Court Opinion

ID: 2667171
Source: CourtListenerOpinion
Date Created: 2014-04-04 13:22:46.002836+00
Date Added: 2024-06-11T13:02:55.403396
License: Public Domain

UNITED STATES DISTRICT COURT
                   FOR THE DISTRICT OF COLUMBIA

SPEECHNOW.ORG, et al.,              :
                                    :
           Plaintiffs,              :
                                    :
     v.                             : Civil Action No. 08-0248 (JR)
                                    :
FEDERAL ELECTION COMMISSION,        :
                                    :
           Defendant.               :

                         MEMORANDUM AND FINDINGS

           The plaintiffs filed a complaint and a motion for a

preliminary injunction in February 2008, asserting that it was

unconstitutional for the FEC to apply its contribution limit

rules to a group such as Speechnow.     Speechnow’s business is so-

called “independent expenditures”: advertisements that advocate

the election or defeat of particular candidates, but are not

coordinated with any candidates or campaigns.       Because these

advertisements have the purpose of promoting candidates, and

because Speechnow proposes to collect more that $1000 per year,

the FEC would regulate Speechnow as a political committee, and

place various limits on the contributions Speechnow could

receive.

           In July 2008, I issued an order denying plaintiffs’

motion for a preliminary injunction.     Dkt. 32.    I found that the

contribution limits on independent expenditure groups supported a

substantial state interest, and that the plaintiffs were unlikely

to succeed on the merits.     Plaintiffs appealed, but
simultaneously pursued the unique procedure set forth in 2 U.S.C.

§ 437h, under which the constitutional questions presented would

be certified to the en banc Court of Appeals, following discovery

and findings of fact.   After I agreed to certify five such

questions, plaintiffs held their appeal in abeyance.

           The task before me is not to answer any constitutional

questions, or to render a judgment of any kind.      Instead, I am to

make findings of fact that will allow the Court of Appeals to

answer the constitutional questions I certify.

           The parties submitted several hundred proposed findings

of fact, accompanied by thousands of pages of studies, reports,

articles, and expert declarations.      Most of the proposed

findings, and nearly all of the supporting material, centered on

the question of whether or not the challenged provisions are

necessary to ward off corruption -- or the appearance of

corruption -- in federal elections.      To my mind, the facts needed

to answer that question are the kind of “facts” that legislatures

find.   They are not the kind of facts that can be determined in a

judicial forum on the basis of a cold paper record full of

hearsay and opinion.    Accordingly, I directed the parties jointly

to submit a set of proposed findings that focused on three

questions: (1) How is SpeechNow organized, and how are the

individual plaintiffs involved with it? (2) What are SpeechNow’s

plans? and (3) How do the challenged provisions affect

                                - 2 -
SpeechNow’s plans?    The findings provided below draw from that

document.    They are essentially those findings on which the

parties agree, and are the kinds of facts (and conclusions of

law, see, e.g., ¶¶ 51-54) that are typically resolved in a

judicial forum.

                        Questions for Appeal

            1. Whether the contribution limits contained in 2

U.S.C. §§ 441a(a)(1)(C) and 441a(a)(3) violate the First

Amendment by preventing David Keating, SpeechNow.org’s president

and treasurer, from accepting contributions to SpeechNow.org in

excess of the limits contained in §§ 441a(a)(1)(C) and

441a(a)(3).

            2. Whether the contribution limit mandated by 2 U.S.C.

§ 441a(a)(1)(C) violates the First Amendment by preventing the

individual plaintiffs from making contributions to SpeechNow.org

in excess of $5000 per calendar year.

            3. Whether the biennial aggregate contribution limit

mandated by 2 U.S.C. § 441a(a)(3) violates the First Amendment by

preventing Fred Young from making contributions to SpeechNow.org

that would exceed his individual biennial aggregate limit.

            4. Whether the organizational, administrative, and

continuous reporting requirements set forth in 2 U.S.C. §§ 432,

433, and 434(a) violate the First Amendment by requiring David

Keating, SpeechNow.org’s president and treasurer, to register

                                - 3 -
SpeechNow.org as a political committee, to adopt the

organizational structure of a political committee, and to comply

with the continuous reporting requirements that apply to

political committees.

           5. Whether 2 U.S.C. §§ 431(4) and 431(8) violate the

First Amendment by requiring David Keating, SpeechNow.org’s

president and treasurer, to register SpeechNow.org as a political

committee and comply with the organizational and continuous

reporting requirements for political committees before

SpeechNow.org has made any expenditures or broadcast any

advertisements.

                         Findings of Fact

    I. The structure of SpeechNow.org and the involvement of the
    individual plaintiffs

           A. SpeechNow.org

           1. SpeechNow.org (“SpeechNow”) is an unincorporated

nonprofit association organized under the District of Columbia

Uniform Unincorporated Nonprofit Associations Act, D.C. Code

§ 29- 971.01 et seq., and registered as a “political

organization” under section 527 of the Internal Revenue Code.

Keating Decl., Ex. G, SpeechNow.org Internal Revenue Form 8871.

           2. The general powers of SpeechNow lie with five voting

“members”: David Keating, Jon Coupal, Edward Crane, Daniel

Shapiro, and Richard Marder.   Bylaws, Art. I, § 5; Art. III,

§§ 1, 2.

                               - 4 -
          3. SpeechNow’s bylaws designate four officers of the

association: president, vice president, secretary, and treasurer.

Id., Art. V, § 1.    Keating is the president and treasurer of

SpeechNow, and he administers all of the association’s affairs.

Keating Decl. at ¶ 2.    Coupal is the vice president and

secretary.   Keating Decl., Ex. D, Member Action by Written

Consent in Lieu of an Organizational Meeting of SpeechNow.

          4. SpeechNow undertakes that it will operate solely on

private donations from individuals.     Keating Decl. at ¶ 8;

Bylaws, Art. II.    Under its bylaws, SpeechNow cannot accept,

directly or indirectly, any donations or anything of value from

business corporations, labor organizations, national banks,

federal government contractors, foreign nationals, political

parties, or political committees.    Keating Decl. at ¶ 8; Bylaws,

Art. VI, § 9; Art X, § 1.

          5. Under its bylaws, SpeechNow cannot engage in

business activities, including the provision of any goods or

services, or any advertising or promotional activity that

resulting in income to SpeechNow, except as such activity may

attract membership dues or donations.     Keating Decl. at ¶ 12.

SpeechNow cannot offer to any donors or members any benefit that

would operate as a disincentive for them to disassociate with

SpeechNow on the basis of the organization’s position on a

political issue, and it cannot offer its donors or members credit

                                - 5 -
cards, insurance policies, savings plans, training, education,

business information, or any other benefits other than those that

are necessary to enable recipients to engage in the promotion of

SpeechNow’s political ideas.   Keating Decl. at ¶ 8; Bylaws, Art.

VI, §§ 6, 8.

          6. SpeechNow is independent of any political

candidates, political committees, and political party committees,

within the meaning of federal campaign finance statutes and the

FEC’s coordination rules, and its bylaws require that it operate

wholly independently of any of these entities.   Keating Decl. at

¶ 9; Bylaws, Art. VI, § 9; Art. X, §§ 2-10.   SpeechNow cannot

make contributions or donations of any kind directly or

indirectly to any FEC-regulated candidate or political committee,

and it cannot coordinate its activities, as defined in 2 U.S.C.

§§ 441a(a)(7)(B) & (C) and 11 C.F.R. Part 109, with any

candidates, national, state, district, or local political party

committees, or their agents.   Bylaws, Art. VI § 10; Art. X §§ 2-

10.

          7. SpeechNow’s bylaws prohibit it from using any

vendors for services in producing or distributing its

communications featuring a candidate for federal office if that

vendor was also engaged during the same election cycle by the

candidate featured in the communication.   Bylaws, Art. X, § 2.

The bylaws similarly prohibit SpeechNow from employing any

                               - 6 -
individuals who were employed during the same election cycle by

any candidate featured in any of SpeechNow’s communications.

Id., Art. X, § 3.

           8. SpeechNow’s bylaws promote the independence of the

association’s speech by requiring members, officers, employees,

and agents of the association to read and understand the FEC’s

rules concerning coordination, 11 C.F.R. § 109.21, Bylaws, Art.

X, § 4, and by prohibiting them from engaging in activities that

might lead to coordination with candidates.     Bylaws, Art. X,

§§ 5-10.

           9. Under SpeechNow’s bylaws, all of the obligations and

prohibitions found in the bylaws must be communicated to all

members, officers, employees, agents, and donors of SpeechNow,

and employees and agents must sign an acknowledgment of these

obligations as a condition of participating in any association

activities.   Bylaws, Art. X, § 11.     Each of SpeechNow’s members

and officers has signed such an acknowledgment.     Keating Decl.

Ex. I, SpeechNow Affirmation.

           10. SpeechNow’s purpose is “expressly advocating the

election of candidates who support rights to free speech and

association and the defeat of candidates who oppose those rights,

particularly by supporting campaign finance laws.”     Am. Compl.

¶ 8.

                                - 7 -
           B. Involvement of individual plaintiffs

           11. David Keating is solely responsible for SpeechNow’s

day-to-day activities.   SpeechNow Response to FEC Interrogatory

1, FEC Exh. 105 at 16; Keating Dep. at 149, FEC Exh. 11.

           12. Keating decides in what elections SpeechNow will

run advertisements supporting or opposing particular candidates.

Keating keeps the other officer (vice-president Jon Coupal) and

four board members of SpeechNow apprised of his decisions and

expects to consult them from time to time.    SpeechNow Response to

FEC Interrogatory 7, FEC Exh. 105 at 22-23.

           13. Keating created SpeechNow’s web site, participates

in the creation of all advertisements SpeechNow wishes to publish

or broadcast, and administers all of SpeechNow’s affairs.     Am.

Compl. ¶ 8.

           14. Keating personally selected the candidates for

SpeechNow to support or oppose in 2008.    Keating Dep. at 162, FEC

Exh. 11.   Keating also expects to pick the candidates that

SpeechNow will support or oppose in future elections, with the

possible help of paid staff.   Keating Dep. at 162, FEC Exh. 11.

           15. Keating would like to donate money to SpeechNow to

support its mission and activities.    Keating Decl. at ¶ 39.

Keating would donate $5,500 to the group, and make additional

contributions in the future, if doing so would not require

                               - 8 -
SpeechNow to register as a political committee under federal law.

Keating Decl. at ¶¶ 39, 51-52.

           16. Fred M. Young would like to donate $110,000 to

SpeechNow.    Declaration of Fred M. Young, Jr. in Support of

Proposed Findings of Fact (hereinafter, “Young Decl.”) at ¶ 6.

           17. Other than donating to SpeechNow, Young does not

anticipate any involvement with SpeechNow in the future.     Young

Dep. at 88, FEC Exh. 19.

           18. Edward Crane would like to donate $6,000 to

SpeechNow.    Declaration of Edward Crane in Support of Proposed

Findings of Fact (hereinafter, “Crane Decl.”) at ¶ 6.    He would

like to make additional contributions to SpeechNow in the future.

Id. at ¶ 8.

           19. Young and Crane support SpeechNow’s mission and

believe that calling for the election or defeat of candidates

based on their support for First Amendment rights is an ideal way

to affect policy and promote the importance of free speech.

Young Decl. at ¶ 3; Crane Decl. at ¶ 3.    They both lack the time

and experience to produce advertisements that can reach a wide

segment of the population.    Young Decl. at ¶ 4; Crane Decl. at

¶ 4.   They believe that associating with other like-minded

individuals and a group like SpeechNow is a more effective way to

speak against candidates who support restrictions on free speech.

Id.

                                 - 9 -
           20. Brad Russo and Scott Burkhardt support SpeechNow’s

mission and believe that calling for the election or defeat of

candidates based on their support of First Amendment rights is an

ideal way to affect policy and promote the importance of free

speech.   Russo Decl. at ¶ 3; Burkhardt Decl. at ¶ 3.

           21. Russo and Burkhardt want to make immediate

donations to SpeechNow of $100 each.    Keating Decl. at ¶¶ 50-51.

SpeechNow has decided not to accept these donations because doing

so would bring it closer to becoming a “political committee”

under the campaign finance laws.    Id. at ¶ 50.

           22. All of the individual plaintiffs have read and

agreed to abide by SpeechNow’s bylaws.    Keating Decl. at ¶¶ 8, 9;

Crane Decl. at ¶ 5; Young Decl. at ¶ 5; Russo Decl. at ¶ 5;

Burkhardt Decl. at ¶ 5.    They acknowledge that their donations

will be used to fund speech, including advertisements, that will

advocate the election and/or defeat of candidates to federal

office based upon their positions on freedom of speech and

campaign finance laws.    They understand that SpeechNow is an

independent group that will not make any contributions to

candidates, political committees, or political parties (or any of

their agents) and will not coordinate its activities with

candidates, candidate committees, or political party committees.

Keating Decl. at ¶ 9; Crane Decl. at ¶ 5; Young Decl. at ¶ 5;

Russo Decl. at ¶ 5; Burkhardt Decl. at ¶ 5.

                               - 10 -
     II. SpeechNow’s planned activities

          A. Fundraising

          23. SpeechNow intends to solicit donations from

individuals to cover operating expenses and to buy political

advertising that promotes the election or defeat of candidates

based on their positions on free speech and associational rights.

Keating Decl. at ¶ 11.   Some of SpeechNow’s solicitations will

refer to particular candidates for federal office by name.       Id.;

Declaration of Steven M. Simpson in Support of Plaintiffs’

Proposed Findings of Fact (hereinafter, “Simpson Decl.”) Ex. 1,

Supplement to AOR 2007-32 (Sample SpeechNow Solicitation).

          24. In its solicitations, SpeechNow intends to inform

potential donors that their donations may be used for political

advertising that will advocate the election or defeat of

candidates to federal office based on their support for First

Amendment rights.   Keating Decl. at ¶ 11.   Under its bylaws,

SpeechNow must also advise donors that their donations are not

tax deductible and that they will be spent at the sole discretion

of SpeechNow.   Id. at ¶ 13; Bylaws, Art. VI, § 11.

          25. SpeechNow’s solicitations will state that donors

will not play a role in determining how their donations will be

spent.   Draft Solicitations for SpeechNow, SNK0259-0273 at 0260,

0263, 0268, 0273, FEC Exh. 20.

                              - 11 -
            26. Keating has set up a PayPal account to allow

individuals to donate money to SpeechNow.        Keating Decl. at ¶ 53;

Keating Decl. Ex. M, Email from PayPal.com confirming SpeechNow

account.

            27. As of August 2008, 182 people had indicated on

SpeechNow’s website that they were interested in receiving the

association’s newsletters.     SNK0370-0372, FEC Exh. 20.    Seventy-

five of those people stated that they were interested in making a

donation.    Id.

            B. Advertising

            28. SpeechNow intended to run advertisements on

television and on other media during the 2008 election cycle and

plans to run similar advertisements in future election cycles.

Keating Decl. at ¶¶ 15-20, 30.

            29. For the 2008 election cycle, SpeechNow had prepared

television scripts for four advertisements.       Keating Decl., Ex.

J, SpeechNow Television Scripts.     Two of the advertisements

called for the defeat of Dan Burton, a Republican Congressman who

ran for reelection in the Fifth District of Indiana.       Both ads

criticized Representative Burton for voting for a bill that would

restrict the speech of many public interest groups.       The first

urged voters to “Say no to Burton for Congress.”       The second

stated: “Dan Burton voted to restrict our rights.       Don’t let him

do it again.”      Id.; Keating Decl. at ¶ 18.   SpeechNow would have

                                  - 12 -
liked to broadcast these advertisements in the Fifth District of

Indiana, where Representative Burton was running for office.       Id.

at ¶¶ 20-24.

           30. The other two advertisements called for the defeat

of Mary Landrieu, a Democratic Senator who ran for reelection in

Louisiana.   Keating Decl. at ¶ 19.   Both ads criticized Landrieu

for voting for a law to restrict the speech of public interest

groups.    The first urged voters to “Say no to Landrieu for

Senate.”   The second concluded by saying: “Our founding fathers

made free speech the First Amendment to the Constitution.      Mary

Landrieu is taking that right away.       Don’t let her do it again.”

Id.; Keating Decl., Ex. J.    SpeechNow would have liked to

broadcast those advertisements in Louisiana, where Senator

Landrieu was running for office.    Keating Decl. at ¶¶ 20-24.

           31. The production costs for those advertisements would

have been approximately $12,000.    Keating Decl. at ¶ 21; Simpson

Decl. Ex. 2, Declaration of Ed Traz in Support of Plaintiffs’

Motion for Preliminary Injunction with Exhibits, dated

February 8, 2008, at ¶¶ 3-5.

           32. The cost to air the advertisements would have

depended on the number of times they ran and the size of the

audience SpeechNow wanted to reach.       Keating Decl. at ¶¶ 21-24;

Simpson Decl. Ex. 2 at ¶¶ 3-5.

                                 - 13 -
            33. Keating would have liked to run the ads enough

times so that the target audience could have viewed the ads at

least ten times.    Such an ad buy would have cost roughly

$400,000.    Keating Decl. at ¶ 24.

            34. Keating made and will make the decisions about

where and in what races to run SpeechNow’s advertisements,

although he expects to keep the other members of SpeechNow

apprised of his decisions.    Keating Decl. at ¶ 25.   Keating will

base his decisions primarily on two factors: (1) the candidates’

records on freedom of speech and/or campaign finance laws; and

(2) whether the race is close enough that SpeechNow’s ads might

have an impact on the outcome.    Id. at ¶ 26.

            35. Keating decided that SpeechNow should run ads in

Congressman Burton’s primary because the Congressman voted for

H.R. 513, a bill that restricted the free speech rights of

certain non-profit organizations, and Keating felt that Burton

was vulnerable to defeat.    Keating Decl. at ¶ 27.    Keating spoke

to Congressman Burton’s opponent, John McGoff, and discovered

that he supported freedom of speech and opposed campaign finance

laws that infringed on freedom of speech.    Id.   As a result,

Keating concluded that running ads highlighting Congressman

Burton’s record on campaign finance laws would be a good way to

convey to Republicans that they should support freedom of speech

                                 - 14 -
and oppose campaign finance laws that would infringe on rights to

free speech.   Id.

           36. He decided that SpeechNow should run ads against

Mary Landrieu because her election was a high-profile race, and

she has consistently supported campaign finance legislation that

in Keating’s view infringed on freedom of speech.   Keating Decl.

at ¶ 28.   Keating never ascertained what Landrieu’s opponent’s

position was on speech issues because it was not clear at the

time who Landrieu’s ultimate opponent would be.   He concluded

that Landrieu’s opponent could not have a worse position on free

speech (from SpeechNow’s perspective), and that running ads in

her race would increase the chances of her defeat and garner

attention for SpeechNow and its message and mission.      Id.

           37. SpeechNow would have run ads in additional races

during the 2008 election cycle if it had been able to do so

without becoming a “political committee,” subject to contribution

limits and other requirements that apply to political committees.

SpeechNow would consider broadcasting advertisements opposing any

candidate who voted for the Bipartisan Campaign Reform Act; any

candidate who voted for or sponsored H.R. 513 as passed by the

House of Representatives in 2006, or similar legislation; or any

candidate who supported legislation to create a Federal Election

Administration such as that proposed by H.R. 421 in the

110th Congress.   SpeechNow would consider broadcasting

                               - 15 -
advertisements supporting candidates who took the opposite

positions.   Keating Decl. at ¶ 29.

          38. If it is able to operate without being treated as a

political committee under federal campaign finance laws,

SpeechNow would run ads in future election cycles.   In the 2010

election cycle, SpeechNow would like to run advertisements

opposing North Dakota Democratic Senator Byron Dorgan.   Keating

Decl. at ¶ 30.   SpeechNow would consider running advertisements

opposing Alaska Republican Senator Lisa Murkowski as well, if she

has a credible primary opponent.      Id.

          39. If SpeechNow were able to function and run ads in

future elections without becoming subject to the contribution

limits and other requirements that apply to political committees,

it intends to make decisions about where to run such ads

consistent with the general approach described in paragraph 34.

Keating Decl. at ¶ 26.   If SpeechNow is able to raise enough

funds, it intends to use methods such as candidate research to

determine the past statements and positions of candidates on free

speech, and public opinion polling to obtain more information

about the viability of particular candidates in particular races.

Id. at ¶ 32.

                               - 16 -
     III. The effect of the challenged provisions on the
     plaintiffs’ plans

          A. Contribution limits

          40. FECA limits contributions by individuals to

nonconnected political committees to $5,000 per calendar year.     2

U.S.C. §§ 431(11), 441a(a)(1)(C).

          41. If Keating, Crane, or Young made contributions to

SpeechNow in the amounts and for the purposes stated in their

declarations, their contributions would violate the law because

they exceed the contribution limits set forth in 2 U.S.C.

§§ 441a(a)(1)(C) and 441a(a)(3).    Simpson Decl. Ex. 14 (FEC

Response to Request for Admission No. 12).

          42. In addition to exceeding the Act’s limit on

contributions to a political committee, Young’s desired

contribution would exceed the Act’s biennial aggregate limit of

$108,200 on contributions by an individual to all candidates and

committees.   2 U.S.C. §§ 431(11), 441a(a)(1)(C), 441a(a)(3); see

72 Fed. Reg. 5294, 5295 (Feb. 5, 2007).

          43. The planned contributions by Russo and Burkhardt

are below the Act’s limit on contributions by individuals to

nonconnected committees.   2 U.S.C. §§ 431(11), 441a(a)(1)(C),

441a(a)(3); see 72 Fed. Reg. 5294, 5295 (Feb. 5, 2007).

          44. Russo and Burkhardt’s planned contributions will

not put them over the aggregate contribution limit.    Burkhardt

                               - 17 -
Dep. at 25-26, 31-32, FEC Exh. 7; Russo Dep. at 30-32, FEC Exh.

13.

           45. Both SpeechNow and Keating (as its treasurer) face

the threat of prosecution if SpeechNow accepts contributions over

the limits contained in 2 U.S.C. §§ 441a(a)(1)(C) and 441a(a)(3).

Keating, Crane, and Young face a threat of prosecution if they

make contributions to SpeechNow above those limits.   Simpson

Decl. Ex. 14 (FEC Responses to Requests for Admission Nos. 1-3,

5-13).

           46. Under 2 U.S.C. § 437g(d) and the FEC’s practices

and policies, Keating, as treasurer of SpeechNow, would be liable

in his personal capacity for any knowing and willful violations

of the contribution limits or reporting obligations that he

commits.   Simpson Decl. Ex. 14 (FEC Responses to Requests for

Admission Nos. 10 & 11).

           47. If SpeechNow had accepted the planned contributions

of the individual plaintiffs, SpeechNow would have had enough

money to fund advertisements in at least two election contests

during the 2008 election cycle.   Keating Decl. at ¶ 22; Simpson

Decl. Ex. 2 at 4; see Keating Decl. Ex. K, Traz Group Bid for

Burton and Landrieu Advertisements.

           48. SpeechNow has voluntarily chosen not to accept any

contributions during the pendency of this case -- even

contributions of less than $5,000 -- and has declined the

                               - 18 -
contributions that have been offered to date because it does not

wish to become a “political committee” under federal law.

Keating Dep. at 165-166, FEC Exhibit 11; SpeechNow Response to

FEC Interrogatory 9, FEC Exh. 105 at 23.

          B. Organizational, administrative, and reporting
          requirements

          49. Currently, SpeechNow reports its contributions and

expenditures under the reporting requirements for those groups

that make independent expenditures.    Keating Decl. at ¶ 35.

Groups “other than political committees” that make independent

expenditures must report their activities pursuant to the FEC

regulations at 11 CFR §§ 104.4(a),(e), and (f), and § 109.10.

Scott Dep. at 95:7-98:14.

          50. To report its independent expenditures, SpeechNow

uses the “Report of Independent Expenditures Made and

Contributions Received,” or FEC Form 5.    Simpson Decl. Ex. 31,

FEC Form 5, Report of Independent Expenditures Made and

Contributions Received; Scott Dep. at 101:6-102:1.    This form

requires the filer to list the total contributions received and

the total expenditures made during the period on a one-page form,

and then to list those who contributed to the independent

expenditure and the payees for the independent expenditures.      It

is accompanied by three pages of instructions.    Simpson Decl. Ex.

32, Instructions for FEC Form 5 and Related Schedules.

                              - 19 -
          51. If SpeechNow decided to make independent

expenditures against candidates for state or local office, its

reporting obligations to the FEC would not change or increase.

Scott Dep. at 107:7-108:5.

          52. Because SpeechNow does not accept any targeted or

“earmarked” funds, it need only disclose all of its contributors

who provided money “for the purpose of furthering” its

independent expenditures.    Keating Decl. at ¶ 36; 2 U.S.C.

434(c)(2)(C).   For each independent expenditure SpeechNow were to

make, SpeechNow would have to disclose all donors whose

contributions were given for such purpose and were used to fund

any portion of the independent expenditure at issue.     Id.

          53. If SpeechNow were to accept donations that, in the

aggregate, were in excess of $1,000, it would have to register as

a “political committee” with the FEC.    Keating Decl. at 45;

Simpson Decl. Ex. 14 (FEC Response to Request to Admit No. 1);

Scott Dep. at 93:3-14.

          54. If SpeechNow were deemed to be a political

committee, it would be classified as a “non-connected” committee.

Scott Dep. at 17:14-18:2.

          55. David Keating, as treasurer of SpeechNow, is

responsible for complying with the reporting requirements that

would apply to SpeechNow if it were treated as a political

                                - 20 -
committee under federal law.    Keating Decl. at ¶ 14; Bylaws, Art.

V, § 8.

           56. Any organization that qualifies as a political

committee must register with the FEC by filing FEC Form 1, a

four-page form.    2 U.S.C. § 433; FEC Form 1 and Instructions, FEC

Exh. 125-126.    The four-page form requires committees to list the

committee name and address, to designate a treasurer and

custodian of records, and to list all bank accounts in which

committee funds are deposited.    Simpson Decl. Ex. 26, FEC Form 1,

Statement of Organization; Scott Dep. at 122:15-123:14.     Any

changes to the Statement of Registration must be made within 10

days.    Scott Dep. at 123:22-124:6.   The form comes with an

additional five pages of instructions.     Simpson Decl. Ex. 27,

Instructions for FEC Form 1.

           57. Political committees must file periodic reports for

disclosure to the public of all receipts and disbursements to or

from a person in excess of $200 in a calendar year, as well as

total operating expenses and cash on hand.     See 2 U.S.C. §§ 433-

34.

           58. All costs associated with a fundraiser for a non-

connected committee must be treated as expenses to be paid by the

committee lest any costs for the event be treated as an in-kind

contribution attributable to the committee.     Scott Dep. at 142:1-

143:7.    The costs are to be determined by assessing the usual and

                                 - 21 -
normal charge for, or fair market value of, that portion of the

home, invitations, and food.   Id. at 143:8-14.   These costs must

be reported on Form 3X.   Id. at 123:7-16; Simpson Decl. Ex. 29 at

10-11 (Instructions for Schedule A, Itemized Receipts).

          59. If a non-connected committee were to make

independent expenditures in state or local elections, it would

have to allocate its costs for fundraising and communications

according to regulations at 11 CFR Part 106.   Scott Dep. at

143:15-144:5.   The committee would also report the allocations

using various Schedules H, which are accompanied by seven pages

of instructions.   Scott Dep. at 146:12-148:9; Simpson Decl. Ex.

29 at 23-30.

          60. Under 2 U.S.C. § 434(c), if SpeechNow were treated

as a political committee, it would have to file statements with

the FEC reporting the identities of those who contributed “for

the purpose of furthering” its advertisements and other

communications, along with the amounts contributed and the other

information required by this provision. Keating Decl. at ¶ 35; 2

U.S.C. § 434(c)(2)(c).

          61. Under 2 U.S.C. § 441d(d)(2), SpeechNow’s

advertisements would have to include a statement indicating that

SpeechNow was responsible for the content of the advertisement.

Keating Decl. at ¶ 34.

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          62. Under 2 U.S.C. § 441d(a), all of SpeechNow’s

advertisements and other communications would have to include its

name, address, and telephone number or World Wide Web address,

along with a statement indicating that the communication was paid

for by SpeechNow and was not authorized by any candidate or

candidate’s committee.   Keating Decl. at ¶ 33.

          63. The FEC’s Reports Analysis Division (RAD) analyzes

reports filed by committees and other entities to determine

whether they are in compliance with campaign finance laws and

regulations.   Scott Dep. at 67:7-11.     Employees of RAD often send

committee treasurers Requests for Additional Information (RFAI)

that seek information necessary for the Commission to determine

whether a committee is complying with the law.      Scott Dep. at

71:13-72:1.    A failure of a political committee to answer an RFAI

can result in an investigation and a recommendation that the

Commission seek a conciliation agreement with the committee that

results in a civil penalty.    Id. at 73:7-20.

          64. All administrative fines issued by the Commission

relate to the failure to properly report the activities of a

political committee.   Scott Dep. at 80:19-81:6.     The Commission

resolves approximately 100 administrative fine matters per year,

and the amount of fines collected is $201,963 from the

Administrative Fines Program alone.      Simpson Decl. Ex. 30,

Federal Election Commission 2006 Annual Report, at 7.      This is an

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average civil penalty of at least $2,000.    Still other civil

penalties for failing to properly administer or report the

activities of political committees are collected through the

Commission’s standard enforcement process, and alternative

dispute resolution programs.    Scott Dep. at 82:3-12.

            65. The FEC can investigate alleged violations of the

campaign finance laws that are brought to its attention through

administrative complaints filed under 11 CFR § 111.4 or that its

staff discovers and has “reason to believe” that a violation has

occurred.    Simpson Decl. Ex. 14 (FEC Response to Interrogatory

No. 6).

                                      JAMES ROBERTSON
                                United States District Judge

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