\ Post-General 2004 Report
~ SCHEDULE H1 (FEC Farm 3X} H1 and H2 Schedule

METHOD OF ALLOCATION FOR:
* SHARED FEDERAL AND NON-FEDERAL ADMINISTRATIVE, GENERIC YOTER
DRIVE AND EXEMPT ACTIVITY COSTS

« SHARED FEDERAL AND LEVIN FUNDS FEDERAL ELECTION ACTIVITY
EXPENSES

NAME OF COMMITTEE in Ful)
America Caming Tagether

USE ONLY ONE SECTION

State and Local Party Committees

Flyad Percentage (select ane)

Presidentia-Only Election Year (28% Fedaral)
Presidential and Senate Eletion Year (56% Federal)

Senete-Cnly Election Yaar (21% Fadereh

—— Neon Presidential and Non-Senete Election Year (15% Fexeral)

|
Seperate Segregated Funds and Nen-Cennected Committees
Fixed Perceniage (select one)

Estimated Diract Candidates Support — Federal ......

12.00 “MG
Entrnated Direct Candidates Support — Not-Federal........
88.00 %
ADJUSTMENTS TO FUNDS EXPENDED:
Actual Direct Candidate
Support -~ Federal
0.00 %

Actus Direct Cancidata
Suppart — Non-Fedarel...

0.00

FEC Schedule H1 (Form3X) Rey. 11402



21

“numerator” would include not just “expenditures” for specific federal candidates, but also those
disbursements that “promote, support, attack or oppose” a federal candidate. Id. at 11,754-55.
And importantly, it specifically proposed setting a minimum level of federal funds for allocated
spending by non-party political committees, and set forth three alternative versions of what the
federal minimum should be, depending on whether the committee operated in one state, or more
than one state. Id. at 11,759-60; 11 C.F.R. § 106.6(c)(ii)(A), (B) (Alternatives 3-A, 3-B)
(proposed).

In doing so, the NPRM specifically raised the question — and invited comment — on
whether a 50 percent minimum federal percentage should be imposed on some or all political
committees:

The Commission is considering other minimum Federal percentages as

alternatives to those presented in the proposed rules. ... Should the Commission.

adopt a fixed minimum Federal percentage? Should it select a higher minimum

for committees that conduct activities in several States? For example, the

allocation rule could specify that nonconnected committees and separate

segregated funds that conduct activities in fewer than 10 States must use a

minimum Federal percentage of 25 percent, while those that do so in 10 or more

States would face a minimum Federal percentage of 50 percent.... [T]he 50

percent figure was chosen to reflect the broader scope of activities and as a slight

reduction to the 60 percent or 65 percent applicable to national party committees

under previous 11 C.F.R. 106.5(b)(2), prior to its sunset on December 31, 2002. . .

. If the final rule should take such an approach, what should the minimum Federal

percentages be?

69 Fed. Reg. 11,754 (emphasis added).

This put Emily’s List, and all other interested parties, on notice that a 50 percent
minimum allocation was under consideration by the Commission. The NPRM specifically

raised the question of whether a political committee that operates in ten or more states should be

subject to a minimum 50 percent Federal percentage for its allocated activities. Emily’s List

70780.1


Local Civil Rule 7.1 Certificate
Civil Action No. 05-00049 (CKK)
Emily’s List v. Federal Election Commission
Certificate required by LCvR 7.1 of the Local Rules of the United States District Court for the

District of Columbia:

I, the undersigned counsel of record for amici, certify that to the best of my knowledge and
belief, the following are parent companies, subsidiaries or affiliates of Democracy 21, the
Campaign Legal Center and the Center for Responsive Politics which have any outstanding
securities in the hands of the public:

None

These representations are made in order that judges of this court may determine the need for

Donald J. Sigfon



Ellen R. Malcokn
President

Deer Friend,
. Ale you ready to go for it, prepared to lay everything on the line to win in 2004?

: Thope so. Because, if we can conat On your personal support and active participation,
2004 will be a year of America Coming Together and George W. Bush going home.

‘fo keep their grasp on the White House and win other critical key House, Senate and
local races, the Bush campaign and the Republican Ni i Committee are amassing a political
fortune. By Election Day, they will have raised and Spent over half a billion dollars to hold
onto power. .

°

We can’t match them dollar-for-dollar. But, we can — and must — match them

door-for-door,

America is divided almost evenly between those who Support President Bush and those
who believe he is taking America in the wrong direction. In the presidential contest and in
other key federal, state and local races, the elections of 2004 will be won by whichever side
does the best job identifying and mobilizing its supporters.

That's why some of the leading progressive organizers in America have come together
to advance a bold, far-reaching Action Plan, an outline ‘vf which I have enclosed with this letter.

With help from committed activists like you, America”
Coming Together (ACT) will organize millions of
face-to-face, door-to-door, neighbor-to-neighbor contacts
that will shape the outcome of the 2004 elections — and
shape the future of American politics.

And, when Election Day is over, we will have defeated George W. Bush and elected
progressive candidates all across the nation. The extraordinary effort we're undertaking is in

Tesponse to the extraordinary. damage Bush and his allies do, on a dally basis, to. vdlues we
believe in and to people we care about.

Jn communities all across America, people are hurting because Bush’s windless devotion
(read on, please)

vr SE ia EPCOS wmpmnsa Ee

‘Steve Rosenthal Chief Executive'Officer / Main Office / 888 16th St. NW / Suite 450 / Washington, Oc 20006 4 T 202 974 8360 / F 202 974 6351
Bilen & Matcolm President / Fundraising Office / 1120 Connecticut AvesNWJ Suite 1120 / Washiagton, OC 20036 / T 202 419 1040 / F202 419 1050

CY Nata td i ep ie iis tam



PeSereerrs

AMERICA COMING TOGETHER
— A

A Bold Action Plan
Essential to Victory in 2004

Introduction

How do we give progressive candidates the winning edge in the race for the White
House and other closely contested elections in 2004?

We organize like we've never organized before — and we work together.

Our America Coming Together Action Plan is based on proven techniques and directed
by proven leaders. Our ambitious voter contact plan was designed by Steve Rosenthal,
ACT’s Chief Executive Officer. Before joining ACT, Steve served for eight years as the
Political Director of the AFL-CIO, where he developed a groundbreaking voter contact
program that increased voter turnout of union members by 4.8 million during a time
when non-union turnout decreased by 15 million.

And ACT’s President is Ellen R. Malcolm, who revolutionized American politics as
founder and president of EMILY’s List, the largest political action committee in
America. EMILY’s List elects pro-choice Democratic women to office and, since
1994, its WOMEN VOTE! program has helped mobilize women to vote, turning the
advantage of the “gender gap” into votes for Democrats.

Here are some of the key details of our Action Plan.

Seventeen States

As the 2004 elections approach, Democrats have a firm grasp on 168 electoral votes.
They’re in states that the Democratic candidate is almost guaranteed to win. President
Bush, on the other hand, seems an almost certain winner in states that add up to 190
electoral votes.

(over, please)

Steve Rosenthal Chief Executive.Officer / Main Office / 888 16th St. NW /‘Suite 450 / Washington, DC 20006 / T 202 974.8360 / F 202 974 6361
-Ellen R. Malcolm President / Fundraising Office / 1120 Connecticut Ave. NW / Suite 1120 / Washington, DC 20036-/ T 202 419 1040 / F 202 419 1050



11

In BCRA, Congress banned national party committee from raising or spending non-
federal funds at all, thus mooting the allocation question since such committees would have only
federal funds, 2 U.S.C. § 441i(a). State party committees were allowed to continue to raise non-
federal funds for non-federal races, but could not spend such funds on ads which “promote,
support, attack or oppose” federal candidates. § 441i(b)(1); § 431(20)(A)Gii). Voter
mobilization activities could be funded by state parties with an allocated mixture of federal funds
and specially regulated non-federal funds (deemed “Levin” funds), but limits were placed on the
size of these non-federal contributions, and other restrictions were imposed on how such funds
could be solicited and what they could be spent for, in order to prevent circumvention of the law.
2US.C. § 441i(b)(2).

In reviewing these provisions aimed at ending the baleful effects of soft money, the
Supreme Court in McConnell explicitly recognized that the Commission’s allocation rules for
political parties had fundamentally undermined the FECA. The Court found that voter
mobilization and generic activities plainly benefit federal candidates:

Common sense dictates . . . that a party’s efforts to register voters sympathetic to

that party directly assist the party’s candidates for federal office. 251 F.Supp. 2d

at 460 (Kollar-Kotelly, J.). It is equally clear that federal candidates reap

substantial rewards from any efforts that increase the number of like-minded

registered voters who actually go to the polls. See, e.g., id., at 459.

540 US. at 167-68. The Court further said:

Because voter registration, voter identification, GOTV, and generic campaign

activity all confer substantial benefits on federal candidates, the funding of such

activities creates a significant risk of actual and apparent corruption.

Id. at 168.
But the Court found that the pre-BCRA system for allocating that spending resulted in

circumvention of the law. The FECA “was subverted by the creation of the FEC’s allocation

70780.1


What People Are Saying About
Ameriéa. Coming Together

~t wholeheartedly support the America Coming Together Action Plan.
“4 helped found EMILy’s {t's about time we came together and organized the kind of extraordinary efforts it takes
List because | knew that, ‘to win on Election Day. | urge you to support this important organization.”
if we wanted to elect Former Texas Governor Ann Richards
more pro-choice a . .
he wor “with the Bush Administration in power, and the way jt has exploited
Dehra poltia : the terrorist attacks of September 11, I feel vary uncomfortable
pa ocak through th about the direction in which the U.S. Is taking the world, and to me ft i not business
through the ae ual. tes for this reasan that | am supporting Amarice Coming Together. ACT Is
barriers that were : ‘an effective way to mobilize civil society, to convince people to go to the polls and
stopping women yote.*
candidates from winning. George Saros
sy estime to change politics -. .
- + again— arid that’s. what so “\'m proud £0 be a part of America Coming Together, The onty
Asierica Coming Together * way to protect our environment is to defeat President Bush and elect strong

ig, a) about.” . environmental candidates nationwide The Americ ‘Coming Together Action Plan
aan “oe is essential to that task.”

Ellen R.Makolm . ‘ Carl Pope

i Sierra Club Executive Director and

“America Coming Together board membar

“The record is dear. #f we talk to voters one-on-one, at the door, In their neighbor
hoods, on the phone, in the mail and on the Intemet abobt the issues they care about —
and weave our communiastons Into an ongoing dialogue, they will come out to vote and
make a change. That's why ’m proud to be a part of America Coming Together”
Steve Rosenthal
ACT CEO and former AFL-GO Political Director

ee =<

www.actavictory.or

Des No FoSTAce

BUSINESS REPLY MAIL —

FIRST-CLASS MAIL PERMITNO. $325 MERRIFIELD VA eat

- =
POSTAGE WILL BE PAID BY ADDRESSEE _—
De eememnael
ea

AMERICA COMING TOGETHER
PO BOX 7010
MERRIFIELD VA 22116-9526

caldevulleUbcolobesotefcrl sfalSecal baal


28

While the new rules are targeted to end a manipulation that proved to be a clear abuse
during the 2004 cycle, such manipulation of the “funds expended” method had not previously
been a common practice. *? As the Supreme Court noted in McConnell, however, “the entire
history of campaign finance regulation” teaches “the hard lesson of circumvention.” 540 U.S. at
165. It is clear that this technique for manipulating the allocation rules would have grown as a
means of circumvention if the rule had not been changed to limit it.

The two new rules adopted by the Commission took effect on January 1, 2005. This
lawsuit and motion for a preliminary injunction followed.

IV. The Motion for a Preliminary Injunction Should Be Denied,

A party seeking a preliminary injunction bears the burden of meeting a four-part test:

1. Whether the plaintiff has a substantial likelihood of success on the merits.

2. Whether the plaintiff would suffer irreparable injury were an injunction not
granted.

3. Whether an injunction would substantially injure other interested parties;

4, Whether the grant of an injunction would further the public interest.
Al Fayed v, CIA, 254 F.3d 300, 303 (D.C. Cir. 2001); Serono Labs, Inc. v. Shalala, 158 F.3d
1313, 1317-18 (D.C. Cir. 1998). The request for a preliminary injunction made by Emily’s List

fails under each of these factors.

® As the E&J noted, “most” committees did not allocate under the “funds expended” method at
all. 69 Fed. Reg. at 68,062. Any committee not allocating “was presumably already using 100% Federal
funds” for generic and administrative expenses, and therefore would not be adversely affected by the new
50 percent rule. Jd.

70780.1


35

11 C.F.R. § 106.6(£)(3)(i) (2005). There is no minimum federal percentage required by this
provision.

Emily’s List attacks this rule on two grounds. The first claim is that an allocation rule
based ona “reference” to a candidate is overbroad and beyond the Commission’s statutory
authority. Pl. Mem. at 12-14. Yet this allocation rule applies to federal political committees —
groups whose “major purpose,” by definition, is to influence elections. When such a group
“refers” in a public communication to a clearly identified federal candidate running in an
election, it is hardly a novel idea to suppose the political committee is trying to influence the
election of that candidate.

The new rule has the added advantage of providing a “bright line” test that is easily
understood by political committees and easily administered by the Commission. Congress
adopted a similar “refers to a clearly identified candidate” test in enacting Title II of BCRA,
which defines and regulates “electioneering communications.” 2 U.S.C. § 434(f)(3).° But
because Title II applies to “any person” who spends money for an “electioneering
communication” — including individuals, corporations, labor unions and other entities which are
not in the business of influencing elections — Congress narrowed the scope of the bright line test
to encompass only broadcast ads in the proximate pre-election period. Such narrowing is not
necessary, however, where the regulation of an ad that “refers to” a candidate falls on a political
committee — an entity that is in the business of influencing elections. It is reasonable for the

Commission to assume that when a political committee spends money to refer to a candidate in a

* An “electioneering communication” is defined as a broadcast communications that “refers to a
clearly identified candidate for Federal office” and that is broadcast to the electorate of that candidate
within 30 days of a primary election or 60 days of a general election in which that candidate is running for
office. Id.

70780.1


Duende — Yftt oH
SCHEDULE H2 (FEC Fonm 3%) yes
ALLOCATION RATIOS bath

PAGE 52/757
NAME OF COMMITTEE {In Full)
America Gaming Together

RATIOS FOR ALLOCABLE FUNDRAISING EVENTS AND DIRECT CANDIDATE SUPPORT
ACTIVITIES APPEARING ON THIS REPORT.
Methods of allocation :

|. FUNDRAISING activites ere allocated using the ‘funds recelved method’ where the federal propertion of expenses Must
sequel the federal proportion of monies raised.

i. Shared DIRECT CANDIDATE SUPPORT activities are alocated according io benefit expected to be derived, where the
‘Tederel preportian of disbursements Is based an beneftt derived by federal candidates: fram the activity.

ACTIVITY OREVENT IDENTIFIER
FRP FEDERAL % NON-FEDERAL %
ACTIVITY Is: _
%] Furcrsising Direct Candidate Suppart 2.00 % 94.00 %
CHECK IF THE RATIO Ie:
x| saw L_ Revises _ Sarna a3 Previously Repartad Transaction ID:
Ri

FEC Behegule H2 (Form 3x) Rev.022005



31

impact on federal elections, even if only in part — that such spending is “for the purpose of
influencing” federal elections and accordingly should be funded exclusively with federal funds.
Indeed, as recounted above, the Commission did take this position in the 1970’s, if only for a
brief time, with regard to state party committees. See Informational Letter 1976-72, supra, p. 7.

McConnell makes clear that the allocation system was a means for widespread
circumvention of the law, not a statutory mandate. The Court noted, with justified skepticism,
the FEC’s decision to permit party committees to allocate at all:

Shortly after Buckley was decided, questions arose concerning the treatment of

contributions intended to influence both federal and state elections. Although a

literal reading of FECA’s definition of “contribution” would have required such

activities to be funded with hard money, the FEC ruled that political parties could

fund mixed-purpose activities — including get-out-the-vote drives and generic

party advertising — in part with soft money.
540 U.S. at 123. The Court upheld Congress’ decision to abolish allocation entirely for national
party committees — in large part because it found that FECA “was subverted by the creation of
the FEC’s allocation regime,” which enabled party committees “to use vast amounts of soft
money in their efforts to elect federal candidates.” Jd. at 142. If allocation as created by the FEC
actually subverts FECA, it certainly cannot be a regulatory mechanism that is required by FECA.

b. The 50 percent Federal allocation rule for federal political committees is not

arbitrary or capricious for lack of “proportionality.”

The Commission had strong grounds to end the “funds expended” method of allocation,
and to provide for a minimum federal percentage for allocated spending.

There was strong evidence that its existing “funds expended” allocation method was
being manipulated on a massive scale, such that at least one federal political committee was
claiming it could use tens of millions of dollars of soft money for the avowed purpose of

influencing the 2004 presidential election. While the Commission is certainly subject to

70780.1


© $500 O Other $_

Please make any necessary
ions to your name and
address. Make checks payable
to ACT, and return in the
enclosed envelope or send to

‘To make your gift by credit
card, please see reverse side
of this form

Contributions to ACT are not
tax deductible for charitable
Purposes.

All convibutions permissible
under federal law (individual
contributions of $5,000 or
less per calendar year) will
blaced in ACT's federal
account to be used in
Cannactinn with fadoral
election

® America Coming Together / 1120 Connecticut Ave, NW / Suite 1120 / Washington, pc 20036 Be .



41

percentage. But even if the allocation rules required a federal political committee such as
Emily’s List to use entirely hard money for all of its activities, that would still not constitute
irreparable harm. As the Supreme Court said in Buckley, “the overall effect of [FECA]
contribution ceilings is merely to require candidates and political committees to raise funds from
a greater number of persons.” 424 U.S. at 21-22. Emily’s List is free to raise and spend all of
the federal funds it wishes, and having to raise such funds does not constitute cognizable injury.
There is no harm to its speech, irreparable or otherwise, in being required to fund its election-
related speech with hard money, much less with just 50 percent hard money.

Finally, there is no irreparable harm because plaintiff can seek to retroactively adjust its
allocation mixture of federal and non-federal funds if it prevails on the merits in this case. Ifa
preliminary injunction is denied, and Emily’s List complies with the allocation rules during the
pendency of this action, it will suffer no harm should the Commission ultimately win the case
and the new regulations are sustained. On the other hand, if a preliminary injunction is denied
but the allocation rules are ultimately stricken, then Emily’s List can seek leave to adjust its
federal/non-federal ratio, in order to compensate for the mix of federal and non-federal money it
spent during the pendency of this case. In other words, if the regulations are struck down,
plaintiff will be able to seek leave to use greater non-federal funds to, in effect, “repay” itself for
the federal funds “unnecessarily” spent under invalid rules. Thus, the harm — if any — is easily
reparable.

C. An Injunction Would Injure the Public, and the Public Interest.

In the case of a public rule or regulation, the third and fourth standards for the issuance of

a preliminary injunction merge — the harm to the “other interested party,” a federal agency, is

reflective of the harm to the public itself.

70780.1


EXHIBIT D

EMILY’S LIST
H1 & H2 Schedules

70859.1


List seeks a preliminary injunction to enjoin the Commission’s new allocation rule, and its
clarified definition of “contribution.” For the reasons set forth below, this motion should be
denied.
I. Interests of the Amici

As set forth in greater detail in the accompanying Motion for Leave to file this
Memorandum, Senator John McCain, Senator Russell Feingold, Representative Christopher
Shays and Representative Martin Meehan are Members of Congress and are the four principal
sponsors of the Bipartisan Campaign Reform Act of 2002. They participated as intervening
defendants in McConnell v. FEC,? and have remained active in other proceedings before the
Federal Election Commission involving the interpretation and implementation of BCRA and the
federal campaign finance laws generally, including the rulemaking on political committee
allocation that is at issue in this case.*

Democracy 21, the Campaign Legal Center and the Center for Responsive Politics are all
non-profit, non-partisan policy organizations that have long experience in political reforms
relating to the role of money in the political process, and specifically to issues related to the

enactment, constitutionality and implementation of the campaign finance laws. All three groups

* See Order of May 3, 2002 in Civ. No. 02-582 (D.D.C.) (three-judge court) (Order granting
intervention).

* See Comments of Senator John McCain, Senator Russell Feingold, Representative Christopher
Shays and Representative Martin Meehan re Notice 2004-6 (April 9, 2004), which can be found in the
record of this rulemaking on the Commission’s website, at http://www.fec.gov/pdf/nprm/political

comm_status/comm2/02.pdf.

70780.1


iv

TABLE OF AUTHORITIES

Case(s): Page(s)
Al Fayed v. CIA,

254 F.3d 300 (D.C. Cir. 2001).......eccccsesceeeesssteeeereesteeeeeeeesennssaeaee 28
Buckley v. Valeo,

424 US. 1 (1976)... cccccceeeceeeeseeeeeeeeeeeseeeseeeseneeeeeesereereeeeeeeeeenee passim
Cal. Med. Ass'n. v. FEC,

453 U.S. 182 (1981)... 12
Civil Serv. Comm’n y. Letter Carriers,

413 U.S. 548 (1973)... 2. ec eseetseentesteeennsenneeetteeeneeeeeeeeeeeee 39
Common Cause v. FEC,

692 F. Supp. 1391 (D.C. 1987)... ccccceseeeceeeeeeeeceesuaaeeseeeaneneeeee 5, 30
FEC v. Colo. Republican Fed. Campaign Comm.,

533 U.S. 431 (2001)... cece cece cece cceceeceeceeseeeeeeneeeeeeenaeaannannee 12, 42
Grayned v. City of Rockford,

408 U.S. 104 (1972). 39
McConnell v. FEC,

540 U.S. 93 (2003)... cee eeceeereeeteesenerterenerenesneetieeeseeneeeneeeees passim
McConnell v. FEC,

251 F.Supp. 2d 176 (D.D.C. 2003) (three-judge court)... ceeeeee eee _passim
Nat’l Right to Work Comm.,

459 U.S. 197 (1982). ....ccccccecccc es eeeeceecenaaeeeceessaneeeeeeeeueeeesseenaeeeeeeaes 42

Shays and Meehan v. FEC,
Civ. No. 04-1597 (D.D.C.) (EGS)...

Serono Labs, Inc. v. Shalala,
158 F.3d 1313 (D.C. Cir. 1998)... ccceeeeeeneeeeeeeseeeeeeereeeesseeeeeeeeeees 28

70780.1


38

Emily’s List challenges the rule by first mischaracterizing it: plaintiff argues that if it
“now refers to a federal candidate in a communication designed to raise monies for its state and
local election program, it risks a Commission finding that its communication ‘indicates’ that
some portion of the monies received may be used to ‘support or oppose’ the federal candidate.”
Pl. Mem. at 18-19. But the new definition of “contribution” does not apply merely because of a
solicitation’s “reference” to a federal candidate. Rather it applies only if the solicitation refers to
a candidate and also indicates that the donated funds will be used to support or oppose the
referenced candidate. There is no “risk” to Emily’s List by merely referring to a federal
candidate in a solicitation, unless the language of the solicitation goes beyond that.

Plaintiff next challenges the rule for vagueness, complaining that it does not define the
term “indicate,” and so its application is “ambiguous,” “confusing” and “highly uncertain.” Jd.
Of course, the current (and longstanding) statutory definition of “contribution” is phrased quite
generally as money donated “for the purpose of influencing” a federal election. The
longstanding regulations implementing that broad standard do little more than simply repeat the
same general test. If Emily’s List has had no problem for twenty years determining whether the
funds it has been receiving are “for the purpose of influencing” a federal election, it should have
no problem in understanding if its own solicitation letters indicate whether the funds it receives
will be used to support or oppose a candidate.

In any event, the operative standard in the new rule is not “indicates,” but the “support or
oppose” test. And that standard is one that the Supreme Court just upheld in McConnell, where
it took no more than a footnote to dismiss a void-for-vagueness challenge to a comparable
standard that BCRA applies to public communications by state party committees. 540 U.S. at

170, n.64. The words “support” or “oppose,” the Court said, “give the person of ordinary

70780.1


But, you and I both know that these mass market, impersonal communications ,
aren't enough to truly engage people. Continuing declines in voter participation are
* evidence énough of that.

Our 2004 Ametica Coming Together Strategy isn’t about adding to the media clutter.
It’s about putting good old-fashioned community organizing back into the electoral
Process. Oar ambitious, well-considered plan revolves around face-to-face, door-to-

door, neighbor-to-neighbor campaigning,
It’s not only the most edifying thing to do; it’s the Most effective thing to do.
Experience has shown that multiple personal contacts, beginning well before the
election and Tunning right up through Election Day, are the most Powerful way to
engage citizens in politics, And, that’s just what our America Coming Together
strategy is all about,

And a one-way ticket back to Crawford, Texas,

The effort we're undertaking won’t be inexpensive. Our America Coming Together

With your help, our America Coming Together Action Plan can help propel progressive
candidates to victory in vitally important state, local and federal contests — and it can
help buy George W: Busha one-way ticket back to Crawford, Texas,

Let's get mad. Let's get organized. Let’s win,


10 million doors knocked on.

The America Coming Together Action Plan is based upon reaching out to millions of
carefully targeted voters in the seventeen most competitive states. If we commit the
time, energy, and financial resources to engaging people in an ongoing conversation —
throughout 2004, we can build a broader community of support and an unstoppable
margin of victory.

We've got to find those-voters: who will support our candidates and. we've got-to-—
engage them face-to-face. We know that, in 2004, voters will experience an avalanche ~
of radio and television ads. Those ads have their place and it's critical for progressive
candidates to stay competitive in the tit-for-tat media wars.

But, you and I both know that these mass market, impersonal communications aren’t
enough to truly engage people. Continuing declines in voter participation are evidence
enough of that.

Our 2004 America:‘Coming Together strategy isn’t about adding to the media clutter.
It’s about putting good old-fashioned community organizing back into the electoral
process. Our ambitious, well-considered plan revolves around face-to-face, door-to-
door, neighbor-to-neighbor campaigning.

It’s not only the most edifying thing to do; it’s the most effective thing to do.

Experience has shown that multiple personal contacts, beginning well before the
election and running right up through Election Day, are the most powerful way to
engage citizens in politics. And, that’s just what our America Coming Together
strategy is all about.

And a one-way ticket back to Crawford, Texas.

The effort we're undertaking aren't inexpensive. The cost of the America Coming
Together Action Plan is $110 million. We've already raised $62 million and, to
keep our efforts on track, we must raise the next $5 million within 30 days.

But, the rewards of victory are worth the time, effort, and money we are investing.
With your help, our America Coming Together Action Plan will help propel
progressive candidates to victory in vitally important state, local and federal
contests — and it will help buy George W. Bush a one-way ticket back to Crawford,
Texas.

Let’s get mad. Let’s get organized. Let’s win.


UNITED STATE DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

EMILY’S LIST,

Plaintiff,

FEDERAL ELECTION COMMISSION,

Defendant.

Le ere SS SS SDS

Civil No. 05-00049 (CKK)

MEMORANDUM OF AMICI CURIAE
SENATOR JOHN McCAIN, SENATOR RUSSELL FEINGOLD,
REPRESENTATIVE CHRISTOPHER SHAYS,
REPRESENTATIVE MARTIN MEEHAN,
DEMOCRACY 21, THE CAMPAIGN LEGAL CENTER,
AND THE CENTER FOR RESPONSIVE POLITICS
IN OPPOSITION TO PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION

Trevor Potter (Bar No. 413778)

J. Gerald Hebert (Bar No. 447676)
Paul Ryan

CAMPAIGN LEGAL CENTER
1640 Rhode Island Avenue, N.W.
Suite 650

Washington, D.C. 20036

(202) 736-2200

Counsel for the Campaign Legal
Center and individual amici

Lawrence Noble (Bar No. 244434)

CENTER FOR RESPONSIVE
POLITICS

1101 14" Street, N.W.

Suite 1030

Washington, D.C. 20005

(202) 857-0044

Counsel for Center for Responsive Politics

Donald J. Simon (Bar No. 256388)

SONOSKY, CHAMBERS, SACHSE
ENDRESON & PERRY, LLP

1425 K Street, N.W.

Suite 600

Washington, D.C. 20005

(202) 682-0240

Counsel for Democracy 21

Fred Wertheimer (Bar No. 154211)
DEMOCRACY 21

1825 I Street, N.W.

Suite 400

Washington, D.C. 20005

(202) 429-2008

Counsel for Democracy 21
and individual amici


2. The solicitation rule...........ccccsceeseessseeteeeeeessentssteeeecens 37
B. Plaintiff Cannot Demonstrate It Would Suffer Irreparable Harm in
the Absence of a Preliminary Injunction.............::ccccccsesessssseeeees 40
Cc. An Injunction Would Injure the Public, and the Public Interest......... 41
Vv. Comclusion............ccccscecssesssssssessaneenessceeeesseeeeteseeeeeeeseeeeeeeseceeeeees 43

Exhibits Attached: A. America Coming Together
H1 & H2 Schedules

B. America Coming Together
Solicitation Letter

c. America Coming Together
Solicitation Letter

Dz. Emily’s List
H1 & H2 Schedules

70780.1


26

In August, the Commission met to consider the general counsel’s recommendations for
final action. The general counsel proposed that the Commission adopt new rules that embodied
four key proposals: (1) a codified definition of the “major purpose” test for “political committee”
status, with special treatment of section 527 groups; (2) an expanded definition of the statutory
term “expenditure” to include ads that promote, support, attack or oppose federal candidates, (3)
a clarified definition of the statutory term “contribution” to include funds received in response to
solicitations that indicate the funds will be used to promote or oppose federal candidates, and (4)
revisions to the allocation rules for non-party political committees.

As to the last, the general counsel proposed replacing the “funds expended” allocation
method with a 50 percent federal minimum percentage that would be applied to generic activities
and administrative costs. The general counsel’s allocation proposal also addressed spending for
a “public communication” that refers to specific Federal or non-Federal candidates, or political
parties.>” Where such a communication refers only to Federal candidates, the proposal stated
that it needed to be funded entirely with Federal funds; where a communication refers only to
non-Federal candidates, it could be funded entirely with non-Federal funds; and where the
communication refers to a political party, it would be subject to allocation as a generic activity

(and thus would have to be funded with at least 50 percent federal funds). And where the public

quickly, spending $62 million through the end of the presidential election, as the Democrats spent another
$115 million.”)

36 Agenda Document 04-75 (August 19, 2004) (available at http://www.fec.gov/agenda/
2004/mtgdoc04-75.pdf).

* “Public communication” is defined by the law as “a communication by means of any broadcast,
cable, or satellite communication, newspaper, magazine, outdoor advertising facility, mass mailing, or
telephone bank to the general public, or any other form of general public political advertising. 2 U.S.C. §
431(22).

70780.1


Page 1 of 1

Fese
SCHEDULE H2 (FEC Form 3X) Cex eral

ALLOCATION RATIOS PAGE_7/ B42

NAME OF COMMITTEE (In Full)
EMILY’s List

RATIOS FOR ALLOCABLE FUNDRAISING EVENTS AND DIRECT CANDIDATE SUPPORT
ACTIVITIES APPEARING ON THIS REPORT.

Methods of allocation :

|. FUNDRAISING ectivites até sllocated using the Tunds recelved method' where the federal proportion of expenses must
jaqual the fedaral proportion of monias raised.

iL Shared DIRECT CANDIDATE SUPPORT activities are alocated according fo benefit expected to be derived, where the
federal propertian af disbursements Is based on benent delved by federal candidates fran the activity.

ACTIVITY OR EVENT IDENTIFIER
Fundralsing/PSP 2008 FEDERAL % NON-FEDERAL %
ACTIVITY IS: _
‘) Funcreising Direct Candidate Support 50.00 % 50.00 %
CHECK IF THE RATIO 18:
_| new L_ Ravisea _X Sune as Previously Reported Transaction ID:
H2-EL-756,

FEC Schedule H2 arm 3x) Rev.022003,

http://images.nictusa.com/showimg/27894. if 1/19/2005


Please charge my contribution to:
. O MasterCard QVISA QO American Express

Gift amount

Account number Expiration date

|. Signature

Federal law requires us to use our best efforts to collect and report the name, mailing address, occupation and name of employer of individuals whose contributions
exceed $200 in a calendar year.

Name: {f federal PAC: Contact:
Current address:

Telephone no.: Home: Office:

Curtent occupation: Employer:

Federal law prohibits foreign nationals, except legal permanent residents of the U.S., from contributing to America Coming Together. Please certify the information below
by signing this card.

\fan individual: | am a citizen of the United States (or) | am a legal permanent resident of the United States

Signature



entirely federal funds for voter mobilization efforts, notwithstanding the impact of that spending,
in part, on non-federal elections. In Ad.Op. 1978-10, the Commission reversed itself again, and
held that state parties could allocate their voter drive activities between their federal and non-
federal accounts.

At first, the Commission did not regulate a committee’s means of allocation. The
Commission adopted rules in 1977 that allowed political committees, including non-party
committees, to establish federal and non-federal accounts and to allocate expenses “ona
reasonable basis” between the two. 11 C.F.R. § 106.1(e) (1977); see 251 F. Supp. 2d. at 196. In
1987, this court held that this “reasonable basis” rule was too permissive in that it allowed a
committee, as a practical matter, to determine its own allocation ratio, and thus “fail[ed] to
regulate improper or inaccurate allocation between federal and nonfederal funds.” Common
Cause, 692 F.Supp. at 1395. In response, the Commission in 1990 promulgated new rules that
established more specific allocation formulae. See “Methods of Allocation Between Federal and
Non-Federal Accounts; Payments; Reporting,” 55 Fed. Reg. 26,058 (June 26, 1990).

Under the new rules, committees were permitted to allocate payments for their
administrative expenses, and for “[g]eneric voter drives including voter identification, voter
registration, and get-out-the-vote drives, or any other activities that urge the general public to
register, vote or support candidates of a particular party or associated with a particular issue,
without mentioning a specific candidate.” 11 C.F.R. § 106.6(b)(2)(iii) (2002). Committees were
also permitted “to allocate payments involving both expenditures on behalf of one or more
clearly identified federal candidates and disbursements on behalf of one or more clearly

identified non-federal candidates.” § 106.1(a) (2002).

70780.1


« F.E.C. IMAGE 24962885046 (Page 664 of 3000) http://images.nictusa.com/cgi-bin/fecimgif/0/C00388876/249628850...

SCHEDULE H2 (FEC Form 3X)
ALLOCATION RATIOS paceea / 808

NAME OF CONIMITTEE {In Full)
America Coming Tagether

RATIOS FOR ALLOCABLE FUNDRAISING EVENTS AND DIRECT CANDIDATE SUPPORT
ACTIVITIES APPEARING ON THIS REPORT.
Methods of allocation :

|. FUNDRAISING activities are alliacated using the Tunds received method’ where the Teceral propertian of expenses must
‘equel tha federal proportion of monias rei

1 Shared DIRECT CANDIDATE SUPPORT activites are alucated according to benefit expected to be derived, where the
‘federsl propertian af disbursements Is based an beneft deived by federal candidates fram the activity.

ACTIVITY OR EVENT IDENTIFIER
FRP FEDERAL % NON-FEDERAL %
ACTIVITY 16: _
] Furersising * Direct Candidate Support 2.00 % 98.00 %
CHECK IF THE RATIO 18:
New — |__ Revised _X Sarna as Previously Reported ‘Transaction ID:
H2-4

FEC SeheduleH2 (Farm 3x) Aev.022008

lofl 1/19/2005 9-16 PM


ee Year-End 2000 H1 and H2 Schedule

SCHEDULE Ht METHOD OF ALLOCATION FOR SHARED FEDET
(roaod 85} AND NON-FEOERAL ADMINISTRATIVE EXPENSES
AND GENERIC VOTER DRIVE COSTS

NAME OF COMMUTES .
EMILY's List

NATIONAL PARTY COMMITTEES

FIKED FEDERAL PERCENTAGE (CHECK THE APPROPRIATE LINE AND ENTER % IN BOXTO RIGHT) Ts
CUPRESICENTIAL YEA (85%)
GALLOTHER YEARS (60%)

HOUSE AND SENATE PARTY CAMPAIGN COMMITTEES
CIMINIMUN FEDERAL PERCENTAGE (85°) [FF CHECKED, ENTER 65% IN BOX TO RIGHT}.
oF
(FUNDS EXPENDED:

+ ESTIMATED DIRECT CANDIDATE SUPPORT — FEDERAL
+ ESTIMATED DIRECT CANDIDATE SUPPORT — NON-FEDERAL

ADJUSTMENTS 70 FUNOS EXPENDED:
ACTUAL DIRECT CANDIDATE SUPPORT —FEDEAAL ...
ACTUAL DNRECT CANDIDATE SUPPORT —NON-FEDERAL

NOTE: FUNDS EXPENOED MUST 8E USED IF THE FEDERAL PROPORTION 18 GREATER THAN 65% IN ANY YEAR.

SEPARATE SEGREGATED FUNDS AND NON-CONNECTED COMMITTEES

FUNDSEXPENDED: (November 28, 2000-December 31, 2000)
« ESTIMATED LARECT CANDIDATE SUPPOAT — FEDERAL «(50 |
+ ESTIMATED DIRECT CANDIDATE SUPPORT ~ NON-FEDERAL we ao *

ADJUSTMENTS TO FUNDS EXPENDED
ACTUAL DIRECT CANOIDATE SUPPORT — FEDERAL were
ACTUAL DIRECT CANDIDATE SUPPORT — NON-FEDERAL .....0

‘STATE AND LOCAL PARTY COMMITTEES

BALLOT COMPOSITION
HECK ALL OFFICES APPEARING ON THE NEXT GENERAL ELECTION BALLOT:

NUKBER CF
POTS.

4, PRESIDENT (1 PONT...
2.8. SENATE Of POINT)
3.US, CONGRESS Ot FORT}

4. SUBTOTAL — FEDERAL {ADO 1, 2, AND 9)...
5. GOVERNOR (1 POT} sae

8. OTHER STATEWIDE OFFICENS) . ats} {1 OZ PANTS) isnrmies
7. STATE SENATE

40, EXTRA NOK-FEDERAL POINT

11. SUBTOTAL — NON-FEDERAL (ADDS, 8,7, 8,9, AND 10).
42 TOTAL POINTS (LINE 4 PLUS LINE 19} nna

FEDEFAL ALLOCATION = LINE ¢ DIVIDED BY LINE 12 .. aI =

http://images.nictusa.com/cgi-bin/fecimgif/0/C00193433/21036814800/21036814768/101/445... 1/19/2005


EXHIBIT C

AMERICA COMING TOGETHER
SOLICITATION LETTER

70859.1


32

criticism for failing to take action to stop this abuse in time for the 2004 election, it was entirely
proper for the Commission to take action, at least prospectively, to prevent the same abuse from
recurring.

The Commission’s new rule is not a perfect safeguard, but it will substantially limit the
kind of circumvention of the law that ACT engaged in. It will prevent a federal committee from
calculating a near-zero federal allocation ratio by the simple expedient of eschewing all
candidate-specific federal activity, as it could under the former rule. And it will thus prevent a
federal committee from spending almost exclusively soft money funds for generic activities and
voter mobilization drives that are for the purpose, and have the effect, of influencing federal
elections. By requiring all non-party committees to spend “at least” 50 percent federal funds for
their generic and voter drive activities, 11 C.F.R. § 106.6(c) (2005), the new rule partially repairs
the fundamental flaw that was exposed in the prior “funds expended” method.

It is the Commission’s prior rule that was arbitrary and irrational and, as was clearly
demonstrated, subject to blatant abuse. For the Commission to replace it with a 50 percent
federal minimum allocation appropriately establishes a federal floor under the spending of a
federal committee. As the Commission correctly explained in its E&J:

These committees have registered as Federal political committees with the FEC;

consistent with that status, political committees should not be permitted to pay for

administrative expenses, generic voter drives and public communications that

refer to a political party with a greater amount of non-Federal funds than Federal

funds.

69 Fed. Reg. 68,062 (Nov. 23, 2004). Furthermore, since the FEC could have required 100
percent federal funds to be spent, as found by this court in the Common Cause case, a rule

requiring a minimum of 50 percent federal funding is a more modest approach to solving the

problem.

70780.1


EXHIBIT A

AMERICA COMING TOGETHER
H1 & H2 Schedules

70859.1


» FEC. IMAGE 24962885045 (Page 663 of 3000) http://images.nictusa.co

lofl

July 2004 Quarterly Report
H1 and H2 Schedule

SCHEDULE H1 (FEC Farm 3x} BBS / 488a

METHOD OF ALLOCATION FOR:
« SHARED FEDERAL AND NON-FEDERAL ADMINISTRATIVE, GENERIC VOTER
DRIVE AND EXEMPT ACTIVITY COSTS

= SHARED FEDERAL AND LEVIN FUNDS FEDERAL ELECTION ACTIVITY
EXPENSES

NAME OF COMMITTEE {In Fulj
America Coming Tagether

USE ONLY ONE SECTION

a

State and Local Party Committees

Fixed Pernentage (select ane)

Presidertla-Only Election Year (28% Fexieral)
Presidential and Senate Eltion Yeer (98% Federal)

Benete-Only Elaniion Yaar (21% Faceral)

———_ Now Presicertin! and Non-Genate Election Year (15% Federal)

Seperate Segregated Funds and Non-Connected Committees
Fired Percentage (selec! one}

Estimated Direct Candidates Support — Faderal......

200 %
Estmneted Direct Candidates Support ~ Nen-Feseral....
88.00 %
ADJUSTMENTS TO FUNDS EXPENDED:
Actual Direct Candidate
‘Support -- Federe
0.00 %

‘Aciuel Direct Cancideba
‘Support — Non-Fedarel

0.00

FEC Schedule H1 (Form X} Rev. 11402

1/19/7005 9:16 PM



E.E.C. IMAGE 24991084999 (Page 51 of 757) Page 1 of 1

Year End 2003 Report
H1 and H2 Schedule

SCHEDULE H1 (FEC Farm 3x} S787

METHOD OF ALLOCATION FOR:
* SHARED FEDERAL AND NON-FEDERAL ADMINISTRATIVE, GENERIC VOTER
DRIVE AND EXEMPT ACTIVITY COSTS

« SHARED FEDERAL AND LEVIN FUNDS FEDERAL ELECTION ACTIITY
EXPENSES

NAME OF COMMITTEE (in Fulh
America Caming Tagether

USE ONLY ONE SECTION

State and Local Party Committees

Flyed Percentage (select one)

PreaidentisHOny Election Year (28% Federal)
Presidential end Senate Eletlon Yeer (58% Federal

‘Senete Cnly Baction Year (21% Federal

Nor-Presidertial and Non-Senate Eleciion Year (16% Federal)

SED
Seperate Segregated Funds and Non-Connected Committees:

Fixed Perventane (selec! one}

Estimated Direct Candidates Support — Federal ...

2000 &
Estirnated Cirect Candidates Support — Nor-Federel ......
98.00 %
ADJUSTMENTS TO FUNDS EXPENDED:
Actual Direct Candidate
‘Suppait -- Federal ..
0.00 %

‘Actuel Diract Candidate
Suppart — Non-Fedarel

0.00

FEC Schediuke H1 (Poem 3X} Rev, 11402

http://images.nictusa.com/cgi-bin/fecimgif/0/C00388876/2499 1084999/24991084949/235/798328429/50/... 1/19/2005


(2)

In communities all across America, people are hurting because of the GOP’s mindless
devotion to tax cuts for the wealthy is making a shambles of our economy. With the President’s
support, the Republicans in Congress have turned record budget surpluses into record deficits
in no time flat.

He has worked hard to undermine a woman’s right to choose. His reckless disregard for
the environment has eroded decades of progress. He’s set timber companies loose or on our

~~national forests == and he’s set John Ashcroft loose-o our civil liberties:

But; wishing won’t make Bush, Cheney, Ashcroft, DeLay and their extremist-agenda.
go away. Wishing won’t elect John Kerry. People-to-people organizing will — and organizing
is what ACT is all about.

With your help, we’re going to put people back into politics — big-time.

What's it going to take to defeat George W. Bush and elect strong progressive
candidates across the country? It’s going to take an ambitious, history-making voter contact
plan — and it’s going to take people like you getting involved.

Do you believe that there is no higher priority in 2004 than defeating George W. Bush

and electing strong progressives to replace those politicians who have helped Bush advance his
extreme agenda?

Are you willing to help America Coming Together finance and execute the most far-
reaching and intensive face-to-face campaigning by progressives that America has ever seen?

Here’s what America Coming Together is all about. It’s about people like you and me
making a personal commitment to defeating George W. Bush and electing strong progressive
candidates at all levels of government — federal, state, and local.

It’s time to put our money where our hearts are. Please join us.

Sincerely,

— 900 h WER

Ellen R. Malcolm
President


Page 1 of 1

Post-General 2004 H1 and H2
Schedule
SCHEDULE H1 (FEC Farm 3X}

METHOD OF ALLOCATION FOR:
» SHARED FEDERAL AND NON-FEDERAL ADMINISTRATIVE, GENERIC YOTER
DRIVE AND EXEMPT ACTIVITY COSTS

» SHARED FEDERAL AND LEVIN FUNDS FEDERAL ELECTION ACTIVITY
EXPENSES

NAME OF COMMITTEE (In Fulj
EMILY’s List

USE ONLY ONE SECTION

State and Local Party Committees

Fixed Percentage (select one}

PrealdentiaHOny Election Year (28% Federal)
Prealdential and Senate Eletion Year (36% Federal)

Sensie-Only Election Yaar (24% Faderal)

Nor-Presicertial and Non-Senate Election Year (15% Federal)

Seperate Segregated Funds and Non-Connected Committees
Fixed Percentage (selec! one}

Estimated Direct Candidates Support — Faderal.......

50.00 G

Estimated Direct Candidates Support — Non-Federal .....

ADJUSTMENTS TO FUNDS EXPENDED:
Actual Direct Candidate

‘Suppot - Federal...

0.00 %
Actual Direct Candidate
‘Suppart — Nor- Federal ..

0.00

FEC Schedube H1 (orm 3X} Rev. 17.02

http://images.nictusa.com/showimg/27797.vif 1/19/2005


39

intelligence a reasonable opportunity to know what is prohibited.” Jd., quoting Grayned v. City
of Rockford, 408 U.S. 104, 108-09 (1972). The Court said this was “particularly true” in BCRA,
“since actions taken by political parties are presumed to be in connection with election
campaigns.” Id. The same observation applies to federal political committees generally,
including Emily’s List, all of which have a “major purpose” to influence elections. And as the
Court also said in McConnell, if any doubt about the meaning of the standard remains, plaintiff is
“able to seek advisory opinions for clarification and thereby ‘remove any doubt there may be as
to the meaning of the law.” Jd, quoting Civil Serv. Comm’n vy. Letter Carriers, 413 U.S. 548,
580 (1973). Again, the same is true here, both about the new rule’s use of the terms “support”
and “oppose” as well as its use of the term “indicates.”

Finally, Emily’s List posits two malevolent motives to the new rule that simply do not
exist. It says that the rule’s “intended” effect is to “limit the use of ‘references’ to federal
candidates” in solicitations for state and local election purposes, “and to impair fundraising
messages that discuss federal officeholders who make and execute government policy.” PI.
Mem. at 19. As to the first, it is again based on an mischaracterization of the rule, which does
not limit mere “references” to federal candidates, but only references that are accompanied by
statements indicating that the funds will be used to support or oppose those federal candidates.
And as to the second, Emily’s List does not explain how it “impairs” a fundraising message that
solicits funds to support or oppose a federal candidate, when the funds received in response are
simply treated as contributions. This treatment is not only consistent with FECA, it is
compelled by it. If by “impairment,” plaintiff means having to live under federal contribution
limits, source prohibitions and reporting requirements for money it raises for the purpose of

supporting or opposing federal candidates, its complaint has been foreclosed since the enactment

70780.1


ii

TABLE OF CONTENTS
Page(s)
Local Civil Rule 7.1 Certificate
Table of Authorities...........0.00.00cccsseessseessesssesseeneseesseesseseeeeeeeeseeeeeeeeseeeeeeeee iv
IL Interests of the AMICi.............0.0ccccccsseeeeeeseeteeesseeseeseeeeneeeeseeeeeeeeeeeeeeees 4
IL. Summary of Arguiment...........:cccccceceeeeeensseeeeeeeessseeececeseneneeeeseseregs 5

Ill. Background...

A. The allocation system.............ccccseseeeeeceeeueeeseeeeaeeeeeennaeeeeeeeenee eee! 6
1. Origins of allocation..............ccccceeeceeeeeeeeeeseeeeesessuneneeeeees 6
2. BCRA and McConnell ..........ccccccccccecceeceeeeee sees see se ese aenees 10
3. ACT and allocation in the 2004 campaign...............cssesseeeeee 12

B. The 2004 Rulemaking...

IV. The Motion for a Preliminary Injunction Should Be Denied.................00006 28
A. Plaintiff Cannot Demonstrate a Substantial Likelihood of
Success on the Merits...........0:cccecceessseeeeeeeeeseeeeeesseseeenaeneerees 29
1. The allocation rules...........ccccssceeeeeeeeeeeeeeeseeaeeeseesnaeeeeees 29
a. Plaintiff has no entitlement to the “funds expended”
allocation rule............cccceeceeceeeeeeeseuaeeeeeenee ee caeeee 29
b. The 50 percent Federal allocation rule for federal
political committees is not arbitrary or capricious for
lack of “proportionality”............cccseeeecceeaneeeseeenaeeeee 31
c. It is reasonable to require federal committees to use
federal funds for ads that “refer” to federal
Candidates..........ccccceeeceecseeeeeeeeeeeeeesseaeeeeesseneeeee 34

70780.1


3,000 Organizers

17
2

ntee

0,000 Volu

20

ion Doors

10M

«and a


F.E.C. IMAGE 24961574991 (Page 116 of 2029) http://images.nictusa.com/cgi-bin/fecimgif/0/C00388876/249615749...

SCHEDULE H2 (FEC Form 3%)
ALLOCATION RATIOS:
PaGHi 6/2028
NAME OF COMMITTEE (In Full)
America Coming Together

RATIOS FOR ALLOCABLE FUNDRAISING EVENTS @ND DIRECT CANDIDATE SUPPORT
ARTIVITIES APPEARING ON THIS REPORT.

Methods of allocation :

|. FUNDRAISING activites ere allocated using the funds recelved method! where the federal propertion af expenses must
‘equal the federal propertion of monies

\. Shared DIRECT CANDIDATE SUPPORT activities are alocated according ip benefit expected to be derived, where the
‘federal propertian of disbursements is based an beneft desived by federal candidates tam the activity.

ACTIVITY OR EVENT IDENTIFIER
FRP FEDERAL % NON-FEDERAL %
ACTIVITY IE: _
%) Furersising  Diract Candidate Support 2.00 % 96.00 %
CHEGK IF THE RATIO 18:
| New |. Revsed —-_x_Serees Previous Reparea ensactan 1:
Hd

FEC EcheduleH2 (Formx) Aev.022008

lof 1 1/19/2005 9-12 PM


22

operates in ten or more states,”’ and thus was on notice that that it might be subject to a 50
percent rule.

Emily’s List did not file comments in response to the NPRM, nor did it testify during the
two-day public hearing held in this rulemaking.** But other groups, including amici and ACT,
filed comments specifically addressing the issue of establishing a 50 percent minimum federal
allocation.

Over 100,000 comments were filed on the NPRM. Almost all of these comments were
focused not on the proposed allocation rules, but on the impact that other parts of the NPRM
might have on section 501(c) non-profit groups.”°

As soon as the NPRM was released, the organizational amici warned the Commission
that the expansively defined scope of the rulemaking threatened to paralyze it. In a letter to the
Commissioners dated March 16, 2004, these amici called on the Commission to bifurcate the
rulemaking, and to focus initially only on the two issues of greatest urgency for the rapidly

approaching 2004 election — the allocation issue and the problem of section 527 groups:

On its website, Emily’s List lists 28 states in which it claims to have helped elect candidates to
the U.S. House and Senate. See http://www.emilyslist.org/candidates/women-helped.html

The comment period for the rulemaking closed on April 9, 2004. See 69 Fed. Reg. 11,736
(Mar. 11, 2004). Emily’s List does not claim to have filed timely comments before this date. Instead, it
notes that it sent a letter to the Commission on August 17, 2004, objecting to the allocation rules to be
considered for final adoption by the Commission two days later. Pl. Mem. at 9. This August letter to the
Commission was more than four months after the close of the formal comment period in the rulemaking.

® Tn addition to dealing with the allocation issue for political committees, and with the question
of when a section 527 group has a “major purpose” to influence federal elections and thus has to register
as a federal “political committee,” the NPRM raised a host of collateral issues about whether and when
other kinds of entities, such as nonprofit organizations operating under sections 501(c)(3) and 501(c)(4)
of the tax code, would potentially trigger “political committee” status under FECA. This one issue alone
proved to be tremendously contentious and was primarily responsible for the overwhelming volume of
grassroots email comment that was generated. It had nothing to do with the allocation question.

70780.1


18

Another article describes Soros meeting “with half a dozen top Democratic political
strategists” in an effort “to try to figure out how he could help bring down [President] Bush . . .
"8 Following this meeting, Soros:

agreed to lead several other major donors in what Democrats hope will be $75

million in spending section on a grass-roots get-out-the-vote effort in 17

battleground states. Called America Coming Together, it’s directed by top

Democratic fundraisers Steve Rosenthal and Ellen Malcolm. That makes Soros a

key player in the huge ‘soft money’ push that the Democrats . . . hope will be one

of the keys to matching Bush’s formidable fundraising apparatus in the 2004

election.

Id.

B. The 2004 Rulemaking

The fact that ACT in early 2004 was claiming a right to fund its activities with 98 percent
soft money under the existing allocation rule was an important backdrop for the FEC’s
rulemaking.'? So also were published reports at the same time that other Democratic groups
such as The Media Fund, operating under section 527 of the tax code, were intending to spend
massive amounts of soft money on broadcast ads to defeat President Bush. The Media Fund
took the position it could engage in this activity without registering as a federal political

committee.

'® Mark Gimein, George Soros Is Mad As Hell, FORTUNE, Oct. 27, 2003.

The organizational amici filed two administrative complaints with the FEC against ACT, the
first in January, 2004 and the second in June, 2004, and argued in those complaints that ACT should not
be allowed to allocate at all. Where, among other things, a political committee’s major donors have given
funds for the stated purpose of defeating a presidential candidate, where the committee’s announced
intentions are to target its activities only to those states it identifies as presidential battleground states, and
where the only candidates named in its fundraising appeals are federal candidates, such as is the case with
ACT, allocation should not be permitted because the committee as a whole has an overriding purpose to
influence federal elections. The Commission to date has taken no publicly disclosed action on either
complaint.

70780.1


30

federally registered political committee, Emily’s List is not entitled to any particular system of
allocation, or indeed, to any system of allocation at all.

This was the conclusion reached by the court in Common Cause v. FEC, 692 F. Supp.
1391 (D.D.C. 1987), which held that allocation was not per se contrary to the 1979 Amendments
to FECA, and thus the Commission had discretion to permit allocation. But the court also said
the Commission had the discretion not to permit allocation, and instead to require that “mixed”
activities be funded entirely with federal funds: “Indeed, it is possible that the Commission may
conclude that no method of allocation will effectuate the Congressional goal that all monies
spent by state political committees on those activities permitted in the 1979 amendments be ‘hard
money’ under the FECA. That is an issue for the Commission to resolve on remand.” 692 F.
Supp. at 1396 (emphasis in original).

The allocation system, thus, is little more than an act of administrative discretion. The
FEC could have chosen to have no allocation at all for federal political committees, and to
require that federal committees fund their generic or “mixed” activities, as well as their
administrative costs, entirely with hard money.

Nothing in FECA mandates allocation for federal political committees.“’ To the contrary,
what FECA mandates is that funds spent “for the purpose of influencing” a federal election be
subject to the contribution limits, source prohibitions and reporting requirements of the law. 2
U.S.C. § 431(9). It would certainly be a permissible interpretation of the statute for the
Commission to conclude that when a federal political committee spends funds on “mixed” or

generic activities, such as voter mobilization drives — where such activities clearly have an

“' The only exception to this, and the only mention of allocation in FECA, is the recently enacted
provision of BCRA that permits state party committees to spend “Levin” funds on an allocated basis for
certain voter drive activities. 2 U.S.C. § 441i(b)(2).

70780.1


SCHEDULE H2 (FEG Fonm 3X)
ALLOCATION RATIOS PAGHSd f 2784

NAME OF COMMITTEE {in Fully
America Coming Together

RATIOS FOR &ALLOCABLE FUNDRAISING EVENTS AND DIRECT CANDIDATE SUPPORT
ACTIVITIES APPEARING ON THIS REPORT.
Methods of allocation :

|. FUNDRAISING aciivites ere allocated using the Tunds recelved method’ where the federal propertian of expenses Must
quel the federal proportion of manias raised.

1. Shared DIRECT CANDIDATE SUPPORT activities are alocated according 1 benefit expected to be derived, where the
federal proportion of disbursements Is based on benefit denved by federal candidates tram the activity.

ACTIVITY OR EVENT IDENTIFIER

FRP 10/4404 -10/1 2004 FEDERAL % NON-FEDERAL %
ACTIVITY IS: _
%) Furcrsising ~ Direct Candidate Suppart 2.00 % 92.00 %
CHECK IF THE RATIO I:
_| new = | Revised _X Same es Previously Reparted Transaction ID:
H2-840
ACTIVITY OR EVENT IDENTIFIER
FRP Effective 10/14/04 FEDERAL % NON-FEDERAL %
ACTIVITY 18:
X| Furcralsing __ Direct Candidate Suppart 12.00 % 3.00 %
(CHECK IF THE RATIO IS;
x | New Revised Same eg Premously Reported “Transaction i

H2-644

FEC GeheduleH2 (Form 3x) Rev. 022005





24

Id. at 2-3.

Although most of the comment and controversy in the rulemaking concerned whether and
how to apply a “major purpose” test for political committee status to non-profit organizations,
comments were filed on the proposed allocation rules by ACT, The Media Fund, the
congressional amici, the organizational amici, and others, even though Emily’s List did not itself
take advantage of the opportunity to do so. The amici organizations supported the proposal for a
50 percent minimum federal allocation,”’ as did amici Congressional sponsors.2 Other
campaign finance groups, such as Public Citizen”? and the League of Women Voters,°° also filed
comments supporting changes to the allocation rules.

Not surprisingly, there was opposition as well. ACT, the principal beneficiary of the
allocation loophole in the 2004 election, filed written comments opposing all proposed changes
to the allocation rules, and specifically criticized the proposal for “a minimum federal percentage

for non-connected PACs” as “arbitrary and unsupported by law.”*! So too did The Media Fund,

?7 See Comments of Democracy 21 et al., supran.5 at 3, 14-20.
?8 See Comments of Senator John McCain, et al., supra n.4, at 3.
° Comments of Public Citizen, “Political committee status” [NPRM 2004-06] (April 5, 2004),

which can be found on the Commission website, at http://www.fec.gov/pdf/nprm/political,
comm. status/public_citizen_holman.pdf.

>° Comments of the League of Women Voters Urging Regulation of Soft Money by Section 527
Organizations (April 7, 2004).

3! Comments of America Coming Together (April 5, 2004) at 35, which can be found on the
Commission website at: http://www. fec.gov/pdf/nprm/political_comm_status/america

coming_tghr_svoboda..pdf.

70780.1


F.E.C, IMAGE 22991487591 (Page 282 of 1051)

SCHEDULE H1 {FEC Fann 3X)

Page 1 of 1

Year-End 2001 Hi and H2 Schedule

METHOD OF ALLOCATION FOR SHARED FEDERAL AND NON-FEDE,....

ADMINISTRATIVE EXPENSES AND GENERIC VOTER DRIVE COSTS
NAME OF COMMITTEE [In Ful)
EMILY List
USE CNLY ONE SECTION Transaction I0:_H1-EL-238
A, NATIONAL PARTY COMMITTEES:
FIXED FEDERAL PERCENTAGE (Check the appropriate line and enter % inboxto right}... 000%
[C1 Presidartial Year (65%)
[LJ Allotter Years 60%)
B. HOUSE AND SENATE PARTY CAMPAIGN COMMITTEES
(Dy MINMIUM FEDERAL PERCENTAGE © (B5% (If checked, enter 65% In bax ta right) 0.00 %
OR
[x] FUNDS EXPENDED:
. Estimated Direct Candidate Suppert— Federal... 0.00
. Estimated Direct Candidate Support — Nor-Federal Ooo 4%
ADJUSTMENTS TO FUNDS EXPENDED:
Actual Direct Candidate
‘Supnort— Faderst 0.00 0.00 %
‘Actual Diract Candidate
‘Suppent — Net-Federal 0.00
NOTE: Func expended must be used If Ihe Federal proportion Is greeter than B5% In any yeer.
G, SEPARATE SEGREGATED FUNDS AND NON-CONNECTED COMMITTEES
FUNDS EXPENDED
- Estimated Direct Gandidate Support - Federal 50.00 %
Estimated Direct Candidate Suoport — Nort Federal. $0.00 %
ACJUSTMENTS TO FUNDS EXPENDED:
‘Actual Diract Candidate
‘Suppert — Federal odd C00
‘Actual Direct Candidate
‘Support — Non-Feceral o.oo
D. STATE AND LOCAL PARTY COMMITTEES
BALLOT COMPOSITION
(Check al Offices appearing or tha naxt Gerral Elecllon Baler: NUMBER:
OF POINTS
4, President... 41 pent
2. US. Serate pint
8. US. Congress point
4. SUBTOTAL -- Federal (ADD 1,2, AND 3)
paint)
3. Lacal Candidates . . (1 paint or 2 Pointay ..
10. Extta Now-Feckeral Point 1 pont] ven
11. SUBTOTAL — Not-Federal (Add 5, 4, 7,89, and 40)...
12. TOTAL POINTS (Line 4 plus Line 11) .
FEDERAL ALLOCATION = Une 4 dhded by Une 72 ....... %
FEC Schedule Hi (Form 3x) (Reed 1/2901)

http://images.nictusa.com/cgi-bin/fecimgif/0/C00193433/2299 148759 1/2299 1487310/146/282917052/28...

1/19/2005


actively participated in the rulemaking that is challenged in this action, both filing written
comments and testifying at the public hearing held in this matter.°
II. Summary of Argument

Emily’s List fails every element of the test for a preliminary injunction, and its motion
should accordingly be denied.

First, plaintiff cannot show a likelihood of success on the merits. The “allocation” rule
challenged in this action sets a floor requiring a federal political committee to spend at least 50
percent federal funds for its generic activities, such as partisan voter mobilization drives, and for
its administrative expenses. Far from being arbitrary or overreaching, the rule is in fact modest:
it still allows a federal committee to fund many of its activities with 50 percent non-federal
funds. And as this court has found, the FEC could have concluded that a federal political
committee must use 100 percent federal funds to finance such activities. Common Cause v.
FEC, 692 F. Supp. 1391, 1395 (D.D.C. 1987).

Nonetheless, the new rule is a vast — and sorely needed — improvement on the prior rule,
which allowed a political committee to massively manipulate its spending in order to calculate an
absurdly low federal allocation ratio. A graphic example of this practice occurred during the
2004 election when one such federally registered committee - America Coming Together —
claimed the right under the former rule to spend 98 percent soft money on voter mobilization
activities which it publicly claimed were for the purpose of influencing the presidential election

and which were concentrated in the 17 presidential battleground states. ACT spent tens of

> See Comments by Democracy 21, the Campaign Legal Center and the Center for Responsive
Politics re Notice 2004-6: Political Committee Status (April 5, 2004), which can be found in the record of
this rulemaking on the Commission’s website, ar http://www. fec.gov/pdf/nprm/political comm_status/

simon_potter_nobel sanford.pdf.

70780.1


5

eee ee

AMERICA COMING TOGETHER
LS

. Ellen. R. Malcolm
President

Dear Friend,

Are you ready to go for it, prepared to lay everything on the line to win in 2004?

Thope so. Because, if we can count on your personal support and active participation,
2004 will be a year of America Coming Together and George W. Bush and his Republican
colleagues in Washington as well as the state and local levels going home.

To keep their grasp on the White House and win other critical key House, Senate and
local races, the Bush campaign and the Republican National Committee and their powerful
special interest allies are amassing a political fortune. By Election Day, they will have raised
and spent over half a billion dollars to hold onto power.

We can’t match them dollar-for-dollar. But, we can — and must — match them
door-for-door. And in many critical states we’ll be at work in places where the Kerry
Campaign and the Democratic Party simply don’t have the resources to operate.

America is divided almost evenly between those who support President Bush and those
who believe he is taking America in the wrong direction. In the presidential contest and in
other key federal, state and local races, the elections of 2004 will be won by whichever side
does the best job identifying and mobilizing its supporters.

That’s why some of the leading progressive organizers in America have come together
to advance a bold, far-reaching Action Plan, an outline of which I have enclosed with this letter.

With help from committed activists like you, America
Coming Together (ACT) will organize millions of
face-to-face, door-to-door, neighbor-to-neighbor contacts
that will shape the outcome of the 2004 elections — and
shape the future of American politics.

And, when Election Day is over, we will have helped John Kerry defeat George W.
Bush and elected progressive candidates all across the nation. The extraordinary effort we’re
undertaking is in response to the extraordinary damage Bush and his allies do, on a daily basis,
to values we believe in and to people we care about.

(read on, please)

- — — _ —

Steve Rosenthal Chief Executive Officer / Main Office / 888 16th St. NW / Suite 450 / Washington, DC 20006 / T 202 974 8360 / F 202 974 6361 -
Ellen R. Malcolm President / Fundraising Office / 1120 Connecticut Ave. NW / Suite 1120 / Washington, DC 20036 / T 202 419 1040 / F202 419 1050



PAC Tt —

| hie |

AMERICA COMING TOGETHER
———$—$——$—

1 Want to Provide Critically Needed Financial Support.

I’m excited that progressives are getting organized in an unprecedented way. And I want
to help America Coming Together defeat George W. Bush and elect progressive candidates
at all levels by organizing an unprecedented, door-to-door campaign. To help advance this

essential organizing effort, Iam enclosing a special donation of:

O25 Gs50 — si00

This amount would really help!

Oj $500

| Also Want to Volunteer My Time and Energy.

As America Coming Together plans its activities in the months ahead, please contact
me about volunteering:

O Id be willing to contact my friends and neighbors about America Coming
Together.

O As Election Day approaches, I’d like to be a part of the America Coming Together
Get-Out-The-Vote operation.

O I’m willing to do anything you need done.

| Want to Be an America Coming Together E-Activist.

I know that events move quickly in a presidential election year and that America
Coming Together must be prepared to take action at a moment’s notice. Please keep
me as up-to-date as possible with e-alerts.

My e-mail address is: @

My phone contact information is:

Home: ( ) -

Work: ( ). .

®

ee ee ee ee ee

© Other $

Please make any necessary
corrections to your name and
address. Make checks payable
to ACT, and return in the
enclosed envelope or send to
1120 Connecticut Ave., NW,
Suite 1120, Washington, DC
20036. Thank you.

To make your gift by credit
card, please see reverse side
of this form.

Contributions to ACT are not
tax deductible for charitable
purposes.

All contributions permissible
under federal law (individual
contributions of $5,000 or
less per calendar year) will
be placed in ACT's federal
account to be used in
connection with federal
elections.

America Coming Together / 1120 Connecticut Ave., NW / Suite 1120 / Washington, DC 20036 o=@33



UNITED STATE DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

)
EMILY’S LIST, )
)
Plaintiff, )
)
)
v. ) Civil No. 05-00049 (CKK)
)
)
FEDERAL ELECTION COMMISSION, )
)
Defendant. )
)

MEMORANDUM OF AMICI CURIAE
SENATOR JOHN McCAIN, SENATOR RUSSELL FEINGOLD,
REPRESENTATIVE CHRISTOPHER SHAYS,
REPRESENTATIVE MARTIN MEEHAN,
DEMOCRACY 21, THE CAMPAIGN LEGAL CENTER,
AND THE CENTER FOR RESPONSIVE POLITICS
IN OPPOSITION TO PLAINTIFF’S MOTION FOR A PRELIMINARY INJUNCTION

Three years ago, Congress enacted landmark campaign finance reform legislation, the
Bipartisan Campaign Reform Act of 2002 (BCRA), Pub. L. No. 107-155, 116 Stat. 81, to halt the
rapidly escalating flow of soft money (funds that do not comply with the contribution limits and
source prohibitions of federal law) into federal elections. In the 2002 campaign — the last
conducted under the discredited and corrupt soft money system — a half billion dollars of soft
money flowed through political party accounts to influence federal campaigns. Because soft
money was found to cause corruption and the appearance of corruption, the provisions of BCRA
aimed at stopping soft money were upheld, in their entirety, by the Supreme Court in McConnell

v, FEC, 540 U.S. 93 (2003).


Bias)

We started with an early canvass, knocking on people’s doors, getting the lay of the
land. And have now launched a massive door-to-door effort — contacting voters,
identifying our supporters, and learning what issues matter most in their lives. We'll
follow up with:a stream of individual communications around the issues people have
told us they are most concerned about.

The America Coming Together effort is combining all the spirit and energy of old-
fashioned political organizing with all the technology and innovation of 21st century
politics.
Our canvassers are equipped with hand-held computer devices, allowing them to
keep a detailed record of every contact and to help shape the content of future

communications with a voter based upon what that voter has told us he cares
about the most.

We're going to work our hearts out right through the fall — staying in close contact
with voters, making sure they have the information they need, registering voters,
organizing absentee and early voting programs, and more.

Our plan will culminate in the most sophisticated and massive Get-Out-The-Vote
operation America has ever seen. And, when we're done, American politics will never
be the same.

200,000 Volunteers

Our America Coming Together Action Plan relies wpon a core of full-time, experienced,
paid organizers in each of our target states — a group that will expand in number as
Election Day gets closer. But, the energy, spirit and enthusiasm of volunteers must and
will play an essential role in our campaign.

As ACT canvassers go door-to-door, they are constantly on the lookout for people
willing to play an ongoing role in our campaign — people like you.

Our most committed volunteers are asked to “take responsibility” for a group of voters
in their neighborhood, staying in touch with them throughout the campaign, making
sure they have all the information they need, and assuring that, come Election

- Day, they get.out and vote for our candidates.

By the time Election Day rolls around, ACT will have mobilized
over 200,000 volunteers — people willing to commit their personal
time and energy to the effort to end the Bush presidency and elect
progressive candidates at all levels.

Our goal is to put every ounce of energy those volunteers commit to the most effective
use. Our America Coming Together Action Plan is a bold, but well-considered,
undertaking.


SCHEDULE H1 {FEC Form 3X)

Year-End 2002 H1 and H2 Schedule

METHOD OF ALLOCATION FOR SHARED FEDERAL AND NON-FEL
ADMINISTRATIVE EXPENSES 4ND GENERIC VOTER DRIVE COSTS

NAME OF COMMITTEE [In Ful)
EMILY's List
USE ONLY ONE SECTION Transaction I0:_H1-EL-461
A. NATIONAL PARTY COMMITTEES
FIXED FEDERAL PERCENTAGE (Check the appropriate line and enter % in bax to right)... aco %
[] Presidarcial Yaor (65%)
[_] All other Years 6056)
B. HOUSE AND SENATE PARTY CAMPAIGN COMMITTEES
(FD MinmuW FEDERAL PERCENTAGE © (85%) (if checked, enter 65% In baw: ta right) o.co %
OR
FUNDS EXPENDED :
. Estimated Direct Candidate Support — Federal 0.00 4%
Estimated Direc! Candidate Support — Nor-Federal O00 %
ADJUSTMENTS TO FUNDS EXPENDED:
Actual Direct Candidate
‘Support — Federal 0.00 O00
Actual Diract Candidate
Support — NotrFederal — 0.00
NOTE: Funds expended must be used If he Federal prapartion is greater than 85% In any yeer,
CG, SEPARATE SEGREGATED FUNDS AND NON-CONNECTED COMMITTEES
FUNDS EXPENDED:
Estimated Direc! Candidate Support — Federal 50.00%
. Estimated Diracl Candidate Support — Non-Federal 50.00%
ADJUSTMENTS TO FUNDS EXPENDED:
Actual Diract Candidate
Support — Federal 0.0q CGO %
Actual Direct Candidate
Support — Non-Feckral 0.00
D. STATE AND LOCAL PARTY COMMITTEES
BALLOT COMPOSITION
Cheek al Offices appearing on tha next Garral Election delet: NUMBER
OF POINTS:
4. President... 1 pint)
2.U.S. Senate 1 point
3. U.S. Congress 1 point)
4. SUBTOTAL -- Federal (ADD 1, 2, AND 3)
5. BOVEMOT oases 4 point)
6, Other Retewide Offices) 41 paint or 2 Points)
7. Slate Senate... 41 point)
8. Geta Reprasentetive 1 paint) -
9, Lacal Candidates . (1 polnt ar 2 Points) ..
1D. Extra Nor-Federal Polrt 0... (1 paint)
41, SUBTOTAL — Now-Federel (Add 5, 4, 7, 8,
412, TOTAL POINTS (Line 4 plus Line 11)
FEDERAL ALLOCATION = Line 4 dMded by Une 12 %

FEC Schedule Hi (Form $4) (Rewaed 1/2001)



SCHEDULE H2 (FEC Fonm 3X!
ALLOCATION RATIOS

NAME OF COMMITTEE ¢In Full}
America Coming Tagether

Pats / 15549

RATIOS FOR ALLOCABLE FUNDRAISING EVENTS AND DIRECT CANDIDATE SUPPORT

ACTIVITIES APPEARING ON THIS REPORT.
Methods of allocation :

|. FUNDRAISING activities ere allocated using the ‘Tunds received method’ where the Tederal proportion at expenses Must

‘equal the fadaral proportion of monias raised.

I. Shared DIRECT CANDIDATE SUPPORT attivities are alocated according to benefit expected to be derived, where the
federal proportion af disbursements ls based on benefit delved by tederal catididates Trany the activi.

ACTIVITY OR EVENT IDENTIFIER

FRP FEDERAL % NON-FEDERAL %
ACTIVITY IG: _
%] Funcreising ~ Ciract Candidate Suppart 12.00 % a. %
CHECK IF THE RATIO Is:
_J new L_ Revised _% Sarna as Previously Reparted ‘Transaction ID:
H2-841

FEC EcheduieH2 (Form 3x) Aev.02/2003



FEC. IMAGE 25980130299 (Page 299 of 3000) http://images.nictusa.com/cgi-bin/fecimgif/0/C00388876/259801302...

SCHEDULE H2 (FEC Form 3X)
ALLOCATION RATIOS PrEaES / 22862
NAME OF COMMITTEE (In Full)
America Coming Together
RaTIOS FOR ALLOCABLE FUNDRAISING EVENTS AND DIRECT CANDIDATE SUPPORT
ACTIVITIES APPESRING ON THIS REPORT.
Methods of allocation :

|. FUNDRAISING ectivites ate allocated using the Tunds received method’ where the Tederal proportion of expenses must
‘squal the facleral proportion of monias raised.

Shared DIRECT CANDIDATE SUPPORT activites are alocated according to benefit expected to be derived, where ihe
Tederal propertion of disbursements Is based on beneft deiived by federal candidates from the activtly,

ACTIVITY OR EVENT IDENTIFIER
FEDERAL % NON-FEDERAL %
ACTIVE: _
| Furcrsising — Direct Candidate Support 2.00 % 98.00 %
CHECK IF THE RATIO I8:
_J| new — |_ Revised _X Sama as Prevously Reported ‘Transaction ID:
Hod

FEC BeheduleH2 (Farm 3X) Rev.022008

lofl 1/19/2005 2:75 PM


14

After BCRA shut down the flow of soft money through party committees into federal
elections, effective the day after the 2002 election, this kind of allocation manipulation by non-
party committees quickly became more than a theoretical matter.

Although this case was brought by Emily’s List, it is impossible to understand the context
of this case, and the background to the issuance of the rule challenged here, without a discussion
of the activities conducted by ACT under the prior allocation rule.

In mid-2003, ACT was organized as a federal political committee, for the overriding
purpose of engaging in massive generic voter mobilization activities to elect the Democratic
presidential nominee.’ But the committee carefully avoided all but a minimal amount of federal
candidate-specific activity. Because it was doing little such activity, it filed reports with the FEC
claiming an allocation ratio, calculated under the “funds expended” method, of 2% federal and
98% nonfederal. It then applied this ratio to all of its generic spending, as well as to its
administrative and overhead expenses. Since ACT was doing almost nothing other than generic
voter drive activity on behalf of the Democratic presidential nominee, virtually all of its spending
was funded as allocated activity, and virtually all of that spending — 98 percent — was funded out

of its nonfederal account with soft money?

® This discussion of ACT is drawn from submissions and materials that were discussed in
comments submitted in the underlying rulemaking by the organizational amici here. See Comments of
Democracy 21 et al., supra n.5, incorporating Comments by Democracy 21, the Campaign Legal Center
and the Center for Responsive Politics on AOR 2004-5 (Feb. 12, 2004), which can be found on the FEC
website, at http://www. fec.gov/aos/2004/aor2004-05com2.pdf.

° We attach as Exhibit A the allocation schedules, Forms H-1 and H-2, submitted by ACT as part
of its public disclosure reports filed with the FEC in 2003 and 2004. These reports, with one exception,
all show an allocation ratio of 98 percent non-federal and 2 percent federal. These reports are available
online at the Commission’s website, at http://query.nictusa.com/cgi-bin/fecimg/?C00388876. (In its 2004
Post General Report, ACT modified its allocation ratio to 88 percent non-federal, 12 percent federal, but
reverted to the 98-2 split in the 2004 Year End Report.)

70780.1


43

V. Conclusion

For the above reasons, amici submit the motion for a preliminary injunction should be

denied.

Trevor Potter (Bar No. 413778)

J. Gerald Hebert (Bar No. 447676)
Paul Ryan

CAMPAIGN LEGAL CENTER
1640 Rhode Island Avenue, N.W.
Suite 650

Washington, D.C. 20036

(202) 736-2200

Counsel for the Campaign Legal
Center and individual amici

Lawrence Noble (Bar No. 244434)

CENTER FOR RESPONSIVE
POLITICS

1101 14" Street, N.W.

Suite 1030

Washington, D.C. 20005

(202) 857-0044

Counsel for Center for Responsive Politics

Respectfully submitted,

\

Donald J. Sis6dn (Bar No. 256388)

SONOSKY, CHAMBERS, SACHSE
ENDRESON & PERRY, LLP

1425 K Street, N.W.

Suite 600

Washington, D.C. 20005

(202) 682-0240

Counsel for Democracy 21

Fred Wertheimer (Bar No. 154211)
DEMOCRACY 21

1825 I Street, N.W.

Suite 400

Washington, D.C. 20005

(202) 429-2008

Counsel for Democracy 21
and individual amici

70780.1


FEC. IMAGE 24961574990 (Page 115 of 2029) http://ima;

lof1

April 2004 Quarterly Report

H1 and H2 Schedule
SCHEDULE H1 (FEC Farm 3X} 41642029
METHOD OF ALLOCATION FOR:

= SHARED FEDERAL AND NON-FEDERAL ADMINISTRATIVE, GENERIC VOTER
DRIVE AND EXEMPT ACTIVITY COSTS

« SHARED FEDERAL AND LEVIN FUNDS FEDERAL ELECTION ACTIVITY
EXPENSES

NAME OF COMMITTEE iln Fuh
Ameriea Coming Tagether

USE ONLY ONE SECTION

State and Local Party Committees

Fixed Parsentage (select ane}

Presidentia-Cniy Etectlon Year (28% Fedarel)

Presidential and Senate Eletion Year (38% Federal)

‘Benate-Only Elaction Yaar (21% Faderal)

Non-Presidential and Non-Genate Eleciion Year {15% Federal)

SE
Seperate Segregated Funds and Non-Connected Committees
Fixed Percentage (ackec! one)

Estimated Diract Candidates Support — Federal...

200 %
Estimated Direct Candidates Support — Nor-Festeral
88.60 %
ACJUSTMENTS TO FUNDS EXPENDED:
‘Actual Direct Candidate
‘Suppatt ~- Federal
0.00 %

Actual Diract Cancidata
‘Support — Non-Feders!

FEC Schedule H1 (ormX} Rev, 11402

1249615749...

1/19/2005 2:12. PM


That leaves seventeen states with 180 electoral votes as the competitive battleground:
in this election. It will be in those states that the Presidential candidates will focus
most of their resources and the media most of their attention. Those states will not
only determine the outcome of the presidential election, they will be the home of
dozens of key federal, state and local races as well. a

Our America Coming Together Action Plan will focus all of our attention in these
key states — the ones that will decide in which direction America goes after the 2004
elections.

There’s no doubt that America Coming Together can make a decisive difference in the
Presidential election and for all progressive candidates at all levels. Consider the facts:

¢ In Wisconsin (10 electoral votes), 2,598,607 people voted and
Al Gore won by 5,396 votes.

« In Oregon (7 electoral votes), 2,598,601 ballots were cast,
Gore won by just 6,765 votes. And, how close are things
in Oregon today? Ina recent poll, 41% say they will vote
to re-elect Bush, 47% plan to vote for or consider someone
-else, and 13% are undecided.

ud d
inof only 537. And, today, a majority of Florida
voters say they will vote for or consider a candidate other
than Bush in 2004.

25,000 organizers

At the heart of our America Coming Together Action Plan is an effort to build an
infrastructure of deeply committed organizers. We are putting highly experienced
directors in each state.

We have now opened 46 offices and have already hired 15 state directors, who are
rapidly organizing their states. We need to add two more states as soon as possible,
but we must have the financial support to know that we can carry out an effective” ~
effort in those states first. That’s why your immediate help is so vitally important.

Each state director builds a detailed plan and strategy to match the specific
circumstances of his or her state. But, the centerpiece of each state plan is specific
vote goals — city-by-city, county-by-county, precinct-by-precinct, voter-by-voter.

We know how many votes we need to defeat President Bush and elect progressive

candidates and we're organizing a massive, interconnected program of voter contact
to go out and find those votes.


The latter type of spending — for payments that refer to both Federal and non-Federal
candidates — was to be allocated “according to the benefit reasonably expected to be derived.”
Id. Thus, in the case of a publication or broadcast ad that refers to both Federal and non-Federal
candidates, “the attribution shall be determined by the proportion of space or time devoted to
each candidate as compared to the total space or time devoted to all candidates.” Jd. This rule
applied to both party and non-party committees.

But the rules distinguished between party and non-party committees (including non-
connected committees such as Emily’s List) in how to allocate spending for administrative
expenses and generic voter drive activity —i.e., spending that is not for candidate-specific
disbursements.

A non-party committee’s ratio for allocating these costs was determined pursuant to the
so-called “funds expended method.” § 106.6(c) (2002). The Commission’s regulations
described this as follows:

Under this method, expenses shall be allocated based on the ratio of federal

expenditures to total federal and non-federal disbursements made by the
committee during the two-year federal election cycle. ... In calculating its

federal expenditures, the committee shall include only amounts contributed to or

otherwise spent on behalf of specific federal candidates. Calculation of total
federal and non-federal disbursements shall also be limited to disbursements for

specific candidates, and shall not include overhead or other generic costs.
§ 106.6(c)(1) (2002) (emphasis added).

The rules were different for party committees. For national party committees, allocation
of “mixed” expenses was done by fixed percentages, depending on the year in which the
spending was done. National party committees in a presidential election year were required to
allocate to their Federal account a flat 65 percent of their spending on generic voter drives and

administrative expenses, and 60 percent in non-presidential election years. § 106.5(b)(2)(i), (ii)

70780.1


FEC. IMAGE 25980130298 (Page 298 of 3000) http://images.nictusa I) 2

\ October 2004 Quarterly Report
H1 and H2 Schedule

SCHEDULE H1 (FEC Farm 3X) a

METHOD OF ALLOCATION FOR:
= SHARED FEDERAL AND NON-FEDERAL ADMINISTRATIVE, GENERIC VOTER
DRIVE AND EXEMPT ACTIVITY COSTS

« SHARED FEDERAL AND LEVIN FUNDS FEDERAL ELECTION ACTIVITY
EXPENSES:

NAME OF COMMITTEE (In Ful)
America Caming Tagether

USE ONLY ONE SECTION

State and Local Party Committees

Axed Perventage (select one)

PresidentiaOnly Election Year (28% Federal)
Presidendiel and Senate Gletion Yeer (58% Federal)

Benaie-Only Elantion Year (21% Fackrel)

Non-Presiciertinl and Non-Senate Election Year (15% Federal)

ee —— ——t
Seperate Segregated Funds and Non-Connected Committees

Fixed Perceniage (selec! one}

Estimated Direct Candidstes Support — Federal...

200 %
Estimated Direct Canddstes Support — Nat Federl....
88.00 %
ADJUSTMENTS TO FUNDS EXPENDED:
‘Actual Direct Candidate
‘Suppait - Federe!
0.00 %

‘Actusl Direct Cencidsta
Support — Non Feder as

0.00

FEC Schedube H1 @oemaX} Rev. 11402

lof1 1/19/9005 9-95 PM


Statutes and Regulations:

Bipartisan Campaign Reform Act of 2002,

Pub. L. No.107-155, 116 Stat. 81.0.0... cccsccccesessseeeceeeessrseueseseversnsueseeeres 1
Federal Election Campaign Act,

86 Stat. 3 (1971)... eeecsecsesscceseeeessescessseeesenteestseeseesseeesssaeeeesueeensaes 2
ZUS.C. § 4314). ceeeccccssseceesesensreeeeecessnseeeeesenteteereescesettsaereseseeeeaee 29
2 USC. § 431(22) .eeceeecccecccecenssceeeeresenteneeeesenststeeeeesessissseeeeeseentataee 26
ZULS.C. § 431 (8A). ee ceecececesessseeeeeecsnsseeeeeseteatteeeeseetentseeeeeeenenaes 37
2ULS.C. § 43109)... ec ececescsseeceeesensteeeeeeeesseneeeeeesentseeeeeeseetstsateseesensaaee 30
2 U.S.C. § 431(20)(A) (ii) oo. ee ccc ecceeceeereeeeeereertateeeeetentaaaeesesesenssatesees 11
2 UVSC. § 434(£)(3).. 0. eceeceeeecceeeeceeceeeeeeeeeeeeeceeeceeceeeeeeeeseeeeeeeeeeeseenaaaeenas 35
2 ULS.C, § 44la(ay(1)(C).... eee ecc cee ceseeeeeeceeseeeeeeeeeeeseeeeeeeeeeeeeeeeeeeeseeeeeeee 7,12
ZUS.C. § 44 1D. icecccccssecesesensseeeceeecsssneeeesenseeateeesersnenauaeeseseretseeeeeess 7
2 ULS.C. § 441 b(b)(2)(C). occ. e cece eeeseeceeceseeceeececeeeeeeceeeeseeeeeeeceeeeeeeeeeeeeeeeeeeeee 7
2ZUS.C. § 44110). cccccccccccesecsescescsecsseacstcscssvstscsssevssescstestsscssvsvaesseneva 11
2 USC. § 441i(D)(1)... eee ecccccccceceesneeeceeeeesnreeeeereesneeeeeeesensenaaeeeeesentieeeees i
2 ULS.C. § 441i(D)(2). 0. cece ceeee cee eeereeeseeeeeeeeseeeseeeseeseneeeeeseeereerereeeeeeree 11,30
26 ULS.C. § 501(C)(3)... 0. cece ceecseeereecnteentteseceseseesesteeeteeeteeeeeeereseeeeeeeeeees 22
26 U.S.C. § S01 (CYA). cccccceccecenesssseceesenertneeeeeeesensneeeeeessneateeeeeesseteseaeeeeeens 22
26 ULS.C. § 527... cecccececcecceceeeecceececceeeeecceceeceeeeeeeeeeeereseeeeeeeeeeeseegaeeataegaaeaaa 2
V1 CAPR. § 100.25 ......cccceeccecceeeeceecceceeeeeceeeeeeeceeeeeeeeeeeeeeeeeeeeeeeeeeeseeeuaueaaaeags 7
11 C.F.R. § 100.51 — 100.56 (2002)......0..cceesesseeeeeeeeessttteeeseseesneeeeeesessnesesees 37
11 C.F.R. § 100.57 (2005).....0ccccsecescsseseeeeessneeeeeeeeeenaeeeseseseneteeeeeseneeaee 3, 38
11 C.F.R. § 106.18) (2002).......cccccseceeeesensreeeeeeesteneeeeresetseeeeeeeeesttsseeeeeeeees 8
11 C.F.R. § 106.1(€) (1977)... .ccccccecceeesensseeeeeeesesetieeeeeeeeentaeeeeesesensssseeeesenstauaes 8

70780.1


The America Coming Together effort will combine all the spirit and energy of old-
fashioned political organizing with all the technology and innovation of 21st century
politics, .

As our canvassets 20 door-to-door, they'll be equipped with hand-held computer
devices, allowing them: to keep a detailed record of every contact and to help shape
the content of future communications with 2 voter based upon what that voter has told
us he cares about the most. .
. Then, we'll work our hearts out right through the fall — staying in close contact
voters, making sure they have the information they need, registering voters,
organizing absentee and éarly voting programy, and more.

Our plan will culminate in the most sophisticated and massive Get-Out-The-Vote
operation America has ever seen. And, when we're done, American politics will never
be the same.

200,000 Volunteers

Our America Coming Together Action Plan will rely upon a core of full-time,
experienced, paid organizers in ech of our target states — a group that will expand
in number as Election Day gets closer. But, the energy, spirit and enthusiasm of
volunteers must and will play an essential role in our campaign.

4s ACT canvassers go door-to-door, they will be constantly on the lookout for people
willing to play ari ongoing role in our campaign — people like you. .

Our most committed volunteers will be asked to “take responsibility” for a group of
voters in their neighborhood, staying in touch with:them throughout the campaign,
making sure they have all the information they need, and assuring that, come Election
Day, they get out and vote for our candidates. ~

By the time, Election Day rolls around, ACT will have
mobilized over 200,000 volunteers — people willing to
commit theit personal time and energy to the effort to
end the Bush presidency and elect progressive candidates.

Our goal is to put every ounce of energy those volunteers commit to the.most effective
use. Our America Coming Together Action Plan is a bold, but well-considered,

undertaking.
10 million doors knocked on. .
The America Coming Together Action Plan is based upon reaching out to millions of

carefully targeted voters in the seventeen most competitive states. If we comumit the
time, energy, and financial resources to engaging people in an ongoing conversation


23

We fear that otherwise, the current rulemaking proposal is a recipe for failure.
The Notice of Proposed Rulemaking adopted by the Commission is so lengthy,
addresses so many issues, raises so many questions and proposes so many new
rules that the Commission is unlikely to be able to conclude this matter by its
mid-May deadline and promulgate new rules for the 2004 general elections.

A failure by the FEC to focus its rulemaking effort on the issues critical for the
2004 elections is likely to result in agency gridlock and inaction.?6

The amici urged the Commission to act on the allocation issue as one of its two priority matters:

There are two major federal campaign finance law problems that have become
manifest in the 2004 election and that should be the focus of the current FEC
tulemaking.

First, one or more non-connected political committees are engaged in partisan
voter mobilization activities aimed at the general public, and are planning to
allocate that spending between their federal and non-federal accounts, pursuant to
11 C.F.R. § 106.6. That regulation allows a committee to calculate its allocation
ratio for the use of hard and soft money based on its “ratio of federal expenditures
to total federal and non-federal disbursements” over a two-year election cycle. Id.
at § 106.6(c)(1).

This regulation is contrary to the Federal Election Campaign Act (FECA) and
leads to indefensible and absurd results. Under the Commission’s existing Part
106 allocation rules, for example, America Coming Together (ACT) is claiming a
tight to spend 98 percent soft money on its voter mobilization activities, even
though ACT and its donors have made publicly clear their overriding purpose is
to mobilize voters to defeat President Bush in the 2004 elections.

The complete inadequacy of the Commission’s existing allocation rules to prevent
the kind of absurd result that has occurred with ACT is a question of immediate
and urgent importance in the rulemaking. The question is raised in the Notice of
Proposed Rulemaking, see Notice at §§ V(C) (“Minimum Federal percentage”)
and D (“Clarifying the ratio in the ‘funds expended’ method), and should be
segregated and resolved on the expedited track that the Commission has set for
the rulemaking.

6 Letter of March 16, 2004 to FEC Commissioners from Democracy 21, the Campaign Legal
Center and the Center for Responsive Politics at 2 (footnotes omitted). A copy of the letter is in the
rulemaking record and can be found on the Commission’s website, at http://www.fec.gov
/pdf/nprm/political_comm_status/mailed/democracy21_wertheimer_2.pdf.

70780.1


3

A Bold Action Plan.
. Essential to Victory in 2004

Introduction

Flow do we give progressive candidates the winning edge in the race for the White
House and other closely contested elections in 2004?

We organize like we’ve never organized before — and we work together.

Our America Coming Together Action Plan is based on proven techniques and directed
by proven leaders. Our embitious voter contact plan Will be designed and executed by
Steve Rosenthal, ACT’s Chief Executive Officer. Before joining. ACT, Steve served for
eight years as the Political Director of the AFL-CIO, where he developed a ground-
breaking voter contact program that increased voter turnout of union members by 4.8
million during a time when non-tmion turnout decreased by 15 million.

And ACT's President is Ellen R. Malcolm, who revolutionized American politics as
founder and president of EMILY’s List, the largest political action commuttee in
America. EMILY’s List elects pro-choice Democrati¢ women to office and, since
1994, its WOMEN VOTE! program has helped mobilizé women. to vote, tuming the
advantage of the “gender gap” into votes for Democrats. ‘

Here are some of the key details of our Action Plan.

Seventeen States

As the 2004 elections approach, Democrats have a firm grasp on 168 electoral votes.
They're in states that the Democratic candidate is almost guaranteed to win: President
Bush, on the other hand, seems an almost certain winner in states that add up to 190
electoral votes.

ere eee
‘Steve Rosenthal Chief Executive Officer / Main Office / 838 ‘16th St. NW / Suite 450 / Washington, OC 20006 / T 202. $74 8360 / F 202 574 5367
Ellen R. Makolm President / Fundenising Office / 1120 Connecticut Ave. NW / Suite 1120 / Washington, OC 20036 / T 202 419 1040 / F 20z $19 1050.



Ament yfiq [o4

Veet 4
SCHEDULE H1 (FEC Farm 3x) ‘ ene 91/787

.

METHOD OF ALLOCATION FOR:
= SHARED FEDERAL AND NON-FEDERAL ADMINISTRATIVE, GENERIC YOTER
DRIVE AND EXEMPT ACTIVITY COSTS

= SHARED FEDERAL AND LEVIN FUNDS FEDERAL ELECTION ACTIVITY
EXPENSES

NAME OF COMMITTEE iln Full)
America Caming Tagether

USE ONLY ONE SECTION

State and Lacal Party Committees

Fixed Peroentage (select ane)

Presidenila-Ony Election Year (25% Federal)
Presidential and Senate Eletion Year (36% Federal)

Senate-Cnly Election Yaar (21% Faderal}

Non-Presidertial and Non-Senate Election Year (15% Federal}

Seperate Segregated Funds and Non-Connected Committees

Fixed Percentage (selec one}

Estimated Diract Candidates Support — Faderal......

2.90

Estrneted Direct Candidates Support — Nor-Federal.......

98.00 %
ADJUSTMENTS TO FUNDS EXPENDED:
Actual Direct Gandidate

Support - Federal

0.00
Actual Diract Canddata

‘Sunpart — Non-Fedaral

0.00

FEC Schedule H1 (Form SX} Rey. 14.02



16

loose on our national forests — and he’s set John Ashcroft loose on our civil
liberties.

But, wishing won’t make Bush, Cheney, Ashcroft, DeLay and their extremist
agenda go away. People-to-people organizing will — and organizing is what ACT
is all about.'?

A June, 2004 version of the same solicitation also specifically referenced the presidential

campaign of Senator Kerry:

We can’t match them dollar-for-dollar. But, we can — and must — match them

door-for-door. And in many critical states we’ll be at work in places where the
Kerry Campaign and the Democratic Party simply don’t have the resources to

operate.

ACT’s enclosed “Bold Action Plan” confirmed that its focus was on influencing the 2004

presidential campaign. The plan was premised on all of ACT’s efforts taking place only in the

seventeen “battleground” states that, in ACT’s assessment, would determine the presidential

election:

As the 2004 elections approach, Democrats have a firm grasp on 168 electoral
votes. They’re in states that the Democratic candidate is almost guaranteed to
win. President Bush, on the other hand, seems an almost certain winner in states
that add up to 180 votes.

That leaves seventeen states with 180 electoral votes as the competitive
battleground in this election... .

? Exhibit B, Solicitation Letter at 1-2.

® Solicitation Letter at 1, A copy of the full letter is attached for the court’s convenience as

Exhibit C. Although this letter was sent after the close of the public comment period in the underlying
rulemaking, it is an outgrowth of the same material that was discussed in the administrative record. This
letter was submitted to the Commission during the time period in which the rulemaking was pending, and
thus was within the knowledge of the Commission, as an attachment to an administrative complaint filed
with the Commission by organizational amici on June 22, 2004.

70780.1


33

Plaintiff complains that the new rule is an unreasonable “one size fits all” approach, Pl.
Mem. at 33, that lacks “proportionality,” id.. at 17, because the 50 percent requirement for
funding administrative costs and generic activities may not relate well, or even at all, to the
federal proportion of a committee’s candidate-specific activities. Id. (federal share under the
prior rule was “in proportion to [a committee’s] actual financial commitment to federal
elections”).

But the supposed “proportionality” that plaintiff commends in the old rule was itself no
more than a regulatory illusion. The ratio of a committee’s candidate-specific spending may, or
may not, relate at all to the entirely separate issue of whether the committee’s generic voter
mobilization activities are for the purpose of influencing federal elections. A committee could
choose to run candidate-specific ads only about gubernatorial contests in Idaho and West
Virginia, while also deciding to spend heavily on generic voter drive activity to influence the

presidential race in Ohio and Florida. The committee’s candidate-specific activity in some states

says nothing about the purpose of its voter drive activity in others.

*” Emily’s List postulates the unlikely scenario that “[i]f” it supports “just one federal candidate or
allocates just one percent of its total budget to the entire class of federal candidates supported in an
election cycle,” it must still pay its administrative expenses with 50 percent federal funds. PI. Mem. at
17. This is, of course, simply hypothetical, since Emily’s List does not argue that this trivial spending on
federal campaigns is what its actual level of federal spending has been or will be. In fact, Emily’s List
has chosen to allocate spending in each of the past five years with a 50 percent federal spending
allocation. See p. 40 infra. Emily’s List describes itself as having “helped to elect” sixty Democratic
women to Congress and eleven to the United States Senate. Pl. Mem. at 5.

The series of other hypothetical scenarios also posed by plaintiff — such as “a multi-million-dollar
state political committee that spends $1,000.01 on a billboard supporting a federal candidate as its only
federal activity,” Pl. Mem. at 18 — also remain just that— hypothetical. No such committee took the
opportunity to object to the proposed rule on this basis during the rulemaking. And it would be the odd
state committee that found itself in the position of having to pay half of all its administrative expenses
with federal funds solely on this basis. Such a state committee would presumably segregate its multi-
million dollar nonfederal activity in a nonfederal committee, and set up an entirely separate federal
committee, registered with the FEC, to pay for the single billboard supporting a federal candidate.

70780.1


Pre-General 2004 Report
SCHEDULE H1 (FEC Farm 3X} HI and H2 Schedule @/27a4

METHOD OF ALLOCATION FOR:
" SHARED FEDERAL AND NON-FEDERAL ADMINISTRATIVE, GENERIC VOTER
DRIVE AND EXEMPT ACTIVITY COSTS

= SHARED FEDERAL AND LEVIN FUNDS FEDERAL ELECTION ACTIVITY
EXPENSES:

NAME OF COMMITTEE tin Fully
America Caming Tagether

USE ONLY ONE SECTION

State and Local Party Committees

Fixed Percentage (select ane)

Preaidertia-Ony Elecilon Year (28% Federal)
Prealdendlal and Senate Eletion Year (6% Federal)

Senate-Cnly Election Yaar (21% Federal

— NerPresidertial and Mon-Genate Eleciion Year (15% Federal)

SS
Seperate Segregated Funds and Non-Connected Committees

Fixed Percentage (sek one}

Estimated Direct Cancidabes Support — Federal ......

2.00 "6
Estimeted Cirect Candidates Support — Nor-Federal.......
98.00 %
AQJUSTMENTS TQ FUNDS EXPENDED:
Actual Direct Candidate
Suppart -- Federal ...
0.00 %

Actual Direct Canddeta
Suppart— Now-Fecerl.....

0.00

FEC Schedule H1 Form aX) Rey. 11.402



19

A political committee organized by operatives associated with the Republicans,
Americans for a Better Campaign (ABC), submitted an advisory opinion request to the FEC in
late 2003, seeking clarification of the law in these areas. In February, 2004, the Commission
issued a narrowly crafted response to the questions posed, Ad. Op. 2003-37," but also
announced that it would undertake a rulemaking on these same issues, because of their scope and
significance.

As the same time, the organizational amici wrote to the Commission and urged it to deal
with the allocation issue in its planned rulemaking:

Democracy 21, the Campaign Legal Center and the Center for Responsive Politics
jointly request the Federal Election Commission to adopt new rules on the
allocation formula for non-connected political committees. It is essential for the
Commission to take this action as part of the expedited rulemaking process the
Commission plans to initiate shortly with the publication of a Notice of Proposed
Rulemaking regarding political committees and section 527 organizations.

Recent events have only served to confirm that the Commission’s existing
allocation rules in Part 106 of its regulations are fundamentally flawed, and do not
properly implement the meaning and language of the Federal Election Campaign
Act. These events also demonstrate why it is essential for the FEC to act in this
area on an expedited basis in order to prevent the current regulations from being
used to improperly channel soft money into the 2004 federal elections.”!

20 In this advisory opinion, the Commission held that a public communication that “promotes,
supports, attacks or opposes” a federal candidate is “’for the purpose of influencing a Federal election’
when made by a [registered federal] political committee,” and must accordingly be funded entirely with
hard money. Ad. Op. 2003-37, at 10. The Commission also held that generic voter drive activities that
do not mention a clearly identified federal candidate are subject to allocation under its section 106.6 rule.
Jd, at 13. (In the Explanation and Justification issued in November, 2004 on the rules challenged here, the
Commission said that this advisory opinion was “superseded” by the Commission’s new rules. 69
Fed.Reg. 68,063 (Nov. 23, 2004).

2! Letter of February 25, 2004 to FEC Commissioners from Democracy 21, the Campaign Legal
Center and the Center for Responsive Politics at 1 (footnotes omitted). A copy of the letter is in the
rulemaking record and can be found on the Commission’s website, at http://www.fec.gov/pdf
/nprm/political_comm_status/exparte_commissioners.pdf.

70780.1


SCHEDULE H1 (FEC Farm 3X)

METHOD OF ALLOCATION FOR:

» SHARED FEDERAL AND NON-FEDERAL ADWINISTRATIVE, GENERIC VOTER

DRIVE AND EXEMPT ACTIVITY COSTS

« SHARED FEDERAL AND LEVIN FUNDS FEDERAL ELECTION ACTIVITY

EXPENSES

Year-End 2003 H1 and H2 Schedule

NAME OF COMMITTEE iln Ful
EMILY's List

USE ONLY ONE SECTION

State and Local Party Committees

Fixed Percentage (select ane}

PresidentisHony Eketlon Year (28% Federal)

Prealdentlal and Senate Elation Year (36% Federal)

Benele-Cnly Blacton Yaar (21% Federal)

——— Non-Presidertial and Non-Senate Election Year (15% Federal)

Seperate Segregated Funds and Non-Connected Committees
Fixed Percentage (selec! one}

Estimated Direct Cancidates Support — Federal.......

Estimated Direct Candidates Support — Noe-Federal

ADJUSTMENTS TO FUNDS EXPENDED:
Actual Direct Candidate

‘Support -- Federal...

‘Aciuel Diract Candidate
Support — Now Federal...

Te em

350.00 %

0.00 %

0.00

FEC Schedube H1(FoemS¥} Rev. 11402

http://images.nictusa.com/cgi-bin/fecimgif/0/C00193433/24990246394/24990246389/22 1/666...

1/19/2005


40

of FECA more than 30 years ago, and the Supreme Court’s decision in Buckley upholding that

law.

B. Plaintiff Cannot Demonstrate It Would Suffer
Irreparable Harm in the Absence of a Preliminary Injunction

There are three reasons why Emily’s List has failed to demonstrate it would suffer
irreparable harm in the absence of an immediate preliminary injunction:

First, throughout its recent history, Emily’s List has claimed a 50-50 ratio for allocating
spending between its federal and non-federal accounts, and has reported that allocation ratio to
the Commission.’ Thus, plaintiff has long characterized its own activities as embodying
precisely the same allocation split that the regulation it challenges now requires. Whatever the
case may be for another committee, there is a perfect fit between the new rule and the recent
activities of Emily’s List. Given the fact that Emily’s List has long managed to conduct its
activities in conformance with what the new rule requires, and given that there is no evidence
Emily’s List is changing its activities, there is no need for plaintiff to alter its behavior — or its
spending — at all. Under these circumstances, plaintiff has not made a showing that this
regulation causes irreparable harm.

Second, compliance with the rules at issue will not cause “irreparable” harm. Emily’s
List can engage in all of the spending for all of the speech it wishes. This includes spending on
generic or voter drive activity for which — even plaintiff concedes — some portion must be funded

with federal money. The only issue is whether that federal portion is 50 percent or some lower

46 Tn disclosure reports filed by Emily’s List for the last five years, it has claimed a 50-50
allocation ratio. We attach as Exhibit D the H-1 and H-2 schedules filed by Emily’s List for its Year End
report for each of the last five years, as a sample showing its consistent and voluntary claim to this
allocation ratio. All of these reports are available on the Commission’s website, at
http://query nictusa.com/cgi-n/dedev/forms/.

70780.1


ing Together

“| wholeheartedly support the America. Coming Together Action Plan.

it's about time we came together and organized the kind of extraordinary efforts it takes
to win on Election Day. | urge you to support this important organization.”
Former Texas Governor Ann Richards

“With the Bush Administration in power, and the way it has exploited
the terrorist attacks of September 11, | feel very uncomfortable
‘about the direction in which the U.S. is taking the world, and to me it is not business
‘as usual. It is for this reason that | am supporting America Coming Together, ACT is
an effective way to mobilize civil society, to convince people to go to the polls and
vote.”
George Soros

“\'m proud to be a part of America Coming Together. The only
way to protect our environment is to defeat President Bush and elect strong
environmental candidates nationwide. The America Coming Together Action Plan
is essential to that task.”

Carl Pope
Sierra Club Executive Director and
America Coming Together board member

“The record is clear. If we talk to voters one-on-one, at the door, in their neighbor-

hoods, on the phone, in the mail and on the internet about the issues they care about —

and weave our communications into an ongoing dialogue, they will come out to vote and
make a change. That's why I’m proud to be a part of America Coming Together.”

Steve Rosenthal
ACT CEO and former AFL-CIO Political

irector

www.act4victory.org


yeat f jJacley

SCHEDULE H2 (FEC Fonm 3X) of
ALLOCATION RATIOS
PAGE 52/767
NAME OF COMMITTEE ¢In Fully
America Caming Together

RATIOS FOR ALLOCABLE FUNDRAISING EVENTS AND DIRECT CANDIDATE SUPPORT
ACTIVITIES APPEARING ON THIS REPORT.
Methods of allocation :

1. FUNDRAISING actvites are allocated using the funds recelved method’ where the Tedenal propertion of expenses muet
sequel the federal proportion of manis raised.

(Shared DIRECT CANDIDATE SUPPORT activities are alocated according ie benefit expected to be derived, where the
federal propertan of disbursements Is baed on benent derved by federal candidates frany the activity.

ACTIVITY OR EVENT IDENTIFIER
FRP FEDERAL % NON-FEDERAL 4
ACTMITY IS: _
%] Funcreising —_Diract Candidate €uppart 2.00 % | ae.00 %
CHECK IF THE RATIONS:
xj new — |_ Revised __ Burne as Previously Reported Transaztlon ID:
RA

FEC Behedule H2 (Farm 3X) Aev.022005



BUSINESS REPLY MAIL

FIRST-CLASS MAIL PERMIT NO. 9325 MERRIFIELD VA

POSTAGE WILL BE PAID BY ADDRESSEE

AMERICA COMING TOGETHER

PO BOX 7010

' MERRIFIELD VA 22116-9526

NO POSTAGE
NECESSARY
\F MAILED
IN THE
UNITED STATES



27

communication refers to both Federal and non-Federal candidates, it would be allocated “based
on the proportion of space or time” devoted to the Federal candidates as compared to the non-
Federal candidates, and funded accordingly.

At its decision-making meeting, the general counsel’s four-part proposal was rejected by
a vote of 2-4. The latter two portions of the general counsel’s proposal — the clarified
definition of “contribution” and the modifications to the allocation system ~ were severed and
moved separately. This motion passed by a vote of 4-2.

The Commission met again on October 28, 2004 to approve an Explanation and
Justification (“E&J”) for the two new rules. Final publication of the rules was made on
November 23, 2004, approximately two weeks after the 2004 election. “Political Committee
Status, Definition of Contribution, and Allocation for Separate Segregated Funds and
Nonconnected Committees,” 69 Fed. Reg. 68,056 (Nov. 23, 2004).

While the final E&J noted that “little attention” was focused on the allocation issues
during the public comment period, id. at 68,061, this description was made only in relative terms.
Almost all of the 100,000 comments received in the rulemaking dealt with the impact of the
proposed regulations on section 501(c) non-profit groups, not with the allocation issue. But as
noted above, ACT — the group that would be most affected by the allocation regulation —
submitted comments on these rules, as did a related 527 organization, The Media Fund. The
principal sponsors of BCRA commented, as did a number of campaign finance groups. And as
noted earlier, these rules were the subject of extensive discussion during the Commission

hearings on the rules.

*8 The minutes of this meeting are available on the Commission’s website, at http://www.
fec.gov/agenda/2004/approve04-77.pdf.

70780.1


million dollars, virtually all of it soft money, for voter mobilization efforts to influence the
presidential election in key presidential battleground states. See n.1.

By late 2003, it had become apparent that these twin avenues of evasion would be used
by political operatives to partially continue the soft money system in the 2004 federal elections.
Efforts were made -— including by amici here — to urge the FEC to take firm and prompt steps to
shut down these avenues for circumvention of the campaign finance laws. The FEC responded
by instituting a rulemaking in March, 2004 to examine both of these issues.

This rulemaking ultimately concluded nine months later in November, 2004 — too late to
have any impact on the 2004 campaign. The Commission took xo action on the problem of
section 527 groups that operated entirely outside the campaign finance laws, making no changes
to its rules defining “political committee” status.” But the Commission did modify its allocation
tules to prevent, on a prospective basis, the kind of manipulation of those rules that resulted in a
federal political committee, such as ACT, spending almost exclusively soft money on voter
mobilization activities for the purpose of influencing a federal election. 11 C.F.R. § 106.6(c)
(2005). The Commission also clarified the FECA definition of “contribution” to include funds
raised in response to solicitations that indicate the money will be spent to influence federal
elections. 11 C.F.R. § 100.57 (2005).

It is these two rules that are challenged in this action. Plaintiff Emily’s List is a federal
political committee headed by Ellen Malcolm, who was also a founder and president of ACT.

Counsel for Emily’s List also served as counsel to ACT in the rulemaking at issue here. Emily’s

? The Commission’s failure to act on this matter is the subject of a separate lawsuit brought by
two amici here, Representatives Shays and Meehan, that is pending before Judge Emmet G. Sullivan.
Shays and Meehan v. FEC, Civ. No. 04-1597 (D.D.C.) (EGS) (complaint filed Sept. 14, 2004).

70780.1


42

The Supreme Court has repeatedly upheld the federal campaign finance laws because
they serve the compelling governmental purposes of preventing “both the actual corruption
threatened by large financial contributions and the eroding of public confidence in the electoral
process through the appearance of corruption.” McConnell, 540 U.S. at 136, quoting FEC v.
Nat'l Right to Work Comm., 459 U.S. 197, 208 (1982); see also FEC v. Colo. Republican Fed.
Campaign Comm., 533 U.S. 431, 440-41 (2001).

These interests are fully implicated by the allocation regulation at issue here. The
regulation serves to prevent widespread circumvention of the federal campaign finance laws and,
in particular, the contribution limits and source prohibitions they impose on funds donated to
federal political committees that are spent for the purpose of influencing federal elections. The
Commission had before it powerful evidence that its prior rule resulted in massive circumvention
and that, under color of that rule, tens of millions of dollars of soft money was spent to influence
the 2004 federal elections.

To enjoin this rule would strongly harm the public and disserve the public interest by
permitting the continuation, and potential expansion, of this massive circumvention, thereby

undermining the compelling public interest served by the statute.

70780.1


BCRA accomplished its basic goal in the 2004 election: it ended the flow of soft money
through political party committees into federal elections and stopped federal officeholders and
candidates from soliciting soft money funds. Nevertheless, a lesser amount of soft money
continued to be spent to influence the 2004 federal elections, this time through different vehicles
and by different mechanisms. Two principal techniques were exploited. The first involved the
use of so-called “section 527” groups, entities registered with the Internal Revenue Service as
“political organizations” under section 527 of the tax code, 26 U.S.C. § 527. These groups did
not register with the FEC as “political committees” under the Federal Election Campaign Act
(FECA), and thus did not raise and spend funds pursuant to the contribution limits and source
prohibitions of federal law. These 527 groups, such as The Media Fund and Swift Boat Veterans
for Truth, operating outside the federal campaign finance laws, spent tens of millions of dollars
of soft money in the 2004 election for broadcast ads that overtly promoted or opposed the
presidential candidates, !

The second mechanism involved soft money funds spent for voter mobilization activities.
The prime example of this was America Coming Together (“ACT”), a group registered with the
FEC as a political committee, that manipulated inappropriate FEC rules governing how a
political committee could “allocate” between a federal and a non-federal account its spending for
voter mobilization drives that affect both federal and non-federal elections. Even though it was
patently clear that ACT was formed, funded and operated for the overriding purpose of
influencing the 2004 presidential election, it claimed a right under the existing FEC allocation

tules to fund 98 percent of the costs of its activities with soft money. ACT spent over $75

' The spending by section 527 groups is compiled on the website of the Center for Responsive
Politics, at http://www.opensecrets.org/527s/527cmtes.asp?level=C&cycle=2004.

70780.1


36

public communication, it is spending that money “for the purpose of influencing” the candidate’s
election. As such, and when it is a federal candidate who is “referenced” in the ad, the spending
by the federal political committee is within the scope of FECA.“

Plaintiff's second attack on the rule is that it will have an unreasonable — even
“incapacitating” — impact on Emily’s List. Pl. Mem. at 14. Here, Emily’s List recites no actual
public communication it has run that “refers to” a federal candidate and for which the new rule
would require an unreasonable, excessive or “incapacitating” amount of federal funding. Instead
of illustrating its point with any real-life example drawn from its twenty years of experience as a
political committee, Emily’s List instead offers only improbable hypotheticals at the outer
reaches of the rule — an ad for a state candidate that includes a reference to a federal candidate in
the name of legislation (e.g., “McCain-Feingold”), or an ad for a state legislative candidate that
mentions an endorsement by a federal candidate. Pl. Mem. at 15-16.

The rule itself provides the best answer to these hypothetical applications. Although
plaintiff claims that a “simple reference” to a federal candidate “converts” the communication
into activity “subject to significant financing restrictions,” id. at 16, this is wrong as it applies to
the examples cited. For an ad that “refers to” both federal and non-federal candidates — the
hypothetical endorsement ad, for instance — the rule requires only an allocation of federal
funding that is “based on the proportion of space or time devoted to each clearly identified

Federal candidate as compared to the total space or time devoted to all clearly identified

“ Plaintiff argues that because Congress did not alter the allocation rules for non-party
committees in BCRA when it did so for party committees, the Commission cannot alter the non-party
committee rules either, because Congress’ silence on the matter indicates that it “accepted the
longstanding allocation regime set forth in” section 106 for non-party committees. Pl. Mem. at 14. But
even plaintiff recognizes this is wrong, and that Congress’ silence on the Commission’s allocation rules
“does not necessarily preclude the FEC from adjusting those rules.” Jd.

70780.1


15

But ACT was plainly and publicly engaged in these voter mobilization activities in order
to defeat President Bush, and to elect the Democratic nominee. That overriding federal purpose
was made clear by its founders, its funders, and its public communications.

According to a report in The Washington Post about the formation of ACT, its president,
Ellen Malcolm, said that ACT would conduct “a massive get-out-the-vote operation that we
think will defeat George W. Bush in 2004.”"° This overriding purpose was confirmed by ACT’s
direct mail fundraising solicitation materials. For one such solicitation, signed by ACT president
Malcolm, the outside of a large envelope in which the solicitation was mailed stated:

17 States;

25,000 Organizers;

200,000 Volunteers,

10 Million Doors Knocked On

.-. and a one-way ticket back to Crawford, Texas’!
The solicitation letter itself is focused on the presidential election:

[I]f we can count on your personal support and active participation, 2004 will be a
year of America Coming Together and George W. Bush going home... .

In communities all across America, people are hurting because Bush’s mindless
devotion to tax cuts for the wealthy is making a shambles of our economy. Bush
has turned record budget surpluses into record deficits in no time flat.

He has worked to undermine a woman’s right to choose. His reckless disregard
for the environment has eroded decades of progress. He’s set timber companies

Thomas Edsall, Liberals Form Fund to Defeat President; Aim is to Spend $75 Million for 2004,
THE WASHINGTON POST, Aug. 8, 2003.

" This solicitation was discussed in comments in the administrative record below. See supra, n.8.
A copy is attached for the court’s convenience as Exhibit B.

70780.1


10

(2002). State party committees were required to use a different method based on a complex
calculation of the state’s “ballot composition.” § 106.5(d)(1)G@) (2002).

As noted above, there were no minimum percentages imposed on allocation by non-party
committees under the “funds expended” method, such as there were for national party
committees.

2. BCRA and McConnell. Political committees operated under these allocation rules
from the effective date of the rules in 1991 until the effective date of BCRA in November, 2002.
In this period, party committees became major vehicles for circumventing the campaign finance
laws and spending soft money to influence federal campaigns. In 1992, the national party
committees raised about $80 million of soft money; by 2000, that increased more than six-fold to
about $500 million. See 251 F. Supp. 2d at 281 (Op. of Kollar-Kotelly, J.). Congress concluded
that the underlying premise of the allocation system devised by the FEC was largely a myth —
allocation did not magically segregate a party committee’s spending of nonfederal funds to only
those activities that influence nonfederal elections. Rather, the allocation system actually
enabled circumvention of the law; it authorized the spending of soft money funds on activities
that were intended to, and had the effect of, influencing federal campaigns. As Judge Kollar-
Kotelly said in McConnell:

For well over two decades, the Commission has sought to regulate the use of

nonfederal funds by permitting the national, state, and local political party

committees to allocate expenses on “nonfederal” activities between their federal

and nonfederal accounts. The vast record in this case demonstrates that this

system — a cobbled-together aggregation of FEC regulations and advisory

opinions — is in utter disarray with all of the different political party units

spending nonfederal money to influence federal elections. Congress was correct

in finding that in many instances, the allocation regime was a failure.

251 F.Supp. 2d at 651. (Op. of Kollar-Kotelly, J.).

70780.1


vi

11 CER. § 106.5(b)(2)......cecsececcceseseeesneeeseceeectsseecsseeseeseesesseesssesenssteenaee 21
11 CFR. § 106.5(b)(2)(i), (ii) (2002)... ieee eseeeeeeteeesteeeeetaeeesseeesessueeriees 9, 10
11 C.FR. § 106.5(d)(1)(i) (2002)........eeeececeeeeesetsteeeeeeseestseseeceeeerssssteseesnnraneee 10
11 CAFR. § 106.6 (2002)........ccceccscceesessssseeecesestteeeeeerststteeescessnisae saaaee 13, 23
11 C.F.R. § 106.6(b)(2)(iii) (2002)... eee eeeeeeseneeeeceeeesteeeeeeesesstsssaseeeeererssueess 8
11 COFLR. § 106.6(C) (2002)......cccccccsesessssseeceessnseeeeeeessstreeeeseeenstsaseeeeseesssasaeens 9
11 C.F.R. § 106.6(C) (2005)...... ccc cece cc eeceececcccceeseeeeeeeeeeeeeesteeseteeanenas 3, 32
11 C.F.R. § 106.6(c)(ii)(A),(B) (Alternatives 3-A, 3-B) (proposed)............scceseteeeeeees 21
11 C.F.R. § 106.6(C)(1) (2002)........... cece cece seeeceeeseeeteceseeeseereeeesereeeeeeeeeeeeenee 9, 23
11 C.F.R. § 106.6(£)(3)(i) (2005)... eecseecnerenenseenteeeesenteeeseeteeeeeeeeeeeees 35, 37
55 Fed. Reg. 26,058 (Jun. 26, 1990)......ccccccccccesesssseeesessstseeeeesenseteeeeeeseeenaaeees 8
69 Fed. Reg. 11,736 (Mar. 11, 2004)....... 2. ccc c cee ceeeseeeeeeeeenenenaaeaaeee 20, 22
69 Fed. Reg. 11,753 (Mar. 11, 2004)..........eceeccececceeceeeeeeeceeeeeeseeeeeeeneeeaee 20
69 Fed. Reg. 11,754-55 (Mar. 11, 2004)... cece eee cee ccccececeeeeeeeenetenee 21, 29
69 Fed. Reg. 11,759-60 (Mar. 11, 2004) .........c cc ccecscscseestseeneereeeetteenneeteeseeeene eee 21
69 Fed. Reg. 68,056 (Nov. 23, 2004)... ccsscsssessessseseteeeseeneceeeesteteeeeeeeeereeeee® 27
69 Fed. Reg. 68,061 (Nov. 23, 2004)........:cccccceetseesseseeeersestsseesseeeeeseeeeseeneeeees 27
69 Fed. Reg. 68,062 (Nov. 23, 2004).........::ccsseesssssssssssessseensestsensseeeeeeeeeeees 28, 32
69 Fed. Reg. 68,063 (Nov. 23, 2004)... cccceeesesesseeenetetntteteesneetseettenteeetnenaee 19
Miscellaneous:

George Soros, Why I Gave, THE WASHINGTON Post, Dec. 5, 2003..........:0:00665 17

Mark Gimein, George Soros Is Mad As Hell, FORTUNE, Oct. 27, 2003............006 18

70780.1


@

rage pee alt I making a shambles of our economy, Busb bas turned record
Simpltises into iccord deficits in no time flee

He has meer fa fat to undcemine a woman's right to choose. His reckiess disregard
for the environment has croded decades of progress, He's set timber companies loose on our
Satna frets — sad he's set ohm Abert en ee

Dub wishing won't make Bush, Cheney, Asherof, DeLay and their extromist spenda
80 away. Péople-to-people Organizing will — and organizing is what ACT is al abont,

ng gOS ty i a tg Sy Wa
and mek SOME PrOBTESsives to replace those poltiion who have helped Bush advance

Ellen R. Malcolm
President

PS. As our Action Plan unfolds in the months ahead, we'll be counting on both your financial
support and your personal participation, So, as you write your check, please take a moment to
fill out the enclosed America Coming Together enroliment form.

oF ow on eit 0 OF our 17 tags sso t,he smc you ean do. So be sure to Iet
Us know how you'd like to be involved.


20

The amici called the Commission’s attention to the manipulation of the allocation rules that was

being undertaken by ACT:

Thus, ACT is currently claiming a right to pay for its partisan generic voter
mobilization activity with 98 percent soft money funding, despite the fact that
ACT and its donors have made publicly clear that its overriding purpose is to
spend money to mobilize voters to defeat President Bush in the 2004 elections, as
we have previously demonstrated.

ACT’s position illustrates the fundamental flaw in the Commission’s existing Part
106 regulations — a flaw that currently licenses a blatant charade. Simply put, the
existing regulations completely fail to protect against the improper flow of soft
money into federal elections through partisan voter mobilization activities of
section 527 groups. Instead, the regulations authorize easy manipulation of the
allocation ratio in order to set the soft money percentage at a fictional and
absurdly high level.”

The Commission published its Notice of Proposed Rulemaking (NPRM) on March 11,

2004. “Political Committee Status,” 69 Fed.Reg. 11,736 (March 11, 2004). The NPRM, in part,

addressed the allocation issue. It sought general comment on “whether either BCRA or

McConnell requires, permits, or prohibits changes to the allocation regulations for separate

segregated funds and nonconnected committees.” Id. at 11,753. It raised the fundamental

question of whether the Commission should permit allocation at all:

Id.

Given McConnell’s criticism of the Commission’s prior allocation rules for
political parties, is it appropriate for the regulations to allow political committees
to have non-Federal accounts and to allocate their disbursements between the
Federal and non-Federal accounts? If an organization’s major purpose is to
influence Federal elections, should the organization be required to pay for all of
its disbursements out of Federal funds and therefore be prohibited from allocating
any of its disbursements?

The NPRM presented various alternative proposals for comment and consideration. One

of the proposals was that the “funds expended” allocation method be modified so that the federal

? Id. at 2.

70780.1


millions of dollars of soft money to influence federal elections through this allocation
manipulation. The Commission was urged to close this loophole in its rulemaking, and it
reasonably did so with its new rule, albeit too late for the 2004 campaign.

Second, Emily’s List has shown no irreparable harm to itself from the new rule. FEC
disclosure reports filed by plaintiff show that it has claimed, for the last five years, a 50-50
allocation ratio for its own allocated spending. Thus, Emily’s List has long been operating in
compliance with the new rule, which requires only 50 percent federal funding for allocated
activity, and plaintiff has shown no basis for why it will be operating differently in the future. In
this circumstance, Emily’s List has shown no harm to itself from the rule, much less irreparable
harm.

Conversely, the public, and the public interest, will be harmed by the issuance of a
preliminary injunction. Such an injunction would reinstate a failed and discredited allocation
regime that was exploited in the last election for massive circumvention of the FECA to facilitate
the flow of soft money into federal campaigns. Granting an injunction would thus undermine the
compelling public purposes served by the contribution limits and source prohibitions of the
federal campaign finance laws, interests whose significance was only recently reaffirmed by this
court, and by the Supreme Court in McConnell v. FEC, 540 U.S. 93 (2003) aff’g in part and
rev’g in part 251 F.Supp. 2d 176, 432-756 (D.D.C. 2003) (three-judge court) (Op. of Kollar-
Kotelly, J.).

MHI. Background

A. The allocation system
1. Origins of allocation, The post-Watergate Federal Election Campaign Act

Amendments, enacted in 1974, imposed a limit of $5,000 per year on contributions by a person

70780.1


25

which called the proposed use of minimum federal percentages a step that would make allocation
“more complicated and burdensome.”?”

There was also extensive discussion of the proposed changes to the allocation rules
during the two-day public hearing on the NPRM in April, 2004.7?

The Commission had originally set May, 2004 as a target to complete the rulemaking, in
order to enact rules changes that could impact ongoing abuses in the 2004 election. In mid-May,
however, the general counsel recommended that the agency “continue work on this rulemaking,

but take additional time before issuing final regulations.”** The Commission agreed, and

deferred action for 90 days.*>

» Comments of The Media Fund (April 5, 2004) at 20, which can be found on the Commission
website at: http://www.fec.gov/pdf/nprm/political_comm_status/media_fund_utrecht.pdf.

33 See FEC, Transcript from April 14, 2004 Public Hearing on Political Committee Status Notice
of Proposed Rulemaking; Testimony of Mr. Laurence Gold, Associate General Council of the AFL-CIO,
pp. 43, 114-117; Testimony of Mr. Donald Simon, Counsel to Democracy 21, pp. 47-48, 87; Testimony
of Mr. Craig Holman, Public Citizen, pp. 158-61. See also FEC, Transcript from April 15, 2004 Public
Hearing on Political Committee Status Notice of Proposed Rulemaking; Testimony of Mr. Lawrence
Noble, Executive Director of the Center for Responsive Politics, pp. 27, 78-80; Testimony of Mr. Robert
F, Bauer, Perkins Coie LLP on behalf of America Coming Together, pp. 81-84; Testimony of Ms. Lyn
Utrecht, Ryan, Phillips, Utrecht and MacKinnon on behalf of Media Fund, pp. 183-86.

4 Agenda Document 04-48 (May 11, 2004), at 5 (available at http://www.fec.gov/agenda/
2004/mtgdoc04-48.pdf)

** As a practical matter, this ensured that the ongoing soft money abuses in the 2004 election
would continue. Republican operatives, who until this point had generally avoided the use of section 527
groups as vehicles for spending soft money to influence the 2004 federal elections, announced that they
would immediately form such groups to do so. In the next few weeks, Republican-leaning section 527
groups such as Swift Boat Veterans for Truth and Progress for America Voter Fund were quickly
organized and began to raise and spend soft money on broadcast ads attacking Senator Kerry, the
Democratic presidential nominee, and promoting President Bush. While Republican-leaning 527 groups
started late in the 2004 election cycle, they ended up raising and spending tens of millions of dollars of
soft money to influence the 2004 election, See Michael Janofsky, Advocacy Groups Spent Record
Amount on 2004 Election, THE NEW YORK TIMES, Dec. 17, 2004 (“By May, when the commission said it
would do nothing to change the rules, Republican 527’s had spent just $237,000 on the presidential race,
compared with $73 million by Democratic 527’s. At that point, however, Republican groups rebounded

(footnote continued)

70780.1


SCHEDULE H2 {FEC Form 3X)
ALLOCATION RATIOS

PAGE 7 (3726

NAME OF COMMITTEE (In Full)
EMILY’s List

RATIOS FOR ALLOCABLE FUNDRAISING EVENTS AND DIRECT CANDIDATE SUPPORT
ACTIVITIES APPEARING ON THIS REPORT.
Methods of allocation :

|. FUNDRAISING activites are sllocated using the funds received method! where the tederel propertion of expenses must
‘equal the feckeral propertion of monias raised.

I, Shared DIRECT CANDIDATE SUPPORT activities are alocated according 1o benefit expected to be derived, where the
Tederal proportion of disbursements Is based an benemt derived by federal candidates tham the activity.

ACTIVITY OR EVENT IDENTIFIER,
Fundralelng/PSP 2003 FEDERAL % NON-FEDERAL %
ACTIVITY 1S:
Furcteising —[_] Diract Candidate Suppart 50.00 % | 80.00 %
CHECK IF THERATIO 8:
[1 new (revised Same es Previously Reported ‘Transactlan ID:
H2-EL-643,

FEC BeheueH2 (Farm 3x} Rev.422008

http://images.nictusa.com/cgi-bin/fecimgif/0/C00193433/24990246395/24990246389/221/666... 1/19/2005


to a federal political committee, where such funds are to be used to influence federal elections. 2
U.S.C. § 441a(a)(1)(C). Longstanding federal law also prohibits corporations and labor
organizations from making contributions to political committees “in connection with” a federal
election. § 441b.°

Early in its history, the FEC confronted the question of how to treat federal political
committees that engage in “mixed” activities that influence both federal and non-federal
campaigns. For instance, voter mobilization efforts — such as voter identification, voter
registration drives, and get-out-the-vote drives — identify, register and bring to the polls voters
who then cast ballots in both federal and non-federal campaigns. The same is true of “generic”
efforts conducted by political committees, which are defined in FEC regulations as activities that
urge voters to support candidates of one party or the other, without mentioning specific
candidates. 11 C.F.R. § 100.25. Ads that say “Vote Democratic” benefit both federal and non-
federal candidates of that party, and influence both kinds of elections. The same is also true of
public campaign communications that refer to both federal and non-federal candidates, such as
ads that say, “Vote for Senator X and Governor Y.”

The per curiam opinion of the three-judge district court in McConnell discussed in detail
the history of the allocation system, observing that the Commission over time “struggled” with
this issue. 251 F. Supp. 2d at 195. In the Commission’s first opinion on the matter, Ad. Op.
1975-21, it permitted a state party committee to allocate its administrative and voter registration
expenses between the committee’s federal and non-federal accounts. The Commission then
reversed itself in Informational Letter 1976-72, and ruled that a state party committee had to use

° Notwithstanding this broad prohibition, section 441b(b)(2)(C) allows the connected
organization of a separate segregated fund to pay for its administration and solicitation costs.

70780.1


http://images.nictusa.com/cgi-bin/fecimgif/0/C00193433/21036814801/21036814768/101/445

SCHEDULE H2 ALLOCATION RATIOS
{eftective 14/91)

+ NAME OF COMMITTES

EMILY's List

ALLOCATION RATIOS FOR INDIVIDUAL FUNDRAISING EVENTS, EXEMPT ACTIVITIES, AND SHARED DIRECT
(CANDIDATE SUPPORT APPEARING ON THIS REPORT.

Methods of allocation:

|. FUNDRAISING acthilies are allocated using the ‘funds receivad mathod where tha federal proportion of expenses
‘must aqual the fedaral propartion of monies raised.

I EXEMPT activities are allocated using the “img and space method” whare tha fecaral proportlanof diabursements
is based on the proportion of time or space devoted to faderal candidates.

i, Shared DIRECT CANDIDATE support activities are allocated according to beneiil axpaciad to be derived, where
the federal proportion of diebursemants is based on the beneilt derived by federal candidates trom the activity.

(NAME OF AQTIVITY OR EVENT FEDERAL® == | NONFEDGRAL SS
2000 PSP .
ACTRITY IS: CORUNOFIAISING .... EXEMPT... © OIRECT CANCIDATE SUPPORT 56 50
(CHEDX UP THE RATIONS sssnau NEW ——. 25) SAME AB PREUOUBLY REPORTED
NAME OF ACTIVIFY OB EVENT . FEDERAL NON-FEDEFAL
{DIRECT CANDIDATE SUPPORT
REVISED..." QAM AS PREVIOUSLY REPORTED

FEDERAL % NOBFEDERAL %

FEQERAL YS NONFEDERAL %

DIRECT GANDIOATE SUPPORT
sow CG SAME AS PREVIOUSLY REFORTED
‘NAMEOF AGTNITY GR EVENT FEDERAL NON-FEDERAL 'S
AGTIVITY FS: stun CO RUNGRAISING enn C) EXEMPT. CUDIRECT CANDM@ATE SUPPORT
CHECK IF THE RATIONS, CURE emer — CI REVISED ene Ci SAME AS PREVIGUBLY REPORTED
NAME OF ACTIVITY GR EVENT FEDERAL =| WON-FEDERAL
ACTIVITY 1S; T FUNBIRWISING .__ G EXEUPT....___..D DEG GANCADATE SUPPORT

CHECK IF THE ATO IS: _..... CO. NEW. ssn EVESED ween 01 SAME 45 PREVIOUSLY REPORTED

NAME OF ACTIVITY OF EVENT . FEDERAL % NONFEOERAL S

CODIRERT CANDIDATE SUPPORT

ACTIVIFY 18; asasune OF UNDRASING 0 EXEMPT. .
0 ___.. CI SAME AS PREVIOUSLY REPORTER:

(CHEGIC LF THE RATIO IS: CI NEW...

1/9/2005


EXHIBIT B

AMERICA COMING TOGETHER
SOLICITATION LETTER

70859.1


That leaves seventeen states with 180 electoral votes as the competitive battleground
in this election. Those states will not only determine the outcome of the presidential
election, they will be the home of dozens of key federal, state and local races as well.

Our America Coming Together Action Plan will focus all of our attention in these

key states — the ones that will decide in which direction Axierica goes after the
2004 elections. . .

‘There's no doubt that America Coming ‘Together can make a decisive difference.
Consider the facts:

* In Wisconsin (10 electoral votes), 2,598,607 people voted and
Al Gore won by 5,396 votes.

* In Oregon (7 electoral votes), 2,598,601 ballots were cast,
Gore won by just 6,765 votes. And, how close are things
in Oregon today? In a recent poll, 41% say they will vote
to re-elect Bush, 47% plan to vote for or consider someone
else, anid 13% are undecided.

* And, of course, in Plorida, 5,963,116 votes were counted
and Bush was declared the winner by a margin of only
537. And, today, a majority of Florida voters say they
will yote for or consider a candidate other than Bush in 2004.

25,000 organizers

At the heart of our America Coming Together Action Plan is an effort to build an
infrastructure of deeply committed organizers. Each state will be led by a highly
experienced state director. .

We're already putting directors jn place in nine states, Bight more will be added as
soon as we have the financial support to know that we can carry out an effective effort
in.those states. That's why your immediate help is so vitally important.

Each state director will build a detailed plan and strategy to match the specific
Grcumstances of his or her state. But, the centerpiece of each state plan'is specific
vote. goals — city-by-city, county-by-county, precinct-by-precinct, voter-by-voter,

We know how many votes we need to defeat President Bush and elect progressive
candidates and we're organizing a massive, interconnected program of voter contact
to go out and find those votes.

We'll begin with an early canvass, knocking on people’s doors, getting the lay of the
land. Then, come summer, we'll Jaunch a massive door-to-door effort — contacting
voters, identifying our supporters, and leaming what issues matter most in their lives.
We'll follow up with a stream of individual communications around the issues people
have told us they are most concerned about. .



12

regime,” id. at 142, which allowed party committees “to use vast amounts of soft money in their
efforts to elect federal candidates.” Jd. The rules made possible the virtually unrestricted flow of
soft money through the political parties into federal elections, so much so that the Court
described these rules as “FEC regulations [that] permitted more than Congress, in enacting
FECA, had ever intended.” Jd. at n.44. The Commission’s allocation rules, the Court stated
bluntly, “invited widespread circumvention” of the law. Id. at 145. The Court accordingly
upheld in their entirety the provisions of BCRA that ended party committee allocation, rejecting
any argument that the allocation regime had been constitutionally compelled. Jd. at 186-89
(rejecting claims based on the Elections Clause, the Tenth Amendment and the Due Process
Clause). 7

3. ACT and allocation in the 2004 campaign. Although the Court in McConnell

addressed the operation of the allocation rules for party committees, its conclusion that allocation
as a regulatory mechanism “subverted” the law and “invited widespread circumvention” is
equally applicable to the prior allocation rule for non-party committees as well.

In particular, the “funds expended” allocation method devised in the 1990 rulemaking
allowed non-party committees to massively circumvent the FECA by structuring their activities

so that the federal portion of their allocated spending could be calculated at zero or close to zero

7 The Court also recognized that measures taken to avoid circumvention of the law themselves
serve compelling governmental purposes: “[B]ecause the First Amendment does not require Congress to
ignore the fact that ‘candidates, donors, and parties test the limits of the current law,’ Colorado II, 533
USS. at 457, these interests have been sufficient to justify not only contribution limits themselves, but
laws preventing the circumvention of such limits. (‘[A]ll Members of the Court agree that circumvention
is a valid theory of corruption’).” McConnell, 540 U.S. at 144, quoting FEC v. Colo. Republican Fed.
Campaign Comm., 533 U.S. 431, 456 (2001). Similarly, in Cal. Med. Ass’n. v. FEC, 453 U.S. 182, 197-
98 (1981), the Court upheld the limit on contributions to multi-candidate political committees, 2 U.S.C. §
441a(a)(1)(C), in order “to prevent circumvention of the very limitations on contributions that this Court
upheld in Buckley.”

70780.1


17

Our America Coming Together Action Plan will focus all of our attention in these
key states — the ones that will decide in which direction America goes after the
2004 election.'*

According to disclosure reports, ACT spent over $75 million dollars of soft money on
these activities.’> It received the bulk of its funding from a handful of large donors, most
prominently George Soros, who gave $7.5 million directly to ACT.'® Soros made clear that this
money was given for the purpose of defeating President Bush. Referring expressly to ACT,
Soros wrote in an op-ed column in The Washington Post that he and others were “contributing
millions of dollars to grass-roots organizations engaged in the 2004 presidential election”
because they “are deeply concerned with the direction in which the Bush administration is taking

the United States and the world.” !”

'S Ex. B and Ex. C (Action Plan at 1-2) (emphasis added), While ACT carefully noted
that these same 17 presidential battleground states would also “be the home of dozens of
key...state and local races as well,” id, at 2, the fact that ACT had no apparent interest in “key”
state or local races outside of the 17 presidential battleground states confirms what is stated in its
various solicitation materials — that its overriding focus was on the presidential race.

'S A compilation of its disclosure reports by the Center for Responsive Politics shows that ACT
spent a total of $76,270,931. See http://www.opensecrets.org/527s 527cmtes.asp?level=C&cycle=2004.

16 A list of the donors to ACT can be found on the website of the Center for Responsive Politics,
at http://www.opensecrets.org/527s/527cmtedetail.asp?ein= 200094706 &cycle=2004&format =& tname
=AmericatComing+Together. It shows that Soros was the largest individual donor directly to ACT.
Soros also gave over $12 million dollars to a section 527 group, “Joint Victory Campaign 2004,” which in
turn donated $18.3 million to ACT. Id. In total, Soros gave $23.5 million to section 527 groups in the
2004 election cycle. See http://www.opensecrets.org/527s/527 contribs.asp? cycle=2004.

Other large donors to ACT include the Service Employees International Union (SEIU), which
gave $4 million, InterService Corp., which gave $3 million, and businessman Peter Lewis, who gave
almost $3 million. (Lewis gave an additional $16 million to “Joint Victory Campaign 2004,” and a total
of $22.4 million to all 527 groups in the 2004 cycle). ACT received $52 million, or about two-thirds of its
total receipts of about $78 million, from a group of just 14 donors, who each gave $1 million or more.
See ACT donor list, at http://www.opensecrets.org/527s/527cmtedetail.asp?ein= 200094706 &cycle=
2004&format=&tname= AmericatComing+Together.

" George Soros, Why I Gave, THE WASHINGTON POST, Dec. 5, 2003.

70780.1


E.E.C. JMAGE 24991085000 (Page 52 of 757)

SCHEDULE H2 {FEC Form 3X)

ALLOCATION RATIOS

NAME OF COMMITTEE (In Full)
America Gaming Together

PAGE 52/757

RATIOS FOR ALLOCABLE FUNDRAISING EVENTS AND DIRECT CANDIDATE SUPPORT
ACTIVITIES APPEARING ON THIS REPORT.

Methods of allocation :

|. FUNDRAISING ectivities ere allocated using the funds received method! where the federal proportion of expenses must
‘equal the feckaral propertion of monias raised.

|W. Shared DIRECT CANDIDATE SUPPORT activities are alocated according io benefit expected to be derived, where the
federal proportion af disbursements Is based on beneft derived by Tederal candidates fram the activity.

ACTIVITY OR EVENT IDENTIFIER
FRF FEDERAL % NON-FEDERAL %
ACTMITY 16: _
X] Funcrising Direct Candidate Support 2.00 % | 96.00 %
CHECK IF THE RATIO [8:
x) new |_ Revised __ Sama a Previously Reparted ‘Transaction ID:
Ri

FEC BeneduleH2 arm 3x) Rev.022005

Page 1 of 1

http://images.nictusa.com/cgi-bin/fecimgif/0/C00388876/2499 1085000/2499 1084949/235/798339112/51/.... 1/19/2005


F.E.C. IMAGE 22991487592 (Page 283 of 1051) Page 1 of 1

SCHEDULE H2 {FEC Fon 3X)
ALLOCATION RATIOS

PAGEIBS (1051

NAME OF COMMITTEE (In Full)
EMILY's List

ALLOCATION RATIOS FOR INDIVIDVAL FUND-RAISING EVENTS, EXEMPT ACTIVITIES, AND SHARED DIRECT
CANDIDATE SUPPORT APPEARING ON THIS REPORT.
Methods of allocation :

|. FUNDRAISING activtles are allocated using the ‘finds recalved methoet where the federal propartion of expenses must
‘squel the fecarel proportion of monigs raised.

I. EXEMPT activities are alocated using the ‘ime and space method where the federal proportion of disbursements is
based on tha properilon of tima or space devoted to federal carvidetas,

I, Shared DNRECT CANDIDATE SUPPORT actluttles are allocated according ta benef empectedt1o be derived, where the
fadere! proportian of disbursements is based on benefi derived by fedaral candidates from the activity.

NAME OF ACTIVITY OF EVENT

Fundralsing/PSP 2001 FEDERAL % NON-FEDERAL %
ACTIVITY IS:

Fundeising = [_] Exerret. = (_] Direct Candidate Suaport sp.00 % 50.00 %
CHECK IF THERATIONS:

C1 New =F] Revised La) Same as Previously Reported ‘Transaction ID:

H2-EL-237

FEC Schedulen2 Form 3x) (Redued 1/2007)

http://images.nictusa.com/cgi-bin/fecimgif/0/C00193433/2299 1487592/2299 14873 10/146/282933681/28... 1/19/2005


29

A. Plaintiff Cannot Demonstrate a Substantial Likelihood of Success on the Merits.

1. The allocation rules.

Emily’s List attacks the allocation rules on two substantive grounds: it argues that a flat
allocation percentage is arbitrary because it lacks any proportional relationship to a committee’s
federal spending, and it argues that the requirement to allocate spending for ads that merely
“refer” to a Federal candidate is burdensome and in excess of the Commission’s statutory
authority. Neither argument is valid.””

a. Plaintiff has no entitlement to the “funds expended” allocation rule.

The “major purpose” of Emily’s List is to influence elections.

That conclusion necessarily follows from the fact that Emily’s List is a registered federal
political committee. In Buckley v. Valeo, 424 U.S. 1 (1976) the Supreme Court construed the
statutory term “political committee,” 2 U.S.C. § 431(4), to “only encompass organizations that
are under the control of a candidate or the major purpose of which is the nomination or election
of a candidate.” Id. at 79 (emphasis added).

The underlying fallacy of plaintiff's merits argument is its apparent assumption that the

previous “funds expended” allocation method was statutorily required. It plainly was not: as a

“ Plaintiff also devotes much energy to arguing that the final allocation rules violate the APA
“notice” requirement because they were not adequately foreseeable as a “logical outgrowth” of the
NPRM. Pl. Mem. at 20-29. Amici will not brief this point, other than to note that, as the description of
the rulemaking set forth above makes clear, the NPRM specifically proposed a minimum federal
percentage for non-party committee allocation, explicitly sought comment on whether there should be a
50 percent minimum federal allocation, 69 Fed. Reg. at 11,754, and received comments on this matter
from a number of interested parties. Emily’s List chose not to comment on this proposal in the course of
the rulemaking, but it should hardly be heard to complain that it did not have notice of it. In fact, since
the President of Emily’s List is also the president of ACT, and was so at the time of the rulemaking, and
since ACT specifically opposed the 50 percent minimum allocation, it is simply not credible for Emily’s
List to argue it did not have notice of this proposal.

70780.1


13

~ even if the committee’s spending was almost entirely directed at influencing the outcome of a
federal election. Because the “funds expended” allocation method imposed no minimum federal
allocation percentage, the rule permitted non-party political committees to engage in an even
more egregious soft money abuse than the Court in McConnell found the party allocation rules
had permitted.

This manipulation could take place because of how the “funds expended” formula
worked. The percentage of federal funds required to pay for a committee’s generic activity and
administrative costs was entirely based on the committee’s candidate-specific disbursements.
The formula compared the amount of a committee’s federal candidate-specific expenditures to
the committee’s total candidate-specific disbursements (not including overhead or other generic
costs). The resulting ratio was then used as the federal percentage for that committee’s non-
candidate-specific spending, i.e., for administrative costs and generic activities. And unlike for
party committees, no minimum federal percentage was imposed. 11 C.F.R. § 106.6 (2002).

This allocation approach could readily be manipulated in order to work absurd results.
For instance, if a non-connected political committee made a single small disbursement on behalf
of a specific nonfederal candidate, but did not undertake any expenditures on behalf of specific
federal candidates, this “funds expended” allocation formula would put zero in the numerator of
the fraction, and thus calculate a zero federal allocation requirement. This would permit the
committee to pay for a generic partisan voter drive — even one intended to elect a presidential
candidate — entirely with soft money, since the committee would have no expenditures “on
behalf of specific federal candidates.” In the Commission’s view, this would be true even if the

sole and explicit purpose of the committee and its donors was to elect a presidential candidate.

70780.1


Year-End 2004 H1 and H2 Schedule
SCHEDULE H1 (FEC Farm 3X} M4757

METHOD OF ALLOCATION FOR:

» SHARED FEDERAL AND NON-FEDERAL ADMINISTRATIVE, GENERIC VOTER
DRIVE AND EXEMPT ACTIVITY COSTS

= SHARED FEDERAL AND LEVIN FUNDS FEDERAL ELECTION ACTIVITY
EXPENSES

NAME OF COMMITTEE iln Ful)
America Caming Tagether

USE ONLY ONE SECTION

State and Local Party Committees

Flyed Percentage (select ane)

PresidentilabOny Election Year (28% Federal)
Presideritial and Senate Cletion Year (36% Federal)

Benefe-Only Election Yaer (21% Fadershy

——— NowPresicertial and Non-Genate Election Year (15% Federal)

nnn nT

Seperate Segregated Funds and Non-Connected Committees
Fixed Percentage (selec! one}

Estimated Direct Candidates Support — Federal ......

2.00 “

Estimated Direct Canddstes Support — Not-Federel......

ADJUSTMENTS TO FUNDS EXPENDED:
Actual Direct Candidate

‘Support -- Federal ...

0.00 %
Actual Direct Canddeta

Support — Nor-Federel.......

0.00

FEC Schedule H1 (orm aXp Rey. 11.412



vii

Michael Janofsky, Advocacy Groups Spent Record Amount in 2004 Election,
THE NEW YorK TIMES, Dec. 17, 2004

25

Thomas Edsall, Liberals Form Fund to Defeat President; Aim is to Spend $75
Million for 2004, THE WASHINGTON Post, Aug. 8, 2003

70780.1


SCHEDULE H2 (FEC Fonm 3x)
ALLOCATION RATIOS

PAGE 6/300

NAME OF CONIMITTEE [In Full)
EMILY's List

ALLOCATION RATIOS FOR INDIVIDUAL FUND-RAISING EVENTS, EXEMPT ACTIVITIES, AND SHARED DIRECT
CANDIDATE SUPPORT APPEARING ON THIS REPORT.
Methods of allocation :

|. FUNDRAISING aciltles are alloceled uelng the ‘Tunde received method where the federal propartion of expenses must
jequel the federal proportion of monias raised.

Il, EXEMPT activities are alocated using the time and space method where he federal proportion of disbursements is
aged on the proporilen of tima or space deveted to federal candidates.

Il, Shared DIRECT CANDIDATE SUPPORT acilties are alloceied according ta benefit empected to be derived, where the
faderal proportian af disbursements is based on benef” darivad by federal candidetas from the activity.

NAME OF ACTIVITY OF EVENT
FundralaingPSP 2002 FEDERAL % NON-FEDERAL %
ACTIVITY IS:
Fundraising [i exeret — ([] Direct Candidate Support 50.00 % 50.00 %

CHECK IF THE RATIO 18:
Oo New Oo Revised

‘Transaction ID:
H2-EL-4d2

FEC Schedule Hz (Form $x) (Rewieed 1/2007)



34

Yet under the old “funds expended” method, it was simply assumed that the ratio of
spending for the latter should be determined by the ratio of spending for the former. The old rule
would have calculated the committee’s federal allocation ratio based only on its spending in the
governor races in Idaho and West Virginia — and thus conclude its federal ratio would be zero.
The committee would then claim a right to fund its voter drive activity in Ohio and Florida
entirely with soft money, notwithstanding its avowed purpose to influence the presidential race
in those battleground states.

The graphic real-life example of this is, of course, ACT. The fact that only 2 percent of
ACT’s candidate-specific spending was federally oriented had no meaningful correlation to the
purpose and effect of its generic and voter mobilization spending, which was overwhelmingly for
a federal purpose —- to influence the 2004 presidential election. In enabling ACT to fund tens of
millions of dollars of that activity with only 2 percent federal funds, the prior rule fostered a
superficial “proportionality” that was a falsehood.

c. It is reasonable to require federal committees to use federal funds for ads that

“refer” to federal candidates.

As discussed above, the Commission also modified the allocation rule for candidate-

specific spending by a non-party political committee — spending that refers to one or more
clearly identified candidates, whether federal or non-federal, or both. The new rule is based on
simple and intuitive propositions: spending that refers exclusively to federal candidates has to be
funded exclusively with federal funds; spending that refers exclusively to non-federal candidates
can be funded exclusively with non-federal funds, and spending that refers to both federal and
non-federal candidates can be funded with a mixture of federal and non-federal funds allocated

on the basis of the “proportion of space or time” devoted to each in the public communication.

70780.1


37

candidates.” 11 C.F.R. § 106.6(£)(3)(i) (2005). Thus, if the endorsement ad posited by plaintiff
is primarily about the state candidate, and refers only incidentally to the federal candidate’s
endorsement, the rule does not require “significant” or “incapacitating” federal funding, but only
proportional federal funding that reflects the space devoted to the federal candidate. An
incidental reference to the federal candidate making the endorsement would thus require only a
small amount of federal funding. (The same is true of an ad with an incidental mention of a
federal candidate’s name as part of the name of legislation). Conversely, if the federal candidate
making the endorsement is prominently featured in the ad, it is reasonable to require a larger
federal allocation because the ad may promote the federal candidate’s own campaign as well as
that of the non-federal candidate.*®

In other words, the rule embodies the very proportionality that plaintiff faults the rule on
allocation of generic activities for lacking.

2. The solicitation rule.

FECA broadly defines a “contribution” to include any “gift, .. . deposit of money. . . or
anything of value made by any person for the purpose of influencing any election for Federal
office.” 2 U.S.C. § 431(8)(A)(i). This statutory definition has long been implemented through
similarly phrased Commission regulations. See 11 C.F.R. §§ 100.51 — 100.56 (2002).

The Commission’s new rule adds a supplementary definition to encompass any gift or
donation made “in response to any communication . . . if the communication indicates that any
portion of the funds received will be used to support or oppose the election of a clearly identified

Federal candidate.” § 100.57 (2005).

* Of course, if a state candidate is endorsed in an ad by a federal officeholder who is not a
“candidate” in that year’s election, the rule would not require any federal funding.

70780.1