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FEC guidance to limit impact of dark money court ruling

With a month to go until midterm elections, the Federal Election Commission on Thursday issued new guidance governing the flow of untraceable campaign cash to so-called “dark money” groups.

It’s the FEC’s response to a recent U.S. District Court decision that found the agency improperly allowed “social welfare” nonprofits to skirt disclosure requirements for some donors. But for campaign finance activists who hailed the August ruling as a transparency victory, Thursday’s guidance was sure to disappoint.

“A lot of people were very excited when (the case) first came out,” said FEC Commissioner Ellen L. Weintraub, a Democrat. “But when you get into the weeds, one has to acknowledge that the opinion is not as broad some people had hoped.”

For starters, both the opinion and the new guidance only apply to donors who give money for “independent expenditure” ads that advocate for, or against, a particular federal candidate. It doesn’t apply to “issue ads” that can be just as hard-hitting. These commercials often reference — and frequently misrepresent — a candidate’s stance on public policy matters.

The FEC memo is also narrow in scope. Its impact is likely limited to about 20 nonprofit groups that continued to spend on independent expenditures after the court ruling took effect in September. Others stopped running ads as a precaution, but even those who didn’t are likely to find creative legal ways to avoid revealing donors, campaign finance experts predict.

“I had clients calling, saying, ‘What the heck is going on?’ But every responsible lawyer was ready,” said Dan Backer, a Republican attorney whose clients include Great America PAC, which supports President Donald Trump.

The case, which has been appealed, centers around the fundraising practices of Crossroads GPS, a Republican-affiliated nonprofit that has spent heavily attacking Democrats.

Campaign finance law states donors must typically be disclosed if they give over $200 for an independent expenditure. The FEC, however, ruled that the law only applies to donations solicited for specific ads — not the broader ad campaigns that groups like Crossroads raise money for.

Citizens for Ethics and Responsibility in Washington sued the FEC over the practice in 2016 and Judge Beryl A. Howell agreed. She ruled in August that the practice “blatantly undercuts the congressional goal of fully disclosing the sources of money flowing into federal political campaigns.”

Ever since the high court’s landmark 2010 Citizens United decision allowed businesses, unions and nonprofits to spend unlimited amounts to influence elections, critics have bemoaned existing transparency requirements. They say the rules are inadequate in the newly reformed landscape, allowing deep-pocketed, anonymous donors to play an outsized role.

But the current case is not likely to be a legal vehicle to change those rules. Despite the bold language, which activists seized on, Weintraub said it wasn’t as encompassing as many thought.

“I wish the decision would have been the death knell for all dark money, but (it) really didn’t go that far,” she said.

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