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This suit was precipitated by an FEC enforcement proceeding in which the California Medical Association (CMA), an unincorporated professional association, and CALPAC, a political committee, were respondents. On April 19, 1979, the FEC had found "probable cause to believe" CMA had violated 2 U.S.C. §441a(a)(1)(C) by making contributions exceeding $5,000 to CALPAC, which CALPAC had accepted. When it was unable to reach a conciliation agreement with the respondents, the Commission filed suit against them on May 22, 1979, in the U.S. District Court for the Northern District of California (Civil Action No. C79-U97-WHO).1
Anticipating the FEC enforcement action, CMA filed a separate suit against the FEC on May 7, 1979, challenging the constitutionality of those provisions of the Act it had allegedly violated. (Civil Action No. 79-4426) Specifically, CMA asked the district court to certify the following constitutional questions to the U.S. Court of Appeals for the Ninth Circuit:
In its opinion of May 23, the appeals court, sitting en banc, rejected all the constitutional claims asserted by CMA. Relying on the Supreme Court's decision in Buckley v. Valeo, the court found that the contribution limits imposed only inconsequential restrictions on rights of free speech. The court observed that these restrictions were minimal compared to the "potent alternative means of expression" available to unincorporated associations like CMA. It noted that CMA, CALPAC and its members could make contributions and expenditures in connection with federal elections, as long as the per-candidate and per-committee contribution limits were respected. Further, CMA, its members and CALPAC could make unlimited independent expenditures to express their political views. Moreover, the court concluded that the contribution limits were supported by a compelling governmental interest, namely preventing the circumvention of the contribution limits, which were intended to minimize both the actuality and appearance of corruption in federal political campaigns.
The court also found that the Act did not abridge Fifth Amendment rights by discriminating against political activities of unincorporated associations. To the contrary, the court concluded that unincorporated associations like CMA are regulated to a lesser degree under the Act. While corporations and labor unions are prohibited from making any contributions or expenditures in connection with federal elections, and individuals are limited to total contributions of $25,000 per year, unincorporated associations have no overall limit imposed on the total amount they may contribute or expend in connection with federal elections. Unlike corporations and labor organizations, they may solicit contributions from anyone and make partisan communications to the general public.
In its appeal to the Supreme Court, filed on June 4, 1980, CMA reiterated the arguments which the appeals court had rejected and restated its claim that the challenged provisions violated both First and Fifth Amendment rights. In challenging the constitutionality of limits on contributions to multicandidate committees, CMA argued that, in its Buckley v. Valeo decision, the Supreme Court had not equated contributions to political committees with contributions to candidates. CMA maintained that "...contributions to political committees are functionally different from contributions to candidates."
In its Supreme Court brief, the FEC challenged appellants' raising of constitutional issues under 2 U.S.C. §437h, a provision by which the Supreme Court may expedite its handling of constitutional challenges to the federal election law. The Commission argued that the provision was "...enacted by Congress in 1974 for the specific purpose of facilitating the resolution of a major constitutional challenge to the Act prior to the 1976 general election." In the Commission's view, appellants sought to "...invoke the extraordinary process of 437h for the purpose of avoiding the Commission's enforcement procedures."
As to the constitutional issues raised in the suit, the Commission supported the decision of the appeals court, reiterating its arguments that the Act violated neither the First nor Fifth Amendment rights of appellants.
On June 26, 1981, the Supreme Court handed down a decision in California Medical Association v. FEC (Civil Action No. 79-1952) that affirmed the earlier decision of the U.S. Court of Appeals for the Ninth Circuit.
In its opinion, the Court upheld the constitutionality of 2 U.S.C. §441a(a)(1)(C), which limits contributions to a political committee to $5,000 per year, per contributor. The Court concluded that the challenged provision did not violate the First Amendment rights of appellants because it was an appropriate means by which Congress could seek to protect the integrity of the contribution restrictions upheld in Buckley v. Valeo (424 U.S. 1 (1976)). The Court said, "If First Amendment rights of a contributor are not infringed by limitations on the amount he may contribute to a campaign organization which advocates the views and candidacy of a particular candidate, the rights of a contributor are similarly not impaired by limits on the amount he may give to a multicandidate political committee, such as CALPAC, which advocates the views and candidacies of a number of candidates."
The Supreme Court also upheld the appeals court's ruling that Section 441a(a)(1)(C) did not violate appellants' equal protection rights under the Fifth Amendment. Appellants had unsuccessfully claimed that the provision allowed corporations and labor organizations to make unlimited contributions to their separate segregated funds while limiting to $5,000 a year the contributions an unincorporated association could make to the multicandidate committee it established. The Court held, however, that no equal protection violation existed. The Court stated, "Appellants' contention ignores the fact that the Act as a whole imposes far fewer restrictions on individuals and unincorporated associations than it does on corporations and unions. The differing restrictions placed on individuals and unincorporated associations, on the one hand, and on corporations and unions, on the other, reflect a congressional judgment that these entities have differing structures and purposes and that they therefore may require different forms of regulation in order to protect the integrity of the political process."
The Court found no merit, however, to the FEC's claim that the appellants' direct appeal to the Court (pursuant to Section 437h of the Act)2 was inappropriate because an FEC enforcement proceeding was pending against appellants (pursuant to Section 437g of the Act). The Court found that neither the legislative history nor the statutory language of Sections 437g and 437h indicated that a direct appeal should be limited to situations where no enforcement proceeding was pending.
1 In its October 21, 1980, opinion in FEC v. California
Medical Association, the district court ordered CMA and CALPAC to pay
the FEC civil penalties of $5,000 each.
2 Section 437h provides for expedited handling of constitutional challenges to the Act. Section 437h(b), which granted the right of direct appeal to the Supreme Court, was repealed by Congress in 1988.
Source: FEC Record -- April 1981, p. 7; and August 1981, p. 1.
California Medical Association v. FEC, 641 F.2d 619 (9th Cir. 1980) (en banc), aff'd, 453 U.S. 182 (1981).
On August 18, 2003, the U.S. District Court for the District of South Carolina, Columbia Division, granted the Commission's motion for summary judgment in this case.
The plaintiff had appealed a $5,500 civil money penalty the Commission imposed on the Joe Grimaud for Congress Committee and its treasurer Peter J. Cannon for failure to file the Committee's 2001 Year-End Report. Although the Committee filed the report on paper, they were required to file electronically. 11 CFR 104.18(a)(1)-(2). Mr. Cannon alleged that the Committee's computer system was infected with a virus, destroying their records and preventing them from filing electronically.
The district court adopted and incorporated the Report and Recommendation of a U.S. Magistrate Judge after Mr. Cannon failed to file an objection to the report with the district court. In the Report and Recommendation, the Magistrate Judge determined that Mr. Cannon waived all arguments by failing to file objections with the Commission during the Commission's administrative process. The Magistrate further concluded that the Commission imposed the proper penalty called for in its regulations, and Mr. Cannon's claim that he was unable to file electronically because of a computer virus was not an "extraordinary circumstance" under 11 CFR 111.35(b).
On January 27, 2010, the U.S. District Court for the Eastern District of Louisiana granted in part and denied in part the motion of Louisiana Congressman Anh “Joseph” Cao, the Republican National Committee (RNC) and the Republican Party of Louisiana (LA-GOP, formerly “RPL”) (collectively, the Plaintiffs) to certify to the Fifth Circuit Court of Appeals challenges to the constitutionality of the coordinated party expenditure limits and party contribution limits. The court certified questions regarding whether the Plaintiffs had sufficient injury to create a constitutional case, whether certain coordinated expenditure and contribution limits as applied to coordinated communications violate the Plaintiffs’ First Amendment rights and whether the $5,000 limit on contributions from political parties to candidate campaigns violates a political party’s First Amendment rights because it is the same limit as for political action committees and the limit is not adjusted for inflation. The district court denied certification and granted summary judgment in favor of the FEC on all of Plaintiffs’ other claims.
Under the Act, a national party committee and state party committees may make expenditures in connection with the general election campaigns of federal candidates that are coordinated with these candidates. 11 CFR 109.30. Coordinated party expenditures do not count against the contribution limits, but are subject to a separate set of limits. 11 CFR 109.32.
The Act provides a formula for calculating coordinated party expenditure limits. For House candidates, the coordinated party expenditure limit is $10,000 increased by the Cost of Living Adjustment (COLA) or, in states with only one representative, the same as the Senate limit. For Senate candidates, the coordinated party expenditure limit is the greater of the number of the state voting age population multiplied by two cents and increased by the COLA, or $20,000 increased by the COLA. For Presidential candidates, the coordinated party expenditure limit is the number of the national voting age population multiplied by two cents and increased by the COLA. 11 CFR 109.32.
On December 4, 2008, Louisiana Congressional candidate Anh "Joseph" Cao, the Republican National Committee (RNC) and the Republican Party of Louisiana (LA-GOP, formerly "RPL") (collectively the Plaintiffs) filed an amended complaint in the U.S. District Court for the Eastern District of Louisiana challenging the constitutionality of the Party Expenditure provision limits at 2 U.S.C. §441a(d)(2)-(3) as applied to their planned coordinated party expenditures. The Plaintiffs allege that the Party Expenditure Provision of the Federal Election Campaign Act (the Act) and the $5,000 contribution limit at 2 U.S.C. §441a(a)(2)(A) are unconstitutional as applied to party coordinated expenditures that are not "unambiguously campaign related" (Buckley v Valeo, 424 U.S. 1, 81 (1976)) or "functionally identical to contributions" (FEC v. Colo. Rep. Fed. Campaign Comm., 533 U.S. 431, 468 n.2). In addition, the Plaintiffs argue that the application of multiple coordinated expenditure limits for the same office is unconstitutional because it is ineffectual in preventing corruption and that the base amounts are too low. The Plaintiffs also challenge the constitutionality of the $5,000 contribution limit on the grounds that the same limits apply to parties as to political action committees, and that the limit it is too low and not indexed for inflation. The original complaint was filed by the Plaintiffs on November 13, 2008.
The RNC and LA-GOP allege that they have spent or committed to spend their coordinated party expenditure limits for Mr. Cao. They state that they wish to continue to coordinate with federal candidates to engage in:
RNC and LA-GOP also allege that they intended to engage in direct and grassroots lobbying responding to the legislative issues that will arise in Congress by lobbying incumbent U.S. Representative William Jefferson on those issues. The RNC and RPL allege that they wished to reference Representative Jefferson within 90 days of the general election on December 6, 2008, in which Representative Jefferson and Mr. Cao were both federal candidates. Moreover, the RNC and RPL allege that they would have liked to have the material involvement of, and substantial discussion with, Mr. Cao concerning the intended communications. The RNC and RPL claim that because they had already met their contribution and coordinated party expenditure limits, and they had already worked with and had substantial discussions with Mr. Cao concerning his plans and needs, they would have run the risk of an investigation by the FEC and being considered in violation of the Act.
In the amended complaint, the Plaintiffs challenge the constitutionality of the Party Expenditure Provision and the $5,000 party contribution limit. With regard to the coordinated party expenditure limits, they allege that the phrase "in connection with the general election campaign of a candidate," when used to limit party expenditures under 2 U.S.C. §441a(d)(2)-(3), is "unconstitutionally vague and overbroad, and beyond Congressional authority to regulate federal elections, unless it is limited to activity that is unambiguously campaign related." The Plaintiffs assert that the only party activities that are "unambiguously campaign related" are:
The Plaintiffs argue that the Party Expenditure Provision "is vague, overbroad, and beyond the authority of Congress to regulate elections, all in violation of the First and Fifth amendments."
In addition, the Plaintiffs argue that it is unconstitutional to treat an express advocacy communication as a coordinated party expenditure if it constitutes the party’s "own speech," as opposed to paying the candidate’s bills. Plaintiffs argue that restrictions on the party’s own speech are expenditure restrictions, rather than contribution restrictions, and expenditure restrictions have been found unconstitutional. Plaintiffs assert that, to the extent that the Provision is applied to restrict a party’s "own speech," it is subject to strict scrutiny and is in violation of the First Amendment.
The Plaintiffs further challenge the expenditure limits of the Party Expenditure Provision as they apply to House and Senate candidates on two main points: the use of multiple limits for the same office and the level of the base amount. They argue that in allowing multiple expenditure limits, the government acknowledges that candidates are not subject to corruption at lesser amounts, thus rendering the lower limits unconstitutional because they are not supported by an anti-corruption interest. They also argue that the rates are too low "to allow parties to fulfill their historic and important role in our democratic republic," thus violating the First Amendment guarantees of free speech and association.
In addition, the Plaintiffs challenge the application to parties of the $5,000 contribution limit in 2 U.S.C.§441a(a)(2)(A) for multicandidate political committees generally. The Plaintiffs assert that, as applied to coordinated or "in-kind" contributions, the limit is “unconstitutionally vague and overbroad, and beyond Congressional authority to regulate federal elections” to the extent that it is not restricted to expenditures that are "unambiguously campaign related." The Plaintiffs additionally challenge the $5,000 contribution limit for both in-kind and direct contributions because the same limit applies to both parties and political action committees. The Plaintiffs argue that "PACs and political parties must be treated differently to allow political parties to fulfill their historic and important role in our democratic republic." Finally, the Plaintiffs allege that the $5,000 limit is unconstitutional on its face because it is too low and is not adjusted for inflation. They argue that when Congress enacted the limit, $5,000 was considered sufficient to eliminate corruption. However, they allege that due to annual inflation, the value of the dollar amount is now lower than Congress originally intended.
The Plaintiffs ask the court for a Declaratory Judgment as to all challenged provisions and a permanent injunction enjoining the FEC from enforcing the challenged provision as applied to the Plaintiffs, their intended activities and all other entities similarly situated.
On January 27, 2010, the district court granted in part the Plaintiffs’ Motion to Certify. Four questions were found nonfrivolous and certified to en banc Fifth Circuit Court of Appeals. The defendant’s Motion for Summary Judgment was granted for all issues not certified to the Fifth Circuit.
Standing. The court found nonfrivolous the question whether Plaintiffs had alleged sufficient injury to create a constitutional "case or controversy" within the judicial power of Article III. However, the court held that LA-GOP does not have standing to bring a Motion to Certify under §437h of the Act, as LA-GOP is neither a national committee of a political party nor an individual
eligible to vote for President.
Unambiguously Campaign Related. The court found frivolous the Plaintiffs’ arguments that several provisions of the Act are vague, overbroad or beyond Congress’ authority to regulate because they allegedly restrict speech that is not "unambiguously campaign related." The provisions challenged under that theory were those that limit expenditures "in connection" with a candidate’s campaign (§§441a(d)(2-3)), limit to $5,000 contributions from multicandidate political committees to any candidate (§441a(a)(2)(A)) and define expenditures "made in cooperation, consultation or concert" with a candidate as contributions (§441a(a)(7)(B)(i)).
Own Speech. The court found non-frivolous the Plaintiffs’ argument that coordinated expenditures cannot be constitutionally limited if they are the party’s "own speech." The court noted that in both Buckley, 424 U.S. at 47, and Colorado II, 533 U.S. at 457, 463-64, the Supreme Court reaffirmed that coordinated expenditures are comparable to contributions under First Amendment analysis. However, the district court stated that coordinated expenditures that explicitly convey an underlying basis for support arguably begin to look more like a "direct restraint . . . on political communication." Buckley, 424 U.S. at 21. Thus, the court found the argument non-frivolous.
Constitutionality of Coordinated Expenditure Limits. The court found frivolous the Plaintiffs’ argument that Congressional discretion to set different coordinated expenditure limits in different races in different states violates Plaintiffs’ First Amendment rights. The court also held that the variable voting-agepopulation formula is constitutional. The court noted that legislators should determine and assess limits, not judges. The court did not certify Plaintiffs’ argument that current coordinated expenditure limits are unconstitutionally low and violate First Amendment rights. The court found no evidence that the effect of then-candidate Cao’s speech was weakened by a lack of resources due to these limits.
The court granted the FEC’s Motion for Summary Judgment on these issues.
Constitutionality of $5,000 Party Contribution Limit. The court found non-frivolous Plaintiffs’ question as to whether the $5,000 contribution limit in 2 U.S.C. §441a(2)(A) is unconstitutional because it imposes the same limits on parties as it does on political action committees (PACs). The district court stated that Colorado II had suggested that parties may warrant additional constitutional protections but had at the time declined to address this specific question. 533 U.S. at 448 n.10. The district court stated that this was sufficient for the court to find the Plaintiffs’ argument non-frivolous.
The court also found non-frivolous the Plaintiffs’ argument that the $5,000 contribution limit in §441(a)(2)(A) is unconstitutional because it is not adjusted for inflation. The court stated that inflation in the years after passage of the statute presents a valid basis for a facial challenge and that the $5,000 limit (which adjusted for inflation today would represent $19,000) might be unconstitutionally low.
Finally, the court found frivolous the Plaintiffs’ argument that the limit is too low to allow political parties to fulfill their historic and important role. The court determined that there was insufficient evidence presented to show that limits hindered the parties’ ability to support candidates in the most recent election cycle.
Constitutionality of Additional Party Contribution Limit For Senate Races. The court found frivolous Plaintiffs’ argument that the provision in 2 U.S.C. §441a(h) that allows national party committees to contribute an additional $35,000 (adjusted for inflation to $39,900 in 2008) to
candidates for Senate vitiates the anti-corruption interest of any lower limits for either Senators or Representatives. The court stated that these limits are best left to Congressional discretion.
The court certified the following questions to the Fifth Circuit:
On September 10, 2010, the U.S. Court of Appeals for the Fifth Circuit upheld several provisions of the Federal Election Campaign Act (the Act) relating to political parties’ contribution limits to federal candidates and coordinated expenditure limits. The court held that these provisions of the Act did not violate the First Amendment, and that in light of previous Supreme Court rulings, each of the challenged provisions was a constitutionally permissible regulation of a political party committee’s campaign contributions and coordinated party expenditures.
Standing of plaintiffs. The court of appeals held that the plaintiffs had met their burden of establishing standing under Article III of the Constitution, since they had a personal stake in the outcome of the controversy and therefore had standing to bring constitutional claims. The FEC had not contested the plaintiffs’ standing in the case.
$5,000 Contribution Limit. The Act provides that contributions from multicandidate political committees (including political party committees) to federal candidates are limited to $5,000 per candidate, per election. 2 U.S.C. §441a(a)(2)(A). The plaintiffs had challenged this provision as a violation of their First Amendment rights since it imposes the same contribution limits on political parties as on other multicandidate political committees. The plaintiffs argued that the speech of political parties deserves a higher degree of protection than that of other multicandidate political committees.
The court instead held that, while Supreme Court precedent acknowledged the important historic role that political parties have played, the Court has also acknowledged that it is precisely this role that political parties fill that gives rise to the government’s compelling interest in regulating their coordinated expenditures and contributions. The Supreme Court in FEC v. Colorado Republican Fed. Campaign Committee, 533 U.S. 431 (2001) (Colorado II) recognized a political party’s unique susceptibility to corruption.
In the present case, the Court of Appeals further held that the Act affords a “reasonable limitation” of $5,000, and as such does not seriously impair political parties’ ability to effectively participate in the political process, as had been the issue in the Supreme Court’s decision in Randall v. Sorrell, 548 U.S. 230 (2006) (Randall). Also, the court found that the Supreme Court’s decision in Citizens United v. FEC did not affect the validity of contribution limits on political party committees and other political committees.
Inflation Adjustment. The plaintiffs also argued that the $5,000 contribution limitation from political party committees to candidates is unconstitutional because it is not adjusted for inflation. The plaintiffs relied on the Supreme Court’s decision in Randall, in which the Court invalidated contribution limits to candidates in Vermont, holding that “[a] failure to index limits means that limits which are already suspiciously low…will almost inevitably become too low over time.” However, the Court of Appeals held that the Supreme Court’s statement “does not, in turn, mean that all contribution limits not indexed for inflation are automatically ‘suspiciously low’ and unconstitutional.” The court stated that, in the present case, the Act’s $5,000 limit is not comparable to Vermont’s $200-$400 limit at issue in Randall.
Coordinated Party Expenditure Limits. The plaintiffs’ challenge to the coordinated party expenditure limits of 2 U.S.C. §441a(d) arose out of the RNC’s desire to spend in excess of the amount allowed for Congressman Cao (which was $42,100 in 2008 for House candidates in Louisiana). Specifically, the RNC wanted to air a radio ad and to coordinate with the Cao campaign as to the “best timing” for the ad.
The RNC stated that its involvement with the Cao campaign amounted to coordination under FEC regulations, and that if they had aired the ad, it would have violated the amount limitations of the party expenditure provision because the RNC had already spent its limit under the Act. The RNC asserted that this provision of the Act violates its First Amendment rights because the provisions regulate the RNC’s “own speech,” and that its own speech may not be regulated, regardless of whether the speech is coordinated. “Own speech” is defined by the RNC as speech that is attributable to the RNC, even when candidate writes the speech and decides how it is to be disseminated.
The Court of Appeals held that the Supreme Court’s holding in Colorado II expressly recognized that Congress has the power to regulate coordinated expenditures in order to prevent circumvention of the contribution limits and political corruption, provided that the restriction is “closely drawn” to match a sufficiently important government interest in combating political corruption. Colorado II at 456. The Court of Appeals stated that if it was to accept the plaintiffs’ arguments, it would “effectively eviscerate the Supreme Court’s holding in Colorado II,” in which the Supreme Court held that coordinated expenditures may be restricted because contribution limits could be eroded if “inducement to circumvent them were enhanced by declaring parties’ coordinated spending wide open.” Id. at 457. The Court of Appeals also held that Citizens United v. FEC (2010) did not undermine Colorado II’s holding that Congress may regulate a party’s coordinated expenditures, since Citizens United dealt with restrictions on independent expenditures by corporations.
The court remanded the case to the district court for entry of judgment consistent with this opinion. U.S. Court of Appeals for the Fifth Circuit; No. 10-30080, No. 10-30146.
On January 31, 2011, Retired Rear Admiral James Carey, Kelly Eustis and the National Defense Political Action Committee (collectively, “the Plaintiffs”) filed suit against the FEC. The lawsuit sought a declaratory judgment that the contribution limits in 2 U.S.C. §§441a (a)(1)(C) and 441a(a)(3) violate the First Amendment to the extent such laws prohibit a nonconnected political committee from soliciting and accepting unlimited contributions to one bank account designated for independent expenditures, while maintaining a second, separate bank account designated for source- and amount-limited contributions to candidates and their authorized political committees. Plaintiffs also sought injunctive relief enjoining the Commission from enforcing the above-mentioned provisions as applied to Plaintiffs, and concurrently filed a Motion for Preliminary Injunction. On June 14, 2011, the U.S. District Court for the District of Columbia granted the Plaintiff's Motion Preliminary Injunction enjoining the Commission from enforcing the above-referenced provisions of Act.
On August 19, 2011, the United States District Court for the District of Columbia entered a Stipulated Order and Consent Judgment whereby the Commission agreed that it would not enforce 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) against the Plaintiffs with regard to contributions for independent expenditures.
Plaintiff Admiral Carey is the founder and treasurer of National Defense PAC (“NDPAC”). Kelly Eustis is a registered voter who resides in Sacramento, California. NDPAC is a nonconnected political committee registered with the FEC that raises and spends funds to support candidates for federal office who are military veterans and who agree with NDPAC’s goals.
On August 11, 2010, NDPAC submitted an advisory opinion (AO) request to the FEC asking whether, based on court decisions in Citizens United and SpeechNow, and the Commission’s conclusions in AOs 2010-09 (Club for Growth) and 2010-11 (Commonsense Ten), it could raise unlimited contributions from individuals, political committees, corporations and unions for the express purpose of making independent expenditures. Simultaneously, NDPAC would raise additional contributions from individuals and political committees subject to the $5,000 per calendar year contribution limit under 2 U.S.C. §441a(a) in order to make contributions to federal candidates. NDPAC proposed recording and segregating its contributions by type into separate bank accounts. The Commission considered draft responses to the request, but was unable to approve an AO by the required four affirmative votes.
As a result, NDPAC claims that it curtailed its activities during the 2010 election cycle. The committee states that it planned to make independent expenditures targeting several opponents of its endorsed candidates, but the constraints of the $5,000 per year contribution limit prevented it from gathering the necessary resources. NDPAC says it plans to make similar independent expenditures during the 2012 primary and general election periods and claims to have a donor (Mr. Eustis) willing to give $1,300 above the $5,000 statutory limit to fund those expenditures. NDPAC asserts that without the legal authority to solicit unlimited contributions, its speech will be abridged. In addition, the Plaintiffs maintain that NDPAC and Admiral Carey will face a threat of prosecution if they solicit or accept contributions to fund NDPAC’s independent expenditures, and that Mr. Eustis will face a threat of prosecution if he makes contributions above the $5,000 limit to fund NDPAC’s independent expenditures.
The Plaintiffs sought a declaratory judgment from the court that the contribution limits in 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) are unconstitutional as applied to them and to any other supporters who wish to make contributions to NDPAC for its independent expenditures. The Plaintiffs also sought preliminary and permanent injunctions enjoining the FEC from enforcing those provisions against them and against any supporters who wish to make contributions to NDPAC for its independent expenditures.
On June 14, 2011, the U.S. District Court for the District of Columbia granted a limited preliminary injunction to Plaintiffs enjoining the Commission from enforcing certain provisions of Act which limit the amount of contributions individuals may make and that NDPAC may accept into a separate bank account for the purpose of making independent expenditures.
The District Court held that the Plaintiffs have a high likelihood of partial success on the merits of their complaint. The court reasoned that since laws that burden political speech are subject to “strict scrutiny,” the Government must prove that restrictions further a compelling interest and are narrowly tailored to achieve that interest. The court held that the Government did not meet this burden because it did not adequately explain why NDPAC’s proposed separation of accounts does not satisfy the same objective as separate political action committees. The court also held that NDPAC’s proposal would comply with the D.C. Circuit Court of Appeals decision in EMILY’s List v. FEC (581 F.3d 1 (D.C. Cir. 2009)) by establishing separate accounts to 1) solicit and spend unlimited funds for independent federal expenditures (soft money); and 2) solicit and spend federally permissible funds on direct contributions to federal political candidates and/or political parties (hard money). The court further held that because the 2012 Presidential election cycle is under way, the Plaintiffs “must be freed immediately from the chill of possible FEC enforcement,” and that prior cases from the D.C. Circuit and Supreme Courts support the Plaintiffs’ position. The court concluded that the Plaintiffs demonstrate that the Commission’s interference with their First Amendment rights constitutes irreparable harm.
The court granted a preliminary injunction to the Plaintiffs that the Commission shall not enforce 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) against the Plaintiffs with regard to independent expenditures so long as NDPAC maintains separate bank accounts for its “hard money” and “soft money,” proportionately pays related administrative costs and complies with the applicable “hard money” limits for its PAC account that is used to make contributions directly to federal candidates.
On August 19, 2011, the court issued a Stipulated Order and Consent Judgment in which the FEC agreed that it would not enforce 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) against Plaintiffs with regard to contributions NDPAC receives to make independent expenditures, as long as NDPAC maintains separate bank accounts 1) to receive such contributions for independent expenditures, and 2) to receive source-and amount-limited contributions for the purpose of making candidate contributions. Further, each account must pay a percentage of administrative expenses that closely corresponds to the percentage of activity for that account, and must comply with the applicable limits for the contributions it receives for the purpose of making candidate contributions.
On October 5, 2011, the Commission issued a statement providing guidance for other political committees that maintain a "non-contribution" account. See FEC Statement on Carey v. FEC.
On March 2, 1981, the U.S. Court of Appeals for the District of Columbia Circuit dismissed Committee for Jimmy Carter v. FEC (Civil Action No. 79-2425). The court's action came in response to an agreement for dismissal of the appeal, filed by the parties on February 20, 1981. This agreement resulted from the Commission's acceptance of the plaintiff's offer to settle the suit.
Petitioners had originally filed the suit on December 3, 1979, challenging an FEC decision to deny matching funds to the Committee for Jimmy Carter (the Committee), the principal campaign committee of former President Carter's 1976 primary campaign. In its suit, the Committee asserted that the Commission had acted arbitrarily, capriciously and contrary to law in certifying only $88,293.92 of the $185,749 in matching funds requested by the Committee in July 1979. The Commission argued that it was bound by its regulations (11 CFR 133.3 (d) and (e))1 to certify only those funds the Committee needed to retire the legitimate debts of Mr. Carter's primary campaign. The Commission therefore asserted that, if it had granted the Committee's entire request, it would have acted contrary to law by sanctioning an improper use of primary matching funds. Specifically, the Committee had stated in its request for primary matching funds that it planned to use the amount withheld by the Commission ($97,456.08) for the following expenditures. In the Commission's view, none of these constituted qualified campaign expenses.
The Committee argued that the transfers to the 1976 general election committee were part of an ongoing transfer authorization granted by the Commission in February 1977. This authorization had allowed the Committee to transfer $500,000 in private contributions to the compliance fund of the general election committee. These contributions were received after Mr. Carter's nomination to the Presidency in July 1976. Moreover, the Committee argued that the Commission's partial denial of the certification violated Section 134.3(c)(2) of FEC regulations, the provision in effect during the 1976 elections. The Committee claimed that this provision entitled it to receive matching funds up to the full amount of its outstanding debts on the date Mr. Carter was nominated for the Presidency, regardless of whether it received any private contributions after that date.3
The Commission maintained, however, that the transfer authorization had terminated in August 1977 when the Committee repaid $126,515 in matching funds to the U.S. Treasury. The Commission noted that it had requested the repayment because it had certified the funds on the understanding that the Committee planned to transfer $500,000 in private contributions to the compliance fund for the general election committee. The Committee had, however, transferred only $300,000.
In the agreement settling the Committee's claim for matching funds, the Commission agreed to certify $65,650.01 to the Committee, an amount equivalent to qualified legal expenses the Committee had incurred through February 1981. The Commission expressly conditioned this certification on the Committee's consent to:
1 The FEC prescribed revised regulations in May 1979.
Section 133.3(d) is now 9034.1(a) and Section 133.3(e) is now 9034.1(b).
2 Under the Presidential Election Campaign Fund Act, major party nominees are eligible for public grants of $20 million (plus a cost-of-living adjustment) to finance their general election campaigns.
3 Under the revised regulation (11 CFR 9034) prescribed in May 1979, Presidential primary candidates are entitled to continue receiving matching funds after their date of ineligibility only if the combined total of their matching funds and private contributions does not cover outstanding debts.
Source: FEC Record -- May 1981, p. 7.
On June 24, 1983, the U.S. Court of Appeals for the District of Columbia ruled that, since the Carter/Mondale Presidential Committee, Inc. (the Committee) had failed to file its petition for review of certain final FEC repayment determinations within 30 days after the FEC had made them, the court had no jurisdiction over the petition. Filed on July 6, 1982, the Committee's petition concerned certain final Commission determinations with regard to the FEC's audit of the Committee's publicly funded primary campaign in 1980.
Since it dismissed the suit on jurisdictional grounds, the court did not address the issue of whether the FEC could require the Committee to:
Source: FEC Record -- August 1983, p. 8.
Carter/Mondale Presidential Committee, Inc. v. FEC, 711 F.2d 279 (D.C. Cir. 1983).
On November 1, 1985, the U.S. Court of Appeals for the District of Columbia Circuit ruled that the FEC did not abuse its discretion in declining to reconsider a final determination the agency had made with regard to the Carter/Mondale Presidential Committee, Inc.'s (the Committee's) repayment of nonqualified campaign expenses to the U.S. Treasury.1 CA No. 84-1393 and 84-1499 (The Committee was the publicly funded principal campaign committee for former President Carter's 1980 primary campaign.) The court's ruling sustained decisions made by the FEC on July 12 and September 20, 1984, not to reconsider its final repayment determination with regard to the Committee.
On July 6, 1982, the Committee had filed a petition with the appeals court which sought review of an FEC final determination that the Committee must repay $104,300.78 to the U.S. Treasury, an amount equal to those nonqualified expenses incurred by the Committee during the 1980 primary campaign. (Carter/Mondale Presidential Committee v. FEC, 111 F.2d 279 (D.C. Cir. 1983); see summary at left.) The court dismissed the case on grounds that it had not been filed within the time frame required by the election law. See 26 U.S.C. §9041(a).
On August 7, 1984, the Committee filed a petition, asking the Court to review the decision that the FEC made on its own initiative not to reopen its final repayment determination for the Committee in light of recent decisions made by the court in two other suits concerning repayments. (In Kennedy for President Committee v. FEC and Reagan for President Committee v. FEC, the court had held that the FEC had exceeded its authority under 26 U.S.C. §9038(b)(2) when it required repayment of the entire amount of nonqualifying payments, rather than the portion attributable to the matching payment account.) The Committee also asked the FEC to reconsider its decision (taken in July 1984) not to reopen the Carter/Mondale repayment determinations. The Commission had decided to reconsider only the repayments by the Kennedy and Reagan committees, which had been required by the court. The Commission had taken this position " 'in the interest of finality in the administrative process, now and in the future.'" The Committee claimed that the FEC's decision disregarded the principle of equal treatment for all candidates, which the Committee alleged the agency had established in reconsidering a final repayment determination made with regard to John Anderson's publicly funded campaign. On September 20, 1984, the FEC once again declined to reconsider the Committee's final repayment determination. On October 2, 1984, the Committee filed a second petition with the appeals court. On October 15, 1984, the court consolidated this case with the Committee's August 1984 case.
The court rejected the Committee's claim that the FEC's July determination was unlawful because it contradicted a precedent established by the agency's reconsideration of the Anderson Campaign's repayment requirements: "Far from establishing any general or even selective practice of reopening final determinations, the record before us [of the FEC's reconsideration of the Anderson determination] displays only an isolated situation in which the facts distinguishable from those in the case at hand tugged the Commission away from application of the finality principle."
Nor did the court find merit in the Committee's assertion that the FEC had treated the Committee unfairly. "No favoritism can be attributed to the FEC when it carries out the letter of a court's order" to reconsider repayments by the Kennedy and Reagan committees. Moreover, the Committee's tardiness in seeking court review of its own repayment determination contradicts "'Congress' strong interest in resolving federal matching fund audits expeditiously.' 111 F.2d at 289 and n.19."
Finally, the court rejected the Committee's argument that the FEC had failed to give reasons for refusing to reopen its repayment determination. "[A]bsence of an express statement does not render its action unlawful where reasons for that action may be gleaned from its [the FEC's] staff's reports."
Source: FEC Record -- December 1985, pp. 6-7.
Carter/Mondale Presidential Committee, Inc. v. FEC, 775 F.2d 1182 (D.C. Cir. 1985).
The Commission's certification of public funds to the Republican nominee was challenged in Carter-Mondale Reelection Committee, Inc. and the Democratic National Committee v. FEC, filed July 24, 1980. The Carter-Mondale Committee (the Committee) asked the U.S. Court of Appeals for the District of Columbia Circuit to prevent the Commission's certification of the Republican nominees, pending resolution of an administrative complaint filed by the plaintiffs against the nominees. In their complaint to the Commission, the Committee had said that Ronald Reagan would be ineligible for public funds since he had allegedly violated the law on several counts. The Committee had charged that several groups, purportedly making independent expenditures on Mr. Reagan's behalf, were in fact making qualified campaign expenditures with the prior consent of the candidate and his agents. In the suit, the Commission argued that the certification was proper and within the Commission's exclusive jurisdiction. On September 12, the court ruled in the Commission's favor and affirmed the Commission's "action in certifying the nominees' application for funds."
Source: FEC Annual Report 1980, p. 20.
In re Carter-Mondale Reelection Committee, Inc., 642 F.2d 538 (D.C. Cir. 1980).
This case was voluntarily dismissed as moot when the Commission took action on three complaints the Center had filed with the agency in 1990 and 1991 (Matters Under Review (MURs) 3175, 3249 and 3325). The Center had filed suit to force the FEC to take action but, in March 1994, agreed to suspend the litigation for four months while the FEC worked to resolved the MURs, which concerned excessive contributions.
The U.S. District Court for the District of Columbia dismissed the case on July 11, 1994. (Civil Action No. 93-2250 (SSH).)
Source: FEC Record -- September 1994, p. 8.
Center for Responsive Politics v. FEC, No. 93-2250 (D.D.C. Oct. 29, 1993).
On November 9, 1995, the U.S. Court of Appeals for the District of Columbia dismissed this case.
The Center for Responsive Politics (CRP) and its executive director, Ellen Miller, brought this suit alleging that the FEC acted contrary to law when, in a recent rulemaking (60 FR 31854, June 16, 1995), it failed to repeal regulations that permit publicly funded Presidential candidates to accept private contributions for their general election legal and compliance fund.
The court ruled that the CRP and Mrs. Miller lacked standing to bring this suit. Neither the CRP nor Mrs. Miller suffered harm that could be directly traced to the FEC's action. Additionally, neither one was qualified to bring suit since their alleged injury was outside the statute's "zone of interest" in this case.
Source: FEC Record -- January 1996 [PDF].
Center for Responsive Politics v. FEC, No. 95-1464 (D.C. Cir. Nov. 9, 1995).
On November 14, 1995, the U.S. Court of Appeals for the District of Columbia reversed the district court's dismissal of this case and ordered the court to issue appellants appropriate declaratory relief.
The U.S. District Court for the District of Columbia had dismissed this case on October 28, 1994, on the grounds that the matter was not ripe for review and that the plaintiffs lacked standing to bring the action.
This case involved the FEC's regulatory definition of "member." FEC regulations allow membership organizations to use their corporate funds to send political communications and solicitations, but only to their administrative and executive personnel and to persons who qualify as "members" under federal election law.1 To qualify as a "member" under FEC regulations a person must have a significant financial interest in the organization, or pay regular dues and possess the right to vote either directly or indirectly for at least one representative in the organization's highest governing body, or possess the right to vote for all members of the organization's highest governing body. 11 CFR 114.1(e)(2).
In 1976, FEC regulations defined an organization's "members" as "all persons who are currently satisfying the requirements for membership" in the organization. 11 CFR 114.1(e). In subsequent years, court decisions and advisory opinions established that political communications and solicitations financed with corporate monies could only be sent to persons who have a significant financial or organizational attachment to the membership organization.
In 1993, the FEC adopted new rules to reflect these precedents. These rules clarified that a person will be considered a "member" for purposes of the Act if that person:
When these new regulations took effect, the Chamber of Commerce of the U.S.A. and the American Medical Association (AMA) submitted Advisory Opinion Requests (AORs) 1994-4 and 1994-12 to the Commission, asking about the "member" status of their members. The Commission responded to the AORs by stating that the six Commissioners could not reach a consensus on the status of more than 200,000 Chamber members and nearly 45,000 AMA members; these persons paid dues to their respective organizations but lacked voting rights.
Not satisfied with this result, the Chamber and the AMA challenged the FEC's revised definition of "member" in the U.S. District Court for the District of Columbia.
The district court ruled that:
The court of appeals found that the Chamber and the AMA did have standing to argue their case before the court: "In the last federal election, appellants, not surprisingly, felt constrained to alter their prior practice-they ceased political communications with those constituents who did not qualify as 'members' under the Commission's new rule. and counsel for the Commission agreed . . . that he would not advise the Chamber and the AMA to ignore the rule." Thus, the issue brought before the court was ripe for review because it caused both the Chamber and the AMA harm.
Further, the Chamber and the AMA had standing to bring this suit because, although an FEC enforcement decision had not been issued against them, there was a credible threat of enforcement if they chose to ignore the regulation. Additionally, the possibility that appellants' First Amendment rights were chilled by the FEC's regulations conferred standing upon appellants. Virginia v. American Booksellers.
The court found that the FEC's rules presented "serious constitutional difficulties" because they precluded "appellants from communicating on political subjects with thousands of persons, heretofore regarded by the Commission as members." Thus, although the court did not disagree with the district court's conclusion that the FEC was entitled to deference under the Chevron doctrine, the court reasoned that the conflict between the rules and the First Amendment warranted judicial review.
At issue here, in the court's view, was whether the FEC's rule accorded with the Supreme Court's opinion in FEC v. National Right to Work Committee (459 U.S. 197, 1982). There, the Court ruled that "members of nonstock corporations were to be defined . . . by analogy to stockholders of business corporations and members of labor unions . . . [which] suggest[ed] that some relatively enduring and independently significant financial or organizational attachment is required . . . "
The appeals court concluded that the FEC's new rule did not square with the Supreme Court's opinion in NRWC: "[I]mplicit in the Commission's rule is the view that dues, no matter how high, are not by themselves a manifestation of a significant financial attachment." The court said that the FEC's position reads the disjunctive "or" between "financial" and "organizational" as if the Supreme Court had used the conjunctive "and."
Furthermore, the court held that, "It is . . . quite illogical to regard someone who has one share of stock in a public corporation, which can be sold in minutes, as more significantly attached to the organization than a person or entity who pays $1000 or even $100,000 (as is the case for some Chamber members) in annual dues."
The court also criticized the rule's voting requirement. It noted that the nearly 45,000 AMA members in question are subject to sanction by the organization should they violate the organization's Principles of Medical Ethics. "It might be thought, that for a professional, placing oneself in such a position is the most significant organizational attachment."
Lastly, the court noted that the rule treats some labor unions and federated rural electric cooperatives differently, exempting them from its new definition of "member." The court noted that this question had not been squarely presented on appeal, but stated that it was not satisfied with the FEC's claim that the separate treatment was consistent with the Act's legislative history. Without further elaboration, the court stated, it "would determine that these exemptions make the regulation arbitrary and capricious."
Source: FEC Record -- December 1994, p. 1; and January 1996 [PDF].
Chamber of Commerce v. FEC, 1994 WL 615786 (Oct. 28, 1994); No. 94-5339 (D.C. Cir. Nov. 14, 1995).
On August 21, 2007, the U.S. District Court for the District of Columbia
granted the Christian Civic League of Maine, Inc.’s (CCL) request for declaratory relief regarding campaign finance law restrictions on a radio ad planned by CCL. CCL had challenged the constitutionality of the Bipartisan Campaign Reform Act’s (BCRA) electioneering communication financing restrictions as applied to certain so-called “grassroots lobbying” ads. The court denied CCL’s request for declaratory relief as to other communications and CCL’s request for injunctive relief.
CCL is a nonprofit corporation
organized under section 501(c)(4) of
the Internal Revenue Code that allegedly
engages in some business activity.
CCL wanted to use its general
treasury funds to broadcast a radio
ad prior to a 2006 Senate vote on a
particular proposed constitutional
amendment. The ad identified Senator
Olympia Snowe by name and was
to air in close proximity to her June
13, 2006, primary election. If the ad
had aired in Senator Snowe’s state
within 30 days prior to her primary
(or 60 days prior to the general), it
would have qualified as an electioneering
2 U.S.C. 434(f)(3)(A)(i). Under the Federal Election Campaign Act (the Act), as amended by the Bipartisan Campaign
Reform Act, corporate funds cannot be used to finance an EC. CCL’s suit contends that this financing restriction prevents it from exercising its First Amendment right to free speech.
The Supreme Court upheld the electioneering communications provision in McConnell v. FEC, stating that, although the provision might apply to some so-called “issue ads,” it is narrowly tailored to meet a compelling government interest. 540 U.S. 93, 206 (2003). After McConnell, on June 25, 2007, the Supreme Court upheld a district court ruling in another case that concerned the constitutionality of the electioneering communications provisions, FEC v. Wisconsin Right to Life (WRTL). In that case, the court found the electioneering communication financing restrictions unconstitutional as applied to ads that WRTL, a 501(c)(4) nonprofit corporation, intended to run before the 2004 elections. The Supreme Court concluded that the electioneering communication financing restrictions are unconstitutional as applied to these ads because:
CCL did not broadcast “Crossroads” and, on April 3, 2006, filed a complaint challenging the constitutionality of the electioneering communication financing restrictions as applied to its planned ads. On September 27, 2006, the district court dismissed CCL’s request for a permanent injunction to prevent the FEC from applying its electioneering communications rules to "Crossroads," concluding that the Senate’s June 2006 vote on the legislation referenced in the ad had rendered the issue moot. The court further granted the FEC’s motion for dismissal of CCL’s claims about possible other ads because they were not ripe for review and were too speculative. CCL admittedly had no firm plans to create or distribute any future ads besides the spring 2006 ad. The Constitution requires an actual “case or controversy” for the court to decide, so a party’s grievance cannot be solely hypothetical.
On May 9, 2006, the U.S. District Court for the District of Columbia denied the Christian Civic League of Maine’s (CCL) motion for a preliminary injunction.
The court cited the Supreme Court finding in McConnell v. FEC that the government had a compelling interest in limiting the expenditure of corporate treasury funds via the electioneering communication (EC) provision contained in the Act. It also restated from McConnell that the EC provision is not a ban on expression, but rather a requirement that corporations fund certain advertisements through their separate segregated funds. The court found that the communication CCL intended to air was functionally equivalent to the “sham issue advertisements” that the McConnell court identified.
Although the court found that the CCL had several different options in communicating its message that would avoid violating the electioneering communication provision, CCL chose not to exercise these options. Therefore, the court found that CCL had not established the likelihood of irreparable harm and that granting a preliminary injunction would harm the interest of the Commission and the public by preventing the enforcement of an Act of Congress.
On September 27, 2006, the U.S. District Court for the District of Columbia granted partial motions to dismiss and for judgment on the pleadings, and dismissed all other CCL claims as moot.
The CCL filed a complaint on April 3, 2006, with the U.S. District Court for the District of Columbia asking the court to find the statutes and regulations regarding electioneering communications to be unconstitutional as applied to broadcast advertisements that CCL contends constitute "grassroots lobbying." CCL further requests preliminary and permanent injunctions enjoining the FEC from enforcing these regulations against CCL and payment of attorneys’ fees.
CCL is a nonprofit corporation group organized under 501(c)(4) of the Internal Revenue code. It claims that it is not a qualified nonprofit corporation within the meaning of 11 CFR 114.10. CCL seeks to air a radio advertisement and other broadcast communications that are electioneering communications (EC) under the Federal Election Campaign Act (the Act). The Act prohibits corporations from distributing or financing ECs with corporate treasury funds.
CCL contends that its communications cannot constitutionally be regulated because they are "grassroots lobbying" communications. CCL believes that it is constitutionally entitled to pay for its planned advertisements with general corporate funds.
The district court dismissed CCL’s request for a permanent injunction to prevent the FEC from applying its EC rules to CCL’s proposed ad, concluding that the Senate’s vote on the legislation referenced in the ad had rendered the issue moot. CCL contended that its situation fit within the "capable of repetition, yet evading review" exception to the mootness
doctrine. The court disagreed, noting that CCL’s claims were closely tied to the facts surrounding the spring 2006 ad, circumstances that were unlikely to recur and would not necessarily evade review even if they did recur. The court further granted defense motions for dismissal of CCL’s claims about possible other ads because they were not ripe for review and were too speculative. CCL admittedly had no firm plans to create or distribute any future ads besides the spring 2006 ad. The Constitution requires an actual “case or controversy” for the court to decide, so a party’s grievance cannot be solely hypothetical.
On October 2, 2006, the U.S. Supreme Court dismissed as moot CCL’s appeal of the district court’s May 9, 2006, denial of a preliminary injunction.; see June 2006 [PDF] Record. On May 12, 2006, CCL filed an appeal with the U.S. Supreme Court and moved for expedited consideration and consolidated briefing of the matter. On May 15, the Court rejected CCL’s motion to expedite and consolidate.
On August 21, 2007, the U.S. District Court for the District of Columbia granted the CCL’s (CCL) request for declaratory relief regarding campaign finance law restrictions on a radio ad planned by CCL.
Although the district court in CCL v. FEC had held in its earlier opinion that CCL’s claims regarding "Crossroads" were moot, the court reviewed that opinion in light of the Supreme Court’s decision in WRTL and found that these claims were not moot because they fell within the Supreme Court’s exception for claims that are “capable of repetition, yet evading review.” Having reached the merits of the claims, the court found that, in accordance with the Supreme Court’s decision in WRTL, the BCRA’s electioneering communication financing restrictions are unconstitutional as applied to CCL’s 2006 "Crossroads” ad. The court granted CCL’s request for declaratory relief with regards to this ad, but denied CCL’s request
for declaratory relief with regard to other communications and denied its request for injunctive relief.
Christian Civic League of Maine, Inc. v. FEC, 529 U.S. 05-1447 (Oct. 2, 2006)
On November 16, 1998, the U.S. Supreme Court refused to review two court cases that posed First Amendment challenges to limits on campaign contributions and expenditures in state and local elections. Both cases had been cast as potential challenges to Buckley v. Valeo, the landmark court case on the Federal Election Campaign Act (the Act). The FEC was not a party to either suit.
The appellate courts' reasoning in the two cases was based in great part on Buckley, where the high court equated campaign spending with the First Amendment's guarantee of free speech. While the Court found that a compelling government interest in preventing real or perceived corruption justified imposing restrictions on contributions, it concluded that this governmental interest was inadequate to sustain limitations on campaign expenditures.
In the first case, Cincinnati v. Kruse, John Kruse, a candidate for a Cincinnati City Council seat, challenged a council ordinance that limited campaign expenditures for council elections to about $140,000. The city council argued that the rising cost of city council races had resulted in a rise in the influence of wealthy donors and the decline in the influence of small donors. The U.S. District Court for the Southern District of Ohio at Cincinnati ruled in favor of Mr. Kruse, finding that the ordinance was unconstitutional on its face.
The U.S. Court of Appeals for the Sixth Circuit affirmed that ruling on April 27, 1998. It reiterated the Supreme Court's view that restrictions that have the potential of limiting the First Amendment guarantee of political expression must be subjected to "exacting scrutiny" by the courts and that "the prevention of corruption or the appearance of corruption" is the only governmental interest that survives strict scrutiny and, as a result, justifies restrictions on campaign finance.
The court also said the perception that the public is discouraged and cynical about the democratic process as a result of perceived corruption in campaign finance is not sufficient evidence for limiting campaign spending.
In Burris v. Russell, Ron Russell challenged the Arkansas Ethics Commission after the state's voters approved a referendum that set contribution limits per election for district races at $100 per contributor and for statewide races (such as governor and state treasurer) at $300 per contributor. (The lowest contribution limit per contributor allowed under Buckley is $1,000.) The referendum also introduced an entity called the small-donor PAC. Individuals could contribute up to $25 to the PAC, and the PAC, in turn, could contribute up to $2,500 per candidate, per election. The initiative also created independent expenditure committees that could accept no more than $500 from any person annually. Finally, the initiative authorized local governments to set reasonable limits on the amount of campaign funds candidates for local offices could raise. Before this initiative, Arkansas voters had approved a measure that limited PAC contributions to $200 per year, down from $1,000.
This case was merged with Citizens for Clean Government v. Russell. The U.S. District Court for the Eastern District of Arkansas rendered a split decision, upholding some of the contribution limits and ruling others unconstitutional. On June 4, 1998, the U.S. Court of Appeals for the Eighth District struck down the individual and PAC contribution limits.
This same pattern emerged with contributions to legislators from several lobbyists who represented various groups, including real estate interests. Again, none of the contributions individually exceeded $1,000.
The court found that the $100 and $300 contribution limits approved in the voter initiative were too low to allow meaningful participation in the political process. The court also held that the $200-per-year PAC contribution limit enacted before the voter initiative was "simply too low to allow for appropriately robust participation in protected political speech and association."
The court concluded that, "the limitations in question here are . dramatically lower than, and different in kind from, the limits approved in Buckley, and thus are unconstitutionally low."
"If any contribution is likely to give rise to a reasonable perception of undue influence or corruption, it would be one from an entity permitted to contribute two-and-a-half times the amount that most others are allowed to contribute," the court stated. "The small-donor PAC provision is not, then, narrowly tailored to serve the compelling government interest of combating the reality or perception of undue influence or corruption."
Severability. The court found that the contribution limits were severable from the remainder of the voter initiative. It let stand the provisions for independent expenditure committees and rendered no decision on the instructions to local governments to establish reasonable limitations on campaign contributions and expenditures.
Source: FEC Record -- January 1999 [PDF].
Kruse v. City of Cincinnati, 142 F.3d 907 (6th Cir. 1998), cert. denied 1998 WL 651027 (U.S.);
Russell v. Burris, 146 F.3d 563 (8th Cir. 1998), cert. denied, 119 S. Ct. 1040 (1999).
On October 27, 2005, the US District Court for the District of Columbia granted the parties’ joint motion to dismiss this case, which challenged the Commission’s refusal to provide documents relating to an ongoing enforcement matter.
On July 12, 2004, Citizens for Responsibility and Ethics in Washington’s (CREW), a nonprofit 501(c)(3) corporation, asked the FEC to provide it with an investigative report prepared by counsel for Westar Energy Company (Westar) regarding possible campaign finance violations by the company. CREW believed the report had been voluntarily forwarded by Westar to the FEC.
The FEC denied CREW’s request for information, citing the “confidentiality provision” of the FECA. Under this provision, any “notification or investigation made under this section shall not be made public by the Commission without the written consent of the person receiving such notification or the person with respect to whom such investigation is made.” 2 U.S.C. §437g(a)(12)(A).
CREW appealed the FEC’s denial of its Freedom of Information Act (FOIA) request, arguing that the “confidentiality provision” does not apply to the Westar report. The FEC denied the appeal. The plaintiff filed a court complaint on September 30, 2004.
On May 16, 2005, the U.S. District Court for the District of Columbia granted the FEC’s motion for summary judgment in this case, and denied the plaintiff’s motion for summary judgment, finding that the FEC’s interpretation of the confidentiality provision of the Federal Election Campaign Act (FECA) is reasonable.
In court, the plaintiff argued that the Westar report does not fall under the FECA’s confidentiality provision because that provision does not apply to matters in their pre-investigatory stage. The FEC argued, to the contrary, that the provision applies to all information in its open enforcement files.
The standard for judicial review of an agency’s construction of a statute it administers is called Chevron review, after the Supreme Court’s decision in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984). In Chevron review, the court asks first whether Congress has spoken to the precise issue at hand. If so, then the agency’s interpretation of the statute must implement Congress’s unambiguous intent. If Congress has not spoken explicitly to the question at hand, then court must ask a second question--whether the agency’s rules are based on a permissible reading of the statute. If the agency’s interpretation is reasonable, then the court must defer to that interpretation.
In this case, the court found that the Act’s confidentiality provision does not speak to the precise issue at hand because it can support both the plaintiff’s and the defendant’s interpretations. Under the second step of Chevron review, the court found that the FEC’s interpretation of the provision is reasonable because it “satisfies the heightened privacy concerns of the FECA confidentiality provision and minimizes the adverse consequences of public knowledge of that ignominious pre-investigatory status.”
The plaintiff had also taken issue with the FEC’s unwillingness, in response to their FOIA request, to acknowledge whether it had the Westar report at all. The FEC countered that acknowledging possession of the report would in itself reveal confidential information. The court concluded that the FEC acted appropriately and in the best interests of the confidentiality provision.
The court granted the FEC’s request for summary judgment and denied the plaintiff’s request for summary judgment. CREW subsequently filed a motion for reconsideration of the court’s decision.
Plaintiffs had filed a Freedom of Information Act (FOIA) request with the FEC in 2004 seeking access to documents concerning the agency’s ongoing investigation of Westar Energy, Inc.. The Commission denied the request, citing the confidentiality provisions of 2 U.S.C. 437g(a)(12(A). CREW challenged that decision in court, but in May 2005 the district court upheld the agency’s response. CREW immediately asked the court to reconsider.
On August 18, 2005, the FEC closed its enforcement case against Westar and publicly released the documents CREW had sought, thereby rendering the request for reconsideration moot.
On January 12, 2007, the U.S. Court of Appeals for the District of Columbia upheld the district court’s summary judgment in favor of the FEC, finding that Citizens for Responsibility and Ethics in Washington (CREW) lacked standing to challenge the Commission’s dismissal of its administrative complaint.
According to the administrative complaint, CREW filed during the 2004 campaign, Grover Norquist, head of Americans for Tax Reform, provided Kenneth Mehlman, campaign manager for Bush-Cheney ’04, with a master list of conservative activists. CREW alleged that the list represented either a prohibited in-kind corporate contribution, if made by ATR, or an excessive contribution, if made personally by Mr. Norquist. In either case, CREW stated that the contribution was also illegal because it was not reported to the FEC. 2 U.S.C. §§441b(a), 441a(a)(1)(A), 441a(f), 434(a) and 434(b).
On October 19, 2004, the Commission determined to take no further action in this matter and to close the file. According to the Commission’s First General Counsel’s Report, the contribution appeared to be “limited in size and impact,” and the Office of General Counsel recommended that the Commission “exercise its prosecutorial discretion and take no further action” in the matter.
On December 13, 2004, CREW filed a complaint with the U.S. District Court for the District of Columbia asking the court to find that the Commission acted contrary to law when it dismissed the plaintiff’s administrative complaint (MUR 5409) dated February 4, 2004. The administrative complaint alleged that Grover Norquist, Americans for Tax Reform (ATR), Ken Mehlman and Bush-Cheney ’04 (BC ’04) violated the limits, prohibitions and reporting requirements of the Federal Election Campaign Act (the Act).
CREW asked the court to find that the Commission’s dismissal of the allegations in its administrative complaint was based on an impermissible interpretation of the Act and was arbitrary, capricious, an abuse of discretion and contrary to law. 2 U.S.C. §437g(a)(8)(A). CREW asked that the court:
The FEC filed a motion for summary judgment on April 15, 2005, arguing that CREW lacked standing to pursue the action.
In order to have standing, the plaintiff must satisfy three requirements: injury, causation and redressability. The injury standard is met when the plaintiff suffers an actual, not abstract, invasion of a concrete, legally protected interest. Causation is proved when the injury is fairly traceable to the defendant’s action in question. Lastly, it must be likely, not merely speculative, that a favorable court decision will redress the injury.
CREW argued that the FEC should assign a monetary value to the master list and publicly disclose that figure, to facilitate CREW in its mission of “empowering citizens.” In order to have standing, however, the plaintiff must prove it has suffered an injury in fact to its own interests, not simply assert that it would be unable to help others achieve abstract goals. CREW cannot vote, nor does it have any members who participate in the political process. Therefore, the court held that CREW could not have suffered from a lack of information in the voting process.
On November 15, 2005, the U.S. District Court for the District of Columbia granted the FEC’s motion for summary judgment finding that CREW lacked standing to challenge the Commission’s dismissal of its administrative complaint.
On December 13, 2004, CREW filed suit to challenge the FEC’s decision not to pursue further investigation. The FEC filed a motion for summary judgment on April 15, 2005, arguing that CREW lacked standing to pursue the action. The motion was granted by the district court on November 14, 2005.
In order to have standing, the plaintiff must satisfy three requirements: injury, redressability and causation. The injury standard is met when the plaintiff suffers an actual, not abstract, invasion of a concrete, legally protected interest. Redressability is proved when it is likely, not merely speculative, that a favorable court decision will redress the injury. Lastly, when the injury is fairly traceable to the defendant’s action in question, the causation standard is satisfied.
CREW argued that the FEC should have required Bush-Cheney ’04 to assign a precise monetary value to the master list and publicly disclose that figure to help CREW in its mission of “empowering citizens.” In order to have standing, however, the plaintiff must prove it has suffered an injury in fact to its own interests, not simply assert that it would be unable to help others achieve abstract goals. CREW cannot vote, nor does it have any members who participate in the political process. As a result, the appeals court upheld the district court’s conclusion that CREW could not have suffered from a lack of information in the voting process.
Like the district court, the court of appeals also found that CREW was unable to prove standing based on the standards of redressability and causation. CREW complained that the FEC’s failure to require Bush-Cheney ’04 to publicly disclose and report the monetary value of the master list was a violation of the Act. However, the court noted that while the Act requires the FEC to negotiate a conciliation agreement after a “reason to believe” determination and “probable cause,” the Act does not require that disclosure of information be part of the conciliation agreement. Therefore, the Commission is not legally bound to requiring, or the court granting, the disclosure of the information to redress the situation.
To prove causation, the alleged harm must be fairly traceable to the defendant’s action. The court inferred that the alleged harm suffered by CREW was based on the FEC’s decision to dismiss the complaint in order to focus its resources
on more pertinent matters. The court did not find that the FEC violated any legal principle when it dismissed the administrative complaint because the FEC retains prosecutorial discretion and is not expected to bring every administrative complaint to court. In support of its ruling, the court cited Common Cause v. FEC, 108 F.3d 413 (D.C. Cir. 1997). Under circumstances similar to those in CREW’s case, Common Cause was held not to have standing.
On August 11, 2010, Citizens for Responsibility and Ethics in Washington (“CREW”) filed suit against the Commission for declaratory and injunctive relief in the U.S. District Court for the District of Columbia, challenging as contrary to law the Commission’s dismissal of a complaint that was filed by CREW and CREW Executive Director Melanie Sloan. CREW argues that the Commission’s actions were improper because it did not provide a Statement of Reasons or explanation for its dismissal of the complaint. 5 U.S.C. §706 and 2 U.S.C. §437g(a)(8). CREW further requests declaratory and injunctive relief under the Administrative Procedure Act (APA) and the Federal Election Campaign Act (the Act), challenging as arbitrary, capricious and contrary to law the Commission’s alleged failure to provide Statements of Reasons or any other explanation for the dismissal of some administrative complaints within the 60-day period for filing petitions of review. 5 U.S.C. §706 and 2 U.S.C. §437g(a).
On August 1, 2011, the U.S. District Court for the District of Columbia granted the Commission’s motion to dismiss this case.
CREW is a non-profit corporation “committed to ensuring the integrity of government officials and to protecting the right of citizens to be informed about the activities of government officials.” On March 14, 2007, CREW and Ms. Sloan filed a complaint with the Commission against Peace Through Strength Political Action Committee (“PTS PAC”) for violations of the Act. PTS PAC was the political action committee of Rep. Duncan Hunter, who was then a Presidential candidate. The complaint alleged that PTS PAC had knowingly received contributions exceeding the Act’s individual contribution limit for “testing the waters” activities; that PTS PAC had failed to register as a candidate committee; that it had made an excessive in-kind contribution; and that it had failed to report disbursements for certain television ads.
The Commission found reason to believe that PTS PAC had violated the Act, but determined on June 29, 2010, to take no further action and closed the file in the matter. The court complaint states that, “to date, CREW has not seen either the documents related to this case or the FEC’s Statement of Reasons explaining its dismissal of CREW’s complaint,” and that without such documents, “CREW cannot ascertain the basis for the FEC’s dismissal of CREW’s complaint.”
The complaint alleges that “the FEC refrains from issuing Statements of Reasons explaining the bases for its dismissal within the 60-day period for filing a petition for review under 2 U.S.C. §437g(a)(8) with the intent and/or effect of depriving complainants of their statutory right to judicial review and preventing the U.S. District Court for the District of Columbia from ruling on the issue on which the FEC has not been able to reach consensus.”
Chairman Petersen and Commissioners Hunter, McGahn, Walther and Weintraub issued a Statement of Reasons on August 23, 2010.
Under the Act, any person who believes there to have been a violation of the Act may file a sworn complaint with the Commission. Upon receipt of a complaint, the Commission has five days in which to notify the person or persons alleged in the complaint to have violated the Act. 2 U.S.C. §437g(a)(1). Based on the complaint, response and any recommendation of the Commission’s Office of General Counsel, the Commission may then vote on whether there is “reason to believe” a violation of the Act has occurred. If the Commission finds there is “reason to believe” a violation of the Act has occurred, the Commission must notify the respondents of that finding and “make an investigation of such alleged violation.” 2 U.S.C. §437g(a)(2).
After the investigation, the Commission’s General Counsel may recommend that the Commission vote on whether there is “probable cause” to believe that the Act has been violated. 2 U.S.C. §437g(a)(3). If the Commission determines that there is “probable cause,” the Commission must attempt for at least 30 days, but not more than 90 days, to resolve the matter by “informal methods of conference, conciliation and persuasion.” 2 U.S.C. §437g(a)(4)(A)(i). If the Commission is unable to settle the matter through informal methods, it may institute a civil action in the appropriate U.S. District Court. 2 U.S.C. §437g(a)(6)(A).
The Act provides that, if the Commission dismisses a complaint, any “party aggrieved” may seek judicial review of that dismissal in the U.S. District Court for the District of Columbia within 60 days after the date of dismissal. The district court reviewing the Commission’s dismissal of a complaint may declare the Commission’s actions “contrary to law.” 2 U.S.C. §437g(a)(8)(A)-(C).
The complaint asks the court to declare that the FEC’s dismissal of CREW’s complaint without providing a Statement of Reasons is contrary to law; to remand the matter to the FEC with an order to conform to the declaration within 30 days; to declare that the FEC’s alleged pattern of failing to provide a Statement of Reasons or other explanation for dismissing complaints within 60 days of such dismissals is arbitrary, capricious and contrary to law; and to order the FEC to issue a Statement of Reasons or other explanation for dismissing complaints “sufficiently within 60 days of such dismissals so as to permit a complainant to file” a petition for review.
In its memorandum opinion, the District Court noted that CREW must establish its standing to pursue its claim. The court noted that, while CREW had the right to file an administrative complaint with the FEC, that right did not grant them standing to seek judicial review of the disposition of that complaint.
Thus, the court analyzed whether CREW had standing in the case. In its arguments, the Commission contended that CREW failed to establish standing to appeal the dismissal of MUR 5908 under prongs one and three of the test in Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992). The court noted that under the first prong of the Lujan test, “the plaintiff “must have suffered an ‘injury in fact’ – an invasion of a legally protected interest which is(a) concrete and particularized . . and (b) ‘actual or imminent, not “conjectural” or “hypothetical[.]” The court also noted that under the third prong of the Lujan test, “it must be ‘likely,’ as opposed to merely ‘speculative,’ that the injury will be ‘redressed by a favorable decision.’”
The court’s review of the complaints, the General Counsel’s reports and the FEC’s Statement of Reasons led the court to find that CREW failed to suffer an “informational injury” as the amount spent on travel was publicly disclosed in FEC reports. Since the amended complaint filed by CREW demanded amended FEC filings regarding the previously disclosed expenditures, the court found that the Plaintiffs did not have standing to bring their claim for wrongful dismissal of MUR 5908.
Regarding the claim that the Commission failed to timely notify CREW of its dismissal of the case, the court noted that the Act requires that any court challenge be filed within 60 days of the agency’s dismissal, but it does not contain a timeframe in which a complainant must receive notice of the dismissal. In this case, the Commission voted to dismiss the case on June 29, 2010, notified CREW of its decision to close the file by letter dated July 23, 2010 and sent CREW its Statement of Reasons by letter dated August 24, 2010. Because the agency notified CREW of its decision to dismiss the administrative complaint within the 60-day timeframe, the district court found that CREW did not have standing to bring this claim.
On January 21, 2010, the Supreme Court issued a ruling in Citizens United v. Federal Election Commission overruling an earlier decision, Austin v. Michigan State Chamber of Commerce (Austin), that allowed prohibitions on independent expenditures by corporations. The Court also overruled the part of McConnell v. Federal Election Commission that held that corporations could be banned from making electioneering communications. The Court upheld the reporting and disclaimer requirements for independent expenditures and electioneering communications. The Court’s ruling did not affect the ban on corporate contributions.
The Federal Election Campaign Act (the Act) prohibits corporations and labor unions from using their general treasury funds to make electioneering communications or for speech that expressly advocates the election or defeat of a federal candidate. 2 U.S.C. §441b. An electioneering communication is generally defined as "any broadcast, cable or satellite communication" that is "publicly distributed" and refers to a clearly identified federal candidate and is made within 30 days of a primary or 60 days of a general election. 2 U.S.C. §434(f)(3)(A) and 11 CFR 100.29(a)(2).
In January 2008, Citizens United, a non-profit corporation, released a film about then-Senator Hillary Clinton, who was a candidate in the Democratic Party’s 2008 Presidential primary elections. Citizens United wanted to pay cable companies to make the film available for free through video-on-demand, which allows digital cable subscribers to select programming from various menus, including movies. Citizens United planned to make the film available within 30 days of the 2008 primary elections, but feared that the film would be covered by the Act’s ban on corporate-funded electioneering communications that are the functional equivalent of express advocacy, thus subjecting the corporation to civil and criminal penalties. Citizens United sought declaratory and injunctive relief against the Commission in the U.S. District Court for the District of Columbia, arguing that the ban on corporate electioneering communications at 2 U.S.C. §441b was unconstitutional as applied to the film and that disclosure and disclaimer requirements were unconstitutional as applied to the film and the three ads for the movie. The District Court denied Citizens United a preliminary injunction and granted the Commission’s motion for summary judgment. The Supreme Court noted probable jurisdiction in the case.
The Supreme Court found that resolving the question of whether the ban in §441b specifically applied to the film based on the narrow grounds put forth by Citizens United would have the overall effect of chilling political speech central to the First Amendment. Instead, the Court found that, in exercise of its judicial responsibility, it was required to consider the facial validity of the Act’s ban on corporate expenditures and reconsider the continuing effect of the type of speech prohibition which the Court previously upheld in Austin.
The Court noted that §441b’s prohibition on corporate independent expenditures and electioneering communications is a ban on speech and "political speech must prevail against laws that would suppress it, whether by design or inadvertence." Accordingly, laws that burden political speech are subject to "strict scrutiny," which requires the government to prove that the restriction furthers a compelling interest and is narrowly tailored to achieve that interest. According to the Court, prior to Austin there was a line of precedent forbidding speech restrictions based on a speaker’s corporate identity, and after Austin there was a line permitting them. In reconsidering Austin, the Court found that the justifications that supported the restrictions on corporate expenditures are not compelling.
The Court in Austin identified a compelling governmental interest in limiting political speech by corporations by preventing "the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s support for the corporation’s political ideas." However, in the current case the Court found that Austin’s "antidistortion" rationale "interferes with the 'open marketplace of ideas' protected by the First Amendment." According to the Court, "[a]ll speakers, including individuals and the media, use money amassed from the economic marketplace to fund their speech, and the First Amendment protects the resulting speech." The Court held that the First Amendment "prohibits Congress from fining or jailing citizens, or associations of citizens, for simply engaging in political speech." The Court further held that "the rule that political speech cannot be limited based on a speaker’s wealth is a necessary consequence of the premise that the First Amendment generally prohibits the suppression of political speech based on the speaker’s identity."
The Court also rejected an anticorruption rationale as a means of banning independent corporate political speech. In Buckley v. Valeo, the Court found the anti corruption interest to be sufficiently important to allow limits on contributions, but did not extend that reasoning to overall expenditure limits because there was less of a danger that expenditures would be given as a quid pro quo for commitments from that candidate. The Court ultimately held in this case that the anti corruption interest is not sufficient to displace the speech in question from Citizens United and that "independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption."
The Court furthermore disagreed that corporate independent expenditures can be limited because of an interest in protecting dissenting shareholders from being compelled to fund corporate political speech. The Court held that such disagreements may be corrected by shareholders through the procedures of corporate democracy.
Finally, Citizens United also challenged the Act’s disclaimer and disclosure provisions as applied to the film and three ads for the movie. Under the Act, televised electioneering communications must include a disclaimer stating responsibility for the content of the ad. 2 U.S.C. §441d(d)(2). Also, any person who spends more than $10,000 on electioneering communications within a calendar year must file a disclosure statement with the Commission identifying the person making the expenditure, the amount of the expenditure, the election to which the communication was directed and the names of certain contributors. 2 U.S.C. §434(f)(2). The Court held that, although disclaimer and disclosure requirements may burden the ability to speak, they impose no ceiling on campaign activities and do not prevent anyone from speaking. As a result, the disclaimer and disclosure requirements are constitutional as applied to both the broadcast of the film and the ads promoting the film itself, since the ads qualify as electioneering communications.
On December 13, 2007, Citizens United, a nonprofit membership corporation, filed a complaint in the U.S. District Court for the District of Columbia challenging the constitutionality of the statutory provisions governing disclaimers on, and disclosure and funding of, certain "electioneering communications" (ECs).
Citizens United is a nonprofit membership organization registered with the IRS under 26 U.S.C. §501(c)(4). One of Citizens United’s activities is the production and distribution of political films. Citizens United has produced a film entitled "Hillary: The Movie" about Senator Hillary Clinton. Citizens United intends to broadcast television ads promoting "Hillary: The Movie" and wishes to make the film available in theaters, through DVD sales and via home viewing through cable video-on-demand systems.
Citizens United asserts that, since the ads are not subject to the EC corporate funding restriction, it is unconstitutional to require disclosure of the donors who paid for the advertisements or disclaimers on the advertisements. Citizens United also claims that the film itself is constitutionally exempt from the corporate funding restriction under Wisconsin Right to Life v. FEC (WRTL II).
Citizens United asks the court to declare the EC disclosure and disclaimer requirements unconstitutional as applied to Citizens United’s ads and all electioneering communications now permitted by WRTL II. Additionally, the plaintiff requests that the corporate and union EC funding restriction be declared unconstitutional both on its face and as applied to plaintiff’s movie. Citizens United seeks preliminary and permanent injunctions preventing the Commission from enforcing each of these provisions. The plaintiffs also request costs and attorneys fees and any other appropriate relief.
On January 15, 2008, the District Court denied Citizens United’s motion for a preliminary injunction, in which Citizens United requested that the court prevent the FEC from enforcing its electioneering communications provisions.
The district court denied Citizens United’s motion for a preliminary injunction. In order for a court to grant the plaintiff a preliminary injunction, the plaintiff must show 1) that it is likely that the plaintiff will have success when the case is decided on the merits; 2) that the plaintiff will suffer irreparable injury if the injunction is not granted; 3) that an injunction would not substantially injure other parties; and 4) that the injunction would benefit the public interest.
With regard to its claims about the movie itself, the court found that Citizens United had little chance of success on the merits because the movie is susceptible of no reasonable interpretation other than as an appeal to vote against Senator Clinton. Thus, the court held that the movie is the functional equivalent of express advocacy and not entitled to exemption from the ban on corporate funding of electioneering communications.
Regarding the proposed ads, Citizens United argued that the EC disclosure and disclaimer requirements were unconstitutional because the Supreme Court in WRTL so narrowed the constitutionally permissible scope of "electioneering communication" that only communications that are not "susceptible of [a] reasonable interpretation other than as an appeal to vote for or against a specific candidate" can be regulated by Congress. The district court, however, held that the Supreme Court in McConnell v. FEC had found the disclosure requirements constitutional as to all electioneering communications, and WRTL did not disturb this holding because the "only issue in [WRTL] was whether speech that did not constitute the functional equivalent of express advocacy could be banned during the relevant pre-election period." Thus, the district court held that Citizens United had not established the probability that it will prevail on the merits of its arguments against the electioneering communication disclosure and disclaimer provisions.
Given that Citizens United did not show that it was likely to win its arguments on the merits, the district court did not find that the harms Citizens United claimed it would suffer under the disclaimer and disclosure requirements warranted preliminary relief. The court also found that enjoining the enforcement of the electioneering communication provisions at issue would not serve the public interest "in view of the Supreme Court’s determination that the provisions assist the public in making informed decisions, limit the coercive effect of corporate speech, and assist the FEC in enforcing contribution limits." The court denied Citizens United’s request for a preliminary injunction with regard to the reporting and disclaimer provisions.
On March 10, 1997, the U.S. Court of Appeals for the District of Columbia Circuit ruled in the FEC's favor, granting its motion for summary affirmance in this case and denying the motion of John P. Clark and the Green Party USA for emergency summary reversal. The ruling upholds the district court's denial of a motion by Mr. Clark, other individual voters and the Green Party to intervene in a suit brought by the Natural Law Party (NLP) and its presidential and vice-presidential candidates against the FEC and the Commission on Presidential Debates (CPD).
This case stemmed from an October 4, 1996, ruling from this same court that upheld a lower court ruling and dismissed lawsuits filed against the FEC and the CPD by the NLP and the presidential and vice presidential candidates running under the Reform Party banner. Both the NLP and the Reform Party candidates had sought to participate in the presidential debates being sponsored by the CPD. The CPD excluded the candidates-the NLP's Dr. John Hagelin and Mike Tompkins and the Reform Party's H. Ross Perot and Pat Choate-from the debates, saying that the minor party candidates did not meet the criteria for participation.
On September 6, 1996, the NLP filed an administrative complaint with the FEC and, on September 13, filed suit in U.S. District Court for the District of Columbia, contending that the CPD had violated FEC rules governing nonpartisan candidate debates. 11 CFR 113.10. Specifically, the NLP suit asked the court to impose a temporary restraining order and issue preliminary and permanent injunctions to prevent the CPD from using any debate selection criteria that did not comply with FEC rules. In the alternative, it asked the court to order the FEC, prior to the debates, to take action on its administrative complaint.
The Green Party, Mr. Clark and seven other individuals, all independent voters or supporters of the Green Party USA and its 1996 presidential candidate Ralph Nader, filed a motion for intervention on September 27, 1996. The district court found that Mr. Clark and the others "show[ed] their curiosity in the case, but.fail[ed] to demonstrate sufficient grounds for intervention." On September 30, the court therefore denied the motion for intervention. However, it did grant Mr. Clark leave to file a brief as a friend of the court.
On November 22-more than a month after the appeals court had ruled in this case and weeks after the debates and 1996 elections had taken place-Mr. Clark filed a notice of appeal of the district court ruling. Mr. Clark had not participated as a friend of the court in the appeals process, nor in a subsequent and unsuccessful petition from Mr. Hagelin for an expedited rehearing and rehearing en banc.
First, the FEC argued that the appellants had failed to demonstrate a common question of law, a requirement for permissive intervention under Fed. R. Civ. P. 24.1 Among other things, Mr. Clark's complaint claimed that the CPD's debate selection criteria violated unspecified sections of the U.S. Constitution. Mr. Hagelin's complaint, on the other hand, had claimed that the CPD's criteria violated FEC regulations at 11 CFR 110.13. Further, the FEC argued that there were no common "questions of fact," as required by Rule 24(b), between Mr. Clark's and Mr. Hagelin's complaints. In addition, the FEC said that the Clark appellants had not shown an independent jurisdictional basis for their claims. The would-be plaintiffs did not even include a presidential or vice-presidential candidate who might have claimed exclusion from the debates.
Timeliness was also at issue, the FEC argued. Rule 24(b) states that a court must consider "whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties." Because the debates were to begin shortly after the original complaints were filed, the district court set about adjudicating the matter on an expedited schedule, but Mr. Clark's motion was not filed until the last day of the briefing schedule.
Finally, the FEC argued that because the district court granted Mr. Clark the option of filing a brief as a friend of the court, it did not abuse its discretion in denying his initial motion to intervene. The appeals court found that the merits of the parties' positions were so clear that they warranted summary action. It held that the district court did not abuse its discretion in denying the appellants' motion to intervene.
1 Federal Rule of Civil Procedure 24(b) states that would-be intervenors must timely file their applications and demonstrate that their claim or defense and the "main action" have a question of law or fact in common. In addition, they must show an independent jurisdictional basis for their claims.
Source: FEC Record -- May 1997 [PDF].
In a suit filed in 1976, Ramsey Clark, former candidate in the New York State Senate primary election, asked the U.S. District Court of the District of Columbia for declaratory and injunctive relief against those provisions in the Act governing legislative review of the rules, regulations and advisory opinions of the FEC. Under these provisions, regulations proposed by the Commission may not be prescribed until they have been before Congress for 30 legislative days, during which time either house may disapprove them.
Clark argued that the "one-house veto" violated the constitutional principle of "separation of powers." Further, he asserted, regulations would be tainted by congressional influence on the Commission's decision-making process. He also claimed the procedure delayed promulgation of Commission regulations, thereby denying him, as voter and as candidate, protection of the Act.
Intervening as a plaintiff on behalf of the Executive Branch, the Attorney General also requested an injunction against the "one-house veto," arguing that it intrudes "upon those areas reserved by the Constitution of the United States to the Executive Branch.... "
The Federal Election Commission asked the court to dismiss the complaint, arguing inter alia, the case was not ripe for court action since Congress had not disapproved any regulation and the plaintiff had claimed no hardship resulting from compliance with the substance of a proposed regulation.
The district court certified a number of constitutional questions to the court of appeals. Concluding that the matter was not "ripe" for adjudication, the court of appeals, in a 6-2 decision on January 21, 1977, returned the certified questions to the district court unanswered, with instructions to dismiss. The court said that Clark 's case, based on his status as a candidate, became moot when he failed to win the primary in New York. As a voter, Clark had neither protested a specific veto action by Congress nor identified any proposed regulation tainted by the threat of veto or review. With respect to the constitutional issue raised by the one-house veto, the court held the case was "unripe" because congressional disapproval of a proposed regulation had not yet occurred. "Until Congress exercises the one-house veto," the Court said, "it may be difficult to present a case with sufficient concreteness as to standing and ripeness to justify resolution of the pervasive constitutional issue which the one-house veto provision involves."
On June 6, 1977, the Supreme Court of the United States affirmed the lower court's decision.1
Source: FEC Annual Report 1977, p. 19.
Clark v. Valeo, 559 F.2d 642 (D.C. Cir.) (per curiam), aff'd mem. sub nom. Clark v. Kimmit, 431 U.S. 950 (1977).
On May 20, 1996, the U.S. District Court for the District of Maine invalidated the FEC's regulations on voting records and voter guides because they regulate issue advocacy and therefore go beyond the FEC's authority.
On June 6, 1997, the U.S. Court of Appeals for the First Circuit declared invalid two parts of those regulations. The court declared the voting record regulation at 11 CFR 114.4(c)(4) invalid only insofar as the FEC may purport to prohibit mere inquiries to candidates and the voter guide regulation at 11 CFR 114.4(c)(5) invalid only insofar as it limits contact with candidates to written inquiries and replies and imposes an equal space and prominence restriction.
The plaintiffs petitioned the court for a rehearing in this case, but that petition was denied on June 27, 1997. The FEC filed a petition for rehearing and suggestion for rehearing en banc on July 21, 1997.
On February 23, 1998, the Supreme Court denied Maine Right to Life Committee's petition for certiorari in this case.
On April, 30, 1998, on remand from the appeals court, the district court declared the Commission's "electioneering message" provisions of its regulations governing voting guides to be invalid because they were inseverable from those struck down by the appeals court.
The Maine Right to Life Committee (MRLC) is a nonprofit membership corporation established for the purpose of advocating pro-life stances. MRLC uses its corporate funds to create and distribute to its members and the general public voter guides and voting records. Robin Clifton is a Maine voter who wishes to receive this information.
FEC regulations at 11 CFR 114.4(c)(4) and (5) make it illegal for a corporation or labor organization to distribute voting records or voter guides to the general public if such materials expressly advocate the election or defeat of a clearly identified candidate or if the organization consults or coordinates with any candidates concerning the content or distribution of such materials. At 11 CFR 114.4(c)(5)(ii), the FEC lists additional restrictions for voter guides, such as prohibiting a corporate or labor organization from contacting a candidate (except through written questions to which a candidate may respond in writing) and requiring the organization to give all candidates for a particular office an equal opportunity to respond.
MRLC argued that the regulations were too restrictive, exceeding the FEC's statutory power and chilling First Amendment rights. The FEC contended that it had the authority to regulate corporate expenditures for voting records and voter guides if there was coordination with a candidate about the preparation, contents and distribution of such materials.
The court pointed out that the ban on direct corporate contributions had been upheld by the U.S. Supreme Court in Buckley v. Valeo on the grounds that the government's interest in preventing corruption or its appearance outweighs First Amendment concerns. On the other hand, based on the Supreme Court's opinions in Buckley and FEC v. Massachusetts Citizens for Life, Inc. (MCFL), the court said that corporate spending cannot be limited unless it expressly advocates the election or defeat of a particular candidate. "In other words," the court concluded, "spending on issue advocacy... cannot be limited." The question the court addressed was whether a corporation's contact with a candidate when preparing a voter guide or voting record would transform permissible issue-advocacy spending into a prohibited contribution.
To answer the question, the court examined two provisions of the Federal Election Campaign Act (the Act). In §441a, the Act sets dollar limits on contributions, and for this purpose "contribution" is defined to include "expenditures made by any person in cooperation, consultation, or concert, with, or at the request or suggestion of, a candidate, his authorized political committees, or their agents." 2 U.S.C. §441a(a)(7)(B)(i).
The other provision, §441b, prohibits corporate "contributions" and "expenditures," which are defined to include "any direct or indirect payment...or anything of value" provided "to any candidate...in connection with any [federal] election." 2 U.S.C. §441b(b)(2). The district court cited the MCFL Court 's interpretation of Section 441b as prohibiting payments (including indirect payments) made "on behalf of candidates." The district court stated: "That is the statutory and interpretive language on which the FEC's new regulations must be based."
The court said that the FEC, in relying on Section 441a as its authority for the challenged regulations, had "misinterpreted the Supreme Court's teachings." The district court pointed out that, in Buckley, the Supreme Court upheld the dollar limitations on contributions because limits on amounts given to a candidate are not the same as limits on direct political speech. "Here," the district court said, "both the disbursements and the speech are direct political speech by the MRLC, not by the candidate. They are thus at the heart of the [Supreme] Court's First Amendment concerns." (Emphasis in original.)
The court concluded that the FEC had based the challenged regulations on too broad an interpretation of the §441b prohibition on corporate expenditures. The court said that the voter guide regulations mistakenly hinge on whether a corporation has had any contact with a candidate rather than on whether the voter guide conveys issue advocacy on behalf of a candidate (which would be an acceptable interpretation). Under the voting record regulations, MRLC would be in violation of §441b if it included an explanation solicited from a candidate concerning apparent inconsistencies in his or her voting record. The court stated: "...it is a distortion of the English language to say that [such an activity] would turn the MRLC's publication...into spending 'on behalf of' a candidate."
In concluding that the FEC had overstepped its authority in promulgating 11 CFR 114.4(c)(4) and (5), the court pronounced that, "as long as the Supreme Court holds that expenditures for issue advocacy have broad First Amendment protection, the FEC cannot use the mere act of communication between a corporation and a candidate to turn a protected expenditure for issue advocacy into an unprotected contribution to the candidate."
The appeals court found that to avoid First Amendment concerns, it would construe 2 U.S.C. §441b narrowly. Under this construction, both the Commission's restriction on oral contact between MRLC and candidates and its insistence that voter guides provide equal space to candidates were unlawful.
The appeals court found that the FEC's requirement of equal space was a "content-based" restriction because it would affect the content of the MRLC's voting guides. The court said that "[T]here is a strong First Amendment presumption against content-affecting government regulation of private citizen speech, even where the government does not dictate the viewpoint." The court cited a case where the Supreme Court struck down Florida's "right of reply" statute, which guaranteed political candidates equal space to reply to criticism printed in the Miami Herald.1
With regard to the Commission's requirement that contact between corporations and candidates be limited to written communications when such corporations are preparing voter guides, the court said that the regulation treads "heavily upon the right of citizens, individual or corporate, to confer and discuss public matters with their legislative representatives or candidates for such office." The court said that such a ban on communications served as a "handicap" for discourse between legislators-and would-be legislators-and those they wish to represent.2
With respect to both regulations, the court rejected the FEC's argument that such restrictions were justified to prevent illegal corporate contributions to candidates. While the court acknowledged the Commission's legitimate concern with uncovering prohibited contributions, it said that the agency should be able to investigate such impermissible actions through its enforcement proceedings.
The court did not take up MRLC's challenge to the regulation concerning "electioneering message" and instead referred the matter back to the district court. The court concluded that at the district court level there had been inadequate briefing as to the content, purpose and severability of these regulations.
The district court declared the Commission's "electioneering message" provisions of its regulations governing voting guides to be invalid because they are inseverable from those struck down by the appeals court. The sections in question-11 CFR 114.4(c)(5)(ii)(D) and (E)-state that voter guides prepared on the basis of written responses from candidates to questions posed by a corporation or labor organization (1) must not include an "electioneering message" and (2) may not score or rate the candidates' responses in a way that conveys an "electioneering message."
Both the Commission and Clifton agreed that the "electioneering message" provisions were not severable from the portions of the FEC's voter guide regulation that had been declared invalId.
On February 23, 1998, the Supreme Court denied Maine Right to Life Committee's petition for certiorari in this case.
1 Miami Herald Publishing Co.
v. Tornillo, 418 U.S. 241, 256 (1974).
2 In a dissenting opinion, Senior Circuit Judge Hugh H. Bownes wrote that the written-contact-only regulation does not infringe on the First Amendment. Citing Buckley v. Valeo, the judge said that the Supreme Court had acknowledged that some governmental interests outweigh the possibility of constitutional infringement. He wrote: "At this stage of American history, it should be clear to every observer that the disproportionate influence of big money is thwarting our freedom to choose those who govern us. This sad truth becomes more apparent with every election. If preventing this is not a compelling governmental interest, I do not know what is."
On May 8, 2000, the Committee for a Unified Independent Party and other plaintiffs (collectively the Committee) asked the U.S. District Court for the Southern District of New York to find that the FEC's debate regulations are not authorized by the Federal Election Campaign Act (the Act) and violate the First and Fifth Amendments to the Constitution.
The regulations in question, 11 CFR 110.13 and 114.4(f), permit nonprofit corporations to stage candidate debates and to accept donations from corporations and labor unions to defray the costs of those debates. This exemption from the general prohibition against corporate and union contributions and expenditures is based on a statutory provision that permits "nonpartisan activity (by corporations or unions) designed to encourage individuals to vote or to register to vote." 2 U.S.C. §431(9)(B)(ii).
The Committee argued that debates are not "nonpartisan activity designed to encourage individuals to vote or to register to vote" and are therefore not authorized by the Act. Further, even if debates were considered exempt nonpartisan activity, the FEC's regulations unlawfully expand the statutory exemption to permit debates that are neither nonpartisan nor designed to encourage voting. Rather, the debate regulations permit corporations and unions to make prohibited contributions to influence federal elections.
The Committee further contended that the debate regulations "tilt the electoral playing field so as to put minor parties . . . and persons and organizations seeking to promote a democratic multiparty electoral process, at a competitive disadvantage" in violation of the First and Fifth Amendments to the U.S. Constitution.
On October 10, 2001, the court granted the Commission's motion to dismiss this case, finding that the Committee lacked standing to challenge the Commission's debate regulations. In order to have standing to bring a case in federal court, the plaintiffs must satisfy a three-part test. The plaintiffs must:
In this case, the court found that the plaintiffs that were political parties lacked standing because they either were not injured as a result of the regulations or could not trace their injury directly to the regulations. Likewise, the CUIP, an organization interested in sponsoring multilateral debates, could not show an injury that was traceable to the debate regulations. The court also found that the plaintiffs who were individual voters, minor party supporters or former candidates lacked standing to challenge the regulations. Having found that Plaintiffs lacked standing, the court ordered the case closed without considering the merits of Plaintiffs' claims.
On April 30, 1980, the U.S. District Court for the District of Columbia granted summary judgment in two cross motions filed by parties to the suit, Common Cause v. FEC (Civil Action No. 78-2135).
Common Cause had filed its motion for summary judgment in November 1978, requesting that the court rule the FEC had acted contrary to law in failing to take final action on Common Cause's administrative complaint within 90 days of its being filed. 2 U.S.C. §437g(a)(9)(B)(ii). In its complaint, Common Cause had asserted that the American Medical Political Action Committee (AMPAC), the separate segregated fund of the American Medical Association (AMA), and the state political action committees of AMA's state affiliates constituted a single political committee by virtue of their affiliation. 2 U.S.C. §441a(a)(5). Therefore, alleged Common Cause, AMPAC and its affiliated state PACs shared a single contribution limit of $5,000 per candidate, per election. Common Cause's complaint listed numerous instances in the 1976 Congressional elections where the combined contribution of AMPAC and an affiliated state PAC to a candidate had exceeded the $5,000 limit.1
At the time Common Cause filed its motion for summary judgment, the Commission had entered into conciliation agreements only with AMPAC and a few of the state PACs named in the June 1978 complaint. By fall of 1979, however, the Commission had entered into separate agreements with an additional five state PACs; between Fall 1979 and Spring 1980 the Commission entered into agreements with eleven other state PACs and was preparing to enter into 10 additional agreements. The court also noted that in February 1977 the Commission had broadened the scope of its initial investigation to include all of the AMA's state affiliates and their PACs. Moreover, the Commission had begun investigating four additional complaints which also alleged violations of the Act's contribution limits by AMPAC and its affiliated state PACs.
Common Cause nevertheless maintained that the FEC had acted contrary to law in not taking final action on its complaint within 90 days. The FEC, on the other hand, viewed the 90-day provision as jurisdictional, giving the court power to decide after the 90-day period whether or not the Commission had acted contrary to law.2
In addition to supporting the FEC's interpretation of the 90-day provision, the court noted that the determination of whether AMPAC and its state PACs were affiliated (i.e., whether they had been established, financed, maintained or controlled by the same entity) was a factual question requiring proof provided by extensive investigation. Therefore, the court did not find the FEC's efforts to collect further evidence to be an abuse of discretion. Moreover, the court found that the FEC's decision not to investigate combined contributions by state PACs affiliated with AMPAC (in addition to the combined AMPAC-State PAC contributions it had investigated) was not contrary to law since Common Cause had mentioned only one such occurrence among the 69 violations it had cited. The court did, however, order the Commission to either enter into conciliation agreements with the ten remaining respondents named in Common Cause's complaint within 30 days of the court's ruling or bring suit against them. The Commission did enter into conciliation agreements with the remaining respondents, and the court issued an order on June 13, 1980, dismissing the case.
1 While this decision was pending, the court
issued an order on August 10, 1979, directing the Commission to release to
the plaintiff certain internal FEC communications regarding the administrative
enforcement action that had been triggered by Common Cause's complaint. Among
other things, the court ordered the documents to be released under court seal,
and access to them was to be restricted to plaintiff's counsel and to senior
officers of Common Cause. Disclosures to outside parties (including the respondents
in the FEC enforcement action) were prohibited until a further order of the
court. 83 F.R.D. 410 (D.D.C. 1979).
2 In 1979 Congress amended §437g, expanding the period in which the Commission must act on a complaint from 90 days to 120 days.
Source: FEC Record -- August 1980, p. 8.
Common Cause v. FEC, 82 F.R.D. 59 (D.D.C.), 83 F.R.D. 410 (D.D.C. 1979), 489 F. Supp. 738 (D.D.C. 1980).
On June 10, 1983, the U.S. District Court for the District of Columbia approved dismissal of Common Cause's suit against the FEC (Civil Action No. 83-0720). Common Cause requested the dismissal because, on May 23, 1983, the FEC had taken final action on the administrative complaint which had precipitated the suit.
Pursuant to 26 U.S.C. §437g(a)(8)(A), Common Cause had asked the district court to issue an order directing the Commission to take final action, within 30 days, on a complaint Common Cause had filed on September 26, 1980.1 In its administrative complaint, Common Cause had alleged that five political committees had made independent expenditures on behalf of the 1980 Republican Presidential nominee which were in violation of 26 U.S.C. §9012(f).2 (This provision prohibits unauthorized committees from making expenditures exceeding $1,000 to further the election of a publicly funded Presidential nominee.)
Alleging that the committees were not, in fact, independent of the official Reagan campaign, Common Cause had claimed that the committees' activities also resulted in violations of:
1 This complaint was merged with a similar
one filed several months earlier by the Carter-Mondale Reelection Committee
and the Democratic National Committee.
2 On July 15, 1980, the FEC filed suit in the district court against three of the committees named in Common Cause's complaint. The FEC sought the court's declaratory judgment that the committees' proposed expenditures were in violation of 26 U.S.C. §9012(f) and that the provision was constitutional as applied to the committees' expenditures. On August 28, 1981, the court ruled that section 9012(f) was unconstitutional as applied to the defendant committees. On January 19, 1982, the Supreme Court voted 4 to 4 on the issue. While this split vote left the district court decision intact, the Court itself made no ruling on the constitutionality of the provision.
Source: FEC Record -- May 1983, p. 7; and August 1983, p. 8.
On December 31, 1986, the United States District Court for the District of Columbia declared that the FEC's dismissal of an administrative complaint filed in 1980 by Common Cause was, in part, contrary to law. (Civil Action No. 83-2199.) The case was remanded to the FEC for action consistent with the court's opinion.
On March 15, 1988, the U.S. Court of Appeals for the District of Columbia Circuit reversed the decision by the district court. (Common Cause v. FEC, Civil Action No. 87-5036). The appeals court found "entirely permissible" the interpretation of 2 U.S.C. §432(e)(4) that the FEC had applied to allegations contained in Common Cause's complaint. The appeals court also vacated the district court's order remanding the case to the Commission for a statement of reasons concerning the FEC's tie-vote dismissal of an allegation in the complaint and instructed the district court to enter an order dismissing the suit.
The original complaint alleged that five unauthorized political committees, which supported Ronald Reagan's 1980 campaign committee, had violated the Act by using Reagan's name in their respective names. Furthermore, it was alleged that the committees involved in the complaint had impermissibly coordinated their "independent expenditures" with the official Reagan committee and, by doing so, had made contributions which exceeded the committees' limits. The five committees named in the complaint were: Americans for an Effective Presidency (AEP), Americans for Change (AFC), North Carolina Congressional Club1 (NCCC), Fund for a Conservative Majority (FCM) and National Conservative Political Action Committee (NCPAC). After investigating the majority of the claims, the FEC voted to close the file regarding the administrative complaint and take no further action.
In its suit, filed August 1, 1983, Common Cause alleged that the FEC had wrongfully dismissed the complaint.
The first legal issue addressed by the court was Common Cause's allegation that AFC, FCM and NCPAC violated the Act (2 U.S.C. §432(e)(4)) by using the name of a candidate, Ronald Reagan, in their respective committee names. Under the Act, only an authorized committee may use a candidate's name in its name. In this case, the committees involved were not authorized by any candidate. Evidence revealed that each committee had used the name "Reagan" in its respective fundraising project when soliciting funds and otherwise communicating with the public. The FEC argued that, because the official registered names of the committees did not contain Reagan's name and that the use of "Reagan" was merely for the purpose of identifying a particular fundraising project, the Act had not been violated.
In its opinion, the court noted that the name of the committee which is presented to the public for identification constitutes a "name" within the meaning of the Act and, therefore, the decision by the FEC to dismiss the complaint was contrary to law. Further, the court ordered the Commission to conform with its opinion within 30 days, pursuant to 2 U.S.C. §437g(a)(8)(c).
In the original administrative complaint, by a vote of 3-3, the FEC reached no conclusion as to whether there was reason to believe AEP and NCCC had coordinated their expenditures with the official Reagan campaign. (With regard to the other three committees, the Commission did find "reason to believe" and did conduct an investigation. See below.) This decision, which resulted in an automatic dismissal of this portion of the complaint, was contrary to the recommendation made by the FEC's General Counsel. Moreover, the Commission submitted no explanation for its decision.
The court stated that some explanation of the FEC's reasons for dismissing the complaint was warranted to enable the court to review the original determination on the issue. As a result, the court ruled that the FEC's action was arbitrary and capricious and required the agency to provide an explanation for its action within 30 days.
The final issue addressed by the court concerned Common Cause's allegation that the FEC, after investigating expenditures by AFC, FCM and NCPAC, acted contrary to law by dismissing the complaint. In the original complaint, it was alleged that all of the committees had "coordinated" their expenditures with those of the official Reagan campaign and had, thereby, made contributions-rather than independent expenditures. These contributions, according to Common Cause, exceeded the limitations contained in the Act, under 2 U.S.C. §441a(a). (There are no limits on independent expenditures.)
In its suit, Common Cause contended that a determination of coordination should be based on the "totality of circumstances." According to Common Cause, the FEC should have considered circumstances such as interlocking membership of persons at the policy-making level, prior alliances with the official committees and the use of common vendors by the committees. The FEC argued, however, that evidence of "direct coordination" was a necessary prerequisite to a determination of "impermissible coordination," and it found no evidence of direct coordination.
The court concluded that the FEC's interpretation of what constitutes "impermissible coordination" was not contrary to the law. Moreover, the court noted that, absent evidence of express intent or communication, "it is difficult to state exactly what combination of circumstances would prove that coordination had occurred." Therefore, in this issue, the court ruled that the FEC's action was proper.
In reversing the district court's ruling, a three-judge panel of the appeals court affirmed the FEC's interpretation of Section 432(e)(4), that is, that a political committee's "name" refers only to the official or formal name under which the committee must register. The court held that the "sparse legislative history of Section 432(e)(4) shows nothing definitive to undercut the Commission's consistent interpretation of this provision as applying only to the official name of a political committee." The court therefore concluded that, while Common Cause's interpretation of the provision was "not totally implausible," it did not "preclude the Commission's quite plausible alternative. There is, in short, a genuine ambiguity in Section 432(e)(4)'s text."
Further, considering the structure of the statute, the appeals court agreed with the FEC's argument that "name" should be similarly defined in Sections 432(e)(4) and 433(b)(1). (Section 433(b)(1) requires unauthorized committees to register one official name with the FEC.) The court held that these two provisions, along with the Act's disclaimer provision (Section 441d(a)), allowed the Commission "to establish a coherent means by which readers and potential contributors can find out the identity and status of those who are soliciting them."
In dissenting from the majority decision on the "name" issue, Judge Ruth B. Ginsburg argued that "Congress enacted Section 432(e)(4) to avoid public confusion and to increase public awareness of the sources of campaign messages.... Sensibly and purposively construed, the Section 432(e)(4) prohibition covers not only the formal, registered name of a political committee, but also the name the committee actually uses to identify itself in communications with the public purporting to solicit contributions for, or on behalf of, a candidate."
Finally, the appeals court reversed the district court's ruling that the FEC's deadlock vote dismissal of other allegations against two political committees must be remanded for a statement of reasons. The appeals court concluded that its recent ruling in Democratic Congressional Campaign Committee (DCCC) v. FEC (Civil Action No. 86-5661) was applicable to the circumstances of Common Cause's case. In DCCC v. FEC, the court found that the FEC's dismissal of an administrative complaint as the result of a deadlock vote was subject to judicial review. Consequently, the court could require the FEC to supply a statement of reasons for such dismissals.
Nevertheless, the court declined to "apply the precedent retroactively to this case, which arose before our DCCC decision...To do so, in this case at least, would be an exercise in futility and a waste of the Commission's resources." The court added, however, that it would "enforce the DCCC rule with respect to all Commission orders of dismissal based on deadlock votes that are contrary to General Counsel recommendations issued subsequent to our decision in that case."
Source: FEC Record -- February 1987, p. 6; and May 1988, p. 7.
Common Cause v. FEC, 655 F. Supp. 619 (D.D.C. 1986) rev'd, 842 F.2d 436 (D.C. Cir. 1988).
On June 25, 1986, the U.S. District Court for the District of Columbia issued an opinion in Common Cause v. FEC, a suit in which Common Cause challenged the FEC's dismissal of an administrative complaint, which the organization had filed with the Commission in September 1984 (Civil Action No. 85-0968). In remanding the suit to the FEC, the court ordered the agency to provide: (1) an explanation of the legal standard that the agency had used in making its decision to dismiss the complaint and (2) a statement of reasons demonstrating how the FEC had applied this legal standard to the facts before it.
On August 24, 1984, one day after accepting the Republican Party's Presidential nomination, President Reagan addressed a convention of the Veterans of Foreign Wars (the VFW) in Chicago. During his speech, Mr. Reagan did not expressly mention his candidacy; nor did he solicit contributions to his campaign. Since the Reagan administration viewed the Chicago trip as official business, the administration allowed the government to absorb the travel costs and did not report them to the FEC.
On September 20, 1984, Common Cause filed an administrative complaint with the FEC against the Reagan-Bush '84 General Election Committee (the Reagan campaign), President Reagan's principal campaign committee for the 1984 general election. In the complaint, Common Cause alleged that the travel costs related to President Reagan's Chicago speech constituted "qualified campaign expenses" incurred for Mr. Reagan's publicly funded general election campaign.2 Consequently, Common Cause claimed that the Reagan campaign had to: (1) pay for and report the costs of the Chicago trip as "qualified campaign expenses" and (2) reimburse the government for using a government airplane to make the trip. On December 24, 1984, the FEC's General Counsel recommended that the Commission find "reason to believe" that the Reagan campaign and its treasurer had violated provisions of the election law and public funding statutes by failing to report these expenses. On January 15, 1985, however, the Commission decided, by a four to two vote, to find "no reason to believe" the Reagan campaign and its treasurer had violated federal election laws. Consistent with past practice, the Commission did not issue a formal statement of reasons for its decision to dismiss Common Cause's administrative complaint.
On March 22, 1985, Common Cause challenged the FEC's dismissal decision by filing suit against the Commission with the district court. In its suit, Common Cause asked the court to declare that the FEC's dismissal of its administrative complaint was contrary to law and to order the agency to act on the allegations in its complaint.
In arguing that the FEC's dismissal was contrary to law, Common Cause said that, in determining whether President Reagan's Chicago trip was campaign related, the Commission should have considered the "totality of circumstances" surrounding his Chicago speech rather than using a narrower review standard, which focused solely on: (1) whether President Reagan's speech expressly advocated his reelection and (2) whether he solicited contributions in conjunction with his speech.
Although accepting the legal standard which the parties agreed had been applied by the FEC in its dismissal of Common Cause's complaint, the court observed that it still had to "determine whether the agency has presented a rational basis for its decision." In this regard, the court noted that "the record before us prevents that threshold determination." The court therefore remanded the case to the FEC "both for an explanation of the legal standard actually applied and...a statement of reasons demonstrating how the Commission applied such legal standards to the facts before it."
In response to the court's second remand order, Commissioners Joan D. Aikens and John W. McGarry submitted a joint statement of reasons, while Commissioner Lee Ann Elliott submitted a separate statement. The fourth dissenting Commissioner in the case, Frank P. Reiche, did not submit a statement of reasons because he left the Commission in April 1985.
On July 15, 1988, the three Commissioners submitted the statements to the court and to Common Cause. While the Commissioners all agreed that President Reagan's speech before the V.F.W.'s annual convention was not campaign related, they were not in unanimous accord concerning the standard that should have been applied to reach this determination. Commissioners Joan D. Aikens and John W. McGarry concluded that they had applied a "totality of circumstances" standard. On the other hand, Commissioner Elliott concluded that, in the case of an officeholder, the "two-pronged" test was appropriate.
The Commissioners stated their views that, in determining whether an officeholder's speech was campaign related, the Commission "has consistently applied a 'totality of circumstances' test, involving examination of external factors." While they agreed that an examination of the elements of the "two-pronged" test was a necessary first step, they maintained that they had to "look further to the timing, the setting and the purpose of the event as integral components of the 'totality of circumstances' test and as necessary to the ultimate determination that certain activity is or is not campaign-related." Citing agency precedents, the Commissioners stated that their use of the "totality of circumstances" standard was "totally consistent with the approach recommended by the General Counsel in his Report...and adopted by the Commission in many advisory opinions."3
Based on these standards, the Commissioners concluded that President Reagan's speech was made in performance of his official duties, rather than to further his reelection. The speech did not expressly advocate President Reagan's election or solicit contributions to his campaign. Nor did the timing, setting or purpose of the President's speech support the complainant's allegations that the speech was campaign related.
With regard to the timing of the speech, the Commissioners noted that the V.F.W. convention was an annual event and that the invitation to attend it had been extended to President Reagan six months before the Republican National Convention. They concluded, "To argue that the timing of this appearance makes it a campaign event would mean that no incumbent President could make an official appearance to perform officeholder duties after the renomination."
In explaining her view that the Commission should apply only the "two-pronged" test to determine whether President Reagan's speech was campaign-related, Commissioner Elliott stated that "an officeholder's speech will be considered campaign-related if it expressly advocates the election or defeat of a clearly identified candidate or solicits contributions on behalf of a federal candidate. This 'two-pronged' test is sensible and workable Commission precedent and has repeatedly been held a permissible construction of the Act. Further, the 'two-pronged' test avoids subjective or imponderable considerations when evaluating an officeholder's speech."
Commissioner Elliott cited as precedent for the test the Supreme Court's decision in Buckley v. Valeo, as well as a series of other federal court cases and FEC actions, including Commission advisory opinions.4 The Commissioner noted that "the reasonableness of this policy is enhanced when viewed against 11 years of even-handed application."
Commissioner Elliott concluded that the totality of circumstances approach "is really not applicable for officeholders. Its objective elements are already part of the 'two-pronged' test's legal inquiry into 'express advocacy' and its subjective elements are too vaporous upon which to rest a legal conclusion."
Finally, the Commissioner stated that the "totality of circumstances" test could not be appropriately applied to the Reagan speech. In the past, the Commissioner explained, this test had been applied only to (1) nonincumbent candidates, (2) officeholders who were engaging in activities that were not normally part of their duties and (3) officeholders who were invited to make appearances as candidates, rather than in their official capacities. Commissioner Elliott therefore concluded that "following Counsel's recommendation in this case would not have been following Commission precedent."
Commissioner Elliott found that, based on the "two-pronged" test, President Reagan had not made a campaign-related speech at the convention. "I concluded that the speech [did] not advocate the re-election of the President or the defeat of his opponent...His appearance was that of a head-of-state and his remarks were on issues of importance to America 's veterans."
On September 27, 1988, the U.S. District Court for the District of Columbia issued a joint stipulation of dismissal in which Common Cause and the FEC agreed to the dismissal, with prejudice, of the suit.
In the joint stipulation of dismissal, Common Cause did not abandon its position that the FEC's action on the administrative complaint was contrary to law. Nor did the FEC abandon its position that its dismissal of the complaint was reasonable.
1 See also Antosh
v. FEC (85-1410).
2 FEC regulations define "qualified campaign expenses" as those expenditures made during the reporting period to further the general election campaign of a publicly funded Presidential candidate. See 11 CFR 9002.11.
3 For example, the Commissioners cited as precedent Advisory Opinions 1977-42, 1977-54, 1978-4, 1978-15, 1980-16, 1980-22, 1981-37, 1982-15, 1982-56 and 1984-13.
4 For example, the Commissioner cited as precedent Buckley v. Valeo, 424 U.S. 1, 84 n. 112 (1976) and Advisory Opinions 1977-42, 1977-54, 1978-4, 1979-25, 1980-16, 1980-22, 1980-89 and 1981-37.
Source: FEC Record -- August 1986, p. 6; and October 1988, p. 7.
On June 19, 1990, the U.S. Court of Appeals for the District of Columbia Circuit reversed a district court decision by ruling that the FEC did not adequately analyze an affiliation issue in its dismissal of an administrative complaint filed by Common Cause. (Civil Action No. 89-5231.) The court remanded the case to the district court with instructions to return the matter to the FEC for reconsideration consistent with the appeals court ruling.
Common Cause filed an administrative complaint with the FEC alleging that the Republican National Independent Expenditure Committee (RNIEC) and the National Republican Senatorial Committee (NRSC) were affiliated committees and that RNIEC's expenditures on behalf of then-Senator Dan Evans' 1984 reelection campaign were coordinated with NRSC. As a result, Common Cause contended, contributions made by the two committees on behalf of Mr. Evans exceeded the contribution limits of 2 U.S.C. §441a. The Commission found no probable cause to believe that a violation of the Federal Election Campaign Act had occurred.
After the Commission dismissed the administrative complaint, Common Cause filed suit in 1985 with the U.S. District Court for the District of Columbia. (Civil Action No. 85-1130). Common Cause asked the court to find that RNIEC and NRSC were affiliated committees, or that they had coordinated their expenditures on behalf of Senator Evans. (Either finding would have resulted in excessive contributions by NRSC.)
In its decision of May 30, 1989, the court found that the Commission's dismissal of Common Cause's principal allegations-affiliation and coordination between RNIEC and NRSC-was reasonable. The court did remand one issue from the original complaint-that of affiliation between RNIEC and the Republican National Committee-back to the FEC for further consideration, finding that the Commission had not addressed that allegation in dismissing the administrative complaint.
In its per curiam opinion, the appeals court noted the deference accorded by the courts to FEC decisions. However, in considering the General Counsel's brief recommending the "no probable cause to believe" finding adopted by the Commission, the court found that "the brief lacks any discussion of the affiliation issue that is independent of the analysis of the separate coordination issue."
Common Cause's affiliation claim was based on three facts: (1) Mr. Rodney Smith served as the financial director and treasurer of NRSC until two months before he co-founded and became treasurer of RNIEC; (2) Senator John Heinz continued to be a member of NRSC a short time after he co-founded and joined the advisory panel of RNIEC; and (3) there was a substantial overlap in contributors to the two committees, the result of RNIEC's use of NRSC's mailing list.
Section 441a(a)(5) of the Act defines affiliated committees as those that are "established or financed or maintained or controlled" by the same person or group. Commission regulations then in effect listed several indicia of affiliation at 11 CFR 100.5(g)(2)(ii)(A)-(E). (Current FEC rules provide revised indicia at 11 CFR 100.5(g)(4)(ii)(A)-(J).) The court stated that the General Counsel's brief made no attempt to tie the relevant indicia of affiliation to the facts of the case. As a result, there was no indication that the agency had considered one pertinent indicium of affiliation: whether Mr. Smith or Senator Heinz had the ability to influence the decisions of both committees. 11 CFR 100.5(g)(2)(ii)(C) (since revised at 100.5(g)(4)(ii)(B)).
Another indicium set out in the rules is whether two committees show a similar pattern of contributions. 11 CFR 100.5(g)(2)(ii)(D) (since revised at 100.5(g)(4)(ii)(J)). The General Counsel's brief did not specifically refer to this indicium. The appeals court found this issue "less troubling" since the brief considered possible affiliation resulting from RNIEC's use of RNSC's contributor list but went on to explain that this implication was rebutted by the committees' dispute over the ownership of the list.
In conclusion the court stated: "Based upon the General Counsel's brief to the Commission, it is impossible to discern whether the FEC applied the applicable statute and regulation to the claim that the NRSC and the RNIEC were affiliated." The court therefore reversed the judgment of the district court on the affiliation issue and remanded the case with instructions for the FEC to reconsider the issue based on the court's decision.
Source: FEC Record -- August 1990, p. 11.
Common Cause v. FEC, 715 F. Supp. 398 (D.D.C. 1989) rev'd, 906 F.2d 705 (D.C. Cir. 1990).
On August 3, 1987, the U.S. District Court for the District of Columbia issued an order which granted the FEC's motion for summary judgment on all issues in this case except one: the allocation, between the federal and nonfederal accounts of state party committees, of expenses of certain specified activities (e.g., voter registration, "get out the vote" efforts, and campaign materials used in connection with volunteer activities). (Common Cause v. FEC, Civil Action No. 86-1838.) For reconsideration of that issue, the court remanded to the FEC Common Cause's petition for rulemaking concerning the use of "soft money" in federal elections.1
On August 25, 1988, the U.S. District Court for the District of Columbia decided to hold in abeyance Common Cause's motion to enforce the district court's previous order that the FEC promulgate rules on "soft money." Instead, the court retained jurisdiction in the case and ordered the FEC to submit, at 90-day intervals, concise reports on the agency's progress toward promulgating the rules.
Common Cause filed its petition for rulemaking on November 7, 1984. The FEC published a notice of availability in the Federal Register, sent copies of the petition to a number of organizations and received five comments. On December 5, 1985, the FEC's General Counsel recommended that the Commission seek information and comments on "soft money" issues. The FEC then scheduled two days of public hearings, published a notice of inquiry on the matter in the Federal Register, sent the notice to 77 organizations and considered the 15 comments it received in response. The Commission also received testimony from Common Cause, the Center for Responsive Politics and the Republican National Committee. On April 29, 1986, the FEC denied Common Cause's petition for rulemaking (see 51 Fed. Reg. 15915).
On June 30, 1986, Common Cause filed this court action pursuant to the Administrative Protection Act, 5 U.S.C. §706, which provides that agency action that is "not in accordance with the law" must be set aside by the reviewing court.
In its motion for summary judgment, Common Cause argued that the FEC:
The court noted that, in 1979, Congress amended the Act to permit state and local party committees to spend money in federal elections for voter registration, "get out the vote" activities, and campaign materials used in connection with volunteer activities. 2 U.S.C.§§431(8)(B)(x), 431(8)(B)(xii), 431(9)(B)(viii) and 431(9)(B)(ix). Under the Act, only monies that are subject to the provisions of the Act may be used for these activities. 2 U.S.C.§§431(8)(B)(x)(2), 431(8)(B)(xii)(2), 431(9)(B)(viii)(2) and 431(9)(B)(ix)(2). Under the Commission's regulations at 11 CFR 102.5 and 106.1, when financing these political activities in connection with both federal and nonfederal elections, state and local party committees may spend money from both their federal and nonfederal accounts, allocating "on a reasonable basis."
In reviewing the FEC's denial of the rulemaking petition, the court rejected plaintiffs' argument that the FEC improperly considered intent as a requisite element. The court found that the question of intent was not crucial or even relevant in the FEC's denial of the rulemaking. Instead, the court said, the FEC had found that there was inadequate evidence to conclude that any "soft money" had been used in the ways Common Cause alleged in its petition.
The court also rejected Common Cause's contention that no allocation method is permissible under the Act, noting that "the FECA regulates federal elections only," and that "Congress would have had to have spoken much more clearly in the amendments at issue to contradict" this limit on the FECA's reach. The court further noted that "the plain meaning of the Act is that any improper allocation of nonfederal funds by a state committee would be a violation of the FECA."
The court maintained, however, that the Commission's regulations provide "no guidance whatsoever on what allocation methods a state or local party committee may use," and thus found that a revision of the Commission's regulations was warranted with respect to this one issue and remanded the matter to the Commission.
Finally, the court found that it was not arbitrary and capricious for the Commission to decline to initiate a rulemaking based on the evidence before it, except with respect to the allocation issue discussed above. The court observed, "The Commission opened its doors to comments from each of the fifty state election finance agencies, as well as both major parties and various other groups interested in the issue of campaign financing. Only fifteen responses were received, some of which adamantly stated that there were no abuses of the type alleged by Common Cause. Indeed, there was testimony that some of the anecdotes submitted by Common Cause were factually erroneous." In conclusion, the court granted the FEC's motion for summary judgment affirming its decision to deny the rulemaking petition with respect to all issues except that of allocation.
In petitioning the district court to enforce its order of August 1987, Common Cause asked the court to impose a timetable on the FEC which would require the agency to:
The FEC argued that it had begun to respond to the court's 1987 order by publishing a Notice of Inquiry in the Federal Register that sought comments on its proposed rulemaking. The FEC pointed out that the election law had established no timetable for rulemakings. Furthermore, under the law, Common Cause could file a documented administrative complaint to remedy any alleged abuses of the allocation rules. Additionally, the FEC argued that its delay (of seven months) did not approach the three-and five-year agency delays that courts have found to be reasonable. Finally, the agency cited demands on the FEC's resources during a Presidential election year.
The court concluded that "Common Cause ha[d] not shown that the Commission's delay thus far warrant[ed] the intrusive relief sought by the plaintiffs." Nevertheless, the court ruled that the FEC should submit a report to the court every 90 days on its progress toward promulgating the rules.
1 In its complaint, Common Cause defined the term "soft money" as "funds from sources prohibited under the FECA that are given to political committees and party organizations ostensibly for use at the state and local level, but which are actually used in connection with and to influence federal elections in violation of the FECA."
Source: FEC Record -- September 1987, p. 6; and October 1988, p. 6.
Common Cause v. FEC, 692 F. Supp. 1391 (D.D.C. 1987); 692 F. Supp. 1397 (D.D.C. 1988).
The U.S. District Court for the District of Columbia granted the FEC's motion to dismiss Common Cause's suit and to dissolve a protective order that had placed court documents under seal. In its order of January 11, 1989, the court noted that Common Cause did not oppose the FEC's motion.
In its suit, filed August 12, 1987, Common Cause asked the court to declare that the FEC failed to take action within the required 120-day period on an administrative complaint Common Cause had filed with the Commission on October 28, 1986. Common Cause further asked the court to direct the FEC to take action within 30 days, pursuant to 2 U.S.C. §437g(a)(8). Civil Action No. 87-2224. Common Cause had alleged in its administrative complaint that the National Republican Senatorial Committee had made excessive contributions to several candidates, a violation of 2 U.S.C. §441a(h).
The Commission asked the court to dismiss Common Cause's suit because the agency had taken final action on the administrative complaint, thus rendering the litigation moot. On December 23, 1988, the Commission had voted to enter into a conciliation agreement with the National Republican Senatorial Committee and had then closed the file. Citing other "failure to act" cases filed against the agency pursuant to 2 U.S.C. §437g(a)(8), the FEC pointed out that the courts have granted similar dismissals once the agency has taken final action.
The FEC had originally requested that the court impose a seal on documents filed in the case that related to the administrative complaint, which was pending at the time and therefore subject to the confidentiality provision of 2 U.S.C. §437g(a)(12). That provision prohibits the agency from making public any information on administrative complaints until the case is resolved. The court imposed a protective seal on October 2, 1987.
Under another provision, however, the Commission must release to the public the results of its inquiries once an enforcement matter is resolved. 2 U.S.C. §437g(a)(4)(B)(i). In its motion to lift the protective seal, the FEC stated that the confidentiality requirements of 437g(a)(12) no longer applied since the agency had since closed the file on the case.
Source: FEC Record -- March 1989, p. 3.
Common Cause v. FEC, No. 87-2224 (D.D.C. Feb. 8, 1988) (memorandum and order), dismissed as moot, (D.D.C. 1989) (unpublished order).
On June 12, 1992, the U.S. Court of Appeals for the District of Columbia Circuit reversed the district court's judgment. The district court had ruled that the National Republican Senatorial Committee (NRSC) had exceeded the contribution limits through its exercise of "direction or control" over earmarked contributions. The court of appeals, however, found that the district court had erred in a previous decision. In that case, Common Cause v. FEC, the district court had ordered the FEC to conform to the court's own interpretation of "direction or control."
If a committee, in soliciting earmarked contributions to be passed on to a candidate, exercises "direction or control" over the contributor's choice of the recipient candidate, the contribution counts against both the contributor's limit and the committee's limit. 11 CFR 110.6(d)(2).
In an administrative complaint filed with the Commission (Matter Under Review (MUR) 2282), Common Cause alleged that NRSC had exercised direction or control over the earmarked contributions it had solicited for twelve Senate candidates. As a result, Common Cause claimed, the contributions counted against NRSC's limits for the candidates and caused NRSC to exceed the contribution limits.
NRSC's October 1986 solicitation letter asked readers to support Republican Senate candidates running in four states, without mentioning the names of the candidates. The letter noted that contributions would be divided equally among the four candidates. Various combinations of the four states appeared in different versions of the letter; twelve states were covered in all. Checks were payable to NRSC or an NRSC-controlled fund. The mailing resulted in $2.3 million in contributions. The NRSC deposited the checks in its own accounts, aggregated the contributions to the specified candidates and forwarded the contributions to the candidates in checks drawn on its accounts.
The FEC's General Counsel recommended, inter alia, that the agency find probable cause to believe that NRSC had exceeded the contribution limits by exercising direction or control over the choice of recipient candidates. The Commission, in a 3-3 vote, deadlocked with respect to this allegation and therefore took no action. Commissioner Thomas J. Josefiak (who has since left the Commission), joined by Commissioners Aikens and Elliott, issued a statement of reasons supporting their votes against a probable cause finding.
The Commission did find probable cause to believe that NRSC had committed other violations, and the MUR was resolved through a December 1988 conciliation agreement in which NRSC agreed to pay a $20,000 civil penalty. The MUR was then closed.
Common Cause asked the court to compel the FEC to act on the "direction or control" allegation. On January 24, 1990, the district court found that the FEC's dismissal of the allegation was contrary to law. Ruling that NRSC had exercised direction or control, the court ordered the agency to proceed on that basis. In compliance with the order, the Commission reopened MUR 2282 and found probable cause. When it failed to reach a conciliation agreement with NRSC on the matter of direction or control, the agency filed suit.
The new suit was assigned by lot to the same district judge. On April 9, 1991, the district court granted the FEC's motion for summary judgment, ruling that the NRSC had exceeded the contribution limits by exercising direction or control over earmarked contributions. The court imposed a $24,000 penalty.
In addressing the central issue-the interpretation of direction or control-the court cited its decision in Democratic Congressional Campaign Committee (DCCC) v. FEC. In that opinion, the court held that, when the FEC dismisses a complaint due to a 3-3 deadlock, the action is subject to judicial review, and the three Commissioners who voted to dismiss must provide a statement of reasons for their vote. The NRSC court noted the purpose of this requirement: "Since those Commissioners constitute a controlling group for purposes of the decision, their rationale necessarily states the agency's reasons for acting as it did." A footnote to the DCCC opinion "strongly suggests that, if the meaning of the statute is not clear, a reviewing court should accord deference to the Commission's rationale."
In the present case, the court pointed out that the three Commissioners who had voted against probable cause in MUR 2282 voted in favor of reopening the enforcement proceedings only because they felt they "were obligated to follow the [district] court's order."1
The court of appeals found that Commissioner Josefiak's Statement of Reasons in MUR 2282, joined by two other Commissioners, should have been sustained in Common Cause v. FEC.2 The court observed that Commissioner Josefiak's statement "identified the two main factors the Commission's General Counsel, and later the district court, invoked to support a finding of direction or control, and pointed out the present inadequacy of each."
The first factor was that NRSC deposited the earmarked contributions in its accounts before forwarding them to the candidates. Noting that FEC regulations permit a conduit committee to deposit earmarked contributions, the court stated: "Nothing has been offered to reveal why engaging in a Commission-approved practice should cause one to run afoul of other Commission rules."
The second factor was that NRSC "controlled" the choice of candidates by selecting the candidates for whom contributions were solicited and by further selecting the four states mentioned in each fundraising letter. The court, however, observed: "Every solicitation 'pre-selects' candidates to some degree. It is fanciful to suppose that national political committees of any party would expend their resources merely to urge individuals to contribute to the candidate of their choice."
To find "direction or control" on the basis of these two factors, the court said, "would throw into doubt whether any solicitation of any earmarked contribution would be exempt from the 'double-counting' requirements of §110.6(d)(2)." However, the court concluded that it was not required to decide if that would be a permissible construction: "It is enough to say that the Commission has not affirmatively adopted such a construction and that it has provided, through the statement of Commissioner Josefiak, joined by two others, a reasoned justification for not doing so." Ruling that "[i]t was an error for the district court to force a different construction upon the Commission," the court reversed the district court judgment.
1 Statement of Reasons of Commissioners Aikens,
Elliott and Josefiak, MUR 2282, December 10, 1990.
2 Statement of Reasons of Commissioner Josefiak, MUR 2282, January 30, 1989; Concurrence, February 24, 1989.
Source: FEC Record -- August 1992, p. 11.
Common Cause v. FEC, 729 F. Supp. 148 (D.D.C. 1990).
FEC v. National Republican Senatorial Committee, 2 Fed. Elec. Camp. Fin. Guide (CCH) ¶9302 (D.D.C. 1991), ¶9316 (D.C. Cir. 1992).
As stipulated by both parties, the U.S. District Court for the District of Columbia dismissed this case with prejudice on July 31, 1992, without ruling on the issues. The FEC and Common Cause stipulated the dismissal in light of the recent court of appeals decision in FEC v. National Republican Senatorial Committee (NRSC). (See Common Cause v. FEC (89-0524).)
Common Cause had challenged the FEC's dismissal of a complaint alleging that the NRSC had exceeded the contribution limits by exercising "direction or control" over earmarked contributions raised in a 1990 fundraising program. See 11 CFR 110.6(d)(2). However, in the NRSC case, decided on June 12, 1992, the U.S. Court of Appeals for the District of Columbia Circuit held that the NRSC had not exercised direction or control in a somewhat similar fundraising program that took place in 1986.
Source: FEC Record -- October 1992, p. 11.
On March 3, 1993, the U.S. District Court for the District of Columbia dismissed this suit by agreement of both parties. Common Cause had asked the court to order the FEC to take action on an administrative complaint but agreed to drop its claim because the agency had completed the investigation and entered into conciliation agreements with the respondents. In its administrative complaint, Common Cause had alleged that seven individuals had each exceeded the $25,000 annual limit on aggregate federal contributions.
Source: FEC Record -- April 1993, p. 10.
On March 30, 1993, the U.S. District Court for the District of Columbia approved an agreement between Common Cause and the FEC to suspend this litigation. In light of that agreement, the court dismissed the suit.
In its suit, Common Cause claimed that the FEC had failed to take required action on its administrative complaint filed in December 1990. The complaint alleged that the National Republican Senatorial Committee (NRSC) had made excessive contributions and expenditures in connection with the 1988 Montana Senate race and had failed to report them accurately. The complaint also alleged that the Montana Republican Party had violated the law by participating in the NRSC's alleged violations.
Common Cause and the FEC agreed to suspend litigation for six months, at the end of which time the FEC was to report on its efforts to resolve the complaint. Under the court's dismissal order, if Common Cause was not satisfied with the Commission's actions on the complaint, the parties would have until October 30 to reopen the litigation.1
Source: FEC Record -- August 1993, p. 5.
On March 29, 1996, the U.S. District Court for the District of Columbia ordered the Commission to reconsider portions of two administrative complaints that had been dismissed. Both had been filed in 1990 by Common Cause and John K. Addy.
On March 21, 1997, the U.S. Court of Appeals for the District of Columbia Circuit found that Common Cause lacked standing to litigate certain claims against the Commission, and the court therefore dismissed those claims.
The administrative complaints, designated Matters Under Review (MURs) 3087 and 3204, alleged that the National Republican Senatorial Committee (NRSC) and the Montana Republican Party (MRP) had exceeded their contribution and expenditure limits with respect to Conrad Burns's 1988 U.S. Senate campaign and had failed to disclose all the contributions and expenditures that they had made on behalf of the candidate.
Under the Act: the MRP's contribution limit for the Burns campaign was $5,000 (2 U.S.C. §441a(a)(2)(A)); the NRSC's contribution limit for the Burns campaign was $17,500 (2 U.S.C. §441a(h)); and the NRSC's 1988 coordinated-party-expenditure limit for the Burns campaign was $92,200 (2 U.S.C. §441a(d)).
The FEC's Office of General Counsel investigated the matters alleged in the complaints and found evidence that both committees had erroneously reported certain transactions as transfers, administrative costs or exempt volunteer activities when in fact they were contributions and expenditures made in excess of the Act's limits. Based on this evidence, the General Counsel recommended that the six-member Commission find probable cause to believe that:
At least four of the six FEC Commissioners must approve of an action before the FEC can execute it. Fewer than four FEC Commissioners voted to accept the General Counsel's recommendations. After further deliberations failed to yield a compromise, five of the Commissioners voted to close this case without taking any action. Subsequent to having their administrative complaints dismissed, Common Cause and Mr. Addy filed suit.
The court stated that it could only order the FEC to reconsider its dismissal of these MURs if it found that the dismissal was arbitrary or capricious or an abuse of discretion. The court reviewed the reasons for the Commissioners' actions, as articulated in their "statement of reasons." The court found that Commissioners on both sides of most of the issues involved in these MURs presented well reasoned explanations for their differing interpretations of federal election law; the court let the Commission's dismissal of these issues stand. The court, however, did not accept the Commission's reasons for dismissing the following issues.
MRP payments to mailing vendor. Both the NRSC and the MRP had argued that payments for a direct mailing that promoted Mr. Burns's candidacy were not contributions or expenditures on the candidate's behalf. The MRP had argued that these payments fell under the volunteer activities exemption at 2 U.S.C. §431(8)(B)(x) and were therefore not contributions. The court noted that this exemption only applied when the purchased materials were distributed by volunteers and not by commercial vendors. 11 CFR 100.7(b)(15)(iv) and 100.8(b)(16)(iv). The Commissioners who voted against finding probable cause assumed that the MRP used volunteers to distribute these materials, but the MRP never produced any documentation that showed that volunteers were used. The court therefore ordered the FEC to reconsider its dismissal of this charge.
MRP salary payments to Burns campaign worker. MRP employee Ken Knudson was paid a salary by the MRP while he was extensively involved in managing and staffing the Burns campaign. The FEC's General Counsel had determined that the MRP's salary payments to Mr. Knudson constituted contributions to the Burns campaign. The Commissioners who disagreed with this determination reasoned that payments made to field staff who perform a variety of functions for a variety of persons need not be attributed to any one candidate. They based this reasoning on MUR 3218. The court noted, however, that MUR 3218 states that such salary payments would not constitute a contribution to a candidate's campaign "absent evidence that [a committee's] field staff [were] extensively involved in managing or staffing [a] particular campaign on an ongoing basis . . . ." Since this was precisely what Mr. Knudson had been doing for the Burns campaign, the court found the dismissal of this charge to be arbitrary and capricious and ordered the FEC to reconsider this issue.
Solicitation costs for earmarked contributions. All of the Commissioners agreed that the NRSC had made a contribution to the Burns campaign when it incurred costs associated with the mailing of a letter that encouraged contributors to earmark their contributions to the Burns campaign, among other Republican campaigns. 11 CFR 106.1(c)(1). However, despite this consensus, the Commission failed to take action on this issue because the Commissioners who originally accepted the General Counsel's probable-cause-to-believe finding refused to separate this issue from the less-clear-cut issue of whether the NRSC had exercised direction and control over these earmarked contributions. In their statement of reasons, these Commissioners explained that they were reluctant to separate these issues because doing so would imply that they rejected the General Counsel's direction-and-control analysis. The court noted that the General Counsel's report made separate recommendations with regard to the direction-and-control issue and the solicitation-costs issue. Therefore, the court reasoned, approving one recommendation did not imply rejecting the other. Based on this reasoning, the court found the Commission's dismissal of the solicitation-costs issue to be arbitrary and capricious. The court ordered the FEC to reconsider its dismissal of this issue.
The appeals court rejected all three of Common Cause's theories as to why it had standing to litigate the remaining claims.
In order to show standing, a plaintiff must have suffered an injury in fact, or an actual wrong against a legally protected interest, that is traceable to the challenged act and is likely to be redressed by a favorable decision from a court. Organizations may have standing to sue in order to vindicate the rights and immunities it enjoys or, under certain conditions, on behalf of its members. When an organization sues on its own behalf, it must show a concrete injury to its activities with a resulting drain on its resources in order to attain standing. In the case of an organization suing on behalf of its members, the organization must show that its members would otherwise have standing to sue in their own right, that the interests it seeks to protect are germane to the organization's purpose and that neither the claim asserted nor the relief requested requires individual members to participate in the lawsuit.
On July 1, 1980, Common Cause filed suit against Americans for Change and several of its officers in the U.S. District Court for the District of Columbia . Common Cause alleged that defendants had made (or were about to make) independent and coordinated expenditures in violation of 26 U.S.C. §9012(f), which prohibits unauthorized political committees from making expenditures of more than $1,000 on behalf of a publicly funded Presidential candidate. Common Cause asked the court to uphold the constitutionality of Section 9012(f) as applied to defendants' alleged expenditures.
On July 11, the Commission was allowed to intervene in the Common Cause suit and moved to dismiss the action on the grounds that the Commission had exclusive jurisdiction over civil enforcement of the alleged violations and that Common Cause lacked standing to bring suit. Four days later, the Commission filed suit, alleging that the defendant political committees (which claimed to be independent of candidate Reagan's campaign) planned to spend large sums in support of the Republican Presidential candidate's general election campaign. The FEC also asked the court to uphold the constitutionality of 9012(f) as applied to defendants' expenditures. On September 24, 1980, the district court consolidated the two suits for argument before the court.
In the motion it filed for summary judgment, the FEC rejected the defendants' argument that the Supreme Court's decision in Buckley v. Valeo invalidated Section 9012(f). The FEC pointed out that the constitutional protection accorded political communications is not the same in every context. Citing the Supreme Court's rulings on the public funding program in Buckley v. Valeo (424 U.S. 1, 96, 99 and 101 (1976)) and in Republican National Committee v. FEC, the FEC maintained that the Court had confirmed the governmental interest served by the contribution and expenditure limits contained in the Presidential public funding program. The FEC argued that, in a similar vein, Section 9012(f) closed off "...the only major avenue by which enormous amounts of aggregate wealth and private financing could be interjected into a scheme designed to encompass only public funding, while avoiding any direct and substantial infringement of protected rights by permitting individuals independent expenditures and by limiting its [Section 9012(f)'s] reach to only those campaigns where candidates have chosen public financing as an alternative to private funding." The FEC maintained that if the defendant committees' "...stated intentions [came] to fruition, namely to raise and expend on behalf of the general election campaign an amount approximately double that which Mr. Reagan and Mr. Bush have accepted in public financing, the Congressional purpose in enacting this legislation would clearly be subverted, with the taxpayer left footing the bill."
The FEC noted that the legislative history demonstrates that Congress was principally concerned with ensuring the effectiveness of the overall limitations imposed upon those candidates accepting public funding. As stated by Senator Taft in support of his amendment to limit committee expenditures, Section 9012(f)'s purpose was "...to prevent any political committees from being formed as a subterfuge so that they can go beyond the authorization of the committees and make expenditures that were not within the limitations of the expenditures which are in the bill."
The FEC further argued that the limited restrictions of Section 9012(f) were constitutional as applied to defendants "...because public funding of a general election presidential campaign is an option which is chosen by candidates in place of unlimited private funding." Additionally, the provision did not abridge free speech rights because "...the transformation of [political committee member] contributions into political debate involves speech by someone other than the contributor (Buckley v. Valeo, 424 U.S. at 21), thereby removing political committee expenditures from the core of individual political expression." (See California Medical Association v. FEC, Opinion at 9 n. 5, 10, 15; Mott v. FEC, Opinion at 7.)
In their motion for summary judgment in the suit, defendants argued that the independent expenditures in question were a form of free speech and, as such, were protected by the First Amendment. They contended that, in its Buckley v. Valeo decision (424 U.S. 1 (1976)), the Supreme Court had held that statutory limits on the amounts which individual citizens or groups could spend on independent communications in political campaigns were an impermissible restraint on First Amendment freedoms. Defendants argued, therefore, that Section 9012(f) could be interpreted as prohibiting only coordinated expenditures authorized or requested by a candidate.
In its opinion of August 28, 1980, the court ruled on the claims made by the FEC and Common Cause in the consolidated suits. In its rulings on the FEC's claims, the three-judge court determined that Section 9012(f) did apply to defendants' activities. The court concluded, however, that the defendants' proposed expenditures constituted "independent expenditures" which, under Buckley v. Valeo, could not be limited. The court said, "The compelling governmental interest to fight electoral corruption is insufficient, here, as in Buckley, to justify what amounts to a direct limitation on political speech.... Whereas a Presidential candidate, by accepting public funds, may choose...to do without unlimited contributions and expenditures, the candidate's public supporters have a separate, protected right to express themselves, individually or jointly. This preserves free access and full participation in the public debate."
Since it had ruled on the constitutionality of Section 9012(f) in the FEC's suit, the court dismissed that portion of Common Cause's suit (Count I) as moot. The court also dismissed Count II of the Common Cause suit, which had sought enforcement of provisions of the Act allegedly violated by defendants. The court stated that the Commission had been vested by Congress with exclusive jurisdiction over enforcement of the Act. The court did not, however, rule on Common Cause's standing to bring suit.
On February 23, 1981, the Supreme Court agreed to consolidate the cases of FEC v. Americans for Change, Americans for an Effective Presidency and Fund for a Conservative Majority (Civil Action No. 80-1754) and Common Cause v. Harrison Schmitt (Civil Action No. 80-1609).
On January 19, 1982, the Supreme Court, in a 4 to 4 split vote, left standing the earlier decision by the district court. (U.S. Supreme Court Nos. 80-1067 and 80-847)
Source: FEC Record -- April 1981, p. 8; and March 1982, p. 1.
Common Cause v. Schmitt, 512 F. Supp. 489 (D.D.C. 1980) (three-judge court), aff'd by an equally divided court, 455 U.S. 129 (1982), petition for further relief denied, (D.D.C. Oct. 19, 1983) (three-judge court) (unpublished opinion).
On November 21, 2001, Common Cause and Democracy 21 (the plaintiffs), both nonprofit public interest organizations, asked the U.S. District Court for the District of Columbia to find that the Commission acted contrary to law when it dismissed the plaintiffs' administrative complaint, filed April 4, 2000. The administrative complaint alleged that, during the 2000 election, joint fundraising efforts by authorized Senate campaign committees and national and state party committees resulted in violations of the Federal Election Campaign Act (the Act). On September 25, 2001, the Commission dismissed the administrative complaint.
Under Commission regulations, political committees, such as authorized candidate committees and party committees, may engage in joint fundraising efforts and may form a committee to act as a joint fundraising representative. 11 CFR 102.17(a). If any participant in the joint fundraiser can lawfully accept nonfederal funds (soft money), then the joint fundraising representative can accept nonfederal funds. 11 CFR 102.17(c)(3) and 2 U.S.C. §§441a, b, c, e, f and g. However, only federal funds-contributions that comply with the Act's limits and prohibitions-may be used to influence a federal election. Party committees may make coordinated expenditures on behalf of their federal candidates, so long as only federal funds are used and the expenditures do not exceed the coordinated party expenditure limits. 2 U.S.C. §441a(d).
Administrative Complaint. In their April 2000 administrative complaint, the plaintiffs alleged that during the 2000 federal elections a number of campaign committees and party committees were using nonfederal funds raised through joint fundraising activities to make expenditures that violated the Act. The plaintiffs alleged that during the 2000 New York Senatorial race, the Democratic Senatorial Campaign Committee (DSCC), the New York State Democratic Committee (NYSDC) and Senator Hillary Clinton's campaign committee (Clinton Committee) created a joint fundraising representative that raised funds for the committees. The plaintiffs claimed that the DSCC and the NYSDC used joint fundraising funds, including nonfederal funds, to purchase television advertisements that were intended to promote Senator Clinton's election and that may have constituted coordinated party expenditures because they appeared to have been coordinated with the Clinton committee. According to the complaint, donors who gave money to the joint fundraising representative understood that their donations would be used to support Senator Clinton's campaign. The plaintiffs asserted that the DSCC transferred funds that under the Act could not be allocated to the Clinton Committee to the NYSDC, which then purchased the ads. Thus, the administrative complaint alleged that the committees violated the Act's contribution limits and its prohibitions on corporate and labor union contributions. 2 U.S.C. §§441a and 441b.
In their November 2001 court complaint, the plaintiffs repeated the above allegations concerning the 2000 New York Senate race. The court complaint further alleged that these expenditures, when aggregated with the parties' other expenditures, exceeded the Act's coordinated party expenditure limits and were not properly reported to the Commission.
As a result, the complaint alleged, the Clinton Committee, the DSCC and the NYSDC violated the Act by:
Additionally, the complaint alleged that the DSCC exceeded the Act's limit on national committee contributions to Senate candidates and that the DSCC and the NYSDC exceeded limits on political committee contributions to candidates and their authorized committees. 2 U.S.C. §§441a(h) and 441a(a).
In their complaint, the plaintiffs also asserted that other committees involved in joint fundraising for the 2000 elections had committed similar violations, including Democratic committees in Michigan supporting Senator Stabenow and Republican committees in Missouri supporting then-Senator Aschcroft.
The plaintiffs claim that the Commission failed to provide a reasoned basis for its decision to dismiss their administrative complaint and that the dismissal was erroneous. The plaintiffs ask the court to declare that the Commission's dismissal of the administrative complaint was arbitrary and capricious and contrary to law under the Act.
Source: FEC Record -- February 2002 [PDF].
On March 26, 1996, the parties in this case agreed to a voluntary dismissal by the U.S. Court of Appeals for the Fourth Circuit. The plaintiff in the case, South Carolina Attorney General Charles Condon, had asked the court to declare that the National Voter Registration Act (NVRA) was an unfunded federal mandate that was unconstitutional. The FEC was named in this suit as one of the defendants.
Mr. Condon had alleged that the NVRA violated the Tenth Amendment, which states that powers not delegated to the federal government and not prohibited to the state by the Constitution are reserved to the states.
Source: FEC Record -- December 1997 [PDF].
On August 30, 2005, the U.S. District Court for the Western District of Louisiana granted the Commission’s motion to dismiss this case. The Court adopted the Report and Recommendation of the Magistrate Judge, finding that the defendant did not show grounds under the administrative fines regulations to challenge the Commission’s final determination and its civil penalty assessment. 11 CFR 111.35.
On April 29, 2003, the Commission notified the Committee that it believed the Committee had failed to file a 2002 30-Day Post-General report, as required under 2 U.S.C. 434(a). On May 2 the Commission notified the Committee of its reason-to-believe finding that the Committee had violated 2 U.S.C. 434(a) and its initial civil penalty calculation of $9,500.
The Committee challenged the Commission's reason-to-believe finding under the administrative process provided for in Commission regulations. 11 CFR 111.35-111.37. The Commission subsequently reduced the penalty amount to $8,000 after the Committee submitted new information that allowed the Commission to calculate the penalty based on actual data rather than on the estimates used for the initial penalty calculation. On April 22, 2004, the Commission made a final determination that the Committee had violated 2 U.S.C. 434(a) and assessed an $8,000 civil money penalty.
On May 26, 2004, John C. Cooksey and Cooksey for Senate Finance Committee (the Committee) filed a complaint in the U.S. District Court for the Western District of Louisiana. The plaintiffs ask the court to review a civil penalty assessed by the Commission under its administrative fines regulations.
In their complaint the plaintiffs alleged that the penalty is unfounded and/or excessive and is based on a factual error regarding the circumstances of the allegedly untimely report. The plaintiffs further argued that the existence of extraordinary circumstances that lasted for more than 48 hours and were beyond the Committee's control relieves the Committee from the Commission's penalty. See 11 CFR 111.35(b).
The plaintiffs asked the court to reduce and/or waive the $8,000 civil penalty.
On September 30, 2003, the U.S. District Court for the District of Puerto Rico granted the plaintiffs' request to dismiss Luis M. Correa, et al. v. FEC with prejudice. The plaintiffs requested dismissal of their suit after reaching a settlement agreement with the Commission, pursuant to which the plaintiffs paid in full the fine assessed by the Commission.
On March 3, 2003, the Comité Jose Hernandez Mayoral Comisionado Residente, Inc., (the Committee) and its treasurer Luis M. Correa filed a petition in the U.S. District Court for the District of Puerto Rico challenging the Commission's final determination that the Committee violated 2 U.S.C. §434(a) by failing to file its 2001 Year-End report in a timely manner and the assessment of a $1,000 civil money penalty. The plaintiffs' petition alleges that they were unable to file the report electronically by the January 31, 2002, deadline because of electronic data conversion and transmission problems for which the Commission was responsible.
On June 14, 2002, the Commission found reason to believe that the plaintiffs violated 2 U.S.C. §434(a) by failing to file the report in a timely manner and made an initial determination to assess a $1,000 civil money penalty. The plaintiffs filed a challenge to the preliminary determination and penalty on July 24, 2002.
On January 24, 2003, the Commission made its final determination that the Committee had violated 2 U.S.C. §434(a) and assessed the full $1,000 civil money penalty. The FEC Reviewing Officer, in recommending that the Commission make this final determination, found that the plaintiffs had failed to show that timely filing had been prevented by "extraordinary circumstances" beyond their control under 11 CFR 111.35.
The petition claims that, despite attempts to gain technical support from the Commission, the Committee did not receive adequate assistance with its electronic data problems until after the filing deadline. The plaintiffs claim that they were not responsible for the late filing because the Commission's technical support staff sent data to an incorrect e-mail account, and because the Commission's electronic filing system software could not accept Spanish characters.
The plaintiffs ask the court to set aside the Commission's final determination and penalty assessment.
On January 21, 2004, the U.S. District Court for the Northern District of Illinois, Eastern Division, granted summary judgment in favor of the Commission in this case.1 The Cox for U.S. Senate Committee (the Committee) and John H. Cox, its treasurer, filed suit against the Commission on May 30, 2003, appealing a civil money penalty assessed against them by the Commission under its administrative fines regulations for the Committee's failure to file two 48-hour reports documenting campaign contributions in excess of $1,000. The plaintiffs argued that the Commission's determination that the Committee and its treasurer violated 2 U.S.C. §434(a) and the Commission's assessment of a $22,150 civil money penalty were arbitrary, capricious, an abuse of discretion and otherwise not in accordance with law. The plaintiffs also argued the Administrative Fines Schedule (the Schedule) imposes a form of criminal punishment and violates the substantive due process and equal protection clauses of the Fifth Amendment, as well as the "excessive fines" clause of the Eighth Amendment.
On February 11, 2002, the Commission sent a Primary Election Report Notice to the Committee, which explained that, under 2 U.S.C. §434(a)(6)(A), campaign contributions of $1,000 or more (including personal loans) received by the Committee between February 28, 2002, and March 16, 2002, must be reported to the Commission within forty-eight hours of the committee's receipt of the same. Mr. Cox delegated responsibility for filing reports during the 48-hour reporting period to a Committee employee, Cheryl Warren.
The Committee received a $75,000 loan from Mr. Cox in the form of a check on March 5, 2002. Although Ms. Warren received the check, she was uncertain as to whether the loan needed to be reported during the 48-hour period, did not take steps to determine whether reporting was required and failed to bring the issue to Mr. Cox's attention. Ms. Warren spent the better part of March 6, 2002, consoling a fellow Committee employee and helping him to find temporary lodging after his apartment had burned in a fire earlier that day. Neither she nor Mr. Cox filed a 48-hour report disclosing the $75,000 loan. On March 12, Mr. Cox wired a $144,507.47 loan directly to the Committee's bank account. Ms. Warren did not know about this second loan, and neither she nor Mr. Cox filed a 48-hour report disclosing it. Both loans, however, were subsequently reported by the Committee in its post-election April 2002 Quarterly Report, which is required by a separate reporting provision.
On September 18, 2002, the Commission found reason to believe that the Committee and Mr. Cox, as its treasurer, violated 2 U.S.C. §434(a)(6)(A) by failing to properly report three contributions of $1,000 or more, totaling $224,507.47, that were received during the 48-hour reporting period.2 On September 19, 2002, the Commission notified the Committee of its finding and the $22,750 civil money penalty, which had been calculated according to the Schedule.
The Committee submitted a response to the Commission's Office of Administrative Review (OAR) on October 25, 2002, in which it conceded that the two loans should have been reported within forty-eight hours of their receipt. The Committee argued, however, that:
The OAR issued its recommendation on March 27, 2003. After determining that a $5,000 contribution from a political action committee (one of the three contributions originally at issue) was not made during the 48-hour reporting period, the OAR recommended reducing the amount of the civil money penalty from $22,750 to $22,150. However, the OAR rejected the remainder of the Committee's arguments, finding that:
The Committee responded to the recommendation with a number of new arguments, including constitutional challenges to the Schedule. The Commission made a final determination that the Committee violated 2 U.S.C. §434(a)(6)(A) and assessed a civil money penalty of $22,150 and notified the Committee on April 30, 2003. The plaintiffs subsequently filed their complaint with the court on May 30, 2003.
The court found that the Commission's assessment of a civil money penalty was not arbitrary, capricious, irrational or an abuse of discretion and was in accordance with law. The court explained that:
The court found that the Schedule does not impose a form of criminal punishment and determined the Schedule's penalties to be civil in construction, nature and application. The court explained that civil fines are not historically regarded as punishment and that the plaintiffs failed to establish that the Schedule's deterrent effect is penal in nature or how it might restrict their future behavior. Moreover, the Federal Election Campaign Act provides separate criminal penalties for knowing and willful violations, which suggests that the Schedule is directed towards civil behavior. 2 USC § 437g(d) An alternative purpose for the civil money penalty, other than a punitive purpose, is clearly assignable -namely the protection of "substantial governmental interests" related to the pre-election disclosure of campaign contributions - and not excessive.
The court also determined that the Schedule does not violate substantive due process or the Equal Protection Clause of the Fifth Amendment. The Committee argued that the sanctions imposed by the Schedule are "so severe that they transform the sanctions into criminal penalties," and this transformation renders the Schedule unconstitutional because the penalties set forth therein "constitute criminal punishment without the safeguards afforded an accused under the Fifth and Sixth Amendments."
The court, however, found that the Committee failed to explain how the money required to satisfy the civil penalty assessed by the Commission constituted or related in any way to an "underlying constitutionally protected property interest." In addition, the court determined that the Committee failed to establish that the Schedule is not "narrowly tailored to serve a compelling state interest." Although the plaintiffs were assessed a civil money penalty for failing to comply with 2 U.S.C. §434(a)(6)(A), their campaign activities and/or ability to run for public office were in no way limited. Furthermore, the disclosure requirements and accompanying Schedule serve to further "substantial governmental interests."
The Committee also failed to establish to the satisfaction of the court that the Schedule creates classifications subject to equal protection analysis, or even how the disclosure requirements differ among campaign committees. In addition, the plaintiffs failed to establish that they have suffered "invidious discrimination" or disparate treatment, or that such treatment was purposeful.
The court also concluded that the Schedule is not grossly disproportionate to the conduct to which it applies and, thus, does not violate the Eighth Amendment's excessive fines clause. Instead, the court found that the Committee subverted "substantial governmental interests" by failing to report the contributions received during the 48-hour reporting period, depriving the public of important pre-election information. Moreover, the court stated that campaign promises are not a substitute for formal and timely reporting. While the violations were inadvertent, the Committee was directly responsible for both violations - negligence is specifically excluded as an "extraordinary circumstance." 11 CFR 111.35(b)(4). Finally, the court found that the Schedule is directly proportional to the amount of the unreported contributions and takes into account the existence of prior violations.
The Court denied the Committee's motion for summary judgment, granted summary judgment in favor of the Commission and upheld the fine assessed against the Committee.
1 The granting of summary judgment by a court is appropriate
where there is "no genuine dispute of material fact and the moving party is
entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). Under the
Administrative Procedure Act, a court can set aside an agency action it finds
"arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with the law." 5 U.S.C. §706(2)(A); Smith v. Office of Civilian Health
& Med. Program of the Uniformed Servs., 97 F.3d 950, 954 (7th Cir.
2 Other than the amounts and dates of the contributions, no other information about the loans was available to the Commission when it made its reason-to-believe finding.
On October 28, 2002, the U.S. District Court for the Southern District of Indiana granted the Commission's motion for summary judgment against the Robert W. Rock for Congress committee (the Committee) and its treasurer, Jeremiah T. Cunningham. The Committee had filed suit challenging the Commission's determination that the Committee had failed to file timely its 2000 Post-General report and alleging that the civil money penalty assessed by the Commission was excessive, erroneous and unwarranted.
The court granted the FEC's motion for summary judgment and denied the Committee's crossmotion for summary judgment, finding that:
On March 20, 2001, the Commission found reason to believe that the Committee had filed its 2000 Post-General Report on February 1, 2001, more than 30 days after the December 7, 2000, deadline. If a report is not filed within 30 days of the deadline, it is considered not filed.
As part of its Administrative Fine program, the Commission made a preliminary determination that the Committee had violated the Act's reporting requirements and thus owed a $4,500 civil penalty. Commission regulations provide for an administrative process through which respondents can challenge the preliminary finding and proposed civil penalty. See 11 CFR 111.35-111.37. The Commission informed the Committee that it had 40 days to challenge the Commission's finding, but the Committee failed to raise any arguments before the Commission challenging that finding. The Commission then made a final determination that the plaintiffs violated the Federal Election Campaign Act (the Act) and assessed the civil money penalty in accordance with its administrative fines regulations.
Under the Administrative Procedure Act, a district court may set aside an agency action only if it is found to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. §706(2)(A). The Committee argued that the penalty was excessive and unwarranted because:
The court found that the Committee had received adequate notice of the Commission's action and that it had waived any arguments before the court by not raising them before the Commission during its administrative proceedings.1 See 11 CFR 111.38.
The court also held that the Commission's determination was rationally based on the administrative record before it. It further found that the Federal Election Campaign Act states that, when calculating civil penalties, the Commission must consider the amount of the violation involved (that is, the level of activity of the report that was untimely filed) and the existence of any prior violations. The Act delegates solely to the Commission the determination of what other factors to take into account in calculating the civil penalty, a decision that the court concluded was not for courts "to second guess." 2 U.S.C. §437g(a)(4)(C)(i)(II).
1 Notice of the Commission's preliminary determination as well as its final determination was sent to the Committee's address of record as listed on its Statement of Organization, which was also the same address of Mr. Rock, the candidate and attorney for the Committee and its treasurer in this case. A signed certified mail receipt indicated that the preliminary determination notice was received by the Committee, even if Mr. Cunningham did not specifically receive it. The court concluded that mailing a document to the last known address constitutes adequate notice, and the Committee was not deprived of an opportunity for administrative review.