Van Hollen v. FEC (District court March 2012)

On March 30, 2012, the U.S. District Court for the District of Columbia found in favor of a plaintiff who challenged a Federal Election Commission regulation regarding disclosure by corporations and unions that fund “electioneering communications.” Brought by U.S. Representative Chris Van Hollen in April 2011, the lawsuit challenged the regulation at 11 CFR 104.20(c)(9) that requires the disclosure of donations of $1,000 or more to corporations (including nonprofits) or labor organizations when the donation “was made for the purpose of furthering electioneering communications.” Representative Van Hollen claimed that the regulation is arbitrary, capricious and contrary to the disclosure regime of the law it implements, the Bipartisan Campaign Reform Act (BCRA).

The Court granted the plaintiff’s motion for summary judgment and denied the FEC’s cross motion for summary judgment. The Court also dismissed motions to dismiss filed by two intervenor-defendants, the Hispanic Leadership Fund and the Center for Individual Freedom.

Background

The BCRA amended the Federal Election Campaign Act (FECA) by placing certain reporting obligations on persons who fund “electioneering communications,” a term that is defined as any broadcast, cable or satellite communication that refers to a clearly identified candidate for federal office and is made within 30 days of a primary or 60 days of a general election and is targeted to the relevant electorate. 2 U.S.C. §434(f)(1)-(2).

Under the BCRA, every person (including a corporation or labor organization) who makes such a disbursement for electioneering communications that exceeds an aggregate $10,000 per year must file a report with the Commission stating, among other things, the identification of the person making the disbursement, of any person sharing or exercising direction or control over the activities of such person and the custodian of the books and accounts of the person making the disbursement. If the disbursement is paid out of a segregated bank account which consists of funds contributed by individuals directly to this account for electioneering communications, the “person” must also disclose the names and addresses of all those who contributed an aggregate of $1,000 or more to such account. If the disbursements were not made from a segregated bank account, the “person” must disclose the names and addresses of all “contributors who contributed” an aggregate of $1,000 or more in a calendar year to the person making the disbursement.

As enacted, the BCRA prohibited corporations and labor organizations from making electioneering communications with their general treasury funds, but in FEC v. Wisconsin Right to Life, the Supreme Court in 2007 held that those restrictions were unconstitutional as applied to communications that are not the “functional equivalent of express advocacy.” In 2010, the Supreme Court in Citizens United v. FEC invalidated those spending restrictions regarding all electioneering communications. In that case, the Supreme Court also upheld FECA’s disclosure provisions, stating that, “the public has an interest in knowing who is speaking about a candidate shortly before an election.”

The regulation at issue in this case, 11 CFR 104.20(c)(9), was promulgated in 2007 after the Supreme Court’s decision in Wisconsin Right to Life. It requires corporations or labor organizations that make 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, aggregating since the first day of the preceding calendar year, which was made for the purpose of furthering electioneering communications.”

Analysis

Van Hollen’s lawsuit states this regulation is inconsistent with the provision of the Bipartisan Campaign Reform Act it implements because “the regulation requires corporations, including non-profit corporations, to disclose only some contributors of $1,000 or more, i.e., donors who have manifested a particular state of mind or ‘purpose.’”

The Court opinion states that BCRA clearly provides that every person who funds electioneering communications must disclose “all contributors.” The Court found that the language of this BCRA provision is not ambiguous, and “there is no question that the regulation promulgated by the FEC directly contravenes the Congressional goal of increasing transparency disclosure in electioneering communications.” The Court thus declined to defer to the Commission’s interpretation of the statutory provision.

The opinion states that the disclosure provision plainly requires every person who funds electioneering communications to disclose contributors who contributed more than $1,000 during the reporting period, “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.

The full text of the Court opinion may be found here: https://transition.fec.gov/law/litigation/van_hollen_dc_memo_opinion.pdf.

U.S. District Court for the District of Columbia: Case 1:11-cv-00766-ABJ.

Resources:

• Van Hollen v. FEC litigation page