject to the prohibitions in 441(b). Therefore, their general treasury funds could

not be used to make contributions for Federal elections, and they

would have to set up a political action committee to be active in

that process.

Clearly, that is a way that Congress could decide to go. It does

place an added burden on any organization to set up a political action committee, but it is also true that a wide range of organizations do. There are thousands of PAC’s that are registered with the

FEC.

So in terms of the proper balance in treating Indian tribes under

the law, I am the first to acknowledge that there are difficult interpretive issues that the agency has faced over the last 20 years,

which is why I think more than anything else clear congressional

direction would be really valuable to the FEC in this area.

The CHAIRMAN. Mr. Lenhard.

Mr. LENHARD. I agree with that. I think that the tribes have

been treated by the FEC, along with a number of other entities, in

a common way with partnerships and unincorporated associations.

I think the question that presents itself here, which really I think

is an appropriate one for Congress to consider, and especially this

Committee to consider, is whether the nature of Indian tribes in

the political process has changed over time.

They have some unique features to them. They are treated as

sovereign nations under the law. One of the effects of that is that

in the context of business activities, they often do not feel the need

to adopt the corporate form. As a consequence, the prohibitions

under the election laws on corporate activity do not apply to Indian

gaming operations and other business operations.

The other thing that obviously has changed is with the rise of

gaming, a number of Indian tribes, and the number may be small,

but a number of Indian tribes have become very politically active.

Again, I think it is reasonable for Congress to consider whether the

aggregation of wealth in those entities has a distorting effect on

politics that should cause the regulatory regime to increase.

Last, and again I note that this committee’s jurisdiction seems

particularly appropriate, there is a particular history of Indian

tribes in this Nation which may have some bearing on this as well,

both in terms of the interactions of the tribes and the American

Government over the last 350 years, the economic opportunities
12

available to tribes, and the internal operations as sovereign entities

within this country.

So I think that these are all factors that you have to consider

and weigh as you discern whether it is valuable at this point to

change the statutory treatment of these tribes.

The CHAIRMAN. I have just two more questions.

Transparency is always the first step whenever there is a problem that you take. Chairman Hogen, Mr. Toner and Mr. Lenhard,

stated in their testimony that it is not easy to determine where

tribal moneys come from. So how can the Commission know if the

tribe is using funds received from a source that is prohibited from

making political contributions? In other words, wouldn’t it be better for us, if we do anything, is to make sure that we know where

the money comes from?

Mr. Toner.

Mr. TONER. Mr. Chairman, that would be I think the single biggest change in the law, if 441(b) of the campaign finance laws was

amended and tribes were required to set up political action committees to be involved in Federal elections, because then it is very

clear that only the personal funds of the solicitable members of

that tribe could——

The CHAIRMAN. But isn’t there a way to determine where the

money came from without saying you have to set up a PAC?

Mr. TONER. It is possible, but I think, Mr. Chairman, it is fair

to say that it is more difficult perhaps in the Indian tribe setting

because so many of these entities are unincorporated. For a corporate entity, it would be more straightforward because any funds

passing through the corporate form could not be used in Federal

elections.

Here we have, as I understand it, most of these tribes are not

incorporated because they do not need to be. Because of their sovereign status, they do not have the same potential liability issues

that other entities do. So you have an unincorporated entity, yet

also a very healthy revenue stream, at least for some of the tribes,

although I think Mr. Hogen’s testimony is very valuable in pointing

out that not all the tribes are operating at this level.

So you have large sums of money that typically in American society would pass through some type of corporate-type entity, that

would be captured by section 441(b), and yet here that does not

happen. So yes, it would be possible to try to assess where those

funds are coming from, but based on how the tribes are structured,

if the funds, say, of a casino are due and owing and essentially

earned by the Native American peoples themselves, then an argument could be advanced that those are personal funds owned by

those individuals, and all those issues would be set aside if Congress required them to set up PAC’s.

The CHAIRMAN. Thank you.

I will forego my last question for later.

Senator Dorgan.

STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM

NORTH DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN

AFFAIRS

Senator DORGAN. Mr. Chairman, thank you very much.
13

First of all, I regret I missed the testimony. I was at a leadership

meeting in the Capitol Building. I have read your testimony. Mr.

Toner and Mr. Lenhard. Last evening when I read the submitted

testimony, I thought it was very helpful to better understand what

the issues are. Thank you for that.

Has the FEC ever required tribes to file reports prior to the time

it made the decision that now exists? Have there ever been requirements that the tribes file reports with respect to campaign contributions?

Mr. TONER. Mr. Vice Chairman, the FEC has never required

tribes to file reports and be political committees, and set up PAC’s,

under the view that at least under existing law, their major purpose was not to influence Federal elections.

Senator DORGAN. You testified about the difficulty of conducting

searches for both tribal and individual contributions. How unique

is that to tribes and individuals, versus other partnerships, other

limited liability companies and so on? Is it specifically unique to

tribes, or is that a more general problem?

Mr. TONER. Mr. Vice Chairman, it is something that we confront

whenever there are unincorporated entities that are contributing

funds from their general treasury funds. You mentioned a partnership. That is not incorporated. A partnership can give to Federal

candidates, but the key from our perspective is whether or not the

individual partners, the individual people who make up that partnership, we treat that as a personal contribution from those individuals.

An LLC, limited liability company, again we look at the tax status of that LLC. Do they elect to take the corporate tax treatment

or do they elect not to do that, in terms of whether the LLC can

give. As our written testimony indicated, we have dealt with a

number of unincorporated associations, recreation associations,

grassroots organizations, where we have made clear that those

types of entities can give to Federal candidates without setting up

a PAC. The fundamental difference is, of course, we are not talking

about nearly the same scale of moneys in those types of organizations. As I indicated earlier, most entities who amass large sums

of money often feel the need to incorporate for liability purposes,

but that may not be the case with respect to Indian tribes, given

that they are sovereign entities.

So in this respect, it has been difficult trying to figure where exactly to fit tribes within existing law, but it would be very helpful

if Congress decided to give us clear mandates on where we need

to go on that.

Senator DORGAN. Review just one more time for us the circumstance that requires corporations and labor unions, for example, to establish PAC’s and contribute through those political action

committees, whereas Indian tribes are not required to do that. Describe for me the difference that resulted in the thinking of the

FEC on that.

Mr. TONER. Yes, Mr. Vice Chairman; section 441(b) of the original Federal Election Campaign Act of 1971, one of its core provisions was that corporations, labor organizations and national banks

could not contribute any funds from their general treasury funds

to Federal candidates period. It is an absolute prohibition under
14

Federal law. But 441(b) also made clear that those types of entities

could set up political action committees, where the individuals who

worked for the corporation or the union could donate their own personal funds to that PAC. Those PAC proceeds then could be given

to Federal candidates.

With Indian tribes, the Commission made the judgment that

based on prevailing Supreme Court case law in terms of what types

of entities can be required to set up a political action committee,

that the major purpose of Indian tribes is not to influence Federal

elections. So in the advisory opinion, the agency has indicated that

the tribes do not meet that major purpose. Congress in section

441(b) has set down a clear marker with respect to corporations

and labor organizations and national banks: Per se they are going

to have to set up PAC’s to be involved in Federal elections. That

really is what the Rogers bill on the House side would do. It would

broaden 441(b) and apply it to unincorporated Indian tribes and

put them on the same playing field as those other entities.

Senator DORGAN. Mr. Chairman, thank you very much.

I thank the witnesses.

The CHAIRMAN. Senator Johnson.

STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM

SOUTH DAKOTA

Senator JOHNSON. Thank you, Mr. Chairman, for convening this

hearing.

A special welcome to Mr. Hogen from South Dakota.

I want to share a few observations at the outset. One is that we

understand that this hearing is in to some degree a consequence

of the follow-on concerns we have from the Abramoff scandal. And

yet, I think that we ought at the outset recognize that there were

very few tribes even indirectly involved in that matter, and to the

degree a few were, by large measure they were victims, rather than

involved actively with anything that Mr. Abramoff was trying to

achieve.

Indian tribes are unique institutions. We have had some parallels drawn with political action committees, corporations and individuals. They are none of those. And so I think it may be a natural consequence of that that our treatment of Indian tribes relative

to political activity may have to be indeed unique as well, recognizing the government-to-government relationship they have, the nature of the sovereignty that they have.

Right now, we have what appears to me to be perhaps a bit awkward, but nonetheless a compromise relative to tribal political contributions in the sense that they are not permitted to give as much

to political candidates as political action committees are. They are

limited to an individual-type contribution. On the other hand, there

is no aggregate limit to how much they can give as is the case with

political action committees that have no limit. Individuals do.

So they have a little bit of both worlds here. They limited to how

much individually they can contribute, much as individuals are,

but there is no aggregate limit, much as is the rule relative to political action committees. I think that it is appropriate that we take

a look at whether there are some additional reporting or transparency issues that would be helpful, but I think we need to take
15

some care that we not come up with some regime that is unworkable or which would further restrict tribes’ abilities to communicate

and to become engaged in the political process.

I would also hope that whatever legislative steps we take, if any,

are done in a consultative manner with the tribes themselves, rather than imposing solutions that may seem appropriate here, but

which have not been fully thought through from the perspective of

Native Americans themselves and their tribal leaders. So I would

say that I hope that we would proceed with that in mind.

I do not have a particular question to ask of this panel other

than to say that I appreciate the observations you shared with us

and I look forward to working with the members of this committee

on whatever legislative action, if any, we will deem appropriate.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much.

Senator Inouye.

STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM

HAWAII

Senator INOUYE. Thank you very much, Mr. Chairman. I am

sorry I am late, so forgive me for not being here in time to listen

to your statement.

According to some of the papers I have read, I am advised that

in the 2004 election cycle, Indian tribes and Indians provided less

than one-third of 1 percent in political contributions nationwide. Is

that correct?

Mr. TONER. Senator, there is no question that in terms of the

total amount of giving in that cycle, it was a relatively small percentage. There certainly was a growth of contributions across the

board in the 2004 cycle. Whether it is exactly that figure, I cannot

confirm, but our best sense at the agency is that your figures are

in the ballpark.

Senator INOUYE. In other words, assuming there was abuse, it is

not a horrendous one, is it?

Mr. TONER. The issue, as Vice Chairman Lenhard and I tried to

lay out in our testimony, is there is no question that Indian tribes

are involved in Federal elections and there is a fair amount of contributions flowing from tribes to various Federal organizations, but

also there is no question that they occupy unique status under

American law and the Federal Election Campaign Act did not specifically refer to them. So the agency really in trying to figure out

how best to apply the law to the tribes wanted to balance the ability for tribes and tribal members to be involved in politics and give

Federal contributions with doing full faith and justice to the statutory provisions that Congress had passed in this area.

The Vice Chairman indicated that in some ways, there is kind

of a trade-off in this area. In some respects the tribes are subject

to additional restrictions than other entities, but in some respects

they have broader ability to give. It really was a good-faith effort

by the agency to try to apply statutory provisions that did not specifically mention Indian tribes to accomplish how we thought Congress intended for us to proceed.
16

Senator INOUYE. During the last 10 years, are you aware of any

Indian tribes being criminally involved in the elections, Federal,

State or local?

Mr. TONER. Senator, in terms of criminally violating the Federal

Election Campaign Act, I am not aware of that. Whether or not

they have been involved in criminal prosecutions of other Federal

statutes, I would not be knowledgeable to be able to answer, but

I am not aware, sitting here today, of criminal prosecutions of Indian tribes arising under the Federal Election Campaign Act.

Senator INOUYE. Whatever it is, it is not widespread, at least we

do not know about it.

Mr. TONER. I think that is a fair assessment, yes, Senator.

Senator INOUYE. Do you think a law that singles out Indian

tribes is necessary?

Mr. TONER. Well, Senator, I think, as I am sure you can appreciate, my role and Vice Chairman Lenhard’s role is to do whatever

we are directed by Congress. There is no question, as we indicated

in our remarks, that the law is less than clear in terms of how the

FEC ought to treat tribes. We really would welcome and benefit

from clear direction from Congress on how you all come down on

these issues. They are tough issues. They are difficult interpretive

issues. Reasonable people can disagree about how to come out on

them.

I think our main goal would be to make clear that we are prepared to implement and enforce whatever statutory regime Congress chooses to set up in this area.

Senator INOUYE. I am a politician, so I run for office, but I am

required by law to submit disclosures. I believe it is sufficiently

transparent. Is that enough?

Mr. TONER. As I indicated in response to some questioning from

the chairman, one of the advantages of having tribes set up political action committees is reporting does become more transparent

because political action committees are given a unique identifier

number to independently report their activity to the Federal Government, as opposed to individuals or tribes or partnerships that

do not have their own reporting obligations. We can rely only on

the recipient committees, the entities that get the funds.

I have to say that type of reporting is not as clean, not as

streamlined as when you have entities reporting directly themselves to the Federal Government. So I think that would be one of

the improvements that would be made if Congress chose to go the

PAC route in this area.

Senator INOUYE. So Mr. Toner and Mr. Chairman, I can conclude

from this exchange that if there are abuses, we are not aware of

them, and the contributions made nationwide would be small, onethird of one percent. Nodding means yes?

Mr. TONER. Senator, As I indicated, there was a huge growth of

Federal contributions across the board in the 2004 cycle. I do not

have any reason to doubt the accuracy of the figure you mention

in terms of the portion of Indian tribe giving to the entire Federal

giving in this country.

Senator INOUYE. Thank you very much, sir.

Thank you, Mr. Chairman.

The CHAIRMAN. Thank you very much.
17

Mr. Toner, the next panel of witnesses will say that if you made

Native Americans form PAC’s, it is very different from a bank or

a corporation or a company because they have a certain number of

wealthy employees and many of these tribes are very poor, and

that to expect the tribal members to give large amounts of money

to a PAC is going to be pretty difficult. Do you understand that argument?

Mr. TONER. Yes, Mr. Chairman.

The CHAIRMAN. Finally, Mr. Toner, by the way, I have to take

a cheap shot here. Your comment that you do whatever is dictated

by Congress: According to Federal court, 13 of the 15 regulations

issued to implement BCRA were unconstitutional. I hope that you

will do a little more in the area of carrying out the direction of

Congress and not have 13 of the 15 next regulations that you issue

to implement BCRA being declared as not only not in keeping with

the law, but egregious violations of the law. That is according to

a Federal judge, not me, although I certainly agree with her.

Anyway, in 2005, Mr. Toner, the FEC issued an advisory opinion

in which it determined that an incorporated tribal enterprise could

not make campaign contributions if it was a Federal contractor, but

that the tribal enterprise was separate from the tribe and so the

tribe could continue to make contributions from tribal funds.

You dissented in that advisory opinion, Mr. Toner. Could you tell

us why and what you would have liked to have seen that opinion

be?

Mr. TONER. Yes, Mr. Chairman; I think this has been one of the

more difficult areas of applying the Federal Election Campaign Act

to tribal activities because, as you now, there is an independent

prohibition on Federal Government contractors giving to Federal

candidates. So the Commission has confronted scenarios where

tribes had qualified for Federal Government contractor status, and

yet still wanted to have the ability to give to Federal candidates.

The agency, in a number of advisory opinions, has indicated that

that can happen provided that there is really clear demarcation,

clear separation between the Indian tribe itself and the Federal

Government contractor entity. As you indicate, I did dissent from

an advisory opinion in 2005 where the commission concluded that

the Indian tribe at issue there and the Federal Government contracting entity did not preclude the Indian tribe from giving.

The main reason that I dissented, along with Commissioner

David Mason, was that we felt under those circumstances that

there was not a sufficient degree of separation, and unlike some

earlier advisory opinions, this was a Government contractor that

the tribe had set up that was seeking to do business across the

country, not just in the Indian lands. So we are talking about a

much broader-scale business activity, and the Government contracting entity there was really depending on its relationship with

the tribe for the government contracting entity to succeed. It was

seeking to have special status under the Small Business Administration Regulations.

The view that Commissioner Mason and I had was there was an

inherent symbiotic relationship between the tribe and the Government contracting entity that really could not be disentangled and

should not be disentangled. Given that government contractors are
18

independently barred from giving to Federal candidates, our view

was that that should not place an undue interference on tribal activities. They just have to make a choice between giving to Federal

candidates and setting up Federal Government contracting entities,

which we think Congress has said you need to make that choice.

So I would have come out the other way in that advisory opinion

for those reasons.

The CHAIRMAN. Mr. Lenhard, do you have a view?

Mr. LENHARD. In general, I think I share Chairman Toner’s analysis of how the problem has sorted itself out. I think that the thing

that is difficult in the area of Federal contractors in the context of

tribes is two things. One is that the tribes have a history of performing a range of different roles and activities on reservations.

One of the early cases that this came up in involved a tribe that

had an electric power generating facility. They provided electricity

to people who lived on the reservation. The Bureau of Indian Affairs ran a school on the reservation and there was an Indian

Health Services Clinic on the reservation. So as a consequence, the

tribe was selling power to the Federal Government for those particular facilities.

The question then became, have they become a Federal contractor and therefore covered under the Federal contractor bar? The

FEC in a number of decisions over the years has tried to acknowledge the special role the tribes play, especially in the context of

reservations, in providing services that are either incidentally also

provided to the Federal Government or in some contexts where

tribes are performing functions of the Federal Government.

My sense is, and I do not know very much about Indian tribes,

but my sense is that over the years increasingly tribes have taken

on the role of providing services under agreements with the Federal Government which could be viewed as contracts. I think there

is a sense that, to a degree, in a number of these decisions that

the FEC should follow the analysis used by the courts in viewing

these, to the degree that the tribes set up a separate entity, they

were rarely incorporated because of the sovereign status of the

tribe, but to the degree that the tribe set up a separate entity to

provide these kinds of services, even in the context of contracting

some of those services for the Federal Government, it should not

disqualify the tribe’s other political activities.

The advisory opinion you cite involved an expansion of that in

the context of the tribe that was setting up an entity that would

do off-reservation construction work. The interlocks there between

the tribe and the entity involved financial support or assistance in

the form of, I believe it was, I cannot remember if they guaranteed

a bond, but they provided a financial guarantee for the entity. I

think that became a much closer question, but I think the chairman has accurately described how the commission has tried to sort

through that problem over the years.

The CHAIRMAN. Thank you.

I thank the panel. Thank you. It has been very helpful to us. I

appreciate your good work. Thank you very much.

Mr. LENHARD. Thank you, sir.

Mr. TONER. Thank you.
19

The CHAIRMAN. Our next panel is Ron Allen, who is the treasurer of the National Congress of American Indians; Larry Noble is

the executive director of the Center for Responsive Politics; and

Professor James Thurber is the director of the Center for Congressional and Presidential Studies. Welcome.

Ron, we are very happy to see you again, and thank you for coming back to visit us. Will you please proceed with your testimony?

STATEMENT OF W. RON ALLEN, TREASURER, NATIONAL

CONGRESS OF AMERICAN INDIANS

Mr. ALLEN. Thank you, Senator. It is always an honor to be before this committee and testify on behalf of the tribes on issues

that are of great importance to us, so I do appreciate you and Vice

Chairman Dorgan for being here, as well as the other Senators who

were here earlier this morning.

This issue is an issue that is of great importance to tribes. The

concern for us is that the illegal actions of Jack Abramoff really is

the issue that seems to have gravitated and turned into a different

agenda for us. This is a lobbying scandal. This is not about a tribal

scandal. This is not about anything that the tribes have done

wrong.

When we look over our history of participating in the political

process, we have done nothing wrong. We have complied with the

laws. I think the earlier testimony reflects that agenda. So we personally feel that there is nothing wrong with the system. If there

is going to be change in the system, we certainly do want to engage

with the leadership of this committee.

We continue to always remind this committee and the members

of Congress that we have worked hard in order for the Congress

to understand who we are. I remember this committee when it was

a select committee. You were not even sure this committee should

be a permanent committee until it did finally become a permanent

committee and recognize the unique status of tribes as sovereign

nations.

So when we look at the history of tribes, the fighting we had over

the Allotment Act, termination, removal and all the experiences

that we have had and all the struggles that we have had over the

years trying to become independent tribes and take care of the

many, many needs of our community, we have to do that by engaging with the Congress. We have to deal with that in engagement

with the Administration.

In terms of compliance with the FEC laws, we feel that we are

complying with them. We have a high, strong interest in making

sure that this Congress, all members of it, whether you have Indian tribes in your States or not, that you understand our issues,

you understand our history, you understand what we have been

trying to achieve, and what we are trying to do in order to address

the many needs of our community.

We continue to remind you that despite and contrary to some

perceptions, our communities are still at the lowest end of every

economic and social category by which we measure the welfare of

our society. The average income of our people still is only in the

$8,000 per person range, $8,000 per person range. So we are onehalf of the lowest spectrum of the United States by the standard
20

by which it measures the lowest level of economic standing of Indian people.

Earlier, Senator Inouye noted that in the 2004 elections, that we

only contributed one-third of 1 percent. Now, when you talk about

the $8 billion, people say, well, that is a lot of money. Well, against

the backdrop of how much money is actually contributed in an election process, and it becomes one-third of 1 percent, then how much

influence are we really having on the electoral process when you

stretch those dollars across the United States, all different levels

of the political spectrum with different candidates? Can you even

compare $8 million to the $182 million given by lawyers and law

firms in 2004? Or how about the $32 million, four times our number, given by leadership PAC’s, which are well known in this Congress in terms of how they engage in this conversation. They are

not subjected to any kind of caps at all.

We just feel that the issue of the agenda here really is about how

the tribes get to stay at the table so that we can engage the Congress and work with the congressional leadership, whether they are

incumbents or whether they are candidates, so that our issues are

on their plate or on their radar screen when they are addressing

our issues. If we do not, then what Congress could do is establish

laws or regulations that disenfranchise us, that take us out of the

process.

The earlier question that you had asked the FEC Chairman

about should we be forced to establish PACs, well, quite frankly

they can establish identifiers. We can identify the moneys that we

contribute at various levels to the different congressional leaders

and candidates, et cetera. So that is not a problem. We are already

transparent. The money has to be recorded, so there is transparency. It appears to us you want more transparency.

We can tell you that the PAC idea is really a bad idea. It would

disenfranchise people. It would disenfranchise our tribes. We have

to remind the Congress that we have a very unique standing as

sovereign governments, a very unique relationship with the Federal Government in our society, one of which it has regularly ignored us in terms of what our issues are.

Our people, who are as poor as anyone in America, depend on

our government to defend their rights. The political system does

not really provide the greatest vehicle for us. So our tax base are

basically our businesses. That is the revenue we generate in order

to use those kinds of revenues in order to engage in the political

process so that we can make a difference.

We are not opposed to reforms. We are supportive of reforms. We

agree that the integrity of the FEC rules and the laws of elections

are important. The tribes are very supportive of that. As we have

already pointed out, we are in compliance with them and understand them, even recognizing the fact that the FEC acknowledges

us as individuals, which we find rather peculiar because we are

tribal governments. We are communities of a few thousand people

to hundreds of thousands of people. So that is the category they put

us, well, fine, then we live by those laws and by those rules.

So if there is any change, it has to be fair. You have to recognize

that you have to provide the tribes the right to engage in the political process so that we can protect our interests, so that we can con-
21

tinue to advance our agenda. Otherwise, what you could easily do

is you could push us back 20, 30, and 40 years so that we are not

able to engage with the congressional leadership in a way that

caused you to understand what our needs are.

Thank you, Mr. Chairman. I am here to answer any questions

you may have.

[Prepared statement of Mr. Allen appears in appendix.]

The CHAIRMAN. Thank you for your usual mild and

uncontroversial statement. [Laughter.]

Thank you.

Mr. Noble, welcome.

STATEMENT OF LARRY NOBLE, EXECUTIVE DIRECTOR,

CENTER FOR RESPONSIVE POLITICS

Mr. NOBLE. Thank you.

Chairman McCain, Vice Chairman Dorgan, I appreciate the invitation to address the committee today on the regulation of Indian

tribes under the Federal Election Campaign Act. I have submitted

my full testimony. I would like to briefly summarize it here and

ask that it be included as part of the record.

The CHAIRMAN. Without objection.

Mr. NOBLE. We are now in the midst of an influence-buying scandal that was in large part triggered by the activities of lobbyist

Jack Abramoff and some of his Indian tribal clients. This has resulted in intense interest in the political giving of Indian tribes and

how they are regulated under the election laws.

As you have heard already, under the Federal campaign finance

laws, certain entities such as corporations and labor unions, are

prohibited from making political contributions from their general

treasury funds. Those entities who can contribute are subject to

limits on how much they can give. Those defined as persons under

the law, which include individuals, associations or any other organization or group of persons, are subject to a variety of limits on

how much they can contribute to different political entities.

In addition to the limits on what a person can give to a single

candidate, party, committee or political committee, there is also an

overall aggregate limit on the total amount that those defined as

individuals can give over a 2-year election cycle. For 2006, this is

$101,400. Indian tribes are unincorporated associations and therefore do not fall within the corporate ban on giving directly from

their general treasury funds. Since they are considered persons

under the Federal election laws, they can make limited contributions to Federal candidates, political parties and political committees.

However, the FEC as you have heard has ruled that Indian

tribes are not individuals under the law and therefore do not come

under the aggregate limit for overall giving within a 2-year cycle.

So how does this affect tribal giving? Well, since 1989, Indian

tribes, their political action committees, and individuals working

for the tribes, have given almost $30 million to Federal candidates,

political parties and leadership PAC’s. About 99 percent of the tribal contributions have come from tribes with casino gaming interests, and $26.9 million has come directly from the Indian tribes’

general revenue funds.
22

At the same time, not falling under the aggregate limit has allowed some tribes to contribute hundreds of thousands of dollars

more to Federal candidates, political parties and committees in a

2-year cycle than they would be able to if they did fal under the

aggregate limit. So far in the 2006 election cycle, 145 Indian tribes

have made Federal political contributions from the general treasuries totaling about $3.1 million; 8 of these tribes have given a combined total of at least $533,000 in excess of what they could have

given if the $101,400 aggregate limit applied. So if you applied that

limit, all together at this point, we have at least $533,000 in excess

of that limit.

In the 2004 cycle, about 224 Indian tribes directly gave $8.3 mil- lion. And 27 of those tribes gave a combined total of at least $3.4

million in excess of what would be allowed if the aggregate limit

then, which was $95,000, applied.

Overall, Indian tribes with gaming casinos have become relatively big political contributors, but they are not at the top of the

list. If we categorized Indian tribes as one of the 100 separate industries we rank in terms of political contributions, they would

rank about 60th. But unlike other industries, 90 percent of their

contributions, again totaling about $26.9 million, are coming from

general treasury revenues. Unlike individuals who give in other industries, some individual Indian tribes are giving more than they

would be allowed under the aggregate limit.

This has led some to question whether Congress should place additional restrictions on the giving of Indian tribes, and if so what

those restrictions should be. In considering these questions, you

should keep in mind that while tribes are not under the same restrictions of others, their contributions are not unregulated and

they really do fall into somewhat of a unique area. They do fall

under the per-recipient limit all persons have to follow.

Indian tribes cannot make their Federal contributions with

money that is passed through tribes from entities that cannot contribute on their own. This is a very important point that has been

brought up before. We assume the money that is being given by the

Indian tribes is not directly coming from sources that would be otherwise prohibited from giving in Federal elections, such as corporations. If that rule is being enforced, then tribes cannot serve as a

conduit for prohibited contributions. If that rule is not being enforced, then we may have a conduit situation.

As for the limit on aggregate contributions that applies to individuals, which have been defined as people, it is a good question

whether you apply the same rule to a group of people. There are

other unincorporated associations, but I am not aware of any that

approach the level of giving of Indian tribes or who are in the same

position as Indian tribes. Again, the fact is they are unique and

they are unique entities under the Federal election laws.

There is also an issue of reporting. I do think there are improvements that can be made with reporting, and that is the lifeblood

of what the Center for Responsive Politics does. But again, these

are difficult issues because you would be treating them differently

than you treat any other group.

I want to thank you for the opportunity to testify and I will be

glad to answer any questions you have.
23

[Prepared statement of Mr. Noble appears in appendix.]

The CHAIRMAN. Thank you very much, Mr. Noble.

Professor Thurber, welcome.

STATEMENT OF JAMES THURBER, DIRECTOR, CENTER FOR

CONGRESSIONAL AND PRESIDENTIAL STUDIES, AMERICAN

UNIVERSITY

Mr. THURBER. Thank you for inviting me, Chairman McCain and

Vice Chairman Dorgan. It is a privilege to speak before you. I think

I am one of the only non-lawyers here, so I will speak very plain

language. For 30 years I have taught courses on campaigns, campaign management and lobbying, including a course on ethics and

lobbying, which is a very popular course these days.

I want to take just 1 moment to thank Senator McCain for being

a strong and consistent leader with respect to bringing three

streams of reform together. This hearing is part of that: First, campaign finance reform; second, lobbying reform; and third, procedural reforms. I see them all as interrelated, as I think you do, and

I see this hearing in that context. The post-Abramoff hearing is

about those three things.

I have written many books. I have had a 7-year grant to study

campaign conduct from the Pew Charitable Trust, so I know many

of the ‘‘tricks’’ in campaigns and I know many of the behaviors that

go on within campaigns. I will summarize my remarks very briefly

with respect to that experience of research and observation.

Again, the focus of this hearing is not about Jack Abramoff and

his misuse of Indian funds, but it is about the large contributions

to Federal election campaigns, PAC’s, and the party committees in

the last decade by Indian tribes. They have also, and I want to

point this out, although it is outside the scope of the hearing, invested large sums in grassroots lobbying, coalition building and direct lobbying in Washington. Much of that is invisible, as you

know, because it is not required to be recorded under the Lobby

Registration Act. Ninety-nine percent of the contributions, as pointed out by Mr. Noble, come from Indian tribes that have gambling

casinos.

Everyone before me has stated the case and the problem with respect to the so-called tribal loophole. Do not worry, I will not repeat

all of that. I have a very simple approach to these problems, but

let’s begin with stating the problems associated with this. One is

rules with regard to tribal campaign contributions with respect to

unlimited overall contributions and the lack of reporting requirement. These combine to make Indian tribes fertile ground for raising campaign funds by political parties and candidates.

I think of Terry McAuliffe, former chair of the DNC, coming into

my class bragging about the fact that when he was a young man,

he wrestled an alligator in Florida in order to get a $25,000-contribution from an Indian tribe. He says that was the first time the

Democratic Party found out that this would be a great source of

campaign contributions. Now, Terry tends to exaggerate, so I am

not sure whether all of this is true, but it points to the fact that

Indian tribes are fertile ground for raising campaign funds.

The lack of reporting requirements throws a veil of secrecy over

the arrangements between Indian tribes and candidates, in my
24

opinion. It is perhaps the last frontier of essentially unregulated

campaign contributions. One way the contributions are increased,

as we know, is through attributing the gifts to the same individuals

and tribes, but using different names. Of the more than 200 Indian

tribes who have given to candidates, 2,000 variations of their

names have been used on checks to candidates. One tribe used 78

variations of its name. No one here would be surprised to learn

that that particular tribe was a client of Jack Abramoff.

We in academia, and you, Senator McCain, and groups who advocate good government, and the media try to connect the dots to see

who is giving campaign contributions to whom and on what issues

they are lobbying on. It becomes very hard to follow the money if

you do not have transparency.

What is the source of the money being contributed by Indian

tribes? It is difficult, often, to determine that. The only way to follow the money is on the contribution reports from candidates and

on their lobbying registration reports that is covered under the

Lobbying Disclosure Act, and there is a great deal of degrees of

freedom there in terms of whether you need to report.

The problem of lack of transparency in reporting requirements

makes attribution of campaign money difficult if not impossible. It

often makes it nearly impossible. Where is the money coming from?

Incorporated gambling casinos? Other corporations? Individuals?

There can be no transparency in this hide-the-ball environment.

Let me say that I would recommend a very simple answer to this.

The answer is related also to the unique status of Indian tribes as

sovereign nations and governments.

I would recommend: First, reporting requirements as PAC’s, but

a unique solution to describe Indian tribe PAC’s with their consultation; second, transparency with respect to these reporting requirements; and third, no aggregate limit in what they can give.

I think this solution allows tribes to maintain their special status

as sovereign nations under campaign finance law, but improves the

reporting of the way money is collected and spent. That is through

this new reporting requirement. Like PAC’s, tribes should be required to register with the FEC before making campaign contributions. Contributions should be reported by the name the tribe uses,

not a new name created for this purpose, or multiple names. The

source of the funds should also be reported. This will shine light

on what contributions are being made and to whom. It is fair because it is, I believe, the same light that is shown on everyone else

who contributes to campaigns.

Like PAC’s, tribes should create a committee or a board of directors to decide what contributions will be made in each election

cycle, and campaign finance law requires PAC’s to name a treasurer who assumes responsibility for registering and filing contribution reports. Tribes should also be required to name and appoint

a treasurer who will be responsible for submitting these reports.

Tribes are not the same as labor unions, corporations, or other

groups that must form PAC’s, and so there should be a difference

in the treatment of Indian tribes and Indian PAC’s under the campaign finance law. An important difference is that PAC’s must collect checks from individual members which they pool together to

contribute to campaigns. The source of funds for campaign giving
25

by Indian tribes should be left up to the discretion of tribal leaders,

but the source should be reported.

Tribes should be allowed to continue to set up their own internal

rules and systems for deciding what candidates to give to and how

much. If that means writing checks directly from their tribal treasuries with no input from their members, so be it.

Campaign finance law should not dictate to sovereign tribal governments how they spend their money. What campaign finance law

should do, however, is require the contributions and their source be

made in full public view, and there should be no aggregate limits

on those contributions.

Thank you very much for holding this hearing. I will take any

questions. I will try to answer any questions that you might have.

Thank you.

[Prepared statement of Mr. Thurber appears in appendix.

The CHAIRMAN. Thank you very much.

Senator Dorgan has to go. He has a question.

Senator DORGAN. Mr. Chairman, thank you very much. I do have

to be at another function.

First, I will thank all three of you for your testimony.

Just a quick question for Professor Thurber. When you described

your recommendations, you indicated that you felt that tribes

should be organized as a political action committee, but should retain the characteristic of not having an aggregate limit, and a couple of other details. Is that because of the sovereignty of tribes and

the unique circumstance of tribes? What is the basis for it?

Mr. THURBER. The basis of that is that is their sovereignty and

their unique relationship with the Federal Government. Yes.

Senator DORGAN. Mr. Allen, thank you for your assertive testimony. And Mr. Noble, thank you for your work.

Let me also join Mr. Noble and Mr. Thurber in saying that the

chairman of this committee has played a pretty instrumental role

on the questions of transparency and campaign finance reform and

other things over many, many years. So let me join you in paying

homage to that work as well.

And thank you for your statements today. I think it is very helpful to this committee.

The CHAIRMAN. Thank you very much, Byron.

Mr. Noble, well, first I guess, Ron, what is your view of Professor

Thurber’s recommendations, and if you would like to examine them

and get back to us for the record, but I would be interested in your

initial impressions.

Mr. ALLEN. Well, first of all, I would like to get back to you, Senator, on that topic. Let me correct one of the points he made, that

the tribes use multiple names. We do not use multiple names. It

is how they record us. If they record us differently, then it appears

like we are using different names. So I want to make sure that you

understand that sometimes there is a perception of using different

names or vehicles.

The CHAIRMAN. Who records it as different names?

Mr. ALLEN. Whoever we are making contributions to. They are

Congressmen, the candidates. Whoever we are making contributions to will record where they are receiving that money, and it is

how do they identify the tribe in their records. So they may not
26

record us exactly the same way, so it appears like multiple entities

are using multiple vehicles.

The CHAIRMAN. Could I have Professor Thurber respond to that

real quick?

Mr. ALLEN. Yes.

Mr. THURBER. I would like to put this in the context of the fact

that Jack Abramoff had eight different names when he registered

under the Lobbying Registration Act and he did it, some thought,

to make his activities non-transparent with respect to his lobbying.

There is some evidence that he gave a tribe advice to use different

names. I do not know this independently; it is reported that the

tribe had 78 different names associated with its contributions in

order to cover up the fact that one tribe is giving money.

The CHAIRMAN. Surely, then, you would not have an objection if

they do not do it to make sure that they do not do it.

Mr. ALLEN. Right.

The CHAIRMAN. Okay. Go ahead. Proceed.

Mr. ALLEN. When we write checks, they come under the tribe’s

name. It is as simple as that. We want to make sure that some

issues like that or facts need to be clear on exactly how they get

transacted.

With regard to his proposal, as I said earlier, I think that the

tribes would be very comfortable with the idea of some sort of identifier. Whether or not there is a need to be a PAC, that is another

question. A PAC creates a different kind or set of criteria and conditions. As I pointed out, because of the unique culture and nature

of the tribes, PACs would not be appropriate for us because it

would disenfranchise us. We would not be able to generate the revenue in order to make contributions.

It is true that a lot of the tribes now who have gaming operations

now have resources to participate, and we are not going to apologize for that. It just happens to be one of the industries that became successful for tribes.

We also point out only 40 percent of the tribes in America have

gaming operations. Maybe we are focusing on the top 15 percent,

who are much more influential and effective in it. We appreciate

them. But are we supportive of transparency? Yes, the answer is

yes, Senator. We do not have a problem with transparency. We do

not have a problem with some sort of identifier, if that makes Congress more comfortable with our contributions.

We definitely believe that the cap should not apply to us in the

same way it does apply to other governments. We point out the

other governments have a different vehicle of representation in

Congress, and we would note, Congressmen and Senators, when

you walk in your door, whose flag is outside that door? It is the

State, but you do not see an Indian flag sitting out there.

So we have to participate in a little different way.

The CHAIRMAN. Well, I hope that you would extend that endorsement of transparency to better reporting procedures to be followed.

Mr. Noble, would you commend on Professor Thurber’s comments?

Mr. NOBLE. Yes; I think Professor Thurber has a number of good

ideas in terms of reporting, but I would want to point out that this

standardization problem with names is not just a problem with In-
27

dian tribes. This is a problem across the board with contributions.

The problem we have found is on both sides. It is often on the

giver’s side and sometimes it is on the recipient committee side,

where they report the same giver slightly differently. In fact, at the

Center for Responsive Politics, where our whole goal is to identify

who the contributors are, much of our work is spent standardizing

names. That is what we do. We go through and you might see a

Larry Noble, a Lawrence Noble, a Lawrence M. Noble, some with

my office address, some with my home address on it. So this problem really does go beyond the tribes.

The CHAIRMAN. It was just developed into a fine art by Mr.

Abramoff.

Mr. NOBLE. Yes; it was developed into a fine art. Some of them

do it with no bad intention. Others do it to try to hide where the

money is coming from and make the aggregation harder. I think

this is something the Federal Election Commission could look at.

Now, also talking about standardization and unique identifiers,

that is already done with political action committees. Political action committees actually have to register under a specific name and

they are given a number by the FEC, an identifying number. That

makes it much easier to trace their political contributions.

If you require Indian tribes to report as PAC’s, you do get into

the situation that political action committees of corporations can

have the corporation pay for all their administrative expenses. I assume the PAC’s of the Indian tribes, since Indian tribes are not incorporated, are not having their administrative expenses paid for

by the tribes themselves, or at least in excess of what the contribution limits would be. They cannot do that now. So you would have

this problem that you are creating a slightly different animal in the

sense that it is not a PAC, it is not an individual, it would be a

tribal reporting entity.

I can give you one little bit of precedent for that, and this goes

way back to my days at the Federal Election Commission. It actually came up, I believe, in an enforcement case, and it would not

come out the same way these days with the Federal Election Commission, but a lot of things wouldn’t. It was actually an unincorporated association in New York. It was not an Indian tribe, but

it was an organization formed under New York State law that was

not incorporated. They were making political contributions, and in

the end the resolution of it was not that they report as a political

committee overall, but they only report all of their political contributions. It was done in a settlement. What they had to do was

just report the political contributions they made on the Federal

level. If you did that for tribes, again, you would not really set the

tribes up as a PAC but you could require them just to report all

their Federal contributions, which would take a change in the law.

The CHAIRMAN. It would require a change?

Mr. NOBLE. It would require a change in the law, yes.

The CHAIRMAN. What would you think about that? If you want

to digest some of this and respond to us in writing, Ron, I would

be glad to have it.

Mr. ALLEN. I do, Senator. It is a proposition that causes me great

concern, and the devil is in the details, as we always say. The main

issue for us, as I pointed out earlier, is that tribes cannot be
28

disenfranchised. You know well that we are here always protecting

our sovereignty, our treaty rights, advancing our health care and

education issues. If we were so influential by our new contributions

that have risen over recent years, why is our health care still falling? Why are we losing ground in health care? Why are we losing

ground on education? Why are we losing ground with essential

services from the BIA?

If we have no much influence, you look across the Indian programs, why are we losing ground? And we are, categorically. So I

question that very nature. The Abramoff issue is a scandal, and because some of his clients were Indians, we do not want to be tainted or be disenfranchised from the political process.

So the idea of amendments to the act or regulations that would

have improved their transparency and disclosure, we are supportive of it. So we would be delighted to work with you on the issue

that you are proposing just as long as it does not push us back into

our previous state 10 and 20 years ago.

The CHAIRMAN. All right. I know you fully appreciate that Mr.

Noble and Professor Thurber are highly regarded as individuals

who are simply committed to the cause of reform and have no bias

in any way to Indian tribes. I hope you also understand that because of this cloud that exists, and average Americans as you know

regrettably do not understand the status of Indian tribes, what

tribal sovereignty means, and government-to-government relationships, that one of the things that would be very helpful to Native

Americans is to remove this cloud and say we have acted so that,

you can never prevent an unscrupulous lobbyist from coming to a

Native American tribe and ripping them off.

As Ben Nighthorse Campbell said in our first hearing, it is another case in a long 300-year history of exploitation of Native

Americans. But at least we could take action which would assure

that if Native Americans were exploited, there would be transparency and reporting procedures so that not only would we know,

but other tribal members would know. Many of the activities that

took place and the exploitation of these tribes, the tribal members

never knew what was happening, as you well know.

So I think it would be beneficial for tribal members to have more

transparency in these activities, as well as all of us, because again,

this scandal as it is has somehow in some ways tainted Indian

tribes who frankly were the victims, and certainly not the perpetrators.

Mr. ALLEN. It is true, Senator. If you are asking about our support for transparency and disclosure, we are supportive of that, to

improve the integrity as it applies to us in Indian country, as long

as it is fair and balanced with respect to the rest of America.

But I do want to note, because we use one example of a small

handful of tribes that were clients of Jack Abramoff, and because

of an example or two there, that is not the norm in Indian country.

Over the last 10, 15 to 20 years, our skill at working the Congress

and engaging with them as tribal leaders to leaders in the Congress has increased and improved exponentially.

So we are very knowledgeable about how to work the system,

and we want to maintain integrity, and we have disclosure at

home. We have our own disclosure that we have to provide our
29

communities so that they know exactly how we are spending our

money, including campaign contributions.

The CHAIRMAN. I would like for any tribal member to be able to

call the FEC and find out exactly what the tribe is doing if he or

she does not know it because of involvement in the tribal council

decisions. As you know, many times these decisions are made outside of the tribal council and that is an internal matter for the

tribes.

Mr. Noble, in summary, is transparency the only answer here?

Or do nothing? Or adopt some of Professor Thurber’s recommendations?

Mr. NOBLE. You have a broad range of options here. Professor

Thurber has put out suggestions including putting certain additional limits on what tribes do. That is definitely an option. We do

not take positions on substantive options like that. We focus on disclosure. But given the unique nature of the tribes, I think if you

do decide to address the issue, you have to look at a variety of different things. You have to look at whether or not you want to put

an aggregate limit on what they do—they are different than others—and whether or not you want to let them have separate PACs

and support those political action committees.

As always in the law, with each obligation you give them, there

will be another freedom they have to do something, and with each

thing you allow them to do, there comes another obligation. I think

that the focus on disclosure is a very important focus, but again the

reality is that the Indian tribes now, at least the gaming Indian

tribes, have become a political force. We are not saying there is

anything wrong with that, but they have become a political force

and they have to be looked at that way in terms of their political

contributions.

The CHAIRMAN. Professor Thurber, with your view of history,

how serious is this scandal and how serious is the state of corruption in the way that we do business here in the Congress?

Mr. THURBER. I think that the scandal is not associated with Indian contributions through campaigns.

The CHAIRMAN. No; I was asking for your view of history.

Mr. THURBER. Well, in my view of history, I think it is pretty

bad. I started working here in 1973 for Senator Hubert H. Humphrey, and I have worked on four congessional reorganizations. I

helped write part of the code of ethics in the House. I think you

are the problem, Senator, not you personally. I think the individuals in the House and Senate should look at themselves and the

staff should look at themselves very clearly and not totally beat up

on lobbyists. Because much of what was associated with Jack

Abramoff was going on for a long time by Members of Congress and

staff. I think your reforms, I will not go through all of them, are

a good step in the right direction.

I believe in enforcement and transparency. I believe in enforcement and transparency with respect to Members of Congress and

staff. I have a book this thick, and you have seen it, of existing

rules.

The CHAIRMAN. Which no one has read.
30

Mr. THURBER. Right. I have. I teach it to my students and they

do case studies on conflicts of interest and ethical problems in lobbying.

I think that we are in a very low state in terms of the attitudes

of the American public about Congress. I am very worried about it.

I am glad you are trying to do something about changing the way

things work here so that the American people will trust this institution.

Our democracy is defined by you, by the people in government

each generation, and it is at a low. I am very worried about it. I

see it with my students and their attitudes, but I also see it with

my 93-year-old mother in Oregon, who thinks everybody is bought

and sold in Washington, DC and I spend a long time explaining to

her, no, that is not the case, but that is the perception.

Support in the polls for Congress is very low, a historic low, and

I think it is directly related to Abramoff and other things, but the

general perception is that this place needs to be cleaned up, and

I think you are doing the right thing to push in a variety of ways

with procedural reforms on earmarks, with campaign finance reform (we know your history there) and with lobbying reform right

now.

Now, I can give a 55-minute lecture if you want me to. I am used

to that, but I am not going to.

The CHAIRMAN. Could I first of all say that I think it is right,

and I think Mr. Noble would agree, that we ought to emphasize

that it is the system that creates the lobbyists which creates the

abuses. If every town in America believes that the only way that

they are ever going to get, or Indian tribe in America believes the

only way they are going to get anything in Congress is to get an

earmark, therefore they have to hire a lobbyist, that accounts for

the now 34,000 or whatever it is lobbyists.

I know I stray from the subject from the hearing, but I would

like to ask both Mr. Noble and Professor Thurber, in the view of

many, BCRA has failed. It has not achieved the anticipated or the

desired results so far. Do you agree with that, Mr. Noble, and if

so, why?

Mr. NOBLE. No; I do not agree with that. BCRA was a reform law

that was aimed at getting at certain specific abuses, most notably

the soft money abuse. What we know at the Center from following

the contributions is that soft money is not going to the political

parties anymore. It successfully cut off the soft money to the political parties.

It also was aimed at stopping Federal candidates from soliciting

soft money. It has done that, though I think, there is a problem in

terms of how the Federal Election Commission, [FEC] has interpreted the law in terms of what is a solicitation and what Federal

candidates can do. But putting the FEC aside, I think that BCRA

did there what it was intended to do.

Most of BCRA was held constitutional, which many people doubted it would be. So I think as a reform law intended to stop soft

money, it was effective. It did not get at this issue of Indian tribal

giving. It was not intended to get at the issue of Indian tribal giving, though I would note that prior to BCRA, the Indian tribes

were giving a lot of soft money. Like everyone else, when BCRA
31

came into being, they stopped giving soft money. So it did affect

them in that way.

On a broader point, I also agree that the problem we are seeing

now, the lobbying ethics scandal is really a two-part problem. Yes,

lobbyists are part of the problem, or some lobbyists are part of the

problem, but I agree with Professor Thurber that it is also members of Congress. It is a culture.

Lobbyists would not be making the contributions, would not be

providing the trips, if members did not want them, if members

were not asking for them, and some members do solicit them. So

that is definitely part of the problem.

Enforcement is part of the problem. I agree with Professor Thurber on that issue. Whether you are talking about campaign finance

laws or ethics laws, you have to have enforcement. Without enforcement, you are going to have everybody pushing the envelope.

Some people will start pushing more and more, and then eventually they will just rip right through it.

Also, there is this question of whether any law, whether it is a

law aimed at further disclosure for Indian tribes or a law aimed

at ethics, it will clean up the system. No law is ever going to clean

up the system. We are dealing with money, politics and power. It

is the very nature of a democracy. What I often say is, there is no

end game in a democracy.

The CHAIRMAN. But there are cycles.

Mr. NOBLE. There are cycles. You never reach a point where you

say, this law, be it BCRA or any other law, solved all of our problems, because in the nature of a democracy, people are going to try

to find ways around the law. People are going to push on certain

parts of it and you have to come back and revisit it. We are going

through that cycle right now on the ethics side where Congress has

to come back and revisit what is going on.

The CHAIRMAN. Professor Thurber.

Mr. THURBER. I think the FEC has been a failure in terms of enforcement. It is deadlocked. It does not have enough money. It allowed the 527’s to exist, which was, as you well know better than

anyone in America, a way for the stream of money to go around

the regulatory dam. Therefore we had hundreds of millions of dollars of soft money as well as issue ads in 2004.

Let me talk about something else that you are trying to improve, and that is the regulation of lobbying. About $2.1 billion was spent

in lobbying in Washington, DC last year. That is almost $4 million

dollars per member per year. That is over $327,000 per member

per month. We are awash in money and that is probably only onefifth of what is being spent on lobbying, because that is only the

required lobbying registration. As you well know, we do not have

to record grassroots, top-roots, astro-turf, coalition building, TV

ads, issue ads in print and radio. If you add that, it is probably a

factor of five, $10 billion. We are awash in money with respect to

lobbying.

Now, that is fine because we have First Amendment rights. We

have the right to assembly, to petition Government for grievances

and speech, but we should make that more transparent, as you are

trying to make it, so that people can make a decision. So if the candidate runs against you, Senator, they can see what has been hap-
32

pening with respect to the money on the outside trying to influence

you. It can become, then, an issue in a campaign, and we have

more competition against people that seem to be overly influenced

by the special interests.

Also, with earmarks, do not forget about all types of earmarks,

such as appropriations, taxes, and authorizations. There are thousands of earmarks in tax bills. There are thousands of earmarks,

as you well know, in the energy bill, the transportation bill, and

authorization bills.

The CHAIRMAN. The highway bill.

Mr. THURBER. The highway bill, right. As you well know, I am

just stating what you have stated so well. We should be looking at

those and making those more transparent, associating them with

a particular member of requiring a justification for each, and voting on them separately if we can.

Washington is in trouble. I think members do not realize they

are on the gallows right now. They should be thinking about the

epiphany that occurs when standing on the gallows and support reforms like yours and others.

The CHAIRMAN. I do not want to drag this out, but this is very

helpful to me, and I hope for the record.

Mr. Noble, on the subject of 527’s, my understanding of the 1974

Act is that any organization that engages in partisan political activity for the purposes of affecting the outcome of an election falls

under campaign contribution limits. How, then, could the 527’s

exist?

Mr. NOBLE. I agree. The problem is that 527 organizations,

which as you know is an Internal Revenue Code designation, have

as their purpose, their major purpose, influencing elections. Not all

527s work on the Federal level, so put aside the ones on the State

level.

My view of it is that the, and I have said this to the Federal

Election Commission, that the 527’s which are active in Federal

elections by definition have their major purpose being involved in

elections, and therefore should be treated as political committees.

I have testified to that effect before the Federal Election Commission. The Federal Election Commission has not adopted that view.

I think that the 527 situation is at this point totally a creation of

the Federal Election Commission, and they have the power and the

authority to do something about it, and the obligation to do something about it.

The CHAIRMAN. I think you would both agree, like any other evil,

if these are unchecked, they can have an incredible influence, particularly on congressional elections. If somebody parachutes in with

$5 million in a congressional race, it is going to have huge implications for anybody’s election or reelection.

Mr. NOBLE. And in some ways, Senator McCain, they became the

new soft money recipients. What did happen is, some of the soft

money, not all of it, but some of the soft money that the parties

can no longer accept, ended up going to 527’s, which were in some

cases run by former party officials. That did not have to happen.

Mr. THURBER. I would like to add one other aspect of BCRA, and

that is the enforcement of the rules associated with coordination.

I would say from my research over many years, but especially the
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seven years supported by the Pew Charitable Trusts, there was a

great deal of illegal coordination going on in campaigns. I would

add that to the 527 problem. It is related.

Mr. NOBLE. And Senator McCain, if you would indulge me for 1

moment. There is one other issue I did want to bring up. It is related to all of this. When we talk about disclosure and transparency,

again, that is the lifeblood of our group. Whatever you do would be

greatly helped if in fact we moved all of the disclosure into the

modern era of electronic disclosure, and that includes the Senate.

The Senate right now does not report electronically. Lobbying

data is not being reported electronically. My group’s, our Senate

data is way behind the data we get from the House and others because of that problem. I think that is another place where the Senate really needs to look at itself and say why won’t it join, let along

the 21st century, the 20th century.

The CHAIRMAN. I think that has to be a fundamental. I think we

are totally knowledgeable of the fact that transparency is the first

step, which brings me back to you, Ron. I appreciate your commitment to greater transparency in this process.

I can assure you that from the comments of members of this committee, there is no intent nor desire nor would we possibly impair,

I believe, the concept of tribal sovereignty, which has been upheld

many, many times in our Supreme Court and here in Congress. We

recognize our unique responsibilities.

I thank the witnesses. Thank you very much.

[Whereupon, at 11:18 a.m., the committee was adjourned, to reconvene at the call of the Chair.]

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APPENDIX

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

PREPARED STATEMENT OF DR. JAMES A. THURBER, DISTINGUISHED PROFESSOR AND

DIRECTOR, CENTER FOR CONGRESSIONAL AND PRESIDENTIAL STUDIES AMERICAN

UNIVERSITY WASHINGTON, DC

I would like to thank Chairman McCain and the members of the Committee on

Indian Affairs for the opportunity to testify today on tribal campaign contributions

and related matters. I want to thank Senator McCain for his strong leadership in

campaign finance reform and lobbying reform. You help to build more confidence

and trust by the American public in Congress through your reform efforts.

My name is James A. Thurber, Distinguished Professor and Director of the Center

for Congressional and Presidential Studies at American University in Washington,

DC. I have taught seminars on campaign management and lobbying for over thirty

years and I direct the Campaign Management Institute and the Public Affairs and

Advocacy Institute at AU. I have just completed a 7-year study funded by a grant

from the Pew Charitable Trusts on how to improve campaign conduct. In the course

of my research and teaching, I have reviewed many campaign and lobbying problems and reform proposals by Members of Congress, including proposals advocating

disclosure of campaign conduct and strengthening oversight and enforcement of

campaign finance activities.

I would like to express my appreciation to the chairman for holding these important hearings on Indian Tribes and the Federal Election Campaign Act. This hearing is in the context of the Jack Abramoff scandal and his use or misuse of large

sums of Indian tribal money. The focus on lobbyist Abramoff and his use of Indian

tribal client funds has led to an inquiry into the issue of the so-called ‘‘tribal loophole’’ in campaign contributions to Federal candidates. Indian tribes have been large

contributors to Federal election campaigns, PAC’s, and party committees in the last

decade as documented by the Center for Responsive Politics. They have also invested large sums for grassroots lobbying, coalition building and direct lobbying in

Washington. Most of these contributions and investment in lobbying has come from

tribes with gambling casinos (or those who would like to have a casino). The loophole in the Federal Election Campaign Act [FEC] that allows tribes to avoid the

overall aggregate on what an individual can contribute to Federal candidates, political parties and other political committees is the topic of my testimony.

The so-called ‘‘tribal loophole’’ is basically an exemption for Indian tribes from the

requirement to report certain kinds of campaign contributions. Under Federal election law, Indian tribes are subject to the contribution limits that apply to individual

candidates and committees, which is currently $2,100 per election to Federal candidates, $5,000 per year to PAC’s, $10,000 per year to state party Federal accounts,

and $26,700 per year to national parties. Unless a tribe is prohibited from making

campaign contributions because it is a corporation or Federal Government contractor, tribes must adhere to these contribution limits. Indian tribes are not required

to report these contributions to the FEC; rather, the contributions are disclosed to

the FEC on the recipients’ disclosure statements.
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1FEC Advisory Opinion 1978–51.

2FEC Advisory Opinion 2000–5.

3 According to PoliticalMoneyLine, the Agua Caliente Band of Cahuilla Indians used 78 variations of its name for campaign donations.<http://www.politicalmoneyline.com/cgiwin/

indexhtml.exe?MBF=tribal> Accessed 1/31/06. 4<http://www.capitaleye.org/abramoff.asp> Accessed 1/31/06.

In addition to the limits on giving to individual candidates and committees, Fed- eral election law also sets an aggregate giving limit of $101,400 for individuals. This

means that an individual donor can only give $101,400 in a 2-year period to any

combination of candidates, PAC’s, or party committees, at the same time adhering

to the individual contribution limits imposed on candidates and committees. This requirement applies only to individual donors—not PAC’s and not Indian tribes. Since

1978, the FEC has considered Indian tribes to be ‘‘persons’’ under campaign finance

law, which is different from the category ‘‘individual’’1. In May 2000, the FEC clarified that Indian tribes are not subject to the aggregate individual contribution limit

because tribes are organizations, not individual human beings.2 Under the Federal

Election Campaign Action and as interpreted by the Federal Election Commission,

Indian tribes are subject to individual, PAC, party committee limits, except the

overall aggregate limit. Tribes can lawfully give an unlimited amount of campaign

money in the aggregate. The central question about the ‘‘tribal loophole’’ is why the

aggregate limit does not apply to Indian tribes? Is it to protect the sovereignty of

American Indian tribes?

There are two problems with the current procedure for making tribal campaign

contributions: The unlimited overall contributions and the lack of reporting requirements. These combine to make Indian tribes fertile ground for raising campaign

cash by political parties and candidates. The lack of reporting requirements throws

a veil of secrecy over the arrangements between Indian tribes and candidates. It is

perhaps the last frontier of essentially unregulated campaign cash contributions.

One way the contributions are increased is through attributing the gifts to the

same individuals and tribes but using different names. Of the more than 200 Indian

tribes who have given to candidates, 2,000 variations of their names have been used

on the checks to candidates. One tribe has used 78 variations of its name.3 No one

here would be surprised to learn that that particular tribe was a client of Jack

Abramoff.4

When groups advocating good government, the media, or academics try to ‘‘connect the dots’’ to see who is giving campaign contributions to whom and what issues

they are lobbying on, it becomes very hard to follow the money. What is the source

of the money being contributed by Indian tribes? It is difficult to determine. The

only way to follow the money is on the contribution reports from the candidates and

on the lobbying registration reports (for lobbying activities covered under the Lobbying Disclosure Act of 1995). This is not transparent because some groups contribute

to a candidate using multiple names and the source of the funds is far from clear.

The problem is a lack of transparency and reporting requirements makes attribution of campaign money difficult, if not impossible. Where is the money coming

from, incorporated gambling casinos, companies, individuals? There can be no transparency in this ‘‘hide the ball environment.’’ Without rigorous FEC enforcement of

prohibited sources of money for campaign contributions or new reporting requirements the non-transparent situation will continue, to no one’s benefit.

Several solutions have been proposed. Some have called for Indian tribes to be

considered ‘‘individuals’’ under Federal election law, which would force them to adhere to the $101,400 contribution ceiling for overall giving. I think this designation

would unfairly limit tribes—who are obviously not individuals, but groups of many

individuals. Forcing entire tribes to adhere to the same contribution limit as an individual would severely diminish their ability to contribute and essentially hold

them to limits so strict that they could not hope to have any influence as sovereign

governments.

Others have called for Indian tribes to be treated the same as corporations or

labor unions, which must form PAC’s in order to collect checks from individual

members to be pooled together to give to candidates. However, tribes are considered

sovereign governments under Federal law, not corporations or unions, thus the designation would be inappropriate.

I think there is a way to allow tribes to maintain their special status as sovereign

nations under campaign finance law, but improve the way money is collected and

spent. That is through new reporting requirements. The new requirements for tribal

campaign contributions should take some of the requirements that are currently in

place for PAC’s. Like PAC’s, tribes should be required to register with the FEC before making campaign contributions. The contributions must be reported by the
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name the tribe uses, not a new name created for this purpose. The source of the

funds should also be reported. This will shine a light on what contributions are

being made and to whom. It is fair because it is, I believe, the same light that is

shone on everyone else who contributes to campaigns.

Like PAC’s, tribes should create a committee or Board of Directors to decide what

contributions will be made each election cycle. Campaign finance law requires PAC’s

to name a treasurer who assumes responsibility for registering and filing contribution reports. Tribes should also be required to name appoint a treasurer who will

be responsible for submitting the required information to the FEC.

But tribes are not the same as labor unions, corporations and other groups that

must form PAC’s, and so there should be differences in the treatment of PAC’s and

Indian tribes under campaign finance law. An important difference is that PAC’s

must collect checks from individual members, which they pool together to contribute

to campaigns.

Indian tribes should not be required to collect checks from individual members.

The source of funds for campaign giving by Indian tribes should be left up to the

discretion of tribal leaders, but the source should be reported. Tribes should be allowed to continue to set up their own internal rules and systems for deciding what

candidates to give to and how much. If that means writing checks directly from

their tribal treasuries with no input from their members, so be it. Campaign finance

law should not dictate to the sovereign tribal governments how they spend their

money. What campaign finance law should do, however, is require those contributions and their source to be made in full view of the public.

Thank you for holding this hearing and the opportunity to testify. I would be

pleased to try to answer any questions related to this proposed reform and other

questions you might have with respect to my testimony at this time or after this

hearing.

James A. Thurber is Distinguished Professor of Government and Director of the

Center for Congressional and Presidential Studies. He was the principal investigator of a 7-year [1997–2004] grant from The Pew Charitable Trusts to study campaign conduct. Dr. Thurber has been a professor at American University since 1974

and was honored as the University Scholar-Teacher of the Year in 1996. He is a

Fellow of the National Academy of Public Administration.

He is author, co-author, and editor of numerous books and more than 80 articles

and chapters on Congress, congressional-presidential relations, interest groups and

lobbying, and campaigns and elections, including Rivals for Power: Presidential Congressional Relations, Third Edition (2005), Campaigns and Elections, American

Style, Second Edition (with Candice Nelson, 2004), Congress and the Internet (with

Colton Campbell, 2002), The Battle for Congress: Consultants, Candidates, and Voters (2001), Crowded Airwaves: Campaign Advertising in Elections (with Candice

Nelson and David Dulio, 2000), Campaign Warriors: Political Consultants in Elections (2000), Remaking Congress: The Politics of Congressional Stability and Change

(with Roger Davidson, 1995), Divided Democracy: Cooperation and Conflict Between

Presidents and Congress (1991), and Setting Course: A Congressional Management

Guide (with Chaleff, Loomis and Serota, 1988).

Dr. Thurber earned a BS in political science from the University of Oregon and

a PhD in political science from Indiana University and was an American Political

Science Association Congressional Fellow. He has worked on five reorganization efforts for committees in the U.S. House and U.S. Senate from 1976 to present. He

was also Director of the Washington, DC, based Human Affairs Research Centers

of the Battelle Memorial Institute.

The Center for Congressional and Presidential Studies [CCPS], located in

the Nation’s capital at American University under the sponsorship of the School of

Public Affairs, provides an integrated teaching, research, and study program focusing on Congress, the presidency, and the interactions of these two basic American

institutions. Established in 1979, CCPS has a long and venerable history of scholarly research and practical training. CCPS capitalizes on its advantageous location

in Washington, DC, by bringing together public policy practitioners and academics

to share their research, knowledge, and experiences in a series of advanced institutes, conferences, and workshops on applied politics.
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