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Van Hollen v. FEC

Appeals Court Allows Campaign Finance (Non) Disclosure Rule to Stand

    

A three-judge panel of a federal appeals court upheld an extremely problematic rule that shields the identity of campaign contributors.

Background

Section 201 of the federal Bipartisan Campaign Reform Act (BCRA) — also known as the “McCain-Feingold” law — generally requires any “person” (including any entity or organization) making a payment for an “electioneering communication” to disclose the identity of “all contributors who contributed an aggregate amount of $1,000 or more to the person making the disbursement.” However, the Federal Election Commission (FEC) in issuing the regulation implementing the law required corporations or labor organizations making these disbursements to comply with this provision only if the donations were made specifically for the purpose of furthering electioneering communication.

Campaign watchdog groups challenged this rule, arguing it turned the BCRA on its head. Rather than furthering open disclosure by requiring the identification of donors donating to an entity that on its whole seeks to influence elections, the regulation narrows mandatory disclosure of donors to those specifically seeking to influence elections. This requires examining the intent of donors rather than the intent of the organization expending the funds.

Significantly, before FEC promulgated this regulation, 71 percent of all electioneering communication reports filed with the FEC in 2004 disclosed names of other donors but by 2010, following the regulation’s issuance, only 15 percent of reports provided this disclosure. This means that in 2010, the public had information on the sources of only about $8 million in donations, while the origins of $67 million in spending remained a mystery. A federal district court ruled that the regulation exceeded the FEC’s authority under BCRA. While the FEC did not appeal, groups hostile to campaign finance restrictions did.

The case came before the D.C. Circuit, where AARP Foundation Litigation attorneys filed AARP’s friend-of-the-court brief in conjunction with eight other organizations. The brief supported the plaintiffs and argued that Congress and the Supreme Court have repeatedly recognized the vital function full disclosure plays in campaign finance regulations. The Supreme Court’s Citizens United decision in 2010 — which permitted corporations to make campaign contributions — affirmed the constitutionality of Section 201 and the importance of transparency. It was only the latest in a long line of Supreme Court and lower court decisions supporting disclosure and transparency in federal campaign finance. Congress mandated that the identity of all contributors be disclosed and did not leave room for the FEC to adopt a test of its own making. “[A]ll contributors,” the brief argued, means all contributors. A three-judge panel rebuffed the challenge to the FEC’s rule. The Court of Appeals disagreed with the District Court’s reading of the BCRA as clearly inconsistent with the FEC’s interpretation — i.e., FEC’s inclusion of a “purpose” element in identifying those contributions ultimately used for electioneering communications that are prohibited. However, the D.C. Circuit declared itself unable to discern whether the FEC’s reading of the BCRA — i.e., including the purpose element — was a “reasonable” one, because the FEC declined to appeal the District Court’s judgment. Thus, the FEC was not before the Court of Appeals to explain itself either in briefing or argument. The appellate court thus remanded the case to the agency, to conduct proceedings explaining its rule so that the District Court, and later, if necessary, the Court of Appeals, could evaluate the validity of the agency’s rationale.

 

 

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