With less than 50 days before this fall’s congressional elections, the ruling has far-reaching consequences that could curtail the ability of major political players to raise money and force the disclosure of some of the country’s wealthiest donors.
In an interview, FEC Chairwoman Caroline Hunter said that the names of certain contributors who give money to nonprofit groups to use in political campaigns beginning Wednesday will have to be publicly reported.
Hunter and other conservatives warned the decision could have a chilling effect just as the midterms are heating up.
“It’s unfortunate that citizens and groups who wish to advocate for their candidate will now have to deal with a lot of uncertainty less than two months before the election,” said Hunter, a Republican appointee.
Advocates for stricter regulation of money in politics celebrated the move.
“This is a great day for transparency and democracy,” Noah Bookbinder, executive director of Citizens for Responsibility and Ethics in Washington (CREW), which brought the case, said in a statement, adding: “We’re about to know a lot more about who is funding our elections.”
The ruling last month by Chief U.S. District Judge Beryl A. Howell will be challenged on appeal. But in the immediate, the decision forces major groups on the left and the right to scramble and reassess how they plan to finance their fall campaigns.
Nonprofit advocacy groups — which do not have to publicly disclose their donors, as political committees do — will now have to begin reporting the names of contributors who give more than $200 per year toward their independent political campaigns, campaign finance lawyers said.
“Moving forward, these groups will need to disclose to the public any donor that gave money for the purpose of influencing a federal election, regardless of whether they want to sponsor a particular race or specific communication,” said Matthew Sanderson, a Republican campaign finance attorney. “Some groups will not need to adjust their approach to raising funds, but this will be a significant change for others.”
The change could affect heavyweight groups across the political spectrum, including the Koch-backed Americans for Prosperity on the right and the League of Conservation Voters on the left.
The case began nearly six years ago when CREW filed a complaint to the FEC, arguing that it should require Crossroads GPS, a major conservative nonprofit, to disclose the names of donors behind a $6 million effort it ran in 2012 against Sen. Sherrod Brown (D-Ohio).
The FEC deadlocked on whether to open an investigation into Crossroads and then dismissed the complaint in 2015. The following year, CREW sued the agency.
In her ruling last month, Howell sided with CREW. In her 113-page opinion, Howell wrote that the FEC’s regulation “blatantly undercuts the congressional goal of fully disclosing the sources of money flowing into federal political campaigns, and thereby suppresses the benefits intended to accrue from disclosure.”
She delayed the disclosure requirement for 45 days to give the agency time to adopt a new rule.
Crossroads GPS unsuccessfully sought to stay the ruling, pending its appeal.
On Tuesday, Chris Pack, spokesman for Crossroads GPS, said in a statement: “While we are disappointed the Supreme Court did not take this opportunity to ensure regulatory clarity for nonpolitical organizations that lawfully engage in election activity, we are confident we can navigate through the current morass and comply with the law, as we always have.”
The FEC must now create a new rule for the nonprofits, but it is unlikely to be in place before the midterms. New regulations must be considered by Congress for 30 legislative days before they go into effect — meaning the FEC would have needed to finish drafting a new rule before the court issued its opinion, for it to go into effect by Sept. 17, the court’s deadline.
Ellen Weintraub, the Democratic vice chairwoman of the FEC, said there is “great interest” among the commissioners to provide guidance ahead of the midterm elections, but said it was too early to specify what that would entail.
Tuesday’s development set off a frenzy among nonprofit groups as they tried to make sense of what the ruling would mean for fundraising and spending activity for the 2018 election.
David Keating, president of the Institute for Free Speech, which opposes campaign finance restrictions, predicted many nonprofit groups will turn to super PACs as a solution.
“They may just take the money they have allocated for this and then decide to just give contributions to super PACs that are going to be active in the races and on the issue that they agree on,” Keating said.
Earlier this month, in the wake of Howell’s ruling, the Koch network launched a new super PAC to serve as a sister organization to Americans for Prosperity.
Conservatives said the decision to throw out the FEC rule raises First Amendment concerns about donor privacy.
“If speakers can’t rely on regulations as written, that chills speech. Additionally, it’s unfair to change rules about political speech in the middle of a campaign, and many organizations have already run [independent expenditure ads] during the current campaign,” according to the Institute for Free Speech.
But Jessica Levinson, an election law professor at Loyola Law School in Los Angeles, said the Supreme Court’s order is a “huge win for the public.”
The now-thrown out rule “was a huge gaping hole in our system and it allowed for so much undisclosed money to be pumped through our electoral system. Disclosure is really all there is left,” Levinson said.