Citizens for Responsibility & Ethics in Wash. v. Fed. Election Comm'n

• Decision Date: 21 August 2020
• Docket Number: No. 18-5261,18-5261
• Citation: 971 F.3d 340
• Parties: CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON and Nicholas Mezlak, Appellees v. FEDERAL ELECTION COMMISSION, Appellee Crossroads Grassroots Policy Strategies, Appellant
• Court: U.S. Court of Appeals — District of Columbia Circuit

971 F.3d 340

CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON and Nicholas Mezlak, Appellees

v. FEDERAL ELECTION COMMISSION, AppelleeCrossroads Grassroots Policy Strategies, Appellant

No. 18-5261

United States Court of Appeals, District of Columbia Circuit.

Argued September 13, 2019

Decided August 21, 2020

Thomas W. Kirby argued the cause for appellant. With him on the briefs were Michael E. Toner and Andrew G. Woodson.

Bobby R. Burchfield was on the brief for amicus curiae Mitch McConnell, Majority Leader of the United States Senate, in support of appellant.

Allen Dickerson and Zac Morgan were on the brief for amicus curiae Institute for Free Speech in support of appellant.

Jeffrey M. Harris and Steven P. Lehotsky were on the brief for amicus curiae the Chamber of Commerce of the United States of America in support of appellant.

Herbert W. Titus, Jeremiah L. Morgan, William J. Olson, and Robert J. Olson were on the brief for amici curiae Free Speech Coalition, et al. in support of defendant-appellant.

Stuart McPhail argued the cause for appellee. With him on the brief were Adam J. Rappaport and Nikhel S. Sus.

Tara Malloy and Megan P. McAllen were on the brief for amicus curiae Campaign Legal Center in support of plaintiffs-appellees.

Jennifer R. Cowan and Gary W. Kubek were on the brief for amici curiae Senators Sheldon Whitehouse, Jon Tester, and Richard Blumenthal in support of appellees.

Before: Srinivasan, Chief Judge, Garland, Circuit Judge, and Williams, Senior Circuit Judge.^*

Srinivasan, Chief Judge:

In recent election cycles, billions of dollars have been spent on political advertisements known as "independent expenditures," or IEs. IEs expressly urge the election or defeat of an identified candidate but without coordination with any candidate.

Most IEs are made by organizations that fund their activities with donations.

Some of those donations must be publicly disclosed under a Federal Election Commission Rule. The Rule's disclosure obligation is relatively narrow, however, requiring an IE-making organization to disclose a contribution only if it is earmarked to support a particular IE. See 11 C.F.R. § 190.10(e)(1)(vi). Under the Rule, then, IE makers need not disclose any donors who give with the intent of generally supporting IEs, without an intent to support a specific one.

The plaintiffs here, led by Citizens for Responsibility and Ethics in Washington (CREW), claim that the narrow reach of the Rule's disclosure obligation is inconsistent with the Federal Election Campaign Act. As CREW reads the statute, it requires an IE maker to disclose any contributor who gives $200 in the aggregate, without regard to any intent to support IEs or a specific IE. At a minimum, CREW argues, donating to generally support the making of IEs suffices to come within the statute's disclosure obligations.

CREW brought an enforcement complaint before the Commission alleging that a well-known IE-making entity, Crossroads GPS, had violated the Rule by failing to disclose certain contributors. The Commission dismissed the complaint, finding that none of the relevant donors had intended to support a specific IE and that their contributions therefore fell outside the Rule's disclosure obligation.

CREW then brought this action in the district court, seeking to have the Rule's circumscribed disclosure mandate declared invalid as inconsistent with the statute. The district court agreed with CREW and held that the Rule conflicts with the plain terms of the statute's broader disclosure requirements. We read the statute the same way and thus affirm the district court's decision.

I.

A.

The Federal Election Campaign Act (FECA), 52 U.S.C. § 30101 et seq. , requires public disclosures by groups and individuals that engage in certain election-related activities. One such activity is the making of "independent expenditures," or IEs. An IE is a payment that (i) goes toward "expressly advocating the election or defeat of a clearly identified candidate" and (ii) "is not made in concert or cooperation with or at the request or suggestion of such candidate," a political committee, or their agents. Id. § 30101(17). The FECA imposes disclosure obligations on any entity (other than political committees, which are separately regulated) that makes over $250 worth of IEs in a calendar year. Id. § 30104(c). Among those disclosure obligations is a requirement that IE makers (we use the term to exclude political committees) provide information about at least some of the contributions they receive. The FECA defines a "contribution" as a donation "made by any person for the purpose of influencing any election for Federal office." Id. § 30101(8)(A)(i).

Two relevant FECA provisions call for IE makers to disclose information about contributions. First, 52 U.S.C. § 30104(c)(1) states that IE makers "shall file a statement containing the information required under subsection (b)(3)(A) for all contributions received." (Because the relevant FECA provisions refer to all statutory subdivisions as "subsections," we do the same.) The cross-referenced subsection (b)(3)(A) imposes disclosure obligations on political committees, requiring them to "identif[y] each ... person ... who makes a contribution to the reporting committee during the reporting period, whose contribution or contributions have an aggregate amount or value in excess of $200 within the calendar year ... together with the date and amount of any such contribution." Id. § 30104(b)(3)(A). Second, subsection 30104(c)(2)(C) separately requires IE makers to disclose "each person who made a contribution in excess of $200 ... for the purpose of furthering an independent expenditure." Id. § 30104(c)(2)(C).

Both of those provisions, which we will refer to by shorthand as FECA (c)(1) and (c)(2)(C), were enacted in 1980. See FECA Amendments of 1979, Pub. L. 96-187, 93 Stat. 1339 (1980). Shortly thereafter, the Federal Election Commission issued implementing regulations. Amendments to Federal Election Campaign Act of 1971: Regulations Transmitted to Congress, 45 Fed. Reg. 15080, 15087 (Mar. 7, 1980). As relevant here, one of those regulations requires IE makers to disclose contributors only if they "made a contribution ... for the purpose of furthering the reported independent expenditure." 11 C.F.R. § 109.10(e)(1)(vi) (emphasis added). As a result, whereas FECA (c)(2)(C) requires disclosure of contributions "made for the purpose of furthering an independent expenditure," the Commission Rule requires disclosure only of contributions "made for the purpose of furthering the reported independent expenditure." The Rule is also silent as to the separate disclosure obligation set forth in FECA (c)(1).

B.

For many years, those disclosure obligations operated in relative obscurity. Before 2010, a separate FECA provision generally prohibited corporations and unions from making IEs or contributing to support IEs. See 2 U.S.C. § 441b (2006), invalidated by Citizens United v. FEC , 558 U.S. 310, 320–21, 130 S.Ct. 876, 175 L.Ed.2d 753 (2010). As a result of that ban, IEs made up a small portion of overall election-related spending. And most IEs were made not by individuals, who would have been subject to the Rule, but by political committees. See, e.g. , Federal Election Commission, Annual Report 1981 at 11, https://fec.gov/resources/about-fec/reports/ar81.pdf (PACs made $14.1 million out of $16 million total IEs made).

Things changed, though, following the Supreme Court's decision striking down the FECA's prohibition on corporate and union IE activity, Citizens United , 558 U.S. at 365, 130 S.Ct. 876, and our court's follow-on decision invalidating the FECA's limits on contributions to political committees as applied to "super PACs," i.e., committees whose sole function is to make IEs, SpeechNow.org v. FEC , 599 F.3d 686 (D.C. Cir. 2010). After those 2010 decisions, overall IE spending exploded: nearly $1.4 billion worth of IEs were made during the 2016 election cycle, compared to $143.7 million in the 2008 cycle and $63.9 million in the 2004 cycle. Total Outside Spending by Election Cycle, Excluding Party Committees, Ctr. for Responsive Pol., https://www.opensecrets.org/outsidespending/cycle_tots.php (last visited August 18, 2020) (entire cycle chart). IE spending is now dominated by organized entities, such as super PACs and 501(c)(4) social welfare organizations, rather than individuals. See, e.g. , 2016 Outside Spending, By Group, Ctr. for Responsive Pol., https://www.opensecrets.org/outsidespending/summ.php?cycle=2016 (last visited August 18, 2020).

Owing in part to the Rule's narrow disclosure obligation, a significant amount of IE spending now comes from organizations that do not disclose their contributors. In fact, more IEs were made by such entities during the 2016 election cycle ($174.8 million) than the total amount of IEs made during the 2008 cycle ($143.7 million). See id. What is more, the same non-disclosing entities also contribute millions to political committees, such as super PACs, in order to further those committees’ political activities, including IEs. See R. Sam Garrett, Cong. Research Serv., Super PACs in Federal Elections: Overview and Issues for Congress 20 (2016), https://fas.org/sgp/crs/misc/R42042.pdf. And while those political committees must disclose their contributors, that reveals little when a contributor is an entity that need not identify its own underlying donors. In that way, entities subject to the Rule can serve as a kind of pass-through, non-disclosure vehicle. Id.

C.

Crossroads GPS is one such entity. Since its creation as a 501(c)(4) social welfare organization in 2010, Crossroads has made over $100 million worth of IEs and over $75 million in contributions to other IE-making entities. Crossroads has not disclosed a single contribution in any of its reports to the Commission.

In 2012, the plaintiffs in this case, led by CREW, sought to uncover the identities of some of Crossroads's contributors....