UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

____________________________________ 

 ) 

CAMPAIGN LEGAL CENTER, et al., ) 

 Plaintiffs, ) Civ. No. 16-cv-752 (JDB) 

 ) 

 v. ) 

 ) 

FEDERAL ELECTION COMMISSION, ) 

 Defendant, ) 

 ) MOTION FOR SUMMARY 

F8, LLC, et al., ) JUDGMENT 

 Intervenor-Defendants. ) 

____________________________________) 

FEDERAL ELECTION COMMISSION’S MOTION FOR SUMMARY JUDGMENT 

In accordance with the Court’s Scheduling Order (Docket No. 29), defendant Federal 

Election Commission (“Commission”) respectfully cross-moves this Court for an order 

(1) granting summary judgment to the Commission pursuant to Rule 56 of the Federal Rules of 

Civil Procedure and Local Civil Rule 7(h), and (2) denying plaintiffs’ motion for summary 

judgment (Docket No. 30). In support of this motion, the Commission is filing a Memorandum 

in Support of Its Motion for Summary Judgment and in Opposition to Plaintiffs’ Motion for 

Summary Judgment and a Proposed Order. 

 Respectfully submitted, 

Lisa J. Stevenson (D.C. Bar No. 457628) 

Acting General Counsel 

lstevenson@fec.gov 

/s/ Haven G. Ward 

Haven G. Ward (D.C. Bar. No. 976090) 

Attorney 

hward@fec.gov 

Kevin Deeley 

Associate General Counsel 

kdeeley@fec.gov 

Charles Kitcher (D.C. Bar No. 986226) 

Acting Assistant General Counsel 

ckitcher@fec.gov 

COUNSEL FOR DEFENDANT 

FEDERAL ELECTION COMMISSION 

999 E Street, N.W. 

Washington, D.C. 20463 

(202) 694-1650 

Dated: August 21, 2017 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 1 of 48
2

 

UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

____________________________________ 

 ) 

CAMPAIGN LEGAL CENTER, et al., ) 

 ) 

 Plaintiffs, ) Civ. No. 16-cv-752 (JDB) 

 ) 

 v. ) 

 ) 

FEDERAL ELECTION COMMISSION, ) 

 ) 

 Defendant, ) 

 ) SUMMARY JUDGMENT 

F8, LLC, et al., ) MEMORANDUM 

 ) 

 Intervenor-Defendants. ) 

____________________________________) 

DEFENDANT FEDERAL ELECTION COMMISSION’S MEMORANDUM IN 

SUPPORT OF ITS MOTION FOR SUMMARY JUDGMENT AND IN OPPOSITION TO 

PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT 

Lisa J. Stevenson (D.C. Bar No. 457628) 

Acting General Counsel 

lstevenson@fec.gov 

Haven G. Ward (D.C. Bar. No. 976090) 

Attorney 

hward@fec.gov 

Kevin Deeley 

Associate General Counsel 

kdeeley@fec.gov 

Charles Kitcher (D.C. Bar No. 986226) 

Acting Assistant General Counsel 

ckitcher@fec.gov 

COUNSEL FOR DEFENDANT 

FEDERAL ELECTION COMMISSION 

999 E Street, N.W. 

Washington, D.C. 20463 

(202) 694-1650 

August 21, 2017 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 2 of 48
i

TABLE OF CONTENTS 

INTRODUCTION ................................................................................................................................. 1

BACKGROUND ................................................................................................................................... 3

I. STATUTORY AND REGULATORY BACKGROUND ......................................................... 3

A. The FEC and FECA’s Administrative Enforcement Process ...................................... 3

B. FECA’s Prohibition Against Contributions Made in the Name of Another ................ 5

C. Political Committee Registration and Reporting Requirements .................................. 5

II. FACTUAL BACKGROUND .................................................................................................... 6

A. Respondents and Administrative Proceedings ...................................................... 6

B. The FEC’s Dismissals of Plaintiffs’ Administrative Complaints .............................. 10

ARGUMENT ....................................................................................................................................... 16

I. THE COMMISSION’S DISMISSAL OF PLAINTIFFS’ ADMINISTRATIVE 

COMPLAINTS IS NOT CONTRARY TO LAW .................................................................. 16

A. Standard of Review .................................................................................................... 17

B. The Controlling Commissioners’ Dismissal of Plaintiffs’ Administrative 

Complaints Was Not Contrary to Law ....................................................................... 22

II. PLAINTIFFS’ CHALLENGE TO THE CONTROLLING COMMISSIONERS’ 

PURPOSE-BASED PROPOSED APPROACH IS NOT RIPE AND IN ANY EVENT 

FAILS ..................................................................................................................................... 31

A. There Is No Ripe Dispute Regarding the Controlling Commissioners' 

Proposed Purpose-Based Approach ........................................................................... 31

B. The Controlling Commissioners’ Interpretation of Section 30122 Is Not Contrary 

to Law or Arbitrary or Capricious ............................................................................. 34

III. PLAINTIFFS’ CHALLENGE TO THE COMMISSION’S HANDLING OF ITS 

ENFORCEMENT DOCKET IS WELL-BEYOND THE SCOPE OF JUDICIAL REVIEW 

HERE ...................................................................................................................................... 38

CONCLUSION .................................................................................................................................... 40

 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 3 of 48
ii

TABLE OF AUTHORITIES 

Cases 

Abbott Labs. v. Gardner, 387 U.S. 136 (1967) ....................................................................... 32

*Akins v. FEC, 736 F. Supp. 2d 9 (D.D.C. 2010) ............................................................. 18, 20

AT&T Corp. v. F.C.C., 349 F.3d 692 (D.C. Cir. 2003) .......................................................... 33

Blancett v. U.S. Bureau of Land Mgmt., No. 04-2152 (JDB), 

 2006 WL 696050 (D.D.C. Mar. 20, 2006)........................................................................ 19

Buckley v. Valeo, 424 U.S. 1 (1976) ......................................................................................... 6 

Cablevision Sys. Corp. v. F.C.C., 649 F.3d 695 (D.C. Cir. 2011) .......................................... 37

Cephalon, Inc. v. Sebelius, 796 F. Supp. 2d 212 (D.D.C. 2011) ............................................ 34

Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 

 467 U.S. 837 (1984) ................................................................................................... passim

Citizens for Responsibility & Ethics in Wash. v. FEC, 

 475 F.3d 337 (D.C. Cir. 2007) .......................................................................................... 17

*Citizens for Responsibility & Ethics in Wash. v. FEC, No. 15-2038 (RC), 

 --- F. Supp. 3d ---, 2017 WL 706155 (D.D.C. Feb. 22, 2017) .................................... 18, 20 

Citizens for Responsibility & Ethics in Wash. v. FEC, No. 16-259 (BAH), 

 --- F. Supp. 3d ---, 2017 WL 1080920 (D.D.C. Mar. 22, 2017) ....................................... 17 

Citizens for Responsibility & Ethics in Wash. v. FEC, 

 209 F. Supp. 3d 77 (D.D.C. 2016) ............................................................................. 21, 22 

Citizens for Responsibility & Ethics in Wash. v. FEC, 

 164 F. Supp. 3d 113 (D.D.C. 2015) .................................................................................. 38

*Citizens United v. FEC, 558 U.S. 310 (2010) ................................................................ passim 

Combat Veterans for Cong. Political Action Comm. v. FEC, 

 795 F.3d 151 (D.C. Cir. 2015) .......................................................................................... 22

Common Cause v. FEC, 842 F.2d 436 (D.C. Cir. 1988) ............................................ 17, 33, 37

Democratic Cong. Campaign Comm. v. FEC, 831 F.2d 1131 (D.C. Cir. 1987) ................ 4, 36

FCC v. Fox Television Stations, Inc., 132 S. Ct. 2307 (2012) .......................................... 15, 31

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 4 of 48
iii

FEC v. Akins, 524 U.S. 11 (1998) ............................................................................................. 2

FEC v. Democratic Senatorial Campaign Comm., 454 U.S. 27 (1981) ........................... 17, 18

FEC v. Kalogianis, No. 8:06-cv-68-T-23EAJ, 

2007 WL 4247795 (M.D. Fla. Nov. 30, 2007)................................................13 

 

FEC v. Nat’l Republican Senatorial Comm., 966 F.2d 1471 (D.C. Cir. 1992) ........ 4, 5, 11, 21

FEC v. Nat’l Rifle Ass’n of Am., 254 F.3d 173 (D.C. Cir. 2001)............................................ 20

FEC v. Rose, 806 F.2d 1081 (D.C. Cir. 1986) ........................................................................ 19

FEC v. Weinstein, 462 F. Supp. 243 (S.D.N.Y. 1978) ........................................................... 35

FEC v. Wis. Right to Life, Inc., 551 U.S. 449 (2007) ............................................................. 22 

Fla. Power & Light Co. v. EPA, 145 F.3d 1414 (D.C. Cir. 1998) .......................................... 33

Fogo De Chao (Holdings) Inc. v. U.S. Dep’t of Homeland Sec., 21

 769 F.3d 1127 (D.C. Cir. 2014) ........................................................................................ 21

Friends of Keeseville, Inc. v. FERC, 859 F.2d 230 (D.C. Cir. 1988) ..................................... 34

F.T.C. v. Standard Oil Co. of Cal., 449 U.S. 232 (1980) .................................................. 33-34

Gen. Elec. Co. v. U.S. E.P.A., 53 F.3d 1324 (D.C. Cir. 1995) ................................................ 30

Hagelin v. FEC, 411 F.3d 237 (D.C. Cir. 2005) ..................................................................... 18

*Heckler v. Chaney, 470 U.S. 821 (1985) ........................................................................ 18, 20

Hill Dermaceuticals, Inc. v. FDA, 709 F.3d 44 (D.C. Cir. 2013) ........................................... 39

In re Barr Labs., Inc., 930 F.2d 72 (D.C. Cir. 1991) .............................................................. 19

In re Sealed Case, 223 F.3d 775 (D.C. Cir. 2000) ............................................................ 20, 21

*La Botz v. FEC, 61 F. Supp. 3d 21 (D.D.C. 2014) ................................................... 18, 19, 20

McConnell v. FEC, 540 U.S. 93 (2003) ............................................................................ 25, 37

Morissette v. United States, 342 U.S. 246 (1952) ................................................................... 35

N. Broward Hosp. Dist. v. Shalala, 172 F.3d 90 (D.C. Cir. 1999) ......................................... 40

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 5 of 48
iv

Nader v. FEC, 725 F.3d 226 (D.C. Cir. 2013) ........................................................................ 19 

*Nader v. FEC, 823 F. Supp. 2d 53 (D.D.C. 2011) .......................................................... 19, 20

Nat’l Min. Ass’n v. McCarthy, 758 F.3d 243 (D.C. Cir. 2014) .............................................. 32

Nat’l Park Hosp. Ass’n v. Dep’t of Interior, 538 U.S. 803 (2003) ......................................... 32

Ohio Forestry Ass’n, Inc. v. Sierra Club, 523 U.S. 726 (1998) ............................................. 33

Orloski v. FEC, 795 F.2d 156 (D.C. Cir. 1986) .................................................... 17, 18, 20, 36

Pub. Citizen Health Research Grp. v. Comm’r, Food & Drug Admin., 

 740 F.2d 21 (D.C. Cir. 1984) ............................................................................................ 34

Pub. Citizen, Inc. v. Fed. Energy Regulatory Comm’n,

 839 F.3d 1165 (D.C. Cir. 2016) ........................................................................................ 21

SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010) ........................................................ 26

Staples v. United States, 511 U.S. 600 (1994) ................................................................... 34-35

Stark v. FEC, 683 F. Supp. 836 (D.D.C. 1988) ...................................................................... 19

Trinity Broad. of Fla., Inc. v. F.C.C., 211 F.3d 618 (D.C. Cir. 2000) .................................... 29

United States v. Danielczyk, 683 F.3d 611 (4th Cir. 2012) .................................................... 37

United States v. Danielczyk, 788 F. Supp. 2d 472 (E.D. Va. 2001) .................................. 36-37 

United States v. Mead Corp., 533 U.S. 218 (2001) ................................................................ 21

United States v. U.S. Gypsum Co., 438 U.S. 422 (1978) ........................................................ 35

United States v. Whittemore, 776 F.3d 1074 (9th Cir. 2015) .................................................. 37

United Steelworkers v. Marshall, 647 F.2d 1189 (D.C. Cir. 1980) ........................................ 39

*Van Hollen v. FEC, 811 F.3d 486 (D.C. Cir. 2016) ....................................................... 22, 37

Video Software Dealers Ass’n v. Webster, 968 F.2d 684 (8th Cir. 1992) .............................. 36

Walter O. Boswell Mem’l Hosp. v. Heckler, 749 F.2d 788 (D.C. Cir. 1984) ......................... 39

 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 6 of 48
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Statutes and Regulations 

Federal Election Campaign Act of 1971, Pub. L. No. 92-225, §§ 310, 311, 

86 Stat. 19 (1972) ................................................................................................................ 35 

Tillman Act of 1907, 59 Cong. Ch. 420, 34 Stat. 864 (1907)................................................. 25 

52 U.S.C. § 30101(4)(A)........................................................................................................... 6 

52 U.S.C. § 30101(8) .............................................................................................................. 25 

52 U.S.C. § 30101(8)(A)................................................................................................... 12, 25 

52 U.S.C. § 30101(8)(A)(i) ....................................................................................................... 6 

52 U.S.C. § 30101(9)(A)(i) ....................................................................................................... 6 

52 U.S.C. § 30101(11) ............................................................................................................ 12 

52 U.S.C. § 30102 ................................................................................................................. 7, 9 

52 U.S.C. § 30103 ............................................................................................................. 6, 7, 9 

52 U.S.C. § 30104 ................................................................................................................. 7, 9 

52 U.S.C. § 30104(a) ................................................................................................................ 6 

52 U.S.C. § 30104(b) ................................................................................................................ 6 

52 U.S.C. § 30106(b)(1) ........................................................................................................... 3 

52 U.S.C. § 30106(c) ............................................................................................................ 3, 4 

52 U.S.C. § 30107(a)(8) ............................................................................................................ 3 

52 U.S.C. § 30109(a)(1) ............................................................................................................ 3 

52 U.S.C. § 30109(a)(2) ............................................................................................................ 3 

52 U.S.C. § 30109(a)(4)(A)(i) .................................................................................................. 4 

52 U.S.C. § 30109(a)(5) ........................................................................................................ 3, 5 

52 U.S.C. § 30109(a)(6) ...................................................................................................... 3, 35 

52 U.S.C. § 30109(a)(6)(A) ...................................................................................................... 4 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 7 of 48
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52 U.S.C. § 30109(d)(D)......................................................................................................... 35 

*52 U.S.C. § 30109(a)(8) ........................................................................................ 3, 16, 17, 20

*52 U.S.C. § 30109(a)(8)(A) .................................................................................................... 4 

*52 U.S.C. § 30109(a)(8)(C) .................................................................................... 4, 5, 17, 38 

52 U.S.C. § 30116(a)(1) .......................................................................................................... 27 

52 U.S.C. § 30116(a)(2) .......................................................................................................... 27 

52 U.S.C. § 30118 ................................................................................................................... 28 

52 U.S.C. § 30118(a) .............................................................................................................. 12 

52 U.S.C. § 30122 ............................................................................................................ passim

11 C.F.R. § 100.5(a).................................................................................................................. 6 

11 C.F.R. § 110.1(g) ......................................................................................................... 14, 30 

11 C.F.R. § 110.4(b)(2)(i) ......................................................................................................... 5 

11 C.F.R. § 110.4(b)(2)(ii) ........................................................................................................ 5 

11 C.F.R. § 111.4 ...................................................................................................................... 3 

Miscellaneous 

Fed. R. Evid. 201(b)(2) ........................................................................................................... 39 

H.R. Rep. No. 94-917 (1976) ............................................................................................ 21, 35

Statement of Policy Regarding Commission Action in Matters at the Initial Stage in the 

 Enforcement Process, 72 Fed. Reg. 12,545 (Mar. 16, 2007) ........................................ 15, 22 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 8 of 48
INTRODUCTION 

Plaintiffs Campaign Legal Center and Democracy 21 challenge the Federal Election 

Commission’s (“FEC” or “Commission”) dismissal of their administrative complaints 

alleging that various individuals and entities violated the Federal Election Campaign Act’s 

(“FECA” or “Act”) prohibition against contributions made in the name of another. Plaintiffs’ 

administrative complaints alleged that certain contributions to super PACs by closely-held 

corporations or corporate LLCs were actually attributable to other sources and that these 

entities thus had acted as “straw donors.” In February 2016, the Commission voted on 

whether to find “reason to believe” that any of the respondents in plaintiffs’ administrative 

complaints had violated FECA. The Commission did not approve pursuing any of the 

matters further, and so voted to close its files, thereby dismissing plaintiffs’ administrative 

complaints. 

The Commission’s dismissal of plaintiffs’ administrative complaints is not contrary to 

law. The decision of the three Commissioners who voted not to proceed in the matters in an 

exercise of prosecutorial discretion is fully explained in a statement of reasons grounded in 

the administrative record. Under the highly deferential standard that governs judicial review 

of FEC decisions to dismiss administrative complaints, the Commission’s exercise of 

prosecutorial discretion need only be reasonable to be affirmed. The dismissal decision here 

readily satisfies this relaxed standard of review. Observing that the question presented by 

each of plaintiffs’ complaints was unsettled, arising in an area where the law not only was 

unclear but also had recently underwent a sea change in light of Citizens United v. FEC, 558 

U.S. 310 (2010), the three Commissioners found that respondents did not have adequate 

notice regarding the potential unlawfulness of their conduct. Discussing due process 

concerns and the need for sensitivity when regulating in the sphere of First Amendment 

rights, the Commissioners concluded that it would be unfair to pursue enforcement in these 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 9 of 48
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circumstances. Instead, the Commissioners “used the present matters to announce a 

governing interpretation to put the public on notice of the conduct that constitutes a violation 

of the Act, while dismissing these cases of first impression.” (AR 98.) 

Plaintiffs’ claim that this action was contrary to law largely boils down to one 

untenable proposition. They argue that, because the record before the Commission could 

support a finding that administrative respondents made improper conduit contributions, the 

FEC was compelled to pursue the alleged violations in enforcement proceedings. But no 

principle of law requires a federal agency to pursue every enforcement matter. Simply 

because the Commission could pursue an enforcement matter does not mean that it must. To 

the contrary, an unbroken line of decisions from the Supreme Court, the D.C. Circuit, and 

other courts in this District makes plain that agencies like the FEC have the discretion to elect 

not to pursue enforcement of alleged statutory violations in particular cases. Indeed, the 

Supreme Court has observed that the FEC has discretion not to pursue an enforcement matter 

even if the agency agrees that the law may have been violated. FEC v. Akins, 524 U.S. 11, 24 

(1998). Here, the Commissioners’ exercise of that discretion should be sustained. 

In addition, plaintiffs’ challenge to the new standard announced in the 

Commissioners’ statement of reasons also must fail. Because that standard was not applied 

in these administrative matters, or any others, plaintiffs’ challenge is not ripe. Judicial review 

must be reserved for a concrete setting when one or more applications of the standard are 

under review. In any event, even if plaintiffs’ disagreements with the Commissioners’ new 

proposed standard arose in a ripe matter, the standard is not contrary to law or arbitrary or 

capricious. Consistent with other areas of FECA and Commission regulations that have been 

affirmed in court, their preferred standard incorporates a purpose requirement to distinguish 

between dissimilar circumstances and reasonably implements FECA in a First Amendmentsensitive manner. 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 10 of 48
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Finally, plaintiffs’ general concerns about the FEC’s enforcement actions in other 

cases have no bearing on this matter. To the extent plaintiffs have timely asserted a statutory 

right of action to seek review of agency dismissals, it is limited to the particular 

administrative complaints that remain before the Court. 

Because the Commission’s actions were not contrary to law, the Court should grant 

summary judgment to the agency. 

BACKGROUND 

I. STATUTORY AND REGULATORY BACKGROUND 

A. The FEC and FECA’s Administrative Enforcement Process 

1. The Commission 

The FEC is a six-member, independent agency vested with statutory authority over 

the administration, interpretation, and civil enforcement of FECA. Congress authorized the 

Commission to “administer, seek to obtain compliance with, and formulate policy with 

respect to” FECA, 52 U.S.C. § 30106(b)(1); “to make, amend, and repeal such rules . . . as 

are necessary to carry out the provisions of [FECA],” id. §§ 30107(a)(8), 30111(a)(8); and to 

investigate possible violations of the Act, id. § 30109(a)(1)-(2). The FEC has “exclusive 

jurisdiction” to initiate civil enforcement actions for violations of FECA in the United States 

district courts. Id. §§ 30106(b)(1), 30109(a)(6). It is required under FECA to make decisions 

through majority votes and, for certain actions, including enforcement decisions, with the 

affirmative vote of at least four Commissioners. Id. § 30106(c). 

2. FECA’s Administrative Enforcement and Judicial-Review 

Provisions 

FECA permits any person to file an administrative complaint with the Commission 

alleging a violation of the Act. Id. § 30109(a)(1); see also 11 C.F.R. § 111.4. After 

reviewing the complaint and any response filed by the respondent, the Commission considers 

whether there is “reason to believe” that FECA has been violated. 52 U.S.C. § 30109(a)(2). 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 11 of 48
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If at least four of the FEC’s six Commissioners vote to find such reason to believe, the 

Commission may investigate the alleged violation; otherwise, the Commission dismisses the 

administrative complaint. Id. §§ 30106(c), 30109(a)(2). 

If the Commission votes to proceed with an investigation, it then must determine 

whether there is “probable cause” to believe that FECA has been violated. Id.

§ 30109(a)(4)(A)(i). Like a reason-to-believe determination, a determination to find probable 

cause requires an affirmative vote of at least four Commissioners. Id. §§ 30106(c), 

30109(a)(4)(A)(i). If the Commission so votes, it is statutorily required to attempt to remedy 

the violation informally and attempt to reach a conciliation agreement with the respondent. 

Id. The FEC’s assent to a conciliation agreement requires an affirmative vote of at least four 

Commissioners. Id. If the Commission is unable to reach a conciliation agreement, FECA 

authorizes the agency to institute a de novo civil enforcement action in federal district court. 

Id. § 30109(a)(6)(A). The institution of a civil action under section 30109(a)(6)(A) requires 

an affirmative vote of at least four Commissioners. Id. § 30106(c). 

If, at any point in the administrative process, the Commission determines that no 

violation has occurred or decides to dismiss the administrative complaint for some other 

reason, FECA permits a complainant to file suit in the District Court for the District of 

Columbia to obtain judicial review to determine whether the decision was “contrary to law.” 

Id. § 30109(a)(8)(A), (C). Reviewable dismissal decisions include instances in which “the 

Commission deadlocks 3-3 and so dismisses a complaint.” FEC v. Nat’l Republican 

Senatorial Comm., 966 F.2d 1471, 1476 (D.C. Cir. 1992) (“NRSC”); see also Democratic 

Cong. Campaign Comm. v. FEC, 831 F.2d 1131, 1133 (D.C. Cir. 1987) (“DCCC”). In such 

split-vote cases, “the three Commissioners who voted to dismiss must provide a statement of 

their reasons” in order “to make judicial review a meaningful exercise.” NRSC, 966 F.2d at 

1476. “Since those Commissioners constitute a controlling group for purposes of the 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 12 of 48
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decision, their rationale necessarily states the agency’s reasons for acting as it did.” Id. 

Should a court find the Commission’s dismissal to be unlawful, FECA permits the court to 

“direct the Commission to conform” with the court’s ruling “within 30 days.” 52 U.S.C. 

§ 30109(a)(8)(C).

B. FECA’s Prohibition Against Contributions Made in the Name of Another 

FECA’s prohibition against contributions made in the name of another person 

complements the Act’s disclosure requirements, and in some circumstances its contribution 

limits and source restrictions. It does so by independently prohibiting the “true source” of a 

contribution from concealing his or her identity by making the contribution through a pass 

through, or what is commonly known as a “straw donor” — i.e., an intermediary or conduit. 

FECA thus provides that “[n]o person shall make a contribution in the name of another 

person or knowingly permit his name to be used to effect such a contribution, and no person 

shall knowingly accept a contribution made by one person in the name of another person.” 

Id. § 30122. 

Commission regulations illustrate the types of activities and transactions that 

constitute making a contribution in the name of another. These include making a 

contribution, all or part of which was provided by “another person (the true contributor)” 

without disclosing the true contributor, or by making a contribution and attributing its source 

to “another person when in fact the contributor is the source.” 11 C.F.R. § 110.4(b)(2)(i)-(ii). 

C. Political Committee Registration and Reporting Requirements 

FECA imposes several different kinds of disclosure obligations that apply depending 

upon the nature of the organization making the communications and the timing, form, and 

content of the communications. In addition to imposing certain event-driven disclosure 

requirements that apply whenever speakers’ communications meet certain criteria, FECA 

provides that certain organizations, which qualify as “political committees,” must, inter alia, 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 13 of 48
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register with the Commission, appoint a treasurer, maintain names and addresses of 

contributors, and file periodic reports disclosing to the public most receipts of $200 or more. 

52 U.S.C. §§ 30103, 30104(a)-(b). 

Under FECA, any “committee, club, association, or other group of persons” that 

receives more than $1,000 in “contributions” or makes more than $1,000 in “expenditures” in 

a calendar year is a “political committee.” Id. § 30101(4)(A); 11 C.F.R. § 100.5(a). The Act 

defines “contribution” and “expenditure” to include any payment of money to or by any 

person “for the purpose of influencing any election for Federal office.” 52 U.S.C. § 

30101(8)(A)(i), (9)(A)(i). In Buckley v. Valeo, however, the Supreme Court held that 

FECA’s political-committee provisions “need 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.” 424 U.S. 1, 79 (1976) (per curiam). Buckley thus established that an entity that 

is not controlled by a candidate must register as a political committee only if the group 

crosses the $1,000 threshold of contributions or expenditures and has as its “major purpose” 

the nomination or election of federal candidates. 

II. FACTUAL BACKGROUND

A. Respondents and Administrative Proceedings 

Plaintiffs seek judicial review of the Commission’s dismissal of three administrative 

complaints they filed with the agency. Each are discussed below.1

 

1. F8 and Eli Publishing 

Eli Publishing, L.C. (“Eli Publishing”) is a limited liability company founded in 1997 

by Steven Lund “for the purpose of publishing a range of specialty books.” (AR 78 (internal 

quotation marks omitted).) Publicly available information indicated it was a going concern, 

 

1

 Plaintiffs sought to challenge dismissals of two additional administrative complaints 

but lack standing to do so. (Mem. Op. at 7-9, 14 (Docket No. 23).) 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 14 of 48
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with estimated sales of $72,000 and $70,000 in 2011 and 2012, respectively. (AR 34; AR 

78.) Although it had only published one book as of June 2012, it stated at that time that it 

intended to publish additional books in the future. (AR 78.) 

F8 LLC (“F8”) was formed in 2008 with a self-described “commercial” purpose. 

(AR 78.) F8’s two publicly listed managers, one of which was also the company’s registered 

agent, were reportedly connected to Lund by family and/or business relationships. (AR 34-

35; AR 78 n.19.) Both companies are publicly listed as having the same address. (AR 35.) 

In 2011, Restore Our Future, Inc. (“ROF”) was a registered independent-expenditureonly political committee (also known as a “super PAC”). (AR 2.) In its amended mid-year 

report that year, ROF disclosed that it received two $1 million contributions from F8 and Eli 

Publishing on March 31, 2011. (AR 78 & n.20.) 

On August 11, 2011, plaintiffs filed two administrative complaints alleging that Eli 

Publishing and F8, respectively, were each used to make straw donor contributions of $1 

million to ROF in violation of 52 U.S.C. § 30122. (AR 1; AR 201; see also AR 78.) The 

complaints were based upon an August 4, 2011 television news report stating that, while F8 

and Eli Publishing had made separate $1 million donations to ROF, neither appeared to do 

“substantial business.” (AR 2; AR 202.) The news footage indicated that neither F8 nor Eli 

Publishing operated out of their shared address. (AR 34-35.) Lund purportedly told the news 

reporter that he was “‘not trying to hide the donation,’” and “‘made [it] through a corporation 

he created . . . years ago because donating through a corporation has accounting 

advantages.’” (AR 36 (emphasis omitted); see also AR 78.) Plaintiffs asserted that “the 

person(s) who created, operated and/or contributed to F8” and Lund, respectively, were the 

true sources of the contributions. (AR 1, 4; AR 201-02.) Plaintiffs also alleged that F8 and 

Eli Publishing were “political committees” that failed to register and file reports in violation 

of 52 U.S.C. §§ 30102, 30103, and 30104. (AR 2; AR 202.) Both complaints requested that 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 15 of 48
8 

the FEC conduct an investigation into the alleged violations, impose appropriate sanctions for 

any violations found, and enjoin the respondents from any future violations. (AR 7; AR 

207.) 

ROF filed a response to both complaints on September 21, 2011. (AR 25-27.) F8 

filed a response and Eli Publishing and Lund filed a joint response on October 6, 2011. (AR 

28-30; AR 222-24.) The FEC’s Office of General Counsel submitted to the Commission its 

First General Counsel’s Report and Proposed Factual and Legal Analysis concerning 

plaintiffs’ allegations on June 6, 2012. (AR 31-57.) This staff report recommended that the 

Commission find reason to believe that F8, Eli Publishing, Lund, and “Unknown 

Respondents” violated section 30122, and to take no action at this time as to ROF or with 

respect to the allegations that F8 and Eli Publishing were political committees. (AR 46-47.) 

2. Specialty Investment Group and Kingston Pike 

In September 2012, William Rose, Jr. formed Specialty Investment Group Inc. 

(“Specialty Group”) and its subsidiary, Kingston Pike Development LLC (“Kingston Pike”). 

(AR 79.) Rose was Specialty Group’s chief executive officer, president, and chairman of the 

board, and Kingston Pike’s sole manager. (Id. at n.25.) According to Rose and the 

companies, Specialty Group and Kingston Pike “‘were formed for the purpose of engaging in 

the real estate business.’” (AR 79 (quoting AR 340).) They have further stated that Specialty 

Group has “‘received private capital and made investments in properties and projects, many 

of which Mr. Rose has worked on for several years.’” (AR 79 (quoting AR 340).) Specialty 

Group and its subsidiaries, through their agent Rose, also claimed to have “‘purchased, 

offered to purchase, and/or negotiated real estate investments valued at over $50 million’” 

between September 2012 and February 2013, and they provided a list detailing numerous real 

estate transactions. (AR 79 n.26 (quoting AR 341); AR 342.1-2.) Specialty Group and 

Kingston Pike were administratively dissolved in August 2013. (AR 389.) 

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9 

In a press release, Rose described Specialty Group as “a private corporation which 

uses private capital for lawful business, social, and political purposes.” (AR 462.) He stated 

that he felt “that the Democratic policies of big government, higher taxes and more 

government regulations will greatly . . . impact the success of Specialty Group in the future, 

if Mr. Obama is re-elected and his policies continue.” (AR 459.) 

Specialty Group and Kingston Pike made contributions to FreedomWorks for 

America (“FreedomWorks ”), a super PAC registered with the FEC, totaling $10,575,000 and 

$1,500,000, respectively, between October 1, 2012 and November 1, 2012. (AR 341; AR 

388; AR 391.) 

On December 12, 2012, plaintiffs filed their administrative complaint regarding 

Specialty Group and Kingston Pike. Plaintiffs alleged that Rose and unnamed others made a 

series of straw donor contributions totaling approximately $12 million through Specialty 

Group and Kingston Pike to FreedomWorks in violation of 52 U.S.C. § 30122. (AR 301-02.) 

Plaintiffs further alleged that Specialty Group and Kingston Pike were “political committees” 

that failed to register and file reports in violation of 52 U.S.C. §§ 30102, 30103, and 30104. 

(AR 302.) Plaintiffs requested that the FEC conduct an investigation into the alleged 

violations, impose appropriate sanctions for any violations found, and enjoin the respondents 

from any future violations. (AR 309-10.) 

Rose, Specialty Group, and Kingston denied that these were improper straw 

donations. (AR 341.) Rather, they asserted that Rose had directed the contributions from 

Specialty Group and Kingston Pike, and that these contributions were correctly disclosed by 

FreedomWorks as having come from those companies. (Id.) 

According to a December 25, 2012 newspaper story, one of the members of 

FreedomWorks’ board of directors, Richard Stephenson, pledged to donate $10-12 million 

during a FreedomWorks retreat in August 2012. (AR 326.) Adam Brandon, FreedomWorks’ 

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10 

executive vice president, purportedly met with Stephenson’s family to arrange the donation, 

which the article asserts were the same donations ultimately made by Specialty Group and 

Kingston Pike. (AR 325-26.) On January 3, 2013, plaintiffs submitted a letter 

supplementing their complaint alleging that Stephenson was the actual “source” of the above 

contributions and attaching the December 25 newspaper article. (AR 322-28.) Plaintiffs’ 

letter contended that Rose and unnamed other individuals may have knowingly permitted the 

companies’ names to be used for these alleged straw donor contributions, and that 

FreedomWorks and its executive vice president, Brandon, knowingly accepted these 

contributions in violation of section 30122. (AR 323.) On April 24, 2013, plaintiffs filed an 

amended complaint formally including these allegations. (AR 343-48.) 

FreedomWorks filed responses to the original complaint and supplemental complaint 

on February 14 and June 12, 2013, respectively. (AR 337-38; AR 370-75.) Specialty Group, 

Kingston Pike, and Rose filed a joint response on February 25, 2013. (AR 339-42.) 

Stephenson filed a response on June 14, 2013. (AR 376-78.) Brandon filed a response on 

June 27, 2013. (AR 379-84.) 

The FEC’s Office of General Counsel submitted to the Commission its First General 

Counsel’s Report and Proposed Factual and Legal Analysis concerning plaintiffs’ allegations 

on June 17, 2014. (AR 385-527.) The report recommended that the Commission find reason 

to believe that Stephenson, Rose, Specialty Group, Kingston Pike, FreedomWorks, and 

Brandon violated section 30122, and to take no action at this time with respect to the 

allegations that the Specialty Group and Kingston Pike were political committees. (AR 404.) 

B. The FEC’s Dismissals of Plaintiffs’ Administrative Complaints 

On February 23, 2016, the Commission, by a vote of 3-3, did not find reason to 

believe that the respondents in each of the three matters above violated section 30122. (AR 

67-68; AR 543-44.) Commissioners Petersen, Hunter, and Goodman voted against finding 

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reason to believe, while Commissioners Walther, Ravel, and Weintraub voted for finding 

reason to believe and to authorize investigations. (Id.) The Commission then voted 6-0 to 

close the files in the matters. (Id.) 

On April 1, 2016, Commissioners Petersen, Hunter, and Goodman issued a statement 

of reasons explaining their vote against finding reason to believe, which they later 

supplemented on April 18, 2016. (AR 75-89; AR 98-101.) Commissioners Walther, Ravel, 

and Weintraub also issued a statement on April 1, 2016 explaining their votes to proceed with 

investigations, which Commissioners Ravel and Weintraub later supplemented on April 13, 

2016. (AR 90-94; AR 95-97.) Because Commissioners Petersen, Hunter, and Goodman 

were the Commissioners voting against making reason-to-believe findings, their “rationale[s] 

necessarily state[] the agency’s reasons for acting as it did” and they accordingly constitute 

the “controlling group” of Commissioners in these matters. NRSC, 966 F.2d at 1476. 

The controlling Commissioners determined that the pending matters were 

appropriately addressed under the straw donor prohibition, not under the regulations 

concerning political committee registration and reporting. (AR 80 n.36.) The controlling 

Commissioners framed their analysis of plaintiffs’ administrative complaints around Citizens 

United and its progeny, explaining the effect of those decisions on the agency’s historical 

treatment of corporate contributions and FECA’s straw donor prohibition in section 30122. 

(AR 75-77; AR 81-85.) As these Commissioners explained, Citizens United led to 

corporations being able to make unlimited contributions to a new type of entity, called an 

independent-expenditure-only political action committee or “super PAC.” (AR 75 & n.1.) 

In section 30122, FECA provides that “‘[n]o person shall make a contribution in the 

name of another person or knowingly permit his name to be used to effect such a 

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12 

contribution.’” (AR 81 (quoting 52 U.S.C. § 30122).)2 Until recently, however, the 

controlling Commissioners explained, “corporations could not make any contributions” for 

the purpose of influencing federal elections. AR 81; see also 52 U.S.C. § 30118(a) (making 

it “unlawful . . . for any corporation whatever . . . to make a contribution or expenditure in 

connection with any election” for federal office). Thus, while FECA generally defines 

“person” to include corporations (AR 81 (citing 52 U.S.C. § 30101(11)), in the pre-Citizens 

United era “the Commission ha[d] never addressed the inverse of the conventional corporate 

straw-donor scheme” in which a corporation or corporate LLC is alleged to be a straw donor 

under section 30122. (AR 81.) 

The controlling Commissioners explained that because corporations could not make 

any contributions under FECA at the time the prohibition against conduit contributions was 

enacted, they found that “Congress likely did not contemplate that corporations could violate 

the prohibition against giving in the name of another by acting as straw donors for 

contributions.” (AR 83.) Interpreting FECA in light of section 30122’s language and 

purpose, the controlling Commissioners concluded — and the Commissioners who voted to 

find reason to believe in these matters agreed — that closely-held and corporate LLCs could 

be straw donors under section 30122. (AR 82; AR 91.) 

 After concluding that the question presented by plaintiffs’ administrative complaints 

was an issue of first impression, as well as taking into account several other considerations 

discussed below, the controlling Commissioners decided to exercise their prosecutorial 

discretion and voted against finding reason-to-believe that section 30122 was violated in the 

pending matters. (AR 76-77.) First, the Commissioners found that the agency had never 

before applied section 30122 to a situation where neither FECA’s contribution limits nor its 

 

2

 A “contribution” is “any gift, subscription, loan, advance, or deposit of money or 

anything of value made by any person for the purpose of influencing any election for Federal 

office.” 52 U.S.C. § 30101(8)(A). 

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source prohibition came into play. (AR 76; AR 83.) Prior cases before the Commission 

typically either involved (a) an individual serving as a straw donor for a prohibited source, 

such as a corporation or federal contractor, or (b) an individual serving as a straw donor for 

another individual, whose total contributions exceeded FECA’s limits. (AR 81 & n.42; AR 

83 & n.51.) By contrast, the issue presented in the pending matters, as plaintiffs alleged 

them, presented neither prohibited sources nor excess contributions because corporations 

currently may make unlimited contributions to super PACs. Accordingly, the controlling 

Commissioners found that the pending matters “differ[ed] substantially” from prior matters 

and, consequently, warranted fresh consideration. (AR 83.) 

Second, the controlling Commissioners considered prior precedent in other contexts 

where, even though a shareholder in a closely-held corporation stated that it was the source of 

the funds at issue, the Commission nonetheless deemed the funds to be from the corporation. 

(AR 83-84.) The Commissioners discussed FEC v. Kalogianis, for example, a case in which 

a candidate’s campaign committee disclosed several loans from two closely-held 

corporations owned by the candidate. No. 8:06-cv-68-T-23EAJ, 2007 WL 4247795, at *2 

(M.D. Fla. Nov. 30, 2007); AR 83-84. In response to the Commission’s notification that 

corporate contributions were prohibited, the campaign committee amended its disclosures to 

reflect that, although some of the funds for the loans may have technically come from the 

closely-held corporations, the candidate was the source of the loans. Kalogianis, 2007 WL 

4247795, at *3. The FEC did not accept this rationale and filed suit. Id. The court agreed 

with the FEC, finding that “‘precedent preclude[d]’” the defendants’ argument that “‘a 

contribution of corporate money by the sole shareholder of a corporation and a contribution 

by the shareholder of the shareholder’s money warrant equivalent treatment because in each 

instance the contribution is necessarily the shareholder’s money.’” (AR 83-84 & n.54 

(quoting Kalogianis, 2007 WL 4247795, at *4).) 

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Third, the controlling Commissioners observed that Commission regulations provide 

that contributions from corporate LLCs are attributed to the corporate entity, not its owners. 

(AR 85 (discussing 11 C.F.R. § 110.1(g)).) While contributions from certain types of LLCs 

are attributed to its owners, the Commission rejected a proposal attributing contributions 

from corporate LLCs to its owners. (Id.) In light of such historical treatment, the controlling 

Commissioners found that “it would be reasonable for Respondents to conclude that 

contributions made by their closely held corporations and corporate LLCs were lawful and 

not contributions in the name of another.” (AR 85.) 

For these reasons, the controlling Commissioners concluded that it had been unclear 

whether and under what circumstances a contribution made by a closely-held corporation or 

corporate LLC to a super PAC constituted an improper straw donor contribution under 

section 30122 that instead should be attributed to the entity’s owner as the “true contributor” 

rather than the entity itself. (AR 82; AR 85; AR 87.) Given this understanding that previous 

matters or Commission regulations had not offered clear guidance, the controlling 

Commissioners found that Respondents did not have adequate notice regarding the 

application of section 30122 to closely-held corporations and corporate LLCs. (AR 82; AR 

85; AR 87.) Because “principles of due process, fair notice, and First Amendment clarity 

counsel against applying a standard to persons and entities that were not on notice of the 

governing norm,” they concluded that the pending matters “should be dismissed in an 

exercise of the Commission’s prosecutorial discretion.” (AR 76-77; see also AR 87-88.)3

 

 

3

 Although two of the Commissioners who had voted to find reason to believe had 

discussed the possibility of finding reason-to-believe as to the respondents while 

simultaneously dismissing the matters without imposing civil penalties, the controlling 

Commissioners explained their understanding that the “Commission abandoned that 

procedure years ago,” citing an FEC policy statement that explained the agency’s preference 

for dismissal or dismissal with admonishment in lieu of finding “‘reason to believe, but take 

no further action’” in order to avoid confusion about the meaning of the reason to believe 

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Rather than imposing a new standard as part of a finding that the respondents had 

violated FECA, the controlling Commissioners instead “used the present matters to announce 

a governing interpretation to put the public on notice of the conduct that constitutes a 

violation of the Act,” thereby providing guidance for future conduct. (AR 98.) The 

Commissioners reasoned that “[a] fundamental principle in our legal system is that laws 

which regulate persons or entities must give fair notice of conduct that is forbidden or 

required.” (AR 87-88 (quoting FCC v. Fox Television Stations, Inc., 132 S. Ct. 2307, 2317 

(2012).) In cases implicating First Amendment rights, such as the pending matters, they 

wrote that “[t]his concern is particularly acute.” (AR 88 & n.72 (collecting cases)). 

The Commissioners considered specific recommendations from the Office of General 

Counsel about several matters in the course of determining what they viewed to be the proper 

standard. (AR 81-82.) They concluded that an inquiry into the purpose of a contribution was 

necessary; without that inquiry, they feared that any contribution by a closely-held 

corporation or single-member corporate LLC would be presumptively an unlawful conduit 

contribution. (AR 81-82 & n.46; AR 100.) Because such corporate entities necessarily only 

act at the direction of their owner/member, the Commissioners reasoned that any contribution 

by the entity would thus be made at the individual’s behest. (AR 81-82 & n.46; AR 100.) 

With the understanding that closely-held corporations and corporate LLCs are entitled to 

make contributions to super PACs as a matter of constitutional law, and so to 

“avoid[]constitutional doubt,” the controlling Commissioners announced their view that 

“when enforcing section 30122 in similar future matters, the proper focus will be on whether 

funds were intentionally funneled through a closely held corporation or corporate LLC for the 

purpose of making a contribution that evades the Act’s reporting requirements.” (AR 86-87.) 

 

finding. (AR 99 & n.6 (citing Statement of Policy Regarding Commission Action in Matters 

at the Initial Stage in the Enforcement Process, 72 Fed. Reg. 12,545 (Mar. 16, 2007)).) 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 23 of 48
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In the absence of direct evidence of this purpose, these Commissioners would consider 

evidence that a corporate entity is a straw donor, such as “evidence indicating that the 

corporate entity did not have income from assets, investment earnings, business revenues, or 

bona fide capital investments, or was created and operated for the sole purpose of making 

political contributions.” (AR 86.) 

ARGUMENT

The Commission’s dismissal of plaintiffs’ administrative complaints should be 

sustained. The dismissal was based on a reasonable exercise of the agency’s broad 

prosecutorial discretion, which readily survives the applicable highly deferential standard of 

review. As explained in their thorough analysis, the controlling Commissioners evaluated 

pursuing enforcement action in a new circumstance resulting from recent changes to federal 

campaign finance law. Their decision to exercise prosecutorial discretion in light of concerns 

of notice, fairness, due process, as well as the sensitivity the agency has been instructed to 

use when regulating in the First Amendment arena, is not contrary to law. In addition, the 

prospective standard the controlling Commissioners announced that they would be using in 

future cases is not ripe for review. Even if it were properly before the Court at this time, it is 

neither contrary to law nor arbitrary or capricious. Finally, plaintiffs here challenge the 

agency’s dismissal of three of plaintiffs’ administrative complaints, and their broad-brush 

complaints about the agency’s enforcement decisions on other matters are irrelevant. The 

agency’s dismissals of plaintiffs’ administrative complaints should be affirmed.

I. THE COMMISSION’S DISMISSAL OF PLAINTIFFS’ ADMINISTRATIVE 

COMPLAINTS IS NOT CONTRARY TO LAW 

In reviewing the challenged dismissal decisions under section 30109(a)(8), the Court 

is bound by controlling decisions of the Supreme Court and D.C. Circuit requiring that the 

Commission’s dismissal decisions be accorded full deference, irrespective of the 

Commission’s divided votes on the matters. Plaintiffs’ attempts to reduce their heavy burden 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 24 of 48
17 

by urging a lesser degree of deference lack support and must be rejected. Applying the 

proper standard of review, the controlling Commissioners’ dismissal decisions were both 

adequately explained and rational. They were not contrary to law.

A. Standard of Review 

1. Section 30109(a)(8)’s Contrary to Law Standard of Review Is 

“Limited” and “Extremely Deferential” 

In section 30109(a)(8), Congress mandated that the judicial task in cases like this is to 

determine whether the Commission’s dismissals of plaintiffs’ administrative complaints are 

“contrary to law.” 52 U.S.C. § 30109(a)(8)(C). Well-settled decisions construing section 

30109(a)(8) make clear that such review is “limited.” Common Cause v. FEC, 842 F.2d 436, 

448 (D.C. Cir. 1988); Citizens for Responsibility & Ethics in Wash. v. FEC, 475 F.3d 337, 

340 (D.C. Cir. 2007). As plaintiffs acknowledge (Mem. of P. & A. in Supp. of Pls.’ Mot. for 

Summ. J. at 19 (Docket No. 30) (“Pls.’ Mem.”)), the FEC’s dismissal of an administrative 

complaint cannot be disturbed unless it was based on an “impermissible interpretation of” 

FECA or was otherwise “arbitrary or capricious, or an abuse of discretion.” Orloski v. FEC,

795 F.2d 156, 161 (D.C. Cir. 1986).4

The contrary-to-law standard simply requires that the Commission’s decision be 

“sufficiently reasonable to be accepted.” FEC v. Democratic Senatorial Campaign Comm., 

454 U.S. 27, 39 (1981) (internal quotation marks omitted). But the Commission’s decision 

need not be “the only reasonable one or even the” decision “the [C]ourt would have reached” 

on its own “if the question initially had arisen in a judicial proceedings.” Id. As the Supreme 

 

4

 Plaintiffs also purport to rely on the Administrative Procedure Act (“APA”) as an 

independent source of jurisdiction (Pls.’ Mem. at 18), but 52 U.S.C. § 30109(a)(8) provides 

the exclusive mechanism for judicial review of any FEC dismissal of an administrative 

complaint. E.g., Citizens for Responsibility & Ethics in Wash. v. FEC, No. CV 16-259 

(BAH), --- F. Supp. 2d ---, 2017 WL 1080920, at *10 (D.D.C. Mar. 22, 2017) (holding that 

section 30109(a)(8) serves as an adequate form of review of the Commission’s dismissal 

decisions and thus precludes review of such decisions under the APA). 

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18 

Court explained decades ago, “the Commission is precisely the type of agency to which 

deference should presumptively be afforded.” Id. at 37. This is due to the FEC’s “‘primary 

and substantial responsibility for administering and enforcing [FECA],’” its authority to 

“‘formulate general policy with respect to the administration of [the] Act,’” its “‘sole 

discretionary power’ to determine in the first instance whether or not a civil violation of the 

Act has occurred,” and its nonpartisan nature resulting from the fact that “no more than three 

of its six voting members may be of the same political party.” Id. “For these reasons” and 

others, the Court said, Congress “wisely provided” that the “dismissal of a[n administrative] 

complaint should be reversed only if ‘contrary to law.’” Id. Accordingly, that standard is 

“extremely deferential” to the agency’s decision and “requires affirmance if a rational basis . 

. . is shown.” Orloski, 795 F.2d at 167 (internal quotation marks omitted); see also Hagelin 

v. FEC, 411 F.3d 237, 242 (D.C. Cir. 2005) (holding that the contrary-to-law standard is 

“[h]ighly deferential” to the Commission’s decision (internal quotation marks omitted)). 

The case for deference to the agency’s dismissal decision is even more appropriate 

where, as here, the agency’s decision not to proceed with an enforcement case is an exercise 

of its prosecutorial discretion. Heckler v. Chaney, 470 U.S. 821, 831 (1985) (“[A]n agency’s 

decision not to prosecute or enforce . . . is a decision generally committed to an agency’s 

absolute discretion.”). As courts in this District have recognized, “[t]he prosecutorial 

discretion afforded to the FEC is considerable.” La Botz v. FEC, 61 F. Supp. 3d 21, 33 

(D.D.C. 2014) (internal quotation marks omitted); see also Citizens for Responsibility & 

Ethics in Wash. v. FEC, No. 15-2038 (RC), --- F. Supp. 3d ---, 2017 WL 706155, at *8 

(D.D.C. Feb. 22, 2017) (“CREW I”) (“In deciding whether to initiate or proceed with charges 

of alleged FECA violations, the Court gives broad prosecutorial discretion to the FEC.”); 

Akins v. FEC, 736 F. Supp. 2d 9, 21 (D.D.C. 2010) (“[T]he prosecutorial discretion given to 

the Commission is entitled to great deference . . ., provided it supplies reasonable grounds.”). 

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19 

Such deference is due to the FEC’s prosecutorial discretion because the “agency is in 

a unique — and authoritative — position to view its projects as a whole, estimate the 

prospects for each, and allocate its resources in the optimal way.” In re Barr Labs., Inc., 930 

F.2d 72, 76 (D.C. Cir. 1991). As the D.C. Circuit has instructed, such “budget flexibility as 

Congress has allowed the agency is not for [the courts] to hijack.” Id. Courts in this Circuit 

have repeatedly applied these principles in affirming Commission decisions not to enforce 

FECA. See Nader v. FEC, 823 F. Supp. 2d 53, 65 (D.D.C. 2011) (“[T]he Court believes that 

the FEC is in a better position to evaluate its own resources and the probability of 

investigatory difficulties than is [the plaintiff].”), vacated on other grounds, 725 F.3d 226 

(D.C. Cir. 2013); Stark v. FEC, 683 F. Supp. 836, 840 (D.D.C. 1988) (“[I]t is . . . surely 

committed to the Commission’s discretion to determine where and when to commit its 

investigative resources.”); cf. FEC v. Rose, 806 F.2d 1081, 1091 (D.C. Cir. 1986) (noting that 

it “is not for the judiciary to ride roughshod over agency procedures or sit as a board of 

superintend[e]nce directing where limited agency resources will be devoted”). Indeed, the 

Commission retains prosecutorial discretion to dismiss an administrative complaint even if 

the complaint identifies a violation because the “FEC is not required to pursue every potential 

violation of FECA.” La Botz, 61 F. Supp. 3d at 35; cf. Blancett v. U.S. Bureau of Land 

Mgmt., No. 04-2152 (JDB), 2006 WL 696050, at *6-11 (D.D.C. Mar. 20, 2006) (rejecting 

argument that agency was legally required to pursue enforcement action under the APA and 

reiterating Supreme Court’s acknowledgement “that law enforcement officers may choose 

not to pursue each and every violation of the law because of competing considerations”). 

2. The Controlling Commissioners’ Rationale for Exercising 

Prosecutorial Discretion Does Not Change the Deference 

Accorded Their Dismissal Decisions 

That the controlling Commissioners’ rationale for exercising prosecutorial discretion 

here touched upon constitutional concerns does not affect the deference courts afford to FEC 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 27 of 48
20 

dismissal decisions, as plaintiffs suggest. (See Pls.’ Mem. at 21-24; see also id. at 25 

(suggesting that the Court “conduct a de novo review of the relevant law and judicial 

precedents”).) An agency’s assessment of the likelihood of success in a matter will often 

involve analyzing legal doctrine outside of the organic statue it is tasked with enforcing, but 

that does not stop courts from deferring to this analysis so long as it is reasonable. See 

CREW I, 2017 WL 706155, at *10 (evaluating statute of limitations arguments); Akins, 736 

F. Supp. 2d at 16 (explaining that “[t]he Commission reasoned that any further investigation 

would be frustrated” in part “by . . . the expiration of the applicable statute of limitations”). 

The Commission was not engaging in some pure legal construction of another statute, the 

Constitution, or a specific judicial opinion, and the decision instead warrants deference 

because the agency is in the best position to evaluate the alleged facts, its own resources and 

priorities, and the likelihood that it will prevail should it attempt enforcement. See, e.g., 

Heckler, 470 U.S. at 831-32 (“The agency is far better equipped than the courts to deal with 

the many variables involved in the proper ordering of its priorities.”); CREW I, 2017 WL 

706155, at *8; La Botz, 61 F. Supp. 3d at 33-34; Nader, 823 F. Supp. 2d at 65. 

Plaintiffs’ extended argument (Pls.’ Mem. at 21-24) that the FEC should not receive 

deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 

837 (1984), therefore, is largely beside the point.5

 To the extent that plaintiffs take issue with 

the controlling Commissioners’ interpretation of section 30122 (e.g., Pls.’ Mem. at 37-39), 

they are also incorrect. When the FEC interprets a provision of FECA in the context of a 

section 30109(a)(8) dismissal, the D.C. Circuit has held that courts must accord Chevron

deference to that decision. E.g., In re Sealed Case, 223 F.3d 775, 779-81 (D.C. Cir. 2000); 

 

5

 The familiar two-step Chevron framework requires the Court to first to determine 

“whether Congress has directly spoken to the precise question at issue” and, if not, to defer to 

the agency’s interpretation as long as it is “based on a permissible construction of the 

statute.” Chevron, 467 U.S. at 842-43. 

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21 

FEC v. Nat’l Rifle Ass’n of Am., 254 F.3d 173, 185 (D.C. Cir. 2001); Orloski, 795 F.2d at 

161-62; NRSC, 966 F.2d at 1476 (“[I]f the meaning of the statute is not clear, a reviewing 

court should accord deference to the Commission’s rationale.”); Citizens for Responsibility & 

Ethics in Wash. v. FEC, 209 F. Supp. 3d 77, 86 (D.D.C. 2016) (“CREW II”) (“Usually, when 

a court’s review turns on an interpretation of FECA’s terms, the ‘contrary to law’ standard 

involves a straightforward application of the familiar two-step framework outlined in 

[Chevron].”). This same standard applies “to all FEC decisions, whether they be unanimous 

or determined by tie vote.” CREW II, 209 F. Supp. 3d at 85; see also id. at 85 n.5 (rejecting 

argument advanced there and here (see Pls.’ Mem. at 23-24) that United States v. Mead 

Corp., 533 U.S. 218 (2001), alters this standard of review); Sealed Case, 223 F.3d 

at 779-81.6

The propriety of Chevron deference is rooted in Congress’s design of the agency to 

take action with care and without the appearance of partisan politics. The Commission can 

“initiate investigations, . . . and take other steps of comparable importance only upon the 

affirmative vote of four . . . members. The four-vote requirement serves to assure that 

enforcement actions, as to which the Congress has no continuing voice, will be the product of 

a mature and considered judgment.” H.R. Rep. No. 94-917, at 3 (1976). The Court of 

Appeals has repeatedly emphasized this important element of the FEC’s decision-making. 

E.g., Pub. Citizen, Inc. v. Fed. Energy Regulatory Comm’n, 839 F.3d 1165, 1171 (D.C. Cir. 

2016) (“The [FEC’s] voting and membership requirements mean that, unlike other agencies 

— where deadlocks are rather atypical — FEC will regularly deadlock as part of its modus 

 

6

 Plaintiffs also rely on the D.C. Circuit’s opinion in Fogo De Chao (Holdings) Inc. v. 

U.S. Dep’t of Homeland Sec., 769 F.3d 1127 (D.C. Cir. 2014), to no avail. (See Pls.’ Mem. at 

24). Fogo De Chao rejected deference to an agency’s decision that was “the product of 

informal adjudication within the [agency], rather than a formal adjudication or notice-andcomment rulemaking.” 769 F.3d at 1136 (emphasis added). The dismissals at issue here are 

relatively formal adjudications that are accorded deference under Sealed Case. 223 F.3d 

at 780. 

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22 

operandi.”); Combat Veterans for Cong. Political Action Comm. v. FEC, 795 F.3d 151, 153 

(D.C. Cir. 2015) (quoting legislative history). 

Moreover, as the D.C. Circuit observed in Van Hollen v. FEC, “[t]he FEC is [u]nique 

among federal administrative agencies, having as its sole purpose the regulation of core 

constitutionally protected activity — the behavior of individuals and groups only insofar as 

they act, speak and associate for political purposes.” 811 F.3d 486, 499 (D.C. Cir. 2016) 

(second alteration in original; internal quotation marks omitted). There, the Court applied 

Chevron deference in evaluating an FEC regulation implementing FEC v. Wisconsin Right to 

Life, Inc., 551 U.S. 449 (2007). Van Hollen, 811 F.3d at 496.7

 Here, the portions of the 

controlling statement analyzing FECA in light of changes following Supreme Court’s 

decision in Citizens United similarly attempted to effectuate the FEC’s “unique prerogative to 

safeguard the First Amendment.” 811 F.3d at 501.8

 

B. The Controlling Commissioners’ Dismissal of Plaintiffs’ Administrative 

Complaints Was Not Contrary to Law 

For the reasons set forth in their statements, see supra pp. 11-15, the controlling 

Commissioners reasonably exercised their prosecutorial discretion when determining not to 

pursue an enforcement action against respondents. Presented with a statutory interpretation 

issue of first impression in an area where the law was unclear, the controlling Commissioners 

 

7

 See also CREW II, 209 F. Supp. 3d at 87 (distinguishing agency interpretations of 

court opinions from agency decisions about how court cases should be implemented, which 

are “the types of judgments that Congress committed to the sound discretion of the agency”). 

8

 Plaintiffs also attempt to reduce their heavy burden by arguing that the reason-tobelieve standard is a “low threshold.” (Pls.’ Mem. at 7.) The argument is misplaced. The 

statement of policy on which plaintiffs rely merely recites in generic terms that the 

Commission generally will find reason to believe “in cases where the available evidence in 

the matter is at least sufficient to warrant conducting an investigation, and where the 

seriousness of the alleged violation warrants either further investigation or immediate 

conciliation.” Statement of Policy Regarding Commission Action in Matters at the Initial 

Stage in the Enforcement Process, 72 Fed. Reg. at 12,545-46 (emphasis added). The 

regulation thus recognizes that the FEC has the discretion to pursue charges, which is 

precisely what the Commission did here. 

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23 

determined that the pending matters were not appropriate vehicles for enforcement action. 

Their determination reflected a careful and thorough review of the records before the 

Commission, as well as a thoughtful and detailed analysis of the history and development of 

an evolving area of law, and is accorded broad deference. The agency’s dismissals of those 

matters therefore should be affirmed. 

1. The Well-Recognized Interest in Disclosure Does Not Impact 

Whether FECA Requires Particular Information To Be Disclosed 

Plaintiffs do not contest the FEC’s right to dismiss enforcement matters on the basis 

of prosecutorial discretion. (Pls.’ Mem. at 20 (“To be sure, the FEC is entitled to exercise its 

enforcement discretion by dismissing matters that, in its considered judgment, do not justify 

the use of agency resources relative to the magnitude of the violation at issue.”).) Instead, 

plaintiffs urge the Court to disregard binding precedent deferring to an agency’s prosecutorial 

discretion in favor of a results-oriented analysis that plaintiffs believe would vindicate the 

government’s interest in disclosure. (Id. at 26-28.) 

But the importance of the government’s disclosure interest is not the only interest for 

the Commissioners to consider here. The importance of disclosure requirements or the value 

of information required to be disclosed under FECA is undisputed. Rather, the novel 

question before the Commission was whether and under what circumstances FECA required 

disclosure of the owner/member of a closely-held corporation or corporate LLC as the source 

of a contribution coming from the corporate entity. That the FEC’s Commissioners and 

plaintiffs agree that section 30122 may apply to such arrangements in certain circumstances 

does not mean that the controlling Commissioners acted improperly by exercising 

prosecutorial discretion in declining to vote to proceed with the enforcement actions plaintiffs 

requested. If the FEC were required to pursue every enforcement matter that could vindicate 

a disclosure interest, the agency’s prosecutorial discretion would be a nullity. 

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24 

2. The Controlling Commissioners Had a Rational Basis for 

Determining That Respondents May Not Have Had Adequate 

Notice Regarding Section 30122’s Application to Closely-Held 

Corporations and Corporate LLCs 

In determining whether respondents were sufficiently on notice that their actions were 

in violation of section 30122, the controlling Commissioners considered and weighed several 

different factors, supra pp. 11-15. First, the controlling Commissioners found — and 

plaintiffs do not dispute — that the Commission had never before considered whether a 

closely-held corporation or corporate LLC could be deemed a straw donor under section 

30122. Second, until recently in Citizens United, a closely-held corporation or corporate 

LLC could not have been a conduit donor, straw or otherwise, because it was separately 

prohibited from making any contributions. Third, prior cases involving conduit contributions 

involved excessive and/or prohibited contributions, which were not at issue here. Fourth, the 

Commission has refused to attribute funds from closely-held corporations to their owners in a 

number of different contexts. And fifth, Commission rules provide that contributions from 

corporate LLCs are not attributed to its members. 

Plaintiffs attempt to respond to the Commissioners’ rationale by raising concerns 

regarding each of these factors. (Pls.’ Mem. at 25-43.) Taking all of the various 

considerations together, however, even accepting some of the caveats and cautions urged by 

plaintiffs, the controlling Commissioners rationally concluded that respondents may not have 

had adequate notice that a closely-held corporation or corporate LLC could be deemed a 

straw donor.9

Plaintiffs seek to downplay the significance of Citizens United’s impact on the straw 

donor prohibition, arguing that the statutory language was clear and there is “no reason to 

 

9

 Plaintiffs’ delay argument (Pls.’ Mem. at 39-40) is misconceived. The controlling 

Commissioners considered whether respondents had adequate notice at the time they 

undertook the allegedly unlawful actions at issue. 

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assume that Congress ‘did not contemplate that corporations could violate the [straw donor] 

prohibition . . . by acting as straw donors for contributions.’” (Pls.’ Mem. at 29, 30 (quoting 

AR 83).) But the controlling Commissioners’ assessment that it was likely that Congress did 

not engage in such contemplation is supported by Congress’s decision to prohibit 

corporations from making campaign contributions since the Tillman Act in 1907. 59 Cong. 

Ch. 420, 34 Stat. 864 (1907). At the time the straw donor prohibition was last amended, in 

2002, the restrictions on corporate contributions had been in place for nearly 100 years. The 

controlling Commissioners thus certainly had a rational basis to find that Congress did not 

anticipate and intend the straw donor prohibition to encompass situations where a corporate 

entity was the purported straw donor. 

Plaintiffs’ contention that “it is not even true that corporations had never made 

contributions under FECA before Citizens United” (Pls.’ Mem. at 30) is also incorrect. In 

support, plaintiffs point to the discussion in McConnell v. FEC, 540 U.S. 93 (2003), 

overruled in part by Citizens United, 558 U.S. 310, of “the ‘soft money’ era prior to BCRA’s 

enactment” (Pls. Mem. at 30), during which corporations could donate money “to political 

parties for activities intended to influence state or location elections.” McConnell, 540 U.S. 

at 122. That very same discussion, however, explains that “soft money” does not include 

“‘contributions’” under FECA, which are defined as “to include only the gift or advance of 

anything of value ‘made by any person for the purpose of influencing any election for 

Federal office.’” McConnell, 540 U.S. at 122 (quoting 52 U.S.C. § 30101(8)(A)). The 

contributions at issue here were made to groups undisputedly involved in express federal 

candidate advocacy, not issue-focused communications or advocacy arguably attributable in 

part to state and local elections. Section 30122, involving “contribution[s]” as defined in 52 

U.S.C. § 30101(8), is thus far more clearly applicable to corporate contributions to federal 

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super PACs after Citizens United than to corporate donations of soft money to political 

parties for nonfederal activity prior to the BCRA. 

Nor do the controlling Commissioners suggest, as plaintiffs assert, that “Congress 

would have wished to exempt corporations from the prohibition on straw donors.” (Pls.’ 

Mem. at 31.) To the contrary, examining the language and purpose of the straw donor 

statute, the controlling Commissioners concluded that closely-held corporations and 

corporate LLCs were not exempt from the prohibition on straw donors. (AR 82.) As 

discussed above, the controlling Commissioners merely found that Congress’s intent was 

simply unclear because Congress was not faced with a situation in which closely-held 

corporations and corporate LLCs were making federally-regulated contributions when it 

enacted the straw donor prohibition. 

Next, plaintiffs assert that the “fiction at the heart” of the controlling Commissioners’ 

rationale is that “respondents, surveying the legal landscape after Citizens United and 

[SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010) (en banc)], could have reasonably 

concluded ‘that contributions made by their closely held corporations and corporate LLCs 

were lawful.’” (Pls.’ Mem. at 32 (quoting AR 85).) In making this argument the centerpiece 

of their case, however, plaintiffs appear to have overlooked that this is precisely what 

happened in another matter. 

In Matter Under Review (“MUR”) 6485 (W Spann LLC), Edward Conard hired 

Ropes & Gray LLP (“Ropes”), a nationally recognized law firm, to advise him about 

“whether he could ‘create an entity for the sole purpose of making a [contribution] . . . 

[which] would not require full public disclosure of his name in connection with the 

contribution.’” (AR 77 & n.8 (quoting Response from Edward Conard and W Spann LLC at 

3, MUR 6485, http://eqs.fec.gov/eqsdocsMUR/16044390479.pdf (“Conard Resp.”)).) 

According to his response to the Commission, supported by a sworn declaration of one of his 

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27 

lawyers, “[f]or several weeks, Ropes conducted legal research concerning the Federal 

Election Campaign Act, this Commission’s regulations and advisory opinions, and secondary 

sources, to determine whether current campaign finance laws would require disclosure of Mr. 

Conard’s identity if he formed and funded a new entity for the purpose of making a 

[contribution].” (Conard Resp. at 3; see also Decl. of Kimberly E. Cohen, Esq. (“Cohen 

Decl.”) ¶ 6 (attached as Exhibit B to Conard Resp.).) Although it did not find the law 

“‘entirely clear,’” Ropes advised Conard that he could lawfully make a contribution through 

a corporate LLC without disclosing his identity. (Conard Resp. at 1-2; Cohen Decl. ¶¶ 8, 10.) 

This advice was based upon Ropes’s “understanding that the FEC’s regulations governing 

limited liability companies do not require attribution of a contribution the LLC’s member or 

members if the LLC made the election to be treated as a corporation for federal tax 

purposes.” (Cohen Decl. ¶ 10; see also First General Counsel’s Report at 4-5, MUR 6485 

(W Spann LLC), http://eqs.fec.gov/eqsdocsMUR/16044390492.pdf (paraphrasing same).) 

Whatever plaintiffs make of the quality of this analysis and advice, it belies their 

claim that the controlling Commissioners’ notice concerns were “fiction.” (Pls.’ Mem. at 

32.) Rather, the Commissioners were aware of a factual scenario demonstrating uncertainty 

about the state of the law and the Commissioners considered that scenario in concluding that 

dismissal was justified at least in part due to such notice concerns. 

Plaintiffs also contend incorrectly that, because the Commission has previously 

applied the straw donor prohibition to find political committees to be straw donors, the 

application of that prohibition to find closely-held corporations and corporate LLCs to be 

straw donors was not “novel.” (Pls.’ Mem. at 32-33.) But political committees have not only 

been legally permitted to make contributions for decades, but they can also be formed for that 

exact purpose. See 52 U.S.C. § 30116(a)(1)-(2) (limits on contributions by persons and 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 35 of 48
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multicandidate political committees).10 Accordingly, Congress would naturally have 

contemplated that political committees would fall within the scope of the straw donor 

prohibition. As discussed above, it was precisely because it was previously well-established 

that corporate entities could not make contributions, and Congress thus could not have 

contemplated the straw donor prohibition applying, that the controlling Commissioners found 

that application of the straw donor prohibition post-Citizens United to be novel. 

As plaintiffs attempt to downplay the impact of Citizens United on the straw donor 

prohibition, they seek to minimize the significance of prior Commission precedent analyzing 

whether the owner or the corporate entity is the “source” of funds from a closely-held 

corporation under section 30118, dismissively stating that “[c]ontributions are always

assumed to come from their immediate sources.” (Pls.’ Mem. at 34.) In those matters, 

however, the Commission considered arguably similar circumstances yet reached results 

seemingly inconsistent with the announced approach of determining that some contributions 

from closely-held corporations or corporate LLCs may have been made in the name of 

another. 

As the controlling Commissioners explained, in MUR 4313 (Coalition for Good 

Government), for example, an individual wanted to run certain political advertisements on 

television. (AR 84.) Rather than pay for the advertisements directly, however, he established 

a closely-held corporation using solely his own personal funds for the purpose of making the 

 

10 Further, the controlling Commissioners did not state that the Commission had only 

considered individuals as potential straw donors, merely that it “almost exclusively” 

considered such situations. (AR 83 (emphasis added).) Plaintiffs’ identification of two 

matters (Pls.’ Mem. at 33) in over 30 years of administrative enforcement history certainly 

does not demonstrate that the controlling group’s analysis of prior matters was unreasonable. 

To the contrary, the controlling Commissioners found that, unlike the present matters as 

alleged by plaintiffs, “nearly every alleged straw-donor scheme [previously] addressed by the 

Commission involved excessive and/or prohibited contributions.” (AR 83.) And both the 

matters plaintiffs’ rely upon address excessive contributions. Rather than undercutting the 

controlling Commissioners’ analysis, these matters thus fit comfortably within it. 

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advertisements. (First General Counsel’s Report at 20, 32-34, MUR 4313 (Coalition for 

Good Government), http://eqs.fec.gov/eqsdocsMUR/0000018F.pdf.) The individual had 

been advised that it was advantageous to make the advertisements through a closely-held 

corporation because, while the corporation would serve effectively as his “alter ego in that 

[he] funded and controlled it,” the corporate form would offer “limited liability from suit by 

vendors and others.” (Id. at 20.) Upon review, the Commission concluded that the source of 

the advertisement funding was nonetheless the corporation, not the individual. (Id. at 34.) 

The Commission reasoned: “It has been the policy of the Commission that once a decision is 

made and carried out to conduct business using the corporate form, any funds taken from the 

corporation’s accounts are to be deemed corporate in nature, whether or not they originated 

as, or could be converted into, the personal funds of a shareholder . . . .” (Id.) Thus, despite 

where and why the funds originated, the fact that the advertisements were ultimately paid for 

by the closely-held corporation was dispositive as to the source of the funds. (Id.) The 

controlling Commissioners found that examples such as this one supported the notion “that 

once funds are deposited in a corporate account, they become the corporation’s funds and are 

no longer those of the corporation’s owner.” (AR 85.) 

Certainly in the context of the straw donor prohibition’s application to a contribution 

by a closely-held corporation, however, the controlling Commissioners have clarified that 

they intend to consider where and why the funds for the contribution originated going 

forward. (AR 86-87.) But the Commission’s different treatment in other contexts presenting 

arguably similar factual scenarios supports the controlling Commissioners’ view that 

respondents — without the benefit of the Commission’s current guidance — could have 

relied upon such section 30118 precedents to reach a different conclusion. Moving ahead 

with an enforcement action in an identified area of legal uncertainty risks rejection in court. 

See, e.g., Trinity Broad. of Fla., Inc. v. F.C.C., 211 F.3d 618, 628-32 (D.C. Cir. 2000) 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 37 of 48
30 

(vacating agency’s decision denying application to renew license because agency’s 

interpretation of applicable regulation, though sufficiently reasonable to survive deferential 

review, had not been sufficiently noticed to the regulated party); Gen. Elec. Co. v. U.S. 

E.P.A., 53 F.3d 1324, 1328-34 (D.C. Cir. 1995) (similarly upholding agency’s interpretation 

of regulations as permissible while vacating agency’s finding of liability, concluding that 

“[w]here, as here, the regulations and other policy statements are unclear, where the 

petitioner’s interpretation is reasonable, and where the agency itself struggles to provide a 

definitive reading of the regulatory requirements, a regulated party is not ‘on notice’ of the 

agency’s ultimate interpretation of the regulations, and may not be punished”). 

Similarly, the controlling Commissioners did not suggest that respondents may have 

interpreted Commission regulations to mean that section 30122 did not prohibit corporate 

straw donors. (Pls.’ Mem. at 36.) Rather, the Commissioners’ point was that, given 11 

C.F.R § 110.1(g)’s command that even contributions from a single-member corporate LLC 

should be attributed to the entity, not the member, it was less likely — particularly in light of 

all the other factors the Commission discussed — that respondents were on notice that 

section 30122 nonetheless required the contribution to be attributed to the member as its “true 

source.” (See AR 86.) 

3. The Controlling Commissioners Reasonably Determined It 

Would Be Unfair To Prosecute Respondents 

Given that the issue was one of first impression and the lack of clarity in the 

governing law, the controlling Commissioners reasonably determined that “principles of due 

process, fair notice, and First Amendment clarity counsel against applying a standard to 

persons and entities that were not on notice of the governing norm” and dismissed plaintiffs’ 

administrative complaints. (AR 76.) 

Plaintiffs acknowledge the “‘due process concern[] . . . that regulated parties should 

know what is required of them so they may act accordingly’ before being subjected to [an] 

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31 

enforcement action.” (Pls.’ Mem. at 36-37 n.20 (quoting Fox Television, 567 U.S. at 253).) 

Plaintiffs nevertheless argue that, here, “[n]o due process concern was implicated because the 

regulated parties knew ‘what [was] required of them.’” (Id. at 37 n.20 (quoting Fox 

Television, 567 U.S. at 253).) But this is merely a re-assertion of plaintiffs’ argument that 

respondents had adequate notice that their conduct was potentially unlawful, and should be 

rejected for the same reasons discussed above. Because due process concerns are generally 

undisputed here, and because the controlling Commissioners’ determination that respondents 

had insufficient notice is adequately explained and reasonable, the Court should sustain the 

controlling dismissal decision. 

II. PLAINTIFFS’ CHALLENGE TO THE CONTROLLING COMMISSIONERS’ 

PURPOSE-BASED PROPOSED APPROACH IS NOT RIPE AND IN ANY 

EVENT FAILS 

Plaintiffs also level a conclusory challenge to the controlling Commissioners’ 

preferred purpose-based approach for applying the straw donor prohibition in future cases as 

arbitrary, capricious, and contrary to law. (Pls.’ Mem. at 37.) But, as plaintiffs repeatedly 

emphasize, the controlling Commissioners “declined to apply that standard to the 

respondents” in this case. (Id. at 22; see also id. at 37, 38.) Any challenge to that standard 

thus is not ripe and should be rejected. In any event, the controlling Commissioners’ 

approach is not contrary to law and passes Chevron review. 

A. There Is No Ripe Dispute Regarding The Controlling Commissioners’ 

Proposed Purpose-Based Approach 

Plaintiffs admit that the controlling Commissioners did not apply their announced 

purpose-based approach to the allegations about the respondents in this case. Nor does it 

appear that it will be applied to plaintiffs in the immediate future and cause them harm. 

Plaintiffs’ challenge to the controlling Commissioners’ purpose-based approach should 

therefore be dismissed as unripe. 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 39 of 48
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The purpose of the ripeness doctrine is “to prevent the courts, through avoidance of 

premature adjudication, from entangling themselves in abstract disagreements over 

administrative policies, and also to protect the agencies from judicial interference until an 

administrative decision has been formalized and its effects felt in a concrete way by the 

challenging parties.” Abbott Labs. v. Gardner, 387 U.S. 136, 148-49 (1967). “The question 

is not whether judicial review will be available but rather whether judicial review is available 

now.” Nat’l Mining Ass’n v. McCarthy, 758 F.3d 243, 253 (D.C. Cir. 2014). When 

determining whether an agency’s action is ripe for review, courts consider “(1) the fitness of 

the issues for judicial decision and (2) the hardship to the parties of withholding court 

consideration.” Nat’l Park Hosp. Ass’n v. Dep’t of Interior, 538 U.S. 803, 808 (2003). 

Particularly because intent can be a heavily fact-intensive inquiry, the Commission 

and the Court would greatly benefit from analyzing the application of any purpose-based 

approach in a specific factual context. As plaintiffs recognize, the “parameters of the 

controlling group’s standard have not been tested,” and an announcement of a standard does 

not demonstrate how it would be applied in an individual case. (Pls.’ Mem. at 38; id. (stating 

that “it is unclear whether [the controlling Commissioners’] standard would capture use of Eli 

Publishing as a straw donor”).) Further, plaintiffs argue that the purpose requirement “may 

be ‘virtually impossible to prove’ because donors can simply ‘claim[] publicly that they 

funneled contributions through a single member or closely held LLC for any reason other 

than evading disclosure.” (Id. (quoting AR 96) (emphasis added).) Future matters will 

permit the FEC to assess whether donors do, in fact, make such claims and to determine 

exactly how difficult it is to satisfy a purpose requirement in the sharpened setting of 

application to concrete facts. 

In contrast to the cost to the Court and the Commission of allowing review to proceed 

now, withholding review of the controlling Commissioners’ purpose-based standard will not 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 40 of 48
33 

impose any legally cognizable hardship on plaintiffs. Unlike cases where the Supreme Court 

has found a pre-enforcement challenge ripe, the proposed purpose-based standard does not 

“force [plaintiffs] to modify [their] behavior in order to avoid future adverse consequences, 

as, for example, agency regulations can sometimes force immediate compliance through fear 

of future sanctions.” Ohio Forestry Ass’n, Inc. v. Sierra Club, 523 U.S. 726, 734 (1998) 

(dismissing case as unripe where there is a lack of significant hardship to the plaintiff from 

postponement). Instead, “[t]he only conceivable hardship [plaintiffs] will endure as a result 

of postponement is the burden of participating in further administrative and judicial 

proceedings” — and that burden for an administrative complainant does “not constitute 

sufficient hardship for the purposes of ripeness.” Fla. Power & Light Co. v. EPA, 145 F.3d 

1414, 1421 (D.C. Cir. 1998); see also AT&T Corp. v. F.C.C., 349 F.3d 692, 700 (D.C. Cir. 

2003) (“If [t]he only hardship [a claimant] will endure as a result of delaying consideration of 

[the disputed] issue is the burden of having to [engage in] another suit, this will not suffice to 

overcome an agency’s challenge to ripeness.” (alterations in original; internal quotation 

marks omitted)). 

Moreover, should plaintiffs instigate future proceedings raising this issue, the entire 

Commission will have the opportunity to consider the appropriate standard in the context of 

new facts. Though the controlling statement provides clear guidance on how three 

Commissioners intend to approach future matters, they may further develop the standard, and 

other Commissioners can continue to determine whether to agree to the proposed, and 

perhaps further developed, standard or continue to engage in a different analysis. See 

Common Cause, 842 F.2d at 449 n.32 (“[A] statement of reasons [by declining-to-go-ahead 

Commissioners]” is not “binding legal precedent or authority for future cases.”). Judicial 

intervention now denies the FEC “an opportunity to correct its own mistakes [(if any)] and to 

apply its expertise” to adjust the standard as future facts and considerations warrant. F.T.C. 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 41 of 48
34 

v. Standard Oil Co. of Cal., 449 U.S. 232, 242 (1980); see also Pub. Citizen Health Research 

Grp. v. Comm’r, Food & Drug Admin., 740 F.2d 21, 31 (D.C. Cir. 1984) (“Review of 

tentative agency positions on substantive questions severely compromises the interests that 

ripeness and finality notions protect.”). 

In sum, “[i]n contrast to the [announced standard’s] lack of legal or practical effect 

upon [plaintiffs], the effect of the judicial review sought by [plaintiffs] is likely to be 

interference with the proper functioning of the agency and a burden for the courts.” Standard 

Oil, 449 U.S. at 242. Plaintiffs challenge to that standard thus is not yet ripe and should be 

dismissed. See Friends of Keeseville, Inc. v. FERC, 859 F.2d 230, 235-36 (D.C. Cir. 1988); 

Cephalon, Inc. v. Sebelius, 796 F. Supp. 2d 212, 216-21(D.D.C. 2011). 

B. The Controlling Commissioners’ Interpretation of Section 30122 Is Not 

Contrary to Law or Arbitrary or Capricious 

To the extent that the controlling Commissioners’ standard may be applied in future 

cases, their purpose-based standard constitutes a permissible construction of section 30122 

and readily passes Chevron review. See supra pp. 20-21 & n.7 (explaining that declining-togo-ahead FEC Commissioners receive Chevron deference when their reasons for voting not 

to find reason to believe rely upon their interpretation of FECA’s provisions). Congress has 

not spoken to the precise issue of the level of intent required for a violation of the prohibition 

on making a contribution in the name of another. And the controlling Commissioners 

properly balanced the interest in disclosure with the potential First Amendment burden when 

deciding to incorporate a purpose-based requirement into section 30122. 

The statute is not clear as to what (if any) scienter or purpose is required to establish 

that someone has made a contribution in the name of another. As the Supreme Court has 

repeatedly recognized in analogous determinations in criminal contexts, a statute’s “silen[ce] 

concerning the mens rea for a violation” “does not necessarily suggest that Congress intended 

to dispense with a conventional mens rea element.” Staples v. United States, 511 U.S. 600, 

Case 1:16-cv-00752-JDB Document 34 Filed 08/21/17 Page 42 of 48
35 

605 (1994). When section 30122 was originally enacted as part of the Federal Election 

Campaign Act of 1971, it was solely enforced through criminal law — which presumptively 

contains a mens rea requirement regardless of a criminal statute’s silence on the matter. 

Federal Election Campaign Act of 1971, Pub. L. No. 92-225, §§ 310, 311, 86 Stat. 19 (1972); 

United States v. U.S. Gypsum Co., 438 U.S. 422, 438 (1978) (“Certainly far more than the 

simple omission of the appropriate phrase from the statutory definition is necessary to justify 

dispensing with an intent requirement.”); Morissette v. United States, 342 U.S. 246, 263 

(1952) (holding that “mere omission from [the statute] of any mention of intent will not be 

construed as eliminating that element from the crimes denounced”); FEC v. Weinsten, 462 F. 

Supp. 243, 246, 249-50 (S.D.N.Y. 1978) (rejecting argument that section 30122 is 

unconstitutionally vague and assuming for purposes of dismissal motion that defendants in 

scheme to mask corporate contributions through use of employees and their spouses was 

done with “direct[ion]” and for the purpose of evading the “simple words” of FECA’s 

prohibition on making a contribution in the name of another). And the relevant language of 

the statute has not changed since. 

While later providing for both criminal and civil enforcement of the statute, Congress 

intended to increase the penalties where a more serious state of mind could be proven, but the 

legislative history does not indicate that Congress intended to have no purpose or scienter 

requirement for other civil violations. Rather, Congress merely “distinguishe[d] between 

violations of the law as to which there is not a specific wrongful intent” and “violations as to 

which the Commission has clear and convincing proof that the acts were committed with a 

knowledge of all the relevant facts and a recognition that the action is prohibited by law.” 

H.R. Rep. No. 94-917, at 4; see 52 U.S.C. § 30109(a)(5), (a)(6), (d)(D) (providing criminal 

liability and higher civil fines for violations of section 30122 that are “knowing and willful”). 

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36 

While plaintiffs might prefer a different interpretation of section 30122, their failure 

to identify any law that is contrary to the controlling Commissioners’ interpretation is largely 

dispositive. DCCC, 831 F.2d at 1135 n.5 (explaining that “[i]n the absence of prior 

Commission precedent . . . judicial deference to the agency’s initial decision or indecision 

would be at its zenith”). Furthermore, the controlling Commissioners’ purpose-based 

standard need only be rational to be upheld, a bar that is certainly met here. Orloski, 795 

F.2d at 167. Indeed, even the Commissioners voting to find reason to believe noted that 

“whether or not the source transmitted the money with the purpose that it be used to make or 

reimburse a contribution” is a “critical consideration in determining the ‘true source’ of a 

contribution.” (AR 93 n.15 (emphasis added).) 

By way of illustration, the controlling Commissioners reasoned: 

[I]f Corporation A provides Individual B a $3,000 bonus for the 

purpose of rewarding good work, and Individual B uses that 

income to contribute to Candidate C, there is no violation of 

section 30122. But if Corporation A provides Individual B a 

$3,000 bonus for the purpose of reimbursing Individual B’s 

contribution to Candidate C, a violation of section 30122 can 

be found, and indeed has. In both scenarios, the purpose of the 

transfer has always been the dispositive fact. 

(AR 100.) Such a purpose-based distinction is rational. At least one court has indicated that, 

at least in the context of direct restraints on speech, a statute regulating First Amendment 

protected activity may not imposes civil penalties on a strict liability basis. Video Software 

Dealers Ass’n v. Webster, 968 F.2d 684, 690 (8th Cir. 1992) (“[W]e believe any statute that 

chills the exercise of First Amendment rights must contain a knowledge element.”). 

Moreover, as the controlling Commissioners pointed out (AR 100 n.12), another court 

considering a similar hypothetical reached a similar conclusion. In United States v. 

Danielczyk, the court considered a hypothetical involving “a proud parent of a politically 

active college student [who] reimburse[s] that student for her purchase of a ticket to a 

political fundraiser.” 788 F. Supp. 2d 472, 483 (E.D. Va. 2011), rev’d in part on other 

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grounds, 683 F.3d 611 (4th Cir. 2012). The court found that the “proud-parent hypothetical 

would only implicate § [30122] where the parent’s purpose was to circumvent his 

contribution limits through his daughter.” Id. at 484 (emphasis added); see also United States 

v. Whittemore, 776 F.3d 1074, 1080 (9th Cir. 2015) (upholding a jury instruction stating 

section 30122 “prohibits conduit contributions, which occur when a person provides anything 

of value . . . to another person for the purpose of causing that other person to make a 

contribution in that other person’s name” (emphasis added)); Danielczyk, 788 F. Supp. 2d at 

483-84 (explaining that a statement in McConnell, 540 U.S. at 231-32, “plainly contemplated 

that § [30122] applied to [the] hypothetical, if the parent intended to circumvent his 

contribution limits via his daughter” (emphasis in original)). 

The controlling Commissioners’ effort to interpret section 30122 in the manner that 

reduced impingements upon First Amendment rights (AR 87 n.69 (collecting cases)) is 

supported by courts’ instructions that the FEC act with sensitivity to such rights. E.g., Van 

Hollen, 811 F.3d at 501 (“By affixing a purpose requirement to [the Bipartisan Campaign 

Reform Act]’s disclosure provisions, the FEC exercised its unique prerogative to safeguard 

the First Amendment when implementing its congressional directives.”); cf. Common Cause, 

842 F.2d at 445 (“[T]he Supreme Court has favored narrow interpretations of FECA 

requirements that implicate first amendment political speech.” (collecting cases)); 

Cablevision Sys. Corp. v. F.C.C., 649 F.3d 695, 713 (D.C. Cir. 2011) (“We . . . decline to 

strike down the Commission’s order as fatally underinclusive simply because an alternative 

regulation, which would restrict more speech or the speech of more people, could be more 

effective.”) (internal quotation marks omitted). 

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Thus, even if the controlling Commissioners’ purpose-based standard were ripe for 

review, it is not contrary to law or arbitrary or capricious.11 

III. PLAINTIFFS’ CHALLENGE TO THE COMMISSION’S HANDLING OF ITS 

ENFORCEMENT DOCKET IS WELL BEYOND THE SCOPE OF JUDICIAL 

REVIEW HERE 

Unable to establish that the controlling Commissioners abused their discretion in this 

case, plaintiffs attempt to broaden the case to challenge those Commissioners’ approach in 

enforcement cases generally, asserting that they have abdicated enforcement of FECA. (Pls.’ 

Mem. at 40-42.) This assertion is baseless and improper for several reasons. 

First, FECA’s text limits judicial review of dismissals of an administrative complaint 

to “the complaint” at issue — it does not permit wide-ranging judicial oversight over the 

Commission’s enforcement processes generally. 52 U.S.C. § 30109(a)(8)(C). Courts have 

rejected similar attempts by plaintiffs to mount “an across-the-board challenge” to FEC 

enforcement matters, holding that the “exclusive remedy” for aggrieved parties is to 

“challenge those particular decisions under the judicial review provision of FECA.” Citizens 

for Responsibility & Ethics in Wash. v. FEC, 164 F. Supp. 3d 113, 120 (D.D.C. 2015). 

Second, plaintiffs’ broad-based attack largely relies on extra-record material that was 

not considered by the Commission in making the underlying dismissal decisions on review 

here. Such material, and plaintiffs’ arguments premised on such material, should thus be 

disregarded. Indeed, it is “black-letter administrative law that . . . a reviewing court ‘should 

have before it neither more nor less information than did the agency when it made its 

 

11 Similarly unpersuasive are plaintiffs’ passing arguments that the controlling 

Commissioners “do not even attempt to argue that the federal political committee registration 

and reporting requirements were unclear.” (Pls.’ Mem. at 29.) But, as the focus of plaintiffs’ 

own briefing makes clear, these are straw donor cases, not political-committee cases. As the 

FEC’s Office of General Counsel explained, “an entity can be a conduit or a political 

committee, but not both.” (AR 44.) All of the Commissioners accordingly reviewed the 

administrative complaints as alleging straw donor violations of section 30122. (AR 80 n.36; 

see generally AR 90-94.) 

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decision.’” Hill Dermaceuticals, Inc. v. FDA, 709 F.3d 44, 47 (D.C. Cir. 2013) (per curiam) 

(quoting Walter O. Boswell Mem’l Hosp. v. Heckler, 749 F.2d 788, 792 (D.C. Cir. 1984)). 

The record rule ensures that a court’s review of any agency’s action is conducted fairly, 

because to “review more than the information before the [agency] at the time [it] made [its] 

decision risks requiring [our] administrators to be prescient or allowing them to take 

advantage of post hoc rationalizations.” Walter O. Boswell Mem’l Hosp., 749 F.2d at 792. It 

also enables agencies to consider information that challengers to agency action deem 

relevant. See id.12

Third, even if FECA permitted such a broad-based attack on the Commission’s 

enforcement authority, plaintiffs’ abdication argument is meritless. Even if the Court could 

consider plaintiffs’ extra-record evidence, which would be contested, an increase in the 

number of deadlocked decisions, without more, does not indicate that certain Commissioners 

are acting improperly. “An administrative official is presumed to be objective [and] mere 

proof that she has taken a public position, or has expressed strong views, or holds an 

underlying philosophy with respect to an issue in dispute cannot overcome that presumption.” 

United Steelworkers, ALF-CIO-CLC v. Marshall, 647 F.2d 1189, 1208 (D.C. Cir. 1980). 

Plaintiffs fail to demonstrate any inflexibility of Commissioners here and, even if they could, 

 

12 Nor are most of plaintiffs’ extra-record citations subject to judicial notice. (See Pls.’ 

Mem. at 8, 40.) Plaintiffs submit news articles in support of widely debated and contested 

propositions, such as the extent to which section 501(c)(4) organizations are devoted to 

electoral advocacy. These are matters subject to reasonable dispute. Cf. Fed. R. Evid. 

201(b)(2) (limiting judicial notice to facts that are “not subject to reasonable dispute”).

Plaintiffs also cite to documents from past FEC matters that either are no longer or 

never were before the Court. Like authority from any agency, plaintiffs are of course free to 

cite those, as the Commission has. They also contend that the Commissioners’ “rationale 

must be evaluated in light of all the information they reviewed in formulating their position.” 

(Pls.’ Mem. at 9 n.6.) True enough, but that does not mean plaintiffs need not clearly 

distinguish the challenges that are still pending from those the Court has dismissed. To the 

extent they are relevant, the existence of additional matters in which the Commissioners 

reached the same conclusion as in the still-pending matters demonstrates consistency, which 

indicates that the pending actions were handled reasonably and not arbitrarily. 

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the D.C. Circuit has rejected the argument “we should deny an agency Chevron deference 

because of our judicial assessment that it has been ‘hostile’ to certain ideas.” N. Broward 

Hosp. Dist. v. Shalala, 172 F.3d 90, 94 (D.C. Cir. 1999). The Court reasoned: 

If an agency’s “hostility” leads it to adopt an unreasonable 

interpretation of a statute, the interpretation will, if challenged, 

be rejected by the courts . . . . It is a far different thing to 

suggest that a court withhold deference to an agency’s 

interpretation of a statute it administers on the basis of some 

sort of judicial “vote of no confidence” regarding the agency’s 

actions on related matters. 

Id. Rather, the D.C. Circuit found that, while Congress could address an agency’s 

“‘unremitting[] hostil[ity]’” to a particular statutory provision, courts could not. Id. “Absent 

such congressional intervention, administration of the [statute] is entrusted to [the agency], 

and our review is that prescribed by Chevron.” Id. 

CONCLUSION 

For the foregoing reasons, the Court should grant the Commission’s motion for 

summary judgment and deny plaintiffs’ motion for summary judgment. 

 Respectfully submitted, 

Lisa J. Stevenson (D.C. Bar No. 457628) 

Acting General Counsel 

lstevenson@fec.gov 

/s/ Haven G. Ward 

Haven G. Ward (D.C. Bar. No. 976090) 

Attorney 

hward@fec.gov 

Kevin Deeley 

Associate General Counsel 

kdeeley@fec.gov 

Charles Kitcher (D.C. Bar No. 986226) 

Acting Assistant General Counsel 

ckitcher@fec.gov 

COUNSEL FOR DEFENDANT 

FEDERAL ELECTION COMMISSION 

999 E Street, N.W. 

Washington, D.C. 20463 

(202) 694-1650 

August 21, 2017 

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