Koch Brothers, Chamber of Commerce Face Possible Campaign Donation Disclosure After Ruling

Court Ruling: Rules Blocking Disclosure By Kochs, Rove, Chamber Invalid

WASHINGTON -- On Friday evening, the U.S. District Court for the District of Columbia issued a ruling that could begin the process of revealing the identities of secret donors to groups connected to Karl Rove and the Koch brothers.

The court ruled in Van Hollen v. Federal Election Commission that the FEC rules that restricted campaign donor disclosure are not valid and must be changed to provide for disclosure.

"We are very happy to see the judge got it right," says Paul Ryan, a lawyer for the Campaign Legal Center, a campaign finance watchdog that was a part of the team challenging the FEC rules.

Those rules state that donors to groups spending money on "electioneering communications," or advertisements that do not specifically call to elect or defeat a candidate, must only be disclosed if they specifically earmarked their donation to that particular expenditure. Since few, if any, donors to these groups ever earmark their donation for a specific election expense there was no disclosure.

That FEC rule came in the wake of the 2007 Supreme Court ruling in Wisconsin Right to Life v. FEC. That ruling overturned a ban, instituted by the McCain-Feingold campaign finance reform law, regarding direct corporate and union contributions to electioneering communications.

Friday's court ruling could reverse a trend started by the FEC rules, and aggravated by the Supreme Court's 2010 Citizens United decision, that led to an explosion in undisclosed contributions to electoral efforts. The percentage of independent spending that went undisclosed jumped from 1 percent in 2006 to 43.8 percent in 2010, according to the Center for Responsive Politics.

Advertisements falling under the rubric of "electioneering communications" include those run against President Barack Obama by the American Energy Alliance and Americans for Prosperity, both non-profits linked to the Koch brothers. All ads run by the U.S. Chamber of Commerce are classified as "electioneering communications." The ruling would require for the first time that contributions to these groups, and many more, be disclosed.

Crossroads GPS, a non-profit linked to Karl Rove, has run millions of electioneering communications against Obama and Democratic senators this election cycle without disclosing any of their donors.

Rep. Chris Van Hollen (D-Md.) challenged these FEC rules in 2011, arguing that the rules preventing disclosure were an unlawful interpretation of the plain language of the McCain-Feingold campaign finance reform law, which mandated disclosure of these donors. Therefore, he said, they should be tossed out by the court.

"This is good news for our democracy and for voters - this victory will compel the FEC to require enhanced disclosures of the funders of campaign-related advertisements," Van Hollen said in a statement.

Judge Amy Berman Jackson stated Friday in her ruling that, "there is no question that the regulation promulgated by the FEC directly contravenes the Congressional goal of increasing transparency and disclosure in electioneering communications."

"In sum, the Court finds that Congress spoke plainly, that Congress did not delegate authority to the FEC to narrow the disclosure requirement through agency rulemaking, and that a change in the reach of the statute brought about by a Supreme Court ruling did not render plain language, which is broad enough to cover the new circumstances, to be ambiguous," the ruling continued. "The agency cannot unilaterally decide to take on a quintessentially legislative function; if sound policy suggests that the statute needs tailoring in the wake of WRTL or Citizens United, it is up to Congress to do it."

Fred Wertheimer, the president of campaign finance watchdog group Democracy 21 and another one of the lawyers representing Van Hollen, said in a statement, "Now it is the FEC’s turn to act. Democracy 21 calls on the FEC to conduct an immediate rulemaking procedure. The FEC must get new rules in place promptly to ensure that outside spenders making electioneering communications disclose the donors funding these campaign related expenditures."

While the ruling unambiguously states that the FEC's rules on electioneering communications are in contravention of congressional intent and should be invalidated, the next step remains murky.

"If this ruling stood and this was the end of it, we'd have much more disclosure," explained University of California-Irvine law professor Rick Hasen. "I don't think that this is going to be the end of it."

On his Election Law Blog, Hasen laid out five possibilities of what could transpire in the wake of this decision, including the FEC immediately writing new, appropriate rules or an appeal from the FEC, prolonging the court challenge. The FEC requires four votes from its six commissioners to appeal a decision.

"This is a good day for those who want to shine light on who's funding our elections," Hasen said. "These things are years in the making. People who think that this is going to solve all the problems immediately are probably going to be disappointed."

The efforts by the Van Hollen team will also continue, according to the statement from Wertheimer. He explained that the legal team will now consult on "a potential second lawsuit challenging the FEC disclosure regulations that have gutted the contribution disclosure requirements for outside groups making independent expenditures."

Independent expenditures are election expenses that do call for the election or defeat of a candidate. This type of spending is what corporations and unions were freed to spend money on in the Supreme Court's Citizens United ruling.

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