and COLORADO COMMON CAUSE, Plaintiffs, v. SCOTT GESSLER, in his official capacity as COLORADO SECRETARY OF STATE, Defendant. - And DAVID PALADINO, MICHAEL CERBO, PROCHOICE COLORADO PAC; PPRM BALLOT ISSUE COMMITTEE; and CITIZENS FOR INTEGRITY, INC., Plaintiffs, v. SCOTT GESSLER, in his official capacity as COLORADO SECRETARY OF STATE, Defendant. JOHN W. SUTHERS, Attorney General MAURICE G. KNAIZER, Deputy Attorney General* Registration Number: 05264 FREDERICK R. YARGER, Assistant Solicitor General* Registration Number: 39479 1525 Sherman Street, 7th Floor Denver, CO 80203 Telephone: 303-866-5132 FAX: 303-866-4745 E-Mail: maurie.knaizer@state.co.us *Counsel of Record

EFILED Document CO Denver County District Court 2nd JD Filing Date: Jul 3 2012 1:48PM MDT Filing ID: 45147803 Review Clerk: Imran Sufi

COURT USE ONLY Case Nos.: 2012 CV 2133 and 2012 CV 2153 Div. 280 Ctrm. 2133


Table of Contents Introduction ................................................................................................................... 3 Factual and Procedural Background ............................................................................ 4 Standard of Review........................................................................................................ 7 I. Plaintiffs bear the burden of separately proving each rule’s invalidity. .......... 7

II. In reviewing interpretations of case law, the court must not substitute its own judgment for that of the Secretary’s...................................................... 8 Argument ....................................................................................................................... 9 I. The Secretary has the duty to enact rules that comport with the law, including the First Amendment. ........................................................................ 9

II. This dispute is limited to six rules, and each was a valid exercise of the Secretary’s rulemaking authority. ................................................................... 14 A. Rule 1.7 does not “modify” the definition of “electioneering communication”; it reflects case law construing the term............................. 16 B. Rule 1.12 clarifies the definition of “issue committee,” giving fair notice to those who wish to participate in public discussion of ballot issues. ............................................................................................................... 22 C. The “major purpose” requirement of Rule 1.18 is based on binding Colorado case law............................................................................................. 29 D. Rules 7.2 and 1.10, which clarify the definition of “political organization,” reflect a federal statutory requirement and longstanding First Amendment principles..................................................... 32 E. Rule 18.1.8(a) defines “good cause” for purposes of waiving penalties for failure to file Major Contributor Reports. ................................................. 37 F. CEW and CCC’s objections to Rules 4.1 and 15.6 are improper because the rules are the subject of an ongoing appeal................................. 40 G. Plaintiffs concede that their objections to Rules 6.1, 6.2, and 14 are moot due to additional rulemaking................................................................. 42 Conclusion .................................................................................................................... 42


Introduction All campaign finance law—whether federal or state—must honor the First Amendment’s boundaries. No law may curtail the constitutional rights of those who engage in public debate, just as no court may ignore the “unflagging obligation to apply constitutional standards to state legislative enactments.” 1 Plaintiffs recognize this fact. They acknowledge that Colorado campaign finance law must be understood in light of the United States Supreme Court’s “landmark rulings.”2 And they concede that judicial precedent is binding “[a]s a matter of constitutional law.” 3 Yet Plaintiffs argue that the Colorado Secretary of State, in enforcing and administering the state’s campaign finance laws, must ignore the dictates of the First Amendment because they come not from the legislature or the voters—but from the courts. Plaintiffs assert that only the judiciary may assess “the impact” of First Amendment jurisprudence. 4 And they claim that the Secretary cannot make rules based on “intervening case law (even from the U.S. Supreme Court).” 5 This is Plaintiffs’ central argument for invalidating rules that the Secretary properly drafted and promulgated.
1 2

N.C. Right to Life, Inc. v. Leake, 525 F.3d 274, 277 (4th Cir. 2008).

CEW/CCC Opening Br. at 16 (citing Citizens United v. Fed. Election Comm’n, 130 S. Ct. 876 (2010)). Paladino Opening Br. at 25 (citing Buckley v. Valeo, 424 U.S. 1, 79 (1976)). CEW/CCC Opening Br. at 14. Paladino Opening Br. at 13. 3

3 4 5

But just like any other state official, the Secretary is required to comply with judicial mandates. Plaintiffs may disagree with First Amendment doctrine, but their disagreement with the law does not relieve the Secretary from heeding it. Each rule Plaintiffs challenge in this case was promulgated to meet a specific need—to explain confusing regulatory requirements, to fill gaps left by unclear constitutional or statutory provisions, or to implement longstanding case law. Each promotes clarity; each allows speakers to easily determine their rights and “resolve disputes quickly without chilling speech through the threat of burdensome litigation,” as the United States Supreme Court requires. 6 The Court should reject Plaintiffs’ arguments and uphold the Secretary’s rulemaking authority.

Factual and Procedural Background As one federal court has observed, “the law of campaign finance is quite complicated” and “[c]ourts, state governments, and those involved in the political process are doing what they can to navigate this difficult terrain.” 7 Colorado’s regime of campaign finance regulation is no less complex than that of other states, and the Secretary, seeking to “improve [the] organization and readability” of

Fed. Election Comm’n v. Wis. Right to Life, Inc. (“WTRL II”), 551 U.S. 449, 469 (2007) (Roberts, C.J.).


N.C. Right to Life, Inc., 525 F.3d at 277. 4

existing campaign finance rules and to “clarify existing laws,” initiated a rulemaking proceeding on November 15, 2011.8 As part of the rulemaking effort, the Secretary held a hearing on December 15, 2011 9 and solicited extensive written comments. 10 Many of the Plaintiffs in this case, and some of their counsel, participated in those proceedings. 11 The record included testimony from several members of the public who described the difficulty of complying with Colorado’s campaign finance regulations. One commenter noted, “I myself have spent many hours reading about the rules, and yet I feel totally incapable of obeying them. . . . For a small-scale project, a political activist easily could spend far more hours navigating the assorted campaign finance rules than the activist actually spends speaking out.”12 Another commenter noted that [C]itizens, especially those who work for underfunded organizations or toward unpopular ends[] must often seek legal advice before engaging in political activity in Colorado. The complexity of state regulations, and the fact they often do not reflect established constitutional

R. Vol. 1, Tab 1, Proposed Statement of Basis, Purpose, and Specific Statutory Authority at 1. (“R. Vol. 1” refers to the eight documents in the official rulemaking record. “R. Vol. 2” refers to written comments submitted by the public as part of the rulemaking.)


See R. Vol. 1 Tab 6; Tr. of Public Hearing (Dec. 15, 2011). See R. Vol. 2.

10 11

See R. Vol. 2, Tab 2 (submission of Planned Parenthood of the Rocky Mountains), Tab 20 (submission of Mark G. Grueskin), Tab 32 (submission of Colorado Common Cause), Tab 35 (submission of NARAL Pro-Choice of Colorado), Tab 41 (submission of Heizer Paul Grueskin LLP), and Tab 42 (submission of Colorado Ethics Watch).

R. Vol. 2, Tab 4 at 1 (comments of Ari Armstrong). 5

law, makes it difficult for a layperson to obtain accurate guidance in the area of campaign finance.13 After considering the rulemaking record, the Secretary issued a Notice of Temporary and Permanent Adoption setting forth the revised rules, as well as a comprehensive Statement of Basis, Purpose, and Specific Statutory Authority, which explained the reason for each new rule or revision and included references to governing law. 14 Because some of the rules were promulgated to incorporate judicial interpretations of the law, the Statement of Basis, Purpose, and Specific Statutory Authority included case citations. On April 6, 2012, two groups of plaintiffs filed complaints challenging some of the Secretary’s new rules. For convenience, this brief refers to these plaintiff groups as “CEW and CCC” (for Colorado Ethics Watch and Colorado Common Cause) and “Paladino Plaintiffs” (for the group of plaintiffs that includes David Paladino). The brief refers to all plaintiffs together as “Plaintiffs.” The Secretary answered the complaints on May 4, 2012. On June 8, Plaintiffs filed their opening briefs.

13 14

R. Vol. 2, Tab 14 at 1 (comments of the Center for Competitive Politics). R. Vol. 1 at 8. 6

Standard of Review I. Plaintiffs bear the burden of separately proving each rule’s invalidity. As discussed below in Part I of the Argument, the parties disagree on whether the Secretary’s rules must adhere to judicial precedent. But they agree on some basic tenets of the standard of review 15: An agency’s rule is presumed to be valid. 16 The party challenging a rule “has a heavy burden to establish invalidity of the rule by demonstrating that the agency violated constitutional or statutory law, exceeded its authority, or lacked a basis in the record for the rule. The court cannot substitute its judgment for that of the agency.” 17 Although the courts review an agency’s interpretation of the law de novo, an agency’s interpretation of governing constitutional and statutory provisions is entitled to “great deference.” 18 The courts must defer to an agency’s interpretation of a law that is silent or ambiguous on a particular subject, looking only to whether the agency’s regulation is based on a permissible construction of the law. 19 An agency may promulgate rules to supplement existing law and “to explain and fill in the interstices.” 20 It is “well-established that agencies possess implied and incidental powers filling the interstices between express powers to effectuate mandates.” 21

15 16 17 18 19 20 21

See CEW/CCC Opening Br. at 10–11; Paladino Opening Br. at 10–15. Colo. Ground Water Comm’n v. Eagle Peak Farms, 919 P.2d 212, 217 (Colo. 1996). Id. (internal citation omitted). Table Servs., Ltd. v. Hickenlooper, 257 P.3d 1210, 1217 (Colo. App. 2011). Smith v. Farmers Ins. Exch., 9 P.3d 335, 340 (Colo. 2000). Henderson-Carrera v. Carlson, 547 F.3d 1237, 1246 (10th Cir. 2008).

Colo. Citizens for Ethics in Gov’t v. Comm. For the Am. Dream, 187 P.3d 1207, 1217 (Colo. App. 2008) (quoting Hawes v. Colo. Div. of Ins., 65 P.3d 1008, 1016 (Colo. 2003)). 7

Within this framework, each challenged rule must be taken on its own terms—one rule’s validity does not depend on another’s. A case from the Colorado Supreme Court illustrates this fact. There, the Court struck down one administrative rule but left another in place, although both were passed as part of the same rulemaking proceeding. 22 This brief therefore explains the legal foundation of each rule, and addresses each of Plaintiffs’ separate arguments, on a rule-by-rule basis. II. In reviewing interpretations of case law, the court must not substitute its own judgment for that of the Secretary’s. Colorado courts have not discussed the standard for reviewing an agency rule that is based on judicial precedent. But in other jurisdictions, courts have used standards similar to those applied to an agency’s interpretation of a statute.23 Under that approach, the interpretation of case law is reviewed de novo, while the agency’s ultimate action is reviewed under the arbitrary and capricious standard. 24 Even when the agency is faced with “two reasonable, but conflicting interpretations of case law,” it may pick one within the bounds of its discretion. 25 It remains true that “a court is not to substitute its judgment for that of the agency.” 26


Citizens For Free Enter. v. Colo. Dep’t of Revenue, 649 P.2d 1054, 1069–70 (Colo. 1982). See, e.g., Clearing House Assoc., L.L.C. v. Cuomo, 510 F.3d 105, 119 (2d Cir. 2007), aff’d in part, rev’d in part, 129 S. Ct. 2710 (2009); see also Russo v. Bd. of Trustees, Police & Firemen’s Ret. Sys., 17 A.3d 801, 809 (N.J. 2011).


See Alliance for Cmty. Media v. Fed. Commc’ns Comm’n, 529 F.3d 763, 783 (6th Cir. 2008); Blackburn v. Reich, 79 F.3d 1375, 1377 n.3 (4th Cir.1996); Montana v. U.S. Envtl. Prot. Agency, 941 F. Supp. 945, 956 (D. Mont. 1996).


Schwalier v. Panetta, No. 11-cv-126, 2012 WL 834109, at *9 (D.D.C. Mar. 14, 8

Argument First is the threshold matter of standing. Plaintiffs argue extensively that they have standing to challenge the Secretary’s rules. The Secretary, however, does not challenge Plaintiffs’ standing in this matter. So, to dispose of this case, the Court must first consider Plaintiffs’ claim that the Secretary is required to ignore judicial decisions in carrying out his duty to “administer and enforce” Colorado’s campaign finance law. The Court must then consider the validity of each rule Plaintiffs have challenged. This brief addresses each of these matters in turn. I. The Secretary has the duty to enact rules that comport with the law, including the First Amendment. Some of the rules that Plaintiffs have challenged were promulgated to address binding case law from Colorado and federal courts. This case therefore presents a question not yet settled in Colorado: Through rulemaking, can the Secretary harmonize Colorado’s campaign finance laws with judicial rulings under the First Amendment? Plaintiffs claim he cannot. In their view, only “the legislature (or the voters)” can shape administrative rules.27 The judiciary’s decisions—“even [those of] the U.S. Supreme Court”—are irrelevant.28

26 27 28

Id.; see also Montana v. EPA, 941 F. Supp. at 956. Paladino Opening Br. at 13 Id.; see also CEW/CCC Opening Br. at 14. 9

Yet in Colorado it is “fundamental to our republican constitutional system” that “the judiciary is a separate, coequal branch of government.” 29 Indeed, not only is the judiciary coequal—it is the only branch that may authoritatively interpret the state and federal constitutions. 30 So it is unclear why Plaintiffs believe the Secretary must ignore the courts. If their view were correct, federal and state law enforcement agencies would be exceeding their authority by implementing the Supreme Court’s decision in Miranda and requiring officers to read criminal suspects their rights. But law enforcement policies at the federal and local levels prove the opposite. The FBI’s Legal Handbook for Special Agents specifically mentions Miranda, 31 and the Denver Police Department’s Operations Manual informs officers that “[t]he Court recognizes the admissibility of any voluntary statement made by a suspect following a proper advisement of their Constitutional rights,” before listing procedures implementing that legal precedent. 32 These agencies recognize that they cannot ignore binding case law. “[G]overnmental agencies, like all individuals and other entities, are obliged to follow and apply the law as interpreted by the courts.” 33 This includes the
29 30

People ex rel. N.R., 139 P.3d 671, 680 (Colo. 2006).

Colorado Common Cause v. Bledsoe, 810 P.2d 201, 206 (Colo. 1991) (citing Marbury v. Madison, 5 U.S. (1 Cranch) 137, 175 (1803)).

Fed. Bureau of Investigation, Legal Handbook for Special Agents, § 7.4.1 (Aug. 20, 2003). Denver Police Dep’t, Operations Manual, § 301.02(2) (Nov. 18, 2011). Lopez v. Heckler, 572 F. Supp. 26, 29 (1983), aff’d, 725 F.2d 1489, 1497, 1503 (9th Cir. 1984) vacated on other grounds, 469 U.S. 1082 (1984); see also Hyatt v. Heckler, 807 F.2d 376, 379 (4th Cir. 1986); Ithaca Coll. v. Nat’l Labor Relations Bd., 623 F.2d 224, 228 (2d Cir. 1980). 10

32 33

Secretary. As a public official, he cannot administer the law in a manner inconsistent with judicial precedent. He must comply with a court order even if he objects to it, as the Colorado Supreme Court demonstrated when it required one of the Secretary’s predecessors to implement a judicial redistricting plan. 34 The Secretary’s rules must therefore align with case law. And whether to issue administrative rules is not a matter of discretion. If gaps arise in Colorado’s campaign finance laws, the Secretary has a mandatory duty to fill them. Both the Colorado Constitution and the campaign finance statutes require the Secretary to “[p]romulgate such rules . . . as may be necessary to administer and enforce” these laws. 35 In doing so, however, the Secretary may not interpret the law in a vacuum, blindly ignoring the views of the judiciary. If he does, a court will strike down his rules. For example, the United States Court of Appeals for the Ninth Circuit overturned several of Washington State’s campaign finance laws and regulations because they conflicted with a Supreme Court ruling. 36 And in Colorado, the Court of Appeals permitted a First Amendment challenge to a policy of the Regional Transportation District, strongly implying that the policy was unconstitutional. In denying RTD’s summary judgment motion, the court applied “federal constitutional jurisprudence” and suggested that RTD’s policies may have amounted to “an

34 35 36

People ex rel. Salazar v. Davidson, 79 P. 3d 1221, 1243 (Colo. 2003). Colo. Const. art. XXVIII, § 9(1)(b); C.R.S. § 1-45-111.5(1). Wash. Initiatives Now v. Rippie, 213 F.3d 1132, 1134, 1140 (9th Cir. 2000). 11

impermissible intrusion upon First Amendment protections.” 37 Even the United States Supreme Court has stepped in to invalidate Colorado laws that violated the First Amendment. 38 The Secretary is therefore bound, through rulemaking, to apply the law of the United States Supreme Court, the Tenth Circuit Court of Appeals, and the Colorado state courts. Attempting to rebut these principles, the Paladino Plaintiffs cite a case from the federal district court for the District of Columbia, Van Hollen v. Federal Election Commission. 39 That case, currently on appeal, 40 does not apply here. In Van Hollen, the district court considered whether the Federal Election Commission could administratively revise a statute to account for “new circumstances,” which neither the statute nor interpretive case law had addressed. 41 Although the Supreme Court had “str[uck] down one provision of a statute,” it “left untouched” the other provisions that were the subject of the rulemaking. 42 The district court noted that the Commission “specifically undertook to modify existing law to fit the changed circumstances.” 43

37 38 39 40

Holliday v. Reg’l Transp. Dist., 43 P.3d 676, 681 (Colo. App. 2001). See Buckley v. Am. Constitutional Law Found., Inc., 525 U.S. 182 (1999). No. 11-766, 2012 WL 1066717 (D.D.C. March 30, 2012).

See Van Hollen v. Fed. Election Comm’n, No. 12–5117, 2012 WL 1758569 (D.C. Cir. May 14, 2012). Van Hollen, 2012 WL 1066717, at *1, 16. Id. at *10. Id. at *8 (emphasis added). 12

41 42 43

In contrast to Van Hollen, here the Secretary’s rules were not enacted to fit the law to “new circumstances” not contemplated by judicial precedent. The Secretary instead enacted the rules to apply existing case law. Judicial decisions from across the country recognize the authority of an administrative agency to make rules under these circumstances. 44 Furthermore, the Plaintiffs’ reading of Van Hollen cannot be correct because it forces the Secretary into an intractable dilemma. According to Plaintiffs, the Secretary cannot promulgate rules to harmonize Colorado’s campaign finance law with judicial precedent, even though he must enforce laws in a manner consistent with applicable court decisions. So, under Plaintiffs’ theory, the Secretary must either (1) enforce Colorado’s laws in an unlawful manner, violating his duty as a public official, or (2) refuse to enforce the law entirely. In contrast to the Secretary’s reasoned rulemaking, which takes account of all relevant existing law, Plaintiff’s approach either disrespects the decisions of the coequal judiciary or contravenes the will of the legislature and the voters. The Court should not adopt this unwarranted position. Two recent Colorado trial court decisions imply that Plaintiffs’ intractable dilemma is legally compelled. 45 But the proceedings in those cases are not complete,

See, e.g., Alliance for Cmty. Media, 529 F.3d at 783; Montana v. EPA, 941 F. Supp. at 957. Independence Institute v. Gessler, No. 10-cv-609, 2012 WL 1439167, at *8 (D. Colo. April 26, 2012); Colo. Common Cause v. Gessler, No. 2011CV4164 (Dist. Ct., City and Cnty. of Denver, Nov. 17, 2011). 13


and one case, Colorado Common Cause v. Gessler, is currently on appeal. This Court should follow the prevailing practice in other jurisdictions, allowing the Secretary to consider judicial rulings when promulgating administrative rules. II. This dispute is limited to six rules, and each was a valid exercise of the Secretary’s rulemaking authority. Plaintiffs’ two complaints implicate a total of eleven rules and request judgment on as many as nine.46 But while CEW and CCC discuss all eleven rules in their opening brief and request judgment on eight, the Paladino Plaintiffs’ brief mentions only six. To the extent Plaintiffs wish to maintain a challenge to rules not raised in their opening brief, they have waived their right to do so. 47 Moreover, Plaintiffs’ objections to three rules (6.1, 6.2, and 14) are moot because the Secretary promulgated additional regulations to address Plaintiffs’ concerns. And their objections to two other rules (4.1 and 15.6) are improper because the Colorado Court of Appeals is considering those same objections in a pending case. In sum, then, only six of the eleven rules implicated in Plaintiffs’ complaints are at issue: Rules 1.7, 1.10, 1.12, 1.18, 7.2, and 18.1.8. CEW and CCC appear to agree, arguing that “the six remaining rules under challenge should be set aside.” 48 And although their opening brief requests judgment on eight rules, 49 this CEW/CCC Compl. ¶ 10 (listing eleven of the Secretary’s new or revised rules); id. ¶ 73 (requesting judgment as to nine rules); Paladino Compl. at 15, Demand for Relief (requesting judgment as to seven rules). See Grohn v. Sisters of Charity Health Servs. Colo., 960 P.2d 722, 727 (Colo. App. 1998); Flagstaff Enters. Constr. Inc. v. Snow, 908 P.2d 1183, 1185 (Colo. App. 1995).
48 49 47 46

See CEW/CCC Opening Br. at 2 (emphasis added). Id. at 27. 14

discrepancy arises because their challenge to Rules 4.1 and 15.6 is improper. As CEW and CCC concede, those rules are the subject of ongoing appellate proceedings, and the Secretary has stayed their implementation until the appeal is decided. 50 For the Court’s convenience, below is a chart showing where each rule is discussed in Plaintiffs’ two opening briefs and where, in this brief, the Secretary responds to Plaintiffs’ arguments. Under a separate heading, the chart lists rules that are not properly part of this proceeding because of mootness or the effect of a pending appeal. Rules Properly Before Court (Appendix A) Rule 1.7 Rule 1.10 Rule 1.12 Rule 1.18 Rule 7.2 Rule 18.1.8 Rules Not Properly Before the Court (Appendix B) Rule 4.1 Rule 6.1 Rule 6.2 Rule 14 Rule 15.6

CCC/CEW Brief pp. 14–18 pp. 23–26 pp. 18–22 pp. 18–20 pp. 23–26 pp. 26–27 CCC/CEW Brief On Appeal, Pp. 22–23 Moot, p. 2 n.1 Moot, p. 2 n.1 Moot, p. 2 n.1 On Appeal, Pp. 22–23

Paladino Brief Not Discussed pp. 28–33 pp. 21–24 pp. 25–26 pp. 26–27 Not Discussed Paladino Brief Not Discussed Moot, p. 5 Moot, p. 5 Not Discussed Not Discussed

This Brief § II.A § II.D § II.B § II.C § II.D § II.E This Brief § II.F § II.G § II.G § II.G § II.F


Id. at 22–23. 15


Rule 1.7 does not “modify” the definition of “electioneering communication”; it reflects case law construing the term.

CEW and CCC argue that Rule 1.7—which, as explained here, clarifies the definition of “electioneering communication” in light of binding case law—is “a significant amendment to the constitutional definition” found in Article XXVIII, Section 2(7). 51 They assert that the definition “may not be modified by the Secretary.” 52 The Secretary, however, did not “modify” the term’s definition. Instead, Rule 1.7 simply acknowledges longstanding precedent from the Colorado Court of Appeals that (1) interprets the term “electioneering communication” and (2) recognizes that the term must be understood in light of the First Amendment jurisprudence of the U.S. Supreme Court. In doing so, the rule provides clarity for potential speakers, ensuring that they have the “breathing space” mandated by the First Amendment. 53 Rule 1.7’s predecessor, Rule 9.4, did precisely the same thing and even relied upon the very same precedent as Rule 1.7. Plaintiffs’ argument that Rule 1.7 somehow “modified” the constitutional definition of “electioneering communication” is therefore wrong. Rule 1.7 does nothing more than clarify an existing definition of the term.

51 52 53

CEW/CCC Opening Br. at 14. Id. at 18. See WRTL II, 551 U.S. at 469. 16


Rule 1.7 uses language drawn directly from binding case law.

Harwood v. Senate Majority Fund, LLC, 54 the case the Secretary followed in promulgating Rule 1.7 (and one of the cases cited in former Rule 9.4 55), was decided over six years ago. There, the Colorado Court of Appeals held that the term “electioneering communication” includes a requirement not found in the bare text of the Colorado Constitution: according to the court, a communication is not “electioneering” unless it amounts to “electoral advocacy.” 56 To arrive at this construction, the court first examined the intent of the voters in passing Amendment 27, concluding that “the electorate was concerned with regulating . . . speech designed to influence the outcome of Colorado elections.”57 The court also examined the plain meaning of the term “electioneering,” finding it to mean “try[ing] to sway public opinion especially by the use of propaganda.” 58 Finally, the court examined case law from the U.S. Supreme Court, which confirmed that an “electioneering communication” requires the intent to “influence voters or sway public opinion.” 59 After Harwood was decided, the United States Supreme Court further refined the definition of “electioneering communication.” Although Harwood
54 55

141 P.3d 962 (Colo. App. 2006)

See Colo. Secretary of State, Notice of Adoption, Amendments Adopted Sept. 19, 2007, at 10; see also Appendix A at A-1, Former Rule 9.4. Id. at 966 (internal quotation marks omitted). Id. at 965. Id. at 966 (quoting Webster’s Third New International Dictionary 731 (1986)). Id. (citing McConnell v. Fed. Election Comm’n, 540 U.S. 93 (2003)). 17

56 57 58 59

adopted an “intent and effect” test—holding that a communication is “electioneering” if the speaker “intends” or “tries” or “seeks” to influence voters 60— the Supreme Court held in Wisconsin Right to Life II (“WRTL II”) that this type of test is too vague. Under an intent-and-effect test, identical communications could be treated differently. Speakers wishing to influence an election could be regulated, while speakers using the same words, but wishing only to voice opinions on public issues, could not. 61 Regulating speech based on the intent of the speaker would therefore “‘blanket[] with uncertainty whatever may be said,’ and ‘offer[] no security for free discussion’”—as a result, intent-based regulation “chill[s] core political speech.” 62 Because of these severe constitutional problems, the Court held that the First Amendment forbids an intent-based test and instead mandates an objective approach. The Court held that a communication amounts to “electioneering” only if it is the “functional equivalent of express advocacy”—in other words, only if it is “susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.” 63 The Court also provided a negative definition of electioneering. Under this safe harbor, a communication is not electioneering if it (1) merely “take[s] a position on [an] issue” and asks the public to adopt that position or urges legislators to do so; (2) does not “mention an election, candidacy,
60 61 62 63

Id. WRTL II, 551 U.S. at 468. Id. (quoting Buckley, 424 U.S. at 43). Id. at 470. 18

political party, or challenger”; and (3) does not “take a position on a candidate’s character, qualifications, or fitness for office.” 64 WRTL II’s holding therefore provided a roadmap to determine whether speech amounts to electioneering. The Secretary, seeking to make Colorado campaign finance law clear and understandable, explicitly included that road map in Rule 1.7, just as former Rule 9.4 did. Indeed, Rule 1.7 mirrors the language of the U.S. Supreme Court and, just like former Rule 9.4, cites WRTL II itself. 65 2. Plaintiffs misread judicial precedent in arguing against Rule 1.7.

CEW and CCC object to the inclusion of WRTL II’s road map in Rule 1.7. They claim that the U.S. Supreme Court’s interpretation of “electioneering communication” is now “obsolete.” 66 In making this argument, they rely on Colorado Ethics Watch v. Senate Majority Fund, 67 a case decided by the Colorado Supreme Court just this year—and a case in which CEW was the plaintiff. Yet they ignore a large swath of that opinion, where the court affirmed the continuing vitality of WRTL II’s objective approach to regulating electioneering communications. Colorado Ethics Watch v. Senate Majority Fund acknowledged that “the [U.S. Supreme] Court narrowed the field of speech that fell under [federal] regulation of ‘electioneering communications’ to only those ads that are ‘susceptible of no
64 65


Compare Rule 1.7 with WRTL II, 551 U.S. at 470; see also Appendix A at A-1, Former Rule 9.4. CEW/CCC Opening Br. at 15. 269 P.3d 1248 (Colo. 2012). 19

66 67

reasonable interpretation other than as an appeal to vote for or against a specific candidate.” 68 The opinion also acknowledged that even this narrowed definition implicates First Amendment “vagueness and overbreadth concerns,” and is only “tolerable” because the term “electioneering communications” contains additional “bright-line criteria” (such as the 30- or 60-day window in which the communication occurs and the requirement that the communication reference a candidate). 69 Finally, the Colorado Supreme Court recognized that “electioneering communication” under Colorado law mirrors the federal definition of that term. 70 Only by ignoring this portion of the Colorado Supreme Court’s analysis could CEW and CCC argue that the WRTL II definition of “electioneering” is now “obsolete.” As the Colorado Supreme Court found, the limitation of “electioneering” to the “functional equivalent of express advocacy” is not only still valid—it is constitutionally compelled. Yet CCC and CEW also assert that, after the U.S. Supreme Court’s 2010 decision in Citizens United v. Federal Elections Commission, 71 the regulation of electioneering communications is now a “disclosure-only” regime. This, they say, obviates the need for a “functional equivalent” test. 72 But CCC and CEW again base

68 69

Id. at 1257 (quoting WRTL II, 551 U.S. at 470) (emphasis added).

Id. at 1258; see also Colo. Const., art. XXVIII § 2(7)(a)(II) (describing the 30- or 60-day requirement). CEW v. Senate Majority Fund, 269 P.3d at 1258 n.8. 130 S. Ct. 876 (2010). CEW/CCC Opening Br. at 16–18. 20

70 71 72

their argument on a misunderstanding of Colorado case law—this time, the 2010 decision In re Interrogatories. 73 In that case, the Colorado Supreme Court analyzed the effect of Citizens United on two specific provisions of Colorado campaign finance law, Sections 3(4) and 6(2) of Article XXVII. 74 The court invalidated these provisions to the extent they banned speech by corporations and unions. But the court said nothing about Colorado’s definition of “electioneering communications” as interpreted by Harwood. Indeed, CEW and CCC admit that “[t]he court left the reporting requirements in Article XXVIII undisturbed.” 75 Harwood and WRTL II, therefore, remain good law. And because Harwood and WRTL II still apply, CEW and CCC are wrong in asserting, without record support, that “Rule 1.7 drastically reduces the amount of spending that must be disclosed as electioneering communications.” 76 Indeed, Rule 9.4, the predecessor to Rule 1.7, explicitly adopted the Harwood–WRTL II “functional equivalent” test. 77 And administrative law judges routinely apply that test in electioneering disputes. 78 Plaintiffs fail to explain how Rule 1.7 “drastically


In re Interrogatories Propounded by Governor Bill Ritter, Jr., Concerning the Effect of Citizens United v. Fed. Election Comm’n, 558 U.S. ___ (2010) on Certain Provisions of Art. XXVIII of the Constitution of the State, 227 P.3d 892 (Colo. 2010). Id. at 894. CEW/CCC Opening Br. at 17. Id. at 18. Appendix A at A-1, Former Rule 9.4.

74 75 76 77 78

See Colo. League of Taxpayers, No. OS 2009-0001, at 2 n.2 (Apr. 24, 2009) (ALJ Decision). 21

reduces” disclosure when it is based on the very same case law as its predecessor. Rule 1.7 did not change Colorado’s disclosure rules; it simply made them clearer. In sum, Rule 1.7 clarifies the definition of “electioneering communications” in light of a long line of case law beginning with Harwood, modified by WRTL II, and confirmed by Colorado Ethics Watch v. Senate Majority Fund and In re Interrogatories. The rule clarifies the definition that had already been adopted by its predecessor, Rule 9.4, and it reflects the prevailing practice in the administrative courts. CEW and CCC may disagree with the precedent, but their claim that the Secretary somehow “amended” or “modified” the Colorado Constitution in enacting Rule 1.7 is wrong. The Secretary simply incorporated the relevant court holdings, including ALJ enforcement decisions, into one rule so that a complete definition of “electioneering communication” could be found in a single location. This was a proper exercise of the Secretary’s authority, and Rule 1.7 must be upheld. B. Rule 1.12 clarifies the definition of “issue committee,” giving fair notice to those who wish to participate in public discussion of ballot issues.

In Colorado, groups that support or oppose ballot measures must comply with comprehensive reporting and disclosure requirements if they fall within the definition of an “issue committee.”79 The Colorado Constitution defines this term, stating that issue committees must have “a major purpose of supporting or opposing any ballot issue or ballot question.” 80

79 80

See C.R.S. § 1-45-108(1)(a)(I). Colo. Const., art. XXVIII, § 2(10)(a)(I). 22


Rule 1.12 reasonably defines the ambiguous phrase “a major purpose.”

The broad requirement of “a major purpose” is difficult to consistently apply. In one recent case, for example, the Colorado Court of Appeals disagreed with the conclusion of an administrative law judge and held that an organization satisfied the “major purpose” requirement. 81 The court weighed myriad fact-specific considerations, including the “interrelationships of [the entity’s] officers and agents,” the amount of time spent “promoting the ballot issue,” and the portion of funds the entity “expended promoting th[e] ballot issue.” 82 In another case, the Court of Appeals considered a collateral challenge to a decision of the same ALJ. In rejecting the challenge and upholding the ALJ decision, the court noted that the ALJ had to conduct a “fact-specific” inquiry into “the length of time the [entity] had been in existence, its original purpose, its organizational structure, the various issues with which it had been involved, and the amount of money expended . . . in proportion to its annual budget.” 83 These rambling fact-specific inquiries are hardly a recipe for clarity. And even though the General Assembly has provided a statutory methodology for analyzing an entity’s “major purpose,” the uncertainty persists. Under the statute, whether an entity has “a major purpose” of advocating ballot issues is informed by the following:

81 82 83

See, e.g., Cerbo v. Protect Colo. Jobs, Inc., 240 P.3d 495, 504 (Colo. App. 2010. Id. at 503–04. Independence Institute v. Coffman, 209 P.3d 1130, 1139 (Colo. App. 2008) 23

(1) “specifically identified objectives in . . . organizational documents” or (2) a “demonstrated pattern of conduct,” which in turn is informed by the entity’s (a) “annual expenditures in support of or opposition to a ballot issue or ballot question” or (b) “[p]roduction or funding, or both, of written or broadcast communications.” 84 This methodology fails to provide certainty because it does not provide a standard. It does not specify how an entity’s “expenditures” and “production or funding” of communications are to be weighed in the determination of whether the entity has “a major purpose of supporting or opposing any ballot issue or ballot question.” Rule 1.12 fills the gap. It uses the statutory methodology to create an easy-toapply standard. Under the rule, if ballot-issue advocacy amounts 30% of an entity’s total budget, the entity has “a major purpose of supporting or opposing any ballot issue or ballot question” and is therefore an issue committee subject to reporting and disclosure requirements. As one member of the public testified at the rulemaking hearing, “I do like the idea that there’s a clear rule here. There hasn’t been a test at all. . . . And so . . . you’re running the risk that you’re going to be dragged into court . . . . [Rule 1.12] would at least have a bright-line test . . . .”85 And the 30% test is reasonable. As the Secretary explained at the rulemaking hearing, Rule 1.12 honors the “difference between a major purpose and the major purpose.” 86 Under the First Amendment, a political committee must have “the major
84 85 86

C.R.S. § 1-45-103(12)(b). Tr. of Public Hearing, 114:4–13 (Dec. 15, 2011). Id. at 122:8–9 (emphasis added). 24

purpose” of supporting or opposing a candidate, 87 meaning that it must spend the majority, or the “preponderance,” of its budget on express advocacy. 88 Issue committees, meanwhile, must meet the “a major purpose” test. The 30% threshold of Rule 1.12 recognizes the distinction. It is less strict than the 50% test for political committees, but it still ensures that a meaningful portion of an issue committee’s budget is spent on ballot-issue advocacy. Plaintiffs may have “a different policy preference,” but the 30% test was well within the “exercise of the [Secretary’s] discretion based upon [his] expertise,” 89 and it is therefore valid. Contrary to Plaintiffs’ arguments, the Secretary did not “ignore” the General Assembly’s definition of “a major purpose” in crafting Rule 1.12.90 Indeed, the rule is explicitly based upon the General Assembly’s statutory methodology: “annual expenditures” and “[p]roduction or funding, or both, of written or broadcast communications.” 91 Promulgating this clarifying rule was therefore well within the Secretary’s authority—and the Colorado Court of Appeals agrees. In a 2010 decision, the court independently interpreted the “a major purpose” requirement for issue committees because “the Secretary of State [had not] defined the term by

87 88

Buckley, 424 U.S. at 79.

Colo. Right to Life Comm., 498 F.3d at 1152 (citing Mass. Citizens for Life, Inc., 479 U.S. at 252 n.6, 262). Citizens For Free Enter., 649 P.2d at 1063. See CEW/CCC Opening Br. at 20. Compare C.R.S. § 1-45-103(12)(b)(II) with Rule 1.12. 25

89 90 91

regulation.”92 The court would not have pointed out the absence of a definitional regulation had it thought the Secretary lacked power to promulgate one. 2. The percentage-based approach complies with the First Amendment and serves the interests of grassroots organizations.

Moreover, Plaintiffs’ objection that Rule 1.12’s percentage-based approach favors speakers with large budgets 93 misunderstands the requirements of the United States Constitution. Under the First Amendment, “political speech cannot be limited based on a speaker’s wealth.” 94 This has been true since 1976, when the United State Supreme Court “rejected the premise that the Government has an interest ‘in equalizing the relative ability of individuals and groups to influence the outcome of elections.’” 95 To regulate based on the impermissible criterion of wealth would allow “suppression of political speech based on the speaker’s identity,” something the First Amendment generally forbids, especially in the context of political speech. 96 Indeed, the Supreme Court has “repeatedly frowned on regulations that discriminate based on the content of the speech or the identity of the speaker.” 97 Rule 1.12’s 30% threshold provides a clear guideline while staying wealth-neutral (and therefore identity-neutral), as the First Amendment requires.
92 93 94 95 96 97

Cerbo, 240 P.3d at 501. See CEW/CCC Opening Br. at 21; Paladino Opening Br. at 22. Citizens United, 130 S. Ct. at 904. Id. (quoting Buckley v. Valeo, 424 U.S. 1, 48 (1976)). Id.

Los Angeles Police Dept. v. United Reporting Pub. Corp., 528 U.S. 32, 47 n.4 (1999) (Stevens, J., dissenting). 26

And contrary to Plaintiffs’ assertions, the threshold actually promotes the interests of organizations with modest resources. One public commenter noted that “[t]he grassroots activist, with limited time and funds, suffers the most from having complicated, time-consuming regulations and draconian penalties over his or her head.” 98 The 30% rule allows grassroots organizations to ensure compliance without breaking their budgets. 3. The 30% threshold is supported by judicial precedent.

This percentage-based approach is also rooted in case law. Colorado decisions addressing the “major purpose” requirement focus on the proportion of spending, not an absolute amount. For example, in 2010 the Colorado Court of Appeals held that “an organization has ‘a major purpose’ of supporting a ballot issue if such support ‘constitutes a considerable or principal portion of the organization’s total activities.’” 99 The court found this requirement to be satisfied because the entity at issue “spen[t] three-fourths of all of the funds it has ever expended promoting that ballot issue.” 100 And the 30% standard follows guidance from the United States Supreme Court, which forbids “amorphous” campaign finance regulations. 101 Under the First Amendment, regulations must be objective, “entail[ing] minimal if any discovery, to
98 99

R. Vol. 2, Tab 26.

Cerbo, 240 P.3d at 501 (quoting N.C. Right to Life, Inc. v. Leake, 525 F.3d 274, 329 (4th Cir. 2008) (Michael, J., dissenting)) (emphasis added).
100 101

Id. at 504. WRTL II, 551 U.S. at 469. 27

allow parties to resolve disputes quickly without chilling speech through the threat of burdensome litigation.” 102 They must also “eschew ‘the open-ended rough-andtumble of factors,’ which ‘invit[es] complex argument in a trial court and a virtually inevitable appeal.’” 103 Otherwise, even reporting and disclosure obligations “may create a disincentive for [] organizations to engage in political speech” and “infringe[] . . . First Amendment activities.”104 As demonstrated by cases construing Colorado’s “a major purpose” requirement—cases that depend on “fact-specific,” multi-prong inquiries 105—Rule 1.12 is necessary to avoid the burdensome litigation that the First Amendment forbids. The bright-line 30% threshold of Rule 1.12 allows potential entities to quickly and easily determine whether they are “issue committees” subject to reporting and disclosure requirements. Plaintiffs, without mentioning this case law, imply that an absolute dollar amount might work better, arguing that a percentage-based approach would allow a “large, well-funded entity” to spend “massive sums of money” without being classified as an issue committee. 106 But because “a major purpose” connotes the “principal portion of the organization’s total activities,” 107 the Secretary acted

102 103


Id. (quoting Jerome B. Grubhart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 547 (1995)).

Fed. Election Comm’n v. Mass. Citizens for Life, Inc., 479 U.S. 238, 254–55 (1986). See, e.g., Cerbo, 240 P.3d at 503–04; Independence Institute, 209 P.3d at 1139. See CEW/CCC Opening Br. at 21–22; Paladino Opening Br. at 22. Cerbo, 240 P.3d at 501 (emphasis added). 28

105 106 107

within the bounds of his discretion—and within the bounds of the case law—in adopting the 30% rule. Plaintiffs’ disagreement with the Secretary’s approach does not make the approach unreasonable. Plaintiffs, just like courts, are forbidden from “substitut[ing their] judgment for that of the agency.”108 4. Rule 1.12 does not change the triggering event for disclosure requirements.

Finally, Plaintiffs argue that Rule 1.12 changes the triggering event for reporting and disclosure, excusing issue committees from complying with these requirements until the end of an election cycle. 109 This is wrong. Just as the General Assembly’s test for “a demonstrated pattern of conduct” 110 is backwardlooking, so is the test in Rule 1.12. An entity cannot “demonstrate” a pattern of conduct until the conduct has occurred. The Rule does not depart from the Colorado Constitution or C.R.S. § 1-45-103(12)(b)(II). It merely provides objective criteria by which to test an entity’s status as an “issue committee.” Rule 1.12 is therefore within the Secretary’s rulemaking authority and must be upheld. C. The “major purpose” requirement of Rule 1.18 is based on binding Colorado case law.

Like the federal government, Colorado regulates “political committees”— entities that “support or oppose the nomination or election of one or more candidates.” 111 In the 1976 decision Buckley v. Valeo, the United States Supreme
108 109 110 111

Colo. Ground Water Comm’n, 919 P.2d at 217. See CEW/CCC Opening Br. at 22; Paladino Opening Br. at 23. C.R.S. § 1-45-103(12)(b)(II). Colo. Const., art. XXVIII, § 2(12)(a). 29

Court mandated that an entity could be regulated as a “political committee” only if it met an important constitutional requirement: its “major purpose” must be supporting or opposing the nomination or election of political candidates. 112 By incorporating Buckley’s “major purpose” test into Colorado’s definition of “political committee,” Rule 1.18 simply says explicitly what the First Amendment has required for nearly forty years. The Paladino Plaintiffs, citing Buckley, concede that “[a]s a matter of constitutional law, a political committee must have ‘the major purpose to support or oppose candidates.’” 113 This concession should be the end of the matter. Yet Plaintiffs proceed to claim that Rule 1.18 contravenes the will of the voters and unlawfully “engrafts” the First Amendment’s “major purpose” requirement into Colorado campaign finance law. 114 Unfortunately for Plaintiffs, the Tenth Circuit and the Colorado Court of Appeals have rejected these arguments. In Colorado Right to Life Committee, Inc. v. Coffman, the Tenth Circuit affirmed that Colorado cannot regulate as a political committee an entity that fails the “major purpose” test. 115 And shortly after the Tenth Circuit weighed in on the issue, the Colorado Court of Appeals applied Buckley’s “major purpose” test to a

Buckley, 424 U.S. at 79; see also Fed. Election Comm’n v. Mass. Citizens for Life, Inc., 479 U.S. 238, 252 n.6 (1986).
113 114 115


Paladino Opening Br. at 25 (emphasis added) (quoting Buckley, 424 U.S. at 79). See CEW/CCC Opening Br. at 19; Paladino Opening Br. at 26. Colo. Right to Life Comm., Inc. v. Coffman, 498 F.3d 1137, 1153 (10th Cir. 2007). 30

Colorado entity. 116 In Alliance for Colorado’s Families v. Gilbert, the court had to decide if an unincorporated nonprofit association was a “political committee,” and was subject to retroactive contribution limits, because it produced a political radio advertisement. 117 The court of appeals recognized that the “major purpose” test is “required by Buckley.” 118 And because the administrative law judge had failed to “make any factual finding regarding [the major purpose test],” the court remanded the case. 119 In these cases, the Tenth Circuit and the Colorado Court of Appeals recognized that Colorado’s definition of “political committee” includes the “major purpose” requirement. Plaintiffs have not suggested that Buckley or the case law applying it is invalid, and they therefore lack a legitimate argument for overturning Rule 1.18. Because Buckley, Colorado Right to Life Committee, and Alliance for Colorado’s Families all require the major purpose test, Rule 1.18 is a reasonable regulation reflecting an existing legal requirement. Plaintiffs nonetheless object to the two criteria Rule 1.18 uses to determine whether an entity meets the “major purpose” requirement: (1) the objectives of the entity set forth in its organizing documents and (2) whether “[a]nnual expenditures made to support or oppose [a] nomination or election . . . are a majority of the organization’s total spending during the same period.” These criteria, however, are
116 117 118 119

Alliance for Colo.’s Families v. Gilbert, 172 P.3d 964 (Colo. App. 2007). Id. at 966–67. Id. at 972 (emphasis added). Id. at 972 (emphasis added). 31

drawn directly from cases applying the major purpose test. As the Tenth Circuit has recognized, the Supreme Court applies the very same two-pronged approach: “(1) examination of the organization’s central organizational purpose; or (2) comparison of the organization’s independent spending with overall spending to determine whether the preponderance of expenditures are for express advocacy or contributions to candidates.” 120 And these requirements are the same as those the General Assembly used to define the “a major purpose” requirement for issue committees. 121 Plaintiffs cannot argue that Rule 1.18 is unreasonable when it reflects both binding case law and a statutory methodology endorsed by the legislature. Rule 1.18 therefore does nothing more than acknowledge requirements that already exist under Colorado law and the United States Constitution. Plaintiffs’ arguments against Rule 1.18 cannot eliminate these requirements, and they provide no basis for overturning the Secretary’s authority to administer state campaign finance law within the boundaries of the First Amendment. D. Rules 7.2 and 1.10, which clarify the definition of “political organization,” reflect a federal statutory requirement and longstanding First Amendment principles.

In 2007, the General Assembly enacted statutes regulating “political organizations.” Under these statutes, a “political organization” is an entity that (1) meets the definition “in section 527(e)(1) of the federal ‘Internal Revenue Code of Colo. Right to Life Comm., 498 F.3d at 1152 (citing Mass. Citizens for Life, Inc., 479 U.S. at 252 n.6, 262).
121 120

C.R.S. § 1-45-103(12)(b). 32

1986’” and (2) “is engaged in influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any state or local public office.” 122 Plaintiffs object to Rules 7.2 and 1.10, which clarify these two requirements. Their objections, however, are off the mark. They fail to acknowledge the federal statute defining 527 organizations, which includes the “major purpose” test used in Rule 7.2, and they ignore longstanding First Amendment jurisprudence interpreting the phrase “influencing or attempting to influence” to mean “express advocacy,” which Rule 1.10 acknowledges. 1. Rule 7.2 reflects the plain requirement of 26 U.S.C. § 527.

Plaintiffs assert that “[t]he addition of a major purpose threshold [in Rule 7.2] narrows the range of groups that would be required to disclose.” 123 They provide no evidence to support this assertion, even though they had the opportunity to do so at the December rulemaking hearing. And their lack of factual support arises for a good reason—the assertion is simply incorrect. Rule 7.2 makes no additions to the law; it merely makes explicit one requirement of 26 U.S.C. § 527, the federal statute on which Colorado’s definition of “political organization” is based. Section 527 imposes a “primary purpose” requirement on political organizations: an entity meets the § 527 definition only if it is “organized and
122 123

C.R.S. § 1-45-103(14.5). CEW/CCC Opening Br. at 24; see also Paladino Opening Br. at 26–7. 33

operated primarily for the purpose of . . . influencing or attempting to influence” an election. 124 Rule 7.2, in requiring a political organization to have “as its major purpose influencing or attempting to influence elections,” does nothing more than incorporate the “primary purpose” requirement of § 527. Plaintiffs cannot contend that § 527’s “primary purpose” and Rule 7.2’s “major purpose” are two different things. The plain meaning of the terms “primary” and “major” are identical. As an adjective, “primary” means “[f]irst or highest in rank, quality, or importance.” 125 And “major” means” [g]reater than others in importance or rank.” 126 Given the words’ linguistic equivalence, it was within the Secretary’s rulemaking discretion to use the more common word “major,” while keeping the “primary purpose” requirement of Section 527 intact. Plaintiffs therefore have no valid objection to the rule. Section 527 has always been the basis for Colorado’s definition of “political organization,” and it continues to be. Rule 7.2 simply provides clarity. The “major” or “primary” purpose requirement is not just a matter of statutory policy; it is based on the First Amendment. In Buckley, the U.S. Supreme Court adopted a “major purpose” test to trigger reporting and disclosure requirements for advocacy groups, thereby ensuring that only “campaign related” organizations would be subject to comprehensive regulation. 127 This requirement
124 125 126 127

26 U.S.C. § 527(e)(1)–(2) (emphasis added). Am. Heritage Coll. Dictionary 1106 (4th ed. 2002). Id. at 834. 424 U.S. at 79. 34

applies not only to “political committees,” but also to “political organizations,” 128 as § 527 acknowledges. By enacting Rule 7.2, the Secretary ensured that Colorado citizens will have easy access to all information relevant to the definition of “political organization.” Rather than being forced to flip back and forth between judicial precedent, federal statutes, Colorado statutes, and administrative regulations, they may now look in a single place to understand how the definition works. The rule does not, therefore, “neglect the voters’ objective of maximizing disclosure,” as Plaintiffs allege.129 Putting aside the fact that Colorado law governing political organizations was passed by the General Assembly, not the voters (and Rule 7.2 therefore does not implicate “the voters’ objectives,” as Plaintiff claim), Plaintiffs have ignored § 527 entirely. Indeed, they neglect even to cite its language in their briefs. Rule 7.2’s “major purpose” requirement does not depart from Colorado law; it follows that law. The rule must be upheld. 2. Rule 1.10 reflects forty years of First Amendment jurisprudence.

The key words from Colorado’s definition of “political organization”— “influencing or attempting to influence”—have long been the subject of First Amendment scrutiny. Nearly forty years ago in Buckley v. Valeo, the United States

See Nat’l Fed’n of Republican Assemblies v. United States, 218 F. Supp. 2d 1300, 1332 (S.D. Ala. 2003), vacated on other grounds, Mobile Republican Assembly v. United States, 353 F.3d 1357 (11th Cir. 2003).


Paladino Opening Br. at 27 (emphasis added). 35

Supreme Court analyzed a nearly identical phrase used in a federal statute: “for the purpose of . . . influencing.” 130 The phrase, like the one in Colorado’s statute, was used to determine when disclosure and reporting obligations were triggered. 131 The Court held that “the ambiguity of this phrase . . . poses constitutional problems,” observing that it creates a potential for regulating “both issue discussion [which the First Amendment broadly protects] and advocacy of a political result [which may be regulated more stringently].” 132 The Court therefore adopted a narrowing construction, holding that the phrase must only reach activity “that expressly advocate[s] the election or defeat of a clearly identified candidate.” 133 The Court interpreted another phrase, “relative to a clearly defined candidate” in a similar manner, 134 suggesting that it is the word “influence”—the same word used in the Colorado definition of “political organization”—that causes the ambiguity. Rule 1.10 makes explicit what Buckley has long required. The rule incorporates the “express advocacy” standard into the ambiguous phrase “influencing or attempting to influence,” using language from Buckley to avoid the phrase’s constitutional problems. The General Assembly, in using words previously interpreted by the courts, “is presumed to adopt the construction which prior

130 131 132 133 134

424 U.S. at 74–82. Id. at 74–76. Id. at 77, 79. Id. at 80. Id. at 41–42. 36

judicial decisions have placed on particular language.” 135 Rule 1.10 does not, therefore, “directly contradict [] statutory provisions.” 136 It simply clarifies them. Plaintiffs object to this clarification, arguing that the phrase “influencing or attempting to influence” is meant to be “broad.” 137 But they provide no legal authority or record support for this argument. And their assertion merely restates the constitutional problem that Buckley solved: “influencing or attempting to influence” is impermissibly vague and must be given a narrowing construction. Plaintiffs may wish the constitutional lines were drawn differently—and they may wish to ignore nearly forty years of judicial precedent—but the Secretary cannot disregard the First Amendment in exercising his power to administer the state’s campaign finance laws. As the Colorado Supreme Court recently observed, Colorado law must be construed to avoid the “vagueness and over-breadth concerns from Buckley that are the bedrock of all campaign finance political speech jurisprudence.” 138 This is precisely what Rule 1.10 accomplishes. E. Rule 18.1.8(a) defines “good cause” for purposes of waiving penalties for failure to file Major Contributor Reports.

CEW and CCC object to Rule 18.1.8(a) on the ground that it “seeks to expressly overrule the statutory scheme governing Major Contributor Reports.” 139
135 136 137 138 139

Vaughan v. McMinn, 945 P. 2d 404, 409 (Colo. 1997). CEW/CCC Opening Br. at 24. See id.; Paladino Opening Br. at 30. Colorado Ethics Watch, 269 P.3d at 1258. CEW/CCC Opening Br. at 26. 37

This is untrue. Rule 18.1.8(a) does not “overrule” any statutes. It simply states that penalties for failing to file a Major Contributor Report cease accruing when a regularly-scheduled report—which includes the same information contained in a Major Contributor Report—is filed. The Rule recognizes that once a reporting deficiency is cured, continuing sanctions are unwarranted. CEW and CCC also claim that the Secretary lacks “power” to pass this Rule. But they ignore that the Colorado Constitution specifically grants the Secretary this power. “Major Contributor Reports” are disclosures that must be filed by candidate committees, political committees, issue committees, and political parties within thirty days of an election. 140 In these reports, entities must list “any contribution of one thousand dollars or more” they received within the thirty-day time period. Id. The reports must be filed “no later than twenty-four hours after receipt of said contribution.” 141 Under C.R.S. § 1-45-111.5(1.5)(c), an entity that fails to file any report— including a Major Contributor Report—is subject to a sanction of up to $50 “per day for each day that [the report] . . . is not filed by the close of business on the day due.” But under the Colorado Constitution, the Secretary may, upon receiving an appeal of a sanctions order, “set aside or reduce the penalty [for failure to file a report] upon a showing of good cause.” 142 Section 1-45-111.5(1.5)(c) acknowledges this

140 141 142

C.R.S. § 1-45-108(2.5). Id. Colo. Const., art. XXVIII, § 10(2)(c). 38

authority, stating that “[i]mposition of any penalty . . . shall be subject to all applicable requirements specified in section 10 of article XXVIII of the state constitution governing the imposition of penalties.” To implement the appeal provisions of article XXVIII, § 10, the Secretary has created a system of uniform “requests for waiver” that a person or entity may file with the Secretary (or an administrative law judge) after receiving a penalty for violation of the campaign finance laws. 143 The Secretary’s request-for-waiver rules explicitly define the circumstances under which various penalties will be waived. In doing so, the rules create clarity and predictability for those seeking to engage in public debate but fearing that simple mistakes will lead to large, unpredictable penalties. Rule 18.1.8(a) is part of this framework. And contrary to the views of CEW and CCC, the Rule does nothing more than define one circumstance in which a failure to file a Major Contributor Report will be excused for “good cause” under article XXVIII, § 10(2)(c). Rule 18.1.8(a) states that “[p]enalties assessed for failure to timely file a Major Contributor Report . . . stop accruing on the date that the contribution is first disclosed, either on the Major Contributor Report or the regularly-scheduled Report of Contributions and Expenditures.” This rule recognizes that, once a regularly-scheduled report is filed, any harm flowing from a failure to file a Major Contributor Report is cured. It makes little sense to continue


See Rule 18.1. 39

penalizing an entity when the public has received all the information it is entitled to. CEW and CCC may suggest that some entities will choose to deliberately withhold Major Contributor Reports, believing that the $50 per day penalty is worth paying to temporarily maintain the secrecy of major contributions. But this scenario was possible before the enactment of Rule 18.1.8(a): if an entity desired to hide its major contributions, it could do so if it were willing to accrue penalties under Section 1-45-111.5(1.5)(c) until it filed a Major Contributor Report. Of course, to maintain the secrecy of its major contributions, the entity would also be required to delay filing a regularly-scheduled report, and would therefore incur additional penalties, just as it would under Rule 18.1.8(a). Rule 18.1.8(a) therefore does not excuse bad behavior any more than Section 1-45-111.5(1.5)(c) does; the Rule merely clarifies when penalties will be set aside for “good cause,” providing predictability for those entities that inadvertently fail to provide information in a Major Contributor Report that is later disclosed in a regularly-scheduled report. This clarification of the constitutional “good cause” standard is within the Secretary’s rulemaking authority and should be upheld. F. CEW and CCC’s objections to Rules 4.1 and 15.6 are improper because the rules are the subject of an ongoing appeal.

In their opening brief, CEW and CCC raise objections to Rules 4.1 and 15.6. They raise these objections while at the same time acknowledging that Rule 4.1 is subject to an ongoing appeal and both Rule 4.1 and Rule 15.6 have been stayed


pending the outcome of the appeal. 144 Both CEW and CCC are taking part in that very appeal. The objections to Rules 4.1 and 15.6 are not ripe. The Secretary has stayed the implementation of both rules “unless or until the Colorado appellate courts reverse the District Court’s decision.” 145 As a result, there is no “reasonable possibility of enforcement or threat of enforcement.” 146 Because the Secretary has not implemented the rules, and will not implement them unless the court of appeals decides the pending appeal in his favor, Plaintiffs’ objections “are premature and do not present a justiciable controversy ripe for declaratory adjudication.” 147 Moreover, even if Plaintiffs’ claims were ripe, this Court cannot preempt the decision of the court of appeals. A trial court’s decision is not binding on an appellate court, 148 and this is especially true in administrative review proceedings, where “an appellate court is in the same position as a trial court, and it applies the same standard of review.” 149 Because “the same issues are already pending in another case,” this court cannot enter judgment as to Rules 4.1 or 15.6. 150

144 145 146 147 148

CEW/CCC Opening Br. at 22–23. Rules 4.1 and 15.6. Developmental Pathways v. Ritter, 178 P. 3d 524, 534 (Colo. 2008). Id. at 535 (internal quotation marks omitted).

See Skyland Metro. Dist. v. Mountain West Enterprise, LLC, 184 P.3d 106, 115 (Colo. App. 2007).
149 150

Eason v. Bd. of Cnty Comm’rs, 70 P.3d 600, 609 (Colo. App. 2003).

See Sprenger v. Pub. Serv. Comm’n of Md., 910 A.2d 544, 552 & n.6 (Md. App. 2006). 41


Plaintiffs concede that their objections to Rules 6.1, 6.2, and 14 are moot due to additional rulemaking.

Plaintiffs raised objections to Rules 6.1, 6.2, and 14 in their complaints, claiming that those rules “lifted the restriction on amounts of money that one level of a political party may transfer to any other.” 151 In response, the Secretary passed Rule 6.3, which clarifies that county-level political parties in home-rule jurisdictions cannot transfer certain funds to other levels of the political party. The Plaintiffs agree that Rule 6.3 has mooted their objections to Rules 6.1, 6.2, and 14, 152 and they no longer request judgment as to those rules. 153

Conclusion The Secretary promulgated the rules at issue in this case to “improve organization and readability,” “clarify existing laws and regulations,” and “address questions arising under State campaign and political finance laws.” 154 During the rulemaking proceeding, one member of the public described the “sheer cost (and arguably need) to hire a professional reporting service” to comply with campaign finance regulations, and the “risk of making a costly mistake that . . . will spook volunteers (like me) from stepping up to leadership roles on campaigns.” 155 Without simplified rules, the tangled web of regulations governing political speech will
151 152 153 154

Paladino Compl. ¶ 23; see also CEW/CCC Compl. ¶¶65–73. CEW/CCC Opening Br. at 2 n.1; Paladino Opening Br. at 5 & n.1. See CEW/CCC Opening Br. at 27.

R. Vol. 1, Tab 1, Proposed Statement of Basis, Purpose, and Specific Statutory Authority at 1.

See R. Vol. 2, Tab 17 (comments of Becky Fuller). 42

continue to deter individuals and small organizations from making their voices heard in the electoral process. The First Amendment demands “vigilan[ce],” even “against . . . modest diminution of speech.” 156 Plaintiffs’ arguments, however, would hamstring the Secretary, preventing him from vigilantly carrying out his duty to administer and enforce Colorado’s campaign finance laws and denying him the ability to clarify regulations in light of case law from the coequal judiciary. The Secretary respectfully requests the Court to enter judgment in his favor and conclude that each rule Plaintiffs have challenged is valid and enforceable.

JOHN W. SUTHERS Attorney General /s/ MAURICE G. KNAIZER, 05264* Deputy Attorney General Public Officials State Services Section FREDERICK R. YARGER, 39479* Assistant Solicitor General Office of the Attorney General Attorneys for Defendant Secretary of State *Counsel of Record


Mass. Citizens for Life, Inc., 479 U.S. 238, 264–65. 43

CERTIFICATE OF SERVICE This is to certify that I have duly served the within ANSWER BRIEF OF THE COLORADO SECRETARY OF STATE upon all parties herein by LexisNexis File and Serve at Denver, Colorado, this 3rd day of July, 2012 addressed as follows:

Mark G. Grueskin, No. 14621 Heizer Paul Grueskin LLP 2401 15th Street #300 Denver, CO 80202 mgrueskin@hpgfirm.com Attorneys for David Paladino et al

Luis Toro Margaret Perl Colorado Ethics Watch 1630 Welton Street #415 Denver, CO 80202 ltoro@coloradoforethics.org pperl@coloradoforethics.org Attorneys for Colorado Ethics Watch

Jennifer H. Hunt Hill & Robbins, P.C. 1441 18th Street #100 Denver, CO 80202 jhunt@hillandrobbins.com Attorneys for Colorado Common Cause

/s/ Debbie Bendell, paralegal


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