Public Citizen v. Federal Election Commission

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA

PUBLIC CITIZEN, et al.,
Plaintiffs,
V.

Civil Case No. 14-148 (RJL)

FEDERAL ELECTION
COMMISSION,

Defendant,

CROSSROADS GRASSROOTS
POLICY STRATEGIES,

Intervenor Defendant.

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MEMORANDUM OPINION

March 16 oh [Dkts. # 23, 32, 60]

Plaintiffs Public Citizen, Protectourelections.org, Craig Holman, and Kevin Zeese
(“plaintiffs”) seek judicial review of the Federal Election Commission’s (““FEC” or
“Commission”) decision not to further investigate whether Crossroads Grassroots Policy
Strategies (“Crossroads GPS”) violated the Federal Election Campaign Act of 1971 by
failing to register with the FEC as a “political committee.” The case is now before the
Court on the parties’ motions for summary judgment. Pls.’ Mot. for Summ. J. [Dkt. #23];
Fed. Election Comm’n Mot. for Summ. J. & Opp’n (“FEC’s Mot. for Summ. J.”) [Dkt.
# 32]; Crossroads Grassroots Policy Strategies’ Mot. for Summ. J. (“Crossroads GPS’s

Mot. for Summ. J.”) [Dkt. # 60].
For the reasons explained more fully below, I hold that the FEC decision is not
subject to judicial review because the Commission exercised its prosecutorial discretion to
dismiss this matter. Consequently, I will GRANT the FEC and Crossroads GPS’s motions
for summary judgment and DENY plaintiffs’ motion for summary judgment.

BACKGROUND

A. Statutory Scheme

The Federal Election Campaign Act of 1971’s (“FECA”) disclosure requirements
“deter actual corruption and avoid the appearance of corruption by exposing large
contributions and expenditures to the light of publicity.” Buckley v. Valeo, 424 U.S. 1, 67
(1976). The requirements also “provid[e] the electorate with information about the sources
of election-related spending.” McCutcheon v. FEC, 572 U.S. 185, 223 (2014) (quotations
and citations omitted).

Some of the FECA’s disclosure requirements apply to a “political committee,”
which is any “committee, club, association, or other group of persons” that receives more
than $1,000 in “contributions” or makes more than $1,000 in “expenditures” in a calendar
year. 52 U.S.C. § 30101(4)(A). “Contributions” and “expenditures” are defined as
payments made with a purpose to “influenc[e] any election for Federal office.” Jd.
§ 30101(8)(A), (9)(A).

But in order to protect issue advocacy under the First Amendment, the Supreme
Court narrowed the definition of “political committee” by establishing the “major purpose”
test in Buckley v. Valeo. Under Buckley, the FECA’s reporting requirements for political
committees only apply to “organizations that are under the control of a candidate or the

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major purpose of which is the nomination or election of a candidate.” 424 U.S. at 79. The
FEC determines on a case-by-case basis whether a group is a “political committee” under
the FECA and Buckley by examining the group’s spending, conduct, and public and private
statements. See Supplemental Explanation & Justification, 72 Fed. Reg. 5595, 5601 (Feb.
7, 2007).

Not surprisingly, there are real consequences for a group that qualifies as a political
committee. The group must register with the FEC, hire a treasurer, keep records of the
names and addresses of contributors, and file detailed monthly reporting, including, among
other information, the amount of money contributed to and received from other political
committees. 52 U.S.C. §§ 30102-03.

Any person may file an administrative complaint with the FEC alleging a violation
of the FECA. 52 U.S.C. § 30109(a)(1). The Commission reviews that complaint and any
responses from the respondent before voting to determine whether there is “reason to
believe” that the respondent has violated the FECA. /d. § 30109(a)(2). If at least four of
the six commissioners vote in favor of a reason to believe, the Commission may investigate
the violation. /d. But without at least four votes, the Commission must dismiss the
administrative complaint.

If, however, the Commission dismisses the administrative complaint at the “reason
to believe” stage, the complainant may seek judicial review of the Commission’s decision

in this District. Jd. § 30109(a)(8)(A).
A. Factual and Procedural Background

Crossroads GPS was founded in June 2010 as a 501(c)(4) nonprofit corporation
devoted to “further[ing] the common good ... by engaging in research, education, and
communication in efforts regarding policy issues of national importance.” AR 401.

Plaintiffs filed an administrative complaint in October 2010, alleging that
Crossroads GPS violated the FECA by “raising and spending significant amounts of money
to influence the 2010 congressional elections” without abiding by the FECA’s disclosure
requirements for political committees. AR 1-22. The administrative complaint requested
that the Commission find “reason to believe” that Crossroads GPS violated the FECA,
conduct an investigation, and impose sanctions for any violations. AR 19-20. Crossroads
GPS submitted several responses to the administrative complaint, as well as evidence of
its financial activities. AR 32-90, 92-176, 228-37, 239-339.

On November 21, 2012, the FEC’s Office of General Counsel (“OGC”) provided
the Commission with the First General Counsel’s Report and Proposed Factual and Legal
Analysis, wherein OGC recommended that the Commission find “reason to believe”
Crossroads GPS violated the FECA “by failing to organize, register, and report as a
political committee.” AR 340-93.

In December 2013, the Commission deadlocked 3-3 on whether there was reason to
believe Crossroads GPS violated the FECA. AR 395. Because a minimum of four
commissioners are needed to proceed with an investigation, the administrative complaint

was dismissed. 52 U.S.C. § 30109(a)(2). The commissioners who found that there was no
“reason to believe” (“Controlling Commissioners”) Crossroads GPS violated the FECA
issued a statement of reasons providing the rationale for their vote. AR 400-504.

The Controlling Commissioners first noted that, based on its public filings,
Crossroads GPS exceeded the $1,000 statutory threshold under 52 U.S.C. § 30101(4)(A)
to qualify as a political committee. AR 404-05.

The Controlling Commissioners then evaluated whether Crossroads GPS qualified
as a political committee under Buckley’s major purpose test. First, the Controlling
Commissioners concluded that “nothing in Crossroads GPS’s official documents—
including its articles of incorporation, mission statement, and website—indicates that its
central organizational purpose was the nomination or election of a federal candidate.”
AR 412. Second, the Controlling Commissioners determined that Crossroads GPS’s
express advocacy spending accounted for 36 percent of its total spending, which, the
Controlling Commissioners concluded, was “well below the threshold spending necessary
to meet the major purpose test.” AR 412-415.!

In its analysis, the Controlling Commissioners rejected two novel theories proffered
by OGC. First, the Controlling Commissioners rejected OGC’s theory that the
Commission should consider Crossroads GPS’s “spending related to federal campaign
activity,” including “funds spent on communications that support or oppose a clearly

identified federal candidate, but do not contain express advocacy.” Id. OGC’s proposal,

' The Controlling Commissioners also considered other metrics for Crossroads GPS’s
express advocacy expenditures and total spending. AR 423-24. But each of these
calculations resulted in spending below 50 percent, which the Controlling Commissioners
concluded was insufficient. Jd.
according to the Controlling Commissioners, would “undermine the function of the major
purpose limitations” and “would count spending wholly outside the Commission’s
regulatory jurisdiction for the explicit purpose of asserting that very regulatory jurisdiction
over the organization.” AR 415. Second, the Controlling Commissioners rejected OGC’s
proposal that the Commission should focus on the 2010 calendar year, instead of
Crossroads GPS’s fiscal year. AR 419. The Controlling Commissioners noted that
Crossroads GPS was founded halfway through 2010, and “using the myopic and artificial
window ofa single calendar year would inevitably subject many issue-based organizations
to the burdens of political committee status.” Jd.
Finally, the Controlling Commissioners stated:
We also note that the Commission maintains broad discretion to
dismiss matters as our decision not to enforce “often involve[] a
complicated balancing of a number of factors which are peculiarly
within [our] expertise.” Heckler v. Chaney, 470 U.S. 821, 831 (1985).
For various reasons, including OGC’s introduction of new legal
theories that attempt to expand the universe of an organization’s
communications while contracting the period of time for evaluating
an organization’s spending for that analysis—neither of which were

properly noticed, we believe that discretion could properly be applied
here.

AR 427 n.117 (alterations in original).

In January 2014—one month after the Commission dismissed the administrative
complaint against Crossroads GPS—plaintiffs filed this complaint against the FEC,
contending that the Commission’s “failure to find ‘reason to believe’ that Crossroads GPS

violated FECA” was “arbitrary, capricious, an abuse of discretion and otherwise contrary
to law” in violation of the Administrative Procedure Act and the FECA. Compl. § 52
(citing 2 U.S.C. § 437g(a)(8)(C); 5 U.S.C. § 706).

Crossroads GPS moved to intervene as a defendant in April 2014. See Crossroads
Grassroots Policy Strategies’ Mot. to Intervene and Mem. in Supp. [Dkt. # 8]. | While
Crossroads GPS’s motion was pending, plaintiffs moved for summary judgment. Pls.’
Mot. for Summ. J. I denied Crossroads GPS’s motion to intervene, see Memo. Order [Dkt.
# 27], and Crossroads GPS sought an interlocutory appeal, see Notice of Interlocutory
Appeal to D.C. Cir. [Dkt. # 28]. While Crossroads GPS’s appeal was pending, the FEC
also moved for summary judgment. FEC’s Mot. for Summ. J. In October 2014, our Circuit
stayed proceedings in this Court pending resolution of Crossroads GPS’s appeal. In June
2015, our Circuit subsequently granted Crossroads GPS’s appeal, permitting them to
intervene, see Crossroads Grassroots Policy Strategies v. FEC, 788 F.3d 312 (D.C. Cir.
2015), and shortly thereafter, not surprisingly, Crossroads GPS also moved for summary
judgment as a defendant-intervenor. Crossroads GPS’s Mot. for Summ. J.

The parties completed initial briefing in April 2016.” I held oral argument on the
parties’ motions for summary judgment in August of that same year, and the parties
submitted supplemental briefing a month later. [Dkts. # 75, 76, 77]. The parties have also
submitted and responded to several notices of supplemental authority. [Dkts. # 70, 78, 79,

80, 81, 83]. The parties’ motions are now ripe for review.

Amicus curiae Center for Competitive Politics submitted a brief in support of the FEC.
Br. of Amicus Curiae Center for Competitive Politics in Supp. of Def. [Dkt. # 37].
ANALYSIS
1. Prosecutorial Discretion?

The FEC argues that the Commission exercised its “broad prosecutorial discretion”
as a “discrete basis for its decision not to prosecute.” FEC’s Mot. for Summ. J. at 49-50;
see also Tr. of Mot. Hr’g Before the Hon. Richard J. Leon, United States District Judge at
19, 29 (Aug. 2, 2016); FEC’s Suppl. Mem. in Supp. of Cross-Mot. for Summ. J. at 13-14
[Dkt. # 76]; Crossroads GPS’s Mot. for Summ. J. at 49 (relying on the Commission’s
exercise of prosecutorial discretion to argue that the matter is moot). Arid because the
Commission exercised its prosecutorial discretion, the FEC argues, the Commission’s
decision is not subject to judicial review. FEC’s Mot. for Summ. J. at 49-50. I agree.

Our Circuit has held that the FEC’s dismissal of an administrative complaint in its
exercise of prosecutorial discretion is presumptively unreviewable. CREW vy. FEC
(“CHGO”), 892 F.3d 434, 439-441 (D.C. Cir. 2018). Indeed, our Circuit has pointedly
noted that “[i]t is not for the judiciary to ride roughshod over agency procedures or sit as
board superintend[ents] directing where limited agency resources will be devoted. [Courts]
are not here to run the agencies.” FEC v. Rose, 806 F.2d 1081, 1092 (D.C. Cir. 1986).

Here, the FEC explicitly exercised its prosecutorial discretion. AR 427 n.117. In

support of their decision, the Controlling Commissioners cited Chaney, id., in which “the

3 Crossroads GPS also argues that plaintiffs lack standing. Crossroads GPS’s Mot. for
Summ J. at 45-47. Although properly understood as a mootness issue, I need not address
it here because “this [C]ourt is not bound to consider jurisdictional questions in any
particular order.” Ass’n of Irritated Residents v. EPA, 494 F.3d 1027, 1030 n.1 (D.C. Cir.
2007) (citing Ruhrgas AG v. Marthon Oil Co., 526 U.S. 574, 584-85 (1999)).

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Supreme Court recited many of the reasons why an agency’s exercise of its prosecutorial
discretion cannot be subjected to judicial scrutiny," CHGO, 892 F.3d at 439. The
Controlling Commissioners then reasoned that, for various reasons, including OGC’s
application of “new legal theories” that were not properly noticed, “prosecutorial discretion
could properly be applied here.”> AR 427 n.117.

There are, however, two limited instances where a party may rebut this presumption
against reviewability. CREW v. FEC, 316 F. Supp. 3d 349, 421-22 (D.D.C. 2018). The
first is “if the agency has ‘consciously and expressly adopted a general policy’ that is so
extreme as to amount to an abdication of its statutory responsibilities.” CHGO, 892 F.3d

at 440 n.9 (quoting Chaney, 470 U.S. at 833 n.3). The second is when the agency’s decision

[A]n agency decision not to enforce often involves a complicated
balancing of a number of factors which are peculiarly within its
expertise. Thus, the agency must not only assess whether a violation
has occurred, but whether agency resources are best spent on this
violation or another, whether the agency is likely to succeed if it acts,
whether the particular enforcement action requested best fits the
agency’s overall policies, and, indeed, whether the agency has enough
resources to undertake the action at all. An agency generally cannot
act against each technical violation of the statute it is charged with
enforcing.

The agency is far better equipped than the courts to deal with the many
variables involved in the proper ordering of its priorities.

Chaney, 470 U:S. at 831-32.

> Plaintiffs place too much emphasis on the Controlling Commissioner’s use of the word
“could.” Pls.’ Reply & Opp’n at 28. As evidenced by the Controlling Commissioner’s use
of “properly” following “could,” the Controlling Commissioners were articulating that
prosecutorial discretion was permitted in this case. The Controlling Commissioners were
not merely stating, as plaintiffs prefer, that prosecutorial discretion could hypothetically be
used in this case.
not to undertake an enforcement action is based entirely on its interpretation of the statute.
Id. at 441 n.11 (citing Akins, 524 U.S. at 26). Neither, however, has occurred here!

First, there is no evidence in the record that the FEC has “consciously and expressly
adopted a general policy” amounting to an abdication of its duty to enforce the FECA. See
CHGO, 892 F.3d at 440 n.9 (citation omitted). And plaintiffs do not contend otherwise.

Second, the Controlling Commissioners’ decision not to prosecute did not rely on
an interpretation of the statute. To be sure, the Controlling Commissioners’ analysis of the
merits of OGC’s legal theories relied, at least in part, on Controlling Commissioners’
interpretation of Buckley and its progeny, an area in which the courts do not afford
deference. Univ. of Great Falls v. NLRB, 278 F.3d 1335, 1341 (D.C. Cir. 2002) (“We are
not obligated to defer to an agency’s interpretation of Supreme Court precedent under
Chevron or any other principle.”) (quoting Akins v. FEC, 101 F.2d 731, 740 (D.C. Cir.
1996) (en banc), vacated on other grounds, 524 U.S. 11 (1998)).

But regardless of the merits of OGC’s legal theories, the Controlling
Commissioners’ decision not to proceed relied upon prudential concerns well within its
expertise. Indeed, proceeding would have required the FEC to rely on novel theories and
Crossroads GPS did not have proper notice of these theories. AR 422, 427 n.117. The
Controlling Commissioners reasoned that “the Commission has made no public statement,
either before or after Crossroads GPS acted, that would put Crossroads GPS on notice that
it would be judged based solely upon its activities for the calendar year 2010.” AR 422.
Therefore, prosecuting Crossroads GPS on OGC’s novel theory would have violated the

FEC’s policy to give the public “notice of the status of the law regarding ... the major

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purpose doctrine.” AR 422 n. 98 (citing 2007 Political Committee E&J at 5606). Further,
the Controlling Commissioners were concerned about the likelihood of success of
prosecuting Crossroads GPS, stating that “due process concerns would preclude the
Commission from seeking to enact a new legal norm now, without prior notice, behind
closed doors in a confidential enforcement action and apply it retroactively.” AR 422
(citing FCC v. Fox Television Station, 132 8. Ct. 2307, 2315-2316 (2012)).

The Controlling Commissioners’ concern with whether prosecuting Crossroads
GPS was consistent with the Commission’s “overall policies” and whether the FEC would
be “likely to succeed” falls squarely within the FEC’s expertise. Chaney, 470 U.S. at 831.
Further, as the Court noted in Chaney, “[a]n agency generally cannot act against each
technical violation of the statute it is charged with enforcing.” Jd. at 832.

Plaintiffs’ arguments that the statement of reasons remains subject to judicial review
are unavailing. In particular, plaintiffs’ argument that the “FEC does not possess the almost
unreviewable enforcement discretion posited in Heckler because Congress has chosen to
subject the Commission’s enforcement decisions to judicial review,” see Pl.’s Reply &
Opp’n at 29, was unequivocally rejected by our Circuit Court in CHGO, stating: “Nothing
in the substantive statute overcomes the presumption against judicial review,” CHGO, 892
F.3d at 439.

Plaintiffs’ additional argument that the FEC’s decision is reviewable because the
Controlling Commissioners provided legal analysis on the merits of the administrative
complaint in addition to exercising their prosecutorial discretion is equally unavailing.

Pls.’ Reply & Opp’n at 28. Our Circuit Court has explicitly rejected “the notion of carving

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reviewable legal rulings out from the middle of non-reviewable actions.” CHGO, 892 F.3d
at 442 (citing Crawley Caribbean Transport, Inc. v. Pefia, 37 F.3d 671, 676 (D.C. Cir.
1994)); see id. at 441-42 (“[E]ven if some statutory interpretation could be teased out of
the Commissioner’s statement of reasons, the dissent would still be mistaken in subjecting
the dismissal of [plaintiff's] complaint to judicial review.”’).

As such, having exercised their prosecutorial discretion to dismiss this matter, the
Controlling Commissioners’ analysis is not subject to judicial review. Consequently, the
FEC and Crossroads GPS’s motions for summary judgment are GRANTED and the
plaintiffs’ motion for summary judgment is DENIED. An order consistent with this

decision accompanies this Memorandum Opinion.

RICHARD J. LEON
United States District Judge

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