On Feb. 1, the Federal Election Commission (FEC) published new guidance for its 2004 rule defining when independent political committees are subject to federal campaign finance rules and contribution limits. The document responds to a court order seeking stricter regulation of 527 groups. In the guidance, the FEC cites its 2006 enforcement action against six groups as proof that its case-by-case approach — used to determine whether a group's "major purpose" is to influence federal elections — is workable. It remains to be seen whether the court will accept this approach, which moves the FEC toward a vague standard similar to the "facts and circumstances" test used by the Internal Revenue Service (IRS) to define prohibited partisan activity by charities and religious organizations. In 2004, the FEC rejected arguments by campaign finance reform groups and Reps. Chris Shays (R-CT) and Martin Meehan (D-MA) urging it to subject groups exempt under Section 527 of the tax code to the same regulatory regime as campaigns and political parties. In response, Shays and Meehan took the issue to federal court, and although the court declined to order a new rulemaking proceeding, it ordered the FEC to explain why 527 tax exempt status should not trigger federal campaign finance regulation. The FEC's new "Explanation and Justification" explains that the IRS tax exempt status criteria are broader and serve a different purpose than the Federal Election Campaign Act (FECA). As a result, the FEC says it will focus on two criteria in FECA that establish whether a group is to be regulated as a federal "political committee": whether the group has received contributions or made expenditures of $1,000 or more that expressly advocate for or against federal candidates and whether the group's "major purpose" is to influence federal elections. After the Supreme Court upheld the McCain-Feingold law, express advocacy is no longer limited to "magic words" like "vote for" or "vote against". Instead, the standard has become vague, counting expenditures for communications that are "unmistakable, unambiguous, and suggestive of only one meaning" as intending to support or oppose federal candidates. In addition, the definition of a group's "major purpose" is not clear, since the FEC says it will make that determination on a case-by-case basis, looking at factors such as the wording of fundraising appeals, spending patterns, and public and internal statements of purpose. The FEC says this "fact-intensive analysis" is necessary, and that "any list of factors developed by the Commission would not likely be exhaustive in any event." The result is that any organization could become the subject of a FEC investigation into its campaign activities compared to its non-campaign activities, with FEC staff deciding what the group's "major purpose" is. The FEC says uncertainty can be addressed by looking at its past enforcement decisions, since "Any organization can look to the public files for the Political Committee Status Matters and other closed enforcement matters, as well as advisory opinions and filings in civil enforcement cases, for guidance…." According to the FEC, nonprofits can ask for Advisory Opinions or make their own best judgment about whether they should register as a regulated political committee. The FEC also says that if a nonprofit disagrees with an FEC Advisory Opinion, the group can appeal, and if a nonprofit is investigated, it can appeal the outcome or settle and pay fines. This will provide little comfort to nonprofits without the resources to hire the legal expertise needed to wade through these complexities. In December 2006, three 527 organizations were fined a total of $630,000 for failure to register as political committees. They included Swift Boat Veterans and POWs for Truth, the League of Conservation Voters and MoveOn.org. The FEC also cited action against the Leadership Forum, Freedom Inc. and League of Conservation Voters 527 fund as proof that their case-be-case approach to enforcement is adequate.