As the presidential campaign swings into high gear, rivers of cash are flowing in to support the candidates, and experts are predicting billions will be raised by next fall. The likely record-breaking donations are thanks in large part to new groups that are taking in unlimited dollars and exploring the outer limits of campaign finance law.

Yet amid this flurry of activity, one player has stayed hands-off: the Federal Election Commission, the agency tasked with ensuring that campaigns and contributors play by the rules.

Faced with recent court rulings rolling back key parts of campaign-finance law — and hampered by a deep ideological divide — the commission has stayed stuck on key questions about how to regulate the rapidly changing world of campaign finance.  

Take super PACs. Arguably the most important campaign-finance innovation in recent years, they have increasingly become a conduit for unlimited donations to fund ads supporting and attacking candidates. Whether through clever ways of funneling money or simply because of the timing of primaries and disclosure deadlines, the true donors in many cases can stay secret until after voters have cast ballots — and sometimes even permanently.

So, how is the FEC regulating these super PACs? Barely. Though the commission has given some guidance on what these groups can and cannot do, it has yet to issue a single rule that specifically addresses super PACs.

“It strikes me as dysfunctional,” said Trevor Potter, a Republican lawyer and former FEC commissioner who founded the Campaign Legal Center, a nonprofit that advocates stronger campaign finance laws. “They’re unable to do their job.”

Campaigns and their supporters, meanwhile, have been pushing the limits on several fronts. For instance, nearly every serious 2012 presidential candidate has benefited from super PACs created by former advisers and aides specifically to support them — a practice that raises questions about the potential for illegal coordination, said Steven Billet, who directs a program on PAC management at George Washington University’s Graduate School of Political Management.

“Some groups, frankly I think, have made a calculation: ‘We think we can get away with it,’” Billet said. “In all likelihood, I think they can.”

Stalemate in a time of sea change

Created in the wake of the Watergate scandal, the FEC is responsible for interpreting and enforcing federal campaign-finance laws. The commission has always been prone to gridlock given its structure of six commissioners evenly divided on party lines, but the divisions have become even more stark as the agency has struggled to address a series of court rulings, including the seminal Citizens United decision, that struck down key restrictions in campaign-finance law.

Nearly two years after Citizens, the FEC still hasn’t begun the process of changing its regulations to comply with the ruling.

The commission’s Republicans want simply to repeal the regulations tied to overturned provisions of law. The commission’s Democrats, noting that the high court reiterated the importance of disclosure, want a new set of disclosure rules to be part of the same discussion. The commission moved twice this year to open the issue for public comment. It deadlocked both times.

The rifts were on display last week in a rare exercise of congressional oversight by the Committee on House Administration — the first such hearing on the FEC since 2004. Pressed by lawmakers about why the commission hadn’t updated regulations to reflect Citizens United, the six commissioners pointed to disagreement over the issues raised by the ruling.

“We’ve fallen down on what we could have done regarding regulations,” Commissioner Steven Walther, a Democrat, told the elections subcommittee.

Contributing to the persistent stalemate is the fact that the current slate of commissioners hasn’t rotated for years, and five of the six are serving on expired terms. By law, commissioners are supposed to serve staggered six-year terms, with two appointments made every two years, but the members may continue as lame ducks if no new appointments are made.

So far, the Obama administration has made only one attempt to seat a new commissioner despite repeated calls from watchdog groups to remake the agency. The nomination was blocked in the Senate, which confirms appointments, and stalled for more than a year until the nominee bowed out last fall. Lacking the appetite for another political tug-of-war, the White House has not made another attempt.

A spokeswoman for the commission declined to comment.

‘A de facto green light’

Ultimately, the FEC is set up in such a way that when the commissioners deadlock, one side comes away with a de-facto win — the side seeking to preserve the status quo.

“If you’re a deregulatory commissioner, you can get a lot done simply by saying no,” said Bradley Smith, a former Republican commissioner who was once a force for campaign-finance deregulation on the commission and now pushes his case through the Center for Competitive Politics.

Nowhere is the default to the status quo more obvious than in the area of enforcement, where a deadlock over whether to impose a sanction essentially closes the case.

Campaign-finance reform groups have consistently criticized cases in which the commission’s three Republicans ignored the recommendations of its lawyers and voted against further investigation or enforcement. In a 2008 case [PDF], the commission had already received a check to cover a civil penalty but deadlocked on whether it was fair to penalize an inexperienced candidate on “hyper-technical rules.” [PDF]

The case was closed, and the check was refunded.

For more aggressive political players, the agency’s inaction on key issues can represent an opportunity.

“The advice to the client has to be that the FEC hasn’t signed off,” said Joseph Sandler, a former Democratic National Committee lawyer who now represents mostly Democratic clients in private practice. But for clients willing to run a risk, betting that the agency won’t enforce sanctions? “Pretty much it’s a de facto green light.”

A less collegial commission

In the last oversight hearing in 2004, Democratic commissioner Ellen Weintraub told lawmakers that the effect of gridlock on the commission was “vastly overstated.” But times have changed, and “those more collegial days,” to quote from one of her statements this year, appear to be over.

“It used to be that commissioners shared a sense that gridlock was a bad thing,” said Weintraub, the commission’s most senior member. She said that’s no longer the case: “You can count the number of times we split. It is demonstrably higher now than it ever has been in the history of the agency.”

Much of the commission’s conflict is rooted in a deep philosophical divide. The more pro-regulation commissioners emphasize that money has a corrupting influence on politics and that the commission has a duty to enforce the campaign-finance laws passed by Congress; the more deregulatory commissioners argue that campaign-finance regulations curtail political expression and that the commission must follow the cues of the Supreme Court.

The panel’s three Republicans, for instance, have blocked sanctions not only against Republican groups and their supporters but against Democrats and major unions.

Smith, a Republican who served on the commission with Weintraub several years ago, said that while he believes the problem of deadlock is overplayed, the current commission does seem “less willing to bend or seek out compromises” than the commission he remembers.

“There is more polarization now than in the past,” said Smith, who said that the lack of compromise cuts both ways. “In that respect, the commission may simply reflect what’s happening elsewhere in Washington.”