New Ruling May Close the Black Hole of Dark Money in Michigan Politics

Judge JacksonFor the second time in three years, U.S. District Court Judge Amy Berman Jackson vacated a 2007 Federal Election Commission rule which had for all practical purposes gutted the requirement for organizations who sponsor third-party campaign issue ads to reveal their donors in the run-up to an election.

Calling the FEC rule “arbitrary , capricious, and contrary to law,” Jackson’s ruling reaffirmed her prior decision finding that the stipulation to disclose only those contributors that expressly gave for the purpose of a particular ad is not consistent with McCain-Feingold, aka, the Bipartisan Campaign Reform Act of 2002.

A little over two years ago, the U.S. District Court of Appeals overturned the judge’s prior ruling and returned the case to her for further consideration.

Jackson thought about it, and yup — it still had the stench of covert electioneering.

The case stemmed from a lawsuit filed by Rep. Chris Van Hollen (D-Maryland), who was joined by numerous advocacy groups standing in opposition to the narrow interpretation of reporting requirements — arguing that they are not in the spirit and intent of McCain-Feingold. The 2007 FEC rule created a loophole allowing anonymous financiers to funnel millions in unreported campaign dollars into issue ads, with no fear of public disclosure. Jackson said the rule “allows the true sponsors of advertisements to hide behind dubious and misleading names.”

Jackson labeled the FEC rule as an “unreasonable interpretation” of the BCRA, designed to thwart congressional intent meant to “promote transparency and ensure that members of the public would be aware of who is trying to influence their votes just before an election.”

It is now up to the six-member FEC panel, chaired by Republican appointee Lee Goodman, to decide whether to appeal again, or abide by the court’s decision and comply with the rule of law. Goodman told the Washington Post:

“I’ve always said that I’m open to judicial guidance on this issue, and now we’ll have to study the court’s opinion to determine exactly what obligation the FEC has in response.”

The FEC, by the way, was created after the Watergate scandal — its mission was to create transparency in campaigns. (“Was” being the operative word.)

According to one of the transparency advocates on the case, lower courts are in lockstep in a call for full disclosure. The Los Angeles Times reports that Tara Malloy, senior counsel for the Campaign Legal Center, said of the ruling:

“We are seeing a full-throated endorsement of disclosure by the lower courts. We are enjoying the victory, though I am sure the fight will continue.”

Yes, the battle will go on, but there’s at at least one federal agency on the side of disclosure.

Unlike the FEC, the Federal Communications Commission has been taking action to expose the vast sums of dark money being poured into third-party ads. Earlier this year, just weeks before the primary election, a new rule took effect requiring over 2000 television black holestations to create an online public database cataloging the documents of all third-party ad buys. Individual contributors will remain invisible, but at least now the electorate can understand the scope of the dark money problem. (Go to Political Ad Sleuth for an easy to use search engine.)

Michigan is recognized a the nation’s black hole when it comes to dark money, and their resident nonpartisan watchdog group, the Michigan Campaign Finance Network, surely appreciates the new FCC disclosure rule. Rich Robinson, Director of MCFN, reports that undisclosed sources dominated both the recent Supreme Court and the Attorney General races in the state. And the secretive spending was primarily of the Republican variety.

The Michigan Republican Party was the principal sponsor of advertising about Michigan Supreme Court candidates. Its ads touted incumbent Justices Brian Zahra and David Viviano and Judge James Redford as protectors of children. The Republican Party spent $4.2 million for its ads, which began on October 1st, but reported no television advertising to the Michigan Bureau of Elections.

Robinson explains why Michigan’s judiciary is so vulnerable:

“The problem with this unreported, unregulated advertising is that it can conceal the identity of a major campaign finance supporter who appears as a litigant before the justices on the Court. If such a supporter is involved in a case before the justices, his or her opponent in litigation is justified in asking the beneficiary of the support to recuse himself from the case.”

But, that can’t happen without full disclosure. Ditto with the Attorney General.

The Koch brothers, national posterboys for covert money in politics, are actually using dark money to fight disclosure rules. Through their front group, American Commitment, a 501(c)(4) nonprofit “social welfare” organization, they are clandestinely attempting to influence public policy by leaning on the IRS, calling efforts to disclose donors a “power grab” intended to “gut the first amendment.”

In a letter to the commissioner of the IRS, they laid-out an argument that is so tortured and contorted it defies the laws of physics. First, they admit it’s political speech, then claim it can’t be classified as such under the BCRA, next they whine that taking away their tax exempt status would somehow restrict free speech, and then put a cherry on it with the argument that dark money funded third-party ads are apparently not related to campaigns of any kind.

Painful to swallow, but here’s an excerpt (Democracy Tree apologizes in advance for subjecting readers to the following):

[The IRS]targets core political speech and association in a way more expansive and breathtaking than any governmental initiative of which we are aware. Although purporting to start with BCRA’s definition of “electioneering communications,” which the Supreme Court has already ruled cannot be used to restrict free speech, the proposed rule dramatically expands the definition to create a concept of “campaign-related political speech” that unabashedly sweeps in speech and associated activities at the very heart of the First Amendment.

Let’s hope the IRS Commissioner shows the same sense and ability to wade through bullshit as Judge Jackson. Not holding our breath.

Bonus Update: Guess which state recently took action to report dark money donors. Click here for answer.

DSCN0444Amy Kerr Hardin


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