<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:25982.wais]
S. Hrg. 109-374
INDIAN TRIBES AND THE FEDERAL ELECTION CAMPAIGN ACT
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON INDIAN AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
ON
OVERSIGHT HEARING REGARDING THE STATUS AND TREATMENT OF INDIAN TRIBES
UNDER THE FEDERAL ELECTION CAMPAIGN ACT
__________
FEBRUARY 8, 2006
WASHINGTON, DC
U.S. GOVERNMENT PRINTING OFFICE
25-982 WASHINGTON : 2005
_____________________________________________________________________________
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COMMITTEE ON INDIAN AFFAIRS
JOHN McCAIN, Arizona, Chairman
BYRON L. DORGAN, North Dakota, Vice Chairman
PETE V. DOMENICI, New Mexico DANIEL K. INOUYE, Hawaii
CRAIG THOMAS, Wyoming KENT CONRAD, North Dakota
GORDON SMITH, Oregon DANIEL K. AKAKA, Hawaii
LISA MURKOWSKI, Alaska TIM JOHNSON, South Dakota
MICHAEL D. CRAPO, Idaho MARIA CANTWELL, Washington
RICHARD BURR, North Carolina
TOM COBURN, M.D., Oklahoma
Jeanne Bumpus, Majority Staff Director
Sara G. Garland, Minority Staff Director
(ii)
C O N T E N T S
----------
Page
Statements:
Allen, W. Ron, treasurer, National Congress of American
Indians.................................................... 19
Dorgan, Hon. Byron L., U.S Senator fron North Dakota, vice
chairman, Committee on Indian Affairs...................... 12
Hogen, Philip N., chairman, National Indian Gaming Commission 5
Inouye, Hon. Daniel K., U.S. Senator from Hawaii............. 15
Johnson, Hon. Tim, U.S. Senator from South Dakota............ 14
Lenhard, Robert E., vice chairman, Federal Election
Commission................................................. 4
McCain, Hon. John, U.S. Senator from Arizona, chairman,
Committee on Indian Affairs................................ 1
Noble, Larry, executive director, Center for Responsive
Politics................................................... 21
Thomas, Hon. Craig, U.S. Senator from Wyoming................ 2
Thurber, James, director, Center for Congressional and
Presidential Studies, American University.................. 23
Toner, Michael E., chairman, Federal Election Commission..... 2
Appendix
Prepared statements:
Allen, W. Ron (with attachment).............................. 38
Hogen, Philip N. (with attachment)........................... 50
Lenhard, Robert E............................................ 80
Noble, Larry................................................. 73
Thurber, James............................................... 35
Toner, Michael E............................................. 80
INDIAN TRIBES AND THE FEDERAL ELECTION CAMPAIGN ACT
----------
WEDNESDAY, FEBRUARY 8, 2006
U.S. Senate,
Committee on Indian Affairs,
Washington, DC.
The committee met, pursuant to notice, at 9:30 a.m. in room
106 Senate Dirksen Building, Hon. John McCain (chairman of the
committee) presiding.
Present: Senators McCain, Dorgan, Inouye, Johnson, and
Thomas.
STATEMENT OF HON. JOHN McCAIN, U.S. SENATOR FROM ARIZONA,
CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
The Chairman. Good morning. I hope that the Senate will
soon adopt lobbying reform that will help to dispel the
public's sense of something rotten on Capitol Hill. We are
embarked on that aspect of the Abramoff issue and the number of
situations that it has brought to light.
But cleaning up our act in Congress is only part of what
needs to be done. There are two sides to the perception that
Congress can be bought, the receiver and the giver, and we
should examine both.
Federal law has long recognized that restrictions on
contributions are appropriate to remove the reality and the
perception of undue influence. While the majority of the 562
federally recognized tribes make no political contributions or
contributions that amount to no more than a few $1,000 a year,
there are a number of tribes that contribute significant
aggregate amounts to Federal candidates and committees. Before
2002, much of this money came in the form of unregulated soft
money, but the Bipartisan Campaign Reform Act of 2002 ended
this for tribes and others.
Still, hard money contributions from wealthy gaming tribes
in recent elections have drawn attention. Certainly, when the
Indian Gaming Regulatory Act was enacted in 1988, nobody
anticipated that any tribe would make enough profit that it
would donate hundreds of thousands of dollars to political
campaigns.
Although I believe the tribes, most of which remain
desperately poor despite gaming operations, can apply tribal
funds, including gaming revenues, to better and more important
uses than political contributions, I understand that there is a
widespread fear in Indian country of losing a seat at the
political table. Tribes fear that just as they are beginning to
more fully participate in the political process through
campaign contributions, opposing interests have proposed
reforms that could effectively exclude them.
I understand these concerns, but feel it is appropriate to
examine how and why tribes, which truly are unique entities,
are treated the way they are under the Federal Election
Campaign Act and whether the law should be changed.
Over the years, I have been blessed with the support and
friendship of many people from Indian country and I am
committed to ensuring that they are treated justly and fairly
by this Nation. Indian tribes are part of the constitutional
fabric of this country and are uniquely impacted by
congressional actions. They must be actively involved in the
political processes that affect them. It is the form of
participation, however, with which we concern ourselves at this
hearing.
In the interest of protecting not just Indian tribes, but
the perception of the integrity of our democracy, I intend to
ask some hard questions today and in the days ahead. I thank
the witnesses for appearing here today and look forward to
their testimony.
Senator Thomas.
STATEMENT OF HON. CRAIG THOMAS, U.S. SENATOR FROM WYOMING
Senator Thomas. Thank you, Mr. Chairman.
I am sorry. As you know, we all have two or three meetings
going on at the same time this morning. I do want to tell you
that I am very interested in this and appreciate your having
this hearing. I think it is very important that we get some
clarification on the roles here and what the responsibilities
are. From what I am able to determine, there is some
uncertainty as to how the various rules apply here and they
should apply fairly to the tribes. So I appreciate what you are
doing and want to work with you on it.
The Chairman. Thank you very much.
Senator Dorgan is also at a meeting and he will be joining
us shortly. In the meantime, we will begin with our witnesses,
who are Michael Toner, who is the chairman of the Federal
Election Commission; Robert E. Lenhard, who is the vice
chairman of the Federal Election Commission; and Philip Hogen,
who is the chairman of the National Indian Gaming Commission, a
frequent witness before this committee.
Welcome to the witnesses. Mr. Toner, we will begin with
you.
STATEMENT OF MICHAEL E. TONER, CHAIRMAN, FEDERAL ELECTION
COMMISSION
Mr. Toner. Thank you, Chairman McCain, for inviting Vice
Chairman Lenhard and me to testify today on behalf of the
Federal Election Commission regarding the status and treatment
of Indian tribes under the Federal Election Campaign Act.
Vice Chairman Lenhard and I have submitted joint written
testimony to the committee which we request be made part of the
record.
Mr. Chairman, I want to emphasize three fundamental things
today. First, Indian tribes, as you indicated, are nowhere
mentioned in the Federal Election Campaign Act of 1971, nor in
any of the subsequent amendments to the act. As a consequence,
in its decision making in this area, the FEC has been guided by
its best sense of how Congress intended the statutory
provisions of the act to apply to Indian tribes and to tribal
activities.
In doing so, the Commission has drawn upon key statutory
provisions in the Act, such as who is a person subject to the
act's prohibitions and limits, and who is an individual who is
subject to additional restrictions under the law.
However, there is no question that the Commission's task in
applying the act in this area has been complicated by the fact
that Indian tribes, as the Supreme Court has noted, do occupy
unique status under our law. This unique status has created
additional complexities in applying the Nation's campaign
finance laws to tribal activities and I suspect that will
always be the case, at least to a certain extent, regardless of
what Congress and the Commission chooses to do in this area.
Such complexities likely will always be with us.
Second, although the Commission has confronted a number of
difficult issues in applying the act to Indian tribes, several
things are clear. Most importantly, the Commission has made
clear that the Nation's campaign finance laws apply to Indian
tribes and to tribal activities. Over the years, a number of
Indian tribes contended, due to their sovereign status, that
they were exempt from the act and from FEC oversight.
The Commission rejected that contention, noting that there
was no evidence in the legislative history of the Federal
Election Campaign Act, nor in any of the subsequent amendments
to the act, that Congress intended to exclude Indian tribes
from the Nation's campaign finance laws. These Commission
decisions have not been challenged by the tribes in court and I
think it is fair to regard them as settled law today.
In addition, the FEC has made clear that Indian tribes are
subject to the same contribution limits that apply to what any
other entity or group of persons can contribute to Federal
candidates, political parties, and political action committees.
In making this determination, the Commission construed the
act's statutory definition of a person, which is defined, among
other things, as an individual, partnership, committee,
association, corporation, labor organization or any other
organization or group of persons, as applying to Indian tribes.
Again, no Indian tribe has brought a legal challenge against
the Commission on this key issue, and therefore this area of
the law is settled as well.
Third, beyond these settled areas of law, there do remain a
number of difficult and complex issues in applying the act to
Indian tribes and to tribal activities. Our jointly submitted
written testimony discusses some of these difficult
interpretative issues, including the impact of various tribal
business activities on the ability of tribes to make
contributions to Federal candidates, such as when a tribe
creates a business that is a Federal Government contractor.
In addition, another difficult issue has been whether the
act's aggregate biannual contribution limits that apply to
individuals should apply to tribal contributions as well.
With respect to these difficult legal issues in particular
and to applying the Act to Indian tribes in general, the
Commission would greatly benefit from a clear and definitive
statement from Congress on how the Nation's campaign finance
laws should apply to Indian tribes and their activities.
A clear congressional declaration on how the act can best
be applied to Indian tribes in particular circumstances, taking
into account the unique status of Indian tribes in American
society, would be enormously helpful to the FEC and to the
regulated community, and the FEC is prepared to implement and
enforce whatever statutory provisions Congress may choose to
enact in this area.
Mr. Chairman, thank you again for inviting me to testify
today. I look forward to the committee's questions.
[Prepared statement of Mr. Toner appears in appendix.]
The Chairman. Thank you very much.
Mr. Lenhard.
STATEMENT OF ROBERT E. LENHARD, VICE CHAIRMAN, FEDERAL ELECTION
COMMISSION
Mr. Lenhard. Chairman McCain, Vice Chairman Dorgan and
members of the committee, thank you for inviting us here today.
I would like to begin by noting that I concur with the remarks
made by my colleague, Chairman Toner.
I would also like to elaborate on two possible amendments
to the Federal Election Campaign Act of 1971 that have been
proposed in Congress or discussed in the press. While these
proposals are examined in more detail in the written testimony
we have submitted to the committee, I wanted to take a moment
to describe the effect of these proposed changes on the legal
status of Indian tribes under the Federal Campaign Finance law.
Before beginning, I want to highlight that the FEC does not
advocate any specific change to the law. Instead, we want to
provide the Committee with our assessment of the legal impact
of these proposals. The FEC stands ready to implement any
future legislation in this area.
We are aware of only one bill that is currently pending in
either the House or the Senate that directly addresses the
issue of Indian tribes making contributions to influence
Federal elections. The effect of that bill, which was
introduced by Representative Mike Rogers, would apply the same
restrictions to Indian tribes that exist upon corporations,
unions and national banks. As a consequence, tribes would be
barred from making political contributions or expenditures from
their general treasury funds.
Like corporations or unions, tribes could sponsor a PAC,
but would have to register with and report its activities to
the FEC. The PAC would be free to make contributions in Federal
elections, but could only do so using money raised from tribe
members. In order to raise money to make contributions, the
tribal PAC would have to solicit voluntary contributions of up
to $5,000 per year from members of the tribe.
This proposal would not place an overall limit on how much
money the tribal PAC could contribute in a 2-year period
because the aggregate limit does not apply to PAC's or other
political committees. In addition, the tribe's PAC, like most
corporate or union PAC's, could contribute more to a single
candidate than tribes can now. This is because the contribution
limit for a person under the law, which is how tribes are now
classified, is $2,100 per election. Most PAC's can give up to
$5,000 per election to a candidate. On the other hand, a tribal
PAC could not contribute as much to political parties as a
tribe can now.
What has not been discussed in considering whether to treat
tribes like corporations or unions is the very important
question of who qualifies as a member of a tribe under Federal
campaign finance laws. This question is important because if
this change is adopted, a tribe's PAC will only be able to
solicit contributions from members of the tribe. H.R. 4696
equates a tribe's membership to a corporation's stockholders,
but does not further define who would be considered a member of
a tribe. This may or may not be an appropriate analogy because
tribal membership is more frequently a question of one's
ancestry, rather than a commercial relationship of a
stockholder.
It is our understanding that the question of who is a
member of a tribe has been a topic of great concern to tribes
and that tribes have taken different views on what standard
should apply to determine if an individual qualifies as a
member of a particular tribe. If Congress decides to amend
Federal campaign finance law to treat Indian tribes in a way
that is analogous to corporations and unions, it will be very
helpful for Congress to use its expertise on the history and
culture of Indian tribes to set a standard for what constitutes
membership in a tribe in the context of Federal campaign
finance law.
In addition to the pending proposal to treat Indian tribes
like corporations and unions, there have also been discussions
in the press implying that Indian tribes should have an
aggregate contribution limit like the one imposed on
individuals. For individuals, that limit is $40,000 to all
candidates and $61,400 to all PAC's and parties, for a total
limit of $101,400 on all Federal campaign contributions in a 2-
year cycle.
Currently, this limit only applies to individuals, which
the FEC has defined as actual human beings. Some have
questioned why a similar limit does not apply to Indian tribes.
If Congress were to adopt such a change, it would not prevent
tribes from using the proceeds from unincorporated gaming or
other tribal moneys to finance political contributions, nor
would it improve the current levels of disclosure. It would,
however, limit the amount of money that an Indian tribe could
spend to influence Federal elections to a sum equal to what an
individual can spend.
In conclusion, Mr. Chairman, I would like to thank you for
giving us the opportunity to appear before the committee to
discuss the application of Federal campaign finance law to
Indian tribes.
[Prepared statement of Mr. Lenhard appears in appendix.]
The Chairman. Thank you.
Mr. Hogen.
STATEMENT OF PHILIP N. HOGEN, CHAIRMAN, NATIONAL INDIAN GAMING
COMMISSION
Mr. Hogen. Good morning, Chairman McCain, Senator Thomas,
Senator Johnson. I am Phil Hogen. I am an Oglala Sioux Indian
from South Dakota. I am proud to chair the National Indian
Gaming Commission.
I want to just take a quick look at the history of Indian
gaming. I know you know this, but in the 1980's tribes started
playing high-stakes bingo and it worked really well. States in
some of those places were perplexed that this was happening in
their midst, inconsistent with State bingo laws. So they took
the tribes to court.
The courts eventually said, well, States, you permit bingo;
you do not criminally prohibit it; you use your regulations;
the tribe can use their regulations. That was eventually
crystallized as the law of the land in the Cabazon decision
decided by the U.S. Supreme Court in 1987. Of course, that was
followed by the Indian Gaming Regulatory Act that I work under,
which was adopted in 1988.
The Chairman. Could I interrupt you one second?
Mr. Hogen. Certainly.
The Chairman. Many citizens understand that history as far
as it goes. What a lot of citizens do not understand is that in
South Dakota, they still allowed bingo on an occasional charity
night where gambling was allowed for the benefit of the local
hospital, et cetera. How did that transfer into allowing Indian
tribes to open full-blown casinos?
Mr. Hogen. Well, the Indian Gaming Regulatory Act divided
the gaming into three categories.
The Chairman. Wasn't it a judge's decision that basically
made it that if they are allowing bingo, therefore the Indian
tribe can have roulette and crap tables?
Mr. Hogen. Not in South Dakota. South Dakota law permits
casino gambling in the historic gold-mining town of Deadwood.
That is the only place you can do that in South Dakota. IGRA
says if the State says somebody can do it someplace, then the
State is obligated to negotiate a class III compact through the
tribe so they can do it on their reservation, and that is what
has occurred.
We have gaming in 28 different States. We have 28 different
models of what the State permits and what the tribe is then
able to negotiate. So one size does not fit all, but that is
kind of the
theory.
Tribes got into gaming not just to raise money, but to
provide jobs. There is a great diversity in Indian gaming. In
South Dakota, we have Bear Soldier Bingo up on the Standing
Rock Reservation near McLaughlin, where they play a few nights
a week. In Connecticut, the Mashantucket Pequots have the
largest casino in the world. All of this gaming is done under
the Indian Gaming Regulatory Act. This chart over here shows
the revenues that have been generated from this activity that
this year will be over $20 billion. It is on the rise. It is on
the increase and it has worked better than any other economic
development that was brought to Indian country.
It is not divided up equally, so to speak. There is great
diversity. I have attached some charts to my testimony, which I
hope will be incorporated into the record. Most of this $20
billion is generated by a small number of tribes; 15 percent of
those some-225 tribes generated over two-thirds of that $20
billion; 30 percent plus is responsible for less than 1 percent
of that total. So you can see not all tribes are making
millions or billions of dollars.
The Indian Gaming Regulatory Act restricted what tribes
could do with their gaming revenues, but the categories that
were created were very broad: to fund tribal government
operations; to provide for the general welfare of the tribe and
its members; to promote tribal economic development; to donate
to charitable organizations; or to help fund operations of
local government.
In an effort to help tribes stay in these categories, NIGC
last year issued a bulletin entitled ``Use of Tribal Gaming
Revenues,'' that we have attached to our testimony, that
hopefully gives guidance to tribes so they can stay in those
categories.
We are authorized to take enforcement when IGRA is
violated, when our regulations are violated, or when the
tribe's own gaming ordinance is violated. So indirectly, I
think it can be concluded we have an oversight and enforcement
responsibility with respect to tribes that do not spend
according to the act. We have investigated a number of
instances where it was alleged or we concluded or observed that
the money was not being used properly. When dollars were being
used to benefit just tribal officials or tribal factions, that
we felt was not a proper use.
There were instances where tribal dollars were used to
influence tribal elections, or taking one side against another.
We inquired into that. There were dollars that were spent to
secure contracts that some of the insider tribal members had
financial interests in. We inquired into that. There were
expenditures that were made inconsistent with what tribal law
provided. We inquired into that. There were payments made to
management contractors that did not have their contract
reviewed and approved by the NIGC as IGRA requires. We looked
into that. In other instances, a group wrested the leadership
of the tribe from the recognized group without BIA recognition
and we felt that that was not an appropriate use, then, of the
dollars.
Those are among the categories where mis-spending, so to
speak, has occurred and can occur.
With respect to the matter we are probably talking about
today that got started inquiring into huge expenditures for
lobbying expenses, NIGC got wind of that and referred it to law
enforcement authorities not because we did not think money
could or should be spent on lobbying, but the way those
particular monies were spent did not appear to comport with
what the tribe's own requirements were with respect to the
expenditures of those dollars. IGRA does not say specifically
how NIGC ought to or does oversee the expenditures of these
dollars.
If we could look at the next chart, tribes are not all set
up the same way, but typically the tribe and its membership
will designate a tribal council that is responsible for the
government. To run businesses, they typically will set up a
board of directors or an enterprise board. So they try to
separate the business from the government, so to speak. After
the enterprise board gets set up, they can start the business,
a casino or a bingo hall, and they can do it directly, hire a
manager, kind of oversee it themselves, or they can enter into
a management contract. Typically, tribes will also set up an
independent tribal gaming commission that will have
independence from the manager, have independence from the
tribal council, but regulate, and then they will run the
business.
Typically, if they run it well, they will have dollars to
spend. Those dollars will come back to that enterprise board
and then the enterprise board will send them back to the tribal
government. Typically, they will then go in to the treasurer's
office where they will be commingled with the other moneys that
the tribes might get from grazing or oil or timber or whatever.
NIGC looks most closely as those dollars come into the
casino, and as they go through the vault and so forth, but we
do not necessarily have a way to look at those dollars after
they get back to the tribe and how they are spent. So that is
typically the way it works. We do not allege that we follow
every dollar that is generated by Indian gaming.
The Department of the Interior's Office of Inspector
General did a report with respect to revenue allocation plans.
Those are the plans that tribes have to adopt if they are going
to make per capita payments. This report done in basically
concluded that nobody was watching the store. That is, these
revenue allocation plans, although they had to be approved by
the Secretary of the Interior, were not then followed
thereafter by the Department of the Interior or NIGC.
In fact, we found as we now started looking at those, many
of those plans were obsolete. They did not comport with what
the tribe was actually doing with its revenues, and the
Department of the Interior is currently revising those
regulations and we are participating in that.
We have never taken action against a tribe for making
campaign contributions or lobbyist payments based on the
proposition that those were not in compliance with those
categories that IGRA provided for. We concluded that such
expenditures were providing for the general welfare of the
tribe, promoting economic development, or funding tribal
operations.
Tribes, maybe more so than any other entities in the
country, are at the mercy of Congress. They need to watch very
carefully what happens in Washington, DC generally, and in this
committee in particular. They need professional assistance
often to do that, not only to report back to the tribes what is
going on, but to provide input. They hire lobbyists to do this.
In some instances, lobbyists probably will be paid above
the line, that is, so to speak, directly from the gaming
operation. They will be hired, and that money will not go back
to the tribal treasury. That I do not think is necessarily
inappropriate. All businesses have some government relations
offices.
But is this to say that these expenditures cannot be
abused? I think they can be, and I think there have been some
instances where they have been. We have seen exorbitant
payments made to lobbyists and moneys contributed to causes
that seem to have no relationship to the direct interests of
the tribe. I think there has been a failure of due diligence on
behalf of those tribes.
Having the economic wherewithal and having the prosperity
to make these contributions is relatively new to tribes,
because before Indian gaming, they just did not have the
dollars to do this. So they are learning how to do it. But as
they do this, you would think that it would be appropriate to
look at other industries, look at similarly situated
organizations. How much do they spend to do this sort of thing?
And be guided in part by that.
So we have a wake-up call here and I think all tribes, as
well as regulators like myself, need to exercise greater due
diligence with respect to how this works.
Indian gaming is a very competitive industry. Gaming is a
competitive industry. Sometimes tribes will spend dollars to
protect their market share. Sometimes they want to protect that
from sister tribes. That is not wrong, but if it is going to be
done, it needs to be done fairly.
So tribes need to look before they leap when they spend
dollars like this. They need to expend due diligence and they
need to fully inform their tribal membership with respect to
what they are doing with those tribal resources. There are
going to be trade secrets. There are going to be political
strategies that need to be closely guarded, but the tribal
members are the shareholders, so to speak. I do not want to
confuse my use of ``shareholders'' with Mr. Lenhard's
explanation there, but they are the owners, so they ought to
have a right to know what is going on and they have a
responsibility to hold tribal leadership to account, account to
give them the information about where the money is going, and
if it appears it is not going into the right place, to demand
compliance or replace that leadership.
If tribes operate with this transparency, I think they can
continue to do right things with their dollars. It is extremely
important to remember that Indian gaming is not a Federal
program. These are not dollars that somebody gave the Indians.
These are hard-earned dollars that they have produced
themselves, and they were doing it long before the Indian
Gaming Regulatory Act came along. The Indian Gaming Regulatory
Act I think accommodated how it would work, but you cannot
ignore the fact that these are their dollars.
We want to play an effective role in providing oversight.
If Congress wants us to watch every dollars, we are going to
need some different tools than we have right now.
I appreciate the opportunity to share this with the
committee. I would be happy to respond to any questions.
[Prepared statement of Mr. Hogen appears in appendix.]
The Chairman. Thank you very much, Mr. Hogen.
Mr. Toner, the FEC determined in 1995 that tribes do not
need to register with the FEC and report their contributions
because, like some other entities, they are not ``political
committees'' since campaign activity is not a ``major purpose''
of tribes. Do you think there is value in having tribes
register and report their contributions?
Mr. Toner. Mr. Chairman, you are correct that that was the
judgment the Commission made in applying Supreme Court
precedent in terms of organizations and under what
circumstances the Government can require them to be political
committees. As you indicated, the touchstone that the Supreme
Court has focused on is whether their major purpose is to
influence elections. The Commission reached the conclusion that
Indian tribes, given that they have a lot of other purposes
totally removed from electoral politics, did not have as their
major purpose was not influencing elections, and therefore, at
least under existing law, it would not be appropriate to
require them to register as political action committees.
Clearly, Congress could decide to broaden the political
committee provisions under our law.
The Chairman. My question, Mr. Toner, was do you think
there is value in having tribes register and report their
contributions?
Mr. Toner. One of the big values for any entity that
reports is that you have a more uniform reporting regime,
because any entity that is a political committee is assigned.
The Chairman. Mr. Toner, in all respect, I would like, do
you think there is value, and this is the third time now I have
asked the question, do you think there is value in having
tribes register and report their contributions?
Mr. Toner. Mr. Chairman, as I was saying, I think there
could be value because there would be improved reporting if
they were registered as political committees because they would
then be provided a unique identifier number. Like any political
committee, they would have independent reporting obligations to
the government, as opposed to only having their activities
reported by the entities that receive their contributions?
The Chairman. I see.
Mr. Lenhard, do you share that view?
Mr. Lenhard. I do, sir. I think that there is value. It
would provide more easily accessible records as to the kinds of
contributions the tribes were making. I think it lies within
the discretion of Congress whether they choose to add that
requirement or not. The tribes are like a number of other
different kinds of entities. Individuals, for example, do not
have to report their overall contributions, partnerships. I
think the question for Congress is, has the level and kind of
tribal political activity risen to the point where it is
appropriate to have them register and report.
The Chairman. Thank you.
Mr. Toner, how are municipal and State governments treated
under FECA?
Mr. Toner. Mr. Chairman, in terms of the coverage of FECA,
the only entity that is clearly excluded from the Federal
campaign finance laws in this respect is the Federal Government
and the arms of the Federal Government. The Commission has
concluded that State governments are subject to FECA's
contribution limits. There has been an advisory opinion that
made that clear.
It is also true that State governments have not been in the
business of contributing to Federal candidates, but the agency
has made clear that as a matter of Federal law, State
governments are part of the Federal campaign finance laws.
The Chairman. So in theory, they could make contributions.
Mr. Toner. In theory, they could. What would be interesting
is to see whether or not, apart from Federal law, are there any
independent prohibitions under State law for State funds being
used for those purposes.
The Chairman. Can I get back to the larger question for a
second? Mr. Toner and Mr. Lenhard, are tribes being treated
appropriately under Federal election campaign law? I understand
this is not an easy question for either one of you. Go ahead.
Mr. Toner. Mr. Chairman, there is no question that Indian
tribes have been very active in Federal elections. Press
reports have indicated the broad ranges of contributions that
have been made by Indian tribes and by Native Americans. There
is no question they are fully engaged in the political process.
But as my opening statement indicated, there are also some
difficult legal issues in terms of how to treat them. So the
Commission has ruled that Indian tribes are not subject to the
biannual aggregate limits that apply to individuals, and made
that judgment based on the view that Indian tribes are not
individuals. They are a distinct entity, recognized by Supreme
Court case law and otherwise.
But I am the first to acknowledge that there is an anomaly
in the law, and the Congress could take a hard look at that
judgment. Another key issue is the sense that the Congress may
be looking at is whether to essentially amend section 441(b) of
our statute, which is what the Rogers bill on the House side
would do, and basically say unincorporated Indian tribes would
be subject to the prohibitions in 441(b). Therefore, their
general treasury funds could not be used to make contributions
for Federal elections, and they would have to set up a
political action committee to be active in that process.
Clearly, that is a way that Congress could decide to go. It
does place an added burden on any organization to set up a
political action committee, but it is also true that a wide
range of organizations do. There are thousands of PAC's that
are registered with the FEC.
So in terms of the proper balance in treating Indian tribes
under the law, I am the first to acknowledge that there are
difficult interpretive issues that the agency has faced over
the last 20 years, which is why I think more than anything else
clear congressional direction would be really valuable to the
FEC in this area.
The Chairman. Mr. Lenhard.
Mr. Lenhard. I agree with that. I think that the tribes
have been treated by the FEC, along with a number of other
entities, in a common way with partnerships and unincorporated
associations. I think the question that presents itself here,
which really I think is an appropriate one for Congress to
consider, and especially this Committee to consider, is whether
the nature of Indian tribes in the political process has
changed over time.
They have some unique features to them. They are treated as
sovereign nations under the law. One of the effects of that is
that in the context of business activities, they often do not
feel the need to adopt the corporate form. As a consequence,
the prohibitions under the election laws on corporate activity
do not apply to Indian gaming operations and other business
operations.
The other thing that obviously has changed is with the rise
of gaming, a number of Indian tribes, and the number may be
small, but a number of Indian tribes have become very
politically active. Again, I think it is reasonable for
Congress to consider whether the aggregation of wealth in those
entities has a distorting effect on politics that should cause
the regulatory regime to increase.
Last, and again I note that this committee's jurisdiction
seems particularly appropriate, there is a particular history
of Indian tribes in this Nation which may have some bearing on
this as well, both in terms of the interactions of the tribes
and the American Government over the last 350 years, the
economic opportunities available to tribes, and the internal
operations as sovereign entities within this country.
So I think that these are all factors that you have to
consider and weigh as you discern whether it is valuable at
this point to change the statutory treatment of these tribes.
The Chairman. I have just two more questions.
Transparency is always the first step whenever there is a
problem that you take. Chairman Hogen, Mr. Toner and Mr.
Lenhard, stated in their testimony that it is not easy to
determine where tribal moneys come from. So how can the
Commission know if the tribe is using funds received from a
source that is prohibited from making political contributions?
In other words, wouldn't it be better for us, if we do
anything, is to make sure that we know where the money comes
from?
Mr. Toner.
Mr. Toner. Mr. Chairman, that would be I think the single
biggest change in the law, if 441(b) of the campaign finance
laws was amended and tribes were required to set up political
action committees to be involved in Federal elections, because
then it is very clear that only the personal funds of the
solicitable members of that tribe could----
The Chairman. But isn't there a way to determine where the
money came from without saying you have to set up a PAC?
Mr. Toner. It is possible, but I think, Mr. Chairman, it is
fair to say that it is more difficult perhaps in the Indian
tribe setting because so many of these entities are
unincorporated. For a corporate entity, it would be more
straightforward because any funds passing through the corporate
form could not be used in Federal elections.
Here we have, as I understand it, most of these tribes are
not incorporated because they do not need to be. Because of
their sovereign status, they do not have the same potential
liability issues that other entities do. So you have an
unincorporated entity, yet also a very healthy revenue stream,
at least for some of the tribes, although I think Mr. Hogen's
testimony is very valuable in pointing out that not all the
tribes are operating at this level.
So you have large sums of money that typically in American
society would pass through some type of corporate-type entity,
that would be captured by section 441(b), and yet here that
does not happen. So yes, it would be possible to try to assess
where those funds are coming from, but based on how the tribes
are structured, if the funds, say, of a casino are due and
owing and essentially earned by the Native American peoples
themselves, then an argument could be advanced that those are
personal funds owned by those individuals, and all those issues
would be set aside if Congress required them to set up PAC's.
The Chairman. Thank you.
I will forego my last question for later.
Senator Dorgan.
STATEMENT OF HON. BYRON L. DORGAN, U.S. SENATOR FROM NORTH
DAKOTA, VICE CHAIRMAN, COMMITTEE ON INDIAN AFFAIRS
Senator Dorgan. Mr. Chairman, thank you very much.
First of all, I regret I missed the testimony. I was at a
leadership meeting in the Capitol Building. I have read your
testimony. Mr. Toner and Mr. Lenhard. Last evening when I read
the submitted testimony, I thought it was very helpful to
better understand what the issues are. Thank you for that.
Has the FEC ever required tribes to file reports prior to
the time it made the decision that now exists? Have there ever
been requirements that the tribes file reports with respect to
campaign contributions?
Mr. Toner. Mr. Vice Chairman, the FEC has never required
tribes to file reports and be political committees, and set up
PAC's, under the view that at least under existing law, their
major purpose was not to influence Federal elections.
Senator Dorgan. You testified about the difficulty of
conducting searches for both tribal and individual
contributions. How unique is that to tribes and individuals,
versus other partnerships, other limited liability companies
and so on? Is it specifically unique to tribes, or is that a
more general problem?
Mr. Toner. Mr. Vice Chairman, it is something that we
confront whenever there are unincorporated entities that are
contributing funds from their general treasury funds. You
mentioned a partnership. That is not incorporated. A
partnership can give to Federal candidates, but the key from
our perspective is whether or not the individual partners, the
individual people who make up that partnership, we treat that
as a personal contribution from those individuals.
An LLC, limited liability company, again we look at the tax
status of that LLC. Do they elect to take the corporate tax
treatment or do they elect not to do that, in terms of whether
the LLC can give. As our written testimony indicated, we have
dealt with a number of unincorporated associations, recreation
associations, grassroots organizations, where we have made
clear that those types of entities can give to Federal
candidates without setting up a PAC. The fundamental difference
is, of course, we are not talking about nearly the same scale
of moneys in those types of organizations. As I indicated
earlier, most entities who amass large sums of money often feel
the need to incorporate for liability purposes, but that may
not be the case with respect to Indian tribes, given that they
are sovereign entities.
So in this respect, it has been difficult trying to figure
where exactly to fit tribes within existing law, but it would
be very helpful if Congress decided to give us clear mandates
on where we need to go on that.
Senator Dorgan. Review just one more time for us the
circumstance that requires corporations and labor unions, for
example, to establish PAC's and contribute through those
political action committees, whereas Indian tribes are not
required to do that. Describe for me the difference that
resulted in the thinking of the FEC on that.
Mr. Toner. Yes, Mr. Vice Chairman; section 441(b) of the
original Federal Election Campaign Act of 1971, one of its core
provisions was that corporations, labor organizations and
national banks could not contribute any funds from their
general treasury funds to Federal candidates period. It is an
absolute prohibition under Federal law. But 441(b) also made
clear that those types of entities could set up political
action committees, where the individuals who worked for the
corporation or the union could donate their own personal funds
to that PAC. Those PAC proceeds then could be given to Federal
candidates.
With Indian tribes, the Commission made the judgment that
based on prevailing Supreme Court case law in terms of what
types of entities can be required to set up a political action
committee, that the major purpose of Indian tribes is not to
influence Federal elections. So in the advisory opinion, the
agency has indicated that the tribes do not meet that major
purpose. Congress in section 441(b) has set down a clear marker
with respect to corporations and labor organizations and
national banks: Per se they are going to have to set up PAC's
to be involved in Federal elections. That really is what the
Rogers bill on the House side would do. It would broaden 441(b)
and apply it to unincorporated Indian tribes and put them on
the same playing field as those other entities.
Senator Dorgan. Mr. Chairman, thank you very much.
I thank the witnesses.
The Chairman. Senator Johnson.
STATEMENT OF HON. TIM JOHNSON, U.S. SENATOR FROM SOUTH DAKOTA
Senator Johnson. Thank you, Mr. Chairman, for convening
this hearing.
A special welcome to Mr. Hogen from South Dakota.
I want to share a few observations at the outset. One is
that we understand that this hearing is in to some degree a
consequence of the follow-on concerns we have from the Abramoff
scandal. And yet, I think that we ought at the outset recognize
that there were very few tribes even indirectly involved in
that matter, and to the degree a few were, by large measure
they were victims, rather than involved actively with anything
that Mr. Abramoff was trying to achieve.
Indian tribes are unique institutions. We have had some
parallels drawn with political action committees, corporations
and individuals. They are none of those. And so I think it may
be a natural consequence of that that our treatment of Indian
tribes relative to political activity may have to be indeed
unique as well, recognizing the government-to-government
relationship they have, the nature of the sovereignty that they
have.
Right now, we have what appears to me to be perhaps a bit
awkward, but nonetheless a compromise relative to tribal
political contributions in the sense that they are not
permitted to give as much to political candidates as political
action committees are. They are limited to an individual-type
contribution. On the other hand, there is no aggregate limit to
how much they can give as is the case with political action
committees that have no limit. Individuals do.
So they have a little bit of both worlds here. They limited
to how much individually they can contribute, much as
individuals are, but there is no aggregate limit, much as is
the rule relative to political action committees. I think that
it is appropriate that we take a look at whether there are some
additional reporting or transparency issues that would be
helpful, but I think we need to take some care that we not come
up with some regime that is unworkable or which would further
restrict tribes' abilities to communicate and to become engaged
in the political process.
I would also hope that whatever legislative steps we take,
if any, are done in a consultative manner with the tribes
themselves, rather than imposing solutions that may seem
appropriate here, but which have not been fully thought through
from the perspective of Native Americans themselves and their
tribal leaders. So I would say that I hope that we would
proceed with that in mind.
I do not have a particular question to ask of this panel
other than to say that I appreciate the observations you shared
with us and I look forward to working with the members of this
committee on whatever legislative action, if any, we will deem
appropriate.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Inouye.
STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII
Senator Inouye. Thank you very much, Mr. Chairman. I am
sorry I am late, so forgive me for not being here in time to
listen to your statement.
According to some of the papers I have read, I am advised
that in the 2004 election cycle, Indian tribes and Indians
provided less than one-third of 1 percent in political
contributions nationwide. Is that correct?
Mr. Toner. Senator, there is no question that in terms of
the total amount of giving in that cycle, it was a relatively
small percentage. There certainly was a growth of contributions
across the board in the 2004 cycle. Whether it is exactly that
figure, I cannot confirm, but our best sense at the agency is
that your figures are in the ballpark.
Senator Inouye. In other words, assuming there was abuse,
it is not a horrendous one, is it?
Mr. Toner. The issue, as Vice Chairman Lenhard and I tried
to lay out in our testimony, is there is no question that
Indian tribes are involved in Federal elections and there is a
fair amount of contributions flowing from tribes to various
Federal organizations, but also there is no question that they
occupy unique status under American law and the Federal
Election Campaign Act did not specifically refer to them. So
the agency really in trying to figure out how best to apply the
law to the tribes wanted to balance the ability for tribes and
tribal members to be involved in politics and give Federal
contributions with doing full faith and justice to the
statutory provisions that Congress had passed in this area.
The Vice Chairman indicated that in some ways, there is
kind of a trade-off in this area. In some respects the tribes
are subject to additional restrictions than other entities, but
in some respects they have broader ability to give. It really
was a good-faith effort by the agency to try to apply statutory
provisions that did not specifically mention Indian tribes to
accomplish how we thought Congress intended for us to proceed.
Senator Inouye. During the last 10 years, are you aware of
any Indian tribes being criminally involved in the elections,
Federal, State or local?
Mr. Toner. Senator, in terms of criminally violating the
Federal Election Campaign Act, I am not aware of that. Whether
or not they have been involved in criminal prosecutions of
other Federal statutes, I would not be knowledgeable to be able
to answer, but I am not aware, sitting here today, of criminal
prosecutions of Indian tribes arising under the Federal
Election Campaign Act.
Senator Inouye. Whatever it is, it is not widespread, at
least we do not know about it.
Mr. Toner. I think that is a fair assessment, yes, Senator.
Senator Inouye. Do you think a law that singles out Indian
tribes is necessary?
Mr. Toner. Well, Senator, I think, as I am sure you can
appreciate, my role and Vice Chairman Lenhard's role is to do
whatever we are directed by Congress. There is no question, as
we indicated in our remarks, that the law is less than clear in
terms of how the FEC ought to treat tribes. We really would
welcome and benefit from clear direction from Congress on how
you all come down on these issues. They are tough issues. They
are difficult interpretive issues. Reasonable people can
disagree about how to come out on them.
I think our main goal would be to make clear that we are
prepared to implement and enforce whatever statutory regime
Congress chooses to set up in this area.
Senator Inouye. I am a politician, so I run for office, but
I am required by law to submit disclosures. I believe it is
sufficiently transparent. Is that enough?
Mr. Toner. As I indicated in response to some questioning
from the chairman, one of the advantages of having tribes set
up political action committees is reporting does become more
transparent because political action committees are given a
unique identifier number to independently report their activity
to the Federal Government, as opposed to individuals or tribes
or partnerships that do not have their own reporting
obligations. We can rely only on the recipient committees, the
entities that get the funds.
I have to say that type of reporting is not as clean, not
as streamlined as when you have entities reporting directly
themselves to the Federal Government. So I think that would be
one of the improvements that would be made if Congress chose to
go the PAC route in this area.
Senator Inouye. So Mr. Toner and Mr. Chairman, I can
conclude from this exchange that if there are abuses, we are
not aware of them, and the contributions made nationwide would
be small, one-third of one percent. Nodding means yes?
Mr. Toner. Senator, As I indicated, there was a huge growth
of Federal contributions across the board in the 2004 cycle. I
do not have any reason to doubt the accuracy of the figure you
mention in terms of the portion of Indian tribe giving to the
entire Federal giving in this country.
Senator Inouye. Thank you very much, sir.
Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Mr. Toner, the next panel of witnesses will say that if you
made Native Americans form PAC's, it is very different from a
bank or a corporation or a company because they have a certain
number of wealthy employees and many of these tribes are very
poor, and that to expect the tribal members to give large
amounts of money to a PAC is going to be pretty difficult. Do
you understand that argument?
Mr. Toner. Yes, Mr. Chairman.
The Chairman. Finally, Mr. Toner, by the way, I have to
take a cheap shot here. Your comment that you do whatever is
dictated by Congress: According to Federal court, 13 of the 15
regulations issued to implement BCRA were unconstitutional. I
hope that you will do a little more in the area of carrying out
the direction of Congress and not have 13 of the 15 next
regulations that you issue to implement BCRA being declared as
not only not in keeping with the law, but egregious violations
of the law. That is according to a Federal judge, not me,
although I certainly agree with her.
Anyway, in 2005, Mr. Toner, the FEC issued an advisory
opinion in which it determined that an incorporated tribal
enterprise could not make campaign contributions if it was a
Federal contractor, but that the tribal enterprise was separate
from the tribe and so the tribe could continue to make
contributions from tribal funds.
You dissented in that advisory opinion, Mr. Toner. Could
you tell us why and what you would have liked to have seen that
opinion be?
Mr. Toner. Yes, Mr. Chairman; I think this has been one of
the more difficult areas of applying the Federal Election
Campaign Act to tribal activities because, as you now, there is
an independent prohibition on Federal Government contractors
giving to Federal candidates. So the Commission has confronted
scenarios where tribes had qualified for Federal Government
contractor status, and yet still wanted to have the ability to
give to Federal candidates.
The agency, in a number of advisory opinions, has indicated
that that can happen provided that there is really clear
demarcation, clear separation between the Indian tribe itself
and the Federal Government contractor entity. As you indicate,
I did dissent from an advisory opinion in 2005 where the
commission concluded that the Indian tribe at issue there and
the Federal Government contracting entity did not preclude the
Indian tribe from giving.
The main reason that I dissented, along with Commissioner
David Mason, was that we felt under those circumstances that
there was not a sufficient degree of separation, and unlike
some earlier advisory opinions, this was a Government
contractor that the tribe had set up that was seeking to do
business across the country, not just in the Indian lands. So
we are talking about a much broader-scale business activity,
and the Government contracting entity there was really
depending on its relationship with the tribe for the government
contracting entity to succeed. It was seeking to have special
status under the Small Business Administration Regulations.
The view that Commissioner Mason and I had was there was an
inherent symbiotic relationship between the tribe and the
Government contracting entity that really could not be
disentangled and should not be disentangled. Given that
government contractors are independently barred from giving to
Federal candidates, our view was that that should not place an
undue interference on tribal activities. They just have to make
a choice between giving to Federal candidates and setting up
Federal Government contracting entities, which we think
Congress has said you need to make that choice.
So I would have come out the other way in that advisory
opinion for those reasons.
The Chairman. Mr. Lenhard, do you have a view?
Mr. Lenhard. In general, I think I share Chairman Toner's
analysis of how the problem has sorted itself out. I think that
the thing that is difficult in the area of Federal contractors
in the context of tribes is two things. One is that the tribes
have a history of performing a range of different roles and
activities on reservations. One of the early cases that this
came up in involved a tribe that had an electric power
generating facility. They provided electricity to people who
lived on the reservation. The Bureau of Indian Affairs ran a
school on the reservation and there was an Indian Health
Services Clinic on the reservation. So as a consequence, the
tribe was selling power to the Federal Government for those
particular facilities.
The question then became, have they become a Federal
contractor and therefore covered under the Federal contractor
bar? The FEC in a number of decisions over the years has tried
to acknowledge the special role the tribes play, especially in
the context of reservations, in providing services that are
either incidentally also provided to the Federal Government or
in some contexts where tribes are performing functions of the
Federal Government.
My sense is, and I do not know very much about Indian
tribes, but my sense is that over the years increasingly tribes
have taken on the role of providing services under agreements
with the Federal Government which could be viewed as contracts.
I think there is a sense that, to a degree, in a number of
these decisions that the FEC should follow the analysis used by
the courts in viewing these, to the degree that the tribes set
up a separate entity, they were rarely incorporated because of
the sovereign status of the tribe, but to the degree that the
tribe set up a separate entity to provide these kinds of
services, even in the context of contracting some of those
services for the Federal Government, it should not disqualify
the tribe's other political activities.
The advisory opinion you cite involved an expansion of that
in the context of the tribe that was setting up an entity that
would do off-reservation construction work. The interlocks
there between the tribe and the entity involved financial
support or assistance in the form of, I believe it was, I
cannot remember if they guaranteed a bond, but they provided a
financial guarantee for the entity. I think that became a much
closer question, but I think the chairman has accurately
described how the commission has tried to sort through that
problem over the years.
The Chairman. Thank you.
I thank the panel. Thank you. It has been very helpful to
us. I appreciate your good work. Thank you very much.
Mr. Lenhard. Thank you, sir.
Mr. Toner. Thank you.
The Chairman. Our next panel is Ron Allen, who is the
treasurer of the National Congress of American Indians; Larry
Noble is the executive director of the Center for Responsive
Politics; and Professor James Thurber is the director of the
Center for Congressional and Presidential Studies. Welcome.
Ron, we are very happy to see you again, and thank you for
coming back to visit us. Will you please proceed with your
testimony?
STATEMENT OF W. RON ALLEN, TREASURER, NATIONAL CONGRESS OF
AMERICAN INDIANS
Mr. Allen. Thank you, Senator. It is always an honor to be
before this committee and testify on behalf of the tribes on
issues that are of great importance to us, so I do appreciate
you and Vice Chairman Dorgan for being here, as well as the
other Senators who were here earlier this morning.
This issue is an issue that is of great importance to
tribes. The concern for us is that the illegal actions of Jack
Abramoff really is the issue that seems to have gravitated and
turned into a different agenda for us. This is a lobbying
scandal. This is not about a tribal scandal. This is not about
anything that the tribes have done wrong.
When we look over our history of participating in the
political process, we have done nothing wrong. We have complied
with the laws. I think the earlier testimony reflects that
agenda. So we personally feel that there is nothing wrong with
the system. If there is going to be change in the system, we
certainly do want to engage with the leadership of this
committee.
We continue to always remind this committee and the members
of Congress that we have worked hard in order for the Congress
to understand who we are. I remember this committee when it was
a select committee. You were not even sure this committee
should be a permanent committee until it did finally become a
permanent committee and recognize the unique status of tribes
as sovereign nations.
So when we look at the history of tribes, the fighting we
had over the Allotment Act, termination, removal and all the
experiences that we have had and all the struggles that we have
had over the years trying to become independent tribes and take
care of the many, many needs of our community, we have to do
that by engaging with the Congress. We have to deal with that
in engagement with the Administration.
In terms of compliance with the FEC laws, we feel that we
are complying with them. We have a high, strong interest in
making sure that this Congress, all members of it, whether you
have Indian tribes in your States or not, that you understand
our issues, you understand our history, you understand what we
have been trying to achieve, and what we are trying to do in
order to address the many needs of our community.
We continue to remind you that despite and contrary to some
perceptions, our communities are still at the lowest end of
every economic and social category by which we measure the
welfare of our society. The average income of our people still
is only in the $8,000 per person range, $8,000 per person
range. So we are one-half of the lowest spectrum of the United
States by the standard by which it measures the lowest level of
economic standing of Indian people.
Earlier, Senator Inouye noted that in the 2004 elections,
that we only contributed one-third of 1 percent. Now, when you
talk about the $8 billion, people say, well, that is a lot of
money. Well, against the backdrop of how much money is actually
contributed in an election process, and it becomes one-third of
1 percent, then how much influence are we really having on the
electoral process when you stretch those dollars across the
United States, all different levels of the political spectrum
with different candidates? Can you even compare $8 million to
the $182 million given by lawyers and law firms in 2004? Or how
about the $32 million, four times our number, given by
leadership PAC's, which are well known in this Congress in
terms of how they engage in this conversation. They are not
subjected to any kind of caps at all.
We just feel that the issue of the agenda here really is
about how the tribes get to stay at the table so that we can
engage the Congress and work with the congressional leadership,
whether they are incumbents or whether they are candidates, so
that our issues are on their plate or on their radar screen
when they are addressing our issues. If we do not, then what
Congress could do is establish laws or regulations that
disenfranchise us, that take us out of the process.
The earlier question that you had asked the FEC Chairman
about should we be forced to establish PACs, well, quite
frankly they can establish identifiers. We can identify the
moneys that we contribute at various levels to the different
congressional leaders and candidates, et cetera. So that is not
a problem. We are already transparent. The money has to be
recorded, so there is transparency. It appears to us you want
more transparency.
We can tell you that the PAC idea is really a bad idea. It
would disenfranchise people. It would disenfranchise our
tribes. We have to remind the Congress that we have a very
unique standing as sovereign governments, a very unique
relationship with the Federal Government in our society, one of
which it has regularly ignored us in terms of what our issues
are.
Our people, who are as poor as anyone in America, depend on
our government to defend their rights. The political system
does not really provide the greatest vehicle for us. So our tax
base are basically our businesses. That is the revenue we
generate in order to use those kinds of revenues in order to
engage in the political process so that we can make a
difference.
We are not opposed to reforms. We are supportive of
reforms. We agree that the integrity of the FEC rules and the
laws of elections are important. The tribes are very supportive
of that. As we have already pointed out, we are in compliance
with them and understand them, even recognizing the fact that
the FEC acknowledges us as individuals, which we find rather
peculiar because we are tribal governments. We are communities
of a few thousand people to hundreds of thousands of people. So
that is the category they put us, well, fine, then we live by
those laws and by those rules.
So if there is any change, it has to be fair. You have to
recognize that you have to provide the tribes the right to
engage in the political process so that we can protect our
interests, so that we can continue to advance our agenda.
Otherwise, what you could easily do is you could push us back
20, 30, and 40 years so that we are not able to engage with the
congressional leadership in a way that caused you to understand
what our needs are.
Thank you, Mr. Chairman. I am here to answer any questions
you may have.
[Prepared statement of Mr. Allen appears in appendix.]
The Chairman. Thank you for your usual mild and
uncontroversial statement. [Laughter.]
Thank you.
Mr. Noble, welcome.
STATEMENT OF LARRY NOBLE, EXECUTIVE DIRECTOR, CENTER FOR
RESPONSIVE POLITICS
Mr. Noble. Thank you.
Chairman McCain, Vice Chairman Dorgan, I appreciate the
invitation to address the committee today on the regulation of
Indian tribes under the Federal Election Campaign Act. I have
submitted my full testimony. I would like to briefly summarize
it here and ask that it be included as part of the record.
The Chairman. Without objection.
Mr. Noble. We are now in the midst of an influence-buying
scandal that was in large part triggered by the activities of
lobbyist Jack Abramoff and some of his Indian tribal clients.
This has resulted in intense interest in the political giving
of Indian tribes and how they are regulated under the election
laws.
As you have heard already, under the Federal campaign
finance laws, certain entities such as corporations and labor
unions, are prohibited from making political contributions from
their general treasury funds. Those entities who can contribute
are subject to limits on how much they can give. Those defined
as persons under the law, which include individuals,
associations or any other organization or group of persons, are
subject to a variety of limits on how much they can contribute
to different political entities.
In addition to the limits on what a person can give to a
single candidate, party, committee or political committee,
there is also an overall aggregate limit on the total amount
that those defined as individuals can give over a 2-year
election cycle. For 2006, this is $101,400. Indian tribes are
unincorporated associations and therefore do not fall within
the corporate ban on giving directly from their general
treasury funds. Since they are considered persons under the
Federal election laws, they can make limited contributions to
Federal candidates, political parties and political committees.
However, the FEC as you have heard has ruled that Indian
tribes are not individuals under the law and therefore do not
come under the aggregate limit for overall giving within a 2-
year cycle.
So how does this affect tribal giving? Well, since 1989,
Indian tribes, their political action committees, and
individuals working for the tribes, have given almost $30
million to Federal candidates, political parties and leadership
PAC's. About 99 percent of the tribal contributions have come
from tribes with casino gaming interests, and $26.9 million has
come directly from the Indian tribes' general revenue funds.
At the same time, not falling under the aggregate limit has
allowed some tribes to contribute hundreds of thousands of
dollars more to Federal candidates, political parties and
committees in a 2-year cycle than they would be able to if they
did fal under the aggregate limit. So far in the 2006 election
cycle, 145 Indian tribes have made Federal political
contributions from the general treasuries totaling about $3.1
million; 8 of these tribes have given a combined total of at
least $533,000 in excess of what they could have given if the
$101,400 aggregate limit applied. So if you applied that limit,
all together at this point, we have at least $533,000 in excess
of that limit.
In the 2004 cycle, about 224 Indian tribes directly gave
$8.3 million. And 27 of those tribes gave a combined total of
at least $3.4 million in excess of what would be allowed if the
aggregate limit then, which was $95,000, applied.
Overall, Indian tribes with gaming casinos have become
relatively big political contributors, but they are not at the
top of the list. If we categorized Indian tribes as one of the
100 separate industries we rank in terms of political
contributions, they would rank about 60th. But unlike other
industries, 90 percent of their contributions, again totaling
about $26.9 million, are coming from general treasury revenues.
Unlike individuals who give in other industries, some
individual Indian tribes are giving more than they would be
allowed under the aggregate limit.
This has led some to question whether Congress should place
additional restrictions on the giving of Indian tribes, and if
so what those restrictions should be. In considering these
questions, you should keep in mind that while tribes are not
under the same restrictions of others, their contributions are
not unregulated and they really do fall into somewhat of a
unique area. They do fall under the per-recipient limit all
persons have to follow.
Indian tribes cannot make their Federal contributions with
money that is passed through tribes from entities that cannot
contribute on their own. This is a very important point that
has been brought up before. We assume the money that is being
given by the Indian tribes is not directly coming from sources
that would be otherwise prohibited from giving in Federal
elections, such as corporations. If that rule is being
enforced, then tribes cannot serve as a conduit for prohibited
contributions. If that rule is not being enforced, then we may
have a conduit situation.
As for the limit on aggregate contributions that applies to
individuals, which have been defined as people, it is a good
question whether you apply the same rule to a group of people.
There are other unincorporated associations, but I am not aware
of any that approach the level of giving of Indian tribes or
who are in the same position as Indian tribes. Again, the fact
is they are unique and they are unique entities under the
Federal election laws.
There is also an issue of reporting. I do think there are
improvements that can be made with reporting, and that is the
lifeblood of what the Center for Responsive Politics does. But
again, these are difficult issues because you would be treating
them differently than you treat any other group.
I want to thank you for the opportunity to testify and I
will be glad to answer any questions you have.
[Prepared statement of Mr. Noble appears in appendix.]
The Chairman. Thank you very much, Mr. Noble.
Professor Thurber, welcome.
STATEMENT OF JAMES THURBER, DIRECTOR, CENTER FOR CONGRESSIONAL
AND PRESIDENTIAL STUDIES, AMERICAN UNIVERSITY
Mr. Thurber. Thank you for inviting me, Chairman McCain and
Vice Chairman Dorgan. It is a privilege to speak before you. I
think I am one of the only non-lawyers here, so I will speak
very plain language. For 30 years I have taught courses on
campaigns, campaign management and lobbying, including a course
on ethics and lobbying, which is a very popular course these
days.
I want to take just 1 moment to thank Senator McCain for
being a strong and consistent leader with respect to bringing
three streams of reform together. This hearing is part of that:
First, campaign finance reform; second, lobbying reform; and
third, procedural reforms. I see them all as interrelated, as I
think you do, and I see this hearing in that context. The post-
Abramoff hearing is about those three things.
I have written many books. I have had a 7-year grant to
study campaign conduct from the Pew Charitable Trust, so I know
many of the ``tricks'' in campaigns and I know many of the
behaviors that go on within campaigns. I will summarize my
remarks very briefly with respect to that experience of
research and observation.
Again, the focus of this hearing is not about Jack Abramoff
and his misuse of Indian funds, but it is about the large
contributions to Federal election campaigns, PAC's, and the
party committees in the last decade by Indian tribes. They have
also, and I want to point this out, although it is outside the
scope of the hearing, invested large sums in grassroots
lobbying, coalition building and direct lobbying in Washington.
Much of that is invisible, as you know, because it is not
required to be recorded under the Lobby Registration Act.
Ninety-nine percent of the contributions, as pointed out by Mr.
Noble, come from Indian tribes that have gambling casinos.
Everyone before me has stated the case and the problem with
respect to the so-called tribal loophole. Do not worry, I will
not repeat all of that. I have a very simple approach to these
problems, but let's begin with stating the problems associated
with this. One is rules with regard to tribal campaign
contributions with respect to unlimited overall contributions
and the lack of reporting requirement. These combine to make
Indian tribes fertile ground for raising campaign funds by
political parties and candidates.
I think of Terry McAuliffe, former chair of the DNC, coming
into my class bragging about the fact that when he was a young
man, he wrestled an alligator in Florida in order to get a
$25,000-contribution from an Indian tribe. He says that was the
first time the Democratic Party found out that this would be a
great source of campaign contributions. Now, Terry tends to
exaggerate, so I am not sure whether all of this is true, but
it points to the fact that Indian tribes are fertile ground for
raising campaign funds.
The lack of reporting requirements throws a veil of secrecy
over the arrangements between Indian tribes and candidates, in
my opinion. It is perhaps the last frontier of essentially
unregulated campaign contributions. One way the contributions
are increased, as we know, is through attributing the gifts to
the same individuals and tribes, but using different names. Of
the more than 200 Indian tribes who have given to candidates,
2,000 variations of their names have been used on checks to
candidates. One tribe used 78 variations of its name. No one
here would be surprised to learn that that particular tribe was
a client of Jack Abramoff.
We in academia, and you, Senator McCain, and groups who
advocate good government, and the media try to connect the dots
to see who is giving campaign contributions to whom and on what
issues they are lobbying on. It becomes very hard to follow the
money if you do not have transparency.
What is the source of the money being contributed by Indian
tribes? It is difficult, often, to determine that. The only way
to follow the money is on the contribution reports from
candidates and on their lobbying registration reports that is
covered under the Lobbying Disclosure Act, and there is a great
deal of degrees of freedom there in terms of whether you need
to report.
The problem of lack of transparency in reporting
requirements makes attribution of campaign money difficult if
not impossible. It often makes it nearly impossible. Where is
the money coming from? Incorporated gambling casinos? Other
corporations? Individuals? There can be no transparency in this
hide-the-ball environment. Let me say that I would recommend a
very simple answer to this. The answer is related also to the
unique status of Indian tribes as sovereign nations and
governments.
I would recommend: First, reporting requirements as PAC's,
but a unique solution to describe Indian tribe PAC's with their
consultation; second, transparency with respect to these
reporting requirements; and third, no aggregate limit in what
they can give.
I think this solution allows tribes to maintain their
special status as sovereign nations under campaign finance law,
but improves the reporting of the way money is collected and
spent. That is through this new reporting requirement. Like
PAC's, tribes should be required to register with the FEC
before making campaign contributions. Contributions should be
reported by the name the tribe uses, not a new name created for
this purpose, or multiple names. The source of the funds should
also be reported. This will shine light on what contributions
are being made and to whom. It is fair because it is, I
believe, the same light that is shown on everyone else who
contributes to campaigns.
Like PAC's, tribes should create a committee or a board of
directors to decide what contributions will be made in each
election cycle, and campaign finance law requires PAC's to name
a treasurer who assumes responsibility for registering and
filing contribution reports. Tribes should also be required to
name and appoint a treasurer who will be responsible for
submitting these reports.
Tribes are not the same as labor unions, corporations, or
other groups that must form PAC's, and so there should be a
difference in the treatment of Indian tribes and Indian PAC's
under the campaign finance law. An important difference is that
PAC's must collect checks from individual members which they
pool together to contribute to campaigns. The source of funds
for campaign giving by Indian tribes should be left up to the
discretion of tribal leaders, but the source should be
reported.
Tribes should be allowed to continue to set up their own
internal rules and systems for deciding what candidates to give
to and how much. If that means writing checks directly from
their tribal treasuries with no input from their members, so be
it.
Campaign finance law should not dictate to sovereign tribal
governments how they spend their money. What campaign finance
law should do, however, is require the contributions and their
source be made in full public view, and there should be no
aggregate limits on those contributions.
Thank you very much for holding this hearing. I will take
any questions. I will try to answer any questions that you
might have. Thank you.
[Prepared statement of Mr. Thurber appears in appendix.
The Chairman. Thank you very much.
Senator Dorgan has to go. He has a question.
Senator Dorgan. Mr. Chairman, thank you very much. I do
have to be at another function.
First, I will thank all three of you for your testimony.
Just a quick question for Professor Thurber. When you
described your recommendations, you indicated that you felt
that tribes should be organized as a political action
committee, but should retain the characteristic of not having
an aggregate limit, and a couple of other details. Is that
because of the sovereignty of tribes and the unique
circumstance of tribes? What is the basis for it?
Mr. Thurber. The basis of that is that is their sovereignty
and their unique relationship with the Federal Government. Yes.
Senator Dorgan. Mr. Allen, thank you for your assertive
testimony. And Mr. Noble, thank you for your work.
Let me also join Mr. Noble and Mr. Thurber in saying that
the chairman of this committee has played a pretty instrumental
role on the questions of transparency and campaign finance
reform and other things over many, many years. So let me join
you in paying homage to that work as well.
And thank you for your statements today. I think it is very
helpful to this committee.
The Chairman. Thank you very much, Byron.
Mr. Noble, well, first I guess, Ron, what is your view of
Professor Thurber's recommendations, and if you would like to
examine them and get back to us for the record, but I would be
interested in your initial impressions.
Mr. Allen. Well, first of all, I would like to get back to
you, Senator, on that topic. Let me correct one of the points
he made, that the tribes use multiple names. We do not use
multiple names. It is how they record us. If they record us
differently, then it appears like we are using different names.
So I want to make sure that you understand that sometimes there
is a perception of using different names or vehicles.
The Chairman. Who records it as different names?
Mr. Allen. Whoever we are making contributions to. They are
Congressmen, the candidates. Whoever we are making
contributions to will record where they are receiving that
money, and it is how do they identify the tribe in their
records. So they may not record us exactly the same way, so it
appears like multiple entities are using multiple vehicles.
The Chairman. Could I have Professor Thurber respond to
that real quick?
Mr. Allen. Yes.
Mr. Thurber. I would like to put this in the context of the
fact that Jack Abramoff had eight different names when he
registered under the Lobbying Registration Act and he did it,
some thought, to make his activities non-transparent with
respect to his lobbying. There is some evidence that he gave a
tribe advice to use different names. I do not know this
independently; it is reported that the tribe had 78 different
names associated with its contributions in order to cover up
the fact that one tribe is giving money.
The Chairman. Surely, then, you would not have an objection
if they do not do it to make sure that they do not do it.
Mr. Allen. Right.
The Chairman. Okay. Go ahead. Proceed.
Mr. Allen. When we write checks, they come under the
tribe's name. It is as simple as that. We want to make sure
that some issues like that or facts need to be clear on exactly
how they get transacted.
With regard to his proposal, as I said earlier, I think
that the tribes would be very comfortable with the idea of some
sort of identifier. Whether or not there is a need to be a PAC,
that is another question. A PAC creates a different kind or set
of criteria and conditions. As I pointed out, because of the
unique culture and nature of the tribes, PACs would not be
appropriate for us because it would disenfranchise us. We would
not be able to generate the revenue in order to make
contributions.
It is true that a lot of the tribes now who have gaming
operations now have resources to participate, and we are not
going to apologize for that. It just happens to be one of the
industries that became successful for tribes.
We also point out only 40 percent of the tribes in America
have gaming operations. Maybe we are focusing on the top 15
percent, who are much more influential and effective in it. We
appreciate them. But are we supportive of transparency? Yes,
the answer is yes, Senator. We do not have a problem with
transparency. We do not have a problem with some sort of
identifier, if that makes Congress more comfortable with our
contributions.
We definitely believe that the cap should not apply to us
in the same way it does apply to other governments. We point
out the other governments have a different vehicle of
representation in Congress, and we would note, Congressmen and
Senators, when you walk in your door, whose flag is outside
that door? It is the State, but you do not see an Indian flag
sitting out there.
So we have to participate in a little different way.
The Chairman. Well, I hope that you would extend that
endorsement of transparency to better reporting procedures to
be followed.
Mr. Noble, would you commend on Professor Thurber's
comments?
Mr. Noble. Yes; I think Professor Thurber has a number of
good ideas in terms of reporting, but I would want to point out
that this standardization problem with names is not just a
problem with Indian tribes. This is a problem across the board
with contributions. The problem we have found is on both sides.
It is often on the giver's side and sometimes it is on the
recipient committee side, where they report the same giver
slightly differently. In fact, at the Center for Responsive
Politics, where our whole goal is to identify who the
contributors are, much of our work is spent standardizing
names. That is what we do. We go through and you might see a
Larry Noble, a Lawrence Noble, a Lawrence M. Noble, some with
my office address, some with my home address on it. So this
problem really does go beyond the tribes.
The Chairman. It was just developed into a fine art by Mr.
Abramoff.
Mr. Noble. Yes; it was developed into a fine art. Some of
them do it with no bad intention. Others do it to try to hide
where the money is coming from and make the aggregation harder.
I think this is something the Federal Election Commission could
look at.
Now, also talking about standardization and unique
identifiers, that is already done with political action
committees. Political action committees actually have to
register under a specific name and they are given a number by
the FEC, an identifying number. That makes it much easier to
trace their political contributions.
If you require Indian tribes to report as PAC's, you do get
into the situation that political action committees of
corporations can have the corporation pay for all their
administrative expenses. I assume the PAC's of the Indian
tribes, since Indian tribes are not incorporated, are not
having their administrative expenses paid for by the tribes
themselves, or at least in excess of what the contribution
limits would be. They cannot do that now. So you would have
this problem that you are creating a slightly different animal
in the sense that it is not a PAC, it is not an individual, it
would be a tribal reporting entity.
I can give you one little bit of precedent for that, and
this goes way back to my days at the Federal Election
Commission. It actually came up, I believe, in an enforcement
case, and it would not come out the same way these days with
the Federal Election Commission, but a lot of things wouldn't.
It was actually an unincorporated association in New York. It
was not an Indian tribe, but it was an organization formed
under New York State law that was not incorporated. They were
making political contributions, and in the end the resolution
of it was not that they report as a political committee
overall, but they only report all of their political
contributions. It was done in a settlement. What they had to do
was just report the political contributions they made on the
Federal level. If you did that for tribes, again, you would not
really set the tribes up as a PAC but you could require them
just to report all their Federal contributions, which would
take a change in the law.
The Chairman. It would require a change?
Mr. Noble. It would require a change in the law, yes.
The Chairman. What would you think about that? If you want
to digest some of this and respond to us in writing, Ron, I
would be glad to have it.
Mr. Allen. I do, Senator. It is a proposition that causes
me great concern, and the devil is in the details, as we always
say. The main issue for us, as I pointed out earlier, is that
tribes cannot be disenfranchised. You know well that we are
here always protecting our sovereignty, our treaty rights,
advancing our health care and education issues. If we were so
influential by our new contributions that have risen over
recent years, why is our health care still falling? Why are we
losing ground in health care? Why are we losing ground on
education? Why are we losing ground with essential services
from the BIA?
If we have no much influence, you look across the Indian
programs, why are we losing ground? And we are, categorically.
So I question that very nature. The Abramoff issue is a
scandal, and because some of his clients were Indians, we do
not want to be tainted or be disenfranchised from the political
process.
So the idea of amendments to the act or regulations that
would have improved their transparency and disclosure, we are
supportive of it. So we would be delighted to work with you on
the issue that you are proposing just as long as it does not
push us back into our previous state 10 and 20 years ago.
The Chairman. All right. I know you fully appreciate that
Mr. Noble and Professor Thurber are highly regarded as
individuals who are simply committed to the cause of reform and
have no bias in any way to Indian tribes. I hope you also
understand that because of this cloud that exists, and average
Americans as you know regrettably do not understand the status
of Indian tribes, what tribal sovereignty means, and
government-to-government relationships, that one of the things
that would be very helpful to Native Americans is to remove
this cloud and say we have acted so that, you can never prevent
an unscrupulous lobbyist from coming to a Native American tribe
and ripping them off.
As Ben Nighthorse Campbell said in our first hearing, it is
another case in a long 300-year history of exploitation of
Native Americans. But at least we could take action which would
assure that if Native Americans were exploited, there would be
transparency and reporting procedures so that not only would we
know, but other tribal members would know. Many of the
activities that took place and the exploitation of these
tribes, the tribal members never knew what was happening, as
you well know.
So I think it would be beneficial for tribal members to
have more transparency in these activities, as well as all of
us, because again, this scandal as it is has somehow in some
ways tainted Indian tribes who frankly were the victims, and
certainly not the perpetrators.
Mr. Allen. It is true, Senator. If you are asking about our
support for transparency and disclosure, we are supportive of
that, to improve the integrity as it applies to us in Indian
country, as long as it is fair and balanced with respect to the
rest of America.
But I do want to note, because we use one example of a
small handful of tribes that were clients of Jack Abramoff, and
because of an example or two there, that is not the norm in
Indian country. Over the last 10, 15 to 20 years, our skill at
working the Congress and engaging with them as tribal leaders
to leaders in the Congress has increased and improved
exponentially.
So we are very knowledgeable about how to work the system,
and we want to maintain integrity, and we have disclosure at
home. We have our own disclosure that we have to provide our
communities so that they know exactly how we are spending our
money, including campaign contributions.
The Chairman. I would like for any tribal member to be able
to call the FEC and find out exactly what the tribe is doing if
he or she does not know it because of involvement in the tribal
council decisions. As you know, many times these decisions are
made outside of the tribal council and that is an internal
matter for the tribes.
Mr. Noble, in summary, is transparency the only answer
here? Or do nothing? Or adopt some of Professor Thurber's
recommendations?
Mr. Noble. You have a broad range of options here.
Professor Thurber has put out suggestions including putting
certain additional limits on what tribes do. That is definitely
an option. We do not take positions on substantive options like
that. We focus on disclosure. But given the unique nature of
the tribes, I think if you do decide to address the issue, you
have to look at a variety of different things. You have to look
at whether or not you want to put an aggregate limit on what
they do--they are different than others--and whether or not you
want to let them have separate PACs and support those political
action committees.
As always in the law, with each obligation you give them,
there will be another freedom they have to do something, and
with each thing you allow them to do, there comes another
obligation. I think that the focus on disclosure is a very
important focus, but again the reality is that the Indian
tribes now, at least the gaming Indian tribes, have become a
political force. We are not saying there is anything wrong with
that, but they have become a political force and they have to
be looked at that way in terms of their political
contributions.
The Chairman. Professor Thurber, with your view of history,
how serious is this scandal and how serious is the state of
corruption in the way that we do business here in the Congress?
Mr. Thurber. I think that the scandal is not associated
with Indian contributions through campaigns.
The Chairman. No; I was asking for your view of history.
Mr. Thurber. Well, in my view of history, I think it is
pretty bad. I started working here in 1973 for Senator Hubert
H. Humphrey, and I have worked on four congessional
reorganizations. I helped write part of the code of ethics in
the House. I think you are the problem, Senator, not you
personally. I think the individuals in the House and Senate
should look at themselves and the staff should look at
themselves very clearly and not totally beat up on lobbyists.
Because much of what was associated with Jack Abramoff was
going on for a long time by Members of Congress and staff. I
think your reforms, I will not go through all of them, are a
good step in the right direction.
I believe in enforcement and transparency. I believe in
enforcement and transparency with respect to Members of
Congress and staff. I have a book this thick, and you have seen
it, of existing rules.
The Chairman. Which no one has read.
Mr. Thurber. Right. I have. I teach it to my students and
they do case studies on conflicts of interest and ethical
problems in lobbying.
I think that we are in a very low state in terms of the
attitudes of the American public about Congress. I am very
worried about it. I am glad you are trying to do something
about changing the way things work here so that the American
people will trust this institution.
Our democracy is defined by you, by the people in
government each generation, and it is at a low. I am very
worried about it. I see it with my students and their
attitudes, but I also see it with my 93-year-old mother in
Oregon, who thinks everybody is bought and sold in Washington,
DC and I spend a long time explaining to her, no, that is not
the case, but that is the perception.
Support in the polls for Congress is very low, a historic
low, and I think it is directly related to Abramoff and other
things, but the general perception is that this place needs to
be cleaned up, and I think you are doing the right thing to
push in a variety of ways with procedural reforms on earmarks,
with campaign finance reform (we know your history there) and
with lobbying reform right now.
Now, I can give a 55-minute lecture if you want me to. I am
used to that, but I am not going to.
The Chairman. Could I first of all say that I think it is
right, and I think Mr. Noble would agree, that we ought to
emphasize that it is the system that creates the lobbyists
which creates the abuses. If every town in America believes
that the only way that they are ever going to get, or Indian
tribe in America believes the only way they are going to get
anything in Congress is to get an earmark, therefore they have
to hire a lobbyist, that accounts for the now 34,000 or
whatever it is lobbyists.
I know I stray from the subject from the hearing, but I
would like to ask both Mr. Noble and Professor Thurber, in the
view of many, BCRA has failed. It has not achieved the
anticipated or the desired results so far. Do you agree with
that, Mr. Noble, and if so, why?
Mr. Noble. No; I do not agree with that. BCRA was a reform
law that was aimed at getting at certain specific abuses, most
notably the soft money abuse. What we know at the Center from
following the contributions is that soft money is not going to
the political parties anymore. It successfully cut off the soft
money to the political parties.
It also was aimed at stopping Federal candidates from
soliciting soft money. It has done that, though I think, there
is a problem in terms of how the Federal Election Commission,
[FEC] has interpreted the law in terms of what is a
solicitation and what Federal candidates can do. But putting
the FEC aside, I think that BCRA did there what it was intended
to do.
Most of BCRA was held constitutional, which many people
doubted it would be. So I think as a reform law intended to
stop soft money, it was effective. It did not get at this issue
of Indian tribal giving. It was not intended to get at the
issue of Indian tribal giving, though I would note that prior
to BCRA, the Indian tribes were giving a lot of soft money.
Like everyone else, when BCRA came into being, they stopped
giving soft money. So it did affect them in that way.
On a broader point, I also agree that the problem we are
seeing now, the lobbying ethics scandal is really a two-part
problem. Yes, lobbyists are part of the problem, or some
lobbyists are part of the problem, but I agree with Professor
Thurber that it is also members of Congress. It is a culture.
Lobbyists would not be making the contributions, would not
be providing the trips, if members did not want them, if
members were not asking for them, and some members do solicit
them. So that is definitely part of the problem.
Enforcement is part of the problem. I agree with Professor
Thurber on that issue. Whether you are talking about campaign
finance laws or ethics laws, you have to have enforcement.
Without enforcement, you are going to have everybody pushing
the envelope. Some people will start pushing more and more, and
then eventually they will just rip right through it.
Also, there is this question of whether any law, whether it
is a law aimed at further disclosure for Indian tribes or a law
aimed at ethics, it will clean up the system. No law is ever
going to clean up the system. We are dealing with money,
politics and power. It is the very nature of a democracy. What
I often say is, there is no end game in a democracy.
The Chairman. But there are cycles.
Mr. Noble. There are cycles. You never reach a point where
you say, this law, be it BCRA or any other law, solved all of
our problems, because in the nature of a democracy, people are
going to try to find ways around the law. People are going to
push on certain parts of it and you have to come back and
revisit it. We are going through that cycle right now on the
ethics side where Congress has to come back and revisit what is
going on.
The Chairman. Professor Thurber.
Mr. Thurber. I think the FEC has been a failure in terms of
enforcement. It is deadlocked. It does not have enough money.
It allowed the 527's to exist, which was, as you well know
better than anyone in America, a way for the stream of money to
go around the regulatory dam. Therefore we had hundreds of
millions of dollars of soft money as well as issue ads in 2004.
Let me talk about something else that you are trying to
improve, and that is the regulation of lobbying. About $2.1
billion was spent in lobbying in Washington, DC last year. That
is almost $4 million dollars per member per year. That is over
$327,000 per member per month. We are awash in money and that
is probably only one-fifth of what is being spent on lobbying,
because that is only the required lobbying registration. As you
well know, we do not have to record grassroots, top-roots,
astro-turf, coalition building, TV ads, issue ads in print and
radio. If you add that, it is probably a factor of five, $10
billion. We are awash in money with respect to lobbying.
Now, that is fine because we have First Amendment rights.
We have the right to assembly, to petition Government for
grievances and speech, but we should make that more
transparent, as you are trying to make it, so that people can
make a decision. So if the candidate runs against you, Senator,
they can see what has been happening with respect to the money
on the outside trying to influence you. It can become, then, an
issue in a campaign, and we have more competition against
people that seem to be overly influenced by the special
interests.
Also, with earmarks, do not forget about all types of
earmarks, such as appropriations, taxes, and authorizations.
There are thousands of earmarks in tax bills. There are
thousands of earmarks, as you well know, in the energy bill,
the transportation bill, and authorization bills.
The Chairman. The highway bill.
Mr. Thurber. The highway bill, right. As you well know, I
am just stating what you have stated so well. We should be
looking at those and making those more transparent, associating
them with a particular member of requiring a justification for
each, and voting on them separately if we can.
Washington is in trouble. I think members do not realize
they are on the gallows right now. They should be thinking
about the epiphany that occurs when standing on the gallows and
support reforms like yours and others.
The Chairman. I do not want to drag this out, but this is
very helpful to me, and I hope for the record.
Mr. Noble, on the subject of 527's, my understanding of the
1974 Act is that any organization that engages in partisan
political activity for the purposes of affecting the outcome of
an election falls under campaign contribution limits. How,
then, could the 527's exist?
Mr. Noble. I agree. The problem is that 527 organizations,
which as you know is an Internal Revenue Code designation, have
as their purpose, their major purpose, influencing elections.
Not all 527s work on the Federal level, so put aside the ones
on the State level.
My view of it is that the, and I have said this to the
Federal Election Commission, that the 527's which are active in
Federal elections by definition have their major purpose being
involved in elections, and therefore should be treated as
political committees. I have testified to that effect before
the Federal Election Commission. The Federal Election
Commission has not adopted that view. I think that the 527
situation is at this point totally a creation of the Federal
Election Commission, and they have the power and the authority
to do something about it, and the obligation to do something
about it.
The Chairman. I think you would both agree, like any other
evil, if these are unchecked, they can have an incredible
influence, particularly on congressional elections. If somebody
parachutes in with $5 million in a congressional race, it is
going to have huge implications for anybody's election or
reelection.
Mr. Noble. And in some ways, Senator McCain, they became
the new soft money recipients. What did happen is, some of the
soft money, not all of it, but some of the soft money that the
parties can no longer accept, ended up going to 527's, which
were in some cases run by former party officials. That did not
have to happen.
Mr. Thurber. I would like to add one other aspect of BCRA,
and that is the enforcement of the rules associated with
coordination. I would say from my research over many years, but
especially the seven years supported by the Pew Charitable
Trusts, there was a great deal of illegal coordination going on
in campaigns. I would add that to the 527 problem. It is
related.
Mr. Noble. And Senator McCain, if you would indulge me for
1 moment. There is one other issue I did want to bring up. It
is related to all of this. When we talk about disclosure and
transparency, again, that is the lifeblood of our group.
Whatever you do would be greatly helped if in fact we moved all
of the disclosure into the modern era of electronic disclosure,
and that includes the Senate.
The Senate right now does not report electronically.
Lobbying data is not being reported electronically. My group's,
our Senate data is way behind the data we get from the House
and others because of that problem. I think that is another
place where the Senate really needs to look at itself and say
why won't it join, let along the 21st century, the 20th
century.
The Chairman. I think that has to be a fundamental. I think
we are totally knowledgeable of the fact that transparency is
the first step, which brings me back to you, Ron. I appreciate
your commitment to greater transparency in this process.
I can assure you that from the comments of members of this
committee, there is no intent nor desire nor would we possibly
impair, I believe, the concept of tribal sovereignty, which has
been upheld many, many times in our Supreme Court and here in
Congress. We recognize our unique responsibilities.
I thank the witnesses. Thank you very much.
[Whereupon, at 11:18 a.m., the committee was adjourned, to
reconvene at the call of the Chair.]
=======================================================================
A P P E N D I X
----------
Additional Material Submitted for the Record
=======================================================================
Prepared Statement of Dr. James A. Thurber, Distinguished Professor and
Director, Center for Congressional and Presidential Studies American
University Washington, DC
I would like to thank Chairman McCain and the members of the
Committee on Indian Affairs for the opportunity to testify today on
tribal campaign contributions and related matters. I want to thank
Senator McCain for his strong leadership in campaign finance reform and
lobbying reform. You help to build more confidence and trust by the
American public in Congress through your reform efforts.
My name is James A. Thurber, Distinguished Professor and Director
of the Center for Congressional and Presidential Studies at American
University in Washington, DC. I have taught seminars on campaign
management and lobbying for over thirty years and I direct the Campaign
Management Institute and the Public Affairs and Advocacy Institute at
AU. I have just completed a 7-year study funded by a grant from the Pew
Charitable Trusts on how to improve campaign conduct. In the course of
my research and teaching, I have reviewed many campaign and lobbying
problems and reform proposals by Members of Congress, including
proposals advocating disclosure of campaign conduct and strengthening
oversight and enforcement of campaign finance activities.
I would like to express my appreciation to the chairman for holding
these important hearings on Indian Tribes and the Federal Election
Campaign Act. This hearing is in the context of the Jack Abramoff
scandal and his use or misuse of large sums of Indian tribal money. The
focus on lobbyist Abramoff and his use of Indian tribal client funds
has led to an inquiry into the issue of the so-called ``tribal
loophole'' in campaign contributions to Federal candidates. Indian
tribes have been large contributors to Federal election campaigns,
PAC's, and party committees in the last decade as documented by the
Center for Responsive Politics. They have also invested large sums for
grassroots lobbying, coalition building and direct lobbying in
Washington. Most of these contributions and investment in lobbying has
come from tribes with gambling casinos (or those who would like to have
a casino). The loophole in the Federal Election Campaign Act [FEC] that
allows tribes to avoid the overall aggregate on what an individual can
contribute to Federal candidates, political parties and other political
committees is the topic of my testimony.
The so-called ``tribal loophole'' is basically an exemption for
Indian tribes from the requirement to report certain kinds of campaign
contributions. Under Federal election law, Indian tribes are subject to
the contribution limits that apply to individual candidates and
committees, which is currently $2,100 per election to Federal
candidates, $5,000 per year to PAC's, $10,000 per year to state party
Federal accounts, and $26,700 per year to national parties. Unless a
tribe is prohibited from making campaign contributions because it is a
corporation or Federal Government contractor, tribes must adhere to
these contribution limits. Indian tribes are not required to report
these contributions to the FEC; rather, the contributions are disclosed
to the FEC on the recipients' disclosure statements.
In addition to the limits on giving to individual candidates and
committees, Federal election law also sets an aggregate giving limit of
$101,400 for individuals. This means that an individual donor can only
give $101,400 in a 2-year period to any combination of candidates,
PAC's, or party committees, at the same time adhering to the individual
contribution limits imposed on candidates and committees. This
requirement applies only to individual donors--not PAC's and not Indian
tribes. Since 1978, the FEC has considered Indian tribes to be
``persons'' under campaign finance law, which is different from the
category ``individual''\1\. In May 2000, the FEC clarified that Indian
tribes are not subject to the aggregate individual contribution limit
because tribes are organizations, not individual human beings.\2\ Under
the Federal Election Campaign Action and as interpreted by the Federal
Election Commission, Indian tribes are subject to individual, PAC,
party committee limits, except the overall aggregate limit. Tribes can
lawfully give an unlimited amount of campaign money in the aggregate.
The central question about the ``tribal loophole'' is why the aggregate
limit does not apply to Indian tribes? Is it to protect the sovereignty
of American Indian tribes?
---------------------------------------------------------------------------
\1\ FEC Advisory Opinion 1978-51.
\2\ FEC Advisory Opinion 2000-5.
---------------------------------------------------------------------------
There are two problems with the current procedure for making tribal
campaign contributions: The unlimited overall contributions and the
lack of reporting requirements. These combine to make Indian tribes
fertile ground for raising campaign cash by political parties and
candidates. The lack of reporting requirements throws a veil of secrecy
over the arrangements between Indian tribes and candidates. It is
perhaps the last frontier of essentially unregulated campaign cash
contributions.
One way the contributions are increased is through attributing the
gifts to the same individuals and tribes but using different names. Of
the more than 200 Indian tribes who have given to candidates, 2,000
variations of their names have been used on the checks to candidates.
One tribe has used 78 variations of its name.\3\ No one here would be
surprised to learn that that particular tribe was a client of Jack
Abramoff.\4\
---------------------------------------------------------------------------
\3\ According to PoliticalMoneyLine, the Agua Caliente Band of
Cahuilla Indians used 78 variations of its name for campaign
donations.<http://www.politicalmoneyline.com/cgiwin/
indexhtml.exe?MBF=tribal> Accessed 1/31/06.
\4\ <http://www.capitaleye.org/abramoff.asp> Accessed 1/31/06.
---------------------------------------------------------------------------
When groups advocating good government, the media, or academics try
to ``connect the dots'' to see who is giving campaign contributions to
whom and what issues they are lobbying on, it becomes very hard to
follow the money. What is the source of the money being contributed by
Indian tribes? It is difficult to determine. The only way to follow the
money is on the contribution reports from the candidates and on the
lobbying registration reports (for lobbying activities covered under
the Lobbying Disclosure Act of 1995). This is not transparent because
some groups contribute to a candidate using multiple names and the
source of the funds is far from clear.
The problem is a lack of transparency and reporting requirements
makes attribution of campaign money difficult, if not impossible. Where
is the money coming from, incorporated gambling casinos, companies,
individuals? There can be no transparency in this ``hide the ball
environment.'' Without rigorous FEC enforcement of prohibited sources
of money for campaign contributions or new reporting requirements the
non-transparent situation will continue, to no one's benefit.
Several solutions have been proposed. Some have called for Indian
tribes to be considered ``individuals'' under Federal election law,
which would force them to adhere to the $101,400 contribution ceiling
for overall giving. I think this designation would unfairly limit
tribes--who are obviously not individuals, but groups of many
individuals. Forcing entire tribes to adhere to the same contribution
limit as an individual would severely diminish their ability to
contribute and essentially hold them to limits so strict that they
could not hope to have any influence as sovereign governments.
Others have called for Indian tribes to be treated the same as
corporations or labor unions, which must form PAC's in order to collect
checks from individual members to be pooled together to give to
candidates. However, tribes are considered sovereign governments under
Federal law, not corporations or unions, thus the designation would be
inappropriate.
I think there is a way to allow tribes to maintain their special
status as sovereign nations under campaign finance law, but improve the
way money is collected and spent. That is through new reporting
requirements. The new requirements for tribal campaign contributions
should take some of the requirements that are currently in place for
PAC's. Like PAC's, tribes should be required to register with the FEC
before making campaign contributions. The contributions must be
reported by the name the tribe uses, not a new name created for this
purpose. The source of the funds should also be reported. This will
shine a light on what contributions are being made and to whom. It is
fair because it is, I believe, the same light that is shone on everyone
else who contributes to campaigns.
Like PAC's, tribes should create a committee or Board of Directors
to decide what contributions will be made each election cycle. Campaign
finance law requires PAC's to name a treasurer who assumes
responsibility for registering and filing contribution reports. Tribes
should also be required to name appoint a treasurer who will be
responsible for submitting the required information to the FEC.
But tribes are not the same as labor unions, corporations and other
groups that must form PAC's, and so there should be differences in the
treatment of PAC's and Indian tribes under campaign finance law. An
important difference is that PAC's must collect checks from individual
members, which they pool together to contribute to campaigns.
Indian tribes should not be required to collect checks from
individual members. The source of funds for campaign giving by Indian
tribes should be left up to the discretion of tribal leaders, but the
source should be reported. Tribes should be allowed to continue to set
up their own internal rules and systems for deciding what candidates to
give to and how much. If that means writing checks directly from their
tribal treasuries with no input from their members, so be it. Campaign
finance law should not dictate to the sovereign tribal governments how
they spend their money. What campaign finance law should do, however,
is require those contributions and their source to be made in full view
of the public.
Thank you for holding this hearing and the opportunity to testify.
I would be pleased to try to answer any questions related to this
proposed reform and other questions you might have with respect to my
testimony at this time or after this hearing.
______
James A. Thurber is Distinguished Professor of Government and
Director of the Center for Congressional and Presidential Studies. He
was the principal investigator of a 7-year [1997-2004] grant from The
Pew Charitable Trusts to study campaign conduct. Dr. Thurber has been a
professor at American University since 1974 and was honored as the
University Scholar-Teacher of the Year in 1996. He is a Fellow of the
National Academy of Public Administration.
He is author, co-author, and editor of numerous books and more than
80 articles and chapters on Congress, congressional-presidential
relations, interest groups and lobbying, and campaigns and elections,
including Rivals for Power: Presidential Congressional Relations, Third
Edition (2005), Campaigns and Elections, American Style, Second Edition
(with Candice Nelson, 2004), Congress and the Internet (with Colton
Campbell, 2002), The Battle for Congress: Consultants, Candidates, and
Voters (2001), Crowded Airwaves: Campaign Advertising in Elections
(with Candice Nelson and David Dulio, 2000), Campaign Warriors:
Political Consultants in Elections (2000), Remaking Congress: The
Politics of Congressional Stability and Change (with Roger Davidson,
1995), Divided Democracy: Cooperation and Conflict Between Presidents
and Congress (1991), and Setting Course: A Congressional Management
Guide (with Chaleff, Loomis and Serota, 1988).
Dr. Thurber earned a BS in political science from the University of
Oregon and a PhD in political science from Indiana University and was
an American Political Science Association Congressional Fellow. He has
worked on five reorganization efforts for committees in the U.S. House
and U.S. Senate from 1976 to present. He was also Director of the
Washington, DC, based Human Affairs Research Centers of the Battelle
Memorial Institute.
The Center for Congressional and Presidential Studies [CCPS],
located in the Nation's capital at American University under the
sponsorship of the School of Public Affairs, provides an integrated
teaching, research, and study program focusing on Congress, the
presidency, and the interactions of these two basic American
institutions. Established in 1979, CCPS has a long and venerable
history of scholarly research and practical training. CCPS capitalizes
on its advantageous location in Washington, DC, by bringing together
public policy practitioners and academics to share their research,
knowledge, and experiences in a series of advanced institutes,
conferences, and workshops on applied politics.
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