FEC Should Disclose Information on Group’s Funders, Court Told

By Kenneth P. Doyle

The Federal Election Commission could remedy a long-running enforcement case at no cost simply by releasing information already known to the agency about who funded a now-defunct conservative nonprofit group, the liberal watchdog Citizens for Responsibility and Ethics is Washington (CREW) argued in recently filed court papers ( CREW v. FEC, D.C. Cir. No. 17-5049, order 5/18/17).

CREW is pursuing a case before the U.S. Court of Appeals for the District of Columbia Circuit, seeking disclosure of funding for the nonprofit Commission on Hope, Growth and Opportunity. The mysterious entity, known as CHGO, spent millions of dollars from an undisclosed donor or donors on ads opposing House Democrats in the 2010 elections. CHGO then ceased operating after the election and the FEC began investigating it.

The appeals court May 18 ordered a briefing schedule for the case, calling for all written briefs to be submitted by Aug. 10. The D.C. Circuit hasn’t yet named the three-judge panel that will consider the case nor scheduled oral argument.

Legality of Secret Donors at Issue

An administrative enforcement complaint was filed by CREW with the FEC charging that CHGO illegally failed to report its donors or spending despite sponsoring about $4 million worth of TV ads attacking Democrats in the 2010 campaign. CHGO and other outside spending groups helped Republicans take control of the House that year. Democrats and liberal watchdog groups alleged that a number of these groups illegally kept their donors secret.

The enforcement complaint against CHGO was dismissed on a deadlocked 3-3 vote of the FEC commissioners. The three Republican commissioners argued the case should be dropped because the spending group has ceased operating and that it would be too costly and would risk extended litigation if the identity of the CHGO’s funders are released now.

A federal district court found the FEC was within its prerogative to dismiss the enforcement matter based on a desire to preserve resources and avoid further litigation. The appeals court should reverse that ruling, CREW argued in a court filing with the appeals court last month, because the FEC Republicans’ concerns about cost and litigation risk are misplaced.

FEC Already Has Donor Information

The FEC is able to remedy the violation of disclosure rules now, at no cost, because it has already uncovered in an investigation the information about CHGO’s funders sought in the court challenge, CREW said.

The FEC has acknowledged that its investigation found out who funded CHGO, but the agency has refused to release this information. A request for the identity of conservative group’s funders filed by Bloomberg BNA under the Freedom of Information Act recently was denied by the FEC, citing privacy concerns.

The judge who first considered CREW’s court challenge, Rudolph Contreras of the U.S. District Court for the District of Columbia, said in a ruling earlier this year that he wouldn’t reverse the FEC’s dismissal. Although the FEC had “strong grounds to prosecute” CHGO for campaign finance violations, the judge said, the agency also had the discretion to drop the case because it dragged on for so long that a statute of limitations had lapsed and the nonprofit group had ceased operating.

The judge acknowledged that the FEC’s investigation had uncovered information about the contributors who provided funding for CHGO’s political ads. But, Contreras said, the FEC could face a legal challenge if it released this information.

CHGO’s case was one of several in which FEC critics have challenged the agency’s inaction against non-disclosing groups spending what they term “dark money” in recent elections. The FEC has deadlocked in many of these cases, with the three commissioners holding Democratic seats voting to pursue enforcement action and the three Republican commissioners voting to drop the cases.

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

To contact the editor responsible for this story: Paul Hendrie at pHendrie@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.