CREW v. FEC’s Impact on Independent Expenditures and Donor Privacy, Explained

September 3, 2020   •  By Brad Smith   •    •  ,

Over the past few years, Citizens for Responsibility and Ethics in Washington (“CREW”) has been on a targeted lawfare campaign against the Federal Election Commission. As of last year, CREW has been responsible for more than a third of the Commission’s litigation docket, much of it with a wink-and-nod understanding that Commissioner Ellen Weintraub would ensure that the FEC, whether lacking a quorum or not, would lie helpfully prone, allowing CREW to pursue its regulatory efforts through the courts.

One of CREW’s longstanding white whales has been Crossroads Grassroots Policy Strategies, the money pit run by Karl Rove that managed to light millions of dollars of donor cash on fire in fruitless efforts to elect people like former Ohio Treasurer Josh Mandel to the U.S. Senate in 2012.

Crossroads GPS, whatever its flaws, conducted much of its business back in the early 2010s. In particular, it sought to protect the privacy of its donors by relying on a longstanding FEC regulation that said only donors giving for the purpose of a particular independent expenditure needed to be disclosed in connection with that expenditure. This wasn’t a controversial interpretation of the regulation. The language is quite clear, and the FEC’s Office of General Counsel agreed that Crossroads was protected by its terms.

CREW disagrees with this regulation and seeks greater disclosure from nonprofit groups (and less privacy for donors to nonprofits generally). But, as the court noted on page 15 of its opinion, rather than seek to open a rulemaking before the Commission, it went after Crossroads itself. This end-run around the Commission’s regulatory apparatus found success in late August, in a 2-0 opinion written by Chief Judge Sri Srinivasan of the D.C. Circuit. (Chief Judge Srinivasan was joined by his predecessor, Judge Merrick Garland; the third judge assigned to hear CREW’s case passed away before the opinion could be issued.)

That decision found that the FEC’s regulation was invalid because it conflicts with Congressional guidance. And with that regulation gone, an important question arises: precisely which donors to an organization making independent expenditures must now be reported?

The Court of Appeals’ decision now requires “an entity making over $250 in IEs to disclose the name of any contributor whose contributions during the relevant reporting period total $200, along with the date and amount of each contribution.” But that raises an important nuance that has been largely missed by commentary on this judicial opinion. In particular, the decision does not say that all money contributed to any nonprofit that makes any independent expenditure now must be exposed to the tender mercies of the Center for Responsive Politics’ data aggregators.

You see, only “contributions” need be disclosed. And federal law doesn’t give the FEC jurisdiction over any “contribution” as a layman might understand the term. Rather, the term contribution is defined by law (52 U.S.C. § 30101(8)(A)(i)) to mean “anything of value made by any person for the purpose of influencing any election for Federal office.” The current Commission regulation regarding the meaning of “contribution,” 11 C.F.R. § 100.52(a), adopts this definition without further elaboration.

If you aren’t quite sure when funds are given “for the purpose of influencing” an election, you aren’t alone. After all, lots of things can “influence” an election. If I spend money to hire 100 people, I arguably “influence” an election in favor of an incumbent by lowering the unemployment rate. The Supreme Court struggled with that language back in 1976. That year, in Buckley v. Valeo, the Court held that that definition was unconstitutionally vague, at least in the context of independent expenditures (that is, expenditures made by anyone other than a candidate, political party, or PAC), and redefined it to mean money spent to expressly advocate specific electoral outcomes, not merely to “influence elections.” Without further guidance from the Court, for years the FEC and regulated parties operated with an understanding that linked “contributions” to “expenditures” – “contributions” were limited to donations that funded “expenditures,” i.e., express advocacy of specific electoral outcomes.

The D.C. Circuit gestured in this direction on page 24 of its opinion, acknowledging that Buckley imposed its own gloss on the law (“Buckley stated more broadly that the term [“contribution”] covers any donation ‘earmarked for political purposes.’ 424 U.S. at 78.”).

Unfortunately, Congress hasn’t bothered to re-write its statute to align with the Buckley opinion. So when the district court opinion in CREW came down last year, we happy few at IFS anticipated that, if the opinion was affirmed by the D.C. Circuit, we might need to have a better understanding of what “contribution” and “for political purposes” mean in practice. To that end, we petitioned for a rulemaking, asking the FEC to provide a plain meaning for the term “contribution.” We specifically noted that the saving phrase “for political purposes” is hardly an easily cognizable term either and needs to be made definite.

Thankfully, at least one court has already provided an answer. In 1995, the Second Circuit said that the term “for political purposes” in Buckley was hopelessly vague and needed to be cabined to “contributions that are earmarked for activities or ‘communications that expressly advocate the election or defeat of a clearly identified candidate.’” FEC v. Survival Education Fund, 65 F.3d 285, 295 (2d Cir. 1995) (citation omitted, emphasis supplied). In other words, donors that give to elect or defeat a particular candidate should be reported, not people that generally give to “help the environment” or “educate people about the Second Amendment” or “to protect reproductive justice” – or even to “elect progressives” generally.

The Second Circuit’s rule would protect nonprofits from having to report donors that gave money unconnected to any electioneering activity: say, a donor that gave to further the American Cancer Society’s general mission of finding a cure. If we’re going to have donor disclosure, it should at least report honest information about which donations are, in fact, intended to support a particular candidate.

If Crossroads elects not to take an appeal to the entire D.C. Circuit or seek review before the Supreme Court, we can only hope the FEC will soon obtain a quorum capable of acting on our petition. Clarification of the law right before an election, I’ve been told, is essential to our democracy.

Until then, the D.C. Circuit’s opinion should not be read as requiring forced disclosure of all donors to nonprofit groups, but only of “contributions,” i.e., donations for the purpose of influencing an election. It is unfortunate that the court of appeals failed to provide vital clarity on that point, sowing more chaos in the field of campaigns and elections.

Brad Smith

Brad Smith

https://www.ifs.org/author/bsmith/

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