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Court Supports Electioneering Ad Disclosures

Rep. Chris Van Hollen (D-Md.) has won another victory in his legal battle to force the Federal Election Commission to write stricter disclosure rules for certain types of political ads.

A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit rejected a request by two conservative groups that it stay a March federal district court ruling that sided with Van Hollen. Van Hollen sued the FEC last year, arguing that its disclosure regulations for “electioneering communications” were too narrow and contrary to the 2002 Bipartisan Campaign Reform Act.

The appeals court ruling, which came late on Monday, raises the prospect that politically active trade associations and nonprofits will have to more fully report who funds the ads they run on the eve of an election.

The ruling doesn’t apply to campaign ads, which explicitly call for a candidate’s election or defeat, but to what’s known as electioneering communications — ads that picture or name a candidate 30 days before a primary or 60 days before a general election.

In 2010, an array of outside groups spent some $80 million on electioneering communications, according to the Center for Responsive Politics. Such expenditures are expected to soar this year with the proliferation of politically active nonprofits in the wake of the Supreme Court’s 2010 Citizens United ruling that freed up corporate and union political spending.

In a statement, Van Hollen said the decision is “yet another important step in our continuing fight to restore transparency to our electoral process,” adding that  it signals that the public interest is best served by increased donor disclosure.

A key question is how major political spenders such as the U.S. Chamber of Commerce and Crossroads Grassroots Policy Strategies, a social welfare group affiliated with the GOP super PAC American Crossroads, interpret the Appeals Court’s ruling.

On the one hand, the ruling leaves no doubt that the more comprehensive disclosure rules laid out in the Bipartisan Campaign Reform Act now stand. That law required groups paying for electioneering communications to publicly report all donors of $1,000 or more, or set up a segregated, fully disclosed fund for such ads. Some election lawyers speculate that politically active social welfare groups will now start to set up such funds.

“All groups making ‘electioneering communications’ are now on notice that we expect them to fully comply with the contribution disclosure provisions in the future,” Democracy 21 President Fred Wertheimer said in a statement. Before Van Hollen took his case to court, political players could take cover behind FEC regulations that essentially required disclosure only of donors whose money had been earmarked for specific ads.

On the other hand, political players may be emboldened by the FEC’s growing reputation as a stalemated agency that fails to aggressively enforce election laws, said Tara Malloy, senior counsel for the Campaign Legal Center, which along with Democracy 21 has worked with Van Hollen on his legal challenge.

“The statute is pretty clear that all donors have to be disclosed,” Malloy said. But she added that some politically active groups might be prepared to play what she called “FEC Russian roulette,” wagering  that the agency will fail to act if outside players don’t fully report who’s paying for their electioneering communications.

The appeals court’s ruling is “not the end of the legal road,” Campaign Legal Center President Trevor Potter noted. Van Hollen is planning another legal challenge to the FEC’s disclosure regulations for independent campaign expenditures, which he argues are also too narrow and contain similar loopholes. Such expenditures take the form of explicit campaign ads run by groups such as unrestricted super PACs.

Van Hollen’s first victory over electioneering communications came on March 30, when U.S. District Court Judge Amy Berman Jackson upheld his challenge and ordered the FEC to rewrite its disclosure rules.

The FEC did not appeal, but a pair of conservative nonprofits that had intervened in the case — the Center for Individual Freedom and the Hispanic Leadership Fund — filed their own appeal and requested a stay.

The appeals court’s three-judge panel rejected that stay, signaling that the more stringent rules that Van Hollen had defended now stand. The two groups requesting the stay “provided no evidence that their contributors ‘would face threats, harassment, or reprisals if their names were disclosed,’ and thus they fail to demonstrate how the disclosure requirements ‘prevent [them] from speaking,’” wrote Court of Appeals Judges Judith Rogers and Thomas Griffith.

The judges also cited arguments in favor of disclosure that the Supreme Court made in both the McConnell v. FEC ruling that upheld the Bipartisan Campaign Reform Act and in the Citizens United ruling that rolled back restrictions on independent corporate and labor spending.

A final decision on the Van Hollen challenge is not expected for several months, and some speculate that the case will eventually make its way to the Supreme Court.

“I expect this stay request to now end up before the Supreme Court, where the outcome may be different,” wrote Richard Hasen, a professor of law at the University of California, Irvine, on his election law blog.