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Emily's List v. Federal Election Commission

February 25, 2005

EMILY'S LIST, PLAINTIFF,
v.
FEDERAL ELECTION COMMISSION, DEFENDANT.



The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge

MEMORANDUM OPINION

Presently before the Court is a Motion for Preliminary Injunction filed against the Federal Election Commission ("FEC") by Plaintiff EMILY's List, an organization that recruits and funds pro-choice women candidates for political office. Plaintiff, a political committee registered with the FEC, is challenging regulations promulgated by the Federal Election Commission to implement the provisions of the Federal Election Campaign Act of 1971, Pub.L. No. 92-255, 86 Stat. 3, ("FECA"), as amended, including the Bipartisan Campaign Reform Act of 2002, Pub. L. No. 107-155, 116 Stat. 81 ("BCRA"). These regulations modify the rules governing how political committees can allocate spending between federal and nonfederal accounts,*fn1 *fn2 and modify the definition of "contribution" as used in FECA. Plaintiff seeks to enjoin the application of these regulations, which went into effect on January 1, 2005.

The regulations at issue are based on provisions in FECA, but not on the amendments to FECA included in BCRA. The amendments undertaken via the enactment of BCRA governed the operation of party committees and candidates, rather than nonparty political committees such as EMILY's List. However, BCRA, and the Supreme Court's subsequent decision in McConnell v. Fed. Election Comm'n, 540 U.S. 93 (2003), upholding BCRA's major provisions, necessarily informed the FEC's approach to the regulations at issue in this suit, which govern solicitation and expenditures by political committees such as Plaintiff.

After a careful examination of Plaintiff's Motion, the parties' briefs and the relevant law, the Court finds that Plaintiff's Motion for Preliminary Injunction shall be denied.

I. BACKGROUND

A. Regulatory Framework

The District Court's per curiam opinion in McConnell v. Federal Election Commission contains a fulsome discussion of the history of campaign finance law in the United States. See McConnell v. Fed. Election Comm'n, 251 F. Supp. 2d 176, 188-206 (D.D.C. 2003). The Court will briefly summarize the backdrop to the instant litigation. The overarching purpose of the Federal Election Campaign Act of 1971, has been to place limitations on contributions and expenditures in connection with federal elections. See McConnell, 251 F. Supp. 2d at 193. However, "[d]espite the passage of FECA, the 'infinite ability' to 'eviscerate[] statutory limitations on contributions and expenditures,' which amounted to 'wholesale circumvention' became a source of further congressional concern." Id. (quoting Buckley v. Valeo, 519 F.2d 821, 837, aff'd in part, rev'd in part, 424 U.S. 1 (1976)). In 2002, Congress enacted the BCRA, which amended FECA. BCRA was intended to stem the tide of nonfederal funds being improperly used to influence federal elections. Although existing campaign finance laws were intended to prevent soft money from being used to influence federal elections, the circumvention of these laws had become routine, resulting in unregulated funds being used to influence federal elections.

The FEC's rules which were in effect until June 2005,*fn3 permitted non-party committees (including EMILY's List to allocate spending for administrative expenses and generic voter drive activity (as opposed to candidate-specific disbursements) pursuant to the "funds expended method." 11 C.F.R. § 106.6(c) (2002). Under this approach, "expenses shall be allocated based on the ratio of federal expenditures to total federal and non-federal disbursements made by the committee during the two-year federal election cycle.... In calculating its federal expenditures, the committee shall include only amounts contributed to or otherwise spent on behalf of specific federal candidates." § 106.6(c)(1) (2002). In contrast, prior to the enactment of BCRA, party committees allocated their expenses for "mixed" federal and nonfederal expenses by fixed percentages. See § 106.5(b)(2)(i), (ii) (2002); § 106.5(d)(1)(i) (2002).

From 1991 until BCRA went into effect, party committees functioned under these allocation rules. During this period, party committees routinely circumvented the spirit of campaign finance laws in order to use soft money to influence federal elections, and Congress ultimately determined that the existing allocation system was not effective at limiting party committees' spending of nonfederal funds to nonfederal activities. Instead, Congress determined that the allocation system in fact enabled the circumvention of the law by authorizing the spending of soft money on activities that were intended to, and in fact did, influence federal campaigns. See McConnell, 251 F. Supp. 2d at 651 (Kollar-Kotelly, J.) (noting that FEC regulations permitted widespread use of nonfederal money by party units to influence federal elections).

In enacting BCRA, Congress sought to modify the flawed regime by banning national party committees from raising or spending any nonfederal funds. See 2 U.S.C. § 441i(a). State party committees were permitted to raise nonfederal funds for nonfederal races, but were precluded from spending nonfederal funds on advertisements that "promote, support, attack or oppose" federal candidates. § 441i(b)(1); § 431(20)(A)(iii). BCRA permitted state parties to fund voter mobilization activities with an allocated mixture of federal funds and limited, regulated nonfederal funds. § 441i(b)(2).

BCRA was challenged, and ultimately upheld by the Supreme Court. See McConnell v. Fed. Election Comm'n, 540 U.S. 93 (2003). In considering BCRA's provisions, the Supreme Court found that the FEC's allocation rules undermined FECA, and that voter mobilization and generic activities clearly benefitted federal candidates. See id. at 167-68. The Court also stated that "[b]ecause voter registration, voter identification, [Get-Out-the-Vote], and generic campaign activity all confer substantial benefits on federal candidates, the funding of such activities creates a significant risk of actual and apparent corruption." Id. at 168. The Court found that the FEC's pre-BCRA system for allocating such voter mobilization spending "invited widespread circumvention" of the law by permitting soft money to flow through political parties into federal elections. Id. at 145. In light of this, the Supreme Court upheld the provisions of BCRA that ended party committee allocation. Id. at 186-89.

Although the Supreme Court's decision addressed allocation with respect to party committees, the FEC undertook rulemaking in 2004 aimed at curbing the similar use of funds by non-party committees as well. The "funds expended" allocation method allowed non-party committees to calculate the federal portions of their allocated spending at or close to zero. See, e.g., Admin. Record, Ex. 1 (Letter to FEC from Democracy 21) at 2; id. Ex. 10 (Facsimile to FEC from Democracy 21) at 2-3; id. Ex. 266 (Letter from McCain, Feingold, Shays, Meehan to Mai T. Dinh). Under this method, groups were not subject to a minimum federal allocation percentage. See 11 C.F.R. § 106.6 (2002).

In February 2004, the FEC issued Advisory Opinion 2003-37, stating its position that political committees were required to pay for any public communication that "promotes, supports, attacks, or opposes" federal candidates with federal funds. The FEC simultaneously indicated its intention to undertake rulemaking with respect to the allocation rules affecting nonconnected political committees. On March 11, 2004, the FEC published its official Notice of Proposed Rulemaking ("NPRM"), which was framed largely in response to the Supreme Court's holding in McConnell. See 69 Fed. Reg. 11,736-38. The NPRM sought comment on "whether either BCRA or McConnell requires, permits, or prohibits changes to the allocation regulations for separate segregated funds and nonconnected committees." Political Committee Status, 69 Fed. Reg. 11,736, 11,753 (March 11, 2004) (discussing proposed 11 C.F.R. § 106.6). The NPRM questioned Given McConnell 's criticism of the Commission's prior allocation rules for political parties, is it appropriate for the regulations to allow political committees to have non-Federal accounts and to allocate their disbursements between Federal and non-Federal accounts? If an organization's major purpose is to influence Federal elections, should the organization be required to pay for all of its disbursements out of Federal funds and therefore be prohibited from allocating any of its disbursements?

Id. at 11,753.

The FEC presented various proposals, noting that one of them "would add a minimum Federal percentage to the 'funds expended' method, and would also clarify the ratio in the 'funds expended' method by further describing the Federal component of that ratio." Id. In particular, this proposal "would clarify that 'amounts... spent on behalf of federal candidates' includes independent expenditures and amounts spent on public communications that promote, support, attack, support [sic] or oppose a clearly identified Federal candidate." Id. at 11,755. The proposal also suggested a minimum level of federal funds for allocated spending by non-party political committees, including three alternative minimums. Id. at 11,759-60. Specifically, the NPRM indicated that the FEC was considering whether nonconnected committees conducting activities "in 10 or more States would face a minimum Federal percentage of 50 percent." Id. at 11,754.

In addition, the NPRM sought comment on a proposed rule establishing "that any funds received in response to solicitations that contained express advocacy for or against a clearly identified Federal candidate" are funds intended "for the purpose of influencing any election for Federal Office," and would therefore be considered "contributions" under FECA. See 69 Fed. Reg. 11,743 (discussing proposed 11 C.F.R. § 100.57). The NPRM also raised the question of whether the new rule should "use a standard other than express advocacy, such as solicitation that promotes, supports, attacks, or opposes a Federal candidate, or indicates that funds received in response thereto will be used to promote, support, attack, or oppose a clearly identified Federal candidate?" Id.

The FEC designated the period from the NPRM until April 9, 2005, for public comments on the proposed rules, and held a hearing on April 14 and 15, 2004. See 69 Fed. Reg. 11,736. EMILY's List's representatives did not submit any comments and did not testify at the hearing, although over 100,000 comments were filed by other parties on a variety of issues raised by the rulemaking. A number of commenters offered remarks on the proposed allocation rules and testimony on the proposed revision of the definition of "contributions." See Def.'s Opp. to Pl.'s Mot. for P.I. at 9-10, Ex. 10 (Comments of Senators McCain and Feingold), Ex. 12 (Comments of Public Citizen), Ex. 14 (Comments of Republican National Committee), Ex. 15 (Comments of Democracy 21, Campaign Legal Center, Center for Responsible Politics), Ex. 9 (Transcript of April 15, 2004 Hearing) at 207-8.

On August 12, 2004, the General Counsel to the FEC submitted draft final rules to the FEC, which it subsequently amended on August 18, 2004. On August 17, 2004, EMILY's List wrote a letter to the FEC noting that "the new proposed rules... provide for substantially different allocation rules for separate segregated funds and non-connected committees," and requested that the FEC publish the draft final rules for new ...


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