United States District Court, District of Columbia
CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON, et al., Plaintiffs,
FEDERAL ELECTION COMMISSION, Defendant. Re Document Nos. 19, 20
MEMORANDUM OPINION GRANTING DEFENDANT'S MOTION
FOR SUMMARY JUDGMENT; DENYING PLAINTIFFS'
MOTION FOR SUMMARY JUDGMENT
RUDOLPH CONTRERAS United States District Judge.
parties agree that the Federal Election Commission had strong
grounds to prosecute the Commission on Hope, Growth and
Opportunity under the Federal Election Campaign Act, but
declined to do so. The parties' main source of
disagreement is the extent to which the FEC can decline to
prosecute after receiving a citizen complaint. Citizens for
Responsibility and Ethics in Washington contends that the FEC
relied on improper legal grounds when it dismissed its
complaint against the Commission on Hope, Growth and
Opportunity. The FEC responds by noting that its dismissal
was not primarily based on legal interpretations, but rather
the agency's discretion in deciding which cases it wishes
to pursue. Specifically, the commissioners who voted to
dismiss Plaintiffs' complaint note that, by the time the
FEC could have moved forward with prosecuting the case, the
statute of limitations on the “obvious”
violations had run, the other violations were not clear-cut
from a legal perspective, and the group had dissolved and had
no identifiable agents or assets. Because any further
prosecution would have cost the FEC more than any benefit it
calculated that it could derive, the FEC argues that its
dismissal was within the scope of its prosecutorial
discretion. Concluding that the FEC rationally dismissed
Plaintiffs' complaint as an exercise of its prosecutorial
discretion, the Court will grant summary judgment for
STATUTORY AND REGULATORY BACKGROUND
The Federal Election Commission
Federal Election Commission (“FEC”) is a
six-member, independent agency charged with administering the
Federal Election Campaign Act (“FECA”). 52 U.S.C.
§ 30106(a)-(b). The FEC has the power to
“administer, seek to obtain compliance with, and
formulate policy with respect to” FECA, and has
exclusive jurisdiction to civilly enforce FECA. Id.
§ 30106(b)(1). The votes of four commissioners are
required for the FEC to pursue enforcement proceedings, civil
actions, or even voluntary compliance with FECA. See
Id. §§ 30106(c), 30107(a)(6)-(9). Third
parties who believe that a violation of FECA has occurred may
file a “citizen complaint” with the FEC.
Id. § 30109(a)(1). After the FEC receives a
citizen complaint and any response from the alleged violator,
if it determines by a vote that it has “reason to
believe” that a violation has occurred, FECA states
that the FEC “shall . . . notify the person of the
alleged violation . . . [and] shall make an investigation of
such alleged violation.” See Id. §
30109(a)(2). At that point, the FEC's Office of General
Counsel (“OGC”) is charged with preparing a brief
outlining OGC's position on the law and facts of the
case. Id. § 30109(a)(3). OGC's brief, along
with a reply brief from the respondent, are then considered
by the FEC in a vote on whether probable cause exists to
believe that a violation has occurred. Id. If the
FEC determines that probable cause exists, it must attempt to
informally and privately resolve the dispute. See
Id. §§ 30109(a)(4)(A)(i)-(B)(i). If those
attempts fail, the FEC may, by vote, determine whether to
institute a civil action. Id. § 30109(a)(6)(A).
A third party who is “aggrieved” by an FEC
decision to dismiss a complaint may seek judicial review of
the FEC decision. Id. § 30109(a)(8)(A). The
statute of limitations for FECA actions is five years.
See 28 U.S.C. § 2462.
The Federal Election Campaign Act
was enacted to limit spending in federal campaigns and
eliminate the perceived or actual influence that wealthy
individuals can have over elections based on their capacity
to bankroll campaigns. See Orloski v. FEC, 795 F.2d
156, 163 (D.C. Cir. 1986). Accordingly, FECA imposes several
limitations on campaign contributions and expenditures, often
based on the source of the contributions and expenditures.
See generally 52 U.S.C. §§ 30101-30126.
Several of those limitations are relevant here.
requires noncandidate “political committees” to
register with the FEC, keep records of the names and
addresses of contributors, and periodically file reports
identifying their contributors, among other requirements.
See 52 U.S.C. §§ 30102-30105. Thus,
whether a group is legally classified as a political
committee has significant practical consequences. Under FECA,
a political committee is “any committee, club,
association, or other group of persons which receives
contributions aggregating in excess of $1, 000 during a
calendar year or which makes expenditures aggregating in
excess of $1, 000 during a calendar year.” Id.
§ 30101(4)(a). Although this definition appears broad at
first glance, it is limited by FECA's definitions of
“contributions” and “expenditures, ”
which require an intent to “influenc[e] any election
for Federal office.” See Id. §§
30101(8)(A), 30101(9)(A). Out of concern for overbreadth of
this definition, which could be construed to reach
“groups engaged purely in issue discussion, ” the
Supreme Court has limited this definition further,
effectively restricting FECA's rules governing political
committees to “organizations that are under the control
of a candidate or the major purpose of which is the
nomination or election of a candidate.” Buckley v.
Valeo, 424 U.S. 1, 79 (1976). The FEC determines a
group's “major purpose” on a case-by-case
basis, taking into account the group's allocation of
spending, public and private statements, and overall conduct.
See 72 Fed. Reg. 5595, 5601 (Feb. 7, 2007);
Shays v. FEC, 511 F.Supp.2d 19, 23, 30 (D.D.C.
Expenditure-Related Reporting Requirements
addition to regulating political committees, FECA requires
anyone who makes “independent expenditures” of
more than $250 over the course of a calendar year to publicly
disclose certain information by filing with the FEC.
See 52 U.S.C. § 30104(c)(1). Among the
information provided, the person making the independent
expenditure must disclose the identity “of each person
who made a contribution in excess of $200 to the person
filing such report [if the] contribution was made for the
purpose of furthering the reported independent
expenditure.” See 11 C.F.R. §
109.10(e)(vi). Like the definition of “political
committee, ” whether an expenditure is an
“independent expenditure” has significant
implications. An “independent expenditure” is an
expenditure made by a person “expressly advocating the
election or defeat of a clearly identified candidate”
that is not made in coordination with a candidate, party, or
political committee. See 52 U.S.C. § 30101(17).
“Clearly identified” means that the name or
photograph of the candidate appears, or “the identity
of the candidate is apparent by unambiguous reference.”
Id. § 30101(18). “Express advocacy”
includes phrases like “vote for the President, ”
“re-elect your Congressman, ” “support the
Democratic nominee, ” and “Smith for
Congress.” See 11 C.F.R. § 100.22(a).
also requires those engaged in certain “electioneering
communications” to disclose the identities of major
contributors. See 52 U.S.C. § 30104(f). An
electioneering communication is a mass broadcast targeting a
relevant electorate that refers to a clearly identified
candidate for federal office and is made within 60 days of a
general election or 30 days of a primary election.
See 11 C.F.R. § 100.29(a). Such communications
must include disclaimers with information like the person who
paid for the communication and whether it is authorized by
the candidate. See Id. § 110.11.
for Responsibility and Ethics in Washington and its former
executive director Melanie Sloan (collectively
“CREW”) take issue with the FEC's handling of
a case involving the Commission for Hope, Growth and
Opportunity (“CHGO”). Thus, this case involves
both the substantive matter that was before the FEC and the
FEC's handing of it. There are few factual disputes. The
Court first outlines the formation and operation of CHGO,
then moves to the FEC's investigation before detailing
the FEC's ultimate decision to dismiss the case against
to Michael Mihalke, the president of Meridian Strategies,
LLC, Scott Reed, a political consultant, approached him about
forming CHGO in early 2010. See Joint Appendix
(“J.A.”) 327, 332, ECF No. 25. Mr. Mihalke
apparently recruited James Powell to be CEO and William
Canfield to be CHGO's legal counsel. See J.A.
363-64. Although Mr. Powell was CEO in form, is his view he
was only the “creative” person, responsible for
the content of the advertisements that CHGO developed.
See J.A. 365.
Canfield, in comparison, was quite active in the formation of
CHGO. After helping to form CHGO, Mr. Canfield applied for
its § 501(c)(4) tax exempt status from the IRS, and in
doing so certified, under penalty of perjury, that CHGO was a
“public welfare organization created to advance the
principle that sustained and expanding economic growth is
central to America's economic future.” See
J.A. 1548-49. Mr. Canfield further stated that the group
would “engage economists and other business experts to
inform its understanding of the necessity for sustained
economic growth and [would] bring the fruits of this
expertise and research directly to the attention of decision
makers at all levels of government.” J.A. 1549. And, in
responding to the question “[D]oes [CHGO] plan to spend
any money attempting to influence the selection, nomination,
election, or appointment of any person to any . . . public
office or to an office in a political organization?, ”
Mr. Canfield checked the box for “No.” J.A. 1551.
The IRS granted CHGO § 501(c)(4) tax-exempt status-which
is reserved for nonprofit groups operated “exclusively
for the promotion of social welfare, ” see 26
U.S.C. § 501(c)(4)- based on Mr. Canfield's
application. See J.A. 114-15; 1549. Having 501(c)(4)
status was important to CHGO because it meant that it would
not have to disclose its donors, see 26 U.S.C.
6104(d)(3)(A). In a slideshow, CHGO stated that 501(c)(4)
status was the “most advantageous vehicle for donor
activity” because “donor names [are] never made
available to the public under law.” J.A. 336. If CHGO
stated that it did plan to influence elections, it would have
needed to seek tax-exempt status under § 527, which
would have required it to disclose the names of its donors.
See 26 U.S.C. § 527(j)(2)-(3).
CHGO's representations to the IRS, the record reveals
significant evidence that CHGO actually was created and
operated for the purpose of influencing several federal
elections. See Pls.' Mem. P. & A. Supp.
Pls.' Mot. Summ. J. (“Pls.' Mot. Summ.
J.”) at 7-9, ECF No. 19; Def.'s Mem. Supp. Mot.
Summ. J. & Opp'n Pl's Mot. Summ. J.
(“Def.'s Mot. Summ. J.”) at 18- 26, ECF No.
20. In the slideshow mentioned above, CHGO asserted that
Citizens United “create[d] [an]
[u]nprecendented [o]pportunity [a]llow[ing] corporations,
labor unions[, ] and individuals to engage in direct, express
advocacy for [the] election or defeat of candidate(s).”
See J.A. 335. CHGO further stated that it had a
“[s]imple mission with all decisions guided by [the]
best use of funds to win Senate seats.” J.A. 337. To
win Senate seats, CHGO stated that it would use “all
options available to it for direct, express advocacy under
[Citizens United], ” and aimed its resources
at specific states. J.A. 332-33.
furtherance of its “simple mission, ” CHGO ran
television advertisements in at least fifteen markets.
See J.A. 1496-1500. One such advertisement, entitled
“Song and Dance, ” featured specific 2010
candidates for federal office in a variety of congressional
districts. See J.A. 213. An iteration of the
commercial featured Democratic incumbent Representative Allen
Boyd and his Republican challenger Steve Southerland. A
voiceover in the ad states:
It's the worst economy in decades. And the folks in
Washington are living it up, spending our tax dollars like
there's no tomorrow. Leading this big song and dance:
Obama, of course, and Nancy Pelosi. But there's one face
you might not expect to see-our old friend Allen Boyd.
Instead of looking out for us, Boyd approved billions in
deficit spending without missing a beat. Let's pull the
plug on this song and dance once and for all.
213. Then, the screen fades to black, an image of Steve
Southerland appears, then the following text appears on the
screen: “Fight back. Join Steve Southerland. Stop the
Big Spenders in Congress.” J.A. 213. While that text is
on the screen, the voiceover says “Join Steve
Southerland's fight against the big spenders in
Washington.” J.A. 213-14. CHGO ran a similar ad
entitled “Collectible Coin, ” a tongue-in-cheek
commemoration of national debt levels, once again advocating
for the election or defeat of specific candidates for federal
office. J.A. 209-11. The messages contained the following
disclaimers: “Paid for by the Commission on Hope,
Growth, and Opportunity, a tax-exempt 501c4 organization and
not a federal political committee. This message is not
coordinated with any federal candidate or committee.”
Complaints and ...