Lawsuit aims to slam shut loophole that lets political parties skirt campaign finance law

A loophole that allows political parties to bypass campaign finance limits now faces a new legal challenge from watchdog groups in Washington D.C.

Nonpartisan organizations Campaign Legal Center and OpenSecretsfiled a lawsuit Monday against the Federal Election Commission, which they hope will create new disclosure rules for national political party committee accounts, according to a joint statement.

“National political party committees currently have free rein to hide information about funds added to and taken from supercharged, special-purpose accounts because of the FEC’s failure to require transparency,” said Campaign Legal Center President Trevor Potter.

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“Voters have a right to know where parties and campaigns are getting their donations from so that they can make clear-eyed assessments of ads and other communications.”

A spokesperson told RawStory the FEC does not comment on pending litigation.

The loophole links back to the 2014 “Cromnibus” and an amendment to the Federal Election Campaign Act that allows parties to draw funds from “special purpose accounts,” according to the complaint.

The three allowable accounts — one for conventions, one for headquarters and one for legal action — provide cash without the disclosure requirements, the lawsuit contends.

With three accounts to draw from, the committees can accept three times the campaign finance limit, currently set at $41,300, the groups contend.

With seven special-purpose accounts per party, this means one person could donate more than $1.7 million during a single election cycle, the watchdogs say.

Of course, not all Americans have $1.7 million with which to play politics.

That’s why OpenSecrets executive director Sheila Krumholz urged the FEC to take action as soon as possible.

“The 2024 elections are around the corner, but the FEC continues to drag its feet on creating long-overdue disclosure rules,” said Krumholz. “Without the FEC’s action, the American people are left in the dark about the true sources of funding behind political party committees.”

This isn’t the groups’ first attempt to force the FEC’s hand.

In 2019, CLC and OpenSecrets filed a rulemaking petition urging the FEC to mandate detailed and transparent reports on the accounts.

After four years of waiting, the groups filed suit, they said.

“As the sole agency tasked with enforcing federal campaign finance laws, the FEC needs to provide rules that ensure national political party committees can follow the transparency requirements previously amended by FECA,” a press release states.

“The current system makes it easy for these entities to pick and choose how they report, to the detriment of a transparent and more functional electoral system.”