Courts See the Light on Transparency

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Yesterday, a three-judge panel of the D.C. Circuit Court of Appeals demonstrated that it gets the need for greater transparency of money in politics. In a victory for transparency advocates, the court denied a motion to stay a lower court ruling that requires comprehensive disclosure of “electioneering communications.” In non-lawyer language, that means that nonprofit groups like the Chamber of Commerce, Crossroads GPS and Priorities USA that want to run political ads right before an election will have to disclose their donors.

The case is Van Hollen v. FEC and the issue is whether the FEC properly narrowed its own disclosure rules, leaving donors in the dark about who is funding campaign ads. Under the Bipartisan Campaign Reform Act, (also known as the McCain-Feingold law) certain disclosure requirements applied to organizations making “electioneering communications”—ads that refer to a candidate and run within 30 days of a primary election or 60 days of a general. Under the law, the group running the ad must identify any person, corporation or labor union that contributed $1000 to the organization. (It should be noted that the old rule also permits the group to set up a separate segregated bank account to make electioneering communications. If it does that, only donors to that account need to be disclosed. This is not unlike provisions in the DISCLOSE Act.)

The FEC gutted the old rule, limiting disclosure to only those contributions made “for the purpose of furthering electioneering communications.” In other words, the Commission created a gaping disclosure loophole that meant donors behind some of the nastiest political ads that flood the airwaves would remain secret. Van Hollen sued, and the lower court agreed with him that the original rule should remain in place. By that time, however, two other groups joined the case as “intervenors” and urged the court to “stay”—or hold off—enforcing the decision that would require immediate disclosure.

The panel of D.C. Court of Appeals agreed with the lower court and refused to grant the stay, recognizing the importance of disclosure. The lower court judge based her decision in part on the Supreme Court’s observation that, “the disclosure requirements serve an important public function because they ‘provide the electorate with information about the sources of election-related spending’ and help citizens ‘make informed choices in the political marketplace.’ (Citations omitted) The result of the ruling is that the original, broad disclosure requirement is in effect and groups should be on notice that they are required to disclose their donors if they plan to run electioneering communications.

But, don’t expect to see a database of donors pop up on the FEC’s website tomorrow. Groups will try to avoid disclosure and have already begun to craft ads they think won’t trigger disclosure requirements. (Think ads that say “Congress” instead of “Congressman Smith.”) The groups will also ask the FEC to provide “Advisory Opinions” (AOs) as to whether disclosure rules apply in particular circumstances. How the FEC responds to these requests for AOs may signal how serious the commission is about enforcing the new, old rule. The FEC, with its even split between Democrats and Republicans may well deadlock rather than move forward on disclosure and enforcement.

The judicial system is likely not done with the case either. It is possible that the decision denying the stay will be appealed, in which case we would hope the judicial system continues to favor disclosure over secrecy. Yesterday’s decision gives us reason to believe that the judicial branch will continue to trend toward greater transparency.

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