Ultimately, the FEC could not decide whether the group, American Issues Project, violated the law by failing to register and report as a political committee.

FEC staff lawyers said in a report that AIP appeared to have broken the law, and they recommended the agency pursue an enforcement case.  Yet Republican and Democratic commissioners deadlocked along party lines in a vote on staff recommendations, meaning the case was dismissed without a definitive legal ruling, according to FEC documents.

AIP funder Harold Simmons, a major Republican donor, was let off the hook by the only clear ruling in the case. The FEC commissioners voted to find Simmons did not violate PAC contribution limits because such limits are no longer valid, due to court decisions in the intervening years since the 2008 election.

However, the FEC deadlock on the main issue in the case—when a political group becomes a PAC—leaves unanswered a key legal question that has lingered and grown through the 2012 campaign and up to the present day.

With the FEC unable to rule on which organizations must follow campaign finance rules, including disclosure of their funding sources, the IRS has been asked more and more to determine which new organizations conducting political activities are eligible for tax-exempt status under Section 501(c)(4)—the part of the tax code governing “social welfare” organizations.

Such organizations have an advantage over FEC-registered PACs because, under the tax law, they can keep their funding sources secret. The groups operate as nonprofit corporations and are becoming increasingly active in campaigns following the 2010 Supreme Court ruling in Citizens United v. FEC, which said corporations can make unlimited independent expenditures to influence campaigns.

The FEC has three Republican commissioners—Caroline Hunter, Donald McGahn, and Matthew Petersen. There are two FEC Democrats—Steven Walther and Ellen Weintraub—with one Democratic seat vacant. The votes of at least four commissioners on the six-member panel are required for any final ruling. Consensus has been lacking at the FEC in recent years, however, with the commissioners splitting along party and ideological lines on many key issues.

That is what happened in the case of the American Issues Project. The group faded from public view after Obama was elected president in 2008, but it made headlines in the summer months of that year by spending $3 million on ads linking Obama to Ayres and the Weather Underground, the 1960s radical group that was described as a `terrorist organization.”  The ads asked if voters “know enough” about Obama to elect him.

Obama’s campaign said the ads distorted the facts to smear Obama and help defeat him in the presidential race. The campaign called loudly in 2008 for the Justice Department to investigate AIP’s alleged criminal violations of campaign finance laws in sponsoring the messages without registering as a PAC.

The group claimed that it was operating legally, though it took a lower profile after the public flap with the Obama campaign.

All of AIP’s money for the anti-Obama ads came from Simmons, who has continued to fund similar organizations up through the last election. The Dallas businessman and his wife provided nearly $27 million to Republican-leaning organizations in the 2012 campaign, according to FEC reports compiled by the nonprofit Center for Responsive Politics.

A staff report from the FEC general counsel’s office concluded that AIP should have registered as a PAC and followed stricter reporting requirements. The counsel’s report suggested that the agency pursue an enforcement case and perhaps seek a fine in the case.

Original post is Obama vs. Simmons: FEC Deadlock by Political Capital.

Photograph by Marc Piscotty/Getty Images

A Sikorsky S-64 Aircrane firefighting helicopter drops water on a hotspot burning close to homes near Horsetooth Reservoir June 11, 2012 near Laporte, Colorado.

Neptune Aviation Services has withdrawn its protest of a U.S. Forest Service contract, allowing the agency to purchase seven air tankers, according to Mike Saccone, spokesman for Sen. Mark Udall. The contract is valued at about $60 million over five years.

Udall, a Colorado Democrat, in May pleaded for the U.S. Forest Service to override the automatic delay caused by the protest of a contract to help put out wildfires. The seven air tankers will be used to drop flame retardant.

“Additional unnecessary appeals and other delays may be simple calculations of dollars and cents for contractors, but slowing the acquisition of a robust air tanker fleet could risk the lives and homes of Coloradans living in wildfire-prone areas,” Udall said in May, according to a statement.

The Missoula, Montana-based company had originally been passed over for the tanker contracts. They were awarded to five closely held companies.

Original post is Neptune Withdraws Contract Protest for Firefighting Air Tankers by Political Capital.

Photograph by Win McNamee/Getty Images

An Environmental Protection Agency contractor collects water samples for testing on May 31, 2010 near the point where the South Pass of the Mississippi River meets the Gulf of Mexico near Venice, Louisiana.

Look for some conversation in the Senate today about whether more than 100 amendments dealing with Environmental Protection Agency permitting authority are germane to the farm bill.

Bloomberg BNA’s LaTrina Antoine and Amena H. Saiyid report that Democrat Kay Hagan of North Carolina is seeking consideration of an amendment dealing with the EPA’s regulation of pesticides going into the water. Michigan Democrat Debbie Stabenow, who heads the Senate Agriculture, Nutrition, and Forestry Committee, told BNA this week that EPA amendments aren’t germane to the farm bill, S. 954.

As of yesterday, at least 122 amendments were filed that dealt with EPA permitting authority, the renewable fuel standard, livestock protection, and labeling of food, beverage, or other edible items containing genetically engineered ingredients.

Hagan said the water amendment is based on S. 802, which she co-sponsored with Republican Mike Crapo of Idaho in April. It would bar EPA and state environmental agencies from requiring a National Pollutant Discharge Elimination System permit for pesticides on or near waters that are already registered for use.

Hagan told reporters that her amendment is aimed at eliminating “redundant regulation.”

Original post is Are EPA Permits Germane to the Farm Bill? by Political Capital.

Photograph by Andrew Harrer/Bloomberg

Copies of the Fiscal Year 2014 Budget sit on a pallet at the U.S. Government Printing Office in Washington, D.C. on April 8, 2013.

By Jonathan Nicholson

When Republicans and Democrats describe each other’s budgets, a person could be forgiven for thinking the plans are as far apart as possible.

Republicans say putting the budget into balance by 2023 is necessary to help get the economy on track, with spending reductions alone and not raising taxes. Democrats say the cuts would hurt growth and instead want to stabilize the deficit in proportion to the size of the economy.

Not long ago — and seemingly forgotten in the current debate about spending programs and tax reform – Republicans said the deficits under George W. Bush were sustainable and in proportion to the size of the economy, while Democrats criticized Republicans and Bush for not reducing the deficit more quickly, Bloomberg BNA reported.

With the deficit-to-GDP ratio in fiscal 2012 at 7.0 percent, the switch in tone begs the question: Have times changed or have only the political winds shifted, reflecting the difference in control of the White House?

Read the full story at Bloomberg.com.

Original post is Bush Debt Load Endorsed by Republicans Now Rejected by Political Capital.

Photograph by Chip Somodevilla/Getty Images

REI Chief Executive Officer Sally Jewell is congratulated by outgoing Interior Secrtary Ken Salazar after she was nominated by President Barack Obama to be the next Secretary of the Interior in the State Dining Room of the White House on Feb. 6, 2013.

Alaska’s Lisa Murkowski, ranking Republican on the Senate Energy and Natural Resources Committee, is threatening to put a hold on the nomination of Sally Jewell to head the Interior Department until it agrees to reverse a preliminary decision rejecting a road through a wildlife refuge,  Bloomberg BNA’s Lynn Garner reports.

After meeting with the nominee yesterday, Murkowski said she didn’t ask Jewell for a commitment, though she made it clear that she views the issue as one of public safety since the road could be used for medical emergencies.

Murkowski said she hopes the current secretary, Ken Salazar, will resolve the issue before he leaves office in the next few weeks.

If that doesn’t happen, Murkowski said she would use “every tool in the tool box,” including putting a hold on Jewell’s nomination.

The only way for residents of King Cove, a fishing community in southwest Alaska, to reach the Cold Bay airport is by boat or airplane, often in high winds and blizzard conditions. There have been 11 fatalities in 30 years attributed to the lack of road access to the Cold Bay airport,  according to Alaskan officials. The U.S. Fish and Wildlife Service rejected a proposed land exchange that would allow construction of a 20-mile gravel road.

Murkowski sent a Feb. 11 letter to Jewell raising the emergency road issue: “I am prepared to consider all actions available to me as a U.S. senator to convince this administration that denying the people of King Cove reliable access to medical care would be a travesty.”

Original post is Senator May Throw Speed Bump in Path of Interior Nomination by Political Capital.

Senate Appropriations Committee Chairwoman Barbara Mikulski said she’s working with her counterpart in the House to come up with a strategy for going into the next fiscal year without the need for a continuing resolution, Bloomberg BNA’s Nancy Ognanovich reports.

While acknowledging obstacles, the Maryland Democrat said she wants to re-establish the committee’s role in setting spending priorities by finishing up work on the fiscal 2013 bills and making good on a promise to return to “regular order” by developing and passing legislation for fiscal 2014.

“For 2014 we are going to have real hearings, we are going to have real debate, real discussions, and a regular order,” she said.

As for the current fiscal year, Mikulski told reporters that she met with House Appropriations Committee Chairman Hal Rogers, a Kentucky Republican, to discuss options for avoiding a government shutdown when the current CR expires March 27.

Rogers has said he wants to attach to a new CR the annual spending bill for the Defense Department — which represents about half of the annual discretionary spending under appropriators’ control — as well as others related to military matters.

Original post is Real Hearings, Real Debate for ’14 Budget? by Political Capital.

Photograph by Brendan Smialowski/Bloomberg

Senator Max Baucus, a Democrat from Montana and chairman of the Senate Finance Committee, left, and Senator Orrin Hatch of Utah, the ranking Republican on the committee, in Washington in this file photo.

Senate Finance Committee Chairman Max Baucus, a Montana Democrat, and ranking member Orrin Hatch, a  Utah Republican, have given U.S. Trade Representative Ron Kirk  their priorities concerning a potential agreement on trade,  investment, and regulatory cooperation between the U.S. and  European Union, Bloomberg BNA’s Len Bracken reports.

The senators, whose committee has jurisdiction over international trade, identified several priorities ahead of any negotiation process, including access for U.S. agricultural exports, notably beef and pork; strong intellectual property protection; access for U.S. services exports; regulatory compliance; and a mechanism for dispute settlement, according
to a letter they sent yesterday.

The senators also wrote that they intend to push for renewal of trade promotion authority, the fast-track congressional approval process for trade agreements that expired in 2007.

The previous authority provided for up or down congressional votes on the agreements within strict time limits.  In his State of the Union address yesterday, President Barack Obama said he wants to begin trade talks with the  European Union.

“Negotiations will not be easy, but they have enormous potential to open new opportunities for us to sell our goods and services in the EU,” said House Ways and Means Committee Chairman Dave Camp, a Michigan Republican.

“I welcome the president’s movement forward on this effort and look forward to consulting closely with the administration,” Camp wrote, according to Bloomberg’s Joi Preciphs.

Original post is Senators Set Priorities on EU Trade Deal by Political Capital.

Photograph by Adam Bird/Bloomberg

Representative Dave Camp, a Republican from Michigan and chairman of the House Ways and Means Committee, speaks at a Rotary Club meeting in Midland, Michigan, in this file photo.

House Ways and Means Committee Chairman Dave Camp wants to break his panel into smaller working groups to tackle specific aspects of tax reform, Bloomberg BNA’s Marc Heller reports.

Ray Beeman, tax counsel to the committee, said in a webinar sponsored by Deloitte Tax LLP that Camp, a Michigan Republican, plans to have the bipartisan groups focus on subject areas that have yet to be defined. Camp is working with the committee’s ranking Democrat, Sander Levin of Michigan, to create the working groups, he said.

“I really think it’s an outreach effort,” Beeman said, adding that the groups’ main task will be to collect facts and at some point come back with a report. Camp has said he intends to pass a comprehensive overhaul of  tax policy by the end of this year.

The groups will probably call upon stakeholders in tax issues but wouldn’t hold public hearings of their own, he said. The plan for informal groups sheds light on Camp’s approach as he works to craft a proposal, though they can’t deal with every tax issue that a comprehensive bill will address, Beeman said.

One of those issues is likely to be an examination of the tax code’s Section 501, which governs the treatment of exempt organizations, according to Bloomberg BNA’s Diane Freda.

Because Congress is looking at changing revenue streams for Section 501 limitations on deductions, there will be a need for a wider conversation about that section, a Senate Democratic aide, whom BNA didn’t identify further, said at a joint meeting of the Great Lakes, Gulf Coast, and Pacific Coast Area Tax Exempt and Government Entities Councils and the Mid-
Atlantic and Northeast Pension Liaison Groups.

The imposition of mandatory amounts of charity care for tax-exempt hospitals — which some institutions had feared under past proposals by Senator Charles Grassley, an Iowa Republican — isn’t garnering much attention now, as sequestration takes center stage, the aide said. Even so, a re-examination of the effectiveness of the 2010 health-care law may follow once Section 501 has been implemented.

Original post is Camp Considers Working Groups to Tackle Tax Reform by Political Capital.

That date puts a decision in the case off until deep into the lame-duck session or for the next Congress, reports Bloomberg BNA’s Nancy Ognanovich.

The U.S. District Court for the District of Columbia said it will hear arguments on whether to dismiss the suit filed by the watchdog group Common Cause against Senate officers or allow the challenge to proceed.

In an order issued Oct. 10, the court said it has scheduled the hearing on the motion to dismiss the case filed by the Office of Senate Legal Counsel. U.S. District Judge Emmet Sullivan will hear the arguments.

Common Cause filed its suit in May, arguing that the Senate filibuster rule is unconstitutional as it violates the principle of majority rule. The suit against Senate officers charges that the practice of requiring 60 votes to consider most legislation and confirm presidential nominees is inconsistent with the principle that only 51 votes are needed to pass important matters.

In its response, filed in July, the Office of Senate Legal Counsel asked the court to dismiss the case on a number of grounds, including provisions of the Constitution allowing each house of Congress to determine its own rules. In earlier cases courts have found the 60-vote rule to be constitutional and have concluded that it cannot be upended by another branch of government, it said.

Original post is Federal Court to Hear Filibuster Challenge by Political Capital.

Some 1,300 pastors will take to the pulpit this Sunday to make the point that the Internal Revenue Service cannot tell them what to say or not say to their congregations about politics.

The yearly event, known as Pulpit Freedom Sunday, got a big boost this year — nearly doubling the number of pastors who signed up — at least in part because it is an election year, Alliance Defending Freedom attorney Erik Stanley, said. Pastors want their sermons to be relevant, and there is no better year than an election year to do that if the subject is campaign issues, he said.

Alliance Defending Freedom, itself described as a Christian legal ministry and exempt under the tax code, created the event to urge pastors to speak their minds, saying it is their First Amendment right of free speech and freedom of religion to do so. The event has grown each year since 2008, so far, largely unchecked by IRS.

IRS rules prohibit tax-exempt churches from endorsing or opposing political candidates, following the 1954 Johnson Amendment. Then-Senator Lyndon Johnson introduced the provision as an amendment to the Revenue Act of 1954. While there is speculation about why he did it, the result has remained the same: direct or indirect endorsements by church leaders in their official capacity are not allowed.

Watchdog groups such as Americans United for Separation of Church and State said the pastors are acting as shills for the Republican Party. Conservative religious leaders are not exactly excited about Mitt Romney’s Mormonism, and are trying to mobilize their base, according to Rob Boston with AU.

Meanwhile the IRS’ hands have been tied since 2009 by a lack of authority to start investigations of churches. Someone at IRS must be deputized to make those decisions and no one has yet been named. Chances of the Treasury Department doing that before the November elections? Nil, said Marc Owens, a former IRS exempt organizations director.  The agency would not want to look like it is interfering in the campaign, he said.

Original post is Pulpit Freedom Sunday: Doubling Up by Political Capital.