FEC Disclosure Loophole Closes On Secret Donors As Court Won't Stay Ruling

WASHINGTON -- A court ruling requiring non-disclosing political groups -- including the U.S. Chamber of Commerce and the Koch brothers' Americans for Prosperity -- to disclose their donors is one step closer to going into effect after a district court refused to stay its ruling in the face of an appeal.

On March 30, a district court ruled in Van Hollen v. Federal Election Commission (FEC) that a loophole in FEC rules that allowed certain independent group campaign efforts to keep private the names of donors was invalid and needed to be rewritten or reset to the original language.

On Friday, the court not only refused to stay the ruling, as requested by two intervening groups that are appealing the case, the Center for Individual Freedom and the Hispanic Leadership Fund, but the court also found that its ruling invalidated the FEC loophole, which required it to be immediately closed, resetting to the original language in the McCain-Feingold campaign reform law, known officially as the Bi-Partisan Campaign Reform Act (BCRA).

District Court Judge Amy Berman Jackson wrote, "Prior to the promulgation of the regulation that was struck down, there was a valid regulation in effect implementing the BCRA's disclosure requirement. ... In light of the Court's ruling, that regulation now governs the disclosures required under the BCRA."

That language in the McCain-Feingold law required groups spending money on electioneering communications -- certain campaign ads running 30 days before a primary election and 60 days before a general election-- to disclose all donors giving $1,000 or more.

The appeal in the case is being made by the two intervenors after the FEC declined to appeal on Thursday.

"[T]he District Court's opinion in this case is thorough and well-reasoned, and does not have sufficient weakness to suggest it is likely to be reversed on appeal," the Democratic FEC commissioners Ellen Weintraub and Cynthia Bauerly wrote. "Nor does this case raise significant constitutional issues or require further guidance from the courts."

The three Republican Commissioners, Caroline Hunter, Donald McGahn and Matthew Peterson, penned a long objection to the decision not to appeal, stating, "The district court's ruling in this litigation leaves us with little direction to resolve the difficult questions facing members of the public who sponsor electioneering communications."

In 2007, the FEC wrote rules that allowed these groups to disclose only those donors who specifically earmarked their contributions for the specific electioneering communications being disclosed to the FEC. This allowed groups to claim that all donations were to their general treasuries and none were specifically intended to be spent on a particular advertising campaign.

"Today is a good day for disclosure, and we will continue our fight to restore the integrity of our electoral process," Rep. Chris Van Hollen (D-Md.), the lead plaintiff in the case, said in a statement. "The American people have a right to know who is behind the front groups spending millions of dollars to sway their vote."

The appeals court now hearing the case can still stay the ruling. If the appeals court refuses to stay the ruling, however, then the original language requiring disclosure of donors giving $1,000 or more will go into effect immediately, barring any new rules quickly written and adopted by the FEC.

Already this election year groups have spent $4.4 million on electioneering communications. These groups include the Karl Rove-linked Crossroads GPS, the U.S. Chamber of Commerce, Americans for Prosperity, American Future Fund, Planned Parenthood Action Fund, American Conservative Union and the Emergency Committee for Israel.

One way that these groups could avoid having to disclose all of their donors when making an electioneering communication would be to set up a separate account to spend on political advertising and then disclose only the donors to that account.