Hopefully this time the Senate will act. The House voted 411-8 to pass S.1, the ethics and lobbying reform bill that would increase disclosure requirements for lobbying activities and for earmarks. The next step is for the bill's passage in the Senate, which may prove a bit more difficult. Read previous reactions by OMB Watch below.

Today, the Democratic leadership in Congress released their long-awaited compromise lobbying and ethics bill - The Honest Leadership and Open Government Act of 2007 (text of the legislation). The bill is 107 pages long, but already there has been some criticism of changes to the bill, particularly the earmark disclosure sections (see Mark Tapscott's reaction and the Porkbusters blog for a sampling). Two Senators, Tom Coburn (R-OK) and Jim DeMint (R-SC) - whose amendment to the bill earlier this year on earmark disclosure greatly strengthen the bill - have also posted disappointing reactions.

At first glance it does appear the final version of the bill is not as strong (i.e. transparent) as the original and it is unclear why those changes were adopted at this point in the debate. DeMint has announced he will offer an amendment during final consideration of the bill to "restore real earmark reform." It's yet to be seen whether that amendment will be adopted of if this version is the best the House and Senate will be able to do this year.

CQ ($$) reports that the lobby bill is almost complete and may be ready for a vote in the House Tuesday. And again the discussion focuses on how a new agreed upon bill may alter the bundling provision, shifting the reporting from lobbyists to lawmakers. This change would mean campaign committees would have to report on bundled campaign donations they receive. And sure enough Senator Jim DeMint (R-SC) may object to the final changes if the Senate-passed earmark language is not included. Since the bill includes changes to Senate rules, the Senate would need 67 votes to overcome an objection and approve the package. To help overcome any objection, lawmakers will need to work hard to ensure support. RollCall ($$) reports on such rallying with the role Senator Feingold (D-WI) may be play in the bill's passage.

With conservative Republicans bracing for significant changes to the bill passed by the Senate in February, McCain could end up fighting his former ally in an effort to block a significantly weakened bill. According to sources close to the issue, Majority Leader Harry Reid (D-Nev.) has called on Feingold to help push the bill over the goal line. Reid hopes Feingold's progressive street credentials and reputation as a reform-minded lawmaker will help keep the left flank from bolting, particularly if Reid and Speaker Nancy Pelosi (D-Calif.) make controversial changes to the bill.

Late yesterday afternoon the House voted 215-205 approving Rep. Mike Pence's (R-IN) amendment to the Department of Commerce and Justice, and Science, and Related Agencies appropriation bill (H.R. 3093). The Pence amendment prohibits funds appropriated in the bill from being used by the Department of Justice to enforce provisions of the Bipartisan Campaign Reform Act of 2002 (BCRA) dealing with ''electioneering communications.'' The amendment does not change the ability of the Federal Election Commission (FEC) to charge civil penalties. The electioneering communications section of BCRA prohibits the use of corporate or labor union funds to pay for broadcast advertisements that include the name of a federal candidate within 30 days of a primary or 60 days of a general election.

Some groups have protested the amendment, writing to House Members; "The recent decision in Wisconsin Right to Life v. FEC did not overrule McConnell and did not strike down the ''electioneering communications'' provisions but rather said they were unconstitutional as applied to certain ads. As a result, the ''electioneering communications'' provisions of BCRA remain the law of the land, as limited by the WRTL decision."

The FEC is expected this summer to conduct a rulemaking to provide guidance as to what ads are still covered by the "electioneering communications" provisions and what ads are protected as a result of the WRTL decision. Considering that the Supreme Court decision addressed genuine issue ads, the question presented with the Pence amendment is whether or not to repeal the electioneering provision entirely. According to CongressDaily ($$), Pence was not sure whether it would survive a conference report, and that he only submitted the amendment to make a statement. In a press release Pence said, "Today freedom of speech prevailed on the floor of the People's House."

Last June OMB Watch was very concerned about rules in Florida that would make voter registration drives very difficult and risky. The law was later overturned as unconstitutional, but one can argue damage was done and a trend of regulating voter registration drives continued. The issue of protecting nonprofits' ability to conduct such valuable efforts has resurfaced. "American democracy depends on private groups more than the government to register voters. As a result, registration efforts have always been sources of political friction."

This past week on Wednesday, July 23, the Senate Rules Committee held a hearing on the Ballot Integrity Act of 2007 (S. 1487). Section III of the bill would prohibit states from passing laws that would hinder voter registration drives. The provision states; "No State shall refuse to register an individual to vote on the grounds that such individual's voter registration application was submitted to the State by a third party." League of Women Voters President Mary G. Wilson testified during the hearing. "Organizations such as the League are crucial to assuring that voter registration is available to EVERY voter, but the facts also show conclusively that we are key to assuring that minority voters have access to registration."

As this blog posting from the Nation details, "There are some divisions within the pro-democracy/voter reform community about some aspects of the bill, but there can be no mistaking the importance of protecting efforts to expand voting participation." The issue of providing a verified paper record of the voter's vote is contentious, but again, the capability of third party registration groups to do such work is imperative.

Reflecting once again on the House Ways and Means Subcommittee on Oversight hearing on tax-exempt organizations, a note of thanks should go out to the Council on Foundations and Representative Bill Pascrell (D-NJ) for addressing an area of great concern. During opening statements, Pascrell commented on Treasury's assertion that charities are a "significant source of terrorist funding," observing that Treasury seems to be "painting the sector with a wide brush." Steve Gunderson, the President and CEO of the Council on Foundations testified at the hearing. Gunderson's written statement submitted for the record states;

In fact, we have seen no evidence to indicate that U.S. charities are a major source of terrorist support. Out of hundreds of thousands of U.S. charities and billions of dollars given out in grants and material aid each year, only six U.S. charities are alleged to have intentionally supported terrorists. Thus far, Treasury has not identified a single case of inadvertent diversion of funds from a legitimate U.S. charity to a terrorist organization. . . . An even larger issue is that, by exaggerating the extent to which U.S. charities serve as a source of terrorist funding, Treasury is fueling an environment in which wary donors may refrain from making charitable contributions.

Following up on Pascrell's opening statement, during questions he addresses Gunderson asking if he agrees with Treasury's claim. Gunderson responds no, and explains the difficulties facing the sector as a whole. Pascrell appears confounded, emphasizing Gunderson's statement that there is no evidence and not a single U.S. charity has been found to redirect funds to a terrorist organization. The fact that these statements were made and will be included in the record is greatly appreciated. Hopefully statements such as this will broaden the attention on the issue.

CQ ($$) reports that the long overdue lobbying and ethics bill could clear Congress before the August recess begins. Staff has been working on an identical measure to be voted in both the House and Senate to replace the passed S.1 and H.R. 2316. In his fight to ensure that earmark language is included, Senate Jim DeMint (R-SC) has reportedly promised to filibuster any legislation that does not contain the precise earmark language in the original Senate bill passed in January. Hopefully though he will be outnumbered and enough members will want to complete a lobbying and ethics package before the recess to avoid bad publicity. DeMint and nine other Republican senators wrote a letter to Senate Majority Leader Harry Reid (D-NV) warning that any new version of legislation brought to the Senate should not be changed from S.1. Senate Minority Leader Mitch McConnell (R-KY) has predicted that the bill will probably pass without going to conference.

In efforts to get a final bill passed, Democratic leaders continue to work on language that would require lobbyists to detail their "bundling" of campaign donations. The original lobbying provision amended the Lobbying Disclosure Act (LDA), while a new approach that is being considered would amend campaign finance law, requiring disclosure also by bundlers who are not lobbyists.

BNA Money and Politics ($$) reported that a approach "to beef up bundling disclosure under FECA and drop the LDA bundling-disclosure requirement could get the measure back on track by addressing reformers' demands for greater transparency about influence-peddling while also responding to lobbyists' objections about being singled out under rules that would not apply to other types of political contributors. . . . Representatives of reform groups, on the other hand, want to make sure that any bundling disclosure system will reveal the activities of lobbyists, even if it also includes bundling by non-lobbyists."

Meanwhile, considering the "revolving door" provision, Democrats may go ahead with allowing each chamber to have different rules. The Senate would set a two-year lobbying ban on former senators becoming lobbyists, while the House would leave its one-year lobby ban. The House is expected to consider its replacement bill first next week with Democratic leaders limiting amendments for quick passage, and then the Senate would then take up identical legislation. See this article on the topic from the latest Watcher.

Yesterday the House Ways and Means Subcommittee on Oversight, led by Chairman John Lewis (D-GA), held a hearing on tax-exempt charitable organizations. Chairman Lewis set the overall tone with his opening statement praising the work of nonprofits. "These organizations play such an important role in our country. Charities and foundations make up the very fabric of our communities. They know the deepest human needs of our friends and neighbors and they know the solutions that work." All other committee members emphasized their appreciation for the nonprofit sector as well. Members commented that far too often the "bad apples" are the focus in the media and in legislation.

A new Government Accountability Office (GAO) report was released in conjunction with the hearing that has an alarming title; "Thousands of Organizations Exempt from Federal Income Tax Owe Nearly $1 Billion in Payroll and Other Taxes." The GAO study reports that "nearly 55,000 exempt organizations had almost $1 billion in unpaid federal taxes as of September 30, 2006," and after establishing just how many exempt organizations there are, Rep. Stephanie Tubbs Jones (D-OH) wanted a clarification. "Don't you think it would have been good to tell us there are 1.8 million exempt organizations when you threw out that 55,000 number? It's your job to get the numbers right." This GAO title seems to be a clear misrepresentation.

Ranking member Jim Ramstad (R-MN) said the vast majority of exempt groups pay their taxes "and are contributing a great deal to people in need in this country." Not only were the Members of the committee very pleased with the sector, Steven Miller, Internal Revenue Service (IRS) Tax Exempt and Government Entities Division commissioner, told the panel that the vast majority of charities are very compliant when it comes to obeying tax laws.

However, a contradicting story came from the Senate side the day before as leaders of the Senate Finance Committee expressed concern over charitable abuse. The IRS supplied follow-up answers to questions leaders of the Finance Committee asked in March on the worst compliance problems facing the exempt sector. And naturally, the negative made the news.

The Internal Revenue Service (IRS) has published a chart outlining seven federal tax law characteristics of 501(c)(3),501(c)(4), 501(c)(5), 501(c)(6) and 527 organizations. The chart indicates whether such organizations may receive tax-deductible contributions, contributions or fees deductible as a business expense, engage in legislative advocacy, engage in candidate election advocacy, or engage in public advocacy not related to legislation or election of candidates.

Four months ago Chiquita admitted it paid terrorist groups $1.7 million in protection money over six years to protect its banana-growing operation in dangerous areas of Columbia. And now, EarthRights International, a human rights group, has filed a lawsuit on behalf of at least six alleged victims seeking unspecified monetary damages for the families. An EarthRights spokesman said that if the case is granted class-action status, several thousand relatives could be represented.

Chiquita Company spokesman Michael Mitchell said; "Suits of this nature are without merit, and we'll certainly defend ourselves vigorously." However, in one case allegations of indirect connections were enough to establish liability. In Boim v. Quranic Literacy Institute, 340 F.Supp.2d 885 (N.D.Ill.,2004) the court held Holy Land Foundation liable for "aiding and abetting" Hamas, based on Treasury's allegations in the 2001 designation and the criminal indictment, even though there was no finding of direct ties to Hamas. For more background, see the OMB Watch report Muslim Charities and the War on Terror. And for more information on the Chiquita lawsuit, see the AP story here.

The Federal Election Commission's (FEC) rulemaking announcement followed a statement that attorney James Bopp, who represented Wisconsin Right to Life (WRTL), filed a petition with the FEC for a rulemaking on behalf of the James Madison Center for Free Speech. The petition asks that the FEC apply the Court's decision in the WRTL case, that the prohibition on "electioneering communications" cannot be constitutionally applied to genuine issue ads. The petition suggests that the rulemaking should be done by directly taking language from the Court's majority opinion. It also asks that the FEC abolish a previous rule defining "express advocacy." Bopp would like the FEC to create some safe harbor examples of genuine issue ads along with a rule that not only addresses ads on pending votes, but also ones that urge candidates to take a position on an issue and ones that advise the public of the candidate's position. Bopp commented; "Groups should not have to hire a lawyer and go to court to get government permission to engage in speech that the Supreme Court has already held to be protected by the First Amendment." For more information, see the James Madison Center press release.

The Federal Election Commission (FEC) announced that it will work on a rulemaking given the Supreme Court decision in Wisconsin Right to Life v. FEC. The Court found that the ads in question were genuine issue ads, as opposed to electioneering ads that advocated for the election or defeat of candidates. The FEC plans to issue a proposed regulation in August and request comments with a public hearing in October, and a vote on a final rule by the end of November. If this timeline is kept, a rule will be set for the primaries in early 2008. The Court's majority opinion has made the FEC's job of drafting a rule pretty easy. For more information, see the FEC press release.

'The FEC intends to make clear how we are interpreting this exemption before mid-December, when the electioneering communication timeframes for the 2008 campaign will begin.' said FEC Chairman Robert Lenhard. 'We believe it is critical to have a clear rule in place in time for the Presidential primaries and caucuses in early 2008.'

After much frustration in trying to send the ethics and lobbying reform legislation to conference committee, RollCall ($$) reports that Senate Majority Leader Harry Reid (D-NV) and Speaker Nancy Pelosi (D-CA) have decided to abandon the normal conference committee process and will use a parliamentary tactic rarely used to push the legislation. According to the article, the plan would be that the House and Senate votes on identical language without amendments attached to circumvent the conference process.

Once a deal is reached Democrats will bring a new version of the bill back to the House floor using a rule to limit amendments. Pelosi could then pass the measure somewhat quickly and send the new version to the Senate. Reid would then have to block any effort to change the bill. The decision was reached as Senator Jim DeMint (R-SC) continues to refuse to let the bill move to conference without a promise from Reid that new earmark reform rules will be included.

Given the high profile of the ethics issue, supporters would gamble that any filibuster could be overcome. But according to Republican aides, DeMint and other conservatives who have been pushing ethics and earmark reforms in the Senate will likely be in no mood to simply accept a new bill, particularly if they feel any of the provisions have been changed or watered down.

Meanwhile, BNA Money and Politics ($$) reports that some who are working on easing disagreements between the two versions might be considering dropping the bundling provision.

Both the House and Senate version of the reform bill contain provisions to require lobbyists to include in reports filed under the Lobbying Disclosure Act the campaign money that they collect or arrange to have delivered to lawmakers and other candidates. A new proposal now reportedly being considered would require only candidates and other political committees, but not lobbyists, to report information on bundled contributions to the Federal Election Commission. . . . But, reformers suspect that others have privately supported DeMint's stance because of objections to provisions in the underlying lobbying legislation, such as the requirement to disclose bundling.

One of the new commissioners on the Election Assistance Commission (EAC) seeks input from voter rights organizations. If you would like to provide such a contribution, see this press release from EAC Vice-Chair Rosemary E. Rodriguez. "I seek to gauge whether there is interest in participating in monthly brownbag lunch discussions about issues that impact voters as we approach the 2008 election. I also seek input on the agenda, including the topics of discussion, for these sessions, which would take place at EAC's office in Washington, D.C."

The New York Times warns readers of the possible implications of the trial that has begun involving the largest Muslim charity in the country. The Holy Land Foundation for Relief and Development (HLF) case has been going on for many years and is extremely complex. In 2001 President Bush announced that HLF was being closed, accusing the charity of funding Hamas. The charity's designation has been challenged, along with the secret evidence used in the case, and many years worth of wiretaps. In February, defense attorneys found that summaries of government wiretap transcripts detailing Holy Land officials' conversations falsely attributed anti-Jewish comments to HLF leaders. A fundamental part of this case will be whether indirect ties can bring criminal prosecution, and if so, non-governmental international funders may decrease grants to troubled areas. The prosecution says the money was channeled through zakat (Arabic for charity) committees, yet none of the zakat committees have been designated.

The case is being closely watched by a large number of charitable organizations, as well as Muslim-Americans, because its outcome might well help determine the line separating legitimate giving from the financing of banned organizations."

The article references Chip Poncy's congressional testimony on May 11 which we have been critical of. Poncy noted that all 44 charities the government has designated as supporting terrorism were engaged in some legitimate charity work, and of those 44 six are either closed or under investigation in the U.S., though not one American charity itself has been convicted of supporting terrorism since the practice started in 2001. HLF says that about $5 million of its assets and charitable donations have been frozen by the Treasury Department.

Kay Guinane of OMB Watch was quoted in the article; The Treasury Department has this 'complete taint' theory, said Kay Guinane of OMB Watch, a Washington group that advocates government transparency. If anyone in a charity is suspected of aiding a terrorist organization, Ms. Guinane said, the entire charity is deemed guilty. Other countries, like Britain, have managed to allow charities under suspicion to continue to deliver aid to the poor, she said, whereas the Treasury Department "disagrees with any approach that says you can separate the real charitable work from the alleged terrorist activity.

According to CongressDaily ($$), Senator Jim DeMint (R-SC) will continue to block a conference on lobbying and ethics reform until he receives a guarantee that his earmark disclosure language will not be changed during conference committee. This promise remains despite Senate Majority Leader Harry Reid's (D-NV) offer to put him on the conference committee. "The majority leader is trying to be clever, but I wasn't born yesterday," DeMint said. "Everybody knows Democrats are going to control the conference, 4 to 3, and they will vote 4 to 3 to kill earmark reform. Being on the conference won't do a thing to protect earmark reform." Many, including members of his own party, are noticing DeMint's stubborn behavior. A story in Roll Call ($$) addresses how DeMint's Republican colleagues are responding.

From BNA Money and Politics ($$); After the Supreme Court ruling in the Wisconsin Right to Life (WRTL) case, the Federal Election Commission (FEC) and members of Congress who intervened in the case came to an agreement late last week with WRTL attorney James Bopp. The agreement details the features of political ads sponsored by corporations and unions that all sides specify as permissible in future campaigns. Nevertheless, legal challenges to restrictions on ads may continue to be reviewed by the courts on a case-by-case basis. Bopp filed of a joint court motion with the FEC and the congressional supporters, stating that the 2006 Christian Civic League of Maine (CCL) ads were constitutionally protected. Both the CCL case and WRTL cases are being handed back to the lower court and WRTL has filed a motion asking a three-judge U.S. District Court to rule quickly on the legality of the ad.

In the WRTL litigation, Bopp filed a separate plea asking the lower court to exclude Senator John McCain (R-AZ) and other congressional interveners from future proceedings. According to the motion, McCain and others could no longer assert that they would be injured if similar ads were to be broadcast, so they had no standing under Article III of the Constitution and must be removed from the case. For more information, visit the scotus blog.

Update:BNA Money and Politics ($$) reports that Bopp, lawyers for the FEC, and lawmakers supporting BCRA agreed to file a joint motion urging the lower court to declare that the ads sponsored by WRTL in 2006 and the ads in question from 2004 were constitutionally protected. "he motions also called for dismissal of Bopp's previous efforts to obtain a court injunction allowing the WRTL and CCL ads. Also dropped as moot was an effort by Bopp to exclude BCRA's congressional backers, led by Sen. John McCain (R-Ariz.), from the litigation over interpretation of the reform law."

Roll Call ($$) reports that the Congressional Management Foundation (CMF) is working on a project to attempt to solve a problem facing Members and their staff, excessive amounts of e-mail that often causes their systems to crash. The article explains the many frustrations citizens and nonprofits are feeling in trying to carry out their advocacy work in encouraging people to contact Congress on important issues, and the frustration of those receiving the unmanageable number of messages.

After offices began receiving more email than they could handle, many offices switched to Web forms, requiring the public to send messages directly from Member Web sites. Then offices began putting logic puzzles on their Web sites, forcing e-mailers to decode a simple puzzle before sending their message. Last year OMB Watch was active in the fight against the use of such logic puzzles.

Grace Markarian, with The Humane Society of the United States was quoted in the Roll Call article; "many groups and constituents who have legitimate issues to bring to Members are frustrated because it is becoming exceedingly difficult to address such matters with their Representatives. She pointed out that while most Members have information on their Web sites about the big issues, it is sometimes difficult to find enough stuff on other matters — requiring correspondence."

And unfortunately many staffers who are frustrated with the amount of e-mail incorrectly stop considering the messages to be from actual constituents.

Some European bodies have tackled similar problems with e-mail overload by creating Internet forums for specific issues. One such Web site, mysociety.org, serves as an intermediary to help British subjects contact their member of Parliament. People can address a range of specific questions through the site or simply send an e-mail asking what their MP has done recently.

In a 2005 report CMF recommended a number of measures to deal with the problem of e-mail overload, including using the Internet as a response tool. CMF also advised advocacy groups to reduce the e-mail logjam. However, cutting down on these communications would only further disconnect the voices of constituents and the legislators who are supposed to represent them.

Yesterday during a Federal Election Commission (FEC) hearing, the commission was considering the issue of hybrid ads. BNA Money and Politics ($$) discusses yesterday's hearing in length and the wrangling of their possible rulemaking. A final rule has not been drafted with details still to be worked out, including how much of the cost of an ad could be taken on by a party and how much must be paid by the candidate or candidates named in the ad. However, the article also touches upon another subject the FEC is considering.

Another highly anticipated action is an expected FEC rulemaking or policy statement on TV and radio ads that mention federal candidates in the final weeks before an election. Corporate and union funding of such ads was banned under the 2002 Bipartisan Campaign Reform Act, but the Supreme Court recently carved out a major exception in its June 25 ruling in FEC v. Wisconsin Right to Life Inc. The court ruled there is a First Amendment exception to the BCRA ad-funding restrictions for certain "grass roots" lobbying messages focusing on legislation or policy issues. The FEC is now expected to try to determine exactly which messages fit that exception, leading to a potentially explosive increase in the type of ads that the commission says pass muster.

Hopefully the FEC will use the Court's opinion to craft a rulemaking that may put off expected litigation and confusion before the 2008 election season is in full swing.

There is currently a push for an advocacy restriction in a proposed deal to allow public radio stations to broadcast over the internet without having to pay additional royalty fees. KCRW, Southern California's National Public Radio weekly music commentary, On The Beat, reported that "SoundExchange offered to music webcasters concerning internet music royalties includes quid pro quos that the organization did not disclose in its July 29 press release. KCRW commentator Celia Hirschman reports that webcasters would have to agree to cease their lobbying efforts on behalf of the Internet Radio Equality Act." For more information, listen to the report here or visit www.kcrw.com.

The House Ways and Means Oversight Subcommittee has announced a July 24 hearing covering an overview of tax-exempt organizations, specifically 501(c)(3) charities and foundations. Most likely witnesses representing the nonprofit sector (from the Council on Foundations and Independent Sector) will urge Congress to extend several tax breaks for donors and put forward their opinion on information that charities must disclose to the Internal Revenue Service (IRS). The witnesses will include a representative from the IRS and the Government Accountability Office (GAO), and as mentioned, Independent Sector and the Council on Foundations. The hearing will focus on the Pension Protection Act of 2006 and the changes to Form 990. Reportedly, there are also plans for a second hearing to focus on the services that urban and rural organizations provide. For more information on the hearing, visit the committee's website.

OMB Watch has released a press statement in response to recent actions that have blocked the Senate from going to conference on lobbying and ethics reform legislation. The latest Watcher has an article on the fruitless attempts to send the measure to conference.

We understand that at least one senator is blocking this bill from moving forward to ensure the senator's provision is part of the conference negotiation. OMB Watch concurs that both the House and Senate bills could be made stronger. But the best way to make that happen is to move to a conference where the better of the two bills can be approved by Congress and signed into law by the president.

An editorial in Roll Call ($$) calls on Senators to go along with Senator DeMint's (R-SC) request on earmarks "so disclosure of spending requests is not delayed until President Bush signs an ethics reform measure that still has not even gone to a House-Senate conference."

The recent New York Times Magazine has an article titled, "Right to Spend" which discusses the complex and certain issue of money in politics by referencing the recent Wisconsin Right to Life (WRTL) decision without actually discussing the case. "Now, however, the Supreme Court has used the First Amendment to throw out one part of the law and threatened to discard the rest. In this new gilded age, are we doomed to return to gilded-age politics? Certainly, the end of McCain-Feingold would have consequences." However, this is not the end of McCain-Feingold (the Bipartisan Campaign Reform Act, or BCRA). As an article in the latest OMB Watcher points out, the decision upholds the free-speech rights of grassroots lobbying organizations, and the actual impact is likely to be much more limited than many are forewarning. Readers of the New York Times Magazine piece can easily be misled to understand that the rest of BCRA will soon be dismissed. Bob Bauer at moresoftmoneyhardlaw.com also responds here.

Meanwhile, as anticipated, discussion of the opinion remains. In the LA Times, Thomas Mann and Bradley Smith discuss the merits of the Court's decision.

Congress has now returned from the July 4th recess and efforts to send lobbying and ethics legislation into conference committee were once again blocked. These events are a repeat of what occurred right before the recess. The Politico reports on the struggle Democratic leaders will face, especially from Senator Jim DeMint (R-SC) who is insisting that the earmark disclosure provision is not altered during conference. However, Democrats simply see this as a means to block the ethics reform bill. DeMint says he supports the lobbying reform package, but he will not change his mind unless Majority Leader Harry Reid (D-NV) promises that the Senate rules on earmarks will not be deleted or changed in the final bill. DeMint argues that a change in the Senate rules should not be included in any conference committee with the House.

The potential impasse could delay action further and threaten passage of one of the Democrats' most important campaign promises. Behind the scenes, it's clear many senators are unhappy with a separate proposed requirement that lobbyists disclose how much money they bundle in campaign donations for incumbents and candidates. Some lobbyists privately warn that they may limit their fundraising roles under such scrutiny.

Senate Majority Whip Dick Durbin (D-IL) objected to a unanimous consent request by DeMint to add the earmark language that passed in January as an amendment to the lobbying and ethics bill. DeMint's request also moved to send the lobbying bill to conference with the House. Senate Democratic leaders said they could not guarantee that DeMint's earmark language would survive negotiations.

On July 11 during a public hearing the Federal Election Commission (FEC) is set to consider a regulation on "hybrid ads," to possibly allow political parties help finance the television advertising of campaigns. The proposed new FEC rule would allow a party to pay for up to 75 percent of any candidate's advertising costs. The hybrid ad rulemaking came up after the Bush-Cheney '04 campaign used Republican National Committee funds to pay over $40 million in ads. The Campaign Legal Center and Democracy 21 filed comments with the FEC on the proposed rulemaking.

The FEC also has a pending advisory opinion request asking that a presidential campaign be allowed to use private money from a special legal and accounting fund (GELAC) to pay for a large portion of its TV ads. The GELAC is made up of private contributions which publicly funded candidates are allowed only to use for legal and accounting costs while money for other campaign expenses, such as advertising, is supposed to come from the public financing program. However, the Kerry campaign argues it should be allowed to use GELAC funds to cover some of a vendor's paperwork expenses. Democracy 21 and Campaign Legal Center oppose the advisory opinion request because of concerns that it would undermine the purpose of the public financing system. For more information on the July 12 public hearing, visit the FEC website.

The San Jose Mercury News reports that environmentalist Ted Smith, founder and senior strategist for Silicon Valley Toxics Coalition sued the city of San Jose, California charging that its expanded lobbying definition of who must register, pay fees and report activities is so broad it violates free-speech rights. As many other candidates nationwide, San Jose Mayor Chuck Reed's victory in November was in part due to an ethics reform agenda, and Reed commented on the importance of promoting a transparent government. "I don't see how it affects anybody's free speech. We're not stopping anybody from talking, just requiring them to tell the public who's paying them to talk."

The suit takes issue with the city's longstanding definition of an "expenditure lobbyist" as anyone who makes payments or incurs expenditures of $5,000 or more in a calendar year with the intent of influencing a city official's vote. The law requires those who meet that definition to pay an annual registration fee of $350 plus $60 for each client; to identify themselves and their clients to the city; and to file quarterly reports detailing their lobbying activity or campaign expenditures on behalf of city officials.

In the lawsuit Smith claims that anyone who spends $5,000 printing and distributing pamphlets criticizing the city government is subject to the ordinance and its requirements, which the suit says violates free speech rights. Sound familiar? The same information was wrought when federal legislation was considered. When the Senate Democrats proposed reforms regarding disclosure of lobbying, including frequency and content of reporting, one provision in particular to require disclosure of grassroots lobbying activities; (activities to encourage the public to lobby for or against particular legislation or public policies) caused the same firestorm of opposition. The San Jose complaint also attacks changes that expand the definition of "in-house lobbyist" to include anyone who spends 10 hours a year or more on "lobbying activity."

The suit is the second in the past year to challenge San Jose laws that seek to regulate efforts by developers, big businesses and other monied special interests to influence local political decisions. Last year, the San Jose Silicon Valley Chamber of Commerce successfully challenged the city's efforts to restrict independent campaign expenditures as an infringement of free-speech rights.

Following the U.S. Supreme Court ruling in the Wisconsin Right to Life (WRTL) case last week, on June 29 the Court sent back another case (Christian Civic League of Maine Inc. v. Federal Election Commission) to the lower court for a new ruling consistent with the WRTL June 25th decision. The Christian Civic League (CCL) had asked the Supreme Court to hear an appeal of a lower court's ruling that dismissed its challenge to restrictions on funding of political ads under the Bipartisan Campaign Reform Act (BCRA). The CCL case involved ads referring to Senator Olympia Snow (R-ME) during her re-election campaign last year. A three-judge panel dismissed the CCL lawsuit last September saying the challenge was moot because the ads were on legislation that had already been voted on. And the court would not grant an exception for ads that might come up again in the future. For more information visit the James Madison Center for Free Speech.

The Internal Revenue Service (IRS) will be hosting two 60 minute phone forums on the redesigned Form 990. The forum will include a presentation of the changes and the reasons for each change. Comments and questions on the new form will be requested from participants and some will be answered during the session. The session on July 18, 2007, is scheduled for 10:00-11:00 a.m. and the session on July 19, 2007 is scheduled for 1:00-2:00 p.m. (Eastern Daylight Savings Time). For more information and to register, click here.

A National Journal ($$) column explains how the prohibition on corporations paying for broadcasts that mention federal candidates 60 days before a general election or 30 days before a primary in the Bipartisan Campaign Reform Act of 2002 (BCRA) sought to prevent business corporations from getting involved in election campaigns, but in turn censored nonprofit groups' criticism of the work of elected officials. "Because nearly all nonprofit advocacy groups are incorporated, the effect was to extend to such groups a ban ostensibly aimed at companies like General Electric and Dow Chemical. Indeed, it was the nonprofit citizens groups, not Big Business, that had bought many or most of the attack ads that legislators so resent."

However, the Court missed an opportunity to apply a "principled, pragmatic, nonideological solution," supported in the amicus brief filed on behalf of a group of charities, including OMB Watch.

The ideal solution would have been for the Supreme Court to uphold the ad ban as applied to business corporations and to carve out an exception for nonprofit advocacy groups. How many justices proposed doing that? Not one. Instead, in FEC v. Wisconsin Right to Life Inc., the five conservatives in the majority and the four liberal dissenters alike focused on all-or-nothing arguments treating all corporations as fungible.

One reason for taking this "all-or-nothing" approach is because the Court sees no difference between the speech rights of a business corporation and individuals and citizen groups. A blog from the Campaign Legal Center addresses this; "The lack of interest in the nonprofit tax exempt status of WRTL is consistent with a jurisprudence of political speech without reference to speakers." Chief Justice Roberts is not concerned about the context or who is speaking (a 501(c)(3) or not), but concerned about the content of the political speech itself.