defined contributions as funds received in response to a solicitation that "indicates that" any
portion of the funds will be used to "support or oppose" federal candidates. 11 C.F.R.
§ 100.57 (2008).

The final rules, with explanation and justification and several additional amendments,
were approved on October 28, 2004, and published on November 23, 2004. See FEC
Agenda Doc. No. 04-102, at 4-5 (Nov. 18, 2004) (minutes of Oct. 28, 2004 meeting) (JA at
279-80); 69 Fed. Reg. 68,056 (JA at 282).

E. Summary of New Regulations

The new regulations, found at 11 C.F.R. §§ 100.57 and 106.6, have three new
features that are challenged here. First, they impose a minimum 50 percent allocation ratio,
regardless of a committee's actual federal and nonfederal activities. Administrative expenses
and generic communications that do not refer to any candidates must be paid for with at least
50 percent federal funds. See id. § 106.6(b)(1). A political committee that spends 99 percent
of its funds in state and local races must use 50 percent federal funds for its administrative
and generic expenses.

The second feature is the mere "reference" rule. Communications that refer to clearly
identified federal candidates, and do not refer to clearly identified nonfederal candidates,
must be paid for using 100 percent federal funds. See id. § 106.6(b), (f)(1). Using entirely
federal funds is required even if the communication cannot be seen or heard by the
referenced candidate's own voters. It is required even if the communication is made years
before the referenced candidate is up for election. It is required no matter how small the
amount of space or time devoted to the federal candidate. FEC Adv. Op. 2005-13, at 4-5

(Oct. 20, 2005) (JA at 302-03). And it is true even if the clear, unambiguous purpose of the

13376-0007/LEGAL15181134.2 -11-


federal candidate. But, under the Commission's regulations, EMILY's List would have to
spend hard money for the same communication — even if the endorsement came from a
candidate in another state. This is not close tailoring.

Likewise, section 106.6(c)'s arbitrary 50 percent minimum allocation scheme for
administrative expenses, generic voter drives, and generic party communications regulates
activity far removed from federal elections for those committees whose federal activities
comprise a small portion of their overall efforts. Unlike the provisions upheld in McConnell,
these provisions are not tailored to reach particular types of activity that have been prone to
abuse. 540 U.S. at 168. Rather, they capture a// of a nonconnected committee's
administrative expenses. And while the Commission's regulations require state parties,
which have a documented history of trying to exploiting soft money loopholes, to pay for
administrative expenses with as little as 15 percent federal funds, see 11 C.F.R.

§ 106.7(d)(2)(iv), the allocation regulations require nonconnected committees like EMILY's
List, with no comparable history, to pay their administrative expenses with an arbitrary

minimum of 50 percent federal funds.'°

° In finding that the allocation regulations were not overbroad, the district court accepted the
Commission's argument that a committee who spent a majority of its funds on nonfederal races would
not be considered a political committee under the Commission's "major purpose” test, which purports
to limit the definition of “political committee" to those organizations whose major purpose is federal
campaign activity. EMILY's List, 569 F. Supp. 2d at 48 (JA at 176). This is not a safety net upon
which any political committee can rely. The Commission has never defined what the major purpose
test entails, or how an organization is to determine whether its major purpose is federal campaign
activity, preferring to rely on a “case-by-case analysis of an organization's conduct." Political
Committee Status, 72 Fed. Reg. 5,595, 5,601 (Feb. 7, 2007).

Further, the use of this test is not consistent with the Commission's enforcement practices.
The Commission has found that a state political committee is required to register and report as a
federal political committee if it makes more than $1,000 in expenditures in a calendar year, with no
analysis of whether the major purpose of the organization is federal activity. For example, the
Commission recently made findings that Freedom, Inc., a nonfederal political committee registered
with the Missouri Ethics Commission, had become a federal political committee based on its federal

13376-0007/LEGALIS181134.2 -32-


government's burden to demonstrate that its regulation achieves an important state interest,
Buckley, 424 U.S. at 25, and a court may not uphold a restriction on constitutionally
protected speech based on mere conjecture. Nixon, 528 U.S. at 392. Nevertheless, that is
what the district court did here. This Court should reverse.

b. The Allocation Regulations Are Not Tailored to Achieve a
Compelling Government Interest

Under the allocation regulations, a mere reference to a clearly identified federal
candidate in a public communication requires EMILY's List to pay for the communication
with 100 percent federal funds, if there is no concomitant reference to a clearly identified
nonfederal candidate. 11 C.F.R. § 106.6(f). And a communication that refers to a political
party without naming a clearly identified candidate must be paid for with at least 50 percent
federal money. /d. § 106.6(b)(1)(iv), (c). These provision are untethered to any

congressional interest in preventing the corruption of federal candidates. For example,

¢ Acommunication that promotes a gubernatorial candidate, by citing his
support of an incumbent President's social or fiscal policies, must be paid in
part with federal funds if the President is running for reelection.

e¢ Acommunication promoting the candidacy of a gubernatorial candidate, in
part on the basis of her support for the "McCain-Feingold" legislation, must
be paid in part with federal funds, as a federal election activity, if either
Senator McCain or Senator Feingold is running for reelection, even if the
communication is made thousands of miles away from Arizona or Wisconsin.

¢ Acommunication in support of a state legislative candidate must be paid in
part with federal funds if the communication mentions endorsement of the

candidate by a federal officeholder who is running for reelection, even if the

13376-0007/1.EGAL15181134.2 -28-


regulating party, corporate and union activity. Congress chose a complicated and varied
scheme for the regulation of state and local parties: it restricted some activities to federal
funding, allowed fully nonfederal or soft money financing for others, and adopted, for still
other activities, a program of allocation. See 2 U.S.C. § 441i(b); McConnell, 540 U.S. at
161-64. In the case of corporate and union spending, it limited regulation to only certain
media, targeted to specific voters, in specific time periods. 2 U.S.C. § 434(f\(3); see WRTL,
127 S. Ct. at 2663. But in none of these cases did Congress regulate based on simple
"references" in public communications to candidates or parties.

Of particular significance is Congress‘ choice of means to address the state and local
parties' financing of so-called "issue advertisements." Those ads — a foundational concern of
the 2002 amendments — name particular candidates, praising or criticizing them on issues,
but do not expressly advocate their election or defeat. McConnell, 540 U.S. at 126, 132.
Even though Congress placed great weight on evidence that these types of ads were typically
a "sham," constructed in fact to influence the election or defeat of named candidates, it
declined to base any financing restrictions on these ads' "reference" to candidates or parties.
Rather, Congress required that these ads be funded under federal restrictions if and only if
they "supported, promoted, attacked or opposed" a federal candidate. See 2 U.S.C.

§ 431(20)(A)(iii); McConnell, 540 U.S. at 169-70. In other words, Congress tied the
restriction to some indicia of federal election-influencing purpose.

The FEC can write and revise allocation rules. But it must write them to capture only
“expenditures.” And it cannot write them to capture activities that Congress consciously
chose not to regulate, even when conducted by the entities that provided the impetus for

legislation. Regulating mere references to federal candidates in the communication of

13376-0007/LEGALIS181134.2 -37-


to federal elections with federal funds, and those particular expenses attributed to state and
local elections with state funds. Fixed overhead costs were paid with both federal and state
funds, on a ratio approximating the level of federal versus nonfederal activities undertaken by
the committee. See 11 C.F.R. § 106.6 (2004).

For example, until the adoption of the new rules effective January 1, 2005, the
regulation governing the allocation of administrative and generic voter drive expenses was
based on the "funds expended" method. /d. § 106.6(c). Purely federal activity was paid for
out of the federal account; purely nonfederal activity was paid for out of the nonfederal
account. Payment for administrative expenses and for generic voter drives — that is, voter
drives that did not refer to particular candidates — was made using funds from both accounts.
In this last case, political committees paid the costs on the basis of the ratio of its direct
support of federal candidates to its direct support of all candidates, federal and nonfederal.
The rule called for precision in calculating and adjusting this ratio during an election cycle,
requiring political committees to revise the ratio as required by its actual record of support
given to both federal and nonfederal candidates.

The result of this allocation scheme was that the payment of generic expenses such as
communications urging party-wide support and administrative expenses — activities designed
to further the overall goal of an organization — reflected the share of that organization's
efforts devoted to federal elections. Organizations that focused overwhelmingly on federal
elections paid for these activities almost entirely with federal funds. And organizations such
as EMILY's List, which spend at least as much time and money on nonfederal elections as on
federal elections, could pay for these activities with a mix of funds that reflected the

organization's actual dual purpose.

13376-0007/LEGAL15181134.2 -5-


§ 441i FEDERAL ELECTION CAMPAIGN Laws

§ 441i. Soft money of political parties‘

(a) National committees.

(1) In general. A national committee of a political party (in-
cluding a national congressional campaign committee of a political
party) may not solicit, receive, or direct to another person a contri-
bution, donation, or transfer of funds or any other thing of value, or
spend any funds, that are not subject to the limitations, prohibitions,
and reporting requirements of this Act.

(2) Applicability. The prohibition established by paragraph
(1) applies to any such national committee, any officer or agent act-
ing on behalf of such a national committee, and any entity that is
directly or indirectly established, financed, maintained, or controlled
by such a national committee.

(b) State, district and local committees.

(1) In general. Except as provided in paragraph (2), an amount
that is expended or disbursed for Federal election activity by a State,
district, or local committee of a political party (including an entity
that is directly or indirectly established, financed, maintained, or
controlled by a State, district, or local committee of a political party
and an officer or agent acting on behalf of such committee or entity),
or by an association or similar group of candidates for State or local
office or of individuals holding State or local office, shall be made
from funds subject to the limitations, prohibitions, and reporting
requirements of this Act.

(2) Applicability.

(A) In general. Notwithstanding clause (i) or (ii) of
section 301(20)(A) (2 U.S.C. § 431(20)(A)), and subject to
subparagraph (B), paragraph (1) shall not apply to any amount
expended or disbursed by a State, district, or local committee of
a political party for an activity described in either such clause to
the extent the amounts expended or disbursed for such activity
are allocated (under regulations prescribed by the Commission)
among amounts—

‘Prior to its repeal on August 14, 1991, by Section 6(d) of the Legislative Branch Appro-
priations Act, 1991, Pub. L. No. 102-90, section 441i regulated the acceptance of honoraria
by Senators and officers and employees of the U.S. Senate, Section 309 of the Bipartisan
Campaign Reform Act of 2002 (BCRA), Pub. L. No. 107-155, amended the Act to add
a new section 441i, concerning nonfederal funds of political parties. This amendment is
effective as of November 6, 2002.

88


UNITED STATES COURT OF APPEALS
DISTRICT OF COLUMBIA CIRCUIT

EMILY'S LIST,

Plaintiff-Appellant,
v. No. 08-5422

FEDERAL ELECTION COMMISSION,

Defendant-Appellee.

CERTIFICATE OF SERVICE
I certify that on January 26, 2009 I, by United States mail, mailed a copy of the Brief.

of Plaintiff-Appellant and the Joint Appendix to:

DAVID KOLKER DONALD JAY SIMON
Federal Election Commission Sonosky, Chambers, Sachse, Endreson &
999 E Street, NW Perry
Washington, DC 20463 1425 K Street, N.W.
Suite 600

Washington, DC 20005

MA
Dated: January 26, 2009 cdl
wee F. Bauer
a W. Reese
INS COIE LLP
607 Fourteenth Street, N.W.

Washington, D.C. 20005-2011
(202) 628-6600

Attorneys for EMILY's List


List on the grounds that (1) the Commission's allocation and solicitation regulations violate

the First Amendment, (2) the regulations violate the Commission's statutory authority, and

(3) the regulations are arbitrary and capricious.

Dated: January 26, 2009

13376-0007/LEGAL15181134.2

1 (La

RobexfF. Bauer

W. Reese

PERKINS COIE LLP

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

Attorneys for EMILY's List


Federal Election Commission

the separate segregated fund's or non-
connected committee's employee or
volunteer to refer to:

(A) One or more clearly identified
Federal candidates, but do not refer to
any clearly identified non-Federal can-
didates; or

(B) One or more clearly identified
Federal candidates and also refer to
candidates of a particular party or as-
sociated with a particular issue, but do
not refer to any clearly identified non-
Federal candidates;

(ii) Voter drives, including voter
identification, voter registration, and
get-out-the-vote drives, in which the
printed materials or scripted messages
refer to, or the written instructions di-
rect the separate segregated fund's or
nonconnected committee's employee or
volunteer to refer to:

(A) One or more clearly identified
non-Federal candidates, but do not
refer to any clearly identified Federal
candidates; or

(B)_One or more clearly identified
non-Federal candidates and also refer
to candidates of a particular party or
associated with a particular issue, but
do not refer to any clearly identified
Federal candidates:

(iii), Public communications that
refer to one or more clearly identified
Federal candidates, regardless of
whether there is reference to a polit-
ical party, but do not refer to any
clearly identified non-Federal can-
didates; and

(iv) Public communications _ that
refer to a political party, and refer to
one or more clearly identified non-Fed-
eral candidates, but do not refer to any
clearly identified Federal candidates.

(c) Method for allocating administrative
expenses, costs of generic voter drives, and
certain public communications. Noncon-
nected committees and separate seg-
regated funds shall pay their adminis-
trative expenses, costs of generic voter
drives, and costs of public communica-
tions that refer to any political party.
as described in paragraphs (b)(1)(i),
(b)(1) (iti), or (b)(1)(iv) of this section,
with at least 50 percent Federal funds,
as defined in 11 CFR 300.2(g).

(qd) Method for allocating direct costs of
fundraising. (1) If federal and non-fed-
eral funds are collected by one com-
mittee through a joint activity, that

§ 106.6

committee shall allocate its direct
costs of fundraising. as described in
paragraph (a)(2) of this section, accord-
ing to the funds received method.
Under this method, the committee
shall allocate its fundraising costs
based on the ratio of funds received
into its federal account to its total re-
celpts from each fundraising program
or event. This ratio shall be estimated
prior to each such program or event
based upon the committee's reasonable
prediction of its federal and non-fed-
eral revenue from that program or
event, and shall be noted in the com-
mittee’s report for the period in which
the first disbursement for such pro-
gram or event occurred, submitted pur-
suant to 11 CFR 104.5. Any disburse-
ments for fundraising costs made prior
to the actual program or event shall be
allocated according to this estimated
ratlo.

(2) No later than the date 60 days
after each fundraising program or
event from which both federal and non-
federal funds are collected, the com-
mittee shall adjust the allocation ratio
for that program or event to reflect the
actual ratio of funds received. If the
non-federal account has paid more than
its allocable share. the committee
shall transfer funds from its federal to
its non-federal account, as necessary,
to reflect the adjusted allocation ratio.
If the federal account has paid more
than Its allocable share, the committee
shall make any transfers of funds from
its non-federal to its federal account to
reflect the adjusted allocation ratio
within the 60-day time period estab-
lished by this paragraph. The com-
mittee shall make note of any such ad-
justments and transfers in its report
for any period in which a transfer was
made, and shall also report the date of
the fundraising program or event
which serves as the basis for the trans-
fer. In the case of a telemarketing or
direct mail campaign, the “date” for
purposes of this paragraph is the last
day of the telemarketing campaign. or
the day on which the final direct mail
solicitations are mailed.

(e) Payment of allocable expenses by
committees with separate federal and non-
federal accounts—(1) Payment options.

141


§ 431

FEDERAL ELECTION CAMPAIGN Laws

(B) any separate segregated fund established under the
provisions of section 441b(b) of this title; or

{C) any local committee of a political party which receives
contributions aggregating in excess of $5,000 during a calendar
year, or makes payments exempted from the definition of con-
tribution or expenditure as defined in paragraphs (8) and (9) of
this section aggregating in excess of $5,000 during a calendar
year, or makes contributions aggregating in excess of $1,000
during a calendar year or makes expenditures aggregating in
excess of $1,000 during a calendar year.

(5) The term “principal campaign committee” means a political
committee designated and authorized by a candidate under section
432(e)(1) of this title.

(6) The term “authorized committee” means the principal
campaign committee or any other political committee authorized by
a candidate under section 432(e)(1) of this title to receive contribu-
tions or make expenditures on behalf of such candidate.

(7) The term “connected organization” means any organization
which is not a political committee but which directly or indirectly
establishes, administers, or financially supports a political commit-
tee.

(8) (A) The term “contribution” includes—

(i) _ 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;
or

(ii) the payment by any person of compensation
for the personal services of another person which are
rendered to a political committee without charge for any
purpose.

(B) The term “contribution” does not include-

(i) the value of services provided without com-
pensation by any individual who volunteers on behalf of
a candidate or political committee;

(ii) _ the use of real or personal property, including
a church or community room used on a regular basis by
members of a community for noncommercial purposes,
and the cost of invitations, food, and beverages, voluntarily
provided by an individual to any candidate or any politi-
cal committee of a political party in rendering voluntary
personal services on the individual's residential premises


explicitly provides otherwise. No rationalization is given for this arbitrary system. The rule
is therefore arbitrary and capricious.

3. The Regulations Fail to Consider the Necessary Goals of Preventing
Corruption and the Appearance of Corruption

The only constitutionally permissible purpose relied upon by the Supreme Court
when approving campaign finance reform measures is to "prevent the corruption or the
appearance of corruption." McConnell, 540 U.S. at 100-01; see also Austin, 494 U.S. at 660.
Yet the Commission never considered the effect of the final rules, if any, on corruption or the
appearance of corruption. This failure renders the regulations arbitrary and capricious.
Under State Farm, agencies must consider all "relevant factors." 463 U.S. at 43. For
Commission action, failing to justify regulations in accordance with the only legitimate state
interests that can sustain restrictions on campaign spending — preventing corruption and the
appearance of corruption — constitutes arbitrary and capricious action. See Shays v. FEC,
337 F. Supp. 2d 28, 87 (D.D.C. 2004), aff'd, 414 F.3d 76 (D.C. Cir. 2005).

In the publication of the final rules, the Commission only discussed corruption in the
context of the definition of "political committee," though, as described earlier, the
Commission did not adopt a new definition of "political committee" to regulate unregistered
section 527 organizations. 69 Fed. Red. at 68,064-65 (JA at 290-91). In contrast, the final
allocation and solicitation rules contain no explanation of their effect on stemming
corruption. The solicitation regulation's explanation focused on the Commission's belief that
it had the power to act; the allocation regulation's explanation focused on administrative

convenience. In neither case did the Commission consider the impact on the only recognized

13376-0007/LEGAL15181134.2 -43-


F. Effect on EMILY's List

The new solicitation and allocation regulations have had a direct effect on EMILY's
List's activities. First, they have required EMILY's List to direct limited federal funds to
purely nonfederal activity. The 50 percent allocation rules have prevented EMILY's List
from spending a higher proportion of nonfederal funds on activities that exclusively or
predominantly reflect nonfederal electoral purposes. (JA at 70). For example, among
EMILY 's List's administrative expenses is a program called Campaign Corps, which trains
young people in campaign skills and helps to place them on campaigns. (JA at 70). In odd-
numbered years, there are no regularly scheduled federal races on the ballot, and a vast
majority of the students are placed on campaigns for state and local offices in New Jersey
and Virginia, which hold elections in these years. In even years, graduates are placed with
both federal and nonfederal campaigns. In the 2006 election cycle, 77 percent of the
graduates trained by the program ultimately worked on nonfederal races. (JA at 70-71).
Even though the vast majority of students go on to work on nonfederal races, EMILY's List
has to pay for the program with 50 percent federal funds. (JA at 71).

EMILY's List has also changed its public communications to comply with the new
allocation regulations. (JA at 73). EMILY's List has in the past paid for public
communications supporting ballot initiatives. For example, in 2006, EMILY's List
sponsored five advertisements supporting two ballot initiatives in Missouri. (JA at 73, 81-
90). EMILY's List would have liked to include a reference to a clearly identified federal
candidate in these advertisements to endorse the ballot initiatives, either a candidate from
Missouri or a "superstar" federal candidate from outside the state. Ballot initiatives very

often present questions of national scope, and endorsements by a national spokesperson such

13376-0007/LEGAL15181134.2 -15-


The Commission has failed to meet its burden in showing that the allocation
regulations are closely tailored to achieve the compelling government interest in preventing
candidate corruption or the appearance thereof. This court should reverse.

( The Solicitation Regulation Is Not Tailored to Achieve a
Compelling Government Interest

The solicitation provision of section 100.57 also fails for lack of tailoring. The
regulation requires EMILY's List to treat as a federal "contribution" all funds received in
response to a solicitation that "indicates that any portion of the funds received will be used to
support or oppose the election of a clearly identified Federal candidate.” 11 C.F.R.

§ 100.57(a). If the solicitation refers to a nonfederal candidate as well as a federal candidate,
at least 50 percent of the funds received must be treated as federal contributions; if the
solicitation does not refer to a clearly identified nonfederal candidate, 100 percent of the
funds received are deemed federal contributions. See id. § 100.57(b). And the regulation
trumps even clear language in the solicitation itself stating that a smaller percentage of funds
will be used for federal election purposes. See 69 Fed. Reg. at 68,057 (JA at 283). A
solicitation that states outright that only one percent of contributions received will be used to
support federal candidates — and that the rest will be used to support non-federal candidates —
will still trigger the 50 or 100 percent minimum. /d. As a result, the rule regulates funds that
will never be spent on federal elections, and it does so without any connection to the
government's interest in preventing the corruption of federal candidates.

Section 100.57's overbreadth is exacerbated by the Commission's aggressive

interpretation of the regulation's scope. When it enacted the rule, the Commission purported

expenditures, despite a lack of evidence, or even an allegation, that the federal activity was a
significant portion of its activity or an area of particular focus. Conciliation Agreement, FEC MUR
5492 (Oct. 31, 2006), available at http://eqs.nictusa.com/eqs/searcheqs.

13376-0007/LEGAL15181 134.2 -33-


TITLE 2. THE CONGRESS § 431

of whether a candidate for State or local office is also

mentioned or identified) and that promotes or supports a

candidate for that office, or attacks or opposes a candidate

for that office (regardless of whether the communication
expressly advocates a vote for or against a candidate);
or

(iv) services provided during any month by an
employee of a State, district, or local committee of a
political party who spends more than 25 percent of that
individual’s compensated time during that month on ac-
tivities in connection with a Federal election.

(B) Excluded activity. The term ‘Federal election activity’
does not include an amount expended or disbursed by a State,
district, or local committee of a political party for—

(i) a public communication that refers solely to a
clearly identified candidate for State or local office, if the
communication is not a Federal election activity described
in subparagraph (A)(i) or (ii);

(ii) a contribution to a candidate for State or local
office, provided the contribution is not designated to pay
for a Federal election activity described in subparagraph
(A);

(iii) the costs of a State, district, or local political
convention; and

(iv) the costs of grassroots campaign materials, in-
cluding buttons, bumper stickers, and yard signs, that name
or depict only a candidate for State or local office.

(21) Generic campaign activity. The term ‘generic campaign
activity’ means a campaign activity (hat promotes a political party
and does not promote a candidate or non-Federal candidate.

(22) Public communication. The term ‘public communication’
means a communication by means of any broadcast, cable, or satellite
communication, newspaper, magazine, outdoor advertising facility,
mass mailing, or telephone bank to the general public, or any other
form of general public political advertising.

(23) Mass mailing. The term ‘mass mailing’ means a mailing
by United States mail or facsimile of more than 500 pieces of mail
matter of an identical or substantially similar nature within any 30-
day period.


TABLE OF CONTENTS
(continued)

Page

3. The Solicitation Restriction Imposed By the New Rule

Impermissibly Burden Fundraising for State and Local Election
Purposes ...

E. The Commission's Illegal and Disparate Treatment of EMILY's List is
Arbitrary and Capricious

1. The Fifty Percent Federal Minimum for Administrative and
Voter Drive Expenses Is Arbitrary and Capricious

2. The Solicitation Regulation Is Arbitrary and Capricious.

The Regulations Fail to Consider the Necessary Goals of
Preventing Corruption and the Appearance of Corruption ..

4, The District Court Erred by Providing a Post Hoc Rationale for
the Commission..

VII. CONCLUSION

13376-0007/LEGAL15181134.2 -iv-


§ 441i FEDERAL ELECTION CAMPAIGN Laws

(C) Prohibiting involvement of national parties, federal
candidates and officeholders, and state parties acting jointly.
Notwithstanding subsection (e) (other than subsection (e)(3)),
amounts specifically authorized to be spent under subparagraph
(B)(iii) meet the requirements of this subparagraph only if the
amounts—

(i) are not solicited, received, directed, transferred,
or spent by or in the name of any person described in
subsection (a) or (e); and

(ii) are not solicited, received, or directed through
fundraising activities conducted jointly by 2 or more
State, local, or district committees of any political party
or their agents, or by a State, local, or district committee
of a political party on behalf of the State, local, or district
committee of a political party or its agent in one or more
other States.

(c) Fundraising costs. An amount spent by a person described in
subsection (a) or (b) to raise funds that are used, in whole or in part, for
expenditures and disbursements for a Federal election activity shall be
made from funds subject to the limitations, prohibitions, and reporting
requirements of this Act.

(d) Tax-exempt organizations. A national, State, district, or local
committee of a political party (including a national congressional campaign
committee of a political party), an entity that is directly or indirectly es-
tablished, financed, maintained, or controlled by any such national, State,
district, or local committee or its agent, and an officer or agent acting on
behalf of any such party committee or entity, shall not solicit any funds
for, or make or direct any donations to—

(1) an organization that is described in section 501(c) of the

Internal Revenue Code of 1986 and exempt from taxation under

section SOI(a) of such Code (or has submitted an application for

determination of tax exempt status under such section) and that makes
expenditures or disbursements in connection with an election for

Federal office (including expenditures or disbursements for Federal

election activity); or

(2) an organization described in section 527 of such Code

{other than a political committee, a State, district, or local commit-

tee of a political party, or the authorized campaign committee of a

candidate for State or local office).

go


TITLE 2, THE CONGRESS § 441i

(i) _ which consist solely of contributions subject to
the limitations, prohibitions, and reporting requirements
of this Act (other than amounts described in subparagraph
(B)(ii)); and

(ii) other amounts which are not subject to the
limitations, prohibitions, and reporting requirements of this
Act (other than any requirements of this subsection).
(B) Conditions. Subparagraph (A) shall only apply if—

(i) the activity does not refer to a clearly identified
candidate for Federal office;

(ii) the amounts expended or disbursed are not for
the costs of any broadcasting, cable, or satellite commu-
nication, other than a communication which refers solely
to a clearly identified candidate for State or local office;

(iii) the amounts expended or disbursed which are
described in subparagraph (A)(ii) are paid from amounts
which are donated in accordance with State law and which
meet the requirements of subparagraph (C), except that no
person (including any person established, financed, main-
tained, or controlled by such person) may donate more
than $10,000 to a State, district, or local committee of a
political party in a calendar year for such expenditures or
disbursements; and

(iv) the amounts expended or disbursed are made
solely from funds raised by the State, local, or district
committee which makes such expenditure or disbursement,
and do not include any funds provided to such committee
from—

(I) _ any other State, local, or district committee
of any State party,
(ID) the national committee of a political party

{including a national congressional campaign com-

mittee of a political party),

(III) any officer or agent acting on behalf of
any committee described in subclause (I) or (II), or
(IV) any entity directly or indirectly established,
financed, maintained, or controlled by any committee
described in subclause (1) or (II).

89


§ 441i FeperaL ELECTION CAMPAIGN Laws

section 501(a) of such Code (or has submitted an application

for determination of tax exempt status under such section)

(other than an entity whose principal purpose is to conduct

activities described in clauses (i) and (ii) of section 301(20)(A))

(2 U.S.C. § 431(20)(A)) where such solicitation does not specify

how the funds will or should be spent.

(B) Certain specific solicitations. In addition to the gen-
eral solicitations permitted under subparagraph (A), an individual
described in paragraph (1) may make a solicitation explicitly to
obtain funds for carrying out the activities described in clauses
(i) and (ii) of section 301(20)(A) (2 U.S.C. § 431(20)(A)), or for
an entity whose principal purpose is to conduct such activities,
if—

(i) _ the solicitation is made only to individuals;
and
(ii) the amount solicited from any individual during
any calendar year does not exceed $20,000.
(f) State candidates.

(1) dn general. A candidate for State or local office, individual
holding State or local office, or an agent of such a candidate or in-
dividual may not spend any funds for a communication described in
section 301(20)(A)(iii) (2 U.S.C. § 431(20)(A)(iii)) unless the funds
are subject to the limitations, prohibitions, and reporting requirements
of this Act.

(2) Exception for certain communications. Paragraph (1)
shall not apply to an individual described in such paragraph if the
communication involved is in connection with an election for such
State or local office and refers only to such individual or to any
other candidate for the State or local office held or sought by such
individual, or both.

§ 441j. Repealed.

§ 441k.’ Prohibition of contributions by minors

An individual who is 17 years old or younger shall not make a
contribution to a candidate or a contribution or donation to a committee
of a political party.

‘Section 318 of the Bipartisan Campaign Reform Act of 2002 (BCRA), Pub. L. No. 107-155,
amended the Act to add section 441k. This amendment was effective as of November 6,

2002. However, in McConnell v. FEC, 540 U.S. 93 (2003), the Supreme Court ruled that
section 441k was unconstitutional.

g2


the allocation and solicitation regulations. Nor was there any record evidence that
nonconnected committees had been complicit in corrupt practices. While the record in
McConnell was rich with evidence of the close relationship between federal candidates and
state parties, there is no record evidence of comparable relationships between nonconnected
committees like EMILY's List and federal candidates. Indeed, in passing BCRA, Congress
chose not to subject nonconnected committees like EMILY's List to stricter soft money
regulations.

In discussion of the solicitation and allocation rules in the explanation and
justification, the Commission made a single desultory reference to anti-circumvention, in the
context of section 106.6(f).8 69 Fed. Reg. at 68,063 (JA at 289). But it cited no record of
attempted circumvention by nonconnected committees, nor did it use this rationale to justify
the other solicitation and allocation provisions. Instead, the new regulations were justified by
repeated reference to the need for ease of administration and ease of compliance. See, e.g.,
69 Fed. Reg. at 68,060, 68,063 (JA at 286, 289). Administrative conveniences, however,
cannot justify the burdening of core First Amendment speech. See WRTL, 127 S. Ct. at 2672.

Only after the Commission adopted the rules and after this litigation commenced did
the Commission attempt to offer evidence of circumvention, in an effort to rationalize its
rules post hoc. In the Commission's Motion for Summary Judgment, it cited a conciliation

agreement, dated August 29, 2007, years after the rulemaking, alleging that in the 2004

® In the NPRM, the Commission did discuss anti-circumvention in recommending that the definition
of "political committee" be expanded to include unregistered section 527 organizations. See 69 Fed.
Reg. at 11,741 (JA at 245). And the explanation and justification discussed corruption briefly in
discussing the definition of "political committee." 69 Fed. Red. at 68,064-65 (JA at 290-91). This
proposed regulation would not have affected EMILY's List, which voluntarily registered as a political
committee with the Commission. Ironically, the final rules did not include a revised definition of
“political committee," id., which would have regulated the organizations whose activities prompted
the rulemaking in the first place.

13376-0007/LEGAL15181134.2 -26-


communication is to support nonfederal candidates. /d. at 5-6 (JA at 303-04). For example,
a communication that refers simply to "Democratic members of the state assembly" must still
be paid at least in part with federal funds. /d.

The third new feature is found at 11 C.F.R. § 100.57. This is an entirely new
regulation, and it requires that organizations treat the fund they receive as contributions under
federal law, subject fully to federal source restrictions and contribution limits, if the
solicitation prompting the donation "indicates that any portion of the funds received will be
used to support or oppose the election of a clearly identified Federal candidate." /d.

§ 100.57(a). If the solicitation refers to a nonfederal candidate as well as a federal candidate,
at least 50 percent of the funds received must be treated as federal contributions; if the
solicitation does not refer to a clearly identified nonfederal candidate, 100 percent of the
funds received are federal contributions. See id. § 100.57(b). This regulation trumps even
clear language in the solicitation itself stating that a smaller percentage of funds will be used
for federal election purposes. See 69 Fed. Reg. at 68,057 (JA at 283). The result of the
regulation is that a political committee may be required to refuse to accept, or to return, funds
it could otherwise accept under state law for use in local and state elections. See id. at
68,058-59 (JA at 284-85).

On January 12, 2005, EMILY's List sued the Commission to enjoin enforcement of
the new rules, foreseeing that they would have an immediate and severe effect on the
committee's operations. (JA at 9-10). On August 18, 2005, EMILY's List submitted an
Advisory Opinion Request to the FEC seeking clarification about the new regulations. FEC
Adv. Op. Request 2005-13 (JA at 295). First, EMILY's List asked whether it would be

required to pay at least 50 percent of its administrative expenses and generic voter drive

13376-0007/LEGAL15181 134.2 -12-


remedy a specific and well-documented problem, the use of unregulated soft money by state
and federal political parties, and thus gave the FEC authority to regulate a specific and
limited class of state activity. McConnell, 540 U.S. at 167-70. The new allocation and
solicitation regulations go far beyond the Commission's statutory authority, ensnaring state
electoral activity by nonconnected, non-party political committees in its regulatory web
solely because it "references" a federal candidate.

Finally, the regulations are arbitrary and capricious. The Commission replaced a
flexible regulatory system with arbitrarily set minimum percentages and, in promulgating the
regulations, failed to consider the only recognized constitutionally permissible goal of
campaign finance reform. And the district court violated a fundamental principle of
administrative law, supplying an explanation that the agency itself had not provided. Motor
Vehicle Mfrs. Ass'n, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983). This

Court should reverse and grant summary judgment to EMILY's List.
B. Standard of Review

This Court reviews a district court's ruling on cross-motions for summary judgment
de novo. Defenders of Wildlife v. Gutierrez, 532 F.3d 913, 918 (D.C. Cir. 2008). A party is
entitled to summary judgment if, based on the pleadings, depositions, and affidavits, "there is
no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as
a matter of law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986) (quoting Fed.
R. Civ. P. 56(c)). In ruling upon a motion for summary judgment, this Court must view the
evidence in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v.

Zenith Radio Corp., 475 U.S. 574, 587 (1986).

13376-0007/LEGAL15181134.2 -18-


2005-13, at 3-4 (JA at 301-02). "Regardless of its context," the reference alone triggered a
100 percent federal financing requirement. /d. at 4 (JA at 302)

Finally, EMILY's List described a proposed funding solicitation that would ask
recipients to support EMILY's List's nonfederal programs. The solicitation would feature a
federal candidate, such as Senator Stabenow, making one of the following three statements:

(a) "We are asking for your support, so that EMILY's List can support candidates,

who, like me, could never succeed as women in politics without the combined

commitment of all [of] us.”

(b) "EMILY's List's support over the years for candidates like me has made an

enormous difference to the progress of women toward equality in the pursuit of

political office. But we have a long way to go. That's why I need your help."

(c) "EMILY's List has always supported me (Senator Stabenow) when I most needed

it. And that is why I am asking you to support EMILY's List today, so that it can

continue the work on behalf of women who, by seeking state office today, will be

ready to claim national leadership tomorrow."
FEC Adv. Op. Request 2005-13, at 2 (JA at 296). The letter asked the Commission whether
it would construe any of the above statements as "indicating" that funds would be used to
support federal candidates under section 100.57. /d. The Commission opined that statements
(a) and (b) both indicated that funds raised from the solicitation would be used to support
Senator Stabenow’s reelection. FEC Adv. Op. 2005-13, at 6 (JA at 304). The proceeds of
those solicitations would, therefore, be "contributions" under section 100.57. The
Commission's response was clear: the rules would be interpreted to encompass even purely
nonfederal activities, and solicitations would be treated as supporting a federal candidate

even when not directed to her voters, and not disseminated when she was actively running for

reelection.

13376-0007/LEGAL15181 134.2 -14-


election cycle, ACT used an allocation ratio of just 2 percent federal funds and 98 percent
nonfederal funds for its administrative expenses and generic voter drives.? (JA at 108).

But there is no record evidence that the Commission considered ACT's alleged
violation during its rulemaking. See Bourgeois v. Peters, 387 F.3d 1303, 1323 (11th Cir.
2004) (holding that a state may not rationalize the regulation of speech post hoc); cf.
KeySpan-Ravenswood, LLC v. FERC, 348 F.3d 1053, 1059 (D.C. Cir. 2003) ("[P]ost hoc
salvage operations of counsel cannot overcome the inadequacy of the Commission's
explanation.") (internal quotation marks and citation omitted). And, even assuming that ACT
violated the allocation provision, a single example of noncompliance is insufficient to
support broad rules that burden protected expression. Indeed, not once has the FEC alleged
that EMILY's List devised allocation formulas inconsistent with the requirements of the law.

The district court accepted the Commission's post-hoc claims of circumvention with
complete credulity, despite the absence of any actual record evidence. In denying EMILY's
List's preliminary injunction, the court stated that "the FEC promulgated these rules in an
effort to close an oft-exploited loophole in federal election law." EMILY's List, 362 F. Supp.
2d at 57 (JA at 53). Granting summary judgment to the Commission, it reached the same
conclusion, quoting its earlier opinion for the same proposition. EMILY's List, 569 F. Supp.
2d at 45 (JA at 167). It is unclear how the district court arrived at the conclusion that the
Commission's pre-rulemaking allocation rules created a "loophole," or that such a "loophole"

as "oft-exploited" by nonconnected committees. There is no record to support these

conclusions in the Commission's rulemaking. This was reversible error. It is the

° In fact, ACT's final allocation ratio based on its actual federal activity was 12 percent federal and
88 percent nonfrederal. (JA at 109).

13376-0007/LEGAL15181134.2 -27-


Then, on March 11, 2004, the Commission issued a wide-ranging notice of proposed
rulemaking. See Political Committee Status, 69 Fed. Reg. 11,736 (proposed Mar. 11, 2004)
(JA at 240) Its principal aim was to extend political committee status to so-called section
"527" organizations which, while exempt from tax under the Internal Revenue Code because
of their election-related activity, were nonetheless not required to register and report with the
FEC. Id.

The proposed rules, through a revised definition of the FECA term "political
committee," see 2 U.S.C. § 431(4)(A), required all section 527 organizations that were
considered to participate in federal elections in any manner to register with and report to the
Commission. The proposed rules also codified the changes to the allocation system first
addressed in Advisory Opinion 2003-37, including the "promotes, supports, attacks, or
opposes" standard. 69 Fed. Reg. at 11,753, 11,757-58 (JA at 257, 261-62). The proposed
rules further treated as federal contributions those funds received in response to a fundraising
solicitation expressly advocating the election or defeat of federal candidates. /d. at 11,757
(JA at 261).

The Commission set "a highly accelerated schedule for this important and far-
reaching rulemaking, targeting approval of final rules just two months after publication of the
NPRM." FEC Agenda Doc. No. 04-48, at 4 (JA at 268). Comments were due by April 9,
and public hearings with 31 witnesses were held on April 14 and 15. Nonetheless, the rules
created such controversy throughout the political and nonprofit communities that even with
fewer than 30 days to address the "important and far-reaching rulemaking," more than
100,000 comments were submitted, "far exceeding the number of comments received in

connection with any of the rulemakings to implement BCRA." /d. at 8 (JA at 272). The only

13376-0007/LEGAL15181134.2 ~9-


TITLE 2. THE CONGRESS §44li

(e) Federal candidates.

(1) In general. A candidate, individual holding Federal office,
agent of a candidate or an individual holding Federal office, or an
entity directly or indirectly established, financed, maintained or con-
trolled by or acting on behalf of | or more candidates or individuals
holding Federal office, shall not—

{A) solicit, receive, direct, transfer, or spend funds in
connection with an election for Federal office, including funds
for any Federal election activity, unless the funds are subject
to the limitations, prohibitions, and reporting requirements of
this Act; or

(B) solicit, receive, direct, transfer, or spend funds in
connection with any election other than an election for Federal
office or disburse funds in connection with such an election
unless the funds—

(i) are not in excess of the amounts permitted
with respect to contributions to candidates and political
committees under paragraphs (1), (2), and (3) of section
315(a) (2 U.S.C. § 441a(a)); and

(ii) are not from sources prohibited by this Act
from making contributions in connection with an election
for Federal office.

(2) State law. Paragraph (1) does not apply to the solicita-
tion, receipt, or spending of funds by an individual described in such
paragraph who is or was also a candidate for a State or local office
solely in connection with such election for State or local office if the
solicitation, receipt, or spending of funds is permitted under State
law and refers only to such State or local candidate, or to any other
candidate for the State or local office sought by such candidate, or
both.

(3) Fundraising events. Notwithstanding paragraph (1) or
subsection (b)(2)(C), a candidate or an individual holding Federal
office may attend, speak, or be a featured guest at a fundraising event
for a State, district, or local committee of a political party.

(4) Permitting certain solicitations.

(A) General solicitations. Notwithstanding any other
provision of this subsection, an individual described in para-
graph (1) may make a general solicitation of funds on behalf
of any organization that is described in section 501(c) of the
Internal Revenue Code of 1986 and exempt from taxation under

91


Federal Election Commission

(2) The following may be paid 100 per-
cent from the non-Federal account of
the nonconnected committee or sepa-
rate segregated fund:

(i) Public communications that refer
to a political party and one or more
clearly identified non-Federal can-
didates, but do not refer to any clearly
identified Federal candidates, as de-
scribed in paragraph (b)(2)(iv) of this
section; and

(ii) Voter drives described in para-
graph (b)(2)(1i) of this section.

@) Notwithstanding 11 CFR
106.1(a)(i), public communications and
voter drives that refer to one or more
clearly identified Federal candidates
and one or more clearly identified non-
Federal candidates, regardless of
whether there is a reference to a polit-
ical party, including those that are ex-
penditures, independent expenditures
or in-kind contributions, shall be allo-
cated as follows:

(i) Public communications and voter
drives, other than phone banks, shall
be allocated based on the proportion of
space or time devoted to each clearly
identified Federal candidate as com-
pared to the total space or time de-
voted to all clearly identified can-
didates, or

(ii) Public communications and voter
drives that are conducted through
phone banks shall be allocated based
on the number of questions or state-
ments devoted to each clearly identi-
fied Federal candidate as compared to
the total number of questions or state-
ments devoted to all clearly identified
candidates.

[55 FR 26071, June 26, 1990, as amended at 57
FR 8993, Mar. 13, 1992; 69 FR 68067, Nov. 23,
2004)

$106.7 Allocation of expenses between
Federal and non Federal ageounts
committees, other than for

Federal election activities.

(a) National party committees are
prohibited from raising or spending
non-Federal funds. Therefore, these
committees shall not allocate expendi-
tures and disbursements between Fed-
eral and non-Federal accounts. All dis-
bursements by a national party com-
mittee must be made from a Federal
account.

§ 106.7

(b) State, district, and local party
committees that make expenditures
and disbursements in connection with
both Federal and non-Federal elections
for activities that are not Federal elec-
tion activities pursuant to Il CFR
100.24 may use only funds subject to the
prohibitions and limitations of the Act,
or they may allocate such expenditures
and disbursements between their Fed-
eral and their non-Federal accounts.
State, district, and local party com-
mittees that are political committees
that have established separate Federal
and non-Federal accounts under 11 CFR
102,5(a)(1)(i) shall allocate expenses be-
tween those accounts according to
paragraphs (c) and (d) of this section.
Party organizations that are not polit-
ical committees but have established
separate Federal and non-Federal ac-
counts, or that make Federal and non-
Federal disbursements from a single
account, shall also allocate their Fed-
eral and non-Federal expenses accord-
ing to paragraphs (c) and (d) of this
section. In lieu of establishing separate
accounts, party organizations that are
not political committees may choose
to use a reasonable accounting method
approved by the Commission (including
any method embedded in software pro-
vided or approved by the Commission)
pursuant to 11 CFR 102.5 and 360.30.

(c) Costs allocable by State, district, and
local party committees between Federal
and non-Federal accounts.

(1) Salaries, wages, and fringe benefits.
State, district, and local party com-
mittees must either pay salaries,
wages, and fringe benefits for employ-
ees who spend 25% or less of their time
in a given month on Federal election
activity or activity in connection with
a Federal election with funds from
their Federal account, or with a com-
bination of funds from their Federal
and non-Federal accounts, in accord-
ance with paragraph (d)(2) of this sec-
tion. See 11 CFR 300.33(d)(1).

(2) Administrative costs. State, dis-
trict, and local party committees may
either pay administrative costs, includ-
ing rent, utilities, office equipment, of-
fice supplies, postage for other than
mass mailings. and routine building
maintenance, upkeep and repair, from
their Federal account, or allocate such
expenses between their Federal and

143


I. STATEMENT OF JURISDICTION

The district court had jurisdiction under 28 U.S.C. § 1331, because the case arises
under the First Amendment and the judicial review provisions of the Administrative
Procedure Act ("APA"), 5 U.S.C. §§ 702-706. This Court has jurisdiction under 28 U.S.C.

§ 1291 over EMILY's List's timely appeal, filed September 25, 2008, from the district court's
grant of summary judgment to the Federal Election Commission and its denial of EMILY's
List's motion for summary judgment, entered July 31, 2008. (Joint Appendix ("JA") at 195).

The district court correctly found that EMILY's List has standing to challenge the
Commission's allocation and solicitation regulations under Article III of the United States
Constitution. EMILY's List v. FEC, 569 F. Supp. 2d 18, 37 (D.D.C. 2008) (JA at 153).

Il. | STATEMENT OF THE ISSUES PRESENTED FOR REVIEW
I Do the Commission's solicitation and allocation regulations, codified at 11 C.F.R.

§§ 100.57 and 106.6, violate the First Amendment of the United States Constitution?
Il. Do the Commission's solicitation and allocation regulations exceed the Commission's

statutory authority?

III. Are the Commission's solicitation and allocation regulations arbitrary and capricious?

Ill. STATUTES AND REGULATIONS

Relevant statutory and regulatory provisions are set out in the Addendum to this brief.

IV. STATEMENT OF THE CASE
On January 12, 2005, Plaintiff-Appellant EMILY's List filed a complaint in the
United States District Court for the District of Columbia seeking declaratory and injunctive

relief against the Federal Election Commission. (JA at 9). The complaint alleged that new

13376-0007/LEGAL15181134.2


to the First Amendment. The exception relates to the perception of undue influence of large
contributors to a candidate."). There, and in subsequent cases, the Court has also upheld
restrictions on entities other than candidates in order to prevent the circumvention of
candidate contribution limits. In all of these cases, the Court has required the government to
provide at least some evidence of circumvention and demonstrate a connection between the
anti-circumvention measure and the risk of candidate corruption. See, e.g., WRTL, 127 S. Ct.
at 2672; McConnell, 540 U.S. at 144-146, 155-56, 164-166; Nixon, 528 U.S. at 392 ("we
have never accepted mere conjecture as adequate to carry a First Amendment burden"); id. at
391 ("The quantum of empirical evidence needed to satisfy heightened judicial scrutiny of
legislative judgments will vary up or down with the novelty and plausibility of the
justification raised."); Buckley, 424 U.S. at 27 & n.28.

For example, in upholding the "core" provisions of BCRA, McConnell, 540 U.S. at
142, the McConnell Court repeatedly relied on a factual record that tied the provisions to the
goal of preventing corruption and the appearance thereof. In upholding BCRA's ban on
national party soft money, the Court found that "common sense and the ample record"
confirmed that "large soft-money contributions to national party committees have a
corrupting influence or give rise to the appearance of corruption." /d. at 145. The Court
pointed to evidence in the record that candidates had exploited the soft money loophole,
asking donors to make soft-money donations to political parties to increase their prospects of
election. /d. at 146. In that case, "[t]he record [was] replete with . . . examples of national
party committees peddling access to federal candidates and officeholders in exchange for
large soft-money donations." /d. at 150 (citing McConnell v. FEC, 251 F. Supp. 2d 176, 492-

506 (D.D.C. 2003) (Kollar-Kotelly, J.).

13376-0007/LEGAL15181134,2 -24-


TITLE 2. THE CONGRESS § 431

newspaper, magazine, or other periodical publication, un-
less such facilities are owned or controlled by any political
party, political committee, or candidate;

(ii) nonpartisan activity designed to encourage
individuals to vote or to register to vote;

Gii) any communication by any membership or-
ganization or corporation to its members, stockholders, or
executive or administrative personnel, if such membership
organization or corporation is not organized primarily for
the purpose of influencing the nomination for election, or
election, of any individual to Federal office, except that
the costs incurred by a membership organization (includ-
ing a labor organization) or by a corporation directly at-
tributable to a communication expressly advocating the
election or defeat of a clearly identified candidate (other
than a communication primarily devoted to subjects other
than the express advocacy of the election or defeat of a
clearly identified candidate), shall, if such costs exceed
$2,000 for any election, be reported to the Commission
in accordance with section 434(a)(4)(A)(i) of this title,
and in accordance with section 434(a)(4)(A)(ii) of this
title with respect to any general election;

(iv) the payment by a State or local committee of
a political party of the costs of preparation, display, or
mailing or other distribution incurred by such commit-
tee with respect to a printed slate card or sample ballot,
or other printed listing, of 3 or more candidates for any
public office for which an election is held in the State
in which such committee is organized, except that this
clause shall not apply to costs incurred by such commit-
tee with respect to a display of any such listing made on
broadcasting stations, or in newspapers, magazines, or
similar types of general public political advertising;

(v) any payment made or obligation incurred by a
corporation or a labor organization which, under section
441b(b) of this title, would not constitute an expenditure
by such corporation or labor organization;

(vi) any costs incurred by an authorized committee
or candidate in connection with the solicitation of con-
tributions on behalf of such candidate, except that this
clause shall not apply with respect to costs incurred by
an authorized committee of a candidate in excess of an


TITLE 2. THE CONGRESS § 431

out-the-vote activities conducted by such committee on

behalf of nominees of such party for President and Vice

President: Provided, That—

(1) such payments are not for the costs of
campaign materials or activities used in connection
with any broadcasting, newspaper, magazine, bill-
board, direct mail, or similar type of general public
communication or political advertising;

(2) such payments are made from con-
tributions subject to the limitations and prohibitions
of this Act; and

(3) such payments are not made from con-
tributions designated to be spent on behalf of a
particular candidate or candidates; and
(x) payments received by a political party commit-

tee as a condition of ballot access which are transferred

to another political party committee or the appropriate

State official.

(10) The term “Commission” means the Federal Election
Commission.

(11) The term “person” includes an individual, partnership,
committee, association, corporation, labor organization, or any other
organization or group of persons, but such term does not include the
Federal Government or any authority of the Federal Government.

(12) The term “State” means a State of the United States, the
District of Columbia, the Commonwealth of Puerto Rico, or a ter-
ritory or possession of the United States.

(13) The term “identification” means—

(A) in the case of any individual, the name, the mailing
address, and the occupation of such individual, as well as the
name of his or her employer; and

(B) in the case of any other person, the full name and
address of such person.

(14) The term “national committee” means the organization
which, by virtue of the bylaws of a political party, is responsible for
the day-to-day operation of such political party at the national level,
as determined by the Commission.

(15) The term “State committee” means the organization which,
by virtue of the bylaws of a political party, is responsible for the
day-to-day operation of such political party at the State level, as
determined by the Commission.


§ 431 FEDERAL ELECTION CAMPAIGN Laws

(16) The term “political party” means an association, com-
mittee, or organization which nominates a candidate for election to
any Federal office whose name appears on the election ballot as the
candidate of such association, committee, or organization.

(17)! Independent expenditure. The term ‘independent expen-
diture’ means an expenditure by a person—

(A) expressly advocating the election or defeat of a
clearly identified candidate; and

(B) that is not made in concert or cooperation with or
at the request or suggestion of such candidate, the candidate’s
authorized political committee, or their agents, or a political
party committee or its agents.

(18) The term “clearly identified” means that—

(A) the name of the candidate involved appears;

(B) a photograph or drawing of the candidate appears;
or

(C) the identity of the candidate is apparent by unam-
biguous reference.

(19) The term “Act” means the Federal Election Campaign Act
of 1971 as amended.

(20)? Federal election activity.

(A) In general. The term ‘Federal election activity’
means—

(i) voter registration activity during the period
that begins on the date that is 120 days before the date a
regularly scheduled Federal election is held and ends on
the date of the election;

(ii) voter identification, get-out-the-vote activity,
or generic campaign activity conducted in connection
with an election in which a candidate for Federal office
appears on the ballot (regardless of whether a candidate
for State or local office also appears on the ballot);

(iii) a public communication that refers to a
clearly identified candidate for Federal office (regardless

"Section 211 of the Bipartisan Campaign Reform Act of 2002 (BCRA), Pub. L. No. 107-
155, amended section 431 by revising the definition of an independent expenditure. This
amendment is effective as of November 6, 2002.

2Section 101(b) of the Bipartisan Campaign Reform Act of 2002 (BCRA)., Pub. L. No.
107-155, amended section 431 by adding new paragraphs (20) through (24). This id
ment is effective as of November 6, 2002.



That argument is akin to telling Cohen that he cannot wear his jacket because he is
free to wear one that says "I disagree with the draft," or telling 44 Liquormart that it
can advertise so long as it avoids mentioning prices. Such notions run afoul of "the
fundamental rule of protection under the First Amendment, that a speaker has the
autonomy to choose the content of his own message."
WRTL, 1278. Ct. at 2671 n.9 (citing 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484
(1996) and Cohen v. California, 403 U.S. 15 (1971), and quoting Hurley v. Irish-Am. Gay,
Lesbian & Bisexual Group of Boston, 515 U.S. 557, 573 (1995)).

Section 106.6(c) imposes a similar burden, requiring EMILY's List to pay for a
general communication that merely refers to a political party with at least 50 percent federal
funds. If EMILY's List wanted to sponsor a communication to Missouri voters about a
Missouri ballot initiative and included a line stating that the initiative had the support of
"both Democrats and Republicans," the communication would have to be paid for with 50
percent federal funds. Again, the regulations require an allocating committee to choose
between changing its message or effectively capping what it can spend.

The solicitation regulations suffer from the same defect. Under section 100.57, a
solicitation that "indicates" that it will use funds to support a federal candidate must treat at
least 50 percent of the proceeds from that solicitation as "contributions," which are subject to
the limitations of FECA. This is a nebulous standard that captures a sweeping range of
conduct. The advisory opinion issued by the Commission to EMILY's List says as much. It
said flatly that a solicitation voiced by an out-of-cycle senator, outside her state, for the
explicit purpose of supporting candidates for state and local office, would trigger federal
contributions and associated limits. See FEC Adv. Op. 2005-13, at 2, 6 (JA at 300, 304). As

a result of this ambiguous and overbroad standard, EMILY's List has changed its speech so

13376-0007/LEGAL15181134.2 -21-


TABLE OF AUTHORITIES

(continued)
Page

Hurley v. Irish-Am. Gay, Lesbian & Bisexual Group of Boston, Inc., 515 U.S. 557

(1995) vresscssessssessssssssessssessseessessntssseesssessneesseessnecssscenessosesvcsssessavessessasessnesusessueeranesseeeneetseeenee 21
KeySpan-Ravenswood, LLC v. FERC, 348 F.3d 1053 (D.C. Cir. 2003)........:sssssssssssssseess 27, 44
La. Pub. Serv. Comm'n v. FCC, 476 U.S. 355 (1986) ...c..sesssssscsesscsseseessessesseeseesetssassasseaseavess 35
Marks v, United States, 430 U.S. 188 (1977) ....sssssssssessssssssssesssssescseesesessseassesssssssseassesseassesace 20
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) ....cssssssssssesssseseeessees 18
McConnell v. FEC, 251 F. Supp. 2d 176 (D.D.C. 2003) ...ssssessssssesseecsseesesecneecsnecsssesseess 24, 25

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

seaessuesaessesssesssesscsscssuesssssnesnesuessesueseeensers 2, 6, 7, 18, 23, 24, 25, 26, 30, 31, 32, 36, 37, 40, 43
Motion Picture Ass'n of Am. v. FCC, 309 F.3d 796 (D.C. Cir, 2002).....:secssscssssesssssssseaseseenee 35

Motor Vehicles Mfrs. Ass'n v, State Farm Mut. Auto Ins. Co., 463 U.S. 29 (1983)...

ssssescenscenscssessuessessucssessecsscsaseasesuscsecsesancssessesssessesssessessuesuesussucensenneqeetseaateaeneseueenees 18, 40, 43, 44
Nixon v. Shrink Mo. Gov't PAC, 528 U.S. 377 (2000).......sssssssssscesceessessessessesenees 19, 24, 28, 30
Republican Nat'l Comm. v. FEC, 76 F.3d 400 (D.C. Cir. 1996)...

Ry. Labor Executives' Ass'n v. Nat'l Mediation Bd., 29 F.3d 655 (D.C. Cir. 1994).......ssse0 35
SEC v. Chenery Corp., 332 U.S. 194 (1947) ...eecsccssssessessesessesessssessescessscsessessessesssessssssssecsesee 44
Shays v. FEC, 337 F. Supp. 2d 28 (D.D.C. 2004), aff'd, 414 F.3d 76 (D.C. Cir. 2005).

Williams v. Rhodes, 393 U.S. 23 (1968) ..ccccscsesssssssssscsecseeseestssaseaseaseseeseesaesoesseeseesseeseeeseeanesees 19
Statutes

#2 U.S.C. § 43 cccseesccseessesstessessessessessesseessesssssessesensentensene 2, 6, 8, 9, 17, 31, 35, 36, 37, 38, 40
2 USC. § 438 ccesecesssessessessesssssssssssssssessessessessessessuessesassaseauecnsenesaesasaesessasssseaneesessessneesesses 35
2 ULS.C. § 44 Li esseecseescseessescssessecssneessscssssscsscssscssecsssassessssesaeensecseceasesseessuceeuecssees 6, 31, 36, 37

13376-0007/LEGAL15181134.2 -vi-


TABLE OF AUTHORITIES

Page

Cases
44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484 (1996)......sessessssssssessssesesseessessesstessesseeseess 21

Anderson y. Liberty Lobby, Inc., 477 U.S. 242 (1986)

Austin v. Mich. Chamber of Commerce, 494 U.S. 652 (1990)...c.ssessesssessesssessecsenseseee 23, 43, 44
Bourgeois v. Peters, 387 F.3d 1303 (11th Cir. 2004) 0... escececsecssessssessessssssscesecsessecsseaseesnees 27
*Buckley v. Valeo, 424 U.S. 1 (1976) ...essessesesseeseeseeseeseeetenteseeseeeee 19, 20, 23, 24, 25, 28, 30
Burlington Truck Lines, Inc. v. United States, 371 U.S. 156 (1962) ...cessessessssssssssssesessessesenve 40
Chevron, U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837 (1984) ....ssssssssseseessesseeseens 35

Citizens Against Rent Control/Coal. for Fair Hous. v. City of Berkeley, 454 U.S. 290
(1981)..

Cohen v. California, 403 U.S. 15 (1971) ..ssessscsesseecsessessessessseessesscsscssessessesssssnsssesenssnseaveavease 21
Common Cause v. FEC, 692 F. Supp. 1391 (D.D.C. 1987) .....csssesssecsecsescessetsosssnssesessenseneesee 39
*Davis v. FEC, 128 S. Ct. 2759 (2008)...essesssessesssessesssessessesscesscnseneeseesesesaeseaeeese 17, 20, 22, 23
Defenders of Wildlife v. Gutierrez, 532 F.3d 913 (D.C. Cir. 2008) ...c.sssscsssscssesseessesesseesssesses 18
EMILY’s List v. FEC, 170 Fed. Appx. 719 (D.C. Cir. 2005) ......estessecsecesceesoesssssessesestesneaveanees 2
EMILY's List v. FEC, 362 F. Supp. 2d 43 (D.D.C. 2005) .....cescescesssessssssssessssenseseessessees 2, 27, 39
EMILY's List v. FEC, 569 F. Supp. 2d 18 (D.D.C. 2008)........... 1, 3, 23, 27, 30, 32, 38, 39, 44
Envtl. Def. Fund, Inc. v. Costle, 657 F.2d 275 (D.C. Cir. 1981) ...csessssecsesssesssessssesssseeseesseessee 42
FEC v. Survival Education Fund, 65 F.3d 285 (2d Cir. 1995) ....essssecsssssesssessssssssescsseceeeseeses 34
*FEC v. Wisconsin Right to Life, Inc., 127 S. Ct. 2652 (2007) ("WRIL") .essessscssssssssesssesseeseense

cosessecasesasssecsessssesssesseassessessussassusessasessnassesseassessnassessessee 2, 17, 20, 21, 22, 23, 24, 26, 29, 37, 44

13376-0007/LEGAL15181 134.2 -V-


portions of the proposed rules to receive significant comment were those targeting section
527 organizations that did not register and report with the FEC, because that was both the
impetus and focus of the proceeding, and because the new allocation regulations tracked
changes already present in Advisory Opinion 2003-37.

The final rules, approved on October 28, did not include a revised definition of
"political committee." Instead, the final rules created an allocation system totally unlike that
contained in Advisory Opinion 2003-37 and the proposed rules — indeed, the Commission
declared that they superseded Advisory Opinion 2003-37. Political Committee Status,
Definition of Contribution, and Allocation for Separate Segregated Funds and Nonconnected
Committees, 69 Fed. Reg. 68,056, 68,063 (Nov. 23, 2004) (JA at 289). The new rules
focused not on whether communications "promoted, supported, attacked, or opposed”
candidates, but whether they merely referred to candidates. 11 C.F.R. § 106.6(f) (2008). In
addition, the allocation system for administrative expenses and voter drives was reduced to a
system of arbitrary threshold amounts. For example, a public communication that referred to
a political party, but to no clearly identified candidate at all, had to be financed with no less
than 50 percent federally regulated funds. /d. § 106.6(c). The new rules took no account of
the extent to which a political committee actually supported federal and nonfederal
candidates. Far from a "refinement" in the allocation rules as originally suggested in the
Commission's NPRM, 69 Fed. Reg. at 11,736 (JA at 240), the final rule effected a radical
change, replacing "allocation" with arbitrary minimums, even though the Commission's own
examination concluded that very few committees choose to allocate at all, see 69 Fed. Reg. at
68,062 (JA at 288). The final rules also contained a new definition of "contribution" that was

far broader in scope than the one contained in the proposed rules; the new section 100.57

13376-0007/LEGAL15181134.2 -10-


GLOSSARY

ABC Americans for a Better Country

ACT America Coming Together

APA Administrative Procedure Act

BCRA Bipartisan Campaign Reform Act of
2002

FEC or the Commission Federal Election Commission

FECA Federal Election Campaign Act

JA Joint Appendix

MUR Matter Under Review

NPRM Notice of Proposed Rulemaking

13376-0007/LEGALI5181134.2 -viii-


as a federal-level officeholder or candidate are more effective in raising funds for or
delivering persuasive messages about those initiatives. (JA at 73). In order to choose the
most effective message, EMILY's List did not want to refer to any clearly identified
nonfederal candidates. (JA at 73). However, under section 106.6(f), merely mentioning a
federal candidate — even if that candidate lived in a state thousands of miles from Missouri
and was not up for election in 2006 — would have required EMILY's List to pay for the
communication with 100 percent federal funds. Thus, EMILY's List changed the content of
its communication and omitted any reference to federal candidates. (JA at 73, 81-90).
Finally, EMILY's List has had to change the language of its solicitations. EMILY's
List has drawn national attention for its success in electing clearly identified federal
candidates, and these victories have helped to brand EMILY's List as an effective political
organization. (JA at 71). Its national reputation encourages people to donate to its
nonfederal programs, because donors are confident that if EMILY's List has succeeded with
the election of federal candidates in high-profile national elections, it can succeed in local
and state elections as well. (JA at 71). EMILY’s List has also found that the use of certain
well-known federal candidates and officeholders are uniquely effective at raising funds for its
efforts on behalf of other federal and nonfederal candidates. (JA at 71). However, under
section 100.57, as the Commission has construed it, EMILY's List must treat as a federal
contribution funds received in response to a communication that indicates that any portion of
the proceeds will be used to support or oppose the election of a clearly identified federal
candidate. Thus, EMILY's List has in some cases removed references to federal candidates
and, in others, added references to clearly identified nonfederal candidates, solely so that it

can treat some of the funds received as nonfederal contributions. (JA at 72, 77).

13376-0007/LEGAL15181 134.2 -16-


ORAL ARGUMENT REQUESTED

UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 08-5422

EMILY'S LIST,
Plaintiff-Appellant,
ve
FEDERAL ELECTION COMMISSION,

Defendant-Appellee.

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

BRIEF OF PLAINTIFF-APPELLANT
EMILY'S LIST

Dated: January 26, 2009 Robert F. Bauer
Ezra W. Reese
PERKINS COIE LLP
607 Fourteenth Street, N.W.
Washington, D.C. 20005
(202) 628-6600

Attorneys for EMILY's List

13376-0007/LEGAL15181134.2


single federal candidate and 100 nonfederal candidates; or contribute $1,000.01 dollars to
one federal candidate plus $100,000 to nonfederal candidates; or devote a million dollars to
federal election activity and $2,000 to nonfederal activity.

This irrational rule federalizes the funding and reporting of a large portion of such a
committee's nonfederal receipts and disbursements, which are not made for the purpose of
influencing federal elections. Bizarrely, it also treats nonparty PACs more harshly than any
other type of committee, save national parties and candidates themselves. The very state
parties that Congress found to be tools of circumvention can pay for as little as 15 percent of
their administrative expenses with federal money. See 11 C.F.R. § 106.7(d)(2)(iv). But
nonparty political committees like EMILY's List, whom Congress left unscathed by BCRA
and who present no such opportunities for evasion, must pay with no less than 50 percent
federal funds, year in and year out. There is no basis — let alone a rational one — for this
wildly disparate result."

3. The Solicitation Restriction Imposed by the New Rule Impermissibly
Burdens Fundraising for State and Local Election Purposes

The new rules also inject federal financing restrictions into fundraising for state and

local elections. FECA only grants the Commission the authority to regulate contributions

" Ih finding that the Commission had authority to promulgate the new allocation regulations, the
district court relied on Common Cause v. FEC, 692 F. Supp. 1391 (D.D.C. 1987), a 22 year-old case
that is not binding on this Court, and concluded that "the FEC's decision to allow any given allocation
formula by a political committee such as EMILY's List, with respect to its expenditures intended to
influence both federal and nonfederal elections [as well as to adjust that allocation formula], is within
the Commission's purview." EMILY's List, 569 F. Supp. 2d at 57 (quoting EMILY’s List, 362 F. Supp.
2d at 56) (JA at 188). Common Cause does not support this broad proposition. In Common Cause,
the court was addressing a specific 1979 amendment to FECA that required state and local parties to
pay for certain voter registration and "get-out-the-vote" expenses with federal money. The court
noted that it was possible that the Commission, through a proper exercise of rulemaking, might
conclude that certain types of state party activities must be paid for with federal funds in order to keep
nonfederal funds from being spent to influence federal elections. The case does not stand for the
proposition that the Commission may pass whatever allocation rules it wishes.

13376-0007/LEGAL15181 134.2 -39-


number of the arguments raised by the parties." (JA at 6, Dkt. No. 29). And yet, on July 31,
2008, the court still granted summary judgment to the FEC, finding that WRTL "does not
control the Court's analysis.” EMILY's List v. FEC, 569 F. Supp. 2d 18, 41 (D.D.C. 2008)
(JA at 160). EMILY's List timely appealed. (JA at 195).

Vv. STATEMENT OF THE FACTS
A. Description of EMILY's List

EMILY 's List is a nonprofit corporation, incorporated under the laws of the District
of Columbia, whose purpose is to recruit and fund women candidates for local, state, and
federal office; to help them build and run effective campaign organizations; and to mobilize
women voters to help elect progressive candidates across the country. (JA at 69). EMILY's
List identifies opportunities to elect pro-choice Democratic women to local, state and federal
office, recruits qualified candidates, trains them to be effective fundraisers and
communicators, and works with them throughout the campaign to make sure that they are
executing winning strategies. EMILY's List also works through its Women Vote! program to
mobilize women voters for local, state, and federal elections through broadcast advertising,
web sites, direct mail and personal voter contact. (JA at 69).

EMILY's List was founded in 1985. At that time, no Democratic woman had ever
been elected to the United States Senate in her own right, no woman had ever been elected
governor of a large state, and the number of Democratic women in the United States House

of Representatives had declined to 12. (JA at 70). Since 1985, EMILY's List has helped to

13376-0007/LEGAL15181134.2 -3-


regulations promulgated by the Commission severely restricted EMILY's List's decades-long
program of supporting women candidates for public office. (JA at 10-11). The regulations
changed how political committees could allocate spending between federal and nonfederal
funds.’ They required certain nonfederal political activity to be paid for with federal funds,
which are subject to the strict source and amount limitations of the Federal Election
Campaign Act of 1971, Pub. L. No. 92-255, 86 Stat. 3, codified at 2 U.S.C. § 431 et seq.
("FECA"). 11 C.F.R. § 106.6. The Commission also required political committees to treat
as federal "contributions" the proceeds of fundraising solicitations that "indicate[]" they will
be used to support a clearly identified federal candidate. /d. § 100.57(a). EMILY's List
alleged that these regulations violated the First Amendment, exceeded the Commission's
statutory authority, and were arbitrary, capricious, and an abuse of discretion. (JA at 10).

On the same day the complaint was filed, EMILY's List moved for a preliminary
injunction. On February 25, 2005, the district court denied the motion. EMILY's List v. FEC,
362 F. Supp. 2d 43 (D.D.C. 2005) (JA at 33). Without reaching the merits, this Court
affirmed the denial of the motion in an unpublished disposition, finding that the district court
did not abuse its discretion. EMILY’s List v. FEC, 170 Fed. Appx. 719 (D.C. Cir. 2005) (per
curiam).

The district court then took up the case on the merits. The parties filed cross-motions
for summary judgment. On July 12, 2007, the court ordered updated motions in light of the
Supreme Court's decision in Federal Election Commission v. Wisconsin Right to Life, Inc.,

127 S. Ct. 2652 (2007) ("WRTL") — which, according to the court, "significantly impacted a

' “Federal” funds, also referred to as “hard money,” are funds that are subject to FECA's source and
amount limitations, and disclosure requirements. McConnell v. FEC, 540 U.S. 93, 122 (2003).
“Nonfederal" funds, or "soft money," are funds raised outside of these limits. Jd. at 123.

13376-0007/LEGAL15181134.2 -2-


§106.6

Nonconnected committees and sepa-
rate segregated funds that have estab-
lished separate federal and non-federal
accounts under 11 CFR 102.5 (a)(i)(i)
shall pay the expenses of joint federal
and non-federal activities described in
paragraph (b) of this section according
to either paragraph (e)(1)(i) or (ii), as
follows:

(i) Payment by federal account; trans-
fers from non-federal account to federal
account. The committee shall pay the
entire amount of an allocable expense
from its federal account and shall
transfer funds from its non-federal ac-
count to its federal account solely to
cover the non-federal share of that al-
locable expense,

(ii) Payment by separate allocation ac-
count; transfers from federal and non-fed-
eral accounts to allocation account. (A)
The committee shall establish a sepa-
rate allocation account into which
funds from its federal and non-federal
accounts shall be deposited solely for
the purpose of paying the allocable ex-
penses of joint federal and non-federal
activities. Once a committee has estab-
lished an allocation account for this
purpose, all allocable expenses shall be
paid from that account for as long as
the account is maintained.

(B) The committee shall transfer
funds from its federal and non-federal
accounts to its allocation account in
amounts proportionate to the federal
or non-federal share of each allocable
expense.

(C) No funds contained in the alloca-
tion account may be transferred to any
other account maintained by the com-
mittee.

(2) Timing of transfers between ac-
counts. (i) Under either payment option
described in paragraphs (e)(1) (1) or (ii)
of this section, the committee shall
transfer funds from its non-federal ac-
count or from its federal and non-fed-
eral accounts to its separate allocation
account following determination of the
fina) cost of each joint federal and non-
federal activity, or in advance of such
determination if advance payment is
required by the vendor and if such pay-
ment is based on a reasonable estimate
of the activity's final cost as deter-
mined by the committee and the ven-
dor(s) involved.

11 CFR Ch. | (1-1-08 Edition)

(ii) Funds transferred from a com-
mittee's non-federal account to its fed-
eral account or its allocation account
are subject to the following require-
ments:

(A) For each such transfer, the com-
mittee must itemize in its reports the
allocable activities for which the
tranferred funds are intended to pay, as
required by 11 CFR 104.10(b)(3); and

(B) Except as provided in paragraph
{d)(2) of this section, such funds may
not be transferred more than 10 days
before or more than 60 days after the
payments for which they are des-
ignated are made.

(iil) Any portion of a transfer from a
committee's non-federal account to its
federal account or its allocation ac-
count that does not meet the require-
ments of paragraph (e)(2)(il) of this sec-
tion shall be presumed to be a loan or
contribution from the non-federal ac-
count to a federal account, in violation
of the Act.

(3) Reporting transfers of funds and al-
located disbursements. A political com-
mittee that transfers funds between ac-
counts and pays allocable expenses ac-
cording to this section shall report
each such transfer and disbursement
pursuant to 11 CFR 104.10(b).

(©) Payments for public communications
and voter drives that refer to one or more
clearly identified Federal or non-Federal
candidates. Nonconnected committees
and separate segregated funds shall pay
for the costs of all public communica-
tions that refer to one or more clearly
identified candidates, and voter drives
that refer to one or more clearly iden-
tified candidates, as described in para-
graphs (b)(2}{i) and (b)(2)(ii) of this sec-
tion, as follows:

(1) The following shall be paid 100
percent from the Federal account of
the nonconnected committee or sepa-
rate segregated fund:

(i) Public communications that refer
to one or more clearly identified Fed-
eral candidates, regardless of whether
there is reference to a political party.
but do not refer to any clearly identi-
fied non-Federal candidates, as de-
scribed in paragraph (b)(2)(lii) of this
section; ai

{ii} Voter drives described in para-
graph (b)(2)(i) of this section.

142


D. The Regulations Violate the Commission's Statutory Authority
The Administrative Procedure Act ("APA"), 5 U.S.C. §§ 500-706, forbids federal

agencies from promulgating regulations "in excess of statutory jurisdiction, authority, or
limitations, or short of statutory right." 5 U.S.C. § 706(2)(C). "[A]n agency literally has no
power to act... unless and until Congress confers power upon it." La. Pub. Serv. Comm'n v.
FCC, 476 U.S. 355, 374 (1986). Deference to an administrative agency's interpretation is
only appropriate when "Congress has left a gap for the agency to fill pursuant to an express
or implied ‘delegation of authority to the agency." Ry. Labor Executives’ Ass'n v. Nat'l
Mediation Bd., 29 F.3d 655, 671 (D.C. Cir. 1994) (en banc) (citation omitted); see also
Motion Picture Ass'n of Am., Inc. v. FCC, 309 F.3d 796, 801 (D.C. Cir. 2002) ("{T]he
agency's interpretation of the statute is not entitled to deference absent a delegation of
authority from Congress to regulate in the areas at issue."). Courts must vacate
“administrative constructions which are contrary to clear congressional intent." Chevron,
U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 843 n.9 (1984).

The regulatory authority of the Commission is granted at 2 U.S.C. § 438(a)(8), which
permits it to "prescribe rules, regulations, and forms to carry out the provisions of [the
FECA)." Thus, the Commission has authority only to effectuate the provisions of federal
campaign finance law. The definitions of "contribution" and "expenditure" only apply to
“anything of value" made "by any person for the purpose of influencing any election for
Federal office." 2 U.S.C. § 431(8)(A)(i), (9)(A)(i). FECA regulates contributions and
expenditures by political committees, but it does not define every payment made to or by a
political committee as a contribution or expenditure. The Commission's new regulations far

exceed FECA's limited grant of authority.

13376-0007/LEGAL15181134.2 -35-


2. The Allocation and Solicitation Regulations are Not Narrowly Tailored to
Achieve a Compelling Government Interest

Following McConnell v. FEC, and ignoring the subsequent cautions laid out by the
Court in WRTL and Davis, the district court denies that the challenged regulations actually
burden EMILY's List's spending or speech, and labors to defend them as "contribution
limits." EMILY's List, 569 F. Supp. 2d at 41 (JA at 160). Yet even contribution limits are
still subject to the "closest scrutiny” and can be upheld only "if the State demonstrates a
sufficiently important interest and employs means closely drawn to avoid unnecessary
abridgement of associational freedoms." Buckley, 424 U.S. at 25 (internal quotation marks
and citation omitted). The Commission failed to meet its burden under either test.

a. The Commission Has Not Shown a Compelling Government
Interest

The Court has recognized only two constitutionally permissible purposes that can

justify campaign finance limitations: "preventing corruption and the appearance of
corruption’ in election campaigns," WRTL, 127 S. Ct. at 2672 (citing Buckley, 424 U.S, at
45), and "corruption" flowing from the "distorting effects of immense aggregations of wealth
that are accumulated with the help of the corporate form," Austin v. Mich. Chamber of
Commerce, 494 U.S. 652, 660 (1990).” In Buckley, the Court recognized Congress's interest
in preventing "corruption and the appearance of corruption spawned by the real or imagined
coercive influence of large financial contributions on candidates’ positions and on their
actions if elected to office." 424 U.S. at 25 (emphasis added); see also Citizens Against Rent

Coutrol/Coal. for Fair Hous. v. City of Berkeley, 454 U.S. 290, 296-97 (1981) ("Buckley

identified a single narrow exception to the rule that limits on political activity were contrary

7 The Commission did not state in its rulemaking, nor did it argue below, that the solicitation and
allocation regulations were justified by the corporate “corruption” rationale of Austin.

13376-0007/LEGAL15181 134.2 -23-


insofar as they are made "for the purpose of influencing" federal elections. 2 U.S.C.

§ 431(8)(A)(i). "Donations made solely for the purpose of influencing state or local elections
are therefore unaffected by FECA's requirements and prohibitions." McConnell, 540 U.S. at
122. BCRA limited what federal candidates and officeholders could raise in state and local
elections, but only for anticorruption reasons. /d. at 182-84. The solicitation regulation goes
far beyond that, deeming as "contributions" all funds received in response to a solicitation
that "indicates" that "any portion" of the funds will be used for federal purposes. Ifa
solicitation specifies that only a small percentage of funds received will be used for federal
purposes, under the statutory definition, only a portion of the funds received are
contributions, because only that portion would have been made for the purpose of influencing
a federal election. But under the regulation, at least 50 percent and as much as 100 percent
are contributions, for no reason other than who is mentioned. The result is a broad
overreaching of the Commission's authority to regulate funds solicited and donated for

plainly nonfederal purposes.

E. The Commission's Illegal and Disparate Treatment of EMILY's List Is
Arbitrary and Capricious

An agency's rulemaking must be vacated if it is found to be "arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). As part
of this task, a court must determine whether “the agency . . . articulate[d] a satisfactory
explanation for its action including a ‘rational connection between the facts found and the
choice made."" State Farm, 463 U.S. at 43 (quoting Burlington Truck Lines, Inc. v. United
States, 371 U.S. 156, 168 (1962)). "[A]n agency's action is arbitrary and capricious [if] the

agency has not considered certain relevant factors or articulated any rationale for its choice."

13376-0007/LEGAL15181134.2 -40-


that it can raise, under state law, the funds that such law authorizes for state and local
elections: it has done this by naming nonfederal candidates in its solicitations so that half of
the proceeds would not be subject to the limits of FECA. (JA at 72, 77).

The Court's recent decision in WRTL prevents the Commission from defending these
tules on the grounds that EMILY's List can simply use federal funds. In WRTL, the Court
invalidated a provision in BCRA that prohibited corporations like Wisconsin Right to Life,
Inc. from sponsoring "electioneering communications" — communications that named a
clearly identified candidate, were aired within 30 days before a federal primary election or 60
days before a federal general election, and were targeted to the candidate's electorate — as
applied to "genuine issue ads" that did not expressly advocate the election or defeat of a
federal candidate and that were not the "functional equivalent" of express advocacy. 127 S.
Ct. 2671-73. Like EMILY's List, Wisconsin Right to Life had a federally registered political
committee into which it deposited only contributions permissible under federal law, and from
which it made independent expenditures to influence federal elections. See id. at 2697
(Souter, J., dissenting). The law was clear that it could make the advertisement in question
through this account, but it sought the right to do so using funds that were unregulated by the
Commission, for purposes it considered unrelated to federal elections. The Supreme Court
considered its request under the strict scrutiny standard, and found that the law impermissibly
impinged on Wisconsin Right to Life's speech. See id. at 2664 (majority opinion). The
Court rejected the Commission's argument that the availability of a federal funds option
trumped the First Amendment concerns. /d. at 2671 n.9.

Because the regulations impose a "substantial burden" on EMILY's List speech, they

violate the First Amendment. Davis, 128 S. Ct. at 2772.

13376-0007/LEGAL15181134.2 -22-


§ 431 FEDERAL ELECTION CAMPAIGN Laws

with any broadcasting, newspaper, magazine, bill-

board, direct mail, or similar type of general public

communication or political advertising;

(2) such payments are made from con-
tributions subject to the limitations and prohibitions
of this Act; and

(3) such payments are not made from con-
tributions designated to be spent on behalf of a
particular candidate or candidates;

(xii) payments made by a candidate or the authorized
committee of a candidate as a condition of ballot access
and payments received by any political party committee
as a condition of ballot access;

(xiii) any honorarium (within the meaning of section
44li' of this title); and

(xivany loan of money derived from an advance
on a candidate’s brokerage account, credit card, home
equity line of credit, or other line of credit available to
the candidate, if such a loan is made in accordance with
applicable law and under commercially reasonable terms
and if the person making such loan makes loans derived
from an advance on the candidate’s brokerage account,
credit card, home equity line of credit, or other line of
credit in the normal course of the person’s business.

(9) (A) The term “expenditure” includes—

(i) any purchase, payment, distribution, loan,
advance, deposit, or gift of money or anything of value,
made by any person for the purpose of influencing any
election for Federal office; and

(ii) a written contract, promise, or agreement to
make an expenditure.

(B) The term “expenditure” does not include—

(i) any news story, commentary, or editorial dis-

tributed through the facilities of any broadcasting station,

‘This is an obsolete reference to a section of the law repealed in 1991 and not to current
section 441i.

? Section 502(6) of the Department of Transportation and Related Agencies Appropriations
Act, 2001, Pub. Law No. 106-346 amended 2 U.S.C. § 431(8)(B) by adding new clause
(xv). Section 103(b) of the Bipartisan Campaign Reform Act of 2002 (BCRA), Pub. L.
No. 107-155, amended section 431(8)(B) to redesignate clause (xv) as clause (xiv). This
amendment is effective as of November 6, 2002.



TABLE OF AUTHORITIES
(continued)

26 U.S.C. § 527 cecccseesssessessecsssssesssesecsessessesseessessnssncssecsssenseeseassasesssssussessussussseesseasenseenseanecneesees 4
28 U.S.C. § 1291
28 U.S.C. § 1331

5 U.S.C. § 706 w.ssecssecsssssscssesssssessesseessssnssnscensssecsssenseacsessesessessessecsassssssusssassesseessesseeeneeneesnets

Regulations and Rules

#11 CPR. § 100.57 (2008)........:sccsessssssesssssensestsesseateanseseesens 1, 2, 10, 11, 12, 14, 16, 21, 33, 34
11 CPLR. § 106.5 (2002)......cscsscssssssssssesseessessesssessessesssssssssessssssessessessusesseaseasecuecasesuseaseneenesaees 6
11 C.F.R. § 106.6 (2004) ......cceccscsessessesssessesssessesstesessssscsessssssseseeeseesessesaeaseaeeasesesesseateeneenees 5,8
*11 CFR. § 106.6 (2008)... 1, 2, 4, 10, 11, 13, 16, 20, 21, 26, 28, 30, 32, 36, 38
11 CAFLR. § 106.7 (2008)......cessecsessessesseesecssesssesssssnssessesssssssssessessessuecsccnsenseensensenees 7, 32, 39, 41
Fed. R. Civ. P. 56(C).c.sccscsscsessesssessesssssssssssssssssssssssssssssseesesssessesssssssesscsscaeeceeeseesacsaeesseeeceneeneess 18
Other Authorities

FEC Adv. Op. 2003-37 w.ccessessssssessssssssscssssssssssssssssssseesuesscseseaseasecuscnessescnesoesseeseceneeneteass 8,9, 10

*FEC Adv. Op. 2005-13 .... «11, 12, 13, 14, 21, 29, 30, 34

FEC Adv. Op. Request 2005-13 ...c.cccsssssssssssssssssssssessessessnesnteateasecuseaeesesacssesseeseeeaee 12, 13, 14
Political Committee Status, 69 Fed. Reg. 11,736 (proposed Mar. 11, 2004)............40 9, 10, 26
Political Committee Status, 72 Fed. Reg. 5,595 (Feb. 7, 2007) .....se.sssscssssssesnsecssesssessssesseessee 32

*Political Committee Status, Definition of Contribution, and Allocation for Separate
Segregated Funds and Nonconnected Committees, 69 Fed. Reg. 68,056 (Nov. 23,
. 10, 11, 12, 13, 26, 33, 34, 41

13376-0007/LEGAL15181134.2 -vii-


expenses with federal funds, even if its budget committed it to spend 65 percent of its
candidate budget on contributions to or expenditures to influence specific nonfederal
candidates. /d. at | (JA at 295). The Commission found that, under section 106.6 (c)
EMILY's List was required to allocate a minimum of 50 percent federal funds "without
regard to how much a federal political committee may choose to spend on non-Federal
elections." FEC Adv. Op. 2005-13, at 2-3 (JA at 300-01).

EMILY's list also asked whether it had to pay for public communications that referred
to "Democrats" without mentioning a specific federal or nonfederal candidate with at least 50
percent Federal funds. The Commission confirmed that it did, reasoning that "references
solely to a political party inherently influence both Federal and non-Federal elections." /d. at
4 (quoting 69 Fed. Reg. at 68,062) (JA at 302). However, if EMILY's List changed the
content of its communication by removing the reference to Democrats, it could pay for the
revised communication with 100 percent nonfederal funds. /d. at 5 (JA at 303).

Second, EMILY's List indicated that it wished to pay for and distribute a public
communication in support of efforts on behalf of state legislative candidates that would refer
to United States Senator Debbie Stabenow. The communication was intended to stress the
importance of successes of women in state elective office, and highlight Senator Stabenow as
a success story in its program of support for nonfederal candidates. The communication
would not reference a clearly identified nonfederal candidate. FEC Adv. Op. Request 2005-
13, at 1-2 (JA at 295-96). Even though the communication would not be distributed in
Senator Stabenow's home state of Michigan, would not reference her federal candidacy, and
even though Senator Stabenow was not up for election in 2006, the Commission opined that

the communication would have to be paid for with 100 percent federal funds. FEC Adv. Op.

13376-0007/LEGALI5181 134.2 -13-


§106.6

Federal account or its allocation ac-
count are subject to the following re-
quirements:

(A) For each such transfer, the com-
mittee must itemize in its reports the
allocable activities for which the
transferred funds are intended to pay,
as required by 1! CFR 104.10(b)(3); and

(B) Except as provided in paragraph
((2) of this section, such funds may
not be transferred more than 10 days
before or more than 60 days after the
payments for which they are des-
ignated are made.

(iii) Any portion of a transfer from a
committee's non-Federal account to its
Federal account or its allocation ac-
count that does not meet the require-
ments of paragraph (g)(2)(1i) of this sec-
tion shall be presumed to be a loan or
contribution from the non-Federal ac-
count to a Federal account, in viola-
tion of the Act.

(3) Reporting transfers of funds and al-
located disbursements. A political com-
mittee that transfers funds between ac-
counts and pays allocable expenses ac-
cording to this section shall report
each such transfer and disbursement
pursuant to 11 CFR 104.10(b).

(h) Sunset provision. This section ap-
plies from November 6, 2602, to Decem-
ber 31, 2002. After December 31, 2002, see
1 CFR 106.7(a).

(67 FR 49116, July 29, 2002)

$106.6 Allocation of ex;
federal and non-fe
by separate segregated funds and
nonconnected committees.

(a) General rule. Separate segregated
funds and nonconnected committees
that make disbursements in connection
with federal and non-federal elections
shall make those disbursements either
entirely from funds subject to the pro-
hibitions and limitations of the Act, or
from accounts established pursuant to
11 CFR 102.5. Separate segregated funds
and nonconnected committees that
have established separate federal and
non-federal accounts under 11 CFR
102.5 (a)(1)(i), or that make federal and
non-federal disbursements from a sin-
gle account under 11 CFR 102.5(a)(I}(ii).
shall allocate their federal and non-fed-
eral expenses according to paragraphs
(c). ). and (f) of this section. For pur-
poses of this section, ‘“‘nonconnected

nses between
leral activities

11 CFR Ch, | (1-1-08 Edition)

committee” includes any committee
which conducts activities in connec-
tion with an election, but which is not
a party committee, an authorized com-
mittee of any candidate for federal
election. or a separate segregated fund.

(b) Payments for administrative ex-
penses, voter drives and certain public
communications—(1) Costs to be allocated.
Separate segregated funds and noncon-
nected committees that make disburse-
ments in connection with Federal and
non-Federal elections shall allocate ex-
penses for the following categories of
activity in accordance with paragraphs
(c) or (d) of this section:

(i) Administrative expenses including
rent, utilities, office supplies, and sala-
ries not attributable to a clearly iden-
tified candidate, except that for a sepa-
rate segregated fund such expenses
may be pald instead by its connected
organization:

(il) The direct costs of a fundraising
program or event including disburse-
ments for solicitation of funds and for
planning and administration of actual
fundralsing events, where Federal and
non-Federal funds are collected
through such program or event. except
that for a separate segregated fund
such expenses may be paid instead by
its connected organization:

(ili) Generic voter drives including
voter identification, voter registration,
and get-out-the-vote drives. or any
other activities that urge the general
public to register, vote or support can-
didates of a particular party or associ-
ated with a particular issue, without
mentioning a specific candidate; and

(iv) Public communications that
refer to a political party, but do not
refer to any clearly identified Federal
or non-Federa] candidate:

(2) Costs not subject to allocation. Sep-
arate segregated funds and noncon-
nected committees that make disburse-
ments for the following categories of
activity shall pay for those activities
in accordance with paragraph (f) of this
section:

) Voter drives, including voter iden-
tification, voter registration, and get-
out-the-vote drives, in which the print-
ed materials or scripted messages refer
to, or the written instructions direct

140


§ 431 FEDERAL ELECTION CAMPAIGN Laws

(vii) any loan of money by a State bank, a federally
chartered depository institution, or a depository institu-
tion the deposits or accounts of which are insured by the
Federal Deposit Insurance Corporation. ..!' or the National
Credit Union Administration, other than any overdraft made
with respect to a checking or savings account, made in
accordance with applicable law and in the ordinary course
of business, but such loan—

(I) _ shall be considered a loan by each en-
dorser or guarantor, in that proportion of the unpaid
balance that each endorser or guarantor bears to the
total number of endorsers or guarantors;

(II) shall be made on a basis which
assures repayment, evidenced by a written instrument,
and subject to a due date or amortization schedule;
and

(III) shall bear the usual and customary interest
rate of the lending institution;

(viii) any legal or accounting services rendered to
or on behalf of—

(1) any political committee of a political party
if the person paying for such services is the regular
employer of the person rendering such services
and if such services are not attributable to activities
which directly further the election of any designated
candidate to Federal office; or

(IE) an authorized committee of a candidate
or any other political committee, if the person pay-
ing for such services is the regular employer of the
individual rendering such services and if such services
are solely for the purpose of ensuring compliance
with this Act or chapter 95 or chapter 96 of title 26,
but amounts paid or incurred by the regular employer

‘The omitted language is an obsolete reference to the Federal Savings and Loan Insurance
Corporation, which in past years provided account or deposit insurance. This corporation
was abolished and its functions transferred in 1989. See note at 12 U.S.C. § 1437 for a
fuller explanation.

2Section 103(b) of the Bipartisan Campaign Reform Act of 2002 (BCRA), Pub. L. No.
107-155, amended section 431(8)(B) to strike clause (viii) (regarding donations to party
building funds) and redesignate clauses (ix) through (xv) as clauses (viii) through (xiv)
respectively. This amendment is effective as of November 6, 2002.


For example, even though EMILY's List's proposed Stabenow communication would
not have been distributed in Senator Stabenow’s home state of Michigan, would not have
referenced her federal candidacy, and would have been distributed in a year in which Senator
Stabenow was not on the ballot, the Commission found that the communication would have
to be paid for with 100 percent federal funds. /d.. This goes far beyond what the Court
stopped in WRTL.

Despite section 106.6's total lack of tailoring, the district court still upheld it,
imagining hypothetical situations in which communications that merely "refer" to a federal
candidate could have an effect on federal elections. For example, with respect to EMILY's
List's proposed Stabenow communication, the court opined that "a communication referring
to Senator Stabenow might well inspire recipients outside of her home state to contribute to
her campaign, and thus influence her federal election, or might otherwise raise her national
profile and ultimately influence her election." EMILY's List, 569 F. Supp. 2d at 41 (JA at
173). But this was reversible error. It is the government's burden to demonstrate that a
regulation is narrowly tailored under the First Amendment. See Buckley, 424 U.S. at 25.
And it cannot be carried — neither by the government, nor by a court seeking to justify its
outcome — by hypothesizing attenuated chains of causality based on "mere conjecture."
Nixon, 528 U.S. at 392.

In upholding the regulations, the district court also relied on McConnell. But, as
shown above, McConnell involved a well-developed record supporting a concern that state
parties would "function as an alternative avenue for precisely the same corrupting forces"
operating through national parties. 540 U.S. at 164. Even there, Congress limited the scope

of the restrictions to the types of activities that had been abused in the past and that were

13376-0007/LEGAL15181134.2 -30-


likely to effect federal elections. For example, a state party's public communication had to
promote, support, attack, or oppose a federal candidate to be payable entirely with federal
funds. 2 U.S.C. §§ 431(20)(A)(iii); 441i(b)(1). And the rules limiting other activities were
time-bound. For example, voter registration by state parties had to be conducted within 120
days of a regularly scheduled federal election to trigger a 100 percent federal funds
requirement. Jd. § 431(20)(A)(i). Hence, the Court in McConnell could credibly say that
BCRA's state party committee restrictions were "narrowly focused on regulating
contributions that pose the greatest risk of this kind of corruption: those contributions to state
and local parties that can be used to benefit federal candidates directly." 540 U.S. at 167.
And, "[flurther, these regulations all are reasonably tailored, with various temporal and
substantive limitations designed to focus the regulations on the important anticorruption
interests to be served." Jd.

The allocation regulations at issue here are entirely different. These rules were
wholly a Commission invention, as Congress was silent on the subject of nonparty PACs
during BCRA's passage. And unlike Congress, the Commission gathered no evidence of
corruption and no evidence that nonconnected committees have conspired with candidates to
help them circumvent the limits. The Commission did not carefully pick the type of activity
to be regulated or limit the scope of the rules' sweep. And the rules go well beyond
communications that "promote" or "attack" federal candidates.

Moreover, the results are perverse, resulting in notable instances of treatment more
favorable for parties than for nonconnected committees like EMILY's List. A state party
could use soft money to pay for a communication in which a federal candidate from the state

endorsed a state ballot initiative, as long as the communication did not support or oppose the

13376-0007/LEGAL15181134.2 -31-


UNITED STATES COURT OF APPEALS
DISTRICT OF COLUMBIA CIRCUIT

EMILY'S LIST,

Plaintiff-Appellant,
Vv. No. 08-5422

FEDERAL ELECTION COMMISSION,

Defendant-Appellee.

CERTIFICATE OF COMPLIANCE WITH RULE 32(a)
This brief complies with the type-volume limitation of Federal Rule of Appellate
Procedure 32(a)(7)(B) because this brief contains 13,422 words, excluding the parts of the
brief exempted by Federal Rule of Appellate Procedure 32(a)(7)(B)(iii) and D.C. Circuit

Rule 32(a)(2).

Dated: January 26, 2009 ie a

Rober ¥. Bauer

“ora W. Reese

PERKINS COIE LLP

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

Attorneys for EMILY's List

13376-0007/LEGAL15181134.2 -46-


Cc. The Commission's Illegal and Disparate Treatment of EMILY's List Violates the
First Amendment of the United States Constitution

1. The Allocation and Solicitation Regulations Substantially Burden Core
Protected Speech and Are Subject to Strict Scrutiny

In regulating the manner in which political committees spend funds and what they
may say while raising funds, the Commission's regulations burden what the Supreme Court
has described as "political expression ‘at the core of our electoral process and of the First
Amendment freedoms." Buckley, 424 U.S. at 39 (quoting Williams v. Rhodes, 393 U.S. 23,
32 (1968)). In Buckley, the Court sharply distinguished expenditure limits from contribution
limits. The Court found that spending limits directly “constrain campaigning by candidates"
and thus must be analyzed under strict scrutiny. /d. at 20. In contrast, the Court found that
limits on a contributor's ability to contribute to a candidate imposed only a marginal
restriction upon the contributor's ability to engage in free communication." /d. The Court
reasoned that "[a] contribution serves as a general expression of support for the candidate and
his views, but does not communicate the underlying basis for the support." Jd. at 21. But
contribution limits are still subject to "closest scrutiny" and must be "closely drawn" to meet
an "important" state interest. /d. at 25 (internal quotation marks and citation omitted).

Since Buckley, the Court has followed this framework, applying strict scrutiny to
spending limits, and evaluating contribution limits under the "closely drawn" standard. See,
e.g., Nixon v. Shrink Mo. Gov't PAC, 528 U.S. 377, 387-88 (2000). But the government
cannot evade strict scrutiny simply by denying that the regulation limits spending. Quite
recently, the Court has rejected Commission efforts to avoid strict scrutiny by characterizing
its restrictions as something other than spending limits. It has found, for example, that a law

which "substantial[ly] burden{s]" political expression is subject to strict scrutiny, even if it

13376-0007/LEGAL15181134.2 -19-


§ 100.55

$100.55 Extension of credit.

The extension of credit by any person
is a contribution unless the credit is
extended in the ordinary course of the
person's business and the terms are
substantially similar to extensions of
credit to nonpolitical debtors that are
of similar risk and size of obligation. If
a creditor fails to make a commer-
cially reasonable attempt to collect
the debt, a contribution will result.
(See 11 CFR 116.3 and 116.4.) If a debt
owed by a political committee is for-
given or settled for less than the
amount owed, a contribution results
unless such debt is settled in accord-
ance with the standards set forth at 11
CFR 116.3 and 116.4.

$100.56 Office building or facility for
national party committees.

A gift. subscription. loan, advance, or
deposit of money or anything of value
to a national party committee for the
purchase or construction of an office
building or facility 1s a contribution.

$100.57 Funds received in response to
solicitations.

(a) Treatment as contributions. A gift,
subscription, loan, advance, or deposit
of money or anything of value made by
any person In response to any commu-
nication is a contribution to the person
making the communication if the com-
munication indicates that any portion
of the funds received will be used to
support or oppose the election of a
clearly identified Federal candidate.

(b) Certain allocable solicitations. If the
costs of a solicitation described in
paragraph (a) of this section are allo-
cable under 11 CFR 106.1, 106.6 or 106.7
as a direct cost of fundraising. the
funds received in response to the solici-
tation shall be contributions as fol-

lows:

() If the solicitation does not refer
to any clearly identified non-Federal
candidates, but does refer to a political
party, in addition to the clearly identi-
fied Federal candidate described in
paragraph (a) of this section, one hun-
dred percent (100%) of the total funds
received are contributions.

(2) If the solicitation refers to one or
more clearly Identified non-Federal
candidates, in addition to the clearly
identified Federal candidate described

11 CFR Ch. | (1-1-08 Edition)

in paragraph (a) of this section, at
least fifty percent (50%) of the total
funds received are contributions,
whether or not the solicitation refers
to a political party.

(c) Joint fundraisers. Joint fundraising
conducted under 11 CFR 102.17 shall
comply with the requirements of para-
graphs (a) and (b) of this section except
that joint fundraising between or
among authorized committees of Fed-
eral candidates and campaign organiza-
tions of non-Federal candidates is not
subject to paragraph (a) or (b) of this
section.

{69 FR 68066, Nov. 23, 2004, as amended at 70
FR 75384, Dec. 20, 2005)

Sul it C—Exceptions to
PPE ntnbuliens

Source: 67 FR $0585, Aug. 5, 2002, unless
otherwise noted.

$100.71 Scope.

(a) The term contribution does not in-
clude payments, services or other
things of value described in this sub-
part.

(b) For the purpose of this subpart, a
contribution or payment made by an
individual shall not be attributed to
any other individual, unless otherwise
specified by that other individual in
accordance with 11 CFR 110.1(k).

$100.72 Testing the waters.

(a) General exemption. Funds received
solely for the purpose of determining
whether an individual should become a
candidate are not contributions. Exam-
ples of activities permissible under this
exemption if they are conducted to de-
termine whether an individual should
become a candidate include, but are
not limited to, conducting a poll. tele-
phone calls, and travel. Only funds per-
missible under the Act may be used for
such activities. The individual shall
keep records of all such funds received.
See 11 CFR 101.3. If the individual sub-
sequently becomes a candidate. the
funds received are contributions sub-
ject to the reporting requirements of
the Act, Such contributions must be
reported with the first report filed by
the principal campaign committee of

62


TITLE 2. THE CONGRESS § 431

for such legal or accounting services shall be reported

in accordance with section 434(b) of this title by the

committee receiving such services;

(ix) the payment by a State or local committee of
a political party of the costs of campaign materials (such
as pins, bumper stickers, handbills, brochures, posters,
party tabloids, and yard signs) used by such committee in
connection with volunteer activities on behalf of nominees
of such party: Provided, That—

(1) such payments are not for the cost of
campaign materials or activities used in connection
with any broadcasting, newspaper, magazine, bill-
board, direct mail, or similar type of general public
communication or political advertising;

(2) such payments are made from con-
tributions subject to the limitations and prohibitions
of this Act; and

(3) such payments are not made from con-
tributions designated to be spent on behalf of a
particular candidate or particular candidates;

(x) the payment by a candidate, for nomination
or election to any public office (including State or local
office), or authorized committce of a candidate, of the
costs of campaign materials which include information
on or reference to any other candidate and which are used
in connection with volunteer activities (including pins,
bumper stickers, handbills, brochures, posters, and yard
signs, but not including the use of broadcasting, newspa-
pers, magazines, billboards, direct mail, or similar types
of general public communication or political advertising):
Provided, That such payments are made from contributions
subject to the limitations and prohibitions of this Act;

(xi) the payment by a State or local committee of
a political party of the costs of voter registration and get-
out-the-vote activities conducted by such committee on
behalf of nominees of such party for President and Vice
President: Provided, That—

(1) such payments are not for the costs of
campaign materials or activities used in connection


Il.

Ml.
Iv.

VI.

TABLE OF CONTENTS

STATEMENT OF JURISDICTION. .......ssssssssssssssssessessssessessesesssesesvonsessaeessseassesnaesnes 1

STATEMENT OF THE ISSUES PRESENTED FOR REVIEW.
STATUTES AND REGULATIONS .

STATEMENT OF THE CASE .
STATEMENT OF THE FACTS .u...cccssessssscssesssssssssessesssseessessseesasscsseesaeeensscanesseseaneensees 3
A. Description Of EMILY's List.......cscsscsssssccsccsesseessesseeasesescsesscerecesseesseeseeseeeees 3
B. "Allocation" Under the Former Regulatory Regime..
Cc. BCRA and Allocation by Party Committees...
D. Federal Election Commission Allocation and Solicitation Rulemaking.
E. Summary of New Regulations 0.0.0.0... ccsesssssesseessessecasenssseesseeseesessecssesseeseees 10
F. Effect on EMILY's List .........:-sssssssesssessssessssssssssseesssecssecsecceneesseeensesseessneesnecsse 14
ARGUMENT .
A. Summary of the Argument. 16
B. Standard of Review
Cc. The Commission's Illegal and Disparate Treatment of EMILY's List
Violates the First Amendment of the United States Constitution ...........0 18
1. The Allocation and Solicitation Regulations Substantially
Burden Core Protected Speech and Are Subject to Strict
Scrutiny
2. The Allocation and Solicitation Regulations are Not Narrowly
Tailored to Achieve a Compelling Government Interest ..................+ 23
a. The Commission Has Not Shown a Compelling
Government Interest ........ccccsscsssessesseeseesseeateanscnseneeeeseneeseeeee 23
b. The Allocation Regulations Are Not Tailored to
Achieve a Compelling Government Interest... 28
c. The Solicitation Regulation Is Not Tailored to Achieve
a Compelling Government Interest .........scssssesssecssecseeeneees 32
D. The Regulations Violate the Commission's Statutory Authority .............000 34

1. The Mere "Reference" Rule Exceeds the Statutory Authority of
the Commission..

2. The "Minimum Percentages" Rule for Administrative Costs
Exceeds the Statutory Authority of the Commission ............cccscsee 38

13376-0007/LEGAL15181134.2 -iii-


allocating committees goes well beyond a statutory basis for FEC regulation. When applied
beyond the sphere of federal election activity, such as to the state and local election activity
vital to EMILY's List, these restrictions at issue contravene the statute and exceed the
Commission's authority.

In summarily rejecting EMILY's List's APA claim, the district court referenced its
earlier conclusion that communications that merely "refer" to a federal candidate could have
a hypothetical effect on federal elections. EMILY's List, 569 F. Supp. 2d at 58 n.17 (JA at
189). This was error. FECA regulates "contributions" and "expenditures" made "for the
purpose of influencing any election for Federal office." 2 U.S.C. § 431(8)(A)(i), (9)(A)(i).
The Commission does not have authority to regulate activity simply because it may have an
effect, however attenuated, on federal elections. This Court should reverse.

2. The "Minimum Percentages" Rule for Administrative Costs Exceeds the
Statutory Authority of the Commission

The final rule requires that political organizations like EMILY's List must pay for
their administrative costs with federal funding at a level of no less than 50 percent of the total
cost, without regard to the actual stake of the organization in federal elections. See 11 C.F.R.
§ 106.6(c). Under this rule, if EMILY's List supports just one federal candidate or allocates
just one percent of its total budget to the entire class of federal candidates supported in an
election cycle, the result is the same: it must pay for no less than 50 percent of its
administrative costs with federal funding.

This arbitrary minimum exceeds the Commission's statutory authority, for the same
reason the "mere reference" standard does. It requires political committees to pay 50 percent

of their administrative costs with federal funds — regardless of whether they support only a

13376-0007/LEGAL15181 134.2 -38-


1. The Mere "Reference" Rule Exceeds the Statutory Authority of the
Commission

The final rules apply severe financing restrictions on the basis of a mere "reference"
to a federal candidate or a political party. See 11 C.F.R. § 106.6(f). The rules require that
communications that merely reference a clearly identified federal candidate must be paid for
with at least some federal funds, and with 100 percent federal funds if no clearly identified
nonfederal candidate is mentioned. See id. This is a course that Congress rejected when
developing FECA and its subsequent amendments. Congress focused the statutory scheme
instead on expenditures "for the purpose of influencing" a federal election. See 2 U.S.C.

§ 431(8)(A)(i), (9)(A)G). The Commission's rules stray impermissibly beyond these
boundaries.

Congress' enactment of BCRA shows why this is so. Acting on record evidence,
Congress found certain types of political party activity to be in connection with federal
elections. See id. § 441i(a); McConnell, 540 U.S. at 132-34, 142. Yet Congress, in the most
comprehensive campaign finance legislation passed in more than twenty years, chose not to
regulate the activities of nonparty committees like EMILY's List at all. Thus, there is no
statutory basis for the Commission's regulation of nonfederal activity. The Commission
remains tethered to the definitions of "contribution" and "expenditure," which are linked
inextricably to federal elections.

Yet even if BCRA had provided a basis to regulate EMILY's List nonfederal
disbursements and solicitations, the Commission would still have exceeded its statutory
authority. By regulating communications that merely refer to federal candidates, on that

basis alone, the Commission flies past the clear limits Congress set in BCRA when

13376-0007/LEGAL15181134.2 -36-


§ 431

FEDERAL ELECTION CAMPAIGN Laws

amount equal to 20 percent of the expenditure limitation
applicable to such candidate under section 441a(b), but
all such costs shall be reported in accordance with section
434(b);

(vii) the payment of compensation for legal or
accounting services—

() rendered to or on behalf of any political
committee of a political party if the person paying
for such services is the regular employer of the indi-
vidual rendering such services, and if such services
are not attributable to activities which directly further
the election of any designated candidate to Federal
office; or

(II) rendered to or on behalf of a candidate
or political committee if the person paying for such
services is the regular employer of the individual
rendering such services, and if such services are
solely for the purpose of ensuring compliance with
this Act or chapter 95 or chapter 96 of title 26, but
amounts paid or incurred by the regular employer for
such legal or accounting services shall be reported
in accordance with section 434(b) by the committee
receiving such services;

(viii) the payment by a State or local committee of
a political party of the costs of campaign materials (such
as pins, bumper stickers, handbills, brochures, posters,
party tabloids, and yard signs) used by such committee in
connection with volunteer activities on behalf of nominees
of such party: Provided, That—

(1) such payments are not for the costs of
campaign materials or activities used in connection
with any broadcasting, newspaper, magazine, bill-
board, direct mail, or similar type of general public
communication or political advertising;

(2) such payments are made from con-
tributions subject to the limitations and prohibitions
of this Act; and

(3) such payments are not made from con-
tributions designated to be spent on behalf of a
particular candidate or particular candidates;

(ix) the payment by a State or local committee of
a political party of the costs of voter registration and get-

8


Cc. BCRA and Allocation by Party Committees

Prior to 2002, political party committees were also allowed to allocate their expenses
for mixed federal and nonfederal expenses, such as get-out-the-vote drives and generic party
advertising. Unlike nonconnected committees, party committees allocated their expenses
according to fixed percentages, rather than the funds expended method. 11 C.F.R.

§§ 106.5(b)(2), (c)(1)(i) (2002).

This changed when Congress passed the Bipartisan Campaign Reform Act of 2002.
BCRA was passed to stem the influence of soft money raised and spent by state and national
party committees with the participation of federal officeholders and candidates. National
parties would raise large amounts of unregulated soft money and transfer it to the state
parties that could use a larger percentage of soft money to finance mixed-purpose activities
that would help elect federal candidates. McConnell v. FEC, 540 U.S. 93, 124 (2003).
Federal candidates would, in turn, solicit soft money for the parties, directing potential
donors to party committees that could accept soft money. /d. at 125. According to a report
issued by the Senate Committee on Governmental Affairs, parties would promise donors
special access to candidates and government officials in exchange for soft money
contributions. /d. at 130. The perceived danger was that unlimited soft money, received by
parties maintaining close association with their candidates, would result in actual or apparent
corruption. In response, BCRA banned national political parties from raising or spending
soft money. 2 U.S.C. § 441i(a). BCRA also prohibited state parties from using soft money
for specific types of "federal election activity," including voter identification, generic party
advertisements, and communications that promote, support, attack, or oppose federal

candidates. Id. §§ 431(20), 441i(b). In McConnell v. FEC, the Supreme Court upheld the

13376-0007/LEGAL15181 134.2 -6-


ADDENDUM



TITLE 2. THE CONGRESS
Chapter 14—Federal Election Campaigns
Subchapter 1—Disclosure of Federal Campaign Funds

§ 431. Definitions

When used in this Act:

(1) The term “election” means—

(A) a general, special, primary, or runoff election;

(B) a convention or caucus of a political party which
has authority to nominate a candidate;

(C) aprimary election held for the selection of delegates
to a national nominating convention of a political party; and

(D) aprimary election held for the expression of a prefer-
ence for the nomination of individuals for election to the office
of President.

(2) The term “candidate” means an individual who seeks
nomination for election, or election, to Federal office, and for purposes
of this paragraph, an individual shall be deemed to seek nomination
for election, or election—

(A) if such individual has received contributions ag-
gregating in excess of $5,000 or has made expenditures ag-
gregating in excess of $5,000; or

(B) if such individual has given his or her consent to
another person to receive contributions or make expenditures
on behalf of such individual and if such person has received
such contributions aggregating in excess of $5,000 or has made
such expenditures aggregating in excess of $5,000.

(3) The term “Federal office” means the office of President
or Vice President, or of Senator or Representative in, or Delegate or
Resident Commissioner to, the Congress.

(4) The term “political committee” means—

(A) any committee, club, association, or other group of
persons which receives contributions aggregating in excess of
$1,000 during a calendar year or which makes expenditures
aggregating in excess of $1,000 during a calendar year; or


nonconnected committee and applied the allocation ratios in order to pay its administrative
and generic ballot expenses with a significant proportion of nonfederal funds.

First, a paper organization calling itself Americans for a Better Country ("ABC")
filed an advisory opinion request with the FEC. Representing supporters of President Bush's
reelection, it claimed to want to engage in the same activities attributed to ACT. In fact,
however, the group had neither raised nor spent any funds — and still has not.’ Its sole
function was to induce the Commission to recast the allocation rules so as to curtail ACT's
activities.

On February 19, 2004, responding to ABC's supposed request, the Commission
issued Advisory Opinion 2003-37. In this opinion, the Commission — without a rulemaking —
required allocating committees to pay for any public communication that "promotes,
supports, attacks, or opposes" federal candidates entirely with federal funds.> FEC Adv. Op.
2003-37, at 9-11 (Feb. 19, 2004) (JA at 205-07). The Commission also built this requirement
into the formulas used to calculate allocation, so that any communication of this kind —
promoting, supporting, attacking or opposing a federal candidate — would be included in the
tally of "direct" federal candidate support used to determine the federal share of allocated
expenses. See id.; 11 C.F.R. § 106.6(c) (2004). The Commission's Office of General
Counsel later described this advisory opinion as a "substantial reinterpretation of the

‘allocation’ rules." See FEC Agenda Doc. No. 04-48, at 7 (May 11, 2004) (JA at 271).

* ABC's FEC disclosure reports may be viewed at http://www. fec.gov/disclosure.shtml.

5 This standard mirrored language in BCRA that prohibited state parties from using soft money to
pay for public communications that "promote," "support," "attack," or "oppose" a candidate for
federal office. 2 U.S.C. §§ 431(20)(A)(3), 441i(b)(1). The Commission did not, however, cite to this
provision but, rather, rooted its finding in FECA's definition of "expenditure." FEC Advisory
Opinion 2003-37, at 9 (citing 2 U.S.C. § 431(9)) (JA at 205).

13376-0007/LEGAL15181134.2 -8-


RULE 26.1 DISCLOSURE STATEMENT

Pursuant to Federal Rule of Appellate Procedure 26.1 and D.C. Circuit Rule 26.1,

Plaintiff-Appellant EMILY's List hereby submits its corporate disclosure statement.

(a) EMILY 's List has no parent company, and no publicly held company has a 10

percent or greater ownership interest in EMILY's List.

(b)  EMILY's List is a political organization whose purpose is to recruit and fund
viable women candidates; to help them build and run effective campaign organizations; and
to mobilize women voters to help elect progressive candidates across the country. Since its
organization 24 years ago, EMILY's List has helped to elect 78 Democratic women to the
U.S. House of Representatives, 15 to the U.S. Senate, 9 to governorships, and over 364 to
other state and local offices. EMILY's List is a nonconnected committee that is registered
with, and reports to, the Federal Election Commission. EMILY's List also raises and
disburses funds for the purpose of influencing state and local elections. EMILY's List reports
its nonfederal receipts and disbursements to the Internal Revenue Service in accordance with

26 U.S.C. § 527), and to state authorities as required by applicable state law.

13376-0007/LEGAL15181134,2 -ii-


federal officeholder is in another state entirely, and even if the officeholder's
election is months or years away.

e Acommunication that supports a political party generally, that refers to no
clearly identified candidates, and that is run before an election in which there
are no federal candidates on the ballot, must be paid for with 50 percent

federal funds.

There is no record evidence to justify this broad sweep. As described above, the
Commission did not consider the relationship between these provisions and the federal
interest in corruption. And the Commission has only identified one example of a
nonconnected committee purportedly trying to circumvent the contribution limits, and only
did so after the rules were adopted, never suggesting for a moment — as it could not — that
EMILY's List's situation was remotely comparable.

The reference standard is even broader than the one rejected in WRTL. In WRTL, the
Court found that, as applied to ads that were not "express advocacy or its functional
equivalent," the restrictions on corporate and union advertising even on the eve of an election
bore too little relation to the government interest in preventing quid pro quo corruption to
pass constitutional scrutiny. 127 S. Ct. at 2671. In contrast, the allocation rules regulate
speech that merely mentions a political party or a clearly identified federal candidate,
"[rlegardless of its context." FEC Adv. Op. 2005-13, at 3-4 (JA at 301-02). And unlike the
provision struck down in WRTL, it has no time limit and no geographic targeting requirement
to ensure that the provision is tailored to regulate communications that would actually affect

federal elections.

13376-0007/LEGAL15181134.2 -29-


VI. ARGUMENT
A. Summary of the Argument

The regulations at issue in this case violate the First Amendment. They are the
functional equivalent of spending limits, prohibiting EMILY's List from supporting state and
local candidates in certain ways when its federal funds are exhausted. In some cases,
EMILY 's List can avoid the harsh consequences of these regulations, but only by altering the
content of its political speech — a result that is impermissible under the First Amendment.
See WRTL, 127 S. Ct. at 2671 n.9. The regulations put a “substantial burden" on EMILY's
List's speech and, therefore, fail under strict scrutiny. See Davis v. FEC, 128 S. Ct. 2759,
2772 (2008).

Even if the regulations are viewed as contribution limits, they do not strike the
required balance between the Commission's authority to regulate federal elections in the
name of preventing corruption or its appearance and the preservation of rights of political
associations like EMILY's List. The regulations were promulgated without any factual
record demonstrating that nonconnected committees like EMILY's List have been complicit
in candidate corruption; before this litigation commenced, the Commission had not once
articulated how the regulations related to preventing candidate corruption; and the
regulations restrict vast amounts of nonfederal activity, showing that they are not tailored to
meet an important, let alone a compelling, government interest. WRTL, 127 S. Ct. at 2664;
Buckley v. Valeo, 424 U.S. 1, 25 (1976)(per curiam).

Nor are the regulations permitted by FECA. FECA was passed to regulate
contributions and expenditures made with "the purpose of influencing any election for

Federal office." 2 U.S.C. § 431(8)(A)(i), (9)(A)(i). In 2002, Congress passed BCRA to

13376-0007/LEGAL 15181 134.2 -17-


CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES

Pursuant to D.C. Circuit Rule 28(a)(1), Plaintiff-Appellant EMILY's List submits this

certificate as to parties, rulings, and related cases.

PARTIES

The parties and amici that appeared before the district court were EMILY's List,
plaintiff; Federal Election Commission, defendant; and Campaign Legal Center, Center for
Responsive Politics, Democracy 21, Senator Russell Feingold, Senator John McCain,

Representative Martin Meehan, and Representative Christopher Shays, amici.

RULINGS UNDER REVIEW
The ruling at issue in this Court is the order of the District Court for the District of
Columbia by United States District Judge Colleen Kollar-Kotelly, entered on July 31, 2008.

The official citation is 569 F. Supp. 2d 18 (D.D.C. 2008)

RELATED CASES

The case on review was previously before this Court on an appeal by EMILY's List of
the district court's denial of plaintiff's motion for a preliminary injunction. This Court
affirmed. EMILY's List v. FEC, 362 F. Supp. 2d 43 (D.D.C. 2005), aff'd, 170 Fed. Appx. 719
(D.C. Cir. 2005) (per curiam) (No. 05-5160). There are no related cases currently pending in

this Court or in any other court of which counsel is aware.

13376-0007/LEGAL15181134.2 -i-


Republican Nat'l Comm. v. FEC, 76 F.3d 400, 407 (D.C. Cir. 1996) (internal quotation marks
and citations).

1. The Fifty Percent Federal Minimum for Administrative and Voter Drive
Expenses Is Arbitrary and Capricious

As noted above, the final regulations require that 50 percent of all administrative and
voter drive expenses be paid for with federal funds; this minimum threshold amount entirely
replaces the funds expended method. This application of a universal threshold to all
allocating committees is arbitrary and capricious.

The Commission reported, in its explanation of the final rules, that a "flat 50%
allocation minimum recognizes that [separate segregated funds] and nonconnected
committees can be ‘dual purpose’ in that they engage in both Federal and non-Federal
election activities. ... However, the 50% figure also recognizes that some Federal [separate
segregated funds] and nonconnected committees conduct a significant amount of non-Federal
activity in addition to their Federal spending." 69 Fed. Reg. at 68,062 (JA at 288). That
explanation demonstrates the arbitrary nature of the Commission's decision.

The Commission crudely decided that because these committees had a "dual
purpose," a 50 percent minimum is appropriate. That decision was, simply put, an illogical
one: the appropriate level of federal funding has nothing to do with how many different roles
a committee has, and everything to do with their relative importance to the organization.
State parties have a "dual purpose" too, and yet they may pay administrative expenses with as
little as 15 percent federal funds, and never more than 36 percent federal funds. See 11
C.F.R. § 106.7(d)(2). Thus, the Commission cannot even claim the benefit of a "one size fits

all" rule. Rather, it singled out non-party PACs for this ungenerous treatment, without ever

13376-0007/LEGAL15181134.2 -Al-


Similar record evidence led the Court in McConnell to uphold statutes preventing
state political parties from using soft money for so-called "federal election activity." Jd. at
173. The Court cited evidence "that the corrupting influence of soft money does not
insinuate itself into the political process solely through national party committees. Rather,
state committees function as an alternative avenue for precisely the same corrupting forces.”
Id. at 164. Indeed, there was specific record evidence of federal parties directing big-ticket
donors — who had contributed the federal maximum -— to state parties, to whom they could
contribute even more. /d. at 164 & n.60. This evidence led the Court to conclude that
"[p]reventing corrupting activity from shifting wholesale to state committees and thereby
eviscerating FECA clearly qualifies as an important governmental interest." /d. at 165-66.

But the Court has since revealed the limits of this anti-circumvention rationale. In
striking down BCRA's prohibition on corporation-sponsored communications as applied to
"genuine issue ads," the Court explained that the state has an interest in regulating ads that
are the "functional equivalent" of express advocacy because such "large independent
expenditures pose the same dangers of actual or apparent guid pro quo arrangements as do
large contributions." WRTL, 127 S. Ct. at 2672 (quoting Buckley, 424 U.S. at 45). Issue ads
that do not expressly advocate the election of a federal candidate, however, "are by no means
equivalent to contributions, and the guid pro quo corruption interest cannot justify regulating
them." Jd. Such a ban on issue ads would be an impermissible "prophylaxis-upon-
prophylaxis." /d.

While McConnell upheld rules that were supported by an "ample record," 540 U.S. at
145, this Court faces rules that have been supported by no evidence at all. In its rulemaking,

the Commission did not once mention the need to prevent corruption as the rationale behind

13376-0007/LEGAL15181134.2 -25-


to "leave[] the group issuing the communication with complete control over whether its
communications will trigger new section 100.57" by adopting the test of FEC v. Survival
Education Fund, Inc., 65 F.3d 285 (2d Cir. 1995). 69 Fed. Reg. at 68,057 (JA at 283). But
the Commission has read this standard broadly to create peril for any organization raising
funds while mentioning a federal candidate. For example, the Commission found a letter to
be a federal solicitation when Senator Stabenow asked: "EMILY's List's support over the
years for candidates like me has made an enormous difference to the progress of women
toward equality in the pursuit of political office. But we have a long way to go. That's why I
need your help." FEC Adv. Op. 2005-13, at 6 (JA at 304). The Commission reasoned that
Senator Stabenow was appealing on her own behalf. This solicitation, however, is
ambiguous at best. A more natural reading is that Senator Stabenow is asking for help to
support a cause she supports, not help to support her reelection campaign.

Far from affording committees "complete control" over their solicitations, this
regulation is a trap for the unwary. The Commission's broad and confusing reading of
section 100.57 has caused committees like EMILY's List to alter their communications,
either by avoiding the mention of federal candidates in their solicitations or by adding
references to nonfederal candidates. (JA at 72). And it has caused organizations to incur
hundreds of thousands of dollars in civil fines from the Commission. See, e.g., Conciliation
Agreement, FEC MUR 5487, at 14 (Feb. 28, 2007), available at
http://eqs.nictusa.com/eqs/searchegs. Section 100.57 impermissibly chills EMILY's List's
speech and is not closely tailored to achieve the compelling government interest in

preventing candidate corruption.

13376-0007/LEGAL15181134.2 -34-


does not limit spending per se. Davis, 128 S. Ct. at 2772; see also WRTL, 127 S. Ct. at
2664°; Buckley, 424 U.S. at 44-45.

In Davis, the Court struck down the so-called "Millionaire's Amendment" of BCRA.
128 S. Ct. at 2766. That provision held that, when a candidate for federal office contributed
personal funds in excess of $350,000 to his or her campaign, the candidate's opponent could
receive contributions at treble the normal limit. /d. The Court found that this scheme
violated the First Amendment because it "require[d] a candidate to choose between the First
Amendment right to engage in unfettered political speech and subjection to discriminatory
fundraising limitations." /d. at 2771.

The rules under challenge here substantially burden EMILY's List's expression and
are subject to strict scrutiny. The allocation rules are the functional equivalent of spending
limits: they prohibit EMILY's List from supporting state and local candidates in certain ways
when its federal funds are exhausted. For example, under the "reference" rule of section
106.6(f), if EMILY's List sponsors a public communication distributed only in Missouri in
which a United States Senator from New York endorses a Missouri state ballot initiative, it
must pay for that communication with 100 percent federal funds, which are subject to the
strict limitations of FECA and are more difficult to raise. Thus, even in the absence of any
real nexus to a federal election, EMILY's List must refrain from participating in nonfederal
elections in the most effective way. This result is impermissible under the First Amendment.
As the Supreme Court found in WRTL, a restraint on speech is not permissible merely

because a speaker can change his or her message to avoid mentioning a candidate:

® Because the Supreme Court did not issue a majority opinion in WRTL, the opinion of Chief Justice
Roberts, decided on the narrowest grounds, is the holding of the Court. See Marks v. United States,
430 U.S. 188, 193 (1977).

13376-0007/LEGAL15181134.2 -20-


elect 78 Democratic women to the U.S. House, 15 to the U.S. Senate, 9 to governorships, and
over 364 to other state and local offices.

The federal account of EMILY's List is a nonconnected political committee’ that is
registered with, and reports to, the Federal Election Commission. For the purpose of raising
and disbursing funds for nonfederal elections, EMILY's List also maintains a nonfederal
account. This account accepts funds from sources, and in amounts, that the states authorize
for use in supporting local and state candidates, but that may not be permissible under federal
campaign finance law for the support of federal candidates. (JA at 70). EMILY's List
reports its nonfederal receipts and disbursements to the Internal Revenue Service in
accordance with section 527(j) of the Internal Revenue Code, 26 U.S.C. § 527(j), and to state
authorities as required by applicable state law.

All of EMILY's List's disclosure reports to the FEC and the IRS are publicly available
on those agencies’ respective Web sites.

B. "Allocation" Under the Former Regulatory Regime

Like other national political organizations, EMILY's List conducts a number of
activities, such as voter identification, voter registration, get-out-the-vote and generic voter
mobilization activities, which affect both federal and nonfederal elections. In addition,
EMILY's List has certain fixed administrative and overhead costs, such as rent, salaries,
supplies, and the like. For more than 25 years, the FEC provided for an "allocation"

procedure to ensure that a political committee paid for those particular expenses attributable

2? EMILY's List site, Women We Helped Elect,
http://www.emilyslist.org/about/women_we_helped_elect/ (last visited Jan. 26, 2009).

> A "nonconnected committee" is a political committee that is not a party committee, an authorized
committee of a candidate, or a separate segregated fund established by a corporation or labor
organization. 11 C.F.R. § 106.6(a).

13376-0007/LEGAL15181134.2 -4.


TITLE 2. THE CONGRESS § 431

or in the church or community room for candidate-related
or political party-related activities, to the extent that the
cumulative value of such invitations, food, and beverages
provided by such individual on behalf of any single can-
didate does not exceed $1,000 with respect to any single
election, and on behalf of all political committees of a
political party does not exceed $2,000 in any calendar
year;

(ii) the sale of any food or beverage by a vendor
for use in any candidate’s campaign or for use by or on
behalf of any political committee of a political party at a
charge less than the normal comparable charge, if such
charge is at least equal to the cost of such food or bever-
age to the vendor, to the extent that the cumulative value
of such activity by such vendor on behalf of any single
candidate does not exceed $1,000 with respect to any
single election, and on behalf of all political committees
of a political party does exceed $2000 in any calendar
year;

{iv) any unreimbursed payment for travel expenses
made by any individual on behalf of any candidate or any
political committee of a political party, to the extent that
the cumulative value of such activity by such individual
on behalf of any single candidate does not exceed $1,000
with respect to any single election, and on behalf of all
political committees of a political party does not exceed
$2,000 in any calendar year;

(v) the payment by a State or local committee of
a political party of the costs of preparation, display, or
mailing or other distribution incurred by such commit-
tee with respect to a printed slate card or sample ballot,
or other printed listing, of 3 or more candidates for any
public office for which an election is held in the State
in which such committee is organized, except that this
clause shall not apply to any cost incurred by such com-
mittee with respect to a display of any such listing made
on broadcasting stations, or in newspapers, magazines, or
similar types of general public political advertising;

(vi) any payment made or obligation incurred by a
corporation or a labor organization which, under section
441b(b) of this title, would not constitute an expenditure
by such corporation or labor organization;


explaining why, and at seeming odds with the Congressional design. This is classic arbitrary
and capricious agency decisionmaking.
2. The Solicitation Regulation Is Arbitrary and Capricious

As described earlier, the solicitation regulation provides that all funds received are
"contributions" if given in response to a solicitation indicating that "any portion" of the funds
will be used to support or oppose federal candidates. This is true even if the solicitation
indicates that some or most of the funds will be used for other purposes, including the
election or defeat of unspecified nonfederal candidates. This regulation is arbitrary and
capricious.

The Commission explained in the explanation and justification of the final rules why
it believed at least some funds should be defined as "contributions" in response to such a
solicitation. However, there was no "rational basis" for the Commission's decision to deem
all such funds to be contributions. See Envtl. Def. Fund, Inc. v. Costle, 657 F.2d 275, 283
(D.C. Cir. 1981). No explanation was proffered as to why a solicitation's specific
explanation of how it will use the funds it receives should not trump the presumption that all
funds are donated and will be used for the purpose of influencing a federal election.

The solicitation regulation also states that funds received in response to solicitations
that indicate that funds will be used to support both clearly identified federal and nonfederal
candidates will be at least 50 percent federal contributions. Even if a solicitation states how
funds will be used, the regulation imposes its own arbitrary threshold amount of federal
contributions. The Commission does not explain, in the explanation and justification of the

final rules or elsewhere, why this particular uniform level was chosen, even if the solicitation

13376-0007/LEGAL15181134.2 -42-


constitutionally permissible goal of campaign finance reform. See WRTL, 127 S. Ct. at 2672;
Austin, 494 U.S. at 660.

As described in detail above, it was only after this litigation commenced that the
Commission advanced arguments connecting the regulations to the goal of preventing
corruption. This is impermissible. "[P]ost hoc salvage operations of counsel cannot
overcome the inadequacy of the Commission's explanation." KeySpan-Ravenswood, 348
F.3d at 1053 (internal quotation marks and citations omitted). Because the Commission did
not “consider an important aspect of the problem," State Farm, 463 U.S. at 43, the

regulations are arbitrary and capricious.

4, The District Court Erred by Providing a Post Hoc Rationale for the
Commission

Though the Commission failed to connect the regulations to the goal of preventing
corruption, the district court proposed to make this connection for it. In its opinion, the Court
stated that its own "discussion above makes the connection between the revised rules and the
important government interests of preventing corruption and the appearance thereof
abundantly clear." EMILY's List, 569 F. Supp. 2d at 60 n.18 (JA at 193). This was reversible
error. A "reviewing court should not attempt itself to make up for such deficiencies [in the
agency's explanation]: ‘We may not supply a reasoned basis for the agency's action that the
agency itself has not given." State Farm, 463 U.S. at 43 (quoting SEC v. Chenery Corp.,

332 U.S. 194, 196 (1947)).

VIL CONCLUSION

For the foregoing reasons, this Court should reverse the district court's grant of

summary judgment to the Commission, and should grant summary judgment to EMILY's

13376-0007/LEGAL15181134.2 -44-


constitutionality of these provisions, relying heavily on the risks presented by the special
relationship of parties and their candidates, including incumbents who could be swayed in the
conduct of their official activities by soft money raised by them through the parties. See 540
USS. at 156, 173.

The FEC amended its state party allocation rules to conform to BCRA. But the new
tules still permitted state parties to pay for their administrative expenses with as little as 15
percent federal funds, depending on which federal candidates are on the ballot in a particular
year. See 11 C.F.R. § 106.7(d)(2), (3) (2008).

D. Federal Election Commission Allocation and Solicitation Rulemaking

For more than two years after BCRA's passage, the FEC did not change the allocation
tules that applied to non-candidate, nonparty political committees like EMILY's List. BCRA
did not change the underlying law with respect to these groups. And these groups had not
figured at all in the record that was assembled to pass BCRA and defend it against
constitutional challenge. There was no record of independent political committees serving as
vehicles for circumvention or corruption, as the parties were said to have done as conduits for
large sums of soft money raised by their candidates.

But in 2004, the Commission abruptly changed course. With no intervening
legislation, it moved to change significantly the allocation process that had been in place for
more than a quarter century. The reason was a partisan effort to curtail nonparty,
independent activity that was thought to be adverse to the reelection of President George W.
Bush. A group called America Coming Together ("ACT") had been formed to identify and

mobilize progressive voters on a then-unprecedented scale; it organized itself as a

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