JURIST - Paper Chase: Federal judge orders FEC to explain campaign finance loophole for 527 groups

[JURIST] US District Judge Emmit G. Sullivan has ruled [PDF text] that the Federal Election Commission (FEC) [official website] has not provided adequate reasons for failing to more strictly regulate so-called 527 groups [Opensecrets.org backgrounder], nonprofits named for the tax code section under which they are organized. The groups are currently not subject to the same soft-money contribution restrictions as traditional political action committees, which allowed them to donate vast amounts of unregulated money to campaigns during the 2004 election cycle. Sullivan did not direct the FEC to develop new rules governing 527s, but instead ordered the FEC Wednesday to present a "reasoned explanation" for the current system, or to institute new rules "if necessary."

Reps. Christopher Shays (R-CT) and Martin Meehan (D-MA) filed the original complaint [PDF text] against the FEC in 2004, claiming that the FEC's failure to issue a rule governing when section 527 groups must register as political committees is arbitrary and capricious, thus violating the Administrative Procedure Act [text]. According to the nonpartisan campaign funding tracking service Political Money Line, 527 groups that supported Kerry or opposed Bush collected $266 million during the 2003-04 election cycle, as opposed to Republican groups that raised $144 million. AP has more.

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