Karl Rove's Lucky Day: DC Appeals Court Rules Top Donors Can Remain Secret

As the Romney campaign teeters, GOP kingpins win legal right to keep 2012's top donors' names secret.

Today is a bad day for American Democracy. A federal appeals court in Washington has ruled in a complex case that the political groups that are raising millions in anonymous donations from multi-millionaires in 2012 and not-so-secretly spending it on political attack ads do not have to reveal their donors.

The ruling by the DC Court of Appeals essentially cements the reality that there are two kinds of political campaigns in American politics: one playing by the rules and limits established by Congress, where donations are capped and disclosed in order to prevent the appearance or occurence of corruption, and another one where those rules do not apply and the super rich can secretly back candidates without telling the public.

The case, Van Hollen vs. FEC, sought to force disclosure of the mega-donors bankrolling political organizations that were organized as non-profits under federal tax law, such as Karl Rove's Crossroads GPS and the pro-Obama Priorities USA. These groups, particularly on the GOP side of the aisle, have been spending tens of millions on campaign ads in the presidential and congressional races. Because they are non-profits and not political committees, they do not have to disclose their donors.

While the IRS has been investigating whether these groups and dozens like them have violated their federal charter as non-profits, it wasn't expected to reach a final conclusion in the weeks before the November election. Thus, this lawsuit, brought by a coalition of progerssive campaign finance reform groups, sought to force the political non-profits to all disclose their donors by citing recent Supreme Court rulings favoring disclosure and federal campaign finance disclosure laws.

Coming against the backdrop of an embattled and sinking Romney campaign, the ruling will be cheered by the GOP as they are likely to double down on their top sponsors to spend even more for negative ads to unseat Obama and try to have majorities in Congress.  

Here's a statement from Gerald Hebert, executive director of the Campaign Legal Center, which sued to force the non-profits to disclose their donors:

"Today’s decision by the DC Court of Appeals is disappointing in that it will allow the continuing wholesale evasion of disclosure laws passed by Congress and upheld by the courts. At issue in this case is an FEC regulation that resulted in an almost complete failure by groups making “electioneering communications” to publicly disclose their contributors.

"The district court had found that the FEC had created a gaping loophole in the disclosure requirement when it issued a regulation in 2007 that required disclosure only of donors who had given “for the purpose of” funding “electioneering communications.”  Today’s decision sends the case back to the trial court, which had overturned the FEC regulation. The Court of Appeals has directed the lower court to provide the FEC an opportunity to revise the regulation in a rulemaking proceeding.  If the FEC fails to issue a new rule, then district court will decide whether the existing rule is arbitrary and capricious, as Representative Van Hollen has argued.

"This order effectively means that there will be no disclosure of the donors funding the tens of millions of dollars being spent on political advertising by 501(c)(4) groups like Crossroads GPS and Priorities USA in the 2012 election cycle.  In the wake of this decision we are once again left with all of the unlimited spending unleashed by the Supreme Court’s Citizens United decision, but with virtually none of the disclosure promised by the narrow five Justice majority in the case.
"The Campaign Legal Center is part of the legal team representing Rep. Van Hollen in this case, which is led by Roger Witten of WilmerHale.  The legal team also includes lawyers from WilmerHale, Democracy 21 and Public Citizen."

AlterNet / By Steven Rosenfeld

Posted at September 18, 2012, 10:25am

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