Groups Ask Appeals Court to Keep Issue-Ad Donors Secret

A U.S. appeals court was asked to reinstate a Federal Election Commission rule that allowed nonprofit groups running “issue ads,” such as the U.S. Chamber of Commerce and Crossroads GPS, to keep their donors secret.

A three-judge panel of the U.S. Court of Appeals in Washington heard arguments today from the Center for Individual Freedom and the Hispanic Leadership Fund, urging reversal of a decision by a lower court judge requiring disclosure of donor names, saying it has hurt political speech in an election year.

“Did Congress clearly and unambigously intend to compel the Federal Election Commission to require corporations and labor unions to make much broader and more burdensome disclosures?” Thomas Kirby, a lawyer for the Center for Individual Freedom, said during today’s argument.

U.S. District Judge Amy Berman Jackson on March 30 voided FEC regulations adopted in 2007 that let organizations and nonprofit groups keep secret the names of donors who pay for pre-election issue ads. She said the regulations clashed with requirements of the 2002 campaign finance law known as McCain- Feingold that groups report their ad spending to the commission.

The FEC, which didn’t appeal the ruling, said in July that groups should report donors of $1,000 or more retroactively effective March 30.

‘Electioneering Communications’

The disclosure rules apply only to what are known as “electioneering communications,” ads that run before an election and mention a federal candidate without urging viewers to vote for or against the person. So-called independent expenditures, which advocate support or opposition to a candidate, aren’t affected by the FEC decision.

At the time the 2002 law was written, independent expenditures could only be paid for by disclosed contributions, a restriction invalidated by the Supreme Court’s Citizens United decision. Nonprofit groups said they would start funding independent expenditures in order to avoid disclosure.

The case was brought by Representative Chris Van Hollen, a Maryland Democrat, who argued that the campaign-finance law required such disclosure.

One of the judges considering the appeal called the case “weird” and said he doubted the groups have authority to bring the appeal since the FEC didn’t pursue one.

Missing Agency

“The agency is not here to defend it so I don’t see what redress you have,” U.S. Circuit Judge Harry Edwards, appointed to the bench by President Jimmy Carter, said.

Circuit Judge A. Raymond Randolph said the interpretation of federal election law arguing for the disclosure “makes no sense.”

Randolph, appointed to the court by President George H.W. Bush, said he was troubled that someone advocating for the election or defeat of a particular candidate must only disclose contributions for that specific advocacy while a company or labor union advertisement that doesn’t urge viewers to vote a certain way must “disclose the kitchen sink.”

Circuit Judge Janice Rogers Brown, a President George W. Bush appointee, asked no questions during the argument.

Americans for Prosperity, which has ties to energy executives Charles and David Koch; Crossroads GPS, the nonprofit group founded with help from Republican strategist Karl Rove, and the Chamber, the largest U.S. business lobby, have spent millions of dollars to help elect Republicans without identifying the sources of their money.

Americans for Prosperity has spent $30.9 million on the 2012 elections, while the Chamber has spent $11.3 million and Crossroads GPS has spent 5.4 million, according to the Center for Responsive Politics, a Washington-based research group that tracks campaign spending.

The lower court case is Van Hollen v. Federal Election Commission, 11-0766, U.S. District Court, District of Columbia (Washington). The appellate cases are Van Hollen v. Federal Election Commission, 12-5117 and 12-5118, in the U.S. Court of Appeals for the District of Columbia Circuit (Washington).

To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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