March 30, 2012: Judge Broadens FEC Disclosure Requirements for Campaign Donations

A federal court rules that the Federal Election Commission (FEC) has exceeded its authority by requiring only corporations and labor unions, and not all contributors, to report contributions made for the purpose of furthering electioneering communications as defined in the 2002 Bipartisan Campaign Reform Act (BCRA—see March 27, 2002). Judge Amy Berman Jackson of the US District Court in Washington, DC, issues the ruling in the case of Van Hollen v. Federal Election Commission, filed by US Representative Chris Van Hollen (D-MD—see April 21, 2011 and After). Under the BCRA, corporations or labor unions who do not segregate their funds for campaign purposes as opposed to more general purposes must report all contributions of $1,000 or more. (The Citizens United decision of 2010 rendered such segregation of funds optional—see January 21, 2010.) Those contributions include money donated by anyone who gives to a corporation or labor union. In December 2007, the FEC revamped its disclosure regulation in the wake of the Right to Life v. Federal Election Commission ruling (the so-called “WRTL ruling”—see June 25, 2007) to create a loophole allowing corporations to evade disclosure requirements. 501(c)4 groups such as Crossroads GPS have avoided disclosure of their donors by using this loophole. Jackson agrees with Van Hollen, ruling that the FEC’s revision violates the plain language and legislative purpose of the BCRA. Jackson writes: “Congress spoke plainly, that Congress did not delegate authority to the FEC to narrow the disclosure requirement through agency rulemaking, and that a change in the reach of the statute brought about by a Supreme Court ruling did not render plain language, which is broad enough to cover the new circumstances, to be ambiguous. The agency cannot unilaterally decide to take on a quintessentially legislative function; if sound policy suggests that the statute needs tailoring in the wake of WRTL or Citizens United, it is up to Congress to do it.” She rejected arguments that broader reporting requirements would place an undue burden on corporations and unions, and thusly would violate their First Amendment freedoms, ruling that the Citizens United decision already invalidated those arguments by upholding BCRA reporting requirements. If Jackson’s ruling survives an appeal, the FEC will have to go back and revamp its regulatory language to require disclosure of all contributors, no matter what the purpose, for any corporation or labor union that uses general, unsegregated funds for campaign purposes. Or, corporations and unions may choose to create segregated funds for campaign purposes in order to avoid reporting their contributors. Josh Israel of the liberal news Web site Think Progress writes that even if the FEC chooses to rewrite its rules to comply with Jackson’s ruling, “countless loopholes remain” to allow corporations and unions to shield the identities of their donors. For instance, donors and companies could more-or-less launder donations through middle-man groups, shielding their own identities. “Even if we somehow achieved full disclosure… for all political spending,” Israel writes, “any meaningful reforms to the campaign finance system will require the high court to reverse the 5-4 Citizens United ruling.” [Law Librarians' Society of Washington, D.C., 9/2002; National Archives and Records Administration, 2012; Van Hollen v. Federal Election Commission: Memorandum Opinion, 3/30/2012; Constitutional Law Prof Blog, 4/3/2012; Think Progress, 4/9/2012] On May 14, an appeals court will refuse a stay of the decision, filed by an organization identified in the court order as the Center for Individual Freedom. [US Court of Appeals for the District of Columbia Court, 5/14/2012 ]