Breaking News: Court of Appeals for D.C. Circuit Denies Stay in van Hollen Campaign Disclosure Case on 2-1 Vote; Sets Sept.Argument Date

Big news from the D.C. Circuit in this order and opinion.  The opinion for two of the three judges explaining the reasons for denying the stay lean heavily on how the challengers to the district court ruling are unlikely to succeed in their legal arguments on appeal.  The court also stresses the values of disclosure, reaffirmed on an 8-1 vote by the Supreme Court in Citizens United.  [UPDATE Bloomberg BNA reports: “Attorneys for two groups sponsoring political ads, which intervened in the case to try to preserve FEC rules allowing them to keep their donors confidential, had no immediate comment about a possible appeal of the stay ruling by the D.C. Circuit panel.”]

But this open a host of unanswered questions about how 501c4 groups and other groups which run issue ads will deal with these new disclosure requirements.(I’m talking here not about political committees such as Crossroads GPS, which masquerade as social welfare groups, but real 501c4s that occassionally get involved with issue adss.)  I expect this stay request to now end up before the Supreme Court, where the outcome may be different.

If further stay attempts fail, and if there are no emergency FEC rules put in place (and the FEC’s frequent 3-3 deadlocks mean new rules are unlikely), we could well see 501c4 groups [UPDATE: and importantly 501c3 groups] creating new separate funds to run these ads, so that the groups need disclose the names of only those donors funding these ads (rather than all of their donors).

From a Democracy 21 Press Release:

This is a very important victory in the battle to end secret contributions being funneled into federal elections,” according to Democracy 21 President Fred Wertheimer, one of the lawyers in the case. “This case represents the first major breakthrough in the effort to restore for the public the disclosure of contributors who are secretly providing massive amounts to influence federal elections,” Wertheimer said….“In the 2010 congressional races, groups making “electioneering communications” disclosed the sources of less than 10 percent of their $79.9 million in “electioneering communications” expenditures,” Wertheimer said….“Every organization making “electioneering communications” in the 2012 presidential and congressional elections is now required to disclose the donors whose funds are being used to pay for their “electioneering communications,” according to Wertheimer. “All groups making “electioneering communications” are now on notice and we expect them to fully comply with the contribution disclosure provisions in the future,” Wertheimer stated. Groups making “electioneering communications” can either set up a separate bank account to fund all of their “electioneering communications” and disclose the donors of $1,000 or more to that bank account, or alternatively the groups are required to disclose all of their donors of $1,000 or more to the organization, according to the disclosure provisions of the campaign finance law….Representative Van Hollen and his lawyers are currently considering bringing a second lawsuit to challenge a similarly flawed FEC regulation that applies to disclosure of contributors funding “independent expenditures,” ads that expressly advocate the election or defeat of a candidate.

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