UNITED STATES DISTRICT COURT
FOR THE D]`STRICT OF COLUMBIA

 

CITIZENS FOR RESPONSIBI`LITY ANI)
ETHICS IN WAS]“IINGTON, et al.,

Plaintiff,

v. Case No. l:l4-cv-Ol4l9 (CRC)
FEDERAL ELECTION C()MMISSI()N,

Def`endant,
AMERICAN AC'I`ION NETWORK, INC.,

Intervenor Defendant.

 

 

MEMORANDUM OPINI()N
In 201 O, American Action Network (“AAN”)ma tax-exempt section 50](0)(4)
organization-~spent $1,065,000 on three versions of the following television advertisement,
which ran in the districts of three different candidates for Congress in the lead~up to that year’s

election:

[On”screen text:] Congress doesn’t want you to read this. Just like [candidate].
[Candidate] & N`ancy Pelosi rammed through government healthcare Without
Congress reading all the details $500 billion in Medicare cuts. Free healthcare for
illegal immigrants Even Viagra for convicted sex offenders So tell [candidate] to
read this; fn November, Fix the healthcare mess Congress made
A.R. 1722. The Federal Election Commission (“FEC”) reviewed this ad, along with nineteen
other AAN-sponsored communications and nine similar “electioneering communications”
sponsored by another non~prot'it, Americans for Job Security (“AJS”). Three Commissioners

concluded that the organizations’ spending on these ads should not be considered in evaluating

whether either entity’s “major purpose” was “the nomination or election of a candidate.”

Buckley v. Valeo, 424 U`.S. l, 79 (1976). On the basis of that analysisJ the FEC--in accordance
with the controlling votes of the three Commissioners-dismissed complaints against AJS and
AAN, concluding that neither organization was an unregistered political committee in violation
of the Federal Election Campaign Act (“FECA”).

Plaintit`f, Citizens for Responsibility and Ethics in Washington (“CREW”), which lodged
the complaints now challenges those dismissal decisions This Court previously dismissed
CREW’s claims to the extent that they relied on the Administrative Procedure Act (“APA”), but
that same opinion recognized that CREW had an “adequate, alternative means to challenge” the
FEC’s decision through FECA’s particularized judicial review mechanisms §ee CREW v_ FEC,
__ F. Supp. 3d __J 2015 WL 10354778, at *l (D.D.C. Aug. 13, 2015). The Couit now considers
cross-motions for summary judgment, the central dispute in which is whether the FEC’s
conclusion»»~“that there was no “reason to believe” the organizations in question had as their
“major purpose” the “nomination or election of a candidate”»-~was “contrary to law,” 52 U.S.C.
§ 30109(a)(8)(C). Finding that the controlling Commissioners premised their conclusion on an
erroneous interpretation of Supreme Court precedent and the First Amendment, the Court agrees
with CREW that the dismissals Were contrary to law. It will, accordingly, grant CREW’s motion
for summary judgment, deny the FEC’s and AAN’s cross-motions, and remand the case to the
FEC for further proceedings consistent with this Opinion.

I. Background

A. Statutorv and Regulatorv Framework

The FEC is a six-member, independent agency charged with administering FECA. §§g
52 U.S_C_ § 30106(b)(l) (tasking the Commission with “administer[ing], seek[ing] to obtain

compliance with, and formulat[ing] policy with respect to” FECA). Any person or entity may

file a complaint with the Commission asserting a FECA violation, following which the alleged
violator is given an opportunity to respond in writingl l_c;L § 301{)9(a)(l). If four or more
Commission members subsequently find there is “reason to believe” that FECA was or will soon
be violated, then the FEC must investigatel Li_._ § 30109(a)(2). Otherwise--i.e., where three or
fewer Commission members have “reason to believe” FECA has been violatedmthe complaint is
dismissed _S_e§ i_d__ § 30106(c) (“[T]he affirmative vote of 4 members of the Commission shall be
required in order for the Commission to take any [enforcernent or other authoritative] action.”).
In the event of dismissal, the controlling group of Commissioners_here, those voting against
enforcement-~must provide a statement of reasons explaining the dismissal decisionl _S_e_e_ fill
v. Nat’l Rer)ublican Senatorial Comm. (NRSC), 966 F.2d 1471, 1476 (D.C. Cir_ 1992). Any
“party aggrieved” by an FEC dismissal decision “may file a petition” for this Court’s review. I_dm.
§ 30109(a)(8)(A).

One way that FECA regulates federal campaign financing is by requiring disclosures for
certain types of election-related communications The Supreme Court has repeatedly recognized
that such disclosure regimes accomplish much while costing relatively little. On the one hand,
disclosure “open[s] the basic process of our federal election[s] to public view,” hughey, 424
U.S. at 82, by “provid[ing] the electorate with information” concerning the sources and outlets
for campaign money, id at 66, and thus “minimiz[ing] the potential for abuse of the campaign
finance system,” McCutcheon v_ FEC, 134 S_ Ct. 1434, 1459 (2014). On the other hand,

disclosure imposes a relatively “less restrictive”-“»though not negligible-~First Amendment

 

burden on those subject to its requirements McCutcheon, 134 S. Ct. at 1460; see also Citizens

United v. FEC, 558 U.S_ 310, 369 (20]0); FEC v. Massachusetts Citizens for Life, Inc. (MCFL),

479 U.s. 238, 262 (1986).

FECA’s disclosure requirements can be triggered by one~time events When any entity
spends more than $250 on an “independent expenditure”--"a communication not coordinated
with a candidacy but “expressly advocating the election or defeat of a clearly identified
candidate,” 52 U.S.C. § 30101-the organization must disclose the date and amount of that
expenditure, as well as the identities of those who contributed and earmarked more than $200 for
the communication Similar reporting requirements apply when an entity spends more than
$10,000 on “electioneering communications,” a broader category including “broadcast, cable, or
satellite” communications that “occur less than 60 days before a general [election or] 30 days
before a primary,” are “targeted to the relevant electorate,” and which “refer{,]” without
expressly advocating for or against, “a clearly identified [federal] candidate.” id § 3{)104(f)(l)m
(3). For expenditures on electioneering communications meeting the $10,000 threshold, the
entity must disclose the identities of those who contributed and earmarked an aggregate of
$1,000 or more for that expenditure 52 U.S.C_ § 30104(f)(2)(F).

More extensive disclosure rules govern “political committees” 52 U_S.C. § 30101.
Poiitical committees must, for example, appoint a treasurer, keep records with the names and
addresses of contributors and fife with the FEC regular reports during a general election year
with certain accounting information, including amounts spent on contributions and expenditures
l_d_. §§ 30102-04. _An entity must register as a political committee when it satisfies two separate
conditions The first is straightforwardly spelled out in FECA; The entity in question must
contribute or expend more than $l,OOO in a calendar year for the purpose of influencing a federal
election id § 30i01(4)(A). The second eondition, imposed pursuant to a Supreme Court-
authored narrowing construction, is at issue here and has previously been the subject of much

dispute: If not controlled directly by a political candidate, the entity’s “major purpose” must be

“the nomination or election of a candidate.” §u§_kley, 424 U.S. at 79; se§plso MQIL, 479 U.S.
at 262.

Rather than adopt a rule specifically defining the contours of this “major purpose”
limitation, the FEC has pursued an adjudicative, case-by-case approach, an implementation
choice which has been litigated, scrutinized, and ultimately validated by a fellow court in this
District. Shays v. FEC, 424 F. Supp. 2d 100 (D.D.C. 2006). In response to a remand for further
explanation regarding why adjudication and not rulemaking was the proper enforcement method,
sue imd.“ at 108, the Commission explained in a notice published in the Federal Register that
“determining political committee status . . . requires” a fact-intensive analysis of an
organization’s “overall conduct,” meaning “whether its major purpose is Federal campaign
activity (i.e., the nomination or election of a Federal candidate).” Political Committee Status, 72
Fed. Reg. 5595, 5597 (Feb. 7, 2007) (Supplemental Explanation and Justification (“SE & J”)).
The court accepted that explanation deferring to the FEC’s judgment that evaluating an
organization’s major purpose required “a very close examination of various activities and
statements” Shays v. FEC, 511 F. Supp. 2d 19, 30 (D.D.C. 2007).

B. Factual and Procedural Histolv

AJS, one of two organizations alleged by CREW to be an unregistered political
committee, was founded as a tax-exempt section 501(0)(6) organization or “[b]usiness league,”
in 1997. A.R. 48-50; 26 U.S.C. § 501(c)(6). Since then, as AJS explained in its response to
CREW’s administrative complaint, the organization’s consistent “message has been a simple
one: free markets and pro-paycheck public policy are fundamental to building a strong economy
and creating more and better paying jobs.” A.R. 50, 98 (citing AJS’s website). To spread that

message, AJS spent millions on “television, radio, newspaper[,j and direct mail advertising[,]

amongst other forms” of communication A.R. 19 (2009 Form 990 Tax Return). During its
early years, AJS’s efforts were not closely tied to elections For instance, between 2004 and
2006, AJS ran a series of advertisements none published or broadcast in the 30- or 60-day lead-
up to primaries or elections, promoting the repeal of the estate tax, and others advocating against
an asbestos trust fund A.R. 50~52. However, over time, AJS shifted to a more election-
focused approach.' ln 2008, the organization started li.mding “electioneering communications,”
and in 2010, it started funding “independent expenditures,” i.e., express advocacy for or against
certain candidates A.R. 52, 1393. Indeed, in 2010, out of roughly $12.4 million in overall
expendituresl AJS spent approximately $4.9 million on express advocacy advertising and an
additional $4.5 million on electioneering communications meaning that over three-fourths of its
spending was in some way tied to elections A_R. 1393-94

AAN, the other organization challenged by CREW, is a tax-exempt section 501(c)(4)
“{c]ivic” organization, founded in 2009. A.R. 1490-91, 1562; 26 U.S.C. § 501(c)(4). The
organization’s stated mission is to “create[], encourage[,] and promote center-right policies based
on the principles of freedom, limited government, American exceptionalism, and strong national
security.” A.R. 1490. To advance that mission, AAN has sponsored “educational activities” and
“grassroots policy events,” A.R. 1563, but the majority of its spending throughout the period in
question_mid-2009 through mid-2011---was on election-related advertising ()ver those two
years, AAN spent roughly $27.1 million in total; of that, a little more than $4 million was

devoted to independent expenditures (i.e., express advocacy for or against political candidates)7

 

1 Lacking data on AJS’s overall receipts and expenditures for the 2010 calendar year, the
FEC used AJS’s fiscal-year information--i.e., covering a period from Novernber l, 2009 to
October 3l, 2010-mas a proxy _Sg,_e_ A.R. 1463 n.lSl; A.R. 18.

_6-

and an additional $13.7 million was devoted to electioneering communications A_R. 1638. In
other words, well over half of itsspending during the period was election-related

Neither AJS nor AAN registered with the FEC as a “political committee_” CREW filed a
complaint With the FEC against AJS in March 2012 alleging that due to AJS’s extensive
campaign-related spending primarily leading up to the 2010 federal electionJ the organization
was an unregistered political committee in violation of FECA. A.R. 1-39. ln June 20l2, CREW
filed a complaint with the FEC against AAN, similarly alleging that its predominantly campaign-
related spending between 2009 and 2011 made it an unregistered political committee A.R.
1480~1552_ 'I`he FEC’s Office of General Counsel separately reviewed the complaints as well
as answers from AJS and AAN, and recommended concluding that there was “reason to believe”
both organizations were political committees having as their “major purpose federal campaign
activity,” and therefore in violation of FECA. A.R. 1411, 1659. l\l`evertheless, in June 2014, the
Commissioners deadlocked 3-to~3 with respect to both AJS and AAN on whether to commence
an investigation, dismissing CREW’s complaints accordinglyl A.R. 1434-35, l686-87.

The controlling group of Commissi\oners issued separate but similar statements for both
AJS and AAN, explaining their conclusions that there was no “reason to believe” either
organization was an unregistered political committee A.R_ 1438-69 (Controlling
Commissioners’ Statement of Reasons Regarding Dismissal of Complaint Against AJS) (“A}S
SOR”); A.R. 1690-1723 (Controlling Commissioners’ Statement ofReasons Regarding
Dismissal of Complaint Against AAN) (“AAN SOR”). First, the Commissioners found--and no
party here contests-~that both organizations “crossed the statutory threshold for political-
committee status by making over $1,000 in independent expenditures” in at least one calendar

year. A.R_ 1454, 1706. However, after considering each organization’s statements of purpose

and evaluating each entity’s “spending on campaign activities [as compared to] its spending on
activities unrelated to the election or defeat of a federal candidate,” the Commissioners
concluded that neither organization’s “major purpose” was the “nomination or election of a
federal candidate.” A.R. 1455, 1706.

To reach those conclusions the Commissioners made two key analytical decisions First,
they excluded from their “major purpose” inquiry all of AJS’s and AAN’s spending on
electioneering communications considering all of those communications to be “genuine issue
advertisements” unrelated to the election of candidates A.R. 145 7-58, 1709-102 As a result,
only spending on express advocacy was considered indicative of the relevant “major purpose.”
ida Second, the Commissioners considered spending only over the “lifetime” of the organization
in question, which for AJS implicated a span of fifteen years A.R. 1457-58, 1708-09.
Together, these choices left the Commissioners, when calculating the overall proportion of
spending reflecting the groups’ relevant “major purpose,” with a relatively small numerator and a
relatively large denominator. Thus, the Commissioners calculated that “during the course of its

history dating back to 1997, AJS spent over $50 million [to support its mission generally} but

 

2 AAN contends that the controlling Commissioners “did not . . . draw the line at
independent expenditures [i.e., express advocacy] in this case [but] instead left open the
possibility that electioneering communications that are the ‘functional equivalent’ of express
advocacy may be relevant to an organization’s ‘major purpose.”’ AAN’s Mem. Supp. l\/lot.
Summ. J. (“AAN’s MSJ”) 19. That may be true as a technical matter, but as discussed below,
the Commissioners never defined-eproperly or otherwise~the “functional equivalent” category
_Sg_e m note 10. Moreover, the whole of the Commissioners’ analysis regarding whether nine
separate electioneering communications sponsored by AJS and twenty such communications
sponsored by AAN were “genuine issue ads” amounted to a few summary sentences7 or about
one paragraph for each organization §ee A.R_ 1457 (AJ`S SOR), 1709 (AAN SOR). Perhaps
this is why the FEC itself acknowledges that “Commissioners determined that the relevant
universe of spending for determining the groups’ federal campaign spending was their
independent expenditures {i.e., on express advocacy].” FEC’s Mem. Supp. l\/lot. Summ. J.
(“FEC’s MSJ”) 36.

only $4.9 million-or a mere 9.8 percent»--of that spending was on express advocacy\” A.R.
145 8_ Similarly, the Commissioners concluded that the “roughly $4.l million that AAN spent on
independent expenditures [i.e., express advocacy] between fits founding in] 2009 and 2011 was
the totality of its spending . . . for the purpose of nominating or influencing the election of a
federal candidate and represented [only] approximately 15% of its total expenses during the
same period.” A.R. 1709

Following the FEC’s dismissal of the above complaints CREW filed a four-count
complaint in this Court alleging violations of FECA and the APA, and seeking a declaration that
the FEC’s dismissal decisions were contrary to law because they applied an incorrect
interpretation of the “major purpose” test. Compl. at 28-33. Mainly, CREW challenged the
Commissioners’ decision to exclude on First Amendrnent grounds an organization’s
expenditures that were not express advocacy from the category of spending indicating a
campaign-related “major purpose.” CREW also challenged the Commissioners’ consideration of
relative spending over the course of an organization’s lifetime_as opposed to within the most
recent calendar year-mas well as the Commissioners’ purported application cfa 50%-plus
spending threshold for relevant expenditures

This Court subsequently granted the FEC’s Motion to Dismiss all APA-related counts
and granted AAN’s Motion to Intervene as an additional Defendant. CREW has now moved and

Defendants have cross-moved for summary judgment on the remaining, FECA-related counts3

 

3 AAN--and not the FEC-argues that CREW lacks Article 111 standing before this
Court. The argument is that the five-year statute of limitations has run on CREW’s
administrative complaints and that therefore CREW cannot “demonstrate a significant
likelihood that a decision of [this] Court would redress its alleged injury,” Sp_l ectrum Five LLC v.
M, 758 F.Bd 254, 256 (I).C. Cir. 2014), since the FEC has a practice of not pursuing stale
enforcement actions even to obtain equitable relief such as political committee registration
AAN’s MSJ 38-43. But, as CREW points out, the AAN cites no “authoritative policy or rule of

w9_

Oppositions and replies have been filed, and a hearing was held on the motions4

II. Legal Standards

The Court will grant summary judgment “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.
R. Civ. P. 56(a). Under these circumstances where summary judgment is sought regarding
certain of the FEC’s dismissal decisions this Court will grant summary judgment to the
challenger only if the agency’s decisions are “contrary to law,” 52 U.S.C. § 30109(a)(8)(C),
meaning either that “the FEC dismissed the complaint as a result of an impermissible
interpretation of [FECA],” or that “the FEC’s dismissal of the complaint, under a permissible
interpretation of the statute, was arbitrary or capricious or an abuse of discretion.” Orloski v.
E§Q, 795 F.2d 156, 161 (D.C. Cir. 1986).

This same standard of review applies to all FEC decisions whether they be unanimous or
determined by tie vote In re Sealed Case, 223 F.3d 775, 779 (D.C. Cir. 2000) (“We have . , .
held that we owe deference to a legal interpretation [issued by the FEC} supporting a negative
probable cause determination that prevails on a 3-3 deadlock.”); l;JB_SQ, 966 F.2d at 1476 (“[l]f
the meaning of {FECA] is not clear, a reviewing court should accord deference to the

Commission’s rationale . . . {even in] situations in which the Commission deadlocks and

 

the FEC that would bar equitable enforcement” of its claim. Pls.’ Reply Mot. Summ. ll (“Pls.’
Reply”) 48 n.25. Nor has the FEC admitted to such a practice or addressed this issue in its
briefing or at the motions hearing This is fatal to AAN’s standing argumentl Finally, the mere
fact that the FEC has discretion to dismiss CREW’s complaint for another reason does not vitiate
the redressability of CREW’s claim. §ee FEC v. Akins, 524 U.S. ll, 25 (1998) (“Akins II”) (“If
a reviewing court agrees that the agency misinterpreted the law, it will set aside the agency’s
action and remand the case_even though the agency (like a new jury after a mistrial) might
later, in the exercise of its lawful discretion, reach the same result for a different reason”).

4 CREW made clear at the hearing on the paities’ motions that its challenges are limited
to the FEC’s articulation of the “major purpose” starrdara', as opposed to the agency’s
application of that standard The Court will limit the scope of its review accordingly

_10_

dismisses.” (citing Democratic Cong. Campaign Comm. v. FEC. 831 F.2d 1131, 1135 n.5 (D.C.

Cir. 1987) and Common Cause v. FEC 842 F_2d 436, 439 (D.C. Cir. 1988))). This follows

 

because the Commissioners voting for dismissal “constitute a controlling group for purposes of
the decision,” and so “their rationale necessarily states the agency’s reasons for acting as it did.”
nss;;, 966 1126 ar 14"16.5

Usually, when a court’s review turns on an interpretation ofFECA’s terms the “contrary
to law” standard involves a straightforward application of the familiar two-step framework
outlined in Chevron, U.S.A._ Inc_ v_ Natural Res. Def. Council. 467 U.S. 837, 842”43. §gg
moskj, 795 F.2d at 161-62 (D.C. Cir. l986) (applying Chevron analysis to evaluate the FEC’s
interpretation of the terms “contribution” and “expenditure” as defined by FECA).

But this is not a usual case CREW’s primary challenge regards the FEC’s understanding

of the constitutional dimensions of a Supreme Court-authored test which was itself developed to

 

5 CREW contends that none of the above precedent is good law after United States v.
Mead Corp., 533 U.S. 218 (200]), which held it improper to afford a tariff classification Chevron
deference because there was “no indication that Congress intended such a ruling to carry the
force of law.” _IL:I_. at 22l. The controlling Commissioners’ statement of reasons is akin to a tariff
ruling, CREW reasons since their decision “is not binding legal precedent or authority in future
cases and is not law.” Pls.’ Reply 8~9. That might be so, but the prospective, binding nature of
an agency’s interpretation is not the sole consideration regarding the applicability of Chevron
As the M_ead Court noted, the type of delegated authority warranting Chevron deference “may be
shown in a variety of ways as by an agency’s power to engage in adjudication . . . or by some
other indication of comparable congressional intent.” Mgad, 533 U.S. at 227. The court in
Sealed Case engaged in a thorough consideration of just such “indication[s],” observing that an
FEC enforcement decision, even one produced by deadlock, is “part of a detailed statutory
framework for civil enforcement . . . analogous to a formal adjudication,” that it “assumes a form
expressly provided for by Congress” and that ultimately it can result in the imposition of
criminal penalties 223 F_Bd at 780 (internal citations omitted). All of those considerations led
the court to conclude that an FEC enforcement decision “falls on the Chevron side of the line.”
I_d. In sum, seeing nothing in _Mmemamd that directly contradicts Sealed Case, the Court will abide its
“obligat[ion] to follow controlling circuit precedent.” United States v. Torres, 115 F_3d 1033,

1036(1;)_€. Cir. 1997).

_]1_

avoid potential constitutional infirmities ln other words the challenge turns directly and almost
exclusively on judicial precedent-§_u_ckl§y itself, but even more so a long line of First
Amendment-related cases in _B_i_i_c_k_l§y’s shadow. Under such circumstances Chevron can have
no sound place in evaluating whether an FEC interpretation is “contrary to law.” This is why a
near-unanimous D_C. Circuit, sitting en banc, rejected the FEC’s “plea for deference” on the
question of whether the Supreme Court had imposed the major purpose test in the first place,
concluding that the deference argument was “doctrinally misconceived.” A_kins v. FEC, 101
F.3d 731, 740 (D.C. Cir. 1996), vacated on other grounds 524 U.S. ll (1998).6 The court

elaborated that it was

not obliged to defer to an agency’s interpretation of Supreme Couit precedent under
Chevron or any other principle The Commission’s assertion that Congress and the
Court are equivalent in this respect is inconsistent with Chevron’s basic premise
Chevron recognized that Congress delegates policymaking functions to agencies
so deference by the courts to agencies’ statutory interpretations of ambiguous
language is appropriate But the Supreme Court does not, of course, have a similar
relationship to agencies and agencies have no special qualifications of legitimacy
in interpreting Court opinions There is therefore no reason for courts_the
supposed experts in analyzing judicial decisions--to defer to agency interpretations
of the Court’s opinions This is especially true where, as here, the Supreme Court
precedent is based on constitutional concerns which is an area of presumed judicial

competence

 

6 Defendants highlight that Akins was vacated and therefore has no binding effect §e§
FEC’s Reply Mot. Summ. J. (“FEC’s Reply”) 7', AAN’s Reply 6. True, but its reasoning has
been adopted by subsequent D.C. Circuit panels see, e.g., Univ. of Great Falls v. N.L.R.B., 278
F_3d 1335, 1341(D.C. Cir. 2002); N.Y. N.Y.. LLC v. N.L.R.B.‘ 313 F.3d 585, 590 (D.C. Cir.
2002), and as an expression of the views of nine judges in this circuit, it is as persuasive as non-
precedential authority can be AAN further argues that Akins “reached only the question of
‘whether the Court established a major purpose test,’ and not ‘how such a test is to be
implemented.”’ AAN’s Reply 7 (citing Akins, 101 F.3d at 74041). That is far from clear,
especially given that the language AAN quotes comes from a portion of the Akins opinion that is
merely describing an argument put forth by the FEC (and an argument that is not directly
returned to). ln any event, as described below, the Court does not read Akins broadly to
prescribe de novo review for all FEC actions implicating the major purpose test.

_]2-

ll In case after case, courts have affirmed this fairly intuitive principle, that courts need not,
and should not, defer to agency interpretations of opinions written by courts See, e.g., Nat’l

Ass’n ofl\/lfrs. v. N.L.R.B., 717 F.3d 947, 959 n.17 (D.C. Cir. 20l3) (“[W]e owe no deference to

 

an agency’s interpretation of judicial precedent.”), overruled on other grounds Arn. Meat Inst. v.
U.S. Dep’t ongric_, 760 F.3d 18 (D.C. Cir. 2014); Univ. of Great Falls v. N.L.R.B_, 278 F.3d

l 1335, 1340-41 (D.C. Cir. 2002) (declining to apply deference where “interpretation of
precedent, rather than a statute” was at issue, especially where that precedent was “based on

constitutional concerns an area of presumed judicial . . . competence”); N.Y. N.Y. LLC v.

 

N.L.R.B., 313 F.3d 585, 590 (D.C. Cir. 2002) (concluding that, as the agency’s “decisions . . .
purport to rest on [its} interpretation of Supreme Court opinions,” those “judgment[s} [are] not
entitled to judicial deference”); Piersall v. Winter, 507 F. Supp. 2d 23, 38 (D.D.C. 2007) (“The
Court will not defer to lan] agency, however, where the task at hand is judicial interpretation of
judicial decisions[.]”); Mudd v. Caldera, 134 F. Supp. 2d 138, 144 (D.D.C. 2001) (“[T]here is no
law that supports the . . . position that an Article lIl judge must defer to an agency or department
of the Executive Branch or the head of such an agency or department . . . on interpretations of
decisions of the United States Supreme Court; for that is quintessentially a judicial function”).
Accordingly, the Court will not afford deference to the FEC’s interpretation of judicial precedent
defining the protections of the First Amendment and the related contours of Bu_ckley’s major
purpose test.

Certain of CREW’s arguments in this case, however, do not primarily challenge the
FEC’s interpretation of Supreme Court doctrine, constitutional or otherwise Rather, CREW’s
attacks on the FEC’s choice of relevant timespan for assessing an organization’s spending

activity, and on the agency’s purported 50%-plus spending threshold for finding major purpose

_13_

based on expenditures are less about what M (and subsequent precedent) means and more
about how _B_tl_clgley (and the test it created) should be implemented Such implementation
choices, which call on the FEC’s special regulatory expertise, were the types of judgments that
Congress committed to the sound discretion of the agencyl The Supreme Court has described the
FEC as “precisely the type of agency to which deference should presumptively be afforded,”
FEC v. Democratic Senatorial Campaign Comm.. 454 U.S. 27, 37 (1981), since it is vested with
“primary and substantial responsibility for administering and enforcing [FECA],” including the
“sole discretionary power” to initiate enforcement actions, B_ucl_<gy, 424 U.S. at 109, 112 n.153.
The statute that the FEC was charged to implement has since been “construe[d]” by the Supreme
Court to incorporate the “major purpose” limitation on political committee status §_ee migl_d_ey,
424 U.S. at 79j 109; Ctr. For Individual Freedom v. l\/Iadi,g.g,_a_nj 697 F.3d 464, 487 (7th Cir. 2012)
(“[T]he ‘major purpose’ limitation . . . was a creature of statutory interpretation.”). But the
Supreme Court’s revised construction of` the statute did not convert every judicial challenge to an
FEC action linked in any way to the major purpose test into an issue for the courts’ de novo
review. It` it had, this Court would not have deferred to the FEC when the agency decided to
adjudicate political committee status_-and the major purpose test-rather than promulgate a rule
defining it. But the Court did defer, and rightly so, reasoning that this implementation choice
was “exactly the type of question generally left to the expertise of an agency.” §_hays, Sl l. F.
Supp. 2d at 31 (citing American Gas Ass’n v. FERC, 912 F.2d 1496, 1519 (D.C. Cir. 1990)).

Of` course, those impiementation decisions are still reviewable under the “contrary to
law” standard, 52 U.SiC. § 30109(a)(8)(C), for a determination of whether “the FEC’s dismissal

of` the complaint . . . was arbitrary or capricious, or an abuse of discretion.” Orloski, 795 F.Zd at

 

_14_

161. 7 In other words, the FEC’s decisions are reversible if the Court determines that the agency
“entirely failed to consider an important aspect of the [relevant] problem” or has “offered an
explanation for its decision that runs counter to the evidence before [it}.” Nat’l Ass’n of Home
Builders v. Def`s. of Wildlife, 551 U.S_ 644, 658 (2007) (quoting l\/l`otor Vehicle Mfrs. Assn. of
United States` lnc. v. State Farm Mut. Automobile lns. Co., 463 U.S. 29, 43 (1983)). At the very
least, “{tjhe agency must articulate a ‘rational connection between the facts found and the choice
made.”’ Bowman Transr).. lnc. v. Arkansas~Best Freight Svs.i Inc., 419 U.S. 281, 285-86 (1974)
(quoting Burlington Trucl< Lines v. United States, 371 U.S_ 156, 168 (1962)). While a court
ought to “uphold a decision of less than ideal clarity if [an] agency’s path may reasonably be
discerned,” Defs\ of Wildlife, 551 U.S. at 658 (quoting Bowman, 419 U.S. at 286), the court
should also insist on a “reasonable explanation of the specific analysis and evidence upon which
the [a]gency relied,” Bluewater Network v. E.P.A.5 370 F.3d lj 21 (D.C. Cir. 2004),

In short, unlike the FEC’s views on the Supreme Court’s First Amendrnent jurisprudence,
the FEC’s choices regarding the timeframe and spending amounts relevant in applying the
“major purpose” test are implementation choices within the agency’s sphere of competence, and

therefore warrant the Court’s deference

 

7 The FEC asserts that “the challenged dismissal decisions are independently justified by
the Commission’s broad prosecutorial discretion.” FEC’s MSJ 49~50. But “an agency’s
decision not to take enforcement action . _ _ is only presumptively unreviewable,” and that
“presumption may be rebutted [by the relevant] substantive statute.” Hecl<ler v. Chaney, 470
U.S. 8217 832 (1985). Here, FECA’s express provision for the judicial review of the FEC’s
dismissal decisions as well as a particular standard governing that review, 52 U.S.C.

§ 30109(a)(8)(C), is just such a rebuttall The Court will therefore apply the contrary-to-law
standard, as Congress has instructed it to.

..15_

III. Analysis

CREW advances three main objections to the Commissioners’ rationale for dismissal
Primarily, it faults the Commissioners for applying an exceedingly narrow definition of “political
committee,” such that only expenditures on express advocacy-and no expenditures on
electioneering communications_were deemed relevant to the “major purpose” inquiry Pls.’
Mem_ Supp. l\/Iot. Summ. J. (“Pls.’ l\/ISJ”) 17. Second, CREW argues that the Cornmissioners
“impermissibly interpreted the ‘major purpose’ test to require an evaluation of a group’s
activities over its entire existence,” as opposed to applying a calendar-year approach I_d_.
Finally, CREW asserts that the Commissioners erroneously required a group’s campaign-related
spending to constitute at least 50% of total spending before concluding that such spending
indicated the entity’s “major purpose.” I_d_. The Court will consider each challenge in turn_

A. Spending Relevant to the “Maior Purpose” Analvsis

CREW principally argues that the controlling Commissionersiirnproperly “interpreted the
‘niajor purpose’ test to capture only those groups who spend a majority of their budget on
express advocacy, to the exclusion of all other campaign activity, including electioneering
communications.” Pls.’ MSJ 25, The FEC concedes that the “Cornrnissioners determined that
the relevant universe of spending for determining the groups’ federal campaign spending was
their independent expenditures [i_e., on express advocacy],” but the agency insists that this
decision was consistent with judicial precedent and therefore “reasonable and not contrary to
law.” FEC’s Mem. Supp. Mot. Summ. J. (“FEC’s MSJ”) 36.

The Commissioners grounded their decision to separate express advocacy ads from issue
ads, and to count only spending on the first category as indicating a “rnajor purpose” to

“nominat[e] or elect[] . . . a candidate,” Bucl<ley, 424 U.S. at 79, in FEC v. Wisconsin Right To

_16w

Lire ina (wRTLn), 551 u_s. 449(200?). A.R. 1450-51 (A.ls soR); A_R. 1702 (AAN soR).

 

That case considered an as-applied challenge to the constitutionality of Section 203 of` the
Bipartisan Campaign Reform Act of 2002 (“BCRA”), 52 U.S.C. § 30118, which criminalized the
broadcasting of electioneering communications by corporations I_dm. at 455-56. The Court
explained that “the interests held to justify the regulation of campaign speech and its ‘functional
equivalent’ ‘might not apply’ to the regulation of issue advocacy,” and it went on to invalidate
the ban on corporate electioneering communications as it applied to advertisements that were nor
the “fiinctional equivalent” of express advocacy § 457, 481 (quoting McConnell v. FEC, 540
U.S. 93, 206 & n.88)_ The Court hirther clarified that an electioneering communication could be
the functional equivalent of express advocacy-~“and therefore subject to more substantial
regulation consistent with the First Amendment-if “the ad is susceptible of no reasonable
interpretation other than as an appeal to vote for or against a specific candidate.” ld_. at 469-70

WRTL II, then, drew a bold line between express advocacy (and its functional
equivalent), which it deemed more regulable, and issue advocacy, which it deemed less so.
Crucially, though, the Court developed that distinction in the context of an outright ban on
speech Since then, the overwhelming weight of legal authority, beginning with the Supreme
Court itself, has concluded that the WRTL II framework is not properly applied in the context of
less restrictive disclosure requirements

In Citizens United, the plaintiff argued that certain of BCRA’s disclosure requirements
should “be confined to speech that is the functional equivalent of express advocacy,” seeking to
“import [WRTL II’s] distinction into BCRA’s disclosure requirements.” 558 U.S. at 368~69.
The Court flatly “reject{ed] th[at] contention.” id at 369. Collecting cases in support of the

proposition that “disclosure is a less restrictive alternative to more comprehensive regulations of

_17_

speech,” the Court went on to engage in a point"by»point refutation of the arguments Citizens
United advanced in favor of a broader application of WRTL ll’s dichotomy l_d_. In doing so, the
Court framed the public’s informational interest justifying disclosure in especially broad terms,
emphasizing that “the public has an interest in knowing who is speaking about a candidate
shortly before an election.” fm (emphasis added).

In the wake of Citizens United, federal appellate courts have resoundingly concluded that
WRTL ll’s constitutional division between express advocacy and issue speech is simply
inapposite in the disclosure context See` e.g.` Indep. Inst. v. Williams, 812 F.3d 787, 795 (10th
Cir. 2016) (‘°It follows from Citizens United that disclosure requirements can . . . reach beyond
express advocacy to at least some forms of issue speech.”); De]. Strong Families v. Att’v Gen. of
§§L, 793 F.3d 304, 308 (3d Cir. 2015), cert. denied sub nom.1 Del. Strong Families v. Denn, l36
S. Ct. 2376 (2016) (“Any possibility that the Constitution limits the reach of disclosure to
express advocacy or its functional equivalent is surely repudiated by Citizens United v. FEC.”);

Vt. Right to Life Comm., lnc. v. Sorrell (VRTL), 758 F.3d 118, 132 (2d Cir\ 2014), cert. denied

 

335 S. Ct. 949 (2015) (“ln Citizens United the Supreme Court expressly rejected flimiting]

 

disclosure requirements . . . to speech that is the functional equivalent of express advocacy,”
thereby “rernov{ing] any lingering uncertainty concerning the reach of constitutional limitations
in [the disclosure] context.” (internal citations omitted)); Ctr. for individual Freedom v.
Madigan, 697 F_3d 464, 484 (7th Cir. 2012) (“Whatever the status of the express advocacy/issue
discussion distinction may be in other areas of campaign finance law, Citizens United left no
doubt that disclosure requirements need not hew to it to survive First Amendment scrutiny.”
(emphasis added)); Nat’l Org. for Marriage v. McKee, 649 F.3d 34, 54»~55 (lst Cir. 2011)

(“[T]he issue/express advocacy dichotomy has only arisen in a narrow set of circumstances not

_13~

present here . . . We find it reasonably clear, in light of Citizens United, that {this] distinction . . .
has no place in First Amendment review of these sorts of disclosure~oriented laws.”); H”uwmma"n
Life of Wash., Inc. v. Brumsickle, 624 F.3d 990, 1016 (9th Cir. 2010) (“[ln Citizens United,] the
Court explained that the distinction between express and issue advocacy . . . did not translate into
the disclosure context Given the Court’s . . . holding that the government may impose
disclosure requirements on speech, the position that disclosure requirements cannot
constitutionally reach issue advocacy is unsupportable.”); _c_f_. lowa Right To Life Comm., Inc. v.
lgpker, 717 F.3d 576J 591 (8th Cir. 2013) (suggesting and declining to resolve a “split” among
pre- and post-Citizens United appellate decisions regarding “whether state campaign-finance
disclosure laws can impose PAC status or burdens on groups lacking f_§ggl;ley’s major purpose”).
Faced with this weight of contrary legal authority, the controlling Commissioners
grounded their decision to apply WRTL ll’s framework on an outlier: a single case that
examined Citizens United’s treatment of BCRA’s disclosure requirements and nevertheless
concluded that WRTL Il’s framework retains some proper applicability in the disclosure

context8 A.R. 1448(A.1S SOR); A.R. 1700 (AAN SOR); FEC’s MS.l 37; AAN’s AAN’s l\/lem.

 

8 Defendants, and the controlling Commissioners in their statement of reasons, also cite
New Mexico Youth Organized v. Herrera. 611 F.3d 669 (10th Cir. 2010), in support of the
decision to apply the express advocacy limitation in the political committee contextl A.R. 1448-
49 (AJS SOR); A.R. 1700 (AAN S()R); FEC’s MSJ 38. Although Herrera was decided after
Citizens United the briefing the case relied on was completed before that decision Accordingly,
Herrera’s only reference to the Supreme Court’s opinion is the statement, included in a footnote,
that “{a]lthough [Citizens United} left many issues unresolved we believe [the opinion did not
change the] requirement . . . that for a regulation of campaign related speech to be constitutional
[that speech] must be unambiguously campaign related” id at 676 n.4. Given Herrera’s
cursory treatment of the decision, it is best considered a pre~ rather than a post-Citizens United
case. All other cases cited by the controlling Commissioners for their exclusion of non-express
advocacy frorn the major purpose analysis predate Citizens United. §ee A.R. 1448-49 (AJS
SOR) (citing l\l. Carolina Right to Life. Inc. v. Leake. 525 F.3d 274 (4th Cir. 2008); Col. Right
To Life Comm._ Inc. v. Coffman` 498 F.3d 1137 (lOth Cir. 2007)', FEC v. Malenick, 310 F.

 

“19_

Supp. Mot` Summ. .1 . (“AAN"s MSJ”) 28. That case, Wisconsin Right To Life5 Inc. v. Barland,
751 F.3d 804 (7th Cir. 2014), sought to limit Citizens United’s rejection of the express advocacy
limitation “to the specifics of the disclosure requirement [there] at issue.” I_d. at 83 6. The
M court surmised that Citizens United was only “addressing the onetime, event-driven
disclosure rule for federal electioneering communications, [and not] the comprehensive,
continuous reporting regime imposed on federal PACs.” id This cramped interpretation placed
B_a_r_l_a_nd_ in conflict with the vast majority of appellate courts, including a prior panel in its own
circuit, see Madigan, 697 F.3d at 484 (rejecting the “express advocacy/issue discussion
distinction” as applied to political committee~related “disclosure requirements”), and the opinion
has since been roundly criticized, g B”_l`__lg 758 F.3d at 132 (faulting Barland’s attempt to
“confme[] [Citizens United] to its ‘specific and narrow context,”’ as the Supreme Court provided
“no indication that [its] ruling depended on the type of disclosure requirement it upheld”).
Bmar_lamn_d_ is out of step with the legal consensus not only because it read nonexistent
qualifiers into a Supreme Court opinion, but also because it rested on a flawed premise: that the
“event-driven disclosure rule[s] [considered in Citizens United] are far less burdensome than the
comprehensive registration and reporting system imposed on political committees.” 751 F.3d at
824 (emphasis added). Defendants, too, make much of the “burdensome” nature of “registration,
reporting, and regulatory obligations that attach to political committee status under FECA.”
AAN’s Reply Mot. Summ. J. (“AAN’s Rep]y”) 12; usme“:me_“a“lsom FEC’s Reply Mot. Summ. J.
(“FEC’s Reply”) 20; AAN’s MSJ 28. But these characterizations are not on firm doctrinal

footing Courts, including the D.C. Circuit sitting en banc, have repeatedly classed periodic

 

 

Supp. 2d 230 (DiD.C. 2004)', FEC v. G()PAC lnc., 917 F. Supp. 851 (D.D.C. 1996)); A.R_
1700-01 (AAN SOR) (same).

_29_

reporting and registration requirements with other disclosure regimes, applying to them the very
same, less~stringent level of constitutional scrutiny SpeechNow. org v. FEC, 599 F.3d 686, 696
(D.C. Cir. 2010) (en banc) (categorizing the FEC’s “organizational and reporting requirements”
as “disclosure requirements,” which “inhibit speech less than do contribution and expenditure
limits”). ln particular, to justify disclosure requirementsj including those attending political
committee status, “the government may point to any ‘sufficiently important’ governmental

interest that bears a ‘substantial relation’ to the disclosure requirement.” I_d. (quoting Citizens

 

QM, 130 S. Ct. at 914)); see also, e.g., _VM, 758 F.3d at 137 (applying lower level of
scrutiny to registration and reporting requirements attending political committee status); M
Leadership Coal. of Texas v. Reisman_ 764 F.3d 409, 424-25 (Sth Cir. 2014) (same)', Worley v.
Ftoriaa sec’y or State, 717 F.3d 1238, 1243-44 (i ith Cir. 2013) (Same); truman Lire, 624 F.3d

at 1012~l4 (2010) (sarne).

Applying this standard of review, the D.C. Circuit described the additional burdens of
“designating a treasurer and retaining records” as not “irnpos[ing] much of` an additional burden
on” political committees, particularly wherwas is the case here_those entities “intend[] to
comply with the [event-driven] disclosure requirements that . . . apply even [in the absence 00
political committee” status Sp_eechNow, 599 F.3d at 696-97 The court balanced these
relatively modest burdens of registration and reporting against the broad public interest in
knowing “who is speaking about a candidate and who is funding that speech,” which “deters and

helps expose violations of other campaign finance restrictions.” 599 F.3d at 698. As might be

_2]_

expected, the court concluded that “[t]hese are sufficiently important governmental interests to
justify requiring [a political committee] to organize and report to the FEC.” li

Other courts have applied the same analysis, and arrived at the same result “[T]he
majority of circuits have concluded that . . . disclosure requirements [related to registration and
reporting] are not unduly burdensome.” Yamada v. Snipes, 786 F.3d 1182, l195 (9th Cir_), _c_e_r_tm_
denied sub nom.` Yamada v. Shoda_ l36 S. Ct. 569 (2015); see also, e.g., M, 758 F.3d at
137-38 (upholding against constitutional attack political committee “registration, recordkeeping
. . . and reporting requirements,” and rejecting the argument that such “burdens that are ‘onerous’
as a matter of law”); W_ogley, 717 F.3d at 1250 (concluding that the state’s “PAC regulations do

not generally impose an undue burden”); McKee, 649 F.3d at 56 (noting that the state’s PAC

 

burdens “do not prohibit, limit, or impose any onerous burdens on speech”).9 Considering the
weight of the above precedent, the Court has little trouble concluding that the Commissioners’
decision to apply WRTL II’s express advocacy/issue speech distinction in the realm of
disclosure, thereby excluding all non-express advocacy speech from consideration, was
“contrary to law.” 52 U.S.C. § 30109(a)(8)(C).10

The Court will not go further, however, as urged by CREW, and declare contrary to law

any approach taken by the FEC that does not assess political committee status by considering all

 

9 Defendants seek additional support in language from Citizens United describing the
burdens associated with political committees 558 U.S. at 339. See, e.g., A.R. 1443 (AJS SOR);
A_R. 1694-95 (AAN SOR); FEC’s MSJ 32', AAN’s Reply 12. But that discussion “consider[ed]
a regime that required corporations to set up a separate legal entity and create a segregated fiind
prior to engaging in any direct political speech_” McKee, 649 F.3d at 56 (emphasis added). N`o
such requirements are implicated here. In any event, the Court does not presume to say that the
burdens on a political committee are negligible, only that “suf`ficiently important governmental
interests°’ may “justify” a political committee definition broader than the one applied by the
controlling Commissioners SpeechNow, 599 F.3d at 698

30 Furthermore, although this was not an issue briefed by the parties, the Court notes that
the FEC’s decision was “contrary to law” for an additional, independent reason. Having chosen

_22_

electioneering communications as indicative of a “purpose” to “nominat[e} or elect[] . . . a
candidate.” Bucl<ley, 424 U.S. at 7 9. §ee Pls.’ l\/lSJ` 26. CREW’s citations to legislative history,
past FEC precedent, and court precedent certainly support the conclusion that many or even most
electioneering communications indicate a campaign-related purpose l"dj at 26-30. lndeed, it
blinl<s reality to conclude that many of the ads considered by the Commissioners in this case
were not designed to influence the election or defeat of a particular candidate in an ongoing race
However, particularly given the FEC’s judicially approved case~by-case approach to
adjudicating political committee status, g M, 72 Fed. Reg. at 5597; §hays, 511 F. Supp, 2d
at 3, the Court will refrain from replacing the Commissioners’ bright-line rule with one of its
own. l

lnstead, the Court will limit itself to identifying the legal error in the Commissioners’
statements-that is, the erroneous understanding that the First Amendment effectively required
the agency to exclude from its consideration all non-express advocacy in the context of

disclosure Since the FEC “based its decision upon an improper legal ground,” the Court “will

 

to incorporate WRTL ll as a framework for conducting their major purpose analysis the
Commissioners articulated a partial-~»and ultimately inaccurate-version of that standard The
Commissioners did not draw from WRTL ll its key test for identifying functional equivalents of
express advocacy, i.e., those ads that are “susceptible of no reasonable interpretation other than
as an appeal to vote for or against a specific candidate.” 551 U.S. at 469470, lndeed, that
standard appears nowhere in the Commissioners’ statements of reasons Instead, the
Commissioners drew from the case a long list of characteristics that were insufficient to place an
ad in the “functional equivalent” category W A.R. l450m~51, 1702 (identifying, inter alia,
“appeal[s] to contact a candidate” or “promot[ing] or criticiz[ing]” a candidate as inadequate to
“render a communication electoral advocacy”). Similarly, the Commissioners indicated that
only “genuine” issue speech should be excluded from the “major purpose” analysis but never
did they explain how an electioneering communication could ever fail to be a “genuine” issue ad
That concept, too, was defined in the negative §eg A.R` 1454, 1705 (“Genuine issue speech
does not lose its character merely by mentioning-or even promoting or criticizing--~a federal
candidate.”). In shoit, not only did the Commissioners improperly import a standard, they also
stated an incomplete version of that standard

_23_

set aside the agency’s action and remand the case” for its reconsideration in light of the
correction _EHE“(;_mvm__“n_i_;ni_s, 524 U_s_ ii, 25 (1998) (“_A_khi_§_u”).

B. Relevant Time Period for Measuring Expenditures

CREW also contends that the controlling Commissioners erred by evaluating the
challenged groups’ spending over their entire existence, as opposed to confining their analysis to
spending within the most recent calendar year. Pls’ MSJ 37»40. There is no doubt that the
controlling Commissioners focused almost exclusively on lifetime, and not calendar-year,
spending §§eL_e_.gL, A.R. 1438 (AJS SOR) (“[W]e believe AJ'S_an organization that has spent
less than ten percent of its funds on express advocacy during irs entire exisleiice_~is an issue-

- advocacy organization that cannot be regulated as a political committee[`}” (emphasis added));
A.R. 1439 (AJ`S SOR) (“The overwhelming majority of [AJS’s] spending since inception has
related to pure issue advocacy[.]” (emphasis added)); A.R. 1456-57 (AJ`S SOR) (“[T]he
Commission assesses an organization’s major purpose by reference 10 its entire history_”
(emphasis added)); A.R. 1709 (AAN SOR) (evaluating AAN’s spending “between 2009 and
2011,” i.e., since the organization’s founding). Indeed, the Commissioners expressly rejected the
calendar-year approach advanced by the FEC’s Office of General Counsel, as “myopic,
distortive, and legally erroneous.” A.R. 1461 (AJS SOR); A.R. 1713 (AAN SOR).

The FEC argues that the “Commissioners’ decision to use the entire record before it was
neither unreasonable nor contrary to law,” since “[n}either FECA nor any judicial decision
specifies a particular time period for determining a group’s major purpose.” FEC’s MSJ 41~45,
The Court agrees, as a general matter. Given the FEC’s embrace of a totality»of-the-

circumstances approach to divining an organization’s “major purpose,” it is not per se

iga,

unreasonable that the Commissioners would consider a particular organizations full spending
history as relevant to its analysis

However, the Commissioners have gone further than merely eschewing the calendar-year
approach as a “rigid, one~size-fits-all rule” at odds with the FEC’s chosen case-by-case method
A.R. l462. Rather, they have replaced that rule with a different-but equally inflexible--metric.
Looking only at relative spending over an organization’s lifetime runs the risk of ignoring the not
unlikely possibility, contemplated by the Supreme Court, that an organization’s major purpose
can change §§§ M, 4?9 U.S. at 262 (recognizing that a group’s “spending [may] become so
extensive that the organization’s major purpose may be regarded as campaign activity [such that]
the corporation would be classified as a political committee.” (emphasis added)). That is
precisely the trajectory that A.lS appears to have followed lt spent no money on election-related
spending until 2008, but then shifted its expenditures towards electioneering communications
and express advocacy over the following several yearsl

The Commissioners’ refbsal to give any weight whatsoever to an organizations’ relative
spending in the most recent calendar year--particularly in the case of` a fi&een»year-old
organization like AJS-indicates an arbitrary “f`ail[ure] to consider an important aspect of the
[relevant] problem.” Def`s. of` Wildlife, 551 U.S. at 658. The seriousness of that failure would
only increase with the lifespan of the challenged organization: A half-century~old organization
with a substantial spending history could commence spending handsomely on election-related
ads and continue such expenditures for decades before its new “rnajor purpose” would be
detected by the controlling Commissioners’ lifetime-only approachl Surely, that cannot be what
Congress contemplated in defining “political committee” in terms of` calendar-year spending

under FECA, see 52 U.S.C. § 30101(4) (defining political committee as an entity with more than

_;,15m

$1,000 in contributions or expenditures in a calendar year), nor can it be what the Supreme
Court intended with its “rnajor purpose” narrowing instruction, ge M, 479 U.S. at 262_

The Court therefore concludes that the Commissioners’ lifetime-only rulewat least as
applied to AJSmis “contrary to law,” 52 U.S.C. § 30109(a)(8)(C), in that it tends to ignore
crucial facts indicating whether an organization’s major purpose has changed, and is inconsistent
with the FEC’s stated fact-intensive approach to the “major purpose” inquiry

C. The 50%-of-Total~St)ending Threshold

Finally, CREW contends that the controlling Commissioners erred in applying a “rigid
50% [spending] threshold” when evaluating an entity’s major purpose Pls. ’ MSJ 40»41.

CREW points mainly to a footnote, where the Commissioners state that AJS would still fail the
major purpose test following the calendar-year approach because even then “only $4.9 million
(or approximately 40%)” of AJS’s spending in 2010 was allocated to independent expenditures,
and “[s]uch spending does not clearly signify a major purpose of engaging in express advocacy.”
A.R. 1463 n.151.

There are multiple flaws in CREW’s argument, but most importantly, it is far from
apparent that the Commissioners did apply any such 50%-plus spending threshold for defining
major purpose Neither the AJS nor the'AAN statement specifically identifies a 50%-plus
thresholdl The Commissioners merely said, with respect to AJS, that 40% of spending “does not
clearly signify a major purpose,” A.R. 1463, and the proportion of AAN"s spending on express
advocacy was so low-~#roughly 15%-that any purported 50% threshold was irrelevant, A.R.

1709. in any event, CREW’s argument also fails because “[r]eview under the arbitrary and

-26”

capricious standard is deferential.” Defs. of Wildlife, 551 U.S. at 658_ A reasonable application
of a 50%-plus rule would not appear to be arbitrary and capriciousl

IV. Rernedy and Conclusion

ln sum, notwithstanding the likely permissibility of a 50%~plus spending threshold (if
such a threshold was even applied), the Court concludes that the controlling Commissioners
relied on a faulty legal premise in applying the “rnajor purpose” test. In paiticular, the
Commissioners incorrectly determined that WRTL II’s framework applied in the context of a
less restrictive disclosure regime Likewise, the Commissioners’ decision to give full weight to
the relative spending of the challenged organizations over their entire lifetimes, as a “fail[ure] to
consider an important aspect of the [relevant] problem,” Defs. Of`Wildlife, 55l U.S, at 658, was
arbitrary and capricious

The Commissioners’ decisions to dismiss CREW’s complaints against AJS and AAN
were thus “contrary to law,” and the Court accordingly “direct{s] the Commission to conform
with [thisj declaration within 30 days.” 52 U.S.C. § 30109. §Mso M_ll 524 U.S. at 25
(“If` a reviewing court agrees that the agency misinterpreted the law, it will set aside the agency’s
action and remand the case{.]”); Gonzales v. Thomas, 547 U.S. 183, 186 (2006) (“[After
deeming an agency’s action arbitrary and capricious,] the proper course, except in rare
circumstances, is to remand to the agency for additional investigation or explanation,” (quoting

I.N.S. v. Orlando Ventura. 537 U.S. l2, 16 (2002)), if the FEC does not appeal this decision or

 

act in accordance with the Court’s declaration within 30 days, “the complainant may bring . . . a

civil action to remedy the violation involved in the original complaint.” 52 U.S.C. § 30109.

_27_

The Court will grant CREW’s motion for summary judgment and deny the FEC’s and

AAN’s cross-motions An Order accompanies this l\/Iemorandum Opinion.

aaa ga _

CHRISTOPHER R. é`ooPER
United States District Judge

Date: September 19, 2016

_gg_

