On November 25, 2014, the U.S. District Court for the District of Columbia vacated a Commission regulation governing the disclosure of certain donations used to fund electioneering communications. Specifically, the court found 11 CFR 104.20(c)(9) arbitrary, capricious and contrary to law because it requires disclosure of only those donations made for the purpose of furthering electioneering communications.
The Federal Election Campaign Act (the Act) defines an electioneering communication as any broadcast, cable or satellite communication that refers to a clearly identified candidate for federal office, is publicly distributed within certain time periods before an election and is targeted to the relevant electorate. 52 U.S.C. § 30104(f)(3), formerly 2 U.S.C. § 434(f)(3). Every person who makes disbursements for an electioneering communication aggregating over $10,000 per year must file a report with the FEC identifying, among other things, the person who made the disbursement. 52 U.S.C. § 30104(f)(1), (2). If the disbursement is paid out of a segregated account consisting of funds donated by individuals directly to the account for electioneering communications, the report must disclose the names and addresses of all those who donated an aggregate of $1,000 or more within a certain time period to the account. If the disbursements were not made from a segregated account, then the report must disclose the names and addresses of all contributors who contributed over $1,000 within a certain time period to the person making the disbursement. 52 U.S.C. § 30104(f)(2)(E).
As enacted, the law prohibited all labor unions and almost all corporations from making electioneering communications, so Congress did not specify a particular disclosure regime for such communications. The regulation at issue in this case, 11 CFR 104.20(c)(9), was promulgated in 2007 after the Supreme Court’s decision in FEC v. Wisconsin Right to Life (WRTL), which allowed corporations and unions to make certain types of electioneering communications for the first time.[FN1] The Commission’s regulation required corporations or labor organizations that made WRTL-permitted electioneering communications to disclose the name and address of each person who made a donation aggregating $1,000 or more to the corporation or labor organization “for the purpose of furthering electioneering communications.” 11 CFR 104.20(c)(9). (Emphasis added)
In April 2011, Rep. Christopher Van Hollen filed suit against the Commission challenging 11 CFR 104.20(c)(9) as contrary to the law it was supposed to implement. In a 2012 opinion, the district court found that the Act clearly requires every person who funds electioneering communications to disclose all contributors, “and there are no terms limiting that requirement to call only for the names of those who transmitted funds accompanied by an express statement that the contribution was intended for the purpose” of making electioneering communications.
On September 18, 2012, the U.S. Court of Appeals for the District of Columbia Circuit reversed the judgment of the district court, finding the statute’s disclosure provisions were ambiguous and could be construed to include a “purpose” requirement. The appeals court remanded the case to the district court for further consideration. On September 20, 2012, the district court directed the Commission to inform the court whether the agency planned to initiate a rulemaking or defend its current regulation. On October 4, 2012, the Commission informed the court of its decision not to initiate a rulemaking to amend its regulations governing the disclosure of electioneering communications, but instead to continue to defend the current regulation at 11 CFR 104.20(c)(9).
Having found the law in question to be ambiguous, the circuit court directed the district court to determine whether the Commission’s regulation was based on a permissible construction of the statute. Citing the purpose requirement in the regulation, the district court concluded that the promulgation of 11 CFR 104.20(c)(9) was arbitrary, capricious and contrary to law.
“Congress passed the disclosure provisions. . . to promote transparency and to ensure that members of the public would be aware of who was trying to influence their votes just before an election,” the court stated. “The added purpose requirement in section 104.20(c)(9) thwarts that objective by creating an easily exploited loophole that allows the true sponsors of advertisements to hide behind dubious and misleading names.”
The court granted the plaintiff’s motion for summary judgment and ordered 11 CFR 104.20(c)(9) vacated.
United States District Court for the District of Columbia Case 1:11-cv-00766-ABJ
1 The Supreme Court’s 2010 decision in Citizens United removed entirely the ban on corporate and union electioneering communications.
Van Hollen v. FEC litigation page