September 17, 2018 / 8:13 PM / a month ago

Chief Justice Roberts stays ruling that would have forced GOP-backing nonprofit to disclose donors

(Reuters) - The District of Columbia U.S. Circuit Court of Appeals issued a potentially groundbreaking decision on Saturday, refusing to stay a trial court ruling that required the right-leaning non-profit Crossroads GPS to disclose a broad swath of contributors who donated money to impact particular campaigns. Crossroads moved at the D.C. Circuit for an emergency stay, arguing that the lower court ruling upended a nearly 40-year-old Federal Election Commission regulation, sowing uncertainty for political campaign contributors mere weeks before a critical midterm congressional election.

The D.C. Circuit, in a per curiam decision by Judges Karen Henderson, Patricia Millett and Robert Wilkins, said Crossroads would almost certainly lose the entire appeal so there was no reason to stay the trial court order. If anything, the D.C. Circuit said, the balance of equities lies with Citizens for Responsibility and Ethics in Washington (CREW), the nonprofit that brought the suit, because the public has an interest “in receiving important voting information and in transparency.”

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The public will have to wait. No sooner had the D.C. Circuit issued its decision enforcing disclosure than Chief Justice John Roberts of the U.S. Supreme Court granted an emergency stay motion by Crossroads’ lawyers at Wiley Rein. Chief Justice Roberts, who oversees emergency petitions arising from the D.C. Circuit, simply said that the trial court’s disclosure order “is hereby stayed pending further order of the undersigned or of the court.”

The Supreme Court simultaneously docketed CREW’s opposition to the emergency stay, which the Chief Justice cited in his order. So it would seem that the order effectively means Crossroads will not have to disclose the particular donors at issue in the litigation until the D.C. Circuit appeal is over. I contacted the Supreme Court’s public information office and Crossroads’ lawyer Thomas Kirby of Wiley Rein to confirm my reading of the chief justice’s order but didn’t hear back. In response to my email about the scope of the order, a CREW spokesman said in an email, “We do not have any information outside of the Roberts order.”

CREW brought its suit after Bloomberg reported in 2012 on a Crossroads gathering of multimillionaire GOP donors at a chi-chi Tampa club. (Bloomberg described the event as a fundraiser; Crossroads called it meeting.) Crossroads advisor Karl Rove told attendees about a pledge of about $3 million by a donor who wanted the money to be used in campaigns in Ohio, where the donor said he really liked a GOP candidate challenging Democratic U.S. Senator Sherrod Brown. Additional contributors coughed up about $1.3 million to back Ohio Republicans.

CREW filed a complaint at the FEC, contending that Crossroads was obligated by statute to disclose the donors, whose contributions were used as “independent expenditures.” (The Federal Election Commission defines independent expenditures as communications that expressly advocate on behalf of a particular candidate but have not been coordinated by the candidate or a political party.)

The FEC – in 2014, during President Obama’s administration – dismissed the complaint, citing a longstanding FEC regulation that requires disclosure of donors who contribute more than $250 for independent expenditures only when the donations are specifically “for the purpose of furthering the reported independent expenditure.” Crossroad contended, both before the FEC and, after Crew sued the FEC and Crossroads in federal district court in Washington, that the contributors who responded to the Ohio campaign pitch were not donating to a specific independent expenditure so their identities could remain secret.

U.S. District Judge Beryl Howell sided with CREW on summary judgment, holding that the FEC regulation misread the statute. The law, she said, calls for disclosure of donations of more than $250 in support of any independent expenditure, not particular ones. Judge Howell agreed to stay her ruling for 45 days, encouraging the FEC to adopt interim regulations to accord with her interpretation of the law.

The FEC did not, so Crossroads sought a stay at the D.C. Circuit. While that motion was pending, it also requested a stay at the Supreme Court. Its brief to Chief Justice Roberts argued that Judge Howell had upset the delicate and long-established balance between First Amendment rights and disclosure obligations.

“For 38 years, the Commission, through the regulation, has reasonably construed this requirement to apply where the contribution was earmarked for a particular independent expenditure – i.e., the expenditure being reported,” the motion said. “Now, 38 years later and only weeks before a national election, the district court decided that the relevant statutory language unambiguously compels the reporting of a much larger universe of contributions that, in some vague sense, fund an organization’s broader “political purposes,” whatever that may mean.” (Crossroads purports in the stay motion to be a big fan of deference to the FEC’s interpretation of the law it administers, in contrast to the vogue among conservatives to bash judicial deference to administrative agencies.)

CREW’s brief – admirable because it was submitted on the same day that the D.C. Circuit rejected Crossroads’ stay motion – argued that Crossroads misrepresented Judge Howell’s decision as “policy driven.” The public interest group said the Supreme Court should not rush in to block an outcome that has already received careful attention from the trial court and the D.C. Circuit, both of which rejected Crossroads’ overblown predictions of chaos.

The Supreme Court stay, as I mentioned, appears to allow Crossroads and other nonprofits that engage in independent spending to back particular candidates to put off disclosing the identify of contributors while the D.C. appeal is under way. Perhaps Chief Justice Roberts is hoping the FEC, with some breathing room to revise its regulations, will come up with new rules that reflect Judge Howell’s statutory interpretation.

But watch out if the D.C. Circuit upholds Judge Howell. A flashlight is bobbing in the distance for dark money.

(This article has been corrected. A previous version incorrectly identified CREW attorneys Adam Rappaport and Stuart McPhail as Crossroads counsel. The article also erroneously described Crossroads as a super PAC.)

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