April 21, 2011

FEC Sued By Chris Van Hollen Over Huge Disclosure Loophole

A Democratic congressman on Thursday sued the Federal Election Commission in an effort to close a massive disclosure loophole before individuals and corporations have the chance to secretly funnel hundreds of millions of dollars into the 2012 presidential and congressional elections.

In his lawsuit, Rep. Chris Van Hollen (Md.) charges that in 2007 the FEC created the loophole by willfully misinterpreting disclosure requirements in the Bipartisan Campaign Reform Act of 2002, which is more commonly known as McCain-Feingold. That law clearly called for disclosure of donors to groups making "electioneering communications." Those are defined as the broadcast ads that refer to a federal candidate in the period 60 days before a general election or 30 days before a primary election.

But in 2007, the FEC added a regulation that complicated the original definition. Now disclosure is only required if a donation is explicitly made "for the purpose of electioneering communication."

As a result, a political group can -- and many now do -- refuse to divulge its donors on the grounds that those supporters were simply giving money to further the group's agenda, in a general sense.

"Not only is [the FEC regulation] inconsistent with the plain language of the statute, it is also manifestly contrary to Congressional intent and has created the opportunity for gross abuse," the lawsuit states. "Congress sought to require more, not less, disclosure of those whose donations fund 'electioneering communications.' The FEC's unlawful regulation produces a result that frustrates Congress's objective."

Van Hollen's case alleges that corporations in the 2010 campaign "exploited the enormous loophole created" by the FEC change.

Indeed, the massive increase in undisclosed spending was one of the biggest stories of the 2010 election cycle. Millions of dollars from donors who remain unidentified was spent by political groups -- conservative organizations, in particular. The Chamber of Commerce alone was responsible for nearly $33 million in untraceable spending.

Donors who prefer secrecy have flocked to nonprofit 501(c)(4) advocacy groups like former Bush administration adviser Karl Rove's Crossroads GPS, and to 501(c)(6) business associations like the Chamber.

In the wake of the Supreme Court's Citizen United decision last year, disclosure is basically the only legal remedy left for those who worry about a return to large-scale corruption, graft and deal-making. That ruling removed any limits on how much corporations can spend in federal elections.

But the Court explicitly upheld McCain-Feingold's disclosure requirements.

"The First Amendment protects political speech and disclosure permits citizens and shareholders to react to the speech of corporate entities in a proper way," lead author Justice Anthony Kennedy wrote for the majority in the 5-4 decision. "This transparency enables the electorate to make informed decisions and give proper weight to different speakers and messages."

Longtime campaign finance reform champion Fred Wertheimer's Democracy 21 group is among the backers of Van Hollen's lawsuit. SOURCE: Huffington Post

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