From the New York Times

F.E.C. Declines to Curb Independent Fund-Raisers
By GLEN JUSTICE, New York Times
WASHINGTON, May 13 - The Federal Election Commission on Thursday refused,
for now, to put limits on independent political groups spending millions in
unrestricted contributions, clearing the way for these organizations to
exert considerable influence over this year's presidential race.
The decision was a major victory for a group of Democratic organizations
that have helped Senator John Kerry by attacking President Bush with
millions of dollars in television advertisements.
It was a setback for Republicans, who had wanted to maintain their financial
advantage over the Democrats by shutting down these groups, known as 527
committees after a section of the tax code. Several Republicans said they
would begin immediately raising millions in unlimited donations known as
soft money from companies, labor unions and wealthy donors in order to
compete.
"The 2004 elections will now be a free-for-all," Ed Gillespie, chairman of
the Republican National Committee, said in a statement. "Thanks to the
deliberate inaction by the Federal Election Commission, the battle of the
527's is likely to escalate to a full scale, two-sided war."
Campaign finance experts called the commission's decision its most
significant one so far concerning a sweeping new campaign finance law
enacted by Congress in 2002. The law banned federal candidates and national
political parties from collecting soft money, which grew into the hundreds
of millions and was a primary source of support in the last presidential
race.
What was under debate Thursday was how the law affected the independent
political committees, which have become the vehicle for collecting six- and
seven-figure donations.
The six-member commission, which is split evenly between Republicans and
Democrats, rejected in divided votes three attempts to impose new rules. It
then unanimously voted to delay any new regulations on the political groups
for 90 days.
The move made it extremely unlikely that new restrictions would be applied
in this election year.
The action was immediately criticized by groups trying to limit the
influence of money in politics, who argued the commission was effectively
gutting the new law. The law's major sponsors - Senators John McCain,
Republican of Arizona, and Russell D. Feingold, Democrat of Wisconsin -
condemned the commission in a joint statement.
"The commission has failed to close a loophole that dangerously undermines
the purpose of the federal campaign finance laws," they said. "As a result,
a flood of soft money will enter the system which will violate the letter
and the spirit of the law."
Don Simon, a lawyer for Democracy 21, which monitors money in politics,
said: "This was a moment of opportunity for the commission, and they
flinched. This is the creation of the next big soft-money loophole in
progress.''
Commission members said they simply did not have enough time to draft
comprehensive regulations that would potentially govern thousands of
organizations and millions of dollars. Many also condemned the idea of
changing the regulations midway through an election.
They acted on the advice of their general counsel, Lawrence H. Norton, who
in a report earlier this week said that "careful line-drawing is difficult
to do at this pace."
"It's a complex issue and a big expansion of the regulations, and it needs
to be done right," Bradley Smith, the commission's Republican chairman,
said.
Ellen Weintraub, a Democratic commissioner, said: "You can't make bad policy
because you are worried somebody is going to do something tomorrow. You have
to do things thoughtfully. We are going to have elections for years to
come."
The election commission turned its attention to 527 committees this year
after Democratic groups like ACT and the Media Fund began to draw fire from
Republicans and campaign finance activists, who cited their support for Mr.
Kerry. Critics called them a "shadow" political party that, though they
cannot coordinate directly with campaigns, provided much-needed money for
Mr. Kerry's efforts. The two groups raised a combined $38 million through
March.
When the campaign finance law was being debated in Congress two years ago,
Republicans largely opposed any controls on soft money and Democrats
provided most of the support for the bill. But once it passed, Democrats,
fearing the Republicans' fund-raising advantage, began forming the 527
committees.
Their action brought several complaints before the F.E.C., including one
filed by the Bush campaign. Some of the complaints are still pending, and no
time frame has been announced to address them.
Meanwhile many Republicans are talking about simply raising more money. For
example, a conservative group, Progress for America, immediately announced
it would work to take in funds to counter Democratic messages.
Though the commission plans to return to the issue in August, Progress for
America's president, Brian McCabe, said that Thursday's decision would
provide new assurance to Republican donors that 527 contributions were
legal.
"Corporations and individuals have been reluctant to give," Mr. McCabe said.
"This will allow us to reach out to a lot of folks."
Democratic organizations said that Thursday's decision was a vindication of
their activities, and they played down the Republican warnings.
"I don't think it's a meaningful threat," said Jim Jordan, a spokesman for
ACT and the Media Fund. "There's never been a question whether people on the
right would be lavishly funded."
The decision was also applauded by groups representing charities, labor
unions, trade associations and social welfare groups, which worried that
regulations would chill their activities.
"This is a great victory for nonprofits' ability to speak out during an
election year," said Nan Aron, co-chairwoman of the Coalition to Protect
Nonprofit Advocacy.
In Congress, however, there was strong reaction from those who have
criticized 527 committees.
Representative Bob Ney, Republican of Ohio, did not support the
McCain-Feingold law. But he has taken a keen interest in policing Democratic
527's and repeatedly clashed with their leaders last year when he tried to
bring them before the House Committee on Administration that he leads. He
still has subpoena authority, though he has not exercised it.
Mr. Ney announced Thursday that the committee would hold a hearing next week
on the commission's decision.
"Very serious questions have been raised regarding the role, influence, and
extent to which these 527 groups are allowed to operate," he said in a
statement. "If the F.E.C. decision is giving the green light for these
groups to operate, which it certainly appears they are, then I expect both
Republican and Democrat groups will soon flourish."
Representative Christopher Shays, a Connecticut Republican who was the lead
House sponsor of the new law, said after the vote that "the commission had a
clear obligation to act on this issue and it failed."
Copyright 2004 The New York Times Company