Clinton Campaign Case to Prompt Review of Disclosure Exemption

Hillary Clinton’s 2016 campaign and a pro-Clinton political action committee must face claims they failed to properly disclose millions in expenditures, a D.C. Circuit panel ruled.

The Federal Election Commission “acted contrary to law” in dismissing watchdog group Campaign Legal Center’s complaint alleging Federal Election Campaign Act violations by Hillary for America and Correct the Record, Judge Cornelia Pillard said in an opinion issued Tuesday. The FEC erred by stretching statutory exemptions for internet spending “beyond lawful limits,” wrote Pillard, of the US Court of Appeals for the District of Columbia Circuit.

Under the law, a candidate’s campaign committee must disclose the money a political committee spends on coordinated communication as a contribution and as an expenditure it made, the court said. The political committee must disclose it as a contribution to the campaign. An exemption exists for unpaid “communications over the Internet,” the court said.

Campaign Legal Center in 2016 accused the Clinton campaign committee of accepting millions of dollars in undisclosed coordinated contributions from Correct the Record in the form of opposition research, message development, surrogate training, video production, and press outreach.

The ruling means the FEC must “sketch the bounds of the internet exemption” and allows it to consider “enforcement action” against the Clinton campaign and Correct the Record, the court said. If the FEC fails to comply with the ruling within 30 days, Campaign Legal Center can also pursue a private lawsuit against Correct the Record and Hillary for America, the court added.

Tuesday’s opinion affirmed a lower court ruling that granted summary judgment to Campaign Legal Center on its claim that the FEC’s dismissal was unlawful. The FEC, with the Clinton campaign and Correct the Record as intervenors, had appealed.

An FEC dismissal is contrary to law if it’s the “result of an impermissible interpretation of the Act,” Pillard said, citing a 2020 D.C. Circuit ruling.

Here, the commission’s decision was impermissible because “by reading FEC regulations to exempt any expenditure even remotely or tangentially related to an eventual posting on the internet, the controlling commissioners pave a path for the very circumvention of campaign finance laws that FECA’s reporting requirement is designed to prevent,” Pillard said.

For example, Correct the Record’s commissioning of a poll was deemed exempt “because the polling firm later posted the poll without charge on its website,” Pillard said.

“Taken to its logical conclusion, that suggests a political action committee wholly devoted to coordinating its spending ‘for the purpose of influencing an election for Federal office’ need not disclose any portion of its rent, internet bills, or inventory costs as campaign contributions, so long as it spends a fractional portion of its time tweeting about its activities,” Pillard said.

The FEC also acted contrary to law in finding that expenditures not covered by the internet exemption weren’t coordinated with the Clinton campaign, “despite plausible allegations that Correct the Record coordinated all its expenditures with Hillary for America,” Pillard said.

The DC Circuit remanded to the district court, with instructions to remand to the commission.

Judges J. Michelle Childs and Harry T. Edwards joined the opinion.

Campaign Legal Center is represented by in-house lawyers. Elias Law Group LLP represents Hillary for America and Correct the Record.

The case is Campaign Legal Center v. FEC, D.C. Cir., No. 22-05336, 7/9/24.