On Wednesday, June 29, the House Administration Committee held a markup of H.R. 513, the 527 Reform Act of 2005. The legislation, which would subject independent 527 organizations to the same restrictions as political parties and campaigns, was voted out of committee on a party-line 5-3 vote without a recommendation for passage.
House Administration Committee Chairman Bob Ney (R-OH), has indicated his preference for H.R. 1316, the 527 Fairness Act (Pence-Wynn), which would allow the political parties to raise more money to compete with independent political groups. He used the hearing to criticize Democratic support of unregulated independent political groups. Democrats have come out against both the 527 Reform Act and the 527 Fairness Act, and Ney is eager to send them both to the floor and force the Democrats to choose between the bills, forcing them to choose between regulating 527 organizations or allowing political parties to raise more money.
An amendment proposed by Rep. Chris Shays (R-CT) would exempt 527 organizations that are engaged entirely in state election activity, even if they conducted get-out-the-vote efforts, as long as those campaigns did not mention federal candidates. The amendment also passed by a party-line 5-3 vote.
The Pence-Wynn bill was sent to the floor earlier this month without the support of any Democrat on the House Administration Committee.
Most worrisome for nonprofits is that the Pence-Wynn bill would allow various types of nonprofit organizations, such as social action groups (501(c)(4)), labor unions (501(c)(5)) and trade associations (501(c)(6)) organizations, to make electioneering communications but does not address 501(c)(3) organizations or unpaid broadcasts. The anomalous situation created by such legislation could result in a ban on broadcasts close to elections for the most nonpartisan of nonprofits, charities, while allowing broadcasts by more partisan groups, such as labor unions and trade associations. This could create a virtual blackout of nonpartisan, non-electoral advocacy communications by nonprofits.
The House is expected to take up the Pence-Wynn bill before the August recess; however, it is unlikely that any campaign finance legislation will emerge from Congress this year. Sen. Majority Leader Bill Frist (R-TN) has said that he does not intend to clear floor time for a 527 bill this session. Additionally, with appropriations bills and one definite Supreme Court nominee confirmation debate, the possibility of a conference committee to resolve the issue seems slim.