Tuesday, May 15, 2012

D.C. Circuit Denies Emergency Stay in Van Hollen Suit Against FEC

The D.C. Circuit yesterday denied motions for an emergency stay pending appeal of the district court's ruling in Van Hollen v. FEC.  That case involved Representative Chris Van Hollen's (D-Md) suit challenging the FEC's regulation on corporate disclosure of contributors in the wake of Citizens United.  The district court ruled for Van Hollen, effectively requiring corporations to disclose all their contributors (and not just contributors who contributed for electioneering communication), or to establish a separate fund for electioneering communication (even though Citizens United held that such a fund is not required).  The court's denial yesterday means that the district court ruling remains in effect pending the appeal to the D.C. Circuit.

The court's ruling yesterday, and the district court's ruling before, are both victories for Van Hollen and for greater disclosure of those who contribute to corporations and labor unions (which then use those contributions for electioneering communication).  As it stands under BCRA, corporations and labor unions that engage in electioneering communication can now either (1) disclose all contributors (whether for electioneering communication or not), including anyone who gives a corporation money for any purpose, or (2) establish a segregated fund for contributions for electioneering communication and disclose only contributors to that fund.  This may give corporations and labor unions an incentive to establish a segregated fund.  (It's either that or disclose the names and addresses of anyone who paid more than $1,000 for any purpose.  This could indeed create a hassle for corporations and labor unions, and it's not clear exactly how useful this kind of undifferentiated disclosure of any and all contributors would be.)  But here's the twist: Citizens United held that corporations and labor unions can't be required to use a segregated fund for electioneering communication.  

Still, nothing in the rulings in Van Hollen's case challenges Citizens United.  Indeed, the rulings are in harmony with it and underscore the value of transparency.  The rulings only mean that BCRA requires disclosure--even of all contributors, when a corporation or labor union declines to establish a segregated fund.  

But this is certainly not the end of the case.  The appeals court only ruled that the appellants hadn't established the stringent requirements for an emergency stay; it did not rule finally and definitively on the merits (even if it gave strong clues in favor of Van Hollen).

Here's some background:

Van Hollen sued the FEC over its December 26, 2007, disclosure regulation, which required disclosure of corporate and labor union contributors as follows:

If the disbursements were made by a corporation or labor organization pursuant to 11 CFR Sec. 114.15, 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 communication.

11 CFR Sec. 104.20(c)(9).  The problem, according to Van Hollen, was that the italicized limit on the disclosure requirement violated the plain language of the BCRA, which says:

(E) If the disbursements were paid out of a segregated bank account which consists of funds contributed . . . directly to this account for electioneering communications, the names and addresses of all contributors who contributed an aggregate amount of $1,000 or more to that account . . . .; or

(F) If the disbursements were paid out of funds not described in subparagraph (E), the names and addresses of all contributors who contributed an aggregate amount of $1,000 or more to the person making the disbursement during the period beginning on the first day of the preceding calendar year and ending on the disclosure date.

2 USC Sec. 434(f)(2).  The problem was that Citizens United said that corporations and labor unions didn't have to use a segregated fund for electioneering communications--telling corporations and labor unions that they didn't have to use subsection (E).  But without (E)--that is, without a segregated fund--corporations and labor unions apparently had to disclose all contributors (for electioneering purposes or not) under subsection (F).  Yet the FEC regs--the italicized part above--requires disclosure of only those contributors who contributed for electioneering purposes.

The district court ruled that the FEC reg violated the BCRA.

The appeals court yesterday denied motions for an emergency stay of this ruling, writing that appellants hadn't satisfied the stringent requirements.  The court was untroubled by the fact that the district court's ruling means that corporations must disclose all contributors (and not just those who contribute for electioneering communication): the appellants failed to show that they'd be silenced by such an interpretation.  The court also said that corporations and labor unions could still establish a segregated fund under subsection (E), above, even though that's not required, and thus disclose only those contributors who contribute for electioneering communication.  Finally, the court said that Van Hollen would be harmed by granting a stay, because he wouldn't be able to respond to electioneering communication funded by anonymous, non-disclosed sources.

SDS

http://lawprofessors.typepad.com/conlaw/2012/05/dc-circuit-denies-emergency-stay-in-van-hollen-suit-against-fec.html

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