By T.W. Farnam
Washington Post Staff Writer
Thursday, September 16, 2010; A23
A Supreme Court decision this year dramatically altered the regulation of money in politics, and a recent vote by the Federal Election Commission could change one area of the law that the court left intact: rules governing disclosure of the sources of campaign money.
A key provision of the 2002 McCain-Feingold campaign finance law curbed so-called issue ads, which avoid spending restrictions by focusing on a candidate's position instead of the election - an often subtle distinction.
The Supreme Court has whittled away at the statute, saying it infringes on free speech. But eight of the nine justices have expressed their support for the part of the law that requires disclosing sources of money for issue ads.
Despite the court's enthusiasm, there has been less and less disclosure of donors in recent years. In the 2004 election, when the law went into effect, 71 percent of the disclosure forms for issue ads listed the sources of money. So far this year, only 15 percent of the disclosures have listed a source.
The drop is partly due to a change in the regulations in 2007 following the Supreme Court's decision in Wisconsin Right to Life v. FEC, which allowed corporate and union funding for issue ads. In writing its regulations after the court opinion, the commission said that only the donations made "for the purpose of furthering electioneering communications" must be disclosed.
Among the groups that have not disclosed their funding sources is the conservative American Future Fund, which has reported $3.6 million in spending but has not disclosed any donors. A message left with the Iowa-based group was not returned.
The new conservative group Crossroads Grassroots Policy Strategies recently disclosed some $1.1 million in funding without listing donations. Unions and corporate trade associations have also filed forms listing spending with no source, but their membership typically gives dues or contributions that are not earmarked for political ads.
Watchdog groups say the Federal Election Commission further weakened disclosure requirements last month with a split vote that stopped an investigation of the conservative group Freedom's Watch. The group filed 58 disclosure forms in the 2008 election cycle before disbanding, but only two of them listed contributions. The major source of funding for the group came from casino magnate Sheldon Adelson, the billionaire chairman and chief executive of the Las Vegas Sands Corp. A spokesman for Adelson declined to comment.
The Democratic Congressional Campaign Committee filed the original complaint against Freedom's Watch, citing an article in the New York Times reporting that Adelson "insisted on parcelling out his money project by project" when giving to the group.
The FEC's general counsel recommended that the commission open an investigation, but the three Republican commissioners voted against it, dismissing the complaint. The six-member commission is evenly divided between Republicans and Democrats.
The Republican commissioners said they interpreted the regulations to mean that a donation only needed to be reported if it was for the specific advertisement included on the disclosure form. That means that even if Adelson had given money to run advertisements generally, his name wouldn't be required to be disclosed unless he directed his money toward specific ads.
Campaign watchdogs the FEC decision signals to other interest groups that they needn't worry about investigations into their funding.
"There was no decision made but they basically made clear where they're standing," said Fred Wertheimer, president of Democracy 21, which advocates for stricter regulation of campaign spending.
Four votes would have been required to open the investigation; the commission voted 3-2 against that move, with one commissioner recusing himself.
"This is an unprecedented narrow reading of the regulation," said commissioner Ellen Weintraub, who helped draft the 2007 regulation requiring disclosure of donors. "It's certainly not what I intended when I voted for that regulation."
Weintraub said the regulation was changed in 2007 to prevent an organization like a union from having to disclose the names of millions of members every time it ran an ad - not to exempt groups that spend most of their money on election ads. But Don McGahn, one of the Republican commissioners, said he wasn't sure how to read the requirement. "The enforcement process is not the place to determine what the rule means," McGahn said.