On March 30, the District Court for the District of Columbia ruled in favor of Representative Chris Van Hollen in Van Hollen v. FEC. This week, the U.S. Court of Appeals for the District of Columbia denied the motion for an emergency stay pending appeal. So what does that mean?
A little background first….
Chris Van Hollen, a member of the U.S. House of Representatives from Maryland, brought suit against the FEC in order to challenge a regulation that he contended was in violation of disclosure requirements set out by the Bipartisan Campaign Finance Reform Act (BCRA). The BCRA subjects persons that make disbursements to fund “electioneering communications” to certain disclosure requirements. An “electioneering communication” under that statute is “any broadcast, cable, or satellite communication” that “refers to a clearly identified candidate for Federal office,” is made within thirty days of a primary or sixty days of a general election, and is geographically targeted to the relevant voting public. Each “person” that spends more than $10,000 on the direct costs of producing and airing electioneering communications must file a report with the FEC. If they spend that money out of a separate segregated fund, then they have to disclose all contributors to that fund that contributed a total of $1,000 or more. If the funds come out of an account that is not a separate segregated fund, then all donors who contributed a total of $1,000 or more must be disclosed. Regardless of which account the money came out of, donors are subject to disclosure if they gave that threshold amount anytime since January 1 of the prior calendar year. In 2007, the FEC promulgated a regulation that restricted the disclosure requirements to donations that were made “for the purpose of furthering electioneering communications.” It is this regulation that Rep. Van Hollen challenges in the suit. The regulation created a loophole where donors could give money to a corporation (this includes nonprofits), and as long as it wasn’t for the express purpose of furthering electioneering communications, they didn’t have to disclose. In 2008, 25.1% of the spending by outside parties on the elections was not disclosed. In 2010, that number jumped to 44% (source – Center for Responsive Politics -- http://www.opensecrets.org/outsidespending/disclosure.php).
So what does a win by Van Hollen mean?
First, I want to quickly point out that the district court granted summary judgment in this case. That is a high standard to meet. It means that the judge did not see any material issue that would allow it to find in favor of the FEC. But – the case is being appealed by two corporations that were parties to the suit (the FEC is not appealing). In the meantime, since the Appeals court denied the stay, the District court’s opinion currently stands. This means that corporations (again, this includes nonprofits) that have spend at least $10,000 in a calendar year on what are considered “electioneering communications” are now required to disclose the underlying source of those dollars when the source gave a total of $1,000 or more since January 1st of the preceding calendar year. Whether or not the money was given for the express purpose of funding electioneering communications is no longer relevant to whether or not those dollars have to be disclosed. Organizations who have not established a separate segregated fund (who then would have been disclosing already), should take note.
In denying the stay, the Appeals court made some statements that I hope point towards the courts reversing the current trend in election spending towards nondisclosure. The Court saw no evidence that that the appelants’ contributors would face threats or harassment, or that in any way would be prevented from speaking through the disclosure requirements. If they want to shelter those that don’t give for the express purpose of funding electioneering communications, then they can create a separate segregated fund. Finally, the Court said that Van Hollen would be hampered in his ability to respond to groups that run electioneering ads against him funded by anonymous donations.
A victory for transparency!