As ThinkProgress’ Josh Israel explained last January, the rush of secret money seeking to influence the 2012 election can be blamed in no small part on the Federal Elections Commission, which issued regulations weakening federal disclosure laws in 2007. Although federal law requires “all contributors who contributed an aggregate amount of $1,000 or more” to fund a certain kind of election spending by a single organization to be disclosed, the FEC interprets this law to only require disclosure when such contributions are “made for the purpose of furthering electioneering communications.” According to Israel, “[t]his huge loophole has meant that 501(c)(4) groups like Crossroads GPS are required to disclose only their donors who overtly earmark the donation for that communication. Very few donors have done so.”
Last April, a federal district court closed this loophole, at least for certain kinds of election spending. Today, a three judge panel of the United States Court of Appeals for the District of Columbia Circuit reversed that decision, claiming that federal law is “anything but clear” that the FEC’s loophole should not exist.
Today’s decision is not the end of the road for this issue. The panel essentially sent the case back to the FEC to either “explain the meaning and scope of [its regulation] or, if the agency deems it appropriate, to engage in further rulemaking to better clarify the regulatory regime.” After the FEC takes this action, it is still possible that a court could hand down a subsequent decision closing the loophole even if the FEC does not do so itself.
Nevertheless, courts generally apply a high degree of deference to agency decisions, so the most likely outcome is that whatever the FEC says will continue to be the law. Moreover, it is also unlikely that the FEC will adopt a more pro-disclosure regulation. By design, each major party controls half of the seats on the FEC, which means that the commission generally stalemates on major votes where one party or the other wishes to block certain regulation. Last time the FEC was asked to review a similar disclosure regulation, it split 3-3.