with established Commission procedure. Under Commission regulations, when the
Commission receives a complaint from a third party alleging that a committee has violated
FECA, the Commission must first determine if there is "reason to believe" that a violation
has occurred. 11 C.F.R. § 111.9. Such a determination means that the complaint sets forth
specific facts, which, if proven true, would constitute a violation of FECA. /d. § 111.4(d)(3);
see Commissioners Mason, Sandstrom, Smith and Thomas, Statement of Reasons, FEC
MUR 4960 (Dec. 21, 2000). Once the Commission finds "reason to believe," it commences
an investigation to verify the truth of the factual claims contained in the complaint. 11
C.F.R. § 111.10. Upon the completion of the investigation, the Commission's General
Counsel makes a recommendation to the Commission as to whether it should find "probable
cause to believe" that a violation has occurred. /d. § 111.16. If four commissioners vote to
find probable cause to believe, the Commission will try to conciliate with the committee. /d.
§§ 111.17, 111.18.

In the case of ACT, several third parties — including amici - filed complaints against
ACT in the first half of 2004. See, e.g., Complaint, FEC MUR 5403 (Jan. 15, 2004).> In
October 2004, the Commission notified ACT that it had found "reason to believe" that ACT
violated campaign finance law. See Notification with Factual and Legal Analysis, FEC
MUR 5403 (Oct. 20, 2004). And ACT and the Commission did not conciliate until August
2007, presumably at the end of the Commission's investigation. (JA at 108). Thus, when the
rulemaking was initiated following "press reports" of ACT's alleged misconduct in February
2004 (Amicus Br. 14), the Commission had not yet made any actual finding as to the validity
of the allegations. And when the Commission promulgated the final rules in November
2004, the Commission had only found that the complaints stated facts that, if true, would

constitute a violation of FECA.

5 MUR documents are available at http://eqs.nictusa.com/eqs/searchegs.

-15-
13376-0007/LEGAL15181 134.2


In any event, the Commission's attempt to justify the more stringent regulation of
nonconnected committees runs squarely into McConnell. There the Court upheld restrictions
on state party soft money spending on a well-developed factual record, which led it to
conclude that state parties would “function as an alternative avenue for precisely the same
corruption forces" operating through national parties. 540 U.S. at 164. But there is no such
factual record here. Congress found none. The Commission made no effort to develop one.
At best, the Commission can only conjecture that "political committees like EMILY's List . .
. could similarly be attractive vehicles for circumvention." (FEC Br. 33-34 (emphasis
added)). But such speculation cannot support the Commission's First Amendment burden.
Nixon v. Shrink Mo. Gov't PAC, 528 U.S. 377, 392 (2000).

In its opening brief, EMILY's List raised a substantial number of other applications
that regulate activity far removed from that aimed at influencing federal elections. (See, e.g.,
Br. 28-29). Together, these examples show that the Commission's regulations are
substantially overbroad, But rather than address them together, the Commission employs a
"divide and conquer" approach. And rather than seriously engaging EMILY's List's
arguments, the Commission's responses are largely non sequiturs.

For example, the Commission repeatedly justifies the regulations by arguing that it
cannot regulate with "scientific precision.” (FEC Br. 15, 51, 54, 56). But just because it is
impossible for the Commission to regulate with a scalpel does not mean it may still use a
chainsaw. The Commission does not explain why, in setting the allocation ratio for
administrative and generic expenses, the Commission chose to round to the nearest 50
percent. It fallaciously assumed that, because a political organization does two things at the
same time, it must be doing both in equal measure.

Similarly, in its opening brief, EMILY's List argued that the solicitation regulations

violated the First Amendment and the APA in part because they trump express statements in

-9-
13376-0007/LEGAL15181134.2


ACT
AO
APA

BCRA

FEC or the Commission
FECA

JA

MUR

WRTL

13376-0007/LEGAL15181 134.2

GLOSSARY

-iv-

America Coming Together
Advisory Opinion
Administrative Procedure Act

Bipartisan Campaign Reform Act of
2002

Federal Election Commission
Federal Election Campaign Act
Joint Appendix

Matter Under Review

Wisconsin Right to Life, Inc.


IV. CONCLUSION

For the foregoing reasons, the Court should reverse the district court's grant of
summary judgment to the Commission, and should grant summary judgment to EMILY's
List on the ground that (1) the Commission's allocation and solicitation regulations violate
the First Amendment, (2) the regulations violate the Commission's statutory authority, and

(3) the regulations are arbitrary and capricious.
Respectfully submitted,

Dated: March 26, 2009 ea

—~Kobert F. Bauer
Brian G. Svoboda
Ezra W. Reese
PERKINS COIE LLP
607 Fourteenth Street, N.W.
Washington, D.C. 20005-2011
(202) 628-6600

Attorneys for EMILY's List

-16-
13376-0007/LEGAL15181134.2


UNITED STATES COURT OF APPEALS
DISTRICT OF COLUMBIA CIRCUIT

EMILY'S LIST,

Plaintiff-Appellant,
v. No. 08-5422

FEDERAL ELECTION COMMISSION,

Defendant-Appellee.

CERTIFICATE OF SERVICE

I certify that on March 26, 2009 I, by messenger service, delivered two copies of the

Reply Brief of Plaintiff-Appellant to:

DAVID KOLKER DONALD JAY SIMON

Federal Election Commission Sonosky, Chambers, Sachse, Endreson &

999 E Street, NW Perry

Washington, DC 20463 1425 K Street, N.W., Suite 600
Washington, DC 20005

FRED WERTHEIMER J. GERALD HEBERT

Democracy 21 The Campaign Legal Center

1875 I Street, N.W., Suite 500 1640 Rhode Island Ave., N.W., Suite 650

Washington, DC 20005 Washington, DC 20036

Dated: March 26, 2009 E Robert F. Bauer

=~ Brian G. Svoboda
Ezra W. Reese
PERKINS COIE LLP
607 Fourteenth Street, N.W.
Washington, D.C. 20005-2011
(202) 628-6600

Attorneys for EMILY's List


upheld FECA's $5,000 limit on contributions to multicandidate political action committees as
a permissible means to prevent donors from evading FECA's contribution limits. 453 U.S. at
199 (plurality opinion). In upholding the law, the Court cited FECA's legislative history, in
which Congress recognized that a donor who wanted to circumvent the candidate
contribution limits by filtering money through political committees. /d. at 199 & n.18.
Cal-Med does not, however, stand for the proposition that all restrictions on political
action committees can be justified by this rationale. In Nixon, the Supreme Court noted that
“[t]he quantum of empirical evidence needed to satisfy heightened judicial scrutiny of
legislative judgments will vary up or down with the novelty and plausibility of the
justification raised." 528 U.S. at 391. And it found that, under no circumstance may "mere
conjecture” suffice to carry the Commission's First Amendment burden. /d. at 392. The type
of circumvention that the Commission purports to prevent here is highly attenuated and
ungrounded in any facts. To support the allocation regulations here, the Commission would
have to conclude that there was a close relationship between non-connected, non-party
committees and candidates; that donors wanting to evade the contribution limits have made
large soft money contributions to such nonconnected committees (even though the candidates
themselves are barred from raising this money under BCRA, see 2 U.S.C. § 441i (e)); that
those committees then conspire to use the soft money to produce communications that
“mention" a federal candidate with the tacit goal of helping him or her; and that federal
candidates "mentioned" in the communications will somehow seem to lavish special favor on

the PAC donors.

b. The Commission's Circumvention Rationale is Devised Post
Hoc

The Commission tries to bolster the non-existent record of political committee
“corruption” by stating that “nonconnected political committees often have close relations

with federal candidates, political parties, and officeholders." (FEC Br. 20-21). But this

-13-
13376-0007/LEGAL1 5181134.2


tules, (JA at 73). For example, in 2006, EMILY's List sponsored five advertisements
supporting two ballot initiatives in Missouri. (JA at 73, 81-90). EMILY's List would have
included a reference to a clearly identified federal candidate in these advertisements to make
them more persuasive. But instead, EMILY's List had to change the communications and
remove the federal candidate references in order to make the costs fit within its budget. It
had to diminish the effectiveness of its nonfederal advocacy to comply with the
Commission's arbitrary rules, and to assuage imagined fears of circumvention.

And finally, the facts are clear that EMILY's List has had to change what it says while
raising money. EMILY's List has found that certain well-known federal candidates and
officeholders are uniquely effective at raising funds for its efforts on behalf of state and local
candidates. (JA at 71). However, under section 100.57, EMILY's List must treat as a federal
contribution funds received in response to a communication that indicates that any portion of
the proceeds will be used to support or oppose the election of a clearly identified federal
candidate. Thus, EMILY's List has in some cases removed references to federal candidates
and, in others, added references to clearly identified nonfederal candidates, just so it can treat
some of the funds received as nonfederal contributions. (JA at 72, 77). Again, it has had to
diminish the effectiveness of its fundraising for state and local candidates, solely because of
the Commission's rules.

The Commission tries repeatedly to minimize the consequences of its new rules,
claiming that they "do not restrict what organizations can spend” (FEC Br. 19), and that
groups like EMILY's List retain “complete control” of what they say when raising funds
(FEC Br. 44). But this is the same disingenuousness that led the Commission to tell the
Supreme Court in Davis v. FEC, 128 S. Ct. 2759 (2008), that the Millionaire's Amendment
did not abridge Jack Davis's rights because he could still spend whatever he wanted on his

own election. Brief for Appellee FEC at 29, Davis, 128 S. Ct. 2759 (No. 07-320). The Court

-5-
13376-0007/LEGAL15181134.2


(FEC Br. 1, 13, 40, 50; Amicus Br. 24). Because the rules purport merely to "implement[]"
FECA's contribution limits, the Commission supposes that it was not obligated to tie the
regulations to any anticorruption rationale. (FEC Br. 13, 18, 20, 30, 55; Amicus Br. 23), But
this is not so. These rules impose entirely new requirements, expand the range of activity
regulated by the government beyond the congressional design, and curtail EMILY's List's
First Amendment-protected activity.

The regulations place new, real limits on EMILY's List's ability to support candidates
for state and local office. First, EMILY's List must use at least 50 percent federally
restricted funds to pay for its administrative expenses and for generic communications that
do not refer to any candidates, regardless of its actual federal and nonfederal activities. 11
CR. § 106.6 (b)(1),; FEC Adv. Op. 2005-13, at 2-3 (Oct. 20, 2005) (JA at 300-01). Thus, it
requires EMILY's List to consume the limited federal funds that it would have used to
support federal candidates in order to pay for the administrative costs involved in supporting
state and local candidates. It effectively federalizes a significant portion of EMILY's List's
state and local election activity, and diminishes the resources available for that activity.

EMILY's List has demonstrated a twenty-year commitment to supporting state and
local candidates. (JA at 70). Never has there been a suggestion that these activities were a
subterfuge, or somehow a cover for supporting federal candidates or parties. And Congress
in BCRA did not limit in any way EMILY's List's programs for supporting state and local
candidates. Yet, unbidden by Congress, and with no factual record to rely upon, the
Commission chose to make it harder for groups like EMILY's List to support state and local
candidates. EMILY's List now faces the choice of diverting its limited federal resources to
state and local candidate support, or curtailing its support of state and local candidates.

Second, the FEC imposes a brand-new mere "reference" rule for communications that

tefer to clearly identified candidates: a rule which has no parallel, even in BCRA's soft

13376-0007/LEGAL15181134.2


I STATUTES AND REGULATIONS

Relevant statutory and regulatory provisions are contained in the Addendum to
Appellant's Opening Brief.

Il. SUMMARY OF THE ARGUMENT

The regulations at issue in this case violate the First Amendment, Chevron U.S.A.,
Inc, v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984), and the Administrative
Procedure Act ("APA"), They restrict vast amounts of state and local election activity. And
yet, they were promulgated without any record to show that they were needed to avoid
corruption or its appearance. Indeed, before this litigation, the Commission had not once
articulated how the regulations prevented candidate corruption. Promulgated on a theory that
the Commission, on its own, may do whatever it wants in the name of anti-circumvention,
the rules are not tailored to meet the government's interest.

The defenses raised in the Commission's response brief are disingenuous or miss the
point. First, the Commission constantly seeks to downplay or minimize the radical effect of
these rules. They do not merely “clarify” or "simplify" the old regulations, nor do they
merely “refine” the definition of "contribution." Rather, without any intervening act of
Congress, they vastly expand the range of fundraising and spending regulated by the
Commission. Second, while asserting such expansive authority, the Commission repeatedly
overlooks a core constraint on its conduct: the need to engage in reasoned decision-making.
The agency's failure to properly tailor these rules causes them to fail First Amendment,
Chevron and APA scrutiny.

Il. ARGUMENT

A. The Regulations Have Radically Changed How Groups Like EMILY's
List May Engage in State and Local Elections.

The Commission argues that new section 106.6 merely "simplifies" the previous

allocation regulation and section 100.57 only "clarifies" the definition of “contribution.”

13376-0007/LEGALI5181134.2


judgment is reached entirely after the fact. There is no evidence that the Commission even
tried, when writing its rules, to build the sort of case Congress did when it specially regulated
national and state parties with BCRA.?

The Commission leans heavily on the 2003-04 experience of another nonconnected
committee, America Coming Together ("ACT"). But this reliance is entirely post hoc.
While two commentators — including one of amici - mentioned ACT in the comments they
submitted to the Commission during the rulemaking, the Commission cites no document
showing that the Commission actually considered ACT's alleged behavior.‘ Indeed, the
Commission's explanation and justification for the final rules did not mention ACT once, did
not discuss corruption (except to explain why it did nof expressly broaden the definition of
"political committee"), and made only a single reference to "anti-circumvention." See 69
Fed. Reg. at 68,063-65 (JA at 289-291). And, while the Commission states that it "was not
required to anticipate [EMILY's List's] argument during the rulemaking" (FEC Br. 35 n.23),
if there is one argument that the Commission must consider when regulating First
Amendment activity, it is the connection between the regulation and the anticorruption
rationale. WRTL, 127 S. Ct. at 2672; State Farm, 463 U.S. at 42-43.

To the extent that the conduct of a single entity, ACT, actually influenced the
Commission's decision to regulate an entire category of actors, it underscores the
Commission's arbitrariness and irrationality. And it also demonstrates that the Commission

was acting in derogation of its duty to adjudicate pending enforcement actions consistent

3 The Commission cites to two fleeting mentions of EMILY's List in the district court's
decision in McConnell to support the proposition that there is a close relation between
nonconnected committees and candidates. (FEC Br. 21). But the Commission overlooks a
point it acknowledges elsewhere: that neither Congress nor the McConnell Court did
anything to regulate the activities of non-party PACs like EMILY's List. (FEC Br. 6).

* On the subject of ACT, amici find themselves tripped up in a contradiction. They claim
that ACT's conduct was already illegal, but that the new rules were created to stop it.
(Amicus Br. 25).

-14-
13376-0007/LEGAL15181134.2


The Commission did not try to pass these rules off as mere "simplifications and
"clarifications" at the administrative stage. It asked bluntly "whether either BCRA or
McConnell requires, permits, or prohibits changes to the allocation regulations for separate
segregated funds and nonconnected committees." Political Committee Status, 69 Fed. Reg.
11,736, 11,753 (Mar. 11, 2004). The Commission knew well that it was significantly
changing the rules — and did so despite a lack of either legal or factual justification.

These new requirements have directly impacted how EMILY's List engages in
political expression. The Commission has no record to show how its rules are necessitated
by corruption or its appearance, but EMILY's List has demonstrated with specificity how its
programs would be adversely affected by the application of these new requirements. The
facts before this Court tell this one consistent story.

As an undisputed matter of fact, the rules have required EMILY's List to direct
limited federal funds to purely nonfederal activity. The 50 percent allocation rules have
prevented EMILY's List from spending a higher proportion of nonfederal funds on activities
that exclusively or predominantly reflect nonfederal electoral purposes, such as its Campaign
Corps program. (JA at 70-71). And the agency has decided summarily that it can impose a
50 percent federal funds requirement irrespective of the level of federal activity in an election
cycle. The Commission seeks to downplay the impact of this new requirement on EMILY's
List by arguing that in the ten years before the regulations were promulgated, EMILY's List
never reported less than a 50 percent allocation ratio. (FEC Br. 26 n.19). This is fallacious.
The proper question is how these new rules impact the committee now, and how they will
affect it in the future. And, since 2004, EMILY's List has devoted a greater and greater
proportion of its efforts to nonfederal elections.

Also as a matter of fact, EMILY's List has had to change what it says when it

communicates about state and local candidates and issues because of the new allocation

13376-0007/LEGAL15181134.2


ORAL ARGUMENT SCHEDULED FOR MAY 4, 2009

UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 08-5422

EMILY'S LIST,
Plaintiff-Appellant,
v.
FEDERAL ELECTION COMMISSION,
Defendant-Appellee.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

REPLY BRIEF OF PLAINTIFF-APPELLANT
EMILY'S LIST

Robert F. Bauer

Dated: March 26, 2009 Brian G. Svoboda
Ezra W. Reese
PERKINS COIE LLP
607 Fourteenth Street, N.W.
Washington, D.C. 20005
(202) 628-6600

Attorneys for EMILY's List

13376-0007/LEGAL15628290.1


The simple, unavoidable fact is that these rules have changed the way groups like
EMILY's List raise and spend funds — to their own and severe disadvantage. The question

for this Court now becomes whether they pass constitutional, Chevron, and APA review.

B. The Commission's Regulations Are Not Properly Tailored to Serve Any
Interest

When the Commission accuses EMILY's List of "conflating" its First Amendment
and administrative law arguments, it unwittingly reveals the central defect of these rules.
They were written without regard to the relationship between the burdens placed and the
interest served. Their flaw is their arbitrariness. EMILY's List would contend that they are
invalid under strict scrutiny, or, alternatively, under the “closest scrutiny" standard of Buckley
v, Valeo, 424 U.S. 1, 25 (1976). But they even fail a more basic requirement: they do not

result from reasoned decision-making.

1. The Regulations Irrationally Penalize Nonconnected Political
Committees

The Commission cites California Medical Association v. FEC, 453 U.S. 182 (1981)
("Cal-Med") for the proposition that differing structures and purposes’ of different entities
‘may require different forms of regulation in order to protect the integrity of the electoral
process." (FEC Br. 28 (quoting Ca/-Med, 453 U.S. at 201)). But this dictum does not
relieve the Commission of its obligation to regulate rationally. And, these rules lead to
impermissibly irrational results.

When the Commission wrote these rules, for example, a corporation could broadcast
an advertisement in a senator's home state 61 days before her general election. As long as
the ad did not expressly advocate the election or defeat of that senator, it would not trigger
any obligations under FECA. See 11 C.F.R. § 100.29. And yet, the Commission, at the same
time, asks this Court to accept a 100 percent federal funds requirement for an EMILY's List

communication that mentions a Senator before voters in another state, more than five years

-7-
13376-0007/,LEGAL} 5181134.2


was not persuaded. See Davis, 128 S. Ct. at 2772.' And, in FEC v. Wisconsin Right to Life,
Inc., 127 §. Ct. 2652, 2672 (2007) ("WRTL"), the Commission argued that it could prohibit
Wisconsin Right to Life, Inc. from sponsoring electioneering communications, arguing that it
was enough that WRTL could speak though its federally registered political action committee
using federal funds. Brief for Appellant FEC at 7, WRTL, 127 S. Ct. 2652 (Nos. 06-969, 06-
970). But the Court flatly rejected this argument as well. See WR7L, 127 S. Ct. at 2671 n.9.

The Commission also argues, no more successfully, that EMILY's List's facial
challenge must fail because it relies on "hypothetical," "unlikely," and "worst-case
scenarios." (FEC Br. 29). But the scenarios described by EMILY's List are neither
hypothetical nor worst-case. Indeed, many of these scenarios came from an advisory opinion
that EMILY's List sought from the Commission, having taken at face value the agency's
assurance that it could always ask for advance approval of its communications and
solicitations. (FEC Br. 29 n.20.)

EMILY 's List has shown that the rules severely limit its activities in nonfederal
elections. And they have the potential to impact many others. In particular, section 100.57 is
a Trojan horse for the vast expansion of the Commission's authority. A local nonprofit
organization or state PAC that raises funds while mentioning a federal candidate risks
receiving "contributions" and thus triggering registration and reporting obligations, see 2
U.S.C. §§ 433(a), 434, and running afoul of the Act's myriad prohibitions and limitations.
See id. §§ 441, 441a, 441b, 441e. Violation of these provisions can result in large civil fines

as well as criminal penalties. See id. § 437g.

' The Commission argues that EMILY's List waived its argument that the solicitation
regulations are subject to strict scrutiny. EMILY's List has always maintained that section
100.57 burdens its speech, and Davis provides intervening authority that a law which
"substantial[ly] burden[s]" political expression is subject to strict scrutiny, even if it does not
limit spending per se. Davis, 128 S. Ct. at 2772.

13376-0007/LEGAL15181134,2


money restrictions. Cf. 2 U.S.C. § 431(20)(A)(iii) (limiting party financing of
communications that promote, support, attack or oppose a federal candidate); id. § 434((3)
(limiting "electioneering communications" to those distributed to the candidate's own voters
within 30 or 60 days of the election). Communications that refer to clearly identified federal
candidates, and do not refer to clearly identified nonfederal candidates, must be paid for
using 100 percent federal funds. See 11 C.F.R. § 106.6(b), (f)(1). Using entirely federal
funds is required even if the communication does not promote, support, attack, or oppose the
referenced candidate; even if it cannot be seen or heard by the referenced candidate's own
voters; even if it is made years before the referenced candidate is up for election; and even if
its clear, unambiguous purpose is to support nonfederal candidates. FEC Adv. Op. 2005-13,
at 4-6 (JA at 302-04).

Third, the new solicitation regulation requires, for the first time, that organizations
treat the funds they receive as "contributions" under federal law, subject fully to federal
source restrictions and contribution limits, if the solicitation prompting the donation
"indicates that any portion of the funds received will be used to support or oppose the
election of a clearly identified Federal candidate." 11 C.F.R. § 100.57(a). This regulation
trumps even clear language in the solicitation itself stating that a smaller percentage of funds
will be used for federal election purposes. See Political Committee Status, Definition of
Contribution, and Allocation for Separate Segregated Funds and Nonconnected Committees,
69 Fed. Reg. 68,056, 68,057 (Nov. 23, 2004) (JA at 283). The Commission's protestations to
the contrary, this rule is a trap. As amici point out, language that a federal officeholder or
anyone else might use in a direct mail appeal for the March of Dimes or Hurricane Katrina
relief— "I need your help” — will be taken by the agency as an indication that she seeks to
promote her own election — even if she lives in Michigan, the prospective donor lives in

California, and her election is not for five years. (Amicus Br. 32).

3-
13376-0007/LEGAI_.15181134.2


UNITED STATES COURT OF APPEALS
DISTRICT OF COLUMBIA CIRCUIT

EMILY'S LIST,

Plaintiff-Appellant,

v. No, 08-5422
FEDERAL ELECTION COMMISSION,

Defendant-Appellee.

CERTIFICATE OF COMPLIANCE WITH RULE 32(a)

This brief complies with the type-volume limitation of Federal Rule of Appellate
Procedure 32(a)(7)(B) because this brief contains 5,029 words, excluding the parts of the
brief exempted by Federal Rule of Appellate Procedure 32(a)(7)(B)(iii) and D.C. Circuit

Rule 32(a)(2).
ZS
Dated: March 26, 2009 obefi F. Bauer
rian G. Svoboda
Ezra W. Reese
PERKINS COIE LLP

607 Fourteenth Street, N.W.
Washington, DC 20005
(202) 628-6600

Attorneys for EMILY's List

-17-
13376-0007/LEGAL15181134.2


TABLE OF AUTHORITIES
(continued)

Regulations and Rules
11 C.F.R. § 100.29
*11 CFR. § 100.57...

FLD CER. § 106.6 o.oo cccccccsccsseessnessnesssecessessusesssessecavecsusesusevesssessssseeea 1, 2, 3, 8, 10, 11
VD CAPR. § 106.7 ooo ecceccsssccsssesssessnessneesssenaessnssstssuassussssssnesueesessssesavesavecseeseessavessneceee 8
VE CHER. 81D. ooccccccccssssessessssscssssssvinsmseesssesananivarenssssssarsesassssisumessasasivanseasavevieee 15
VD CPR. § 12.4 cece eee ceseesnesnesseessessessnessssiesissssnssisaneecssessusseveressessesseseeavessetee 1
Other Authorities

FEC Adv. Op. 2005-13 (Oct. 20, 2005) o....eeccecccsesstessessessesstestceesscsacsansssearensessnseseareevesnees 2,3
Political Committee Status, 69 Fed. Reg. 11,736 (Mar. 11, 2004) o.oo... ccecccececeecescessteseeeeee 4

Political Committee Status, 72 Fed. Reg. 5,595 (Feb. 7, 2007)...

Political Committee Status, Definition of Contribution, and Allocation for Separate
Segregated Funds and Nonconnected Committees, 69 Fed. Reg. 68,056 (Nov. 23,
2004)

-iii-
13376-0007/LEGAL15181 134.2


a solicitation that indicate that a lower percentage of funds received would be used to support
or oppose federal candidates. Rather than seriously engaging this argument, the Commission
dismisses it as “an unsupported worst-case hypothetical." (FEC Br. 56). But it is not a
hypothetical. It is precisely how the Commission said it would apply the rule in its
tulemaking. See 69 Fed. Reg. at 68,057 (JA at 283). Further, in defending the solicitation
regulations, the Commission's response asserts that the standard in FEC v. Survival
Education Fund, Inc., 65 F.3d 285 (2d Cir. 1995) is clear enough. (FEC Br. 46). But it fails
to address the core of EMILY's List's claim, which is that, as implemented by the
Commission, the standard is used to sweep in solicitations unrelated to federal elections.

The Commission's justification of 106.6(f) is similarly evasive. In response to the
Stabenow example (Br. 13-14) and several other examples provided by EMILY's List (Br.
28-29), the Commission first asserts that a communication that references a federal candidate
“could influence federal elections." As described above, this is purely speculative -an
attenuated standard found nowhere else in federal campaign finance law.2. The Commission
also did not bother to offer this justification in the rulemaking. Next, the Commission argues
that 106.6(f) is closely tailored because "to the extent the federal references are as small a
part of the communication as EMILY's List implies, the federal share of the expenditure
would be proportionately small under the time/space allocation rules... ." But this ignores
the illogic of the Commission's own proxy for federal election-influencing purpose. A sole,
fleeting reference to a lone federal candidate is sufficient to make the communication
payable with 100 percent federal funds, even if it runs five years before her own election and

is not even broadcast to her electorate. But if an equally fleeting reference to a nonfederal

? The Commission also defends its regulation of nonfederal election activity by citing to
United States v. Slone, 4\1 F.3d 643 (6th Cir. 2005). (FEC Br. 52 n.30). Slone is entirely
inapposite, as it involved Congress's power to regulate vote buying under the Elections
Clause and the Necessary and Proper Clause. It had nothing to do with the First Amendment
or with FECA.

-10-
13376-0007/LEGAL15181134.2


campaign spending — preventing corruption and the appearance of corruption — is arbitrary
and capricious. See Shays v. FEC, 337 F. Supp. 2d 28, 87 (D.D.C. 2004), aff'd, 414 F.3d 76
(D.C. Cir. 2005).

As EMILY 's List described in its opening brief, the Commission failed to tie the new
allocation and solicitation regulations to any purported interest in combating corruption or
the appearance thereof. The Commission's response to this charge is self-contradictory. On
the one hand, it argues that the challenged regulations merely implement FECA's
contribution limits and therefore do not need to show a corruption rationale. (FEC Br. 21-22)
On the other, the agency argues that it did consider corruption, through possible

circumvention of FECA's limitations, in its rulemaking. (FEC Br. 20). Both defenses fail.

a. The Regulations Do Not Merely "Implement" FECA's
Contribution Limits

The Commission maintains that the regulations "implement" FECA's contribution
limits, therefore removing the need to tie the regulations to a government interest in
countering corruption. (FEC Br. 13, 18, 20, 30, 55; Amicus Br. 23). But these regulations
do not simply change what EMILY'’s List may raise. They actually change what a wide
Tange of groups may say when raising and spending funds. For example, a local nonprofit
organization that raises funds while mentioning a federal candidate is halfway to political
committee status by virtue of that fact alone. It will need an experienced campaign finance
lawyer to assure it that the Commission will not interpret the reference as supporting or
opposing her election, and that its activities will not trigger the "major" purpose test — which
the Commission evaluates on a case-by-case basis through enforcement. Political Committee
Status, 72 Fed. Reg. 5,595, 5,601 (Feb. 7, 2007).

The Commission also argues that, because these regulations merely implement
FECA, they are permissible anti-circumvention provisions that can be supported solely by

the Court's reasoning in Ca/-Med. (FEC Br. 21-22, 27). In Cal-Med, the Supreme Court

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TABLE OF AUTHORITIES

Page
Cases
Buckley v. Valeo, 424 U.S..1 (1976) .......eccesccccseccsscecesesesesessesesscsesessesseaversanerestsaeevaneaas 7,11
California Medical Association v. FEC, 453 U.S. 182 (1981) ....c..ccccccccsssssssseesseessseeee 7, 12, 13

ratte Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837
(1984)...

*Davis v. FEC, 128 S. Ct. 2759 (2008)... ecccccecscesecssessestesessessesessssessecssessesrecavesvesseseeases 5,6
FEC v. Survival Education Fund, 65 F.3d 285 (2d Cir. 1995) .........ccccccccccccscsseeseseesesecseseees 10
*FEC v. Wisconsin Right to Life, Inc., 127 S. Ct. 2652 (2007) .......ceccceccceeccceeee 6,11, 14
*McConnell v. FEC, 540 U.S. 93 (2003) 0... ceecccececseseeeeeeeteeeeteesestesesieeteeeneeas 4, 8,9, 11, 14
*Motor Vehicles Mfrs. Ass'n v. State Farm Mut. Auto Ins. Co., 463 U.S. 29 (1983)....... 11,14

*Nixon v. Shrink Mo. Government PAC, 528 U.S. 377 (2000)...

*Shays v. FEC, 337 F. Supp. 2d 28 (D.D.C. 2004), aff'd, 414 F.3d 76 (D.C. Cir. 2005)....... 12
United States v. Slone, 411 F.3d 643 (6th Cir. 2005)..0.00.0.000ccccecececcceseereteeteeseseseseee JO

Statutes

ZUS.C. § 48D ccc essere rcsessesseseesseesesresausscsnesreseeseusensresiesestussssaareseeaneesareaneess 3,8
2US.C. § 433 icc ccccesesecsessesssesssesessecsessnsssecressuesnseesersavesimsussusseseresieenesseesneanssnseneans 6
2 USC. § 434. cece ees neeneesersnesnesseasessecsusssessesassessrseaceseseesenssaarecsusseeseesientesseese 3,6
ZU S.C. § ABT cece eee eesneeserseesecsessessuessessecsssusssecsesrssacsasseseeserecauseneeresseesetensenseneaes 6
2U.SC. § 441

ZU S.C. § 44a ccccccsccesessssesssossossevnessssssasssvveieessesstsnvesnsetassiviessstssisasssvuussesssevemeeseeana 6
ZUS.C. § 44ND. ccc ese essecsseeesersnessissssssssnceresresssetsesuesssssissssecsecarseneeeeeananere 6
ZULS.C. § 4416 ccc esc cesecsnesseeseesessessessuesseseesanseissnereerssessusenssesessssiasessesensaesressneens 6
ZULS.C. § 44D ieee ees ces eeseeneeseesesssesressessesssussssarcerssteiseneeressteeteesrereereneents 8, 13

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TABLE OF CONTENTS

I.
Il.

A. The Regulations Have Radically Changed How Groups Like EMILY's

List May Engage in State and Local Elections .......0...0..ccccccscccsscccsescessssesssee 1
B. The Commission's Regulations Are Not Properly Tailored to Serve
Any Interest... eccesscsesseessessessvssussussssassarsssearsanssasarsavessessesseerevareasece 7
1. The Regulations Irrationally Penalize Nonconnected Political
Committees... eee ecceeccseeessesssssssssvessvessesssssvessresssessetssesseesseees 7

2. The Regulations Are Not Supported by Any Established
Corruption Rationale

a. The Regulations Do Not Merely "Implement" FECA's
Contribution Limits 2.0... ceecccccccsecsssesssesecsessteseesseaees 12

b. The Commission's Circumvention Rationale is Devised

IV. | CONCLUSION

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13376-0007/LEGALI 5181 134.2


before her own re-election, because it might affect her long-distant re-election, or because it
might affect another federal election in that state. This is not rational.

When the Commission wrote these rules, a state party could use soft money to pay for
a communication in which a federal candidate from the state endorsed a state ballot initiative,
as long as the communication did not support or oppose the federal candidate. See 2 U.S.C.
§§ 431(20)(A)(iii); 441i (b)(1). But, under the Commission's regulations, EMILY's List
would have to spend hard money for the same communication - even if the endorsement
came from a candidate in another state. This is not rational.

And when the Commission wrote these rules, state parties - which, according to the
Court in McConnell v. FEC, 540 U.S. 93, 164 (2003), had a record of close identification
with federal candidates and national parties, and thereby could serve as vehicles of actual
circumvention — could pay for administrative expenses with as little as 15 percent federal
funds. See 11 C.F.R. § 106.7 (d)(2)(iv). However, under 106.6(c), nonconnected committees
like EMILY's List, with no comparable history, must pay their administrative expenses with
an arbitrary minimum of 50 percent federal funds. This is not rational.

The Commission tries to justify this disparate treatment of political committees and
state parties by asserting that state and local party committees “have a vital interest in
nonfederal elections — and [their] major purpose . . . is usually not the election of federal
candidates." (FEC Br. 33). But the Commission is asking the Court to accept onerous
restrictions on groups Congress never intended to regulate, while minimizing the activities of
groups that Congress singled out for special regulation. Furthermore, the Commission
provides absolutely no basis to support its supposition that EMILY’s List has less of an
interest in nonfederal elections than state parties, when EMILY's List's stated purpose is to
help elect candidates for local and state, as well as federal office, and when it has helped to

elect hundreds of women to state and local offices. (JA at 69-70). This is not rational.

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candidate can be dropped in arbitrarily, then the federal "price" of the piece drops by 50
percent.

In yet another example, EMILY's List argued that it would have to pay for a
communication supporting a state ballot initiative with at least 50 percent federal funds if the
communication stated that "both Democrats and Republicans" supported the initiative. Such
a communication is hardly "unlikely" (FEC Br. 28); bipartisanship is a common selling point
in electoral appeals. In any event, the Commission's response to the example is that
“EMILY 's List has not asked the Commission to opine on whether such a bipartisan mention
of political parties would be covered by the regulation” and that it can request an advisory
opinion if it desires clarification (FEC Br. 28-29 & n.20). And yet, under the plain language
of 106.6(c), the 50 percent allocation rule would still apply here. It is unclear why EMILY's
List should have to submit an advisory opinion request and wait up to 60 days for
Commission response, see 11 C.F.R. § 112.4(a), when the regulation is already clear on its
face.

As EMILY's List's examples demonstrate, the Commission's regulations treat
nonconnected political committees irrationally, and the Commission's attempt to justify the

regulations post hoc fails.

2. The Regulations Are Not Supported by Any Established
Corruption Rationale

The only constitutionally permissible purpose relied upon by the Supreme Court
when approving campaign finance regulation is to "prevent the corruption or the appearance
of corruption" in election campaigns. McConnell, 540 U.S. at 100-01; WR7L, 127 S. Ct. at
2672 (citing Buckley, 424 U.S. at 45). And, under the APA, an agency's action is arbitrary
and capricious if it fails to consider all "relevant factors." Motor Vehicles Mfrs. Ass'n v. State
Farm Mut. Auto Ins. Co., 463 U.S. 29, 42-43 (1983). For Commission action, failing to

justify regulation with the only legitimate state interests that can sustain restrictions on

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