[Senate Hearing 109-374]
[From the U.S. Government Publishing Office]



                                                        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
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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. Accessed 1/31/06.
    \4\  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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