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

• Decision Date: 20 March 2018
• Docket Number: Case No. 16–cv–2255 (CRC)
• Citation: 299 F.Supp.3d 83
• Parties: CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON, et al., Plaintiffs, v. FEDERAL ELECTION COMMISSION, Defendant, American Action Network, Inc., Intervenor Defendant.
• Court: U.S. District Court — District of Columbia

299 F.Supp.3d 83

CITIZENS FOR RESPONSIBILITY AND ETHICS IN WASHINGTON, et al., Plaintiffs,

v.FEDERAL ELECTION COMMISSION, Defendant,American Action Network, Inc., Intervenor Defendant.

Case No. 16–cv–2255 (CRC)

United States District Court, District of Columbia.

Signed March 20, 2018

Stuart C. McPhail, Citizens for Responsibility and Ethics in Washington, Washington, DC, for Plaintiffs.

Charles Kitcher, Erin R. Chlopak, Gregory John Mueller, Kevin Deeley, Federal Election Commission, Washington, DC, for Defendant.

Claire J. Evans, Wiley Rein LLP, Washington, DC, for Intervenor Defendant.

MEMORANDUM OPINION

CHRISTOPHER R. COOPER, United States District Judge

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

In 2012, CREW filed an administrative complaint with the Commission to that effect. By an evenly divided vote, the Commission dismissed CREW's complaint because a majority of the Commissioners did not find "reason to believe" that AAN violated the Act. 52 U.S.C. § 30109(a)(2). Specifically, the three controlling Commissioners concluded that AAN did not qualify as a political committee because it lacked a "major purpose" of nominating or electing a candidate for federal office, Buckley v. Valeo, 424 U.S. 1, 79, 96 S.Ct. 612, 46 L.Ed.2d 659 (1976). This Court in a previous decision held that dismissal "contrary to law" because it rested on an erroneous premise regarding Buckley's"major purpose" requirement. On remand, the Commission again dismissed CREW's complaint in a deadlocked decision.

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

I. Background

A. Legal Background

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

This case is about FECA's disclosure requirements—specifically, those triggered by spending on political advertisements. In broad terms, these disclosure requirements serve "three important interests: providing the electorate with relevant information about the candidates and their supporters; deterring actual corruption and discouraging the use of money for improper purposes; and facilitating enforcement of the prohibitions in the Act." McConnell v. FEC, 540 U.S. 93, 121, 124 S.Ct. 619, 157 L.Ed.2d 491 (2003) (controlling opinion of Stevens & O'Connor, J.J.).

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

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

An entity qualifies as a political committee when it satisfies two separate conditions. The first was imposed by Congress in the text of FECA: the entity must receive or spend more than $1,000 in a calendar year for the purpose of influencing a federal election. Id. § 30101(4)(A), (8)(A)(i), (9)(A)(i).¹ The second condition was imposed by the Supreme Court in Buckley v. Valeo as a narrowing construction of the statutory definition. Under Buckley, political committees are limited to those "organizations that are under the control of a candidate or the major purpose of which is the nomination or elec tion of a candidate." 424 U.S. at 79, 96 S.Ct. 612 (emphasis added). A broader definition of "political committee," the Court explained, could raise problems of vagueness under the First Amendment by threatening the speech of "groups engaged purely in issue discussion" and not just those engaged in "campaign related" activity. Id.

Several decades after Buckley, Congress in the Bipartisan Campaign Reform Act of 2002 ("BCRA") amended FECA to add important new disclosure requirements. BCRA was aimed, among other targets, at the post- Buckley rise of corporate and union spending on ads that were nominally related to political issues but were clearly intended to sway voters in upcoming federal elections. See McConnell, 540 U.S. at 126–32, 124 S.Ct. 619. To capture these "so-called issue ads," id. at 126, 124 S.Ct. 619, Congress created a new category of communications called "electioneering communications"—television advertisements that air within 60 days of a federal election, clearly identify a candidate running for federal office, and target the relevant electorate. 52 U.S.C. § 30104(f)(3)(A)(i). Corporations spending over $10,000 on those communications in a calendar year must file a statement with the Commission that discloses information about the entity, the candidates identified in the communications, the recipients of any disbursements, and any donors who gave over $1,000 toward electioneering communications since the beginning of the preceding calendar year. Id. § 30104(f)(2) ; 11 C.F.R. § 104.20(c)(9).² Ads that qualify as electioneering communications must also include disclaimers with information like the name of the entity that paid for the ad and whether the ad was authorized by a candidate. 52 U.S.C. § 30120(a) ; see 11 C.F.R. § 100.11(c)(3).

The Federal Election Commission ("FEC"), an independent agency with six Commissioners, is responsible for enforcing FECA's disclosure requirements. See 52 U.S.C. § 30106(b)(1). The Commission has not adopted a rule that further clarifies the meaning of Buckley's"major purpose" limitation. Rather, it has taken a case-by-case approach by deciding whether particular entities have a major purpose of nominating or electing a candidate. See Shays v. FEC, 511 F.Supp.2d 19, 30 (D.D.C. 2007). This approach was ultimately upheld by a fellow judge in this District against challenge under the Administrative Procedure Act. See id.

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

B. Factual and Procedural Background

1. The FEC's First Dismissal

American Action Network ("AAN") is a tax-exempt § 501(c)(4) civic organization. Joint Appendix ("J.A.") 1490–91 (ECF No. 46). The group's stated mission is to "create, encourage and promote center-right policies based on the principles of freedom, limited government, American exceptionalism, and strong national security." J.A. 1490. To advance that mission, AAN has sponsored educational activities and grassroots events. But the majority of its spending throughout the period at issue in this case—July 23, 2009 through June 30, 2011³ —was on political advertisements. Of its $27.1 million in total spending over that period, just over $4 million was devoted to independent expenditures—i.e. , ads expressly advocating for or against a federal candidate. J.A. 1765. An additional $13.7 million was devoted to electioneering communications—i.e. , ads run near an election that identify a candidate and target the relevant electorate. Id.

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