SCOTUS Denies Stay in Campaign Spending Case

Lower court decision, which could force some political spending groups to reveal donor names, now heads to appeals court

A brief, somewhat cryptic order released by the U.S. Supreme Court last week has made way for the disclosure of so-called “dark money” donors who fund political advertising via nonprofit groups.  

The two-sentence-long order released by the court on Tuesday, Sept. 18, read, “The application for stay, presented to the Chief Justice and by him referred to the Court, is denied. The order heretofore entered by the Chief Justice is vacated.” The order offered no elaboration and no vote-count.  

Just days earlier, Chief Justice John Roberts had stayed a lower court ruling in the case Citizens for Responsibility and Ethics in Washington v. Federal Election Commission. The initial district court decision out of Washington, D.C., by Judge Beryl Howell required nonprofits that place political advertising to disclose donors who contribute more than $200. Previously, groups could conceal the identity of such contributors.  

Advocates of campaign finance reform pounced on the news, hailing the moment as a victory for “transparency and democracy.” 

The case now heads to the federal appeals court level for a ruling. According to news reports, however, a judge is not expected to issue a decision in the case until after the November mid-term elections, meaning the names of some donors who’d been previously shielded might be disclosed in the meantime.   

In her lengthy, 113-page ruling, Howell began by outlining the importance of the disclosure of money that’s been contributied to federal elections. “Campaign finance law has long recognized the value of disclosure as a means of enabling the electorate to make informed decisions about candidates, to evaluate political messaging, to deter actual, or the appearance of, corruption, and to aid in enforcement of the ban on foreign contributions, which may result in undue influence on American politicians. … As the protection of speech is also a fundamental value safeguarded under the First Amendment, disclosure has been upheld as “the least restrictive means of curbing the evils of campaign ignorance and corruption.’”  

Hawley went on, “This case concerns the requisite disclosures about contributions that organizations making independent expenditures, in support of our opposition to particular candidates for federal office, must make, when those organizations are not political committees controlled by, or operating in coordination with, candidates or national political parties.”  

The lawsuit, the facts of which stretch back six years, hinges in part on an event that took place in the fall of 2012. The gathering was put on by American Crossroads, a political action committee, and Crossroads Grassroots Policy Strategies, a 501c4 tax-exempt social welfare group. As a so-called Super PAC, American Crossroads has to publicly disclose donations and expenditures; Crossroads GPS, however, does not.   

In bringing the lawsuit, the nonprofit watchdog group Citizens for Responsibility and Ethics in Washington, alleged that Crossroads GPS failed to correctly disclose donations and expenditures that were political in nature. At the 2012 event in question hosted by the two Crossroads groups, a donor contributed “a multimillion-dollar ‘matching challenge.’” That challenge, according to court documents, produced more than $6 million dollars in contributions, which Crossroads GPS spent on advertising for the Republican challenger to Ohio Sen. Sherrod Brown. The group did not disclose the names of those who contributed the money.  

Crossroads GPS, which claims Karl Rove as an unpaid advisor, stated it had followed all the relevant Federal Election Commission guidelines. The FEC disagreed and issued letters to Crossroads GPS that cited deficiencies in the disclosures, namely not identifying those who contributed the money. The plaintiffs then filed an administrative complaint with the FEC, which was reviewed but eventually dismissed by the FEC Commissioners.  

According to the opinion by Howell, “The plaintiffs’ administrative complaint alleged that Crossroads GPS’s failure to disclose the names of (1) the anonymous donor who promised a $3 million contribution in the spring of 2012, (2) the other contributors to the “matching challenge” triggered by the anonymous donor, and (3) the contributors solicited at the Tampa, Florida event, constituted “direct and serious violations of the [FECA].” 

Then, in 2016, CREW sued, and Judge Howell ruled this past August in their favor, declaring the relevant FEC regulation “invalid.” The judge wrote, “In particular, the FEC regulation, 11 C.F.R. § 109.10(e)(1)(vi), is declared invalid and is vacated, with vacatur stayed for 45 days to provide time for the FEC to issue interim regulations that comport with the statutory disclosure requirement of 52 U.S.C. § 30104(c), consistent with this Memorandum Opinion.” 

With Crossroads GPS having failed to obtain a stay at the Supreme Court, the ruling will remain in effect as the case is now on track to be heard by the D.C Circuit Court of Appeals.

— Chris Outcalt

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