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March 15,2017 ^ 

4 Chainnan Steven T. Walther 

Federal Election Commission 

999 E Street, NW 

Washington, DC 20463 

VIA FACSIMILE AND REGULAR U.S. MAIL 

Re: MUR 6920- Factual and Legal Analysis 

Dear Chairman Walther: I 

We are in receipt of your letter dated February 7,2017, notifying our client, American 

Conservative Union C'ACU"), that the Commission found reason to believe it violated 52 U.S.C. 

§ 30122 (formerly 2 U.S.C. §^lf), and the so-called Factual and Legal Analysis ("F&LA") that 

sets forth the purported basis for the Conunission's finding. Your letter also states that we may 

"submit any factual or legal materials that [we] believe are relevant to the Commission's 

consideration of this matter." Accordingly, we request clarification regarding the following legal 

issues with respect to the provided F&LA, which constitutes necessary information for cur client 

to determine whether to engage in pre-probable cause conciliation. 

The F&LA you provided does not provide a legal rationale for the application of 52 

U.S.C. § 30122 to Independent Expenditures-Only Committees (hereinafter "Supisr PACs")i 

which are not subject to the contribution limits and prohibitions of the Federal Election 

Campaign Act of 1971, as amoided (the "Act"). The cases cited in the F&LA as the basis for 

applying § 30122 do not address that issue and are not on point in this matter. 

The Supreme Court has clearly stated that "independent expenditures. ..do not give rise to 

conuption or the appearance of corruption."' On the other hand, contributions can be restricted 

to a candidate because of the risk that they will lead to quid pro quo corruption. As we stated 

previously. Section 44 If bolsters this restriction.^ Inde^ the O'Domell and Boende/ cases 

' CUUens UnUedv. FEC, SS8 U.S. 310.357 (2010). 

' Buckley v. Valeo, 424 U.S. 1,26-27 (1976) (per curiam). 
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MUR 6920 (American Conservative Union) 

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(Ninth Circuit and Seventh Circuit, respectively) involved contributions made to a Federal 

candidate's campaign committee through straw donors. In both cases, the contributors were 

subject to the Act's "hard money" contribution limits and prohibitions, which is not the case 

here. Even if you apply these cases to this situation, the F&LA conveniently ignores additional 

language in those cases that cites the anti-circumvention interest of Section 30122, which is 

simply not applicable in this context. 

In fact, prior to the enactment of the Bipartisan Campaign Reform Act of2002 

("BCRA"), Courts concluded that 441f does not apply in the soft money contwt.^ For example, 

the U.S. Court of Appeals for the District of Columbia Circuit concluded that ^here is no soft 

money ooiihteipart to / 441f 'vci FECA itselfj which prohibits conduit transfers of'contributions,' 

i.e., hard money." * Likewise, the U.S. Court of Appeals for the Third Circuit stated that the 

disclosure requirement of § 44 If was limited to "contributions of hard money."^ Althou^ the 

Supreme Court's decision in Citizens United v. FEC was not about national party soft money,^ 

the Supreme Court stiudt the "hard money" prohibition that applied to independent 

expenditures. Furthermore, the U.S. Court of Appeals for the D.C. Circuit's decision in 

SpeechNow v. resulted in the elimination of "hard money" limits to entities that make 

independent expenditures.' Thus, Super PACs are not subject to "hard money" contribution 

limits and prohibitions, which raises lemtimate questions as to the applicability of Section 30122 

to Super PACs and their contributors. 

This matter is more akin to the cases addressing soft money prior to enactment of BCRA. 

The O'Donnell and Boender cases cited in the F&LA deal with candidate committees where 

there are strict contribution limits and source prohibtions that do not exist in the Super PAC 

context. Moreover, the rationale in drose cases was not just the disclosure interest, which is what 

is suggested by the F&LA, but more so an anti-circumvention interest, which is inherent in any 

contributions made to candidates. The anti-circumvention interest is not at issue here. 

* United States v. O 'Donnell, 608 F.3d 546 (9th Cir. 2010) 

' United States v. Boender, 649 F.3d 650 (7th Cir. 2011). 

^ See UnUed States V. rne.23F. Supp.2d 55 (D.D.C. 1998); United States v. Kanchanatak, 192F.3d 1037.1042 

(D.C. Cir. 1999); Marianiv. United Slates, 212 F.3d 761,775 (3rd Cir. 2000). 

' United States V. Kanchanatak, l92F.3d 1037,1042 (D.C. Cir. 1999). 

' Mariani v. United States, 212 F.3d 761,775 (3rd Cir. 2000) (concluding "that Congress was free to detennine that 

disclosure of hard money donations was the most important form of disclosure, and to limit the regulation to that 

area."). 

* See Citizens UnUed v. FEC, 558 U.S. 310,360 (2010). 

* See SpeechNow K FEC, 599 F.3d 686 (D.C. Cir. 2010) (en banc). 

We note that the Courts in the Trie and Kanchanalak cases held that the Commission's regulation at 11 C.F.R. 

§ I04.8(a),(e) required political committees to repoit soft money; however, this created the bizarre situation where an 

individu^ or political committee could violate a regulation but not the stamte the regulation was purportedly rooted 

in, as well as potentially subject an individual to felony prosecution for false statements or con^iracy but not be 

able to prosecute that individual under FECA's misdemeanor provisions. See Robert D. Probasco. Prosecuting 

Conduit Campaign Contributions - Hard Tbne for Soft Money, 42 S. Tex. L. Rev. 841 (2001). 

ClAM HH.1. 
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MUR 6920 (American Conservative Union) 

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Even if the Commission suggests that O'Donnell and Boender are applicable here, this 

area of law is gray with respect to committees that can accept unlimited contributions. The 

Commission has not produced any binding precedent that indicates Section 30122 applies in this 

context." Accordin^y, based just upon the provided F&LA, there is no legal rationale for the 

Commission's RTB determination. We respectfully request diat the Commission review the 

case-law cited in this letter and consequently dismiss this MUR. If the Commission is, upon 

reevaluation, sticking with the RTB determination, then we request that a coherent F&LA 

rationale be provided sO our client can make an educated decision on how to proceed. 

Thank, you in advance for your considered response in this matter. Please do not hesitate 

to contact me directly at (202) S72-8663 with any questions. 

Res ibmitted. 

Spies 

Elizabeth Beacham White 

Cc: Vice-Chair Caroline C. Hunter 

Commissioner Lee E. Goodman 

Commissioner Matthew S. Petersen 

Commissioner Ellen L. Weintraub 

Antoinette Fuoto, Office of General Counsel 

" The Commission closed che file with respect to MURs 6485 (W Spann LLC, et al.), 6487 & 6488 (F8, LLC, et 

al.), 6711 (Specialty Investments. Inc.. et al.), and 6930 (SPM Holdings LLC. et al.). The Statement of Reasotis 

issued by thm Vice Chairman Steven T. Walther and Commisstoners Ann M. Ravel and Ellen L. W^traub, states 

that Section 30122 "squarely applies in this case" citing to the same decisions as the F&LA in this inaner, which are 

not on point. The Statement of Reasons of then Chainnan Matthew S. Petersen and Commissioners Caroline C. 

Hunter and Lee E. Goodman provides an analysis in the context of contributions made via a closely held corporetton 

or coipoiate LLC. 

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