Federal Court Reverses Ruling on Campaign Finance Disclosure

Decision Stands: Only Targeted Electioneering Funds Must Have Parties' Names, Addresses Disclosed to FEC

A federal court has, for now, invalidated a decision that could have taken some of the "dark money" contributions out of a campaign funding system fueling hundreds of millions of dollars in local and national TV campaign ad buys.

The U.S. Court of Appeals for the D.C. circuit Tuesday reversed a lower court decision (Van Hollen v. FEC) and upheld a Federal Election Commission interpretation of campaign finance law. That FEC interpretation, of the Bipartisan Campaign Reform Act (BCRA), was that only contributions by corporations or unions specifically earmarked for electioneering communications -- TV and radio ads, for example -- required disclosure to the FEC of the names and addresses of each person who gave at least $1,000 toward that targeted contribution.

That meant those contributing money not specifically earmarked for campaign ads did not have to be disclosed, opening the door for so-called "dark money" contributions.

Rep. Chris Van Hollen (D-Md.), one of the leaders for campaign finance reform legislation, took issue with what he saw as the FEC's improper narrowing of the BCRA disclosure provision, and a district court agreed, rendering a summary judgment in favor of Van Hollen, saying that "Congress spoke plainly [and] did not delegate authority to the FEC to narrow the disclosure requirement through agency rulemaking."

But in its decision Tuesday, the federal appeals court reversed that summary judgment and remanded it back to the lower court, saying it should wait to see if the FEC wants to clarify its stand with a rulemaking, or if not, take a look at the arguments again. The federal court said it would give expedited review to whatever came decision came of that process.

The Federal Appeals Court said that the FEC had filled in a gap in the statute and that the district court had erred when it said Congress had spoken plainly" on the subject. "The statute is anything but clear," said the court, "especially when viewed in the light of the Supreme Court's decisions in Citizens United."

That is the Supreme Court decision in 2010 that allowed corporations and unions to directly fund electioneering speech in the run-up to campaigns, direct funding that can come in the form of the kind of contributions at issue in the Van Hollen case.

The Sunlight Foundation, whose goal is more transparency in election funding, called it a setback for a lower court decision that had favored transparency. It took some comfort in the remand back to the district court for another look. "The district court ruled in favor of transparency once, and we hope it will do so again," said the group.