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.
- 22 - 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
- 23 - 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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