J 

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

31 

32 

33 

RECEIVED 

FEDERAL ELECTION 

COMMISSION 

SENSITIV®*^EI^AL ELECTION COMMISSION 

999 E Street, N.W. 2013 JAN 17 PH 12: 19 

Washington, D.C. 20463 

FIRST GENERAL COUNSEL'S REPORT CELA 

COMPLAINANTS: 

RESPONDENT: 

RELEVANT STATUTES 

AND REGULATIONS: 

INTERNAL REPORTS CHECKED: 

FEDERAL AGENCIES CHECKED: 

MUR: 6589 

DATE OF COMPLAINT: 6/7/12 

DATE OF NOTIFICATION: 6/12/12 

DATE OF LAST RESPONSE: 10/1/12 

DATE ACTIVATED: 8/20/12 

EXPIRATION OF SOL: 7/23/14 

Citizens for Responsibility and Ethics in 

Washington 

Melanie Sloan 

American Action Network and Stephanie Fenjiro in 

her capacity as treasurer 

2U.S.C.§431(4) 

2 U.S.C. § 432 

2 U.S.C. § 433 

2 U.S.C. § 434 

26 U.S.C. § 501(c) 

11C.F.R.§ 100.22 

Disclosure Reports 

None 

r~0 

C9 

O* 

c_ s»» 

IS: 

-o 

— 

PO « • 

ro 

ro 

P! 

5=3" 

•• o 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 2 of27 

TABLE OF CONTENTS 

2 I. INTRODUCTION 3 

3 II. FACTUAL AND LEGAL ANALYSIS 3 

4 A. Facts 3 

5 1. AAN 3 

6 2. AAN's Activities 4 

7 B. Analysis 5 

8 1. The Test for Political Committee Status 5 

4 9 a. The Commission's Case-By-Case Approach to Major Purpose 5 

10 b. Challenges to the Commission's Major Purpose Test and the 

11 Supplemental E&J 7 

12 c. Organizational and Reporting Requirements for Political Committees.... 10 

13 2. Application of the Test for Political Committee Status to AAN 11 

14 a. Statutory Threshold 11 

15 b. Major Purpose 12 

16 C. Conclusion 25 

17 III. PROPOSED DISCOVERY 26 

18 IV. RECOMMENDATIONS 27 

19 
1 

2 

3 

4 

5 

1 6 

4 

0 7 

4 

5 8 

f 9 

1 10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

MUR 6589 (American Action Network) 

General Counsel's Report 

Page 3 of27 

I. INTRODUCTION 

This matter involves allegations that American Action Network ("AAN") violated the 

Federal Election Campaign Act of 1971, as amended ("the Act"), by failing to organize, register, 

and report as a political committee after spending over $17 million on independent expenditures 

and electioneering communications between July 2009 and June 2011. See Compl. at 19-31. 

AAN concedes that it exceeded the Act's $1,000 threshold for expenditures or 

contributions triggering political committee status. 2 U.S.C. § 431(4). AAN argues, however, 

that it is not a political committee because it lacks the requisite major purpose: the nomination 

or election of federal candidates. Resp. at 1-2. AAN's argument rests on the assertion that it 

spent greater sums on activity not considered express advocacy than it did on independent 

expenditures. Resp. at 2-3. In our view, the argument is wide of the mark. 

As discussed below, the available information regarding AAN's overall conduct supports 

a finding that there is reason to believe that AAN had as its major purpose the nomination or 

II. FACTUAL AND LEGAL ANALYSIS 

A. Facts 

1. AAN 

AAN, formed in 2009, is a nonprofit corporation organized under section 501(c)(4) of the 

Internal Revenue Code. Resp. at 3. AAN describes as its mission to "create, encourage and 

promote center-right policies based on the principles of freedom, limited government, American 

exceptionalism, and strong national security," and states that its "primary goal is to put our 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 4 of 27 

1 center-right ideas into action by engaging the hearts and minds of the American people and 

2 spurring them into active participation in our democracy." 

3 http://americanactionnetwork.org/about. Its Board Members are Norm Coleman, Fred Malek, 

4 Isaac Applbaum, Dylan Glenn, Hoyden Gray, Mel Martinez, Jim Nussle, Tom 

5 Reynolds, Gregory Slayton, and Vin Weber. Id. 

2 6 2. AAN's Activities 

4 

u 7 According to its publicly-available tax returns, AAN received $30,229,735 and spent 

4 

4 8 $27,139,009 over its fiscal years 2009 and 2010, a period which ran from July 23, 2009, through 

g 

2 9 June 30, 2011. See Form 990,2009 Tax Return of American Action Network at I; Form 990, 

9 10 2010 Tax Return of American Action Network at I. 

11 According to AAN, approximately 19% ($5,221,061) of its spending over the two-year 

12 period was for "political campaign activities" as defined by the IRS, and only about 15% 

13 ($4,096,910') was for "independent expenditures" as defined by the Act and Commission 

14 regulations. Supp. Resp. at 1. Electioneering communications comprised the largest category of 

15 AAN's expenses over the two-year span of the complaint and totals approximately $ 13,792,875 

16 — all spent in calendar year 2010. AAN states that it has engaged in "extensive issue advocacy 

17 activities, including television and digital advertising focused on fiscal responsibility, healthcare 

18 reform, regulatory reform and other federal legislative issues...." Resp. at 3. AAN also has 

19 hosted "educational activities, including grassroots policy events and [held] interactive policy 

20 briefings called 'Learn and Lead' with activists and guest speakers...." Id. at 4.^ 

' The Commission's records put the total at $4,097,962.29 for the two-year period. Approximately 

$4,044,572 of that total was spent during 2010. 

^ The "Learn and Lead" articles and accompanying clips are available at 

http://americanactionnetwork.org/leam-and-lead. 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 5 of27 

1 B. Analysis 

2 1. The Test for Political Committee Status 

3 The Act and Commission regulations define a "political committee" as "any committee, 

4 club, association or other group of persons which receives contributions aggregating in excess of 

5 $ 1,000 during a calendar year or which makes expenditures aggregating in excess of $ 1,000 

6 during a calendar year." 2 U.S.C. § 431(4)(A); 11 C.F.R. § 100.5. In Buckley v. Valeo, 424 U.S. 

7 1 (1976), the Supreme Court held that defining political committee status "only in terms of the 

^ 8 annual amount of 'contributions' and 'expenditures'" might be overbroad, reaching "groups 

9 engaged purely in issue discussion." Id. at 79. To cure that infirmity, the Court concluded that 

10 the term "political committee" "need only encompass organizations that are under the control of 

11 a candidate or the major purpose of which is the nomination or election of a candidate." Id. 

12 (emphasis added). Accordingly, under the statute as thus construed, an organization that is not 

13 controlled by a candidate must register as a political committee only if (1) it crosses the $1,000 

14 threshold and (2) it has as its "major purpose" the nomination or election of federal candidates. 

15 a. The Commission's Case-By-Case Approach to Major Purpose 

16 Although Buckley established the major purpose test, it provided no guidance as to the 

17 proper approach to determine an organization's major purpose. See, e.g.. Real Truth About 

18 Abortion, Inc. v. FEC, 681 F.3d 544, 556 (4th Cir. 2012), cert, denied, 81 U.S.L.W. 3127 (U.S. 

19 Jan. 7, 2013) (No. 12-311) ("RTAA"). The Supreme Court's discussion of major purpose in a 

20 subsequent opinion, Massachusetts Citizens for Life v. FEC, 479 U.S. 238 (1986) Q'MCFL"), 

21 was similarly sparse. See id. at 262. In that case, the Court identified an organization's 

22 independent spending as a relevant factor in determining an organization's major purpose, but 

23 examined the entire record as part of its analysis and did not chart the outer bounds of the test. 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 6 of27 

1 479 U.S. at 238. Following Buckley and MCFL, lower courts have refined the major purpose test 

2 — but only to a limited extent.^ In large measure, the contours of political committee status — 

3 and the major purpose test — have been left to the Commission.^ 

4 Following Buckley, the Commission adopted a policy of determining on a case-by-case 

5 basis whether an organization is a political committee, including whether its major purpose is the 

6 nomination or election of federal candidates. Political Committee Status, 72 Fed. Reg. 5,596 

7 (Feb. 7, 2007) (Supplemental Explanation and Justification). The Commission has periodically 

8 considered proposed rulemakings that would have determined major purpose by reference to a 

9 bright-line rule — such as proportional (i.e., 50%) or aggregate threshold amounts spent by an 

10 organization on federal campaign activity. But the Commission consistently has declined to 

11 adopt such bright-line rules. See Independent Expenditures; Corporate and Labor Organization 

12 Expenditures, 57 Fed. Reg. 33,548, 33,558-59 (July 29, 1992) (Notice of Proposed Rulemaking); 

13 Definition of Political Committee, 66 Fed. Reg. 13,681,13,685-86 (Mar. 7, 2001) (Advance 

14 Notice of Proposed Rulemaking); see also Summary of Comments and Possible Options on the 

15 Advance Notice of Proposed Rulemaking on the Definition of "Political Committee," 

16 Certification (Sept. 27, 2001) (voting 6-0 to hold proposed rulemaking in abeyance). 

' See FEC v. Machinists Non-Partisan Political League, 655 F.2d 380, 396 (D.C. Cir. 1981) (stating that 

political committee "contribution limitations did not apply to ... groups whose activities did not support an existing 

'candidate'" and finding Commission's subpoena was overly intrusive where directed toward "draft" group lacking 

a "candidate" to support); FEC v. COPAC, Inc., 917 F. Supp. 851, 861-62 (D.D.C. 1996) (holding that a group's 

support of a "farm team" of future potential federal candidates at the state and local level did not make it a political 

committee under the Act); see also UnityOS v. FEC, 596 F.3d 861, 869 (D.C. Cir. 2010) (concluding that an 

organization "is not subject to regulation as a political committee unless and until it selects a 'clearly identified' 

candidate"). 

^ Like other administrative agencies, the Commission has the inherent authority to interpret its statute 

through a case-by-case approach. See SEC v. Chenery Corp., 332 U.S. 194,202-03 (1947) ("[T]he choice made 

between proceeding by general rule or by individual... litigation is one that lies primarily in the informed 

discretion of the administrative agency."). 
1 

2 

3 

4 

5 

I 6 

4 

0 3 

7 

4 8 

f 9 

g 10 

0 11 

2 12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

MUR 6589 (American Action Network) 

Genera] Counsel's Report 

Page 7 of27 

In 2004, for example, the Commission issued a notice of proposed rulemaking asking 

whether the agency should adopt a regulatory definition of "political committee." See Political 

Committee Status, 69 Fed. Reg. 11,736,11,745-49 (Mar. 11, 2004) (Notice of Proposed 

Rulemaking). The Commission declined to adopt a bright-line rule, noting that it had been 

applying the major purpose test "for many years without additional regulatory definitions," and 

concluded that "it will continue to do so in the future." See Final Rules on Political Committee 

Status, Definition of Contribution, tind Allocation for Separate Segregated Funds and 

Nonconnected Committees, 69 Fed. Reg. 68,056, 68,064-65 (Nov. 23,2004). 

b. Challenges to the Commission's Major Purpose Test and the 

Supplemental E&J 

When the Commission's 2004 decision not to adopt a regulatory definition was 

challenged in litigation, the court rejected plaintiffs' request that the Commission initiate a new 

rulemaking. Shays v. FEC, 424 F. Supp. 2d 100,117 (D.D.C. 2006) {"Shays /"). The district 

court found, however, that the Commission had "failed to present a reasoned explanation for its 

decision" to engage in case-by-case decision-making, rather than rulemaking, and remanded the 

case to the Commission to explain its decision. Id. at 116-17. 

Responding to the remand, the Commission issued a Supplemental Explanation and 

Justification for its final rules on political committee status to further explain its case-by-case 

approach and provide the public with additional guidance as to its process for determining 

political committee status. Political Committee Status, 72 Fed. Reg. 5595 (Feb. 7,2007) 

("Supplemental E&J"). The Supplemental E&J explained that "the major purpose doctrine 

requires fact-intensive analysis of a group's campaign activities compared to its activities 

unrelated to campaigns." Id. at 5601-02. The Commission concluded that the determination of 

an organization's major purpose "requires the flexibility of a case-by-case analysis of an 
2 

3 

4 

5 

1 

A 

6 

0 7 

4 3 8 1 f 9 

9 

0 10 

5 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

MUR 6589 (American Action Network) 

General Counsel's Report 

Page 8 of27 

1 organization's conduct that is incompatible with a one-size fits-all rule," and that "any list of 

factors developed by the Commission would not likely be exhaustive in any event, as evidenced 

by the multitude of fact patterns at issue in the Commission's enforcement actions considering 

the political committee status of various entities." Id. 

To determine an entity's "major purpose," the Commission explained that it considers a 

group's "overall conduct," including public statements about its mission, organizational 

documents, government filings (e.g., IRS notices), the proportion of spending related to "federal 

campaign activity," and the extent to which fundraising solicitations indicate funds raised will be 

used to support or oppose specific candidates. Id. at 5597, 5605. Among other things, the 

To provide the public with additional guidance, the Supplemental E&J referenced 

After the Commission issued the Supplemental E&J, the 5/iay5 / plaintiffs again 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 9 of27 

1 Shays v. FEC, 511 F. Supp. 2d 19, 24 (D.D.C. 2007) {"Shays //"). The court recognized that "an 

2 organization ... may engage in many non-electoral activities so that determining its major 

3 purpose requires a very close examination of various activities and statements." Id. at 31. 

4 Recently, the Fourth Circuit rejected a constitutional challenge to the Commission's case5 by-case determination of major purpose. The court upheld the Commission's approach, finding 

6 that Buckley "did not mandate a particular methodology for determining an organization's major 

7 purpose," and so the Commission was free to make that determination "either through 

8 categorical rules or through individualized adjudications." RTAA, 681 F.3d at 556. The court 

9 concluded that the Commission's case-by-case approach was "sensible,... consistent with 

10 Supreme Court precedent and does not unlawfully deter protected speech." Id. at 558.^ The 

11 Fourth Circuit concluded that the Supplemental E&J provides "ample guidance as to the criteria 

12 the Commission might consider" in determining an organization's political committee status and 

13 therefore is not unconstitutionally vague. Id.\ see Transcript of Telephonic Oral Ruling, Free 

14 Speech V. FEC, No. 12-CV-127-SWS, at 21-22 (D. Wy. Oct. 3; 2012) (citing RTAA and finding 

' The RTAA court rejected an argument — similar to the one made by AAN here — that the major purpose 

test must be confined to "(1) examining an organization's expenditures to see if campaign-related speech amounts to 

50% of all expenditures; or (2) reviewing 'the organization's central purpose revealed by its organic documents.'" 

RTAA, 681 F.3d at 555. The Fourth Circuit recognized that determining an organization's major purpose "is 

inherently a comparative task, and in most instances it will require weighing some of the group's activities against 

others." Id. at 556; see also Koerber v. FEC, 483 F. Supp. 2d 740 (E.D.N.C. 2008) (denying preliminary relief in 

challenge to Commission's approach to determining political committee status, and noting that "an organization's 

'major purpose' is inherently comparative and necessarily requires an understanding of an organization's overall 

activities, as opposed to its stated purpose"); FEC v. Malenick, 310 F. Supp. 2d 230,234-37 (D.D.C. 2004) 

(considering organization's statements in brochures and "fax alerts" sent to potential and actual contributors, as well 

as its spending influencing federal elections); FEC v. GOPAC, inc., 917 F. Supp. 851,859 (D.D.C. 1996) ("The 

organization's purpose may be evidenced by its public statements of its purpose or by other means, such as its 

expenditures in cash or in kind to or for the benefit of a particular candidate or candidates."); id. at 864, 866 

(applying a fact-intensive inquiry, including review of organizations' meetings attended by national leaders and 

organization's "Political Strategy Campaign Plan and Budget," and concluding that organization did not have as its 

major purpose the election of federal candidates). 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 10 of27 

1 Commission's method of determining political committee status to be constitutional), appeal 

2 docketed, No. 12-8078 (10th Cir. Oct. 19, 2012).*^ 

3 c. Organizational and Reporting Requirements for Political 

4 Committees 

5 

6 Political committees — commonly known as "PACs" — must comply with certain 

7 organizational and reporting requirements set forth in the Act. PACs must register with the 

1 

4 8 Commission, file periodic reports for disclosure to the public, appoint a treasurer who maintains 

Q 

9 its records, and identify themselves through "disclaimers" on all of their political advertising, on 

10 their websites, and in mass e-mails. See 2 U.S.C. §§ 432-34; 11 C.F.R. §110.11(a)(1).' The 

11 Act's reporting requirements "are minimal" and the organizational requirements are not "much 

12 of an additional burden." SpeechNow.org v. FEC, F.3d 686,696 (D.C. Cir. 2010) 

13 {"SpeechNow"). These requirements, which promote disclosure, do not, of course, prohibit 

14 speech. RTAA, 681 F.3d at 552 n.3. 

15 In the wake of the Supreme Court's decision in Citizens United v. FEC, 130 S. Ct. 876 

16 (2010), which struck dowTi the Act's prohibitions on corporate independent expenditures and 

17 electioneering communications, the D.C. Circuit held in SpeechNow that political committees 

18 that engage only in independent expenditures are not subject to contribution limits. See 599 F.3d 

19 at 696. These political committees, often referred to as independent expenditure-only political 

* • The Supreme Court's decision in FCC v. Fox Television Stations, Inc. is not to the contrary. See 132 S. Ct. 

2307,2317 (2012) ("[A] regulation is not vague because it may at times be difTicult to prove an incriminating fact 

but rather because it is unclear as to what fact must be proved"). In that case, the FCC's indecency standard was 

held to be vague for lack of notice when it applied a new stricter standard, ex post facto, to the Fox defendants, and 

when it relied on a single "isolated and ambiguous statement" from a 50-year old administrative decision to support 

its finding of indecency against the ABC defendants. Id. at 2319. Here, in sharp contrast, the Supplemental E&J — 

which was issued several years before the conduct at issue — provides extensive guidance on the Commission's 

approach to major purpose and has withstood both APA and constitutional challenges. See also Center for 

Individual Freedom v. Madigan, 697 F.3d 464 (7th Cir. 2012) {"Madigan") (rejecting vagueness challenge to the 

definition of "political committee" in the Illinois campaign finance statute). 

^ An organization must register as a political committee when it crosses the S1,000 threshold and determines, 

based on the guidance in the Supplemental E&J, that it has the requisite major purpose. 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 11 of27 

1 committees or Super PACs, continue to be subject, however, to the "minimal" "reporting 

2 requirements of 2 U.S.C. §§ 432,433, and 434(a), and the organizational requirements of 

3 2 U.S.C. §§ 431(4) and 431(8)." Id. at 689. 

4 Notably, the Supreme Court has stressed that such requirements serve the vital role of 

5 disclosure in political discourse. See Citizens United, 130 S. Ct. at 916 (recognizing that 

6 increased "transparency" resulting from FECA disclosure requirements "enables the electorate to 

7 make informed decisions and give proper weight to different speakers and messages"); Doe v. 

8 Reed, 561 U.S. , 130 S. Ct. 2811,2820 (2010) (holding that public disclosure of state 

9 referendum petitions serves important government interest of "promot[ing] transparency and 

10 accountability in the electoral process," and "preserving the integrity of the electoral process"); 

11 Madigan, 697 F.3d at (upholding Illinois's campaign finance disclosure provisions against 

12 constitutional facial challenge, finding a substantial relation to "Illinois's interest in informing its 

13 electorate about who is speaking before an election"); see also Doe, 130 S. Ct. at 2837 (Scalia, 

14 J., concurring) ("Requiring people to stand up in public for their political acts fosters civic 

15 courage, without which democracy is doomed.").® 

16 2. Application of the Test for Political Committee Status to AAN 

17 a. Statutory Threshold 

18 

19 To assess whether an organization has made an "expenditure," the Commission "analyzes 

20 whether expenditures for any of an organization's communications made independently of a 

21 candidate constitute express advocacy either under 11 C.F.R. § 100.22(a), or the broader 

22 definition at 11 C.F.R. § 100.22(b)." Supplemental E&J at 5606. AAN states that it spent 

' But cf. Minn. Citizens for Life, Inc. v. Swanson, 692 F.3d 864, 876 (8th Cir. 2012) (striking down certain 

registration and disclosure provisions of Minnesota's campaign finance law, finding that those obligations as applied 

to associations that do not meet Buckley's "major purpose test" are unduly burdensome and do not match any 

"sufficiently important disclosure interest"). 
2 

3 

4 

5 

6 

1 7 

4 

0 8 

4 

9 

! 

10 

§ 11 

7 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

MUR 6589 (American Action Network) 

General Counsel's Report 

Page 12 of27 

$4,096,910' on reported independent expenditures between July 2009 and June 2011. Resp. 

at 25. According to the Commission's records, approximately $4,044,572 of that total was spent 

in 2010. Thus, AAN far exceeded the $1,000 statutory threshold for political committee status. 

See 2 U.S.C. § 431(4)(A); 11 C.F.R. § 100.5. 

b. Major Purpose 

AAN states in its response, on its website, and in its tax returns, that its major purpose is 

not federal campaign activity, but rather advocating issues and educating the public. See Resp. at 

3-4; http://americanactionnetwork.com/about; 2009 Tax Return at 2; 2010 Tax Return at 2, 

Schedule O. The Commission noted in the Supplemental E&J that it may consider such 

statements in its analysis of an organization's major purpose, Supplemental E&J at 5606, but that 

such statements are not necessarily dispositive. See Real Truth About Obama v. FEC, No. 3:08-

cv-00483, 2008 WL 4416282, at 14 (E.D. Va. Sept. 24, 2008) ("A declaration by the 

organization that they are not [organized] for an electioneering purpose is not dispositive.") 

(emphasis in original, alteration added), ajfd, 575 F.3d 342 (4th Cir. 2009), vacated on other 

grounds, 130 S. Ct. 2371 (2010), remanded and decided, 796 F. Supp. 2d 736, affirmed sub nom. 

Real Truth About Abortion v. FEC, 681 F.3d 544 (4th Cir. 2012), cert, denied, 81 U.S.L.W. 3127 

(U.S. Jan. 7,2013) (No. 12-311). Under the Commission's case-by-case approach, the 

Commission considers the organization's "overall conduct," including its disbursements, 

activities, and statements. Supplemental E&J at 5597. In this case, AAN's proportion of 

spending related to federal campaign activity is alone sufficient to establish that its major 

purpose in 2010 was the nomination or election of federal candidates. 

Again, the Commission's records put the total at $4,097,962. 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 13 of27 

1 AAN repoiled spending approximately $4,044,572 on independent expenditures in 2010. 

2 In addition, the available information indicates that AAN spent at least $ 12,968,445 in 2010 on 

3 communications that support or oppose a clearly identified Federal candidate, but do not contain 

4 express advocacy. In past enforcement actions, the Commission has determined that funds spent 

5 on communications that support or oppose a clearly identified federal candidate, but do not 

1 6 contain express advocacy, should be considered in determining whether that group has federal 

4 

0 7 campaign activity as its major purpose. 

^ 8 For example, the Commission has relied, in part, on the following advertisements in 

9 determining that an entity was a political committee; 

10 • "Child's Pay": The advertisement contains "images of children performing 

11 labor-intensive jobs: washing dishes in a restaurant kitchen, vacuuming a hotel 

i 2 hallway, working on an assembly line in a factory, collecting garbage, working at 

13 an auto repair shop, and checking groceries," and concludes with the question: 

14 "Guess who's going to pay off President Bush's $ 1 trillion deficit?"'' 

15 

16 • "70 Billion More": The advertisement shows images of a young boy sitting at a 

17 school desk and a young girl with a thermometer in her mouth. The voice-over 

18 states: "We could build thousands of new schools, or hire a million new teachers. 

19 We could make sure every child has insurance. Instead, George Bush has spent 

20 $150 billion in Iraq and has a secret plan to ask for $70 billion more. But after 

See Conciliation Agreement H IV. 11, MUR 5754 (MoveOn.org Voter Fund) (relying on funds used for 

advertisements that "opposed" or "criticized" George W. Bush to establish political committee status); Factual and 

Legal Analysis at 2, MUR 5753 (League of Conservation Voters 527) (finding major purpose satisfied where funds 

spent on door-to-door and phone bank express advocacy campaign, and also on advertisements "supporting or 

opposing clearly identified federal candidates, some of which contained express advocacy"); Conciliation 

Agreement ^ IV. 14, MUR 5487 (Progress for America Voter Fund) (concluding that PFA VF had met the major 

purpose test after spending 60% of its funds on communications that "praised George W. Bush's leadership as 

President and/or criticized Senator Kerry's ability to provide similar leadership"); see also Stipulation for Entry of 

Consent Judgment 122, FEC v. Citizens Club for Growth. Inc., Civ. No. 1:05-01851 (Sept. 6,2007) (entering 

stipulation of Commission, approved as part of a consent judgment, where organization was treated as a political 

committee because "the vast majority of [the group's disbursements] were made in connection with federal 

elections, including, but not limited to, funding for candidate research, polling, and advertisements and other public 

communications referencing a clearly identified federal candidate"). 

'' Factual and Legal Analysis at 3-4, 12-13, MUR 5754 (MoveOn.Org Voter Fund). The full communication 

can be viewed at http://www.youtube.com/watch?v=A9WKimKIyUQ. 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 14 of27 

1 four years it's now dear: George Bush has no plan for taking care of America. 

2 Face it. George Bush is not on our side."'^ 

3 

4 • "Jobs": "Is George Bush listening to us? Since taking office, he's let oil and 

5 energy companies call the shots. Special exemptions from the Clean Water and 

6 Clean Air Acts. Halliburton collecting billions in no-bid contracts. Here in 

7 Wisconsin, 52,500 manufacturing jobs lost. America is going in the wrong 

8 direction. And George Bush just listens to the special interests."'^ 

9 

10 • "Yucca You Decide": "Yucca Mountain. While everyone plays politics, who's 

1 11 looking out for Nevada? Eighty-five percent of the nuclear waste could come 

4 12 through Las Vegas. Past businesses. Through communities. By our schools. 

0 13 Accidents happen, and if so, how could Las Vegas, a city and economy built on 

2 14 tourism, recover? Who would come visit us then? The question: did George W. 

f 15 Bush really try and stop Yucca Mountain? Or was he just playing politics?""' 1 

1 17 • "Finish It": [On screen: Images of Mohammed Atta, Osama bin Laden, Khalid 

9 18 Sheik Mohammed, Nick Berg's killers, and victims of terrorist attacks.] "These 

0 19 people want to kill us. They killed hundreds of innocent children in Russia. Two 

^ 20 hundred innocent commuters in Spain. And 3,000 innocent Americans. John 

21 Kerry has a 30-year record of supporting cuts in defense and intelligence and 

22 endlessly changed positions on Iraq. Would you trust Kerry against these fanatic 

23 killers? President Bush didn't start this war, but he will finish it."'^ 

24 

25 • "Ashley's Story": This advertisement recounts the story of Ashley Faulkner, 

26 whose mother was killed in the September 11,2001, terrorist attacks, and the 

27 interaction she had with President George W. Bush during a visit to Ohio. It 

28 closes with Ashley Faulkner's father stating: "What I saw was what I want to see 

29 in the heart and in the soul of the man who sits in the highest elected office in our 

30 country."'-® 

31 

32 The Commission found that each of these advertisements — though not express advocacy 

33 — indicated that the respondents had as their major purpose the nomination or election of federal 

12 Id. at 4, 12-13. The full communication can be viewed at http://archive.org/details/movf70billlonmore. 

" Factual and Legal Analysis at 5, 18, MUR 5753 (League of Conservation Voters 527). The full 

communication can be viewed at http://archive.org/details/lcvjobs_102604. 

Id. at 5, 18. The full communication can be viewed at http://archive.org/details/lcv_yucca_decide. 

Conciliation Agreement KIV. 14, MUR 5487 (Progress for America Voter Fund). The full communication 

can be viewed at http://www.livingroomcandidate.org/commercials/2004/finish-it. 

Id. The full communication can be viewed at 

hnp://www.livingroomcandidate.org/commercials/2004/ashleys-story. 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 15 of27 

1 candidates. These ads evidenced that the organization's major purpose was federal campaign 

2 activity because they "support," "oppose," "praise," or "criticize" the federal candidates. See 

3 jwpro n.10-16. 

4 Likewise, the following electioneering communications on which AAN spent 

5 approximately $ 12,968,445, though not express advocacy, oppose or criticize federal candidates 

6 and therefore provide evidence that AAN had as its major purpose the nomination or election of 

7 federal candidates." 

8 i. "Bucket"'" 

9 We send tax money to Washington and what does Russ Feingold do with it? 

10 Eight hundred billion dollars for the jobless stimulus. Two point five trillion for a 

11 healthcare plan that hurts seniors. A budget that forces us to borrow nine trillion 

12 dollars. And when he had a chance at reform, he voted against the Balanced 

13 Budget Amendment. Russ Feingold and our money. What a mess. [SUPER: 

14 Russ Feingold. What a mess.] 

15 

16 ii. "Naked"" 

17 [Announcer:] How can you tell the taxpayers in Congressman Gerry 

18 Connolly's district? We're not so tough to spot. Connolly stripped us with 

19 a wasteftil stimulus, spent the shirts off our backs. [On-Screen Text:] S74 

20 Trillion Debt. [Announcer:] Connolly is taking money from our pockets 

" AAN spent approximately SI 3,792,875 on electioneering communications during 2010. The 

communications collected here are available online in video or transcript form. We were unable to locate two 

advertisements on which AAN spent approximately $824,430, that were reported to the Commission as 

electioneering communications: "First," which identifies Mike Oliverio (WV-01) (two separate reports of $149,700 

and $225,000) and "Remember," which identifies Martin Heinrich (NM-01) ($449,730). Although six of these 

advertisements are specifically identified in the Complaint, all of the advertisements identified in this report are 

included in the Complaint's allegations. See Compl. at 3 ("AAN reported to the FEC it spent... $14,038,625 

million [sic] on electioneering communications between July 23, 2009 and June 30,2011"), 7 ("All of AAN's 

spending on ... electioneering communications were for the purpose of the nomination or election of federal 

candidate [s/c]"). 

AAN reported spending $290,395 on this electioneering communication. This ad (or a similar ad with the 

same title) was also reported as an independent expenditure. A transcript is available at 

http://americanactionnetwork.org/content/aan-releases-new-campaign-wisconsin. 

" AAN reported spending a total of $2,092,975 on seven versions of this communication featuring the 

following candidates: Geny Connolly (VA-11); Joe Donnelly (IN-02); Tom Perrioello (VA-05); Tim Walz (MN01); Martin Heinrich (NM-01); Steve Kagen (WI-08); and Kurt Schrader (OR-05). 
i 

i 

I 

MUR 6589 (American Action Network) 

General Counsel's Report 

Page 16 of27 

1 to put in Washington's pockets. [Actor:] "Now I don't have any pockets." 

2 [Announcer:] Now, Congress wants to strip us bare with more spending. 

3 Call Congressman Connolly. Tell him: vote to cut spending this 

4 November. 

5 

6 iii. "Leadership"^® 

7 [Announcer:] Herseth Sandlin on health care: [Herseth Sandlin:] "1 stood 

8 up to my party leadership and voted no." [Announcer:] The truth is 

9 Herseth Sandlin supports keeping Obamacare, a trillion dollar health care 

10 debacle, billions in new job-killing taxes. It cuts five hundred billion from 

11 Medicare for seniors then spends our money on health care for illegal 

12 immigrants. Tell Congresswoman Herseth Sandlin to vote for repeal in 

13 November. 

14 

15 iv. "Quit Critz"^' 

16 He was our district economic development director when we lost jobs and 

17 unemployment skyrocketed. Mark Critz. He supports the Obama-Pelosi 

18 agenda that's left us fourteen trillion in debt. Mark Critz. And instead of 

19 extending tax cuts for Pennsylvania families and businesses, he voted with 

20 Nancy Pelosi to quit working and leave town. Mark Critz. Tell 

21 Congressman Critz that Pennsylvania families need tax relief this 

22 November, not more government. 

23 

24 V. "Taxes"^^ 

25 Congressman Mark Critz. We know he opposes repealing Obamacare, 

26 which means five hundred billion in new job-killing taxes. Now 

27 Congressman Critz wants to raise taxes on small businesses, a devastating 

28 blow to a weak economy. Congressman Critz even voted to delay 

29 extending child tax credits for families. Tell Congressman Mark Critz to 

30 vote to extend the tax cuts in November. 

31 

^ A AN reported spending $146,135 on this communication. 

" AAN reported spending $177,310 on this communication. 

" AAN reported spending $435,000 on this communication. A transcript is available at 

http://politicalcorrection.org/adcheck/201010240001. 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 17 of27 

1 

2 vi. "Ridiculous"" 

3 Ridiculous stimulus! Courtesy of Charlie Wilson and Nancy Pelosi. 

4 Three million for a turtle tunnel. Two hundred thousand for Siberian 

5 lobbyists. Half a million to study Neptune. Two million to photograph 

6 exotic ants and one hundred fifty thousand to watch monkeys on drugs. 

7 The only thing Wilson and Pelosi's stimulus didn't do? Fix Ohio's 

8 economy. Call Charlie Wilson. Tell him to keep the tax cuts, ditch the 

9 stimulus. 

10 

11 vii. "Mess"^" 

12 A government health care mess thanks to Nancy Pelosi and Chris Murphy. 

13 Five hundred billion in Medicare cuts, free health care for illegal 

14 immigrants, thousands of new IRS agents, jail time for anyone without 

15 coverage, and now a forty-seven percent increase in Connecticut health 

16 care premiums. Forty-seven percent! Call Chris Murphy. Tell him to 

17 repeal his government health care mess. 

18 

19 viii. "Wasted"" 

20 America is thirteen trillion in debt yet Congresswoman Herseth Sandlin 

21 keeps on spending, voting for the eight hundred billion stimulus they 

22 promised would create jobs. Instead, our money was wasted upgrading 

23 offices for DC bureaucrats, studying African ants, and building road 

24 crossings for turtles. Now they want to do it again. Tell Congresswoman 

25 Herseth Sandlin to vote "no" on a second, wasteful stimulus in November. 

26 

AAN reported spending $505,000 on this communication. 

" AAN reported spending SI 37,900 on this communication. AAN filed two separate reports for "Mess" and 

"Mess revised," both of which identity Chris Murphy. The reports were filed, respectively on October 27,2010, and 

October 28, 2010. The covering periods, respectively, are October 12-26 and October 12-28. The amounts, 

respectively, are $14,750 and $123,150. Both are marked as "new" reports. AAN also reported spending $379,000 

on "47," which may be the same as (or similar to) "Mess". 

AAN reported spending $231,000 on this communication. The transcript is available at 

http;//politicalcorrection.org/adcheck/201010250013. 
J 

§ 

MUR 6589 (American Action Network) 

General Counsel's Report 

Page 18 of27 

.«26 1 ix. "Skype' 

2 Person 1: Hey, what's up? 

3 Person 2: Hey. You have to check out the article I just sent you. 

4 Apparently, convicted rapists can get Viagra paid for by the new health 

5 care bill. 

6 Person I: Are you serious? 

7 Person 2: Yep. I mean, Viagra for rapists? With my tax dollars? And 

8 Congressman Perlmutter voted for it. 

9 Person 1; Perlmutter voted for it? 

10 Person 2: Yep. I mean, what is going on in Washington? 

11 Person 1: We need to tell Perlmutter to repeal it in November. 

12 

13 X. "Order"" 

14 [On-screen text;] If Nancy Pelosi gave an order...would you follow it? 

15 Mike Oliverio would. Oliverio says he would support Pelosi in 

16 Washington. After all, Oliverio voted himself a 33% pay raise. Oliverio 

17 voted for higher taxes. Even on gas. And Oliverio won't repeal Obama's 

18 $500 billion Medicare cuts. So what will Mike Oliverio do in 

19 Washington? Whatever Nancy Pelosi tells him to. 

20 

21 xi. "Read This"" 

22 [On-screen text] Rick Boucher wants to keep you in the dark. About his 

23 Washington Cap and Trade deal. Boucher sided with Nancy Pelosi. For 

24 billions in new energy taxes. That will kill thousands of Virginia jobs. But 

25 Rick Boucher didn't just vote for Cap and Trade. The Sierra Club called 

26 Boucher the "linchpin" of the entire deal. Call Rick Boucher. Tell him no 

27 more deals. 

28 

29 xii. "Wallpaper"" 

30 Congressman Kurt Schrader is wallpapering Washington with our tax 

31 money. Schrader spent nearly eight hundred billion on the wasteful 

32 stimulus that created few jobs but allowed big executive bonuses. He 

^ A AN reported spending a total of $1,430,000 on two versions of this communication featuring Dana Titus 

(NV-03) and Ed Perlmuner (CO-07). 

27 

2S 

AAN reported spending $225,000 on this communication. 

AAN reported spending $226,000 on this communication. 

" AAN reported spending a total of $ 1,600,000 on five versions of this communication identifying the 

following candidates; Steve Kagen (WI-08); Kurt Schrader (OR-05); Joe Donnelly (IN-02); Ed Perlmutter (CO-07); 

and Martin Heinrich (NM-OI). 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 19 of27 

1 threw nearly a trillion at Pelosi's health care takeover and voted to raise 

2 the national debt to over fourteen trillion. Now Congress wants to raise 

3 taxes. Call Congressman Schrader. Tell him to vote for a tax cut this 

4 November to stop wallpapering Washington with our tax dollars. 

5 

6 xiii. "Ouch"^° 

7 During her eighteen years in Washington, Patty Murray voted for the 

8 largest tax increase in history, and repeatedly against tax relief. But this 

9 November, Murray promises to vote for a huge tax hike on small 

X 10 businesses. Ever heard of helping small businesses, Patty? Tell Senator 

5 11 Murray "ouch!" We can't afford more tax hikes, 

y ,2 

13 xiv. "Back Pack"'' 

14 There's a lot on the backs of our kids today, thanks to Congressman 

15 [Gerry Connolly/Tom Perriello/Tim Walz]. [Connolly/Perriello/Walz] 

16 loaded our kids up with nearly eight hundred billion in wasteful stimulus 

17 spending. Then added nearly a trillion more for Pelosi's health care 

18 takeover. A debt of fourteen trillion. Now Congress wants to pile on more 

19 spending. How much more can our children take? Call 

20 Congressman [Connolly/Perriello/Walz]. Tell him to vote to cut spending 

21 this November. It's just too much. 

22 

23 XV. "Read This"" 

24 [On-screen text:] Congress doesn 7 want you to read this. Just 

25 like [Charlie Wilson/Jim Himes/Chris Murphy]. [Charlie Wilson/Jim 

26 Himes/Chris Murphy] & Nancy Pelosi rammed through government 

27 healthcare. Without Congress reading all the details. $500 billion in 

28 Medicare cuts. Free healthcare for illegal immigrants. Even Viagra for 

29 convicted sex offenders. So tell [Charlie Wilson/Jim Himes/Chris 

30 Murphy] to read this: In November, Fix the healthcare mess Congress 

31 made. 

A 

30 AAN reported spending S652,584.69 on this communication. 

" AAN reported spending a total of $ 1,210,000 on three versions of this communication identifying the 

following candidates: Tim Walz (MN-01); Gerry Connolly (VA-11); and Tom Perrioello (VA-05). 

" AAN reported spending a total of $1,065,000 on three versions of this communication identifying the 

following candidates: Charlie Wilson (OH-06); Jim Hines (CT-04); and Chris Murphy (CT-05). These three 

versions of "Read This" are distinct from the Rick Boucher version of "Read This". See supra n.28. 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 20 of 27 

1 xvi. "Extreme"" 

2 [On-Screen Text:] Pelosi is not extreme. Compared to Annie 

3 Kuster. Kuster supported the trillion dollar government Healthcare 

4 takeover. But says it didn V go far enough. $525 billion in new taxes for 

5 government Healthcare. Now, Kuster wants $700 billion in higher taxes 

6 on families and businesses. And $846 billion in job killing taxes for cap 

7 and trade. Nancy Pelosi is not extreme. Compared to Annie Kuster. 

8 

9 xvii. "Secret"" 

^ 10 Remember this? [PELOSI:] "We have to pass the bill so that you can, uh, 

0 11 find out what is in it." Now we know what Pelosi and Mark Schauer were 

4 12 hiding. A trillion-dollar health care debacle. Billions in new job-killing 

4 13 taxes. They cut five hundred billion from Medicare for seniors, then spent 

5 14 our money on health insurance for illegal immigrants. In November, 

^ 15 tell Congressman Mark Schauer to vote for repeal. 

9 

1 17 xviii. "Repeal"" 

S 

18 Obamacare. A trillion-dollar health care debacle. Yet Congressman Critz 

19 says he opposes repealing it. It means five hundred billion in new Job20 killing taxes. Cuts billions from Medicare for seniors. And spends our tax 

21 dollars on health insurance for illegal immigrants. Yet Congressman Critz 

22 says he wants to keep it. Tell Congressman Mark Critz to vote for repeal 

23 in November. 

24 

25 xix. "New Hampshire"^® 

26 Winter's here soon. Guess Congressman Hodes has never spent nights 

27 sleepless, unable to pay utility bills. Why else would he vote for the cap28 and-trade tax? Raise electric rates by ninety percent? Increase gas to four 

29 dollars? Cost us another two million jobs? Kelly Ayotte would stop the 

30 cap-and-trade tax. Cold. 

31 

" AAN reported spending $875,000 on this communication. 

" AAN reported spending $370,000 on this communication. 

" AAN reported spending $435,000 on this communication. 

AAN reported spending $484,999 on this communication. The transcript is available at 

http://politicalcorrection.org/'adcheck/201008050003. 
2 

3 

4 

5 

6 

7 

8 

9 

4 10 

0 

4 II 

4 

3 12 

1 13 

s 14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

MUR 6589 (American Action Network) 

General Counsel's Report 

Page 21 of27 

XX. "Promise"" 

Spending in Washington is out of control...Representative Hodes promised 

he'd fight wasteful spending. Hodes hasn't kept that promise. He voted 

for Peiosi's Stimulus bill....For the auto bailout...For massive govemmentrun health care. Trillions in new spending. As New Hampshire families 

struggle...Paul Hodes continues the wastefiil spending spree with our tax 

dollars. Tell Congressmem Hodes to stop voting for reckless spending. 

AAN argues in its response that none of its electioneering communications qualifies as 

express advocacy or its functional equivalent, and that only its independent expenditures should 

count when determining its major purpose for political committee status. Resp. at 25-27. As 

discussed above, however, that argument fails to come to terms with the Commission's 

longstanding view — upheld by the courts — that the required major purpose test is not limited 

solely to express advocacy (or the functional equivalent of express advocacy). Each of the AAN 

ads features a clearly identified federal candidate, criticizes or opposes a candidate, and was run 

in the candidate's respective state shortly before a primary or election. The fact that the ads do 

not contain express advocacy, or the functional equivalent, does not shield such ads from 

consideration under the major purpose test.^® 

Nor does Buckley support an argument that determining an organization's major purpose 

is limited to consideration of its express advocacy. The Court first established the major purpose 

test in the context of its discussion of Section 434(e) — a provision that required the disclosure 

of expenditures by persons other than political committees. In order to cure vagueness concerns 

in that section, the Court construed "expenditure" to reach only express advocacy. Id. at 79-80. 

" AAN reported spending $14,896.34 on this communication. The transcript is available at 

http://americanactionnetwork.org/content/two-new-advocacy-campaigns-wisconsin-and-new-hampshire. 

" Similarly, the fact that some of the ads contain a tag line requesting that the viewer call the candidate and 

tell the candidate to take certain action (i.e., "Tell Congressman Hodes to stop voting for reckless spending") does 

not immunize the communications from being considered federal campaign activity when determining major 

purpose. 
MUR 6S89 (American Action Network) 

General Counsel's Report 

Page 22 of 27 

1 By contrast, limiting which expenditures political committees would have to disclose, the Court 

2 held that the term "political committee" — as defined in Section 431 (d) — "need only 

3 encompass organizations that are under the control of a candidate or the major purpose of which 

4 is the nomination or election of a candidate." Id. at 79. Thus, the two limitations were imposed 

5 on two different terms in two different sections of the Act: (1) "express advocacy" as a 

^ 6 limitation on "expenditures" made by persons other than political committees pursuant to Section 

0 7 434(e); and (2) "major purpose" as a limitation on the definition of "political committee" 

^ 8 pursuant to Section 431 (d). The opinion could have articulated a test that linked the limitations 

9 — requiring, for example, that to be considered a political committee an organization's "major 

10 purposed must be to expressly advocate the nomination or election of a candidate." But the 

11 Court did not take that tack. Indeed, the Court noted that even ''partisan committees" which 

12 include "groups within the control of the candidate or primarily organized for political 

13 activities" would fall outside the definition of "political committee" only if they fail to meet the 

14 statutory spending threshold. /</. at 80 (emphasis added). 

15 Similarly, in MCFL, the Court's opinion nowhere suggests that express advocacy 

16 communications are the only kind of "campaign activity" that can satisfy the major purpose test. 

17 See MCFL, 479 U.S. at 252-53, 262 (political committee requirements inapplicable to 

18 "organizations whose major purpose is not campaign advocacy," but "political committee" does 

19 include organizations with a major purpose of "campaign activity") (emphasis added). And 

20 many lower federal courts have likewise decided that a determination of major purpose is not 

21 restricted to consideration of a group's express advocacy as compared to its other activities.^' 

" See North Carolina Right to Life v. Leake, 525 F.3d 274,289 (4th Cir. 2008) (major purpose test may be 

implemented by examining, inter alia, "if the organization spends the majority of its money on supporting or 

opposing candidates") (emphasis added); Akins v. FEC, 101 F.3d 731, 742 (D.C. Cir. 1997) ("an organization 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 23 of 27 

1 AAN also argues that the IRS's definition of "political campaign activities" — and the 

2 figures reported as such in AAN's tax filings — should inform the Commission's determination 

3 of AAN's major purpose. Resp. at 7,27; Supp. Resp. at 1. The Commission has determined 

4 previously, however, that "neither FECA, as amended, nor any judicial decision interpreting it, 

5 has substituted tax status for the conduct-based determination required for political committee 

6 status." Supplemental E&J at 5999. Rather, when interpreting and applying the Act, the 

7 Commission has concluded that "a detailed examination of each organization's contributions, 

8 expenditures, and major purpose" is the proper approach, as described in detail above. Id. 

9 Although both the complaint and response discuss AAN's activities over a two-year 

10 period coinciding with AAN's fiscal tax years (July 2009 - June 2011), a calendar year test 

11 provides the firmest statutory footing for the Commission's major purpose determination — and 

12 is consistent with FECA's plain language. The Act defines "political committee" in terms of 

devoted almost entirely to campaign spending could not plead that the administrative burdens associated with such 

spending were unconstitutional as applied to it") (emphasis added), vacated on other grounds, 524 U.S. 11 (1998); 

FEC V. Machinists Non-Partisan Political League, 655 F.2d 380, 393 (D.C. Cir. 1981) (recognizing "the grave 

constitutional difficulties inherent in construing the term 'political committee' to include groups whose activities are 

not... directly related to promoting or defeating a clearly identified 'candidate' for federal office") (emphasis 

added); RTAA, 796 F. Supp. 2d 736, 751 (E.D. Va. 2011) (Recognizing that "the FEC considers whether the group 

spends money extensively on campaign activities such as canvassing of phone banks, or on express advocacy 

communications" and "the FEC is entitled to consider the full range of an organization's activities in deciding 

whether it is a political committee"), affirmed by 681 F.3d 544 (4th Cir. June 12, 2012); Transcript of Telephonic 

Oral Ruling, Free Speech v. FEC, No. I2-CV-I27-SWS, at 21-22 (D. Wy. Oct. 3,2012) (quoting RTAA and 

upholding Commission's case-by-case method of determining political committee status), appeal docketed. No. 12-

8078 (10th Cir. Oct. 19, 2012). But see New Mexico Youth Organized v. Herrera, 611 F.3d 669, 678 (10th Cir. 

2010) (interpreting Buckley's major purpose test as establishing that regulation as a political committee is only 

constitutionally permissible (1) when an organization's central purpose is "campaign or election related"; or (2) 

when a "preponderance of [the organization's] expenditures is for express advocacy or contributions to 

candidates."); Statement of Reasons, Comm'rs. Petersen and Hunter at 6, MUR 5842 (Economic Freedom Fund) 

(interpreting the Court's major purpose requirement to mean that "the Act does not reach those 'engaged purely in 

Issue discussion,' but instead can only reach ... 'communications that expressly advocate the election or defeat of a 

clearly identified candidate'") (citing Buckley, 424 U.S. at 79-80); see also Colo. Right to Life Comm., Inc. v. 

Coffman, 498 F.3d 1137, 1154 (10th Cir. 2007) (holding a Colorado statute unconstitutional as applied because it 

"would, as a matter of common sense, operate to encompass a variety of entities based on an expenditure that is 

insubstantial in relation to their overall budgets"). 
1 

2 

3 

4 

5 

1 6 

0 7 

4 

1 8 

1 9 

1 10 

9 

11 

12 

13 

14 

15 

16 

MUR 6589. (American Action Network) 

General Counsel's Report 

Page 24 of 27 

expenditures made or contributions received "during a calendar year." 2 U.S.C. § 431(4) 

(emphasis added). 

Moreover, using a calendar year as the statutory basis for defining "political committee" 

as required by the Act but not as the basis for examining major purpose, could lead to absurd 

results. For example, two groups with identical spending patterns could be evaluated differently 

if one group ended its fiscal tax year on May 31 and the other's fiscal tax year ended on 

December 31. The possibility of such an incongruous result is underscored by the ability of a 

nonprofit organization to change its tax filing period with the IRS. 

Finally, examining a group's spending with reference to a calendar year, rather than a 

fiscal year, is consistent with the Commission's actions in the enforcement matters cited as 

guidance in the 2007 Supplemental E&J. In two matters cited by the 2007 Supplemental E&J — 

and in one concluded shortly thereafter — the Commission focused on the group's activity 

during the 2004 calendar year for that election to determine major purpose, and only used the 

groups' later activity to assess their ongoing reporting obligations as political committees."" The 

Commission, however, has not routinely examined a group's post-election activity unless such 

activity implicated its ongoing obligations under the Act."' 

For example, in MUR 5487 (Progress for America Voter Fund), the Commission's major purpose analysis 

of the group's spending was based on the ftmds raised and spent "before the 2004 General Election." See 

Conciliation Agreement ^ 33-36, MUR 5487 (Progress for America Voter Fund). The Commission limited its 

analysis to activity during 2004 even though Progress for America Voter Fund had raised approximately $4.6 

million and spent approximately S11.2 million since the 2004 presidential election. See id. H 18. The Commission 

has also noted when groups cease to function after an election cycle. See Conciliation Agreement ^ 16, MUR 5754 

(MoveOn.org Voter Fund); Conciliation Agreement H 36, MURs 5511, 5525 (Swift Boat Veterans and POWs for 

Truth). 

Not surprisingly, many political committee enforcement matters involve groups that only spend funds 

during the calendar year of an election, and that spending thus necessarily forms the sole basis for major purpose 

analysis. 
1 

2 

3 

4 

5 

1 6 

4 

0 

4 

7 

4 8 f 9 

I 10 

II 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

MUR 6S89 (American Action Network) 

General Counsel's Report 

Page 25 of 27 

Thus, whether AAN had the requisite major purpose should be determined by reference 

to its activities during the 2010 calendar year, which is the only complete calendar year included 

in the period discussed in the complaint. 

* * * * 

In sum, American Action Network appears to have spent at least $17,013,017 during 

2010 on the type of communications that the Commission considered to be federal campaign 

activity, and therefore indicative of major purpose, in past enforcement decisions. AAN's tax 

returns don't allow us to pinpoint in which calendar year its unreported spending occurred. But 

even if we assume that all of its additional spending was both luirelated to federal campaigns and 

occurred in 2010 — the assumption most favorable to AAN — its total spending for that 

calendar year would be $27,139,009. Therefore, the minimum amount spent on federal 

campaign activity ($17,013,017) is approximately 62.6% of AAN's total spending for calendar 

year 2010. As a result, AAN's spending shows that the group's major purpose during 2010 was 

federal campaign activity (i.e., the nomination or election of a federal candidate).''^ 

C. Conclusion 

AAN made over $1,000 in expenditures during 2010, and its spending during that 

calendar year indicates that it had as its major purpose federal campaign activity (i.e., the 

nomination or election of federal candidates). Accordingly, we recommend that the Commission 

find reason to believe that AAN violated 2 U.S.C. §§ 432,433, and 434, by failing to organize, 

register, and report as a political committee, and that the Commission authorize an investigation. 

Although we believe there is sufficient information at this stage to recommend pre-probable 

In reaching this conclusion, we do not intend to express the view that a finding of major purpose requires 

clearance of a 50 percent threshold, but only that the spending on federal campaign activity in this case is alone 

sufficient to support a finding of major purpose. 
MUR 6589 (American Action Network) 

General Counsel's Report 

Page 26 of 27 

1 cause conciliation based solely on AAN's spending for advertisements, as detailed herein, an 

2 investigation of AAN's additional 2010 activity, including examination of its fundraising 

3 solicitations and advocacy mailings, may furnish evidence of additional spending on federal 

4 campaign activity that will enhance the public record and establish definitively the date by which 

5 AAN should have registered as a political committee. 

I 6 III. PROPOSED DISCOVERY 

0 7 We plan to seek information (1) to establish the extent, nature, and cost of American 

4 

^ 8 Action Network's federal campaign activity and (2) to identify potential witnesses who may 

•S ^ 9 have relevant knowledge of these facts. We also request that the Commission authorize the use 

f 10 of compulsory process, including the issuance of appropriate interrogatories, document 

11 subpoenas, and deposition subpoenas, as necessary. The information sought through any 

12 discovery would be focused on ascertaining the scope of American Action Network's reporting 

13 obligations, and would be consistent with the type of information that the Commission seeks in 

14 its analysis of a group's requirements as a political committee. 

15 
2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

29 

30 

MUR 6589 (American Action Network) 

General Counsel's Report 

Page 27 of 27 

IV. RECOMMENDATIONS 

1. 

2. 

3. 

4. 

Date 

Find reason to believe that American Action Network violated 2 U.S.C. 

§§ 432,433, and 434. 

Approve the attached Factual and Legal Analysis. 

Authorize the use of compulsory process in this matter. 

Approve the appropriate letter. 

DanierA. Petalas 

Associate General Counsel for Enforcement 

"^usan Lebeaux 

Assistant General Counsel 

•*eter Reyn6l3sP 

Attorney