Judge Hints Could Remand Disclosure Case to FEC

By Kenneth P. Doyle

Sept. 12 —A federal judge suggested he might remand to the Federal Election Commission a dismissed enforcement matter involving politically active nonprofit groups that refused to disclose their funders ( CREW v. FEC, D.D.C., No. 14-cv-1419, hearing 9/12/16 ).

In a nearly two-hour court hearing, Judge Christopher R. Cooper of the U.S. District Court for the District of Columbia questioned whether Republican FEC commissioners voting to dismiss the enforcement cases against the conservative groups, American Action Network (AAN) and Americans for Job Security (AJS), carefully considered the ads the groups sponsored.

Cooper quizzed lawyers for the FEC and conservative groups about whether the ads in question could be considered “genuine issue ads,” rather than campaign ads intended to elect or defeat candidates. The question is crucial for determining whether the groups had a “major purpose” of influencing elections and thus were required to register with the FEC as political action committees and report their donors.

‘Viagra' for ‘Rapists.'

Cooper noted that one of the ads in question attacked a candidate for “giving Viagra to rapists,” while others focused on policy questions but also called on viewers to remember candidates positions “in November.”

Charles Kitcher, an FEC attorney, and Claire Evans, an attorney with the firm Wiley Rein representing the conservative groups, both insisted that the Republican FEC commissioners voting to dismiss enforcement action considered these ads to be issue ads, not campaign ads, and that the courts must defer to their decision.

Arguing that the groups were required disclose their funding and that the enforcement cases against them were improperly dismissed was attorney Stuart McPhail, representing the liberal watchdog group Citizens for Responsibility and Ethics in Washington (CREW).

Cooper questioned McPhail during the court argument, asking repeatedly why the court was not required under previous precedents to give deference to a federal agency's decisions on matters within its jurisdiction.

Following the hearing, Cooper gave no firm indication how he would rule. He said the court would take under advisement the parties' cross motions for summary judgment and issue a ruling “as soon as we can.”

Few Challenges to FEC Succeed

Campaign finance law allows entities that file enforcement complaints, like CREW, to file a court challenge if an FEC complaint is dismissed. However, few of these court cases have succeeded in the past, usually because of procedural hurdles and the courts' deference to the FEC's “prosecutorial discretion.”

In recent years, however, liberal groups challenging conservative nonprofits' nondisclosure of donors going back to the 2010 campaign filed a series of court cases, all of which were dismissed by the FEC based on a 3-3 deadlocked vote of the commissioners. The commissioners include three recommended by Democrats and three by Republicans.

None of these ongoing court cases has yet resulted in a decision, though one is farther along than CREW's case involving enforcement action against AAN and AJS. That case, which was filed by the liberal nonprofit Public Citizen, involves the FEC's dismissal of an enforcement action against the conservative nonprofit Crossroads GPS, which is linked to prominent Republican political adviser Karl Rove.

Another federal judge in the U.S. District Court in Washington, Richard Leon, held a hearing last month in the case involving Crossroads GPS. At the conclusion of that hearing Leon gave no indication how or when he would rule on summary judgment motions.

Leon Questioned ‘Crystal Ball Exercise.'

The argument at the court hearing before Leon also focused on whether the three Republican FEC commissioners, who voted against enforcement action, had adequate legal reasons for doing so. Leon asked, however, whether it was “a crystal ball exercise” to try to second-guess the reasoning of the Republican FEC commissioners.

The conservative nonprofit groups involved in these court challenges have spent tens of millions on dollars since the 2010 Supreme Court decision in Citizens United v. FEC, which struck down decades-old barriers to corporate campaign spending and led to a big increase in political ad spending by outside groups not directly linked to candidates. Some of the nondisclosing groups, which mainly supported Republican candidates, may have been funded by corporations, but the donors to these groups have never been revealed.

The current status of Crossroads GPS, AAN and AJS, in terms of involvement in elections, is unclear. Although the groups reported spending a combined amount of nearly $200 million to influence elections from 2010 through 2014, they have reported no major independent expenditures to the FEC in the current election cycle.

If court challenges succeed in forcing FEC action against Crossroads GPS, AAN and AJS, however, that could be significant for the future of campaign spending by other nondisclosing groups. Groups engaged in such spending—which critics call “dark money”—have proliferated.

According to an analysis of FEC reports by the nonprofit Center for Responsive Politics, total campaign spending by groups that disclose none of their funding sources has already reached more than $60 million in the current cycle, though the percentage of outside campaign spending from undisclosed sources is less than in the last election.

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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