United States Supreme Court Upholds Campaign Ad Disclosure Requirement

by Snell & Wilmer
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In its recent four-word decision (“The judgment is affirmed.”) Independence Institute v. Federal Election Commission, the U.S. Supreme Court upheld a campaign finance law requirement that donors backing certain campaign ads must be disclosed to the Federal Election Commission (FEC).

In 2002, Congress passed the Bipartisan Campaign Reform Act (BCRA), also called the McCain-Feingold Act, regulating the financing of political campaigns. Among other things, it required that when an electioneering communication, such as a television or radio advertisement, names a federal candidate within 30 days of a primary election, or within 60 days of a general election, the donors contributing directly to producing or airing that advertisement must be disclosed to the FEC. In its 2010 Citizens United v. Federal Election Commission decision, the Supreme Court allowed unlimited campaign spending by corporations and unions, but upheld the disclosure requirements found in the BCRA for electioneering communications.

The Independence Institute (Institute), a Colorado-based 501(c)(3) nonprofit corporation, challenged the BCRA’s disclosure requirements by bringing suit against the FEC requesting declaratory and injunctive relief with respect to a radio ad regarding an increase in prison costs that mentioned senators by name. The name-dropping of the senators—one of whom was a candidate in an upcoming general election—in the radio spot triggered the campaign finance requirement under the BCRA that the Institute disclose to the FEC any donors supporting the ad. The Institute sought to keep the names of its donors secret, arguing that the disclosure requirement violated its rights under the Constitution’s First Amendment and that the requirement was overbroad as applied to its radio advertisement since the ad was focused on an issue, sentencing reform, and not on the re-election campaign of any particular senator.

In response to the Institute’s arguments, the FEC argued that for more than a century, federal law has required organizations that influence elections to disclose information about their funding sources, and that disclosure requirements serve governmental interests—such as deterring corruption—that are sufficiently important enough to outweigh the privacy interests of donors.

The three-judge panel of the district court sided with the FEC, observing that the Supreme Court had twice considered and twice upheld the disclosure requirements at issue and in so doing had rejected the very type of issue-centered exception that the Institute advocated for. Without issuing any substantive opinion, the Supreme Court summarily affirmed the lower court’s ruling in favor of the FEC in Independence Institute.

Independence Institute represented the latest in a series of cases aimed at rolling back federal campaign finance restrictions. In part based on the Independence Institute decision, many observers contend that the BCRA and federal disclosure regulations related to the support of political advertisements are here to stay. Organizations, whether for-profit or non-profit, and individual donors may wish to consider these disclosure issues and ensure appropriate disclaimers for contributions related to political campaigns.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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