D.C. Court of Appeals Denies Stay of District Court Decision in Van Hollen Lawsuit; Groups Now Required to Disclose Contributors Financing “Elections Communications”

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A three-judge panel of the Court of Appeals for the D.C. Circuit late yesterday turned down a request to stay a district court ruling that struck down an FEC regulation that had all but eliminated the disclosure of donors to groups that make “electioneering communications” in federal elections.

The district court ruling by Judge Amy Berman Jackson on March 30, 2012 came in a case brought last year by Representative Chris Van Hollen (D-MD), and held that the FEC regulation was in violation of a statutory requirement that “all contributors” to such groups be disclosed.

“This is a very important victory in the battle to end secret contributions being funneled into federal elections,” according to Democracy 21 President Fred Wertheimer, one of the lawyers in the case. “This case represents the first major breakthrough in the effort to restore for the public the disclosure of contributors who are secretly providing massive amounts to influence federal elections,” Wertheimer said.

Representative Van Hollen is represented in the lawsuit by the Democracy 21 legal team led by WilmerHale senior partner Roger Witten and including lawyers from Democracy 21. Lawyers from the Campaign Legal Center also participated in the case.

“In the 2010 congressional races, groups making “electioneering communications” disclosed the sources of less than 10 percent of their $79.9 million in “electioneering communications” expenditures,” Wertheimer said.

“Every organization making “electioneering communications” in the 2012 presidential and congressional elections is now required to disclose the donors whose funds are being used to pay for their “electioneering communications,” according to Wertheimer. “All groups making “electioneering communications” are now on notice and we expect them to fully comply with the contribution disclosure provisions in the future,” Wertheimer stated.

Groups making “electioneering communications” can either set up a separate bank account to fund all of their “electioneering communications” and disclose the donors of $1,000 or more to that bank account, or alternatively the groups are required to disclose all of their donors of $1,000 or more to the organization, according to the disclosure provisions of the campaign finance law.

“Electioneering communications” are defined under the law as broadcast ads that mention a federal candidate and that are run within 60 days of a general election or 30 days of a primary.

Representative Van Hollen and his lawyers are currently considering bringing a second lawsuit to challenge a similarly flawed FEC regulation that applies to disclosure of contributors funding “independent expenditures,” ads that expressly advocate the election or defeat of a candidate.

“The Van Hollen lawsuit is one part of a multi-prong effort being undertaken to end hundreds of millions of dollars in contributions being secretly laundered into federal elections,” Wertheimer stated.

“Other efforts to restore campaign finance disclosure include the battle in Congress to enact the DISCLOSE Act of 2012 sponsored in the Senate by Senator Sheldon Whitehouse (D-RI) and Representative Chris Van Hollen (D-MD); and complaints filed at the IRS by Democracy 21, joined by the Campaign Legal Center, to challenge the eligibility of certain groups for tax-exempt status as section 501(c)(4) “social welfare” organizations,” Wertheimer stated.

“The groups whose claimed tax status is being challenged include Crossroads GPS, the brainchild of Republican operative Karl Rove, and Priorities USA, an organization backing President Obama. These groups are attempting to claim status as 501(c)(4) “social welfare’ organizations in order to avoid disclosing their donors,” Wertheimer said.

Other efforts are also being pursued at the Securities Exchange Commission and with individual corporations to obtain increased disclosure of campaign finance activities by public corporations.

In yesterday’s decision, Court of Appeals Judges Judith Rogers and Thomas Griffith voted to deny the stay.  The third member of the panel, Judge Karen LeCraft Henderson, would have granted the stay.

Judges Rogers and Griffith issued an opinion in support of their decision to deny the stay stating that the intervenors “have failed to make a strong showing that they are likely to succeed on the merits” or “demonstrate that they will be irreparably injured absent a stay.”

Judges Rogers and Griffith said that “Congress was clear that all contributors of $1,000 or more are covered” by the disclosure requirement.  “[I]n BCRA Congress evinced a clear intent not to limit section 434(f)(2)’s reach, and instead to cover all contributors of $1,000 or more.”

In rejecting the intervenors’ argument that they will be irreparably harmed absent a stay, Judges Rogers and Griffith relied on the Supreme Court’s decision in Citizens United v. FEC and said that the intervenors “provided no evidence that their contributors would face threats, harassment, or reprisals if their names were disclosed and thus they fail to demonstrate how the disclosure requirements prevent them from speaking.”

Judges Rogers and Griffith also noted that a stay would cause “substantial harm.”  In quoting Citizens United, they said,

 The Supreme Court upheld BCRA § 201, acknowledging that the public interest is best served by access to more, not less, information: ‘Disclosure [requirements are] justified…on the ground that they [] help citizens make informed choices in the political marketplace.’”

Judge Amy Berman Jackson district court ruling invalidated an FEC regulation which required disclosure only of donors who made contributions to a group “for the purpose of furthering” an electioneering communication.  Judge Jackson reinstated an earlier FEC regulation which instead requires disclosure of “each donor” who donated $1,000 or more to the group making an electioneering communication, without regard to the donor’s purpose in making the donation.

“The broader disclosure requirement is now in effect,” Wertheimer said.

The Federal Election Commission voted not to appeal the district court ruling by Judge Jackson.  But two groups which intervened in the case in support of the FEC regulation – the Center for Individual Freedom and the Hispanic Leadership Fund – filed an appeal of the district court ruling.  They also filed the request for a stay of the decision pending appeal, which was rejected by Judge Jackson and by the D.C. Circuit Court of Appeals yesterday.

The D.C. Circuit panel set an expedited schedule for the pending appeal of the district court ruling to the Court of Appeals with briefing on the appeal to be completed by early August and oral argument to be held sometime in September.