An attempt by Sens. John McCain (R-AZ) and Russell Feingold (D-WI) to extend federal campaign finance regulation to independent political groups has backfired in the Senate Rules Committee, which amended the 527 Reform Act of 2005 (S. 271), to repeal portions of the Bipartisan Campaign Reform Act of 2002 (BCRA). The vastly altered version of S. 271 passed by the committee on April 27 is a crazy quilt of amendments that restricts independent groups while lifting limits on business groups and PACs run by members of Congress. An additional amendment exempts groups that limit their activities to voter mobilization if they do not use broadcast media. Another exempts the Internet from the definition of regulated public communications. The bill reflects opposing approaches to changing campaign finance laws that were also debated in an April 21 hearing by the House Administration Committee. S. 271 would subject many non-party groups that do not coordinate with candidates or campaigns to Federal Election Commission (FEC) rules that require registration and reporting and limit the amount and sources of funds that can be raised. A sponsors' amendment was submitted before the committee markup began April 27 to clarify that the bill applies to 527s that register with the Internal Revenue Service (IRS), eliminating the original threshold that would have regulated groups "described in" Section 527. This change made it clear that the bill would not cover other nonprofit groups such as 501(c)(3) and 501(c)(4) entities. The sponsors also narrowed its application to state and local political committees. Summary of Amendments The committee approved an amendment proposed by Sen. Charles Schumer (D-NY) that would protect voter mobilization activity by exempting independent political committees that work exclusively to get out the vote and do not use broadcast communications. The result is that wealthy individuals can continue to give unrestricted donations to groups that qualify for this exemption. Internet postings were exempted from the definition of regulated public communications in an amendment proposed by Sen. Robert Bennett (R-UT). A series of additional amendments offered by Bennett would repeal parts of BCRA, making it easier for federal officeholders to raise and contribute political funds, and tilt the political playing field in favor of business corporations. The amendments would:

• Increase the limits on individual contributions to regulated political action committees (PAC), PAC contributions to candidates, and contributions from one PAC to another from $5,000 to $7,500
• Increase the limits on PAC contributions to national political parties from $15,000 to $25,000
• Allow unlimited transfers of funds from leadership PACS (operated by members of Congress) to national party committees
• Increase the threshold for registration with the Federal Election Commission (FEC) from $1,000 to $10,000
• Index all limits for inflation
• Eliminate the requirement that trade associations get prior written approval from their member corporations before soliciting contributions from executives and administrative personnel, and allow members to permit fundraising by more than one association
• Eliminate the twice yearly limit on employee political fundraising by corporations.

The committee also approved an amendment offered by Sen. Richard Durbin (D-IL) that would require broadcasters to charge candidates the lowest advertising rate available during the election season. Rancorous Committee Debate Defines Issues for the Senate Floor Schumer withdrew his sponsorship of the bill, saying the bill was "serving as an anti-campaign-finance Trojan horse." Senate Minority Leader Harry Reid (D-NV) released a statement after the hearing noting the Republicans "moved to report the bill from Committee without a recorded vote over strong and repeated Democratic objections," resulting in amendments that "unravel McCain-Feingold campaign reform legislation." The majority of Republicans voting for the bill opposed McCain and Feingold's BCRA legislation in 2002. More amendments are likely when the bill goes to the Senate floor. McCain and Feingold said they would seek to remove the amendments, while Sen. Ted Stevens (R-AK) promised an amendment extending FEC regulation to 501(c) groups that broadcast ads asking people to "call so and so." This would treat grassroots lobbying communications as election ads. Sen. Diane Feinstein (D-CA) said she would continue working on an amendment that would extend expenditure disclosure requirements to non-broadcast communications of regulated 527s. The amendment was withdrawn during the committee's consideration of the bill because of confusion over its impact. The Internet exemption is the subject of separate legislation Reid introduced in March. S. 678 would exempt Internet communications from FEC regulation. A companion bill (H.R. 1606 is pending in the House. The FEC is currently seeking comments on a proposed rule regulating some Internet communications. The rulemaking is in response to a court order that invalidated a rule exempting all Internet communications from the definition of a regulated public communication. The court found the FEC did not adequately explain the basis for the exemption. The Rules Committee action and pending legislation make it clear that Congress does not intend to extend campaign finance regulation in this direction.