Appeals court overturns political donor disclosure ruling

WASHINGTON — Conservative groups pumping hundreds of millions of dollars into the 2012 campaign won a reprieve Tuesday when the U.S. Court of Appeals in Washington overturned a decision requiring organizations that run election-related television ads to reveal their donors.

In an unsigned decision, a three-judge panel said a lower court erred in finding that Congress intended to require such disclosure. It sent a case brought by Rep. Chris Van Hollen (D-Md.) against the Federal Election Commission back to the district court and called on the FEC to defend its regulations or issue new ones.

Practically, the ruling changes little in the short term: Nonprofit organizations such as the U.S. Chamber of Commerce, Americans for Prosperity and Crossroads GPS changed the type of ads they were running this summer in order to sidestep the lower-court ruling and keep their donors secret.

But the appellate court decision was hailed by conservative groups as a major victory in their broader battle against the push for donor disclosure — a fight that took on new stakes after recent federal court rulings unshackled corporations and groups of wealthy individuals to spend freely on campaigns.

“We’re just delighted,” said Thomas Kirby, an attorney for the Center for Individual Freedom, one of two groups that pursued an appeal of the case. “CFIF believes that the right to engage in political speech should not be needlessly conditioned upon the loss of anonymity.”

Disappointed campaign finance reform advocates said they were not giving up.

“The Court of Appeals got it wrong,” said Fred Wertheimer, president of Democracy 21. “There is no way Congress enacted a statute to result in no disclosure of contributors when the statute calls for all disclosure of contributors.”

Van Hollen, in a statement, called the ruling “a blow against transparency.”

Such transparency in political spending was at one time embraced by conservatives, who argued that regulating campaign money was unnecessary because the disclosure of contributors would prevent corruption. But in the last several years, deep-pocketed conservative groups such as the Alexandria, Va.-based Center for Individual Freedom — which received $2.75 million from Crossroads GPS in 2010 — have fought vigorously to overturn disclosure laws.

The case hinges on the FEC’s interpretation of the 2002 McCain-Feingold Act, a sweeping campaign finance reform measure that required groups that engage in “electioneering communications” to reveal all contributors who gave $1,000 or more.

Unlike political ads run by “super PACs,” electioneering communications are television spots that refer to federal candidates but stop short of advocating for their election or defeat and air within 30 days before a primary and 60 days before the general election.

In 2007, the FEC issued a rule stating that organizations that do electioneering had to reveal only the donors who gave for the explicit purpose of financing the TV ads.

Van Hollen — backed by lawyers from campaign finance reform organizations Democracy 21, Public Citizen and Campaign Legal Center — sued the FEC, arguing that the rule created a major loophole that undermined the intent of the McCain-Feingold Act. U.S. Judge Amy Berman Jackson agreed, ruling on March 30 that the FEC had overstepped its authority.

Her decision reinstated a 2003 FEC regulation that required organizations doing electioneering to report all donations of $1,000 or more dating back to the first day of the preceding year.

That triggered a scramble among politically active groups on the right. Despite the fact that they are organized as nonprofit social welfare organizations — or, in the case of the U.S. Chamber of Commerce, as a trade group — the groups switched to running explicitly political ads, taking advantage of the conflicting patchwork of campaign finance rules that did not require disclosure of those doing “express advocacy.”

That move came with its own risk, as financing overtly political spots could jeopardize donors’ tax status.

Such a maneuver is no longer necessary after Tuesday’s ruling by the appellate court, which declared that Congress’ intent in the McCain-Feingold Act is “anything but clear” in light of major court cases that have followed it.

The appeal was heard by Circuit Court Judges Harry T. Edwards, an appointee of President Carter; A. Raymond Randolph, who was put on the bench by President George H.W. Bush; and Janice Rogers Brown, who was named by President George W. Bush.

The panel chided the FEC for not clearly dealing with the changes in the law or defending its stance in court.

But with the FEC locked in partisan gridlock, it remains unclear whether the six commissioners will be able to come to agreement on how to proceed.

matea.gold@latimes.com