08.08.2018

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Updates

The United States District Court for the District of Columbia published an opinion, on August 3, 2018, in Citizens for Responsibility and Ethics in Washington (CREW) v. Federal Election Commission (FEC). The opinion holds that organizations that make independent expenditures must disclose to the FEC more information about their donors than required by the FEC’s current regulation.

“Independent expenditures” are communications that expressly advocate the election or defeat of a clearly identified federal candidate. Organizations create and disseminate independent expenditures without any input from candidates or political parties. Entities sponsoring independent expenditures totaling over $250 during a calendar year must file reports with the FEC. The district court’s opinion addresses the content of these reports.

Under a longstanding FEC regulation, the only time an organization making independent expenditures had to disclose the identity of a donor was when the donor gave over $200 “for the purpose of furthering the reported independent expenditure.” This meant that even if a donor made a contribution earmarked for the organization’s independent expenditure program, or responded to a solicitation asking for donations for independent expenditures in general, there was no disclosure requirement because the donor was not giving money for a particular independent expenditure.

In CREW v. FEC, the court invalidated this regulation, finding that the FEC did not give effect to all parts of the underlying statute. According to the court, the Federal Election Campaign Act of 1971, as amended, requires broader disclosure than the regulation. The court held that the statute, when read together with court precedent on the First Amendment, requires organizations making over $250 in independent expenditures in one year to disclose the identity of donors who contributed over $200: (1) for the organization’s “independent expenditure activity, even if the donors did not specify the precise form of the independent expenditures that the[ir] contribution[s] would ultimately fund;” or (2) “for other political purposes in support or opposition to federal candidates by the organization,” such as “contributions directly to candidates, candidate committees, political party committees, or super PACs.”

Interim Period Keeps Existing Regulation in Effect

Significantly, the court has delayed the impact of its opinion for 45 days to give the FEC an opportunity to promulgate a replacement regulation. During this 45-day interim period, the existing regulation will remain in effect. This means that organizations engaging in independent expenditure activity can continue to file reports as they have in the past. There is also no need to amend previously filed reports.

Because the FEC or Crossroads GPS, which was an intervenor in the court action, may decide to appeal the court’s decision, it is possible that the impact of the decision will be delayed even longer (or be overturned). We will provide additional updates if the FEC or Crossroads GPS appeals, or if the FEC promulgates a new regulation or provides additional guidance.

Engaging in Federal Political Activity?

If your organization is planning to make independent expenditures or engage in any other federal political activity, we suggest reaching out to experienced counsel for guidance, particularly if you are planning to make solicitations or allow a federal candidate to solicit contributions on your behalf. As has always been the case, organizations not registered with the FEC should carefully consider solicitations which appear to be raising funds for the purpose of influencing federal elections. We recommend instituting a review process for written solicitations before they are sent and contractually obligating any paid fundraisers to comply with all laws and regulations when making solicitations on your behalf.

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