DC Court of Appeals Affirms District Court Decision Requiring Expanded FEC Donor Disclosure for Independent Expenditures by Section 501(c) Organizations
Date: August 24, 2021
On August 21, 2020, the US Court of Appeals for the District of Columbia affirmed a 2018 US District Court decision holding that the FEC’s independent expenditure (“IE”) disclosure rule was contrary to law. The lower court ruling was addressed in our August 2018 Client Alert.
The Circuit Court affirmed the two main holdings of the district court decision. Any 501(c) organization – like a 501(c)(4) or (c)(6) organization – that spends over $250 on IEs, must disclose the identities of persons who provide over $200 in “contributions” to the group. This encompasses funds “earmarked” or that the donor might reasonably believe will be used for political purposes of any kind. In addition, any such group must disclose those persons who contributed to support any IE sponsored by the group.
The FEC regulation at issue had limited required donor disclosures in FEC IE reports to include only those donors who made contributions to a 501(c) organization earmarked for a particular IE. As a result, prior to 2018, few if any 501(c) organizations disclosed their donors in FEC IE reports.
Following the district court decision, the FEC provided guidance requiring much broader disclosures. Although far from clear, the October 4, 2018 FEC guidance has been interpreted to require the disclosure of all donors with knowledge that an organization might use their donation to make IEs, or for other political purposes, such as contributing to another 501(c) organization or Super PAC making IEs. As a result, almost all 501(c) organizations concerned about donor confidentiality have avoided making IEs since 2018. In light of the Circuit Court decision, this caution will continue.
The future prospects for this litigation are unclear, since the decision was issued by only two judges (the third having recently died). Although en banc review by the full DC Circuit or seeking Supreme Court review are possible, neither alternative is likely to result in any change prior to the November 2020 elections.