With the presidential campaign now entering in its final phase, a federal appeals court Tuesday overturned a ruling that could have curbed the ability of secret-money outside groups from running advertisements during that critical time.
The court said that nonprofit groups such as Crossroads GPS, the Republican group helmed by Karl Rove, do not have to disclose their donors, even if they run ads that clearly name a political candidate in the two months before an election. Ever since the original court decision forced the disclosure of donors’ names for these groups, such activity had nearly ceased.
These groups, organized as tax-exempt charities, not political entities, have been able to run ads since 2007. But ads in the late stages of campaigns faced special restrictions, and with less than two months before the election, that disclosure mandate was poised to offer voters some respite from the barrage of ads.
“Today’s decision by the D.C. Circuit Court overturned one of the few glimmers of hope in campaign finance disclosure law,” Melanie Sloan, executive director of the campaign finance activist group Citizens for Responsibility and Ethics in Washington, said in a statement. “Voters are being pummeled by campaign ads with no way to discover who is really trying to influence our elections.”
Although super PACs have attracted much of the critics’ attention because they can accept unlimited contributions from businesses, unions and individuals and spend it directly advocating for candidates, so-called “dark money” groups organized under Section 501(c) of the tax code have rapidly supplanted them, even though there are more limitations on their political speech than there are for super PACs. The difference? While both can accept unlimited contributions from any source, super PACs have to disclose their donors, while nonprofits don’t.
That distinction has made such nonprofits highly attractive to many donors.
Americans for Prosperity, a nonprofit led by one of the billionaire Koch brothers, has spent $10 million on anti-Obama ads, and Crossroads GPS has bought more television ads than a related organization, American Crossroads, that is organized as a super PAC. On Monday, hours before the decision, Americans for Prosperity made four ad buys in Las Vegas and one in Florida.
The Federal Election Commission’s rules were unusual in that they required groups running such ads to disclose the names of only donors who had given with the stated purpose of funding the ads. Almost no one, it turns out, overtly states the purpose of a donation when giving to a group. That odd loophole led Rep. Chris Van Hollen, Maryland Democrat, to sue the FEC, winning the original lower-court decision that was issued in March.
Republicans, including Senate Minority Leader Mitch McConnell, said Mr. Van Hollen was trying to curb free speech. But Mr. Van Hollen noted that nothing prevented groups from speaking.
The appeal was argued by attorneys from Mr. Van Hollen on one side and those from the Center for Individual Freedom and the Hispanic Leadership Fund on the other. The Federal Election Commission, which did not respond to a request for comment from The Times, did not participate, a stance criticized in Tuesday’s decision.
“The FEC’s failure to participate in this appeal makes it impossible for the court to fully understand the agency’s position on numerous issues that have been raised by the parties with respect to the meaning of the statute, the intended reach of the disputed regulation, and the import of the Supreme Court’s decisions addressing campaign finance law,” the decision says.
The ruling says that the earlier decision is overturned while the FEC, which it says is best situated to resolve the issue, makes clearer rules, and instructs the agency to tell the court promptly whether it intends to do so.
But the agency, which has been crippled by internal deadlocks, is highly unlikely to act before the election.