Federal District Court in Van Hollen Case Strikes FEC Regulation that Gutted Contribution Disclosure Requirement for Outside Groups Making Expenditures Close to an Election

The federal district court in Washington D.C. today struck down a regulation issued by the Federal Election Commission (FEC) that has severely limited the reporting of donors to groups making “electioneering communications.”

The decision was issued in a case brought in 2011 by Rep. Chris Van Hollen (D-MD). 

The case challenged a disclosure regulation issued by the FEC that limited reporting by groups making “electioneering communications” to only require that they disclose the names of their donors who gave money “for the purpose of furthering electioneering communications.”

Under the FEC rule, there has been little or no reporting of the donors funding groups making electioneering communications. The regulation allowed donors to avoid disclosure simply by claiming they were not giving the contributions to further electioneering communications.

Judge Amy Berman Jackson in today’s opinion concluded that the FEC rule impermissibly narrowed the disclosure provision in the Bipartisan Campaign Reform Act (BCRA) which requires a group making electioneering communications to report the names of “all contributors who contributed an aggregate amount of $1,000 or more” to the person making the disbursement for the electioneering communication.

 Judge Jackson said the FEC’s promulgation of the regulation narrowing the disclosure requirement “was arbitrary, capricious, and contrary to law” and further concluded the regulation “is an unreasonable interpretation of BCRA for several reasons.” 

The lawsuit was developed by Rep. Van Hollen working with Democracy 21. Rep. Van Hollen was represented in the case by Roger Wilson and his law firm WilmerHale, joined by lawyers from Democracy 21, the Campaign Legal Center and Public Citizen.

According to Democracy 21 President Fred Wertheimer:

Today’s court victory for disclosure shows that the FEC gutted a statutory contribution disclosure requirement for outside groups making expenditures close to an election.

The FEC through flawed regulations enabled and facilitated the flow of dark money into federal elections. Instead, the FEC should have carried out its statutory responsibilities to properly implement the disclosure laws.    

The FEC must act now to adopt effective contribution disclosure regulations for outside spending groups that serve the interests of the American people and not the interests of anonymous donors and the officeholders who benefit from their secret contributions.

Although the FEC initiated its rulemaking in response to a Supreme Court decision that narrowed the definition of “electioneering communications” for purposes of the ban on corporate and union spending,  FEC v. Wisconsin Right to Life, 551 U.S. 449 (2007), Judge Jackson found that nothing in that decision required the Commission to narrow the reporting requirements for electioneering communications.  She concluded that “the Commission’s action was unmoored from the stated basis for embarking on a rulemaking in the first place” and “nothing the Supreme Court did in that case provides a basis for narrowing the disclosure rules enacted by Congress.”

She also found that “there is little or nothing in the administrative record that would support the Commission’s decision to introduce a limitation into the broad disclosure rules in the BCRA.”  There is, Judge Jackson said, “a very poor fit between the rule that was promulgated and both the question and the evidence that were before the agency at the time.”

Finally, she said that the language of the regulation that narrows the scope of disclosure “is inconsistent with the statutory language and purpose of the BCRA.”  She said that the regulation is “contrary to the policy goal that Congress intended to implement” and that the rule “serves to frustrate the aim of the statute because the introduction of a subjective test to the reporting regime creates an exception that has the potential to swallow the rule entirely.”

Judge Jackson concluded that “the fact that some contributors ‘just don’t want their names known’ does not provide grounds to override a clear Congressional choice in favor of transparency.”

The court vacated the disclosure regulation, which means that the regulation is no longer in effect.

In March 2012, the district court invalidated the same rule on different grounds.  That decision was reversed on appeal by the Court of Appeals for the D.C. Circuit in September 2012, which remanded the case back to the district court for further consideration.  Today’s opinion addresses the grounds that the D.C. Circuit ordered the district court to review.

 

 

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