The District of Columbia Circuit Court affirmed that a Federal Election Commission (FEC) rule impermissibly allowed groups to spend big money in federal elections without disclosing key information about their funders.
This decision is a win for transparency, and it underscores an important but often-overlooked reality of our current campaign finance system: that the FEC bears much of the blame for the explosion in secret election spending over the past decade.
The case, brought by Citizens for Responsibility and Ethics in Washington (CREW), concerns disclosure by so-called “dark-money” groups that are not registered with the FEC as political committees but that make independent expenditures—ads that expressly advocate for or against the election of federal candidates.
The law requires such groups to report their spending on those ads to the FEC, and it also requires them to report the contributions they’ve received which were made for political purposes or “for the purpose of furthering an independent expenditure.”
Yet the FEC—the federal agency tasked with enforcing and administering federal campaign finance law’s transparency requirements—created a much narrower standard for these groups’ disclosure of donors. As the court’s decision explained, the FEC’s rule required the disclosure “only of donations linked to a particular [independent expenditure].”
The District of Columbia Circuit Court held, as the district court below did, that that rule "conflicts with the [statute’s] unambiguous terms twice over”: first, it “exempts from disclosure any contribution intended to support [independent expenditures] in general,” “impermissibly narrow[ing]” what the statute requires.
Secondly, it ignores the separate requirement for independent spenders to disclose all their contributors who gave more than $200 for political purposes, regardless of any link to eventual independent expenditures.
In practice, this meant that major dark-money groups spending millions on independent expenditures could easily evade disclosing any contributions.
This became a particularly significant problem after the Supreme Court’s 2010 decision in Citizens United allowed all corporations—for the first time—to spend unlimited amounts on independent expenditures.
The FEC’s independent expenditure disclosure rule had been on the books for decades before Citizens United, but when corporations could not pour unlimited amounts into federal elections, disclosure under this particular provision of the law was “barely an issue,” as the District of Columbia Circuit explained.
That was because independent expenditures “made up a relatively small slice of election-related spending,” and “[a]n even smaller portion” came from “entities other than political committees.”
And even the sliver of expenditures by non-committees, the court went on to explain “were usually made by individuals, not organizations soliciting contributions from others.”
That landscape changed dramatically in 2010, when the Citizens United decision, combined with the FEC’s narrow disclosure rule, ushered in a new era of secret election spending by entities like nonprofit corporations that raised undisclosed contributions.
Despite groups like Campaign Legal Center (CLC) urging the FEC to address the problem through a new rulemaking, the FEC failed to act.
As CLC has previously reported, the FEC’s narrow rule allowed up to $769 million in dark money to flow into our elections between the 2010 election cycle and mid-2018 when the lower court first invalidated the FEC’s narrow rule.
CREW brought this suit after the FEC dismissed a complaint CREW had filed against the dark-money group Crossroads GPS. The FEC is not participating in the appeal, but Crossroads intervened to fight disclosure at each stage of the case.
Nonetheless CREW prevailed, and the result is that two federal courts have now explicitly agreed that the FEC’s narrow disclosure rule was contrary to the unambiguous terms of the law that Congress passed.
Now, it’s up to the FEC to finally and fully implement this transparency mandate.
Back in 2018, when the lower court first declared the FEC’s rule impermissible, the FEC responded not by proceeding with a new rulemaking, but instead just by issuing informal enforcement guidance—in the form of a press release—describing the court’s ruling.
Since then, the FEC has also sent follow-up letters to some groups referring back to the press release and decision.
These half-measures are no substitute for formal rulemaking.
Following the 2018 lower court decision and the FEC’s press release, which also coincided with the final stretch of the 2018 midterms, CLC found that dark-money groups covered by the old rule had reported spending over $50 million in independent expenditures in that final period, yet only 8% of that spending was accounted for with disclosed contributions.
This suggested that dark-money groups took the FEC’s failure to craft a new rule as a signal that they could continue to flout the law with impunity.
Since then, this practice of non-disclosure has continued. We do not yet have the full picture of independent expenditure activity in this election cycle and expect the majority to flow in the final months before the general election.
But even the snapshot we have so far indicates that many top dark money spenders are still avoiding disclosing contributions all together. For example:
- In August 2019, House Majority Forward reported spending $1.1 million on ads that advocated the election of the Democratic candidate in the special election in the North Carolina 9th congressional district. Yet it did not disclose a single dollar in contributors, claiming instead that “As a matter of policy, House Majority Forward does not accept funds earmarked for independent expenditure activity or for other political purposes in support or opposition to federal candidates.”
- Earlier this year, in the Democratic presidential primary, the Big Tent Project Fund reported $4.8 million in anti-Bernie Sanders independent expenditures without disclosing any donors, despite its executive director repeatedly emphasizing to the press that he formed the group at the behest of donors concerned about Sanders’ rise. (This prompted an FEC complaint from CLC.)
- In this year’s congressional primaries in New York’s 16th congressional district and New Mexico’s 3rd congressional district, the pop-up dark money groups Perise Practical and Avacy Initiatives together reported nearly $1 million promoting candidates without reporting any donors.
- Also this year, the new Democratic dark-money group Fellow Americans has reported $200,000 in ads opposing Trump with no donor disclosure.
In the coming months, we are all but certain to see a surge of election spending from groups like these, and most are likely to continue keeping their donors secret.
The FEC currently lacks the requisite four members that it needs even to initiate a new rulemaking, but when it does regain that quorum, bringing more transparency to the sources behind hundreds of millions of dollars of federal election spending should be a top priority.