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Citizens For Responsibility and Ethics in Washington v. Federal Election Commission

United States District Court, District of Columbia

March 20, 2018



          CHRISTOPHER R. COOPER United States District Judge .

         This is the second in a series of cases involving the Federal Election Commission and its (non)regulation of American Action Network, Inc. (“AAN”), a self-described “issue-oriented action tank” that ran nearly $18 million in television advertisements just before the 2010 federal midterm elections. Citizens for Responsibility and Ethics in Washington-a watchdog group known as “CREW”-contends that AAN's spending on these ads rendered it a “political committee” as defined in the Federal Election Campaign Act of 1971. And, according to CREW, because AAN did not register as a political committee during the relevant time period, it evaded the Act's recordkeeping and disclosure requirements that apply to those groups.

         In 2012, CREW filed an administrative complaint with the Commission to that effect. By an evenly divided vote, the Commission dismissed CREW's complaint because a majority of the Commissioners did not find “reason to believe” that AAN violated the Act. 52 U.S.C. § 30109(a)(2). Specifically, the three controlling Commissioners concluded that AAN did not qualify as a political committee because it lacked a “major purpose” of nominating or electing a candidate for federal office, Buckley v. Valeo, 424 U.S. 1, 79 (1976). This Court in a previous decision held that dismissal “contrary to law” because it rested on an erroneous premise regarding Buckley's “major purpose” requirement. On remand, the Commission again dismissed CREW's complaint in a deadlocked decision.

         CREW then filed this suit challenging the Commission's second dismissal as contrary to law. Because the Court finds that the Commission's analysis was inconsistent with the governing statutes, it will grant summary judgment in favor of CREW and remand this matter to the Commission.

         I. Background

         A. Legal Background

         The Federal Election Campaign Act of 1971 (“FECA”), as substantially amended in 1974, regulates federal elections in two key ways. First, the law sets monetary limits on contributions to political parties and candidates. See 52 U.S.C. § 30116. Second, it imposes disclosure requirements on entities that spend money for the purpose of influencing elections, even when that spending does not go directly to a candidate's coffers. See id. § 30104.

         This case is about FECA's disclosure requirements-specifically, those triggered by spending on political advertisements. In broad terms, these disclosure requirements serve “three important interests: providing the electorate with relevant information about the candidates and their supporters; deterring actual corruption and discouraging the use of money for improper purposes; and facilitating enforcement of the prohibitions in the Act.” McConnell v. FEC, 540 U.S. 93, 121 (2003) (controlling opinion of Stevens & O'Connor, J.J.).

         Some of FECA's disclosure requirements are triggered by certain types of communications. For example, an entity that makes “independent expenditures”-that is, a communication “expressly advocating the election or defeat of a clearly identified candidate, ” 52 U.S.C. § 30101(17)-of over $250 in a calendar year must file a report with the Commission containing information about itself and its contributors, id. § 30104(c).

         FECA also imposes more pervasive disclosure requirements on entities based on their campaign-related spending patterns. As relevant here, “political committees”-commonly referred to as “political action committees” or “PACs”-are subject to extensive, ongoing disclosure requirements. They must appoint a treasurer, keep records with the names and addresses of contributors, and file regular reports during a general election year with accounting information, including the amounts spent on contributions and expenditures. Id. §§ 30102-04. They must also register with the Federal Election Commission or face penalties. Id. §§ 30104(a)-(b), 30109(d)(1).

         An entity qualifies as a political committee when it satisfies two separate conditions. The first was imposed by Congress in the text of FECA: the entity must receive or spend more than $1, 000 in a calendar year for the purpose of influencing a federal election. Id. § 30101(4)(A), (8)(A)(i), (9)(A)(i).[1] The second condition was imposed by the Supreme Court in Buckley v. Valeo as a narrowing construction of the statutory definition. Under Buckley, political committees are limited to those “organizations that are under the control of a candidate or the major purpose of which is the nomination or election of a candidate.” 424 U.S. at 79 (emphasis added). A broader definition of “political committee, ” the Court explained, could raise problems of vagueness under the First Amendment by threatening the speech of “groups engaged purely in issue discussion” and not just those engaged in “campaign related” activity. Id.

         Several decades after Buckley, Congress in the Bipartisan Campaign Reform Act of 2002 (“BCRA”) amended FECA to add important new disclosure requirements. BCRA was aimed, among other targets, at the post-Buckley rise of corporate and union spending on ads that were nominally related to political issues but were clearly intended to sway voters in upcoming federal elections. See McConnell, 540 U.S. at 126-32. To capture these “so-called issue ads, ” id. at 126, Congress created a new category of communications called “electioneering communications”-television advertisements that air within 60 days of a federal election, clearly identify a candidate running for federal office, and target the relevant electorate. 52 U.S.C. § 30104(f)(3)(A)(i). Corporations spending over $10, 000 on those communications in a calendar year must file a statement with the Commission that discloses information about the entity, the candidates identified in the communications, the recipients of any disbursements, and any donors who gave over $1, 000 toward electioneering communications since the beginning of the preceding calendar year. Id. § 30104(f)(2); 11 C.F.R. § 104.20(c)(9).[2] Ads that qualify as electioneering communications must also include disclaimers with information like the name of the entity that paid for the ad and whether the ad was authorized by a candidate. 52 U.S.C. § 30120(a); see 11 C.F.R. § 100.11(c)(3).

         The Federal Election Commission (“FEC”), an independent agency with six Commissioners, is responsible for enforcing FECA's disclosure requirements. See 52 U.S.C. § 30106(b)(1). The Commission has not adopted a rule that further clarifies the meaning of Buckley's “major purpose” limitation. Rather, it has taken a case-by-case approach by deciding whether particular entities have a major purpose of nominating or electing a candidate. See Shays v. FEC, 511 F.Supp.2d 19, 30 (D.D.C. 2006). This approach was ultimately upheld by a fellow judge in this District against challenge under the Administrative Procedure Act. See id.

         Any person or entity may file a complaint with the Commission asserting a FECA violation. 52 U.S.C. § 30109(a)(1). If four or more Commissioners find “reason to believe” that FECA was or will soon be violated, then the Commission must investigate. Id. § 30109(a)(2). Otherwise, the complaint is dismissed. See id. § 30106(c). In the event of dismissal, the controlling group of Commissioners-here, those voting against enforcement-must provide a statement of reasons explaining the dismissal decision. See FEC v. Nat'l Republican Senatorial Comm. (“NRSC”), 966 F.2d 1471, 1476 (D.C. Cir. 1992). “Any party aggrieved” by an FEC dismissal decision may petition for this Court's review. 52 U.S.C. § 30109(a)(8)(A). If the Court finds the statement of reasons to be contrary to law, it can direct the FEC to take action within 30 days that “conforms with” the Court's ruling. Id. § 30109(a)(8)(C).

         B. Factual and Procedural Background

         1. The FEC's First Dismissal

         American Action Network (“AAN”) is a tax-exempt § 501(c)(4) civic organization. Joint Appendix (“J.A.”) 1490-91 (ECF No. 46). The group's stated mission is to “create, encourage and promote center-right policies based on the principles of freedom, limited government, American exceptionalism, and strong national security.” J.A. 1490. To advance that mission, AAN has sponsored educational activities and grassroots events. But the majority of its spending throughout the period at issue in this case-July 23, 2009 through June 30, 2011[3]-was on political advertisements. Of its $27.1 million in total spending over that period, just over $4 million was devoted to independent expenditures-i.e., ads expressly advocating for or against a federal candidate. J.A. 1765. An additional $13.7 million was devoted to electioneering communications-i.e., ads run near an election that identify a candidate and target the relevant electorate. Id.

         In June 2012, CREW and its then-executive director filed a complaint with the FEC alleging that AAN's spending near the 2010 midterms rendered it an unregistered political committee. J.A. 1480-88. The FEC's Office of General Counsel reviewed the complaint and recommended that the Commission investigate it because there was reason to believe that AAN was indeed a political committee. Id. at 1659. Nevertheless, in June 2014, the Commissioners deadlocked three-to-three on whether to commence an investigation and, accordingly, the Commission dismissed CREW's complaint. Id. at 1689.

         The three controlling Commissioners-those voting against investigation-issued a Statement of Reasons explaining that AAN was not a political committee because it did not have a major purpose of nominating or electing a federal candidate. J.A. 1690-723. The Commissioners first explained that, based on AAN's organizational documents, its official public statements, and its tax-exempt status, AAN appeared to have a “central organizational purpose” that was “issue-centric” and not focused on electing candidates. Id. at 1706-07. They then turned to the heart of CREW's complaint: that AAN's spending on advertisements rendered it a political committee. Id. at 1708. In this part of their analysis, the Commissioners relied on a rigid distinction between “express advocacy” for a candidate-which properly counted toward an electoral major purpose-and “issue advocacy”-which categorically did not. See id. at 1709-10. In the Commissioners' view, the Supreme Court had interpreted the First Amendment to require such a categorical distinction-first in Buckley and more recently in FEC v. Wisconsin Right to Life, Inc. (“WRTL II”), 551 U.S. 449 (2007), which held that a statute prohibiting corporations from funding electioneering communications could not, consistent with the First Amendment, be applied to forbid the funding of “genuine issue ads” that are not “the functional equivalent of express advocacy, ” id. at 480-81.[4] See J.A. 1704-05, 1709.

         Relying on the dichotomy between express and issue advocacy from WRTL II, the Commissioners characterized all of AAN's ads that did not expressly advocate for a candidate (i.e., its electioneering communications) as “genuine issue advertisements, ” the $13.7 million cost of which could not be counted toward an election-related major purpose. J.A. 1709-10. They made this determination wholesale, without discussing the content of any individual ad. Id. The Commissioners also considered AAN's spending over its lifetime-mid-2009 to mid-2011-instead of year-to-year and, in total, found that only the $4.1 million that AAN spent on express advocacy between 2009 and 2011 was aimed to elect a candidate. Id. at 1709. In their view, because that spending accounted for only 15% of AAN's total expenses during that period, the group necessarily lacked a major purpose of nominating or electing a candidate. Id. at 1709- 10, 1716.

         CREW filed suit in this Court challenging the FEC's dismissal of the complaint against AAN, as well as the dismissal of a similar complaint against another organization, Americans for Job Security (“AJS”). CREW v. FEC, 209 F.Supp.3d 77, 80-81 (D.D.C. 2016). CREW alleged that both dismissals violated FECA.[5] AAN and AJS intervened as additional defendants and the parties filed cross-motions for summary judgment. Id. at 85.

         In a September 2016 decision, this Court held that both dismissals were contrary to law and remanded them to the Commission for reconsideration. Id. at 95. As the Court explained, the FEC's reliance on a hard distinction between express advocacy and issue advocacy depended on an erroneous premise: that the First Amendment required it to exclude from its consideration all non-express advocacy in the context of disclosure requirements. Id. at 93. While the Supreme Court in WRTL II had concededly drawn such a distinction in evaluating a ban on corporate-sponsored electioneering communications, in McConnell and Citizens United v. FEC, 558 U.S. 310 (2010), it had expressly declined to take that approach in evaluating disclosure requirements triggered by those communications. Id. at 89-90 (quoting Citizens United, 558 U.S. at 369). And in the wake of those cases, “federal appellate courts ha[d] resoundingly concluded that WRTL II's constitutional division between express advocacy and issue speech is simply inapposite in the disclosure context.” Id. at 90.

         This Court nevertheless declined to adopt CREW's proposed rule that, to comply with FECA, the Commission must treat all electioneering communications as indicative of an election-related major purpose. As the Court explained:

CREW's citations to legislative history, past FEC precedent, and court precedent certainly support the conclusion that many or even most electioneering communications indicate a campaign-related purpose. Indeed, it blinks reality to conclude that many of the ads considered by the Commissioners in this case were not designed to influence the election or defeat of a particular candidate in an ongoing race. However, particularly given the FEC's judicially approved case-by-case approach to adjudicating political committee status, the Court will refrain from replacing the Commissioners' bright-line rule with one of its own.

Id. at 93 (citations omitted).

         2. The FEC's Second Dismissal

         On remand, the FEC again divided three-to-three and dismissed CREW's complaint against AAN. J.A. 1763. The controlling Commissioners' Statement of Reasons acknowledged that, in light of this Court's decision, it could no longer categorically exclude AAN's electioneering communications from its major-purpose calculation. Id. at 1767-68. Rather, the Commissioners explained that they would proceed ad-by-ad and weigh several factors in deciding whether each electioneering communication should count toward an election-related major purpose. These factors included (1) the extent to which the ad's language focuses on “elections, voting, political parties, ” and the like; (2) “the extent to which the ad focuses on issues important to the group or merely the candidates referenced in the ad”; (3) the context of the ad (but “only to the extent necessary . . . to understand better the message being conveyed”); and (4) whether the ad “contains a call to action and, if so, whether the call relates to the . . . issue agenda or, rather, to the election or defeat of federal candidates.” Id. at 1768.

         Before they turned to each ad, the Commissioners explained that all of the ads ran in a time period that-while admittedly near the federal midterm elections-also preceded an anticipated “lame duck” congressional session. J.A. 1768-70. During that session, Congress was expected to “consider several pieces of major legislation, many involving policy issues of great importance to AAN” like “Bush-era tax cuts, federal spending, health care, and energy.” Id. at 1769. And, as the Commission noted, Congress did ultimately convene a lame duck session in December 2010 and considered some of those issues. Id. at 1769-70.

         “With that context in mind, ” the controlling Commissioners then evaluated AAN's twenty electioneering communications. J.A. 1770. They concluded that four of the ads indicated an election-related major purpose: those titled “Bucket, ”[6] “New Hampshire, ”[7] “Order, ”[8] and “Extreme.”[9]Id. at 1779. “Order” and “Extreme, ” for example, sought to criticize two Democratic congressional candidates-Mike Oliverio and Annie Kuster, respectively-by linking them with Nancy Pelosi in unfavorable ways. Id. at 1778. As the Commissioners explained, “[n]either ad contains a call to action, nor do they focus on changing the ...

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