Bloomberg News

FEC Orders Names of Donors Fueling Issue Ads Be Disclosed

July 27, 2012

The Federal Election Commission today said that it would require groups funding issue ads, such as the U.S. Chamber of Commerce and Crossroads GPS, to disclose their donors.

The FEC ruling applies only to what are known as “electioneering communications,” so-called issue ads that run before an election and mention a federal candidate without urging viewers to vote for or against the person. “Independent expenditures,” which advocate support or opposition to a candidate, aren’t affected by the FEC decision.

The commission said all groups should report donors of $1,000 or more effective March 30. That’s when a U.S. District Court judge threw out FEC rules allowing groups to hide their contributors. The case was brought by Representative Chris Van Hollen, a Maryland Democrat, who argued that the 2002 campaign- finance law required such disclosure.

“This lawsuit is one step forward in our fight to restore the integrity of our electoral process, and will shine an important light on some of the shadowy money that has flooded our elections,” Van Hollen said.

In an interview, Paul Ryan, a member of Van Hollen’s legal team, said: “It’s about time that the FEC made clear its understanding of its obligation to enforce the law as it is written in the statute.”

Legal Appeal

That district court ruling has been appealed, and the FEC said it could reverse its policy if a higher court overturns the decision. A phone calls to the Chamber wasn’t immediately returned.

“The FEC statement is not new policy, but rather reiterates the Van Hollen decision,” said Jonathan Collegio, a Crossroads spokesman. “Crossroads is aware of the rules and is careful to follow them closely.”

Organizations can get around the FEC ruling and continue to hide their donors if they fund “independent expenditures,” which advocate directly for or against a particular candidate.

That’s because when the 2002 law was written, independent expenditures could be funded only by groups reporting donors and spending. Subsequent court decisions allowed corporations and unions to fund such expenditures without disclosing donors.

Millions Spent

Crossroads GPS, the nonprofit founded with help from Republican strategist Karl Rove, and the Chamber, the largest U.S. business lobby, have spent millions of dollars to help elect Republicans without identifying the sources of their money. This year, the Chamber has spent $3.3 million and Crossroads $286,810 on electioneering communications, FEC data shows.

Today’s commission action affects all issue ads airing 60 days before the general election or 30 days before a primary election or the national political conventions. The ads typically urge viewers to call their lawmaker and express support or opposition on an issue. For instance, a recent Crossroads ad urges viewers to tell President Barack Obama that “for real job growth, cut the debt.”

Senate Republicans twice this month blocked legislation to require all groups attempting to influence the outcome of elections to identify their donors, no matter what is in their ads.

To contact the reporter on this story: Jonathan D. Salant in Washington at jsalant@bloomberg.net.

To contact the editor responsible for this story: Jeanne Cummings at jcummings21@bloomberg.net.


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