D.C. Circuit Decision Limiting Political Ad Disclosure Will Stand

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By Kenneth P. Doyle

Sept. 27 — A federal appellate panel ruling that limits disclosure requirements for groups sponsoring political ads will stand, as the full U.S. Court of Appeals for the District of Columbia Circuit said it will not review the panel's ruling ( Van Hollen v. Federal Election Commission, D.C. Cir., No. 15-5017, petition for en banc rehearing denied 9/26/16 ).

A brief order issued Sept. 26 said a majority of eligible D.C. Circuit judges “did not vote in favor of the petition” for a full court en banc rehearing in a case brought by Rep. Chris Van Hollen (D-Md.).

The long-running litigation challenged as too lax current FEC disclosure rules for “electioneering communications”—targeted television and radio ads that refer to a federal candidate in the final weeks before an election. The FEC rules in most circumstances don't require disclosure of those funding such ads.

The appeals court's denial of en banc rehearing came six months after a three-judge panel of the D.C. Circuit issued a ruling that contended a broader FEC disclosure rule would violate free speech rights (See previous story, 03/07/16). The panel acknowledged previous court decisions supporting disclosure but suggested such rulings conflicted with other precedents giving broad First Amendment protection to political speech.

Wertheimer: Legislation Needed

Fred Wertheimer, a veteran advocate for strong campaign finance rules who heads the nonprofit Democracy 21, backed Van Hollen's court challenge of the FEC disclosure rules. Wertheimer told Bloomberg BNA in a phone interview Sept. 27 that the D.C. Circuit panel ruling would not be appealed further. He said the option of filing a petition for Supreme Court review was not being considered.

“The bottom line is we need new legislation” to strengthen disclosure requirements, Wertheimer said. He suggested a push for new campaign finance laws could come after the November elections but said that this would depend largely on the election results.

“I believe we will eventually get” new campaign finance legislation, Wertheimer added.

Democrats in Congress have advocated for tougher disclosure rules since the Supreme Court's 2010 decision in Citizens United v. FEC struck down barriers on corporate campaign spending and spurred a rise in spending by nonprofit corporations and other outside groups. However, Democrat-backed legislation known as the DISCLOSE Act has been blocked for years by solid Republican opposition.

Road Map for Donor Secrecy

In the D.C. Circuit case, known as Van Hollen v. FEC, the Maryland congressman, with the backing of Democracy 21 and another nonprofit, the Campaign Legal Center, challenged an FEC rule that critics have said provides a road map for groups that want to spend money to influence elections while keeping their donors secret.

The appellate panel that upheld the FEC rule was composed of three of the D.C. Circuit appeals court's most conservative judges, who have previously ruled against campaign finance regulation: Janice Rogers Brown, Raymond Randolph and David Sentelle.

At issue in the case was an FEC rule adopted in 2007, following a key Supreme Court ruling in Wisconsin Right to Life v. FEC. The rule required some disclosure by corporations, unions and other groups funding electioneering communications, but a key provision required disclosure of donors only if they gave money to an ad sponsor “for the purpose of furthering” a particular ad. Defenders of the rule said it was a reasonable measure to avoid overly burdensome reporting.

Little Spent on Electioneering Communications

The D.C. Circuit panel reversed a federal district court ruling that struck down the FEC rule and said the underlying law, the 2002 Bipartisan Campaign Reform Act, required greater disclosure of donors to groups that sponsor electioneering communications. The main effect of the lower-court ruling was to prompt sponsors of political ads to change the wording of their messages to express advocacy explicitly endorsing or opposing candidates.

Spending for such ads is governed by FEC disclosure rules for “independent expenditures” to influence campaigns. Paradoxically, the rules for independent expenditures by some outside groups are looser than the disclosure law for electioneering communications.

Spending reports filed with the FEC and analyzed by the nonprofit Center for Responsive Politics (CRP) show a total of $845 million in outside campaign spending by dozens of super political action committees and other outside groups in the 2016 election, so far. But, only $1.4 million of the total this year has come in the form of electioneering communications. This spending was reported by a handful of groups, none of which disclosed their donors.

The CRP's analysis showed, overall, that $130 million of outside groups' campaign spending—about 15 percent of the total, so far—has come from groups that keep secret some or all of their donors.

CREW v. FEC Ruling Favored Disclosure

Despite their setback in Van Hollen, advocates for greater disclosure were boosted in another court case decided earlier this month by the U.S. District Court for the District of Columbia.

In that case, Citizens for Responsibility and Ethics in Washington v. FEC , Judge Christopher Cooper gave the FEC 30 days to reconsider its dismissal of an enforcement complaint against conservative nonprofit groups that spent millions in recent elections but refused to disclose their donors (See previous story, 09/20/16).

The case involved enforcement complaints filed by the liberal watchdog group Citizens for Responsibility and Ethics in Washington (CREW), which were dismissed on deadlocked, party-line votes of the FEC commissioners.

Cooper's ruling said FEC Republican commissioners acted “contrary to law” by voting to dismiss FEC enforcement action against the conservative groups American Action Network (AAN) and Americans for Job Security (AJS). The judge questioned whether the Republican commissioners considered the content of the political attack ads sponsored the conservative groups. The commissioners deemed the ads to be “genuine issue ads” that didn't trigger disclosure requirements.

Whether a group spends most of its money on issue ads or campaign ads is crucial for determining whether it had a “major purpose” of influencing elections and thus was required to register with the FEC as a political action committee and report all of its donors.

To contact the reporter on this story: Kenneth P. Doyle in Washington at kdoyle@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com

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