[EL] question about disclosure rules as interpreted by the FEC

Fri Mar 23 11:23:07 PDT 2012

Hi Rick:

I believe you already know much of this, but since you asked, below is a segment of a report entitled "Fading Disclosure," that discusses the evolution away from near 100% donor disclosure in 2004 and 2006 to about 50% donor disclosure in 2010, largely attributable to the revised FEC disclosure rule of 2008, compounded by the 3-member Republican caucus on the FEC stretching the wording of the revised rule to an incredulous nth degree in the Freedom's Watch decision.

Specifically as to your question, #2 is now the standard for donor disclosure for outside groups making electioneering communications or independent expenditures. Since super PACS are registered committees rather than outside groups, the rationale to gut the disclosure requirement expressed by the Republican caucus does not necessarily apply to super PACs -- but that is not to say the caucus will not also gut the disclosure requirement for registered committees if asked. All the caucus has to do is choose not to enforce the law for registered committees as well.

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Taylor Lincoln and Craig Holman, Fading Disclosure (Sept. 15, 2010): 

After Wisconsin Right to Life created a broad exemption to BCRA’s ban on independent electioneering
communications close to elections – the case permitted corporations and unions
to fund any ad that could be interpreted as something other than an appeal to support or
oppose a candidate – the FEC modified its regulations implementing the disclosure requirements.
The agency essentially preserved its provision that required a non-corporate
entity engaging in electioneering communications to disclose all donors of at least $1,000
dating back through the last calendar year. [See 11 C.F.R. § 104.20(c)(8) (requiring disclosure of “the name and address of each donor who donated an amount aggregating $1,000 or more to the person making the disbursement, aggregating since the first day of the preceding calendar year”].

But the FEC reasoned that since corporations and labor unions could make electioneering
communications, they should not be required to disclose the names of everyone who provides
them with $1,000 or more for purposes unrelated to electioneering. The agency
added a separate section to that effect, requiring a corporation or labor organization that
makes electioneering communications to disclose “the name and address of each person
who made a donation aggregating $1,000 or more to the corporation or labor organization,
aggregating since the first day of the preceding calendar year, which was made for the purpose
of furthering electioneering communications.” BCRA makes no such exception. [11 C.F.R. § 104.20(c)(9) (emphasis added)].

Nearly all “third party” groups that spend corporate money on TV ads attacking candidates,
such as Americans for Job Security or the U.S. Chamber of Commerce, are themselves incorporated
and thus evade disclosing their major donors under the rule. As a result, this
language has recently been interpreted by a growing number of outside groups to mean
that only those donors who specifically “earmark” funds for a campaign ad need be disclosed.
FEC staff has periodically requested full donor disclosure from outside groups financing
independent ads, but the Commission itself has deadlocked on taking any actions 

against those declining compliance. As documented in this study, more and more of these
groups are now refusing to disclose the major donors funding their campaign ads, claiming
that none of their funders earmarked the money for electioneering activity. This refusal to
disclose donors is also expanding among groups funding other independent expenditures,
not just electioneering communications.

On August 18, 2010, the Republican bloc of FEC commissioners further emasculated the
disclosure requirements when it blocked a case alleging that an organization called Freedom’s
Watch failed to comply with the disclosure rule. [Statement of Reasons for Chairman Matthew S. Petersen and Commissioners Caroline C. Hunter and Donald F. McGahn, Freedom’s Watch, Inc., MUR 6002 (Aug. 13, 2010), available at:
http://eqs.sdrdc.com/eqsdocsMUR/10044274536.pdf]

Freedom’s Watch, a conservative nonprofit corporation, sponsored television ads in the
2008 elections that reportedly were funded by roughly $30 million from a single donor. A
New York Times article quoted an unnamed Republican operative saying that the group’s
$30 million for ad spending “came almost entirely from casino mogul Sheldon G. Adelson,”
who has “insisted on parceling out his money project by project, as opposed to setting an
overall budget, limiting the group’s ability to plan and be nimble . . . .” [Michael Luo, “Great Expectations for a Conservative Group Seem All But Dashed,” The New York Times , April 12, 2008.]

Substantial evidence showed that Mr. Adelson earmarked contributions for Freedom’s
Watch’s electioneering communications budget. But in a written “statement of reasons,”
the three Republican commissioners announced a new, even higher bar for requiring disclosure:
Not only must funds be earmarked for electioneering communications; they must
be earmarked for a specific campaign ad.

Through deregulation and lack of enforcement, very little is left of what by all rights should
be a very robust transparency law.

Craig Holman, Ph.D.
Government Affairs Lobbyist
Public Citizen
215 Pennsylvania Avenue NE
Washington, D.C. 20003
TEL: (202) 454-5182
CEL: (202) 905-7413
FAX: (202) 547-7392
Holman at aol.com

-----Original Message-----
From: Rick Hasen <rhasen at law.uci.edu>
To: law-election <law-election at UCI.edu>
Sent: Fri, Mar 23, 2012 1:54 pm
Subject: [EL] question about disclosure rules as interpreted by the FEC

              Some time        back, the three Republican FEC commissioners took the position        that only a limited set of contributions funding electioneering        communications need to be disclosed.
        From the Washington          Post:

The Republican commissioners said they interpreted the      regulations to mean that a donation only needed to be reported if      it was for the specific advertisement included on the disclosure      form. That means that even if Adelson had given money to run      advertisements generally, his name wouldn't be required to be      disclosed unless he directed his money toward specific ads.      

    So I'm trying to get a handle on how this split on the FEC affects    what is ultimately disclosed to the FEC.  My question is this: how    would the extent and/or timing of disclosure be different between    these two hypothetical cases:

        Case 1: Contributor gives money to group, asking it to be used    for electioneering communications attacking Senator x, who is    running for reelection.

        Case 2: Exactly the same as Case 1, except Contributor names a    specific ad attacking Senator x, to be broadcast at a specific time    on a specific television station.

     I'm particularly interested in whether if a contributor gives money    to a Super PAC (registered with the FEC) as opposed to to a 501c4,    whether the contribution to the super PAC in Case 1 gets    disclosed---when and how.

    Thanks.

    Rick

-- 
      Rick Hasen
      Chancellor's Professor of Law and Political Science
      UC Irvine School of Law
      401 E. Peltason Dr., Suite 1000
      Irvine, CA 92697-8000
      949.824.3072 - office
      949.824.0495 - fax
      rhasen at law.uci.edu
      http://law.uci.edu/faculty/page1_r_hasen.html
      http://electionlawblog.org

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