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D.C. Circuit Court of Appeals Again Upholds Transparency in Political Advertising Donations

By Joseph Fawbush, Esq. on August 26, 2020 | Last updated on August 10, 2021

The D.C. Circuit Court of Appeals has made it harder for donors seeking to help create political advertising to remain anonymous, holding that all donations over $200 to organizations that spend over $250 on political advertising not associated with a particular candidate (known as independent expenditures) must be disclosed to the Federal Elections Commission.

What Are Independent Expenditures?

Independent expenditures (IEs) account for billions in spending on political advertising. Once a minor factor in politics, Citizens United v. FEC allowed corporations and organizations to donate unlimited amounts to support IEs. IEs have accordingly grown into a behemoth. Such advertising advocates for the election or defeat of a certain political candidate but are not endorsed by, or coordinated with, any candidate.

IE ad makers must disclose donations of more than $200 made to create such ads under federal election law. Specifically, §30104(b)(3)(A), which says IE ad makers must “identif[y] each . . . person . . . who makes a contribution to the reporting committee during the reporting period, whose contribution or contributions have an aggregate amount or value in excess of $200 within the calendar year . . . together with the date and amount of any such contribution."

There's a big but when it comes to enforcing this law, however. In one of those “only in Washington" rules created by the Federal Election Commission, if a donor only wishes to make a general donation in support of an organization that spends money on IEs, under the FEC rule the disclosure requirement disappears. It is, perhaps, the quintessential example of an exception swallowing the rule. Any donor wishing to remain anonymous could simply give a general donation to that organization with the implicit understanding it will be used in support of advertising with which the donor agrees. Only a specific agreement would require disclosure. In practical terms, this means the FEC does not enforce the law.

Does the FEC Rule Violate Federal Election Law?

The Citizens for Responsibility and Ethics in Washington (CREW) filed an administrative complaint before the FEC against Crossroads GPS, a prominent IE organization that has spent over $175 million on political advertising, alleging that they violated the Federal Election Campaign Act by failing to disclose large donations related to a 2012 event featuring Karl Rove. The FEC's Office of General Counsel sided with Crossroads GPS, arguing that Congress only required disclosing large donations when there was an “express link between the receipt and the independent expenditure." In other words, when the donation was for a specific ad.

The FEC became deadlocked in a 3-3 vote on whether Crossroads GPS violated their rule, however, and so dismissed the complaint. CREW took it to federal court, which sided with CREW and held that the FEC rule violated federal election law. More procedural arguments followed, and ultimately the D.C. Circuit took up the case after the Supreme Court declined to issue a stay of the District Court's invalidation of the FEC rule.

In a unanimous opinion, the D.C. Circuit panel dismissed the FEC and Crossroad GPS' creative interpretation of election law. “The Rule conflicts with the FECA's unambiguous terms twice over," Chief Judge Sri Srinivasan wrote. First, by ignoring the clear law requiring disclosure of donations over $200, and by impermissibly narrowing the law so that it amounts to “materially rewrit[ing] and recast[ing] plain statutory text . . ."

For now, donations over $200 will need to be disclosed, which Crossroads GPS, which has temporarily stopped making IEs, says will harm its fundraising efforts. Perhaps they can run ads, after disclosing their donors, to elect members of Congress who support their position. Until then, however, neither the FEC nor Crossroads GPS can ignore the law.

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