FEC to shine a light on dark money

Karl Rove has a sad. Today's FEC statement, which technically regards its implementation of the district court's decision in the Van Hollen case (pending appeal), is a B.F.D.:

Effective March 30, 2012, persons making disbursements for electioneering communications should report 'the name and address of each donor who donated an amount aggregating $1,000 or more to the person making the disbursement, aggregating since the first day of the preceding calendar year.'

See, persons means anyone'human, corporation, 501(c)(4), etc. And what's an electioneering communication? As opposed to an independent expenditure, which is paid speech in any medium "expressly advocating the election or defeat of a clearly identified candidate," it's this:

An electioneering communication is any broadcast, cable or satellite communication that fulfills each of the following conditions:

• The communication refers to a clearly identified candidate for federal office;
• The communication is publicly distributed shortly before an election for the office that candidate is seeking; and
• The communication is targeted to the relevant electorate (U.S. House and Senate candidates only).

...The electioneering communications rules apply only to communications that are transmitted within 60 days prior to a general election or 30 days prior to a primary election for the federal office sought by the candidate, including elections in which the candidate is unopposed. ... In the case of Presidential and Vice-Presidential primary candidates, the communication is publicly distributed if it can be received by 50,000 or more people... [a]nywhere in the United States during the period between 30 days prior to the nominating convention and the conclusion of that convention.

The regulations at 11 CFR 100.29(c)(1) through (5) exempt certain communications from the definition of "electioneering communication"... Expenditures or independent expenditures that must otherwise be reported to the Commission.

Mother Jones' Andy Kroll explains:

Here's the quick-and-dirty version of how nonprofits including Crossroads GPS, Americans for Prosperity, and pro-Obama Priorities USA, among others, ended up in this bind. Until recently, nonprofits had exploited a federal loophole allowing them to run issue ads without disclosing the sources of their funding. These so-called social welfare organizations may also run ads directly backing or opposing candidates, but can't run too many of them at the risk of running afoul of the IRS for being too political.

In 2011, Rep. Chris Van Hollen (D-Md.) and pro-reform advocacy groups sued the Federal Election Commission to close that loophole. This March, a federal district court judge agreed with Van Hollen, and a second federal judge refused to stay that decision. The loophole was gone. (The case is currently on appeal.)

In other words, the rulebook has changed mid-election for politically active nonprofits, and the first effects will be felt Saturday. Now, if AFP or Priorities USA runs a TV or radio ad mentioning Obama or Romney without endorsing or opposing a candidate, the group's donors must be named. Starting in early September, if they mention any federal candidate, donors must be named.

So, what happens next? Again, Kroll:

[T]ax law requires 501(c)(4) nonprofits to prove that the majority of their work benefits the community at-large, not a single candidate or party. Running too many overtly political ads ... could imperil the group's tax status which prevents them from making politicking their primary focus.

An official at Americans for Prosperity, the conservative nonprofit founded by David Koch, says AFP brass have met multiple times to discuss how to tweak the group's ad strategy. One option that's been discussed is ramping up the group's online advertising, which isn't affected by the beefed-up disclosure rule. The staffer stressed that any option forcing AFP to name its donors is off the table. The staffer added, however, that AFP would not go dark on the airwaves in the run-up to the November elections: "We're going to continue to be on the air and continue to follow the law, and we're gonna protect the identity of our donors."

Nonprofits could always gamble that the slow-moving IRS and gridlocked FEC won't target them even if they flout the law. And if they're caught, the blowback would be relatively minimal when compared with the potential for political gain, says Rick Hasen, an election law expert at the University of California, Irvine. It's unlikely that the IRS or FEC would crack down on lawbreakers before Election Day. And if a group got slapped with a six- or seven-figure fine after the election, or had to shut down, that's hardly the end of the world, Hasen says. "If a nonprofit has to sacrifice its name and pay a fee," he says, "and it helps keep the House, win back the Senate, and take back the White House, that's a small price to pay."