On Aug. 21, the United States Court of Appeals for the District of Columbia Circuit affirmed a U.S. District Court order that overturned a Federal Election Commission (FEC) rule regulating donor disclosure requirements for entities making independent political expenditures. 
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Welcome to _The Disclosure Digest_, a weekly look at state and federal disclosure policies for nonprofit organizations and their donors.

 
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D.C. CIRCUIT AFFIRMS DISTRICT COURT ORDER INVALIDATING FEC DONOR DISCLOSURE REGULATIONS
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On Aug. 21, the United States Court of Appeals for the District of Columbia Circuit affirmed a U.S. District Court order that overturned a Federal Election Commission ([link removed]) (FEC) rule regulating donor disclosure requirements for entities making independent political expenditures.  The D.C. Circuit affirmed the lower court's finding that the FEC rule was impermissibly narrow in its application.

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** BACKGROUND 
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The D.C. Circuit's ruling concerns independent expenditures ([link removed]) (IEs) -- money spent on political advertising in support of, or in opposition to, particular candidates for elective office. Individuals, political committees, super PACs, select nonprofits, corporations, and labor unions can make IEs, but IEs cannot be coordinated with a candidate, a candidate's committee, or a political party committee.

The disputed FEC rule is 11 CFR § 109.10(e)(1)(vi) ([link removed]) , which requires that groups making IEs disclose "the identification of each person who made a contribution in excess of $200" if the contribution was "made for the purpose of furthering the reported independent expenditure." 

Citizens for Responsibility and Ethics in Washington ([link removed]) (CREW), the lead plaintiff in the lawsuit, argues that the FEC disclosure rule contradicts the Federal Election Campaign Act (FECA). In CREW's reading, FECA "requires an IE maker to disclose any contributor who gives $200 in the aggregate, without regard to any intent to support IEs or a specific IE." CREW filed a complaint with the FEC against Crossroads Grassroots Policy Strategies ([link removed]) (Crossroads GPS), alleging that the latter group failed to meet disclosure requirements. The FEC dismissed the complaint, rejecting CREW's reading of the rule and FECA. 

On Feb. 16, 2016, CREW filed suit against the FEC and Crossroads GPS in the United States District Court for the District of Columbia, asking the court to invalidate the rule on the grounds of its inconsistency with FECA. On Aug. 3, 2018, Judge Beryl Howell ruled in favor of the plaintiffs. Crossroads GPS appealed the decision to the D.C. Circuit. 

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** HOW DID THE COURT RULE?
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The D.C. Circuit voted 2-0 to uphold the district court's ruling. Chief Judge Srikanth Srinivasan ([link removed]) wrote the court's opinion, which was joined by Circuit Judge Merrick Garland ([link removed]) . The panel's third judge, Stephen Williams ([link removed]) , died on Aug. 7, 2020. Srinivasan was appointed to the court by Barack Obama (D), Garland by Bill Clinton (D), and Williams by Ronald Reagan (R).

Srinivasan rejected "various threshold jurisdictional and procedural arguments made by both CREW and Crossroads" before turning to the question of whether the FEC rule contradicts FECA.  

Srinivasan situated the court's ruling within the context of Chevron deference ([link removed]) : 

"Our analysis is governed by _Chevron U.S.A. Inc. v. Nat. Res. Def. Council, Inc._, under which we accept an agency’s reasonable construction of an ambiguous statutory provision. Yet 'under _Chevron_, we owe [the Commission’s] interpretation of the law no deference unless, after employing traditional tools of statutory construction, we find ourselves unable to discern Congress’s meaning.'"

Finding that Congress' intent in adopting FECA was unambiguous, Srinivasan wrote:

"The Rule conflicts with FECA's unambiguous terms twice over. First, the Rule disregards [§ 30104(c)(1)'s] requirement that IE makers disclose each donation from contributors who give more than $200, regardless of any connection to IEs eventually made. Second, by requiring disclosure only of donations linked to a particular IE, the Rule impermissibly narrows [30104(c)(2)(C)'s] requirement that contributors be identified if their donations are “made for the purpose of furthering an independent expenditure.”

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Want to learn more about deference and why it matters? Check out our Learning Journey ([link removed]) on Judicial Deference ([link removed]) to learn about what deference is, when it applies, and how different types of deference have been established over time.

Keep up to date on changes to federal regulatory activity by subscribing to _Checks and Balances ([link removed]) _, a newsletter from Ballotpedia's Administrative State Project. Each monthly issue contains a summary of federal issues we're watching, as well as stories on what's been happening in the states. Our feature story rotates between book reviews, scholarly articles we're reading, or a deep dive into a topic. Check out the August edition here ([link removed]) . 

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** WHAT ARE THE REACTIONS?
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Jordan Libowitz, a spokesman for CREW, said ([link removed]) , "This is yet another major win in the fight against dark money in politics. It will be much harder for donors to anonymously contribute to groups that advertise in elections. This is a great day for transparency and democracy." 

Crossroads GPS has not commented publicly on the ruling. 

Joe Birkenstock, from the law firm Sandler Rieff (which, according to _Politico_, "advises Democratic-leaning groups") said ([link removed]) , "I think it’s significant. The earth moved when the district court opinion came out. That district court opinion called for much broader disclosure than had previously been the case, and [after] a period of a week or two there was real nervousness about it."

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** WHAT COMES NEXT?   
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Crossroads GPS has not indicated whether it will appeal the D.C. Circuit's ruling. The case name and number are _Citizens for Responsibility and Ethics in Washington v. Federal Election Commission ([link removed]) _ (18-5261).

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** [link removed]
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** WHAT WE'VE BEEN READING
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Politico, "Appeals court backs greater disclosure of 'dark money' donors," Aug. 21, 2020 ([link removed])

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Venable, LLP, "States’ Response to IRS Regulations on Nonprofit Donor Disclosure," Aug. 11, 2020 ([link removed])

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The Fulcrum, "In wake of scandal, bipartisan push in Ohio for money-in-politics transparency," Aug. 6, 2020 ([link removed])

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** THE BIG PICTURE
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NUMBER OF RELEVANT BILLS BY STATE: We're currently tracking 52 pieces of legislation dealing with donor disclosure. On the map below, a darker shade of green indicates a greater number of relevant bills. Click here ([link removed]) for a complete list of all the bills we're tracking. 

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NUMBER OF RELEVANT BILLS BY CURRENT LEGISLATIVE STATUS: 

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NUMBER OF RELEVANT BILLS BY PARTISAN STATUS OF SPONSOR(S): 

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** RECENT LEGISLATIVE ACTIONS
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NEBRASKA LB210 ([link removed]) : This bill would revise reporting requirements for independent expenditures and establish disclosure requirements for electioneering communications. 

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Nonpartisan sponsorship. 

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Indefinitely postponed Aug. 13.

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OHIO HB737 ([link removed]) : This bill would make a number of modifications to the state's campaign finance laws regarding independent expenditures and PACs. 

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Bipartisan sponsorship. 

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Introduced July 27.

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OHIO HB739 ([link removed]) : This bill would extend donor disclosure requirements to nonprofits and limited liability corporations that make election expenditures. 

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Democratic sponsorship. 

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Introduced July 29.

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OHIO SB347 ([link removed]) : This bill would make a number of modifications to the state's campaign finance laws regarding independent expenditures and PACs.

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Republican sponsorship.

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Introduced July 30. 

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OHIO SB349 ([link removed]) : This bill would require 501(c)(4) nonprofits and limited liability companies to disclose the sources of contributions made to finance political campaigns. It would also require these groups to disclose certain information about their owners and the purposes of their organizations.

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Bipartisan sponsorship.

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Introduced Aug. 4.

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VIRGINIA HB5038 ([link removed]) : This bill would require referendum committees to include disclosures on political advertisements.

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Republican sponsorship.

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Introduced and referred to House Privileges and Elections Committee Aug. 18.

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