Democrats finally caught a break on their effort to increase regulation of money in politics last week when a federal judge in Washington threw out a loophole in disclosure requirements.
U.S. District Judge Amy Berman Jackson ruled that the Federal Election Commission had overstepped its authority in 2007 when it issued rules allowing groups that produce so-called “issue ads” to withhold the names of those funding the ads. Rep. Chris Van Hollen (D-Md.) had challenged the regulations.
The case centers on rules for “electioneering communications,” ads that mention a candidate’s name just before an election but don’t explicitly call for the candidate’s election or defeat. Those commercials, also known as issue ads, have long been used as a way for groups that don’t already disclose donors to avoid doing so.
The U.S. Chamber of Commerce and nonprofit groups such as Crossroads GPS have run millions of dollars worth of electioneering communications without disclosing donors. The ruling does not affect super PACs, which already disclose donors.
The March 30 decision was the first time that Democrats have made any headway in their effort to blunt the rapid growth in undisclosed spending by interest groups after the Supreme Court’s Citizens United decision in 2010, which allowed direct election spending by corporations and unions. Interest-group spending heavily favored the GOP in the 2010 midterm elections.
President Obama and congressional Democrats are pushing for new legislation, dubbed the Disclose Act, that would force more groups to release the names of financial backers. The measure failed to overcome Republican opposition in the Senate ahead of the 2010 elections and hasn’t drawn Republican support in the current Congress.
Jackson’s ruling suggests that Democrats and their allies may have better luck in the courts. The lawsuit is one of several regulation challenges and complaints requesting that interest groups funding ads be investigated.
“This is going to be a long fight, but I think we will prevail in the end,” Van Hollen said in an interview. “I think voters overwhelmingly support the idea of greater transparency because they understand the connection between greater transparency and greater accountability.”
But the ultimate outcome of the recent court decision is still in doubt. If the FEC decides to appeal the ruling, new rules are likely to be delayed. Even if there is no appeal, new regulations are unlikely to be written before the November elections, and in the meantime, it is unclear which rules would apply.
Two groups, the Hispanic Leadership Fund and the Center for Individual Freedom, joined the case as “intervenors” supporting the FEC regulations, and they could also appeal the decision. The Center for Individual Freedom and a lawyer for the Hispanic Leadership Fund did not respond to a request for comment.
Congress passed a law regulating issue ads as part of the 2002 McCain-Feingold act overhauling election funding. In 2007, the Supreme Court ruled that part of the law banning corporate and union funding for electioneering communications was unconstitutional. The FEC changed its rules for disclosure so that only donations “made for the purpose of furthering” the ads would need to be publicly revealed.
That was meant to prevent the awkward situation where a labor union would be required to list all of its dues-paying members or a corporation would have to list its shareholders and customers. In practice, it created a loophole that interest groups used to avoid nearly all disclosure.
The Center for Responsive Politics reports that donors were kept secret for more than 40 percent of the $300 million spent by interest groups in the 2010 election.