MEMORANDUM OPINION
TREVOR
N. MCFADDEN UNITED STATES DISTRICT JUDGE.
Plaintiffs
Campaign Legal Center and Democracy 21 claim that it was
unlawful for the Federal Election Commission to decline to
investigate three complaints that corporate entities
committed “straw donor” violations of the Federal
Election Campaign Act's prohibition on making “a
contribution in the name of another person or knowingly
permit[ting] [one's] name to be used to effect such a
contribution.” 52 U.S.C. § 30122; Compl.
¶¶ 1-2. Three of the alleged violators intervened
as Defendants, and all parties have filed cross motions for
summary judgment. Finding that there was a rational basis for
the Commission's exercise of its prosecutorial
discretion, the Court will grant summary judgment for all
Defendants.
I.
BACKGROUND
A.
The Federal Election Commission's Enforcement
Authority
The
Federal Election Commission is an agency that
“administer[s], seek[s] to obtain compliance with, and
formulate[s] policy with respect to” the Federal
Election Campaign Act (the Act), and has “exclusive
jurisdiction with respect to the civil enforcement of such
provisions.” 52 U.S.C. § 30106(b)(1). The
Commission comprises “6 members appointed by the
President, by and with the advice and consent of the
Senate.” Id. § 30106(a)(1). “No
more than 3 members of the Commission . . . may be affiliated
with the same political party.” Id. “All
decisions of the Commission with respect to the exercise of
its duties and powers . . . shall be made by a majority vote
of the members of the Commission.” Id. §
30106(c). “The voting and membership requirements mean
that, unlike other agencies-where deadlocks are rather
atypical-[the Commission] will regularly deadlock as part of
its modus operandi.” Pub. Citizen, Inc. v.
Fed. Energy Regulatory Comm'n, 839 F.3d 1165, 1171
(D.C. Cir. 2016).
“Any
person” may file an administrative complaint with the
Commission alleging a violation of Act. 52 U.S.C. §
30109(a)(1). “If the Commission . . . determines, by an
affirmative vote of 4 of its members, that it has reason to
believe that a person has committed, or is about to commit, a
violation, ” then the Commission “notif[ies] the
person of the alleged violation, ” and begins “an
investigation . . . which may include a field investigation
or audit.” Id. § 30109(a)(2). The
Commission then votes on whether there is “probable
cause” to believe that the person “has committed,
or is about to commit, a violation of [the] Act.”
Id. § 30109(a)(4)(A)(i). If the Commission
finds probable cause, it must attempt to remedy the violation
informally, with a conciliation agreement ratified by four
Commissioners. Id. If a conciliation agreement
cannot be reached, then the Commission (again with the vote
of four Commissioners) may institute a civil enforcement
action in federal district court. Id. §
30109(a)(6)(A). If at any point the Commission dismisses an
administrative complaint, the party who filed the complaint
may file suit in this District, asserting that “the
dismissal of the complaint . . . is contrary to law.”
Id. § 30109(a)(8).
Here,
the Plaintiffs asked the Commission to enforce the Act's
requirement that “political committees” must file
publicly available reports detailing receipts and
expenditures, 52 U.S.C. § 30104(a)-(b), and its straw
donor prohibition: “No person shall make a contribution
in the name of another person or knowingly permit his name to
be used to effect such a contribution, and no person shall
knowingly accept a contribution made by one person in the
name of another person.” Id. § 30122. The
Act defines “person” to include a
“corporation.” 52 U.S.C. § 30101(11).
B.
The Commission Dismisses Plaintiffs' Complaints
This
case involves three administrative complaints filed by the
Plaintiffs in 2011-2013. Two of the complaints focused on $1
million donations made in March 2011 by limited liability
companies (LLCs) Eli Publishing L.C. and F8 LLC,
respectively, to a registered independent-expenditure-only
political action committee (or super PAC) called Restore Our
Future, Inc. R. at 78.[1] The Plaintiffs filed two complaints
alleging that Steven Lund (who founded Eli Publishing) and
others (who operated F8 LLC) were the true sources of the
contributions. R. at 32. The complaints also asserted that
the LLCs were “political committees” subject to
reporting requirements under 52 U.S.C. § 30104.
Id. Mr. Lund told news media that he made the
donations through a corporation for “accounting
advantages, ” and was not trying to hide them. R. at
78. The Commission's Office of General Counsel
recommended finding reason to believe that Mr. Lund, both
companies, and the unknown operators of F8 violated the straw
donor prohibitions of 52 U.S.C. § 30122, but counseled
taking no action on the political committee allegations. R.
at 80.
The
third complaint concerns a series of donations totaling over
$12 million from Specialty Investment Group Inc., and its
subsidiary Kingston Pike Development LLC to FreedomWorks for
America, another super PAC. R. at 79. William Rose was
Specialty Group's CEO, president, and board chairman, and
the sole manager of Kingston Pike, id., and the
Plaintiffs alleged that FreedomWorks board member Richard
Stephenson made the contributions through Mr. Rose's
companies, with assistance from Adam Brandon, a
FreedomWorks' executive vice president. R. at 323. The
Commission's General Counsel recommended finding reason
to believe that Mr. Stephenson, Mr. Rose, both companies,
FreedomWorks, and Mr. Brandon had violated the straw donor
prohibition, but recommended against investigating the
political committee allegations. R. at 80.[2]
In
February 2016, the Commission deadlocked-three votes to
three-on whether to find reason to believe that any violation
had occurred and to proceed with an investigation. R. at
67-68, 543-44. As a result, the Commission voted unanimously
to close the files and “[s]end the appropriate
letters.” Id. The letters informed the
Plaintiffs of their right “to seek judicial review of
the Commission's dismissal.” R. at 70-71, 73-74,
546-47, 550-51. The Commissioners who voted against an
investigation released a Statement of Reasons in April 2016,
R. at 75-89, which “necessarily states the agency's
reasons for acting as it did” because it comes from the
Commission's “controlling group.” Fed.
Election Comm'n v. Nat'l Republican Senatorial
Comm., 966 F.2d 1471, 1476 (D.C. Cir. 1992). The
dissenting Commissioners also provided a Statement of
Reasons. R. at 90-94.
The
Commission stated that it declined to find reason to believe
a violation occurred as “an exercise of the
Commission's prosecutorial discretion, ”
id. at 77, because the Supreme Court's decision
in Citizens United v. Fed. Election Comm'n, 558
U.S. 310 (2010) created a sea change in campaign finance law,
overturning the ban on corporate political speech and making
it necessary to examine as “an issue of first
impression” how Section 30122's straw donor ban
applied to corporate contributions. R. at 75-76. The
Commission also “kept . . . in mind” (1) that the
Commission had previously applied the straw donor ban
“almost exclusively” in situations involving
“excessive and/or prohibited contributions, ”
while the matters under review involved donations to super
PACs not subject to such limitations, (2) that
“Commission precedent has treated funds deposited into
a corporate account and then used for contributions as the
funds of that corporation, ” (3) that the Commission
had “rejected an attribution rule that would deem the
individual owners of corporate LLCs as the makers of those
LLC's contributions, ”[3] and (4) that “the
speech rights recognized in Citizens United would be
hollow if closely held corporations and corporate LLCs were
presumed to be straw donors-thus, triggering investigations
and potential punishment-each time they made
contributions.” R. at 76.
The
Commission therefore announced a new standard to evaluate
straw donor allegations in this factual context, focused on
“whether the funds used to make a contribution were
intentionally funneled through a closely held corporation or
corporate LLC for the purpose of making a contribution that
evades the Act's reporting requirements, making the
individual . . . the true source.” Id. The
Commission declined to proceed with investigations of
Plaintiffs' complaints, concluding that “because
past Commission decisions . . . may be confusing in light of
recent legal developments[;] principles of due process, fair
notice, and First Amendment clarity counsel against applying
a standard to persons and entities that were not on notice of
the governing norm.” Id.
The
three dissenting Commissioners reasoned that “current
law clearly prohibits contributors from using the names of
LLCs to shield their identity from disclosure to the public,
” and that the issue presented was “not []
difficult.” R. at 91-92. They acknowledged that
“the ability of individuals and corporations to make
unlimited contributions to super PACs is a post-Citizens
United . . . phenomenon, ” but argued that
“the longstanding prohibition against making
contributions in the name of another remains unchanged and
squarely applies in these cases.” R. at 92. In a
separate Statement, two dissenting Commissioners criticized
the controlling Commissioners for delaying their decision,
and challenged the purpose-focused standard they had
announced. R. at 95-97. The controlling Commissioners
defended their conduct and the proposed standard in a
Supplemental Statement. R. at 98-101.
C.
Plaintiffs Challenge the Commission's Decision Not to
Investigate
Plaintiffs
filed this suit in April 2016, a few weeks after the
Commission announced its reasoning. F8 LLC, Eli Publishing,
and Steven Lund then intervened as defendants. Minute Order,
June 30, 2016. The Commission moved to dismiss for lack of
standing, Mot. Dismiss pg. i, ECF No. 13, and my colleague
granted the motion in part, dismissing the Plaintiffs'
challenge on two complaints, but allowing the remainder of
the case to proceed. Mem. Op. 7-9. All parties then moved for
summary judgment.
II.
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