Election Ad Rule Keeping Donors Secret Is Thrown Out Again

A U.S. judge again tossed out a Federal Election Commission rule that allowed nonprofit groups running “issue ads” to keep their donors secret, in a setback for groups such as the U.S. Chamber of Commerce and Crossroads GPS.

U.S. District Judge Amy Berman Jackson in Washington said today that the rule is “arbitrary, capricious and contrary to law.” Jackson arrived at her decision a second time, after a Washington-based appeals court asked her to reconsider a 2012 order requiring disclosure of donor names.

At issue were FEC regulations adopted in 2007 that let organizations and nonprofit groups keep secret the names of donors who pay for issue ads during an election campaign. In her previous ruling, Jackson said the regulations clashed with requirements of the 2002 campaign-finance law known as McCain-Feingold, a finding she reiterated today.

Congress passed the disclosure rules “to ensure that members of the public would be aware of who was trying to influence their votes just before an election,” Jackson wrote. The FEC’s rule “thwarts that objective by creating an easily exploited loophole that allows the true sponsors of advertisements to hide behind dubious and misleading names,” she said.

Two groups -- the Center for Individual Freedom and the Hispanic Leadership Fund -- had urged the appeals court to reverse Jackson’s first decision. Thomas Kirby, a lawyer for the Center for Individual Freedom, declined to comment on today’s ruling.

Report Donors

The FEC, which didn’t appeal Jackson’s earlier ruling, said in July 2012 that groups should report donors of $1,000 or more. Today’s lawsuit was brought by Representative Chris Van Hollen, a Maryland Democrat, who argued that the campaign-finance law required such disclosure.

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

Under McCain-Feingold, independent expenditures could only be paid for by disclosed contributions, a restriction later invalidated by the Supreme Court’s 2010 decision in Citizens United v. FEC.

American Crossroads, the super PAC co-founded by President George W. Bush former adviser Karl Rove, and its issue advocacy arm Crossroads GPS this year ran tens of thousands of television spots that helped Republicans win control of the Senate.

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).

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