Court Reinstates Rule on`Issue-Ad’ Donors’ Secrecy

A U.S. appeals court reinstated a Federal Election Commission rule that allows 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 today reversed a decision of a lower court judge, who ruled that Congress, in passing the 2002 campaign finance law known as McCain-Feingold, had intended that the donors’ identities be disclosed.

“The district court erred in holding that Congress spoke plainly” when enacting the statute, the judges said in a five- page order. “The statute is anything but clear, especially when viewed in light of the Supreme Court’s decision in Citizens United v. FEC.”

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.

Sending the case back to the lower court for supervision, the appeals judges asked the Federal Election Commission, which didn’t participate in the appeal, “to explain the meaning and the scope” of the rule, citing the advantages of allowing the agency “to apply its expert judgment.”

The appeal was brought by the Center for Individual Freedom and the Hispanic Leadership Fund, which argued disclosure of donors’ names hurts political speech in an election year.

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 reporters on this story: Sara Forden in Washington at sforden@bloomberg.net; Tom Schoenberg in Washington at tschoenberg@bloomberg.net.

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