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A Win Against Dark Money Eight Years in the Making

A federal court has ruled in favor of stronger disclosure requirements just in time for the November 2020 elections, writes Brennan Center Fellow Ciara Torres-Spelliscy.

September 4, 2020

Good news is infre­quent when you’re on the anti­cor­rup­tion beat. Notable recent incid­ents, for example, have included the senten­cing of a former U.S. congress­man’s wife for misuse of campaign funds and the resig­na­tion of a North Caro­lina state legis­lator who had pled guilty to tax evasion charges. However, in a rare posit­ive devel­op­ment, the D.C. Circuit Court ruled last month that the Federal Elec­tions Commis­sion (FEC)’s disclos­ure rules on dark money were too weak.

In the case at hand, CREW v. FEC (which should not be confused with other cases, includ­ing a  2018 case of the same name), the plaintiffs were led by the Citizens for Respons­ib­il­ity and Ethics in Wash­ing­ton (CREW), a nonpar­tisan nonprofit organ­iz­a­tion whose mission is to hold govern­ment offi­cials account­able to ethics rules, campaign finance laws, and the Consti­tu­tion. Mean­while, the defend­ant was the FEC, the agency respons­ible for admin­is­ter­ing federal campaign finance laws, includ­ing trans­par­ency rules. CREW sues the FEC often because the agency is known for fail­ing to achieve its main object­ive — the enforce­ment of campaign finance laws. While many crit­ics scream at the FEC, “you had one job!”, CREW actu­ally does the hard work of litig­a­tion in order to prompt the agency toward action.

The case star­ted eight years ago when CREW filed a complaint at the FEC against Cross­roads GPS, a dark money group that had engaged in secret spend­ing during the 2012 elec­tion cycle. When the FEC failed to take action, CREW then sued the FEC — and won their case in a federal district court in August 2018. The 2020 case involves an appeal of that lower court opin­ion.

The CREW v. FEC case liter­ally turns on the differ­ence between the words “an” and “the”. While this may seem like an infin­ites­imal differ­ence, it actu­ally matters for how our demo­cracy works. In fact, the differ­ence created a huge loop­hole in campaign finance law that allowed for $1 billion dollars in dark money spend­ing in federal elec­tions over the past decade.

The issue in the case was the 1979 version of the Federal Elec­tion Campaign Act (FECA) at 52 USC § 30104, which requires disclos­ing the iden­tity of anyone who contrib­uted more than $200 toward inde­pend­ent expendit­ures — ads that promote or attack polit­ical candid­ates. The key language in the stat­ute from subsec­tion 30104(c)(2)(C) requires inde­pend­ent expendit­ure makers to disclose “each person who made a contri­bu­tion in excess of $200 . . . for the purpose of further­ing an inde­pend­ent expendit­ure.” Note the use of the word “an.”

However, when the FEC promul­gated their regu­la­tions (11 C.F.R. § 109.10(e)(1)(vi)) in 1980 imple­ment­ing this stat­ute, they used language that required disclos­ing the iden­tity only of persons whose contri­bu­tions were “made for the purpose of further­ing the repor­ted inde­pend­ent expendit­ure.” Note the use of the word “the” — a choice that allowed elec­tion lawyers repres­ent­ing dark money groups to argue success­fully for decades that donors only had to be disclosed if they had earmarked funds for a partic­u­lar polit­ical ad. And the FEC has enshrined this pro-dark money approach in its instruc­tions for FEC forms used by contrib­ut­ors.

The FEC’s tradi­tional approach to “disclos­ure” led to Alice-in-Wonder­land filings at the agency that repor­ted millions in spend­ing that all appeared to come from no one at all. For example, if you pull the inde­pend­ent expendit­ure report for the U.S. Cham­ber of Commerce for the 2018 elec­tion, you will find a list­ing for $7,458,414.89 in spend­ing and $0 from donors.  Simil­arly, if you look at the FEC filings for the National Rifle Asso­ci­ation Insti­tute For Legis­lat­ive Action (NRA-ILA) — the biggest dark money spender in the 2016 pres­id­en­tial elec­tion cycle — you will find a list­ing for $33,341,464.65 spend­ing and $0 from donors.

The recent ruling in CREW v. FEC throws out the FEC rule that never matched up with its controlling stat­ute. This shuts down a big avenue for dark money just in time for the 2020 federal elec­tions. Now donors who bank­roll polit­ical ads that meet the inde­pend­ent expendit­ure defin­i­tion need to disclose their role in attack­ing or support­ing candid­ates.

This change is long over­due. Open Secrets, a nonpar­tisan research group that tracks dark money in polit­ics, has noted that “more than $116 million in polit­ical spend­ing and 2020 contri­bu­tions can be traced back to ‘dark money’ groups aligned with Demo­cratic or Repub­lican party lead­er­ship.” The group also noted that dark money conduits are also fund­ing super PACs during the 2020 cycle.

The bad news is that the FEC is without a quorum for the second time in the 2020 elec­tion cycle. This could delay the FEC from comply­ing with the D.C. Circuit Court’s good CREW v. FEC decision in a timely fash­ion.

The views expressed are the author’s own and not neces­sar­ily those of the Bren­nan Center.