Court of Appeals Ruling on Campaign Donor Disclosures by 501(c)(4)s

On September 17th, 2012 the US Court of Appeals for the District of Columbia handed down what will undoubtedly be viewed by many as a controversial ruling. With campaign finance on the minds of most voters in this extraordinarily contested election season, the Court ruled that the FEC did not overstep its authority in allowing IRC 501(c)(4) organizations to keep their donors secret.

The issue in the case was whether the FEC’s regulation that allowed 501(c)(4) groups to conduct electioneering communications without disclosing their donors was simply an regulatory interpretation of the McCain-Feingold campaign finance law or a violation of that law. The 2002 McCain-Feingold law required groups making “electioneering communications” to disclose their donors. The FEC regulation arguably created a loophole by interpreting the law so that disclosure was only required of those donors who specifically gave “for the purpose of” funding electioneering communications. The Court found the regulation to be an attempt at interpretation, but did recognize that the law was not at all clear on the issue of disclosure and directed the lower Court (whose Spring 2012 decision was overturned) to give the FEC the opportunity to revise the regulation in a rulemaking proceeding. In so doing, the Court virtually guaranteed that the issue would not be resolved before the end of the current electoral season.

The case (Van Hollen v. Federal Election Commission) was originally brought by Rep. Chris Van Hollen (D-Md.) who represented by Public Citizen, Democracy 21 and others, prevailed at the federal district court level. The case was thereafter appealed by a group of conservative organizations lead by Citizens for Individual Freedom and the Hispanic Leadership Fund.

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