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2012CV2133 and 2012CV2153 ___________________________________ ___ Appellees/CrossAppellants: COLORADO ETHICS WATCH and COLORADO COMMON CAUSE And Appellants/CrossAppellees: DAVID PALADINO; MICHAEL CERBO; PROCHOICE COLORADO PAC; PPRM BALLOT ISSUE COMMITTEE; and CITIZENS FOR INTEGRITY, INC. ▲ COURT USE ONLY ▲ ________________________ v. Case No. 12 CA 1712 Appellant/CrossAppellee: SCOTT GESSLER, in his official capacity as Colorado Secretary of State
Attorneys for Colorado Ethics Watch: Luis Toro, #22093 Margaret Perl, #43106 1630 Welton Street, Suite 415 Denver, CO 80202 Telephone: 3036262100 Email: email@example.com firstname.lastname@example.org Attorneys for Colorado Common Cause: Jennifer H. Hunt, #29964 Hill & Robbins, PC 1441 18th Street, Suite 100 Denver, CO 80202 Telephone: 3032968100 Email: email@example.com
JOINT OPENINGANSWER BRIEF
CERTIFICATE OF COMPLIANCE I hereby certify that this brief complies with all requirements of C.A.R. 28 and C.A.R. 32, including all formatting requirements set forth in these rules. Specifically, I certify that: The brief complies with C.A.R. 28(g). It contains 9,282 words. It does not exceed 30 pages. The brief complies with C.A.R. 28(k). For the party raising the issue: It contains under a separate heading (1) a concise statement of the applicable standard of appellate review with citation to authority; and (2) a citation to the precise location in the record (R. , p. ), not to an entire document, where the issue was raised and ruled on. For the party responding to the issue: It contains, under a separate heading, a statement of whether such party agrees with the opponent’s statements concerning the standard of review and preservation for appeal, and if not, why not. I acknowledge that my brief may be stricken if it fails to comply with any of the requirements of C.A.R. 28 and C.A.R. 32. s/ Jennifer H. Hunt Jennifer H. Hunt Attorney for the Appellee/CrossAppellant Colorado Common Cause
TABLE OF CONTENTS I. STATEMENT OF ISSUES PRESENTED FOR REVIEW...................................1 II. STATEMENT OF THE CASE .............................................................................1 III. SUMMARY OF ARGUMENT ........................................................................ 10 IV. ARGUMENT.................................................................................................... 13 A. B. Standard of Review ............................................................................ 13 The District Court Properly Invalidated Rules 1.10, 1.12, 1.18 and 7.2 as Impermissible Attempts to Inject the Secretary’s Own Interpretation of First Amendment Case Law to Change Constitutional and Statutory Requirements. ...................................... 15 1. The Secretary’s Political Organization Definition (Rules 1.10 and 7.2) Effectively Repeals the Political Organization Disclosure Statute.......................................................................... 15 Adding a Percentage Threshold to the Issue Committee Definition (Rule 1.12) Arbitrarily Reduces the Scope of the Constitutional and Statutory Provisions........................................ 23 The Political Committee Definition (Rule 1.18) Improperly Limits the Constitutional Definition. ............................................ 27 The District Court Properly Invalidated Rule 18.1.8 as Exceeding the Secretary’s Delegated Authority. ............................... 29 The District Court Erred in Upholding Rule 1.7................................ 31 1. 2. Standard of Review ....................................................................... 31 Rule 1.7 Modifies and Contravenes the Colorado Constitution and Statutory Definitions of Electioneering Communications. .......................................................................... 32 Similarity to the Prior Rule is Irrelevant to the Analysis of Whether Rule 1.7 Violates the Colorado Constitution and Statutes. ......................................................................................... 37 Other Courts Have Rejected Limits on Electioneering Communications Disclosures Similar to Rule 1.7 Pursuant to Citizens United. ............................................................................. 41 ii
3. C. D.
V. CONCLUSION .................................................................................................. 42
TABLE OF AUTHORITIES
Alliance for Colorado’s Families v. Gilbert, 172 P.3d 964 (Colo. App. 2007) ..... 29 Bd. of County Comm’rs v. Colo. Pub. Utils. Comm’n, 157 P.3d 10838 (Colo. 2007).............................................................................................................. 14, 40 Buckley v. Valeo, 424 U.S. 1 (1976) ................................................................. 19, 20 Ceja v. Lemire, 154 P.3d 1064 (Colo. 2007) .......................................................... 17 Center for Individual Freedom v. Madigan, 697 F.3d 464 (7th Cir. 2012) ............ 42 Cerbo v. Protect Colorado Jobs, Inc., 240 P.3d 495 (Colo. App. 2010) ......... 24, 25 Citizens United v. F.E.C., 558 U.S. 310, 130 S. Ct. 876 (2010) ..................... passim Colo. Citizens for Ethics in Gov’t v. Comm. for the Am. Dream, 187 P.3d 1207 (Colo. App. 2008) ...................................................................................... 35 Colo. Ethics Watch v. Clear the Bench Colo., 2012 COA 42 ...................................3 Colo. Ethics Watch v. Senate Majority Fund, LLC, 2012 CO 12.................... passim Colo. Office of Consumer Counsel v. Colo. Public Utils. Comm’n, 2012 CO 33 (Colo. 2012) ............................................................................................. 14, 31 Colo. Right to Life Comm. v. Coffman, 498 F.3d 1137 (10th Cir. 2007) .......... 28, 35 Colorado Citizens for Ethics in Gov’t v. Comm. for Am. Dream, 187 P.3d 1207 (Colo. App. 2008) ...................................................................................... 14 Colorado Common Cause v. Gessler, Denver Dist. Ct. Case No. 2011CV4164 (Order, Nov. 17, 2011) .......................................................... passim F.E.C. v. Wisconsin Right to Life, 551 U.S. 449 (2007)....................... 33, 34, 35, 36 Frazier v. People, 90 P.3d 807 (Colo. 2004).......................................................... 23 Harwood v. Senate Majority Fund, LLC, 141 P.3d 962 (Colo. App. 2006)........... 35 Human Life of Washington v. Brumsickle, 624 F.3d 990 (9th Cir. 2010) ............... 41 In Re Interrogatories Propounded by Governor Ritter, Jr. Concerning the Effect of Citizens United v. Federal Election Comm’n, 558 U.S.___ (2010) on Certain Provisions of Article XXVIII of The Constitution of the State of Colorado, 227 P.3d 892 (Colo. 2010)........................................................... 34, 35 iv
Independence Institute v. Coffman, 209 P.3d 1130 (Colo. App. 2008)............ 24, 26 Ingram v. Cooper, 698 P.2d 1314 (Colo 1985) ................................................ 38, 39 League of Women Voters of State v. Davidson, 23 P.3d 1266 (Colo. Ct. App. 2001).................................................................................................................... 29 Marbury v. Madison, 5 U.S. 137 (1803)................................................................. 13 Nat’l Org. for Marriage, Inc. v. CruzBustillo, 2012 U.S. App. Lexis 9898 (11th Cir. 2012) .................................................................................................... 41 Nat’l Org. for Marriage, Inc. v. McKee, 649 F.3d 34 (1st Cir. 2011)..................... 20 NM Youth Organized v. Herrera, 611 F.3d 669 (10th Cir. 2010) ........................... 29 Patterson Recall Comm., Inc. v. Patterson, 209 P.3d 1210 (Colo. App. 2009)........4 People v. Lowrie, 761 P.2d 778 (Colo. 1988)......................................................... 13 Real Truth About Abortion v. F.E.C., 681 F.3d 544 (4th Cir. 2012)....................... 41 Sampson v. Buescher, 625 F.3d 1247 (10th Cir. 2010) .............................................5 Sanger v. Dennis, 148 P.3d 404 (Colo. App. 2006) ......................................... 32, 37 State v. Nieto, 993 P.2d 493 (Colo. 2000) .............................................................. 17 Vermont Right to Life v. Sorrell, 875 F. Supp. 2d 376 (D. Vt. 2012)..................... 41
26 U.S.C. § 527....................................................................................................... 18 C.R.S. § 145101, et seq. ..........................................................................................1 C.R.S. § 145103 ............................................................................................ passim C.R.S. § 145108 ............................................................................................ passim C.R.S. § 145111.5 ................................................................................................ 30 C.R.S. § 244106 ................................................................................. 14, 26, 32, 38
2010 Colo. Sess. Laws 1239 ................................................................................... 27 Colo. Const. art. XXVIII.................................................................................. passim Fair Campaign Practices Act .....................................................................................1
I. STATEMENT OF ISSUES PRESENTED FOR REVIEW 1. Whether the Secretary of State’s authority to enact rules to
“administer and enforce” Article XXVIII of the Colorado Constitution and the Fair Campaign Practices Act extends to rules that contradict or amend those laws, based on his personal interpretation of the First Amendment. 2. Whether the Secretary of State exceeded his authority when enacting a
rule that places a cap on fines that can be assessed for certain late filings under the Colorado Constitution and statutes, regardless of whether the violator applies for a fine waiver or demonstrates good cause. 3. Whether the District Court erred in upholding a Secretary of State
Rule that excused from disclosure requirements spending on advertisements that meet the constitutional definition of “electioneering communication” but do not engage in express advocacy or its “functional equivalent” as defined by that Rule. II. STATEMENT OF THE CASE The heart of this case is the fundamental principle that the Colorado Secretary of State does not have the authority to impose his own idiosyncratic interpretation of the First Amendment upon Colorado campaign finance law through rulemaking that effectively amends the Colorado Constitution and the Fair Campaign Practices Act (“FCPA”), C.R.S. §§ 145101 – 118.
In 2002, Colorado voters passed Amendment 27, which became Article XXVIII of the Colorado Constitution. Article XXVIII creates a comprehensive campaign and political finance system, including disclosure requirements that apply to various categories of participants in the elections process, such as issue committees and political committees, and public disclosure filings required when certain types of advertisements called “electioneering communications” are distributed in the last weeks before an election. Section 1 of Article XXVIII states that the “interests of the public are best served by . . . providing for full and timely disclosure of campaign contributions.” Consistent with this purpose, the FCPA requires issue committees and political committees to register and report all contributions, the names and addresses of all persons who contribute twenty dollars or more, and all expenditures. C.R.S. § 145108(1)(a)(I) (2011). The statement of registration must include the name of the committee; the name of a registered agent; the committee’s address and telephone number; the identities of all affiliated candidates and committees; and the “purpose or nature of interest” of the committee. C.R.S. § 145108(3). “Issue committee” is defined, in part, as any group “that has accepted or made contributions or expenditures in excess of two hundred dollars to support or oppose any ballot issue or ballot question.” Colo.
Const. art. XXVIII, § 2(10)(a)(II). “Political committee” (sometimes colloquially referred to as “PAC” from the analogous federal term, “political action committee”) is defined, in part, as any group “that has accepted or made contributions or expenditures in excess of two hundred dollars to support or oppose the nomination or election of one or more candidates.” Colo. Const. art. XXVIII, § 2(12)(a); see also Colo. Ethics Watch v. Clear the Bench Colo., 2012 COA 42, ¶ 12 (hereinafter “Clear the Bench”). In response to concerns that socalled “527” groups were spending money to influence Colorado elections without expressly supporting or opposing candidates and therefore without disclosure as “political committees,” the General Assembly amended the FCPA in 2007. See C.R.S. §§ 145103(14.5) and 108.5. Section 103(14.5) defined as a “political organization” any group “that is engaged in influencing or attempting to influence the selection, nomination, election, or appointment of any individual to any state or local public office in the state and that is exempt, or intends to seek any exemption, from taxation pursuant to section 527 of the internal revenue code” and Section 108.5 requires political organizations to file reports of contributions and “spending” in excess of twenty dollars. See Colo. Ethics Watch v. Senate Majority Fund, LLC, 2012 CO 12
(hereinafter “Senate Majority Fund”) (groups that were properly registered as political organizations were not required to register as political committees). Amendment 27 also established a twotrack enforcement system. Late filings are subject to a fine of $50 per day, but may be reduced by the Secretary upon a showing of “good cause.” Colo. Const. art. XXVIII, § 10(2). All other violations of Article XXVIII and the FCPA are enforced only through a litigation process pursuant to which “any person” may file a complaint with the Secretary, who refers the case to an administrative law judge for resolution. Colo. Const. art. XXVIII, § 9(2)(a). Courts in such cases may impose fines of up to $50 per day for violations of disclosure requirements or from double to five times the amount of an illegal contribution. Colo. Const. art. XXVIII, § 10(1)(2); see also Patterson Recall Comm., Inc. v. Patterson, 209 P.3d 1210, 1216 (Colo. App. 2009). This is the second case to reach this Court regarding this Secretary’s attempts to use his personal interpretation of the First Amendment as a vehicle to weaken Colorado’s campaign finance laws. The first case arose from the Secretary’s enactment on May 13, 2011 of Campaign and Political Finance Rule 4.27, which purported to relieve issue committees of any obligation to register or report contributions and expenditures until they had raised or spent $5000, not $200 as expressly stated in the Colorado Constitution. The Secretary contended
that this rule was supported by his interpretation of First Amendment case law, including specifically Sampson v. Buescher, 625 F.3d 1247 (10th Cir. 2010). Colorado Common Cause (“CCC”) and Colorado Ethics Watch (“Ethics Watch”) filed suit challenging the rule on the ground that the Secretary lacked authority effectively to rewrite the constitutional definition of “issue committee.” On November 17, 2011 the Denver District Court entered judgment that Rule 4.27 was invalid. Colorado Common Cause v. Gessler, Denver Dist. Ct. Case No. 2011CV4164 (Order, Nov. 17, 2011), a copy of which is in the Administrative Record (“AR”), Tab 542 (Exhibit 1 to comments of Ethics Watch). After explaining that the Secretary’s expansive interpretation of Sampson as striking down the $200 reporting threshold in all its applications was incorrect, the district court went on to address the Secretary’s limited authority to “administer and enforce” campaign finance laws, holding that the Secretary could not promulgate rules that abrogate existing constitutional and statutory requirements. Id. at pp. 6 7. On November 15, 2011, after oral argument but just before the district court’s final order in the issue committee threshold case, the Secretary issued a Notice of Rulemaking Hearing and Proposed Statement of Basis, Purpose and Specific Statutory Authority. (AR Tab 1.) Unlike the issue committee threshold
rule, which was prompted by the Tenth Circuit’s ruling in Sampson, this rulemaking was not prompted by any particular legislative or judicial directive, but to generally “clarify existing laws and regulations” and “address questions arising under State campaign and political finance.” See id. The Secretary proposed revising the entirety of the Rules Concerning Campaign and Political Finance at 8 C.C.R. 15056 (“Rules”) and included in the proposal substantive amendments to numerous Rules. A revised notice and set of proposed rules was issued on December 9, 2011. (AR Tabs 2 and 3.) Pursuant to the revised notice, a public hearing was held on December 15, 2011. (AR Tabs 4, 5 and 6.) At the hearing and in written comments submitted by interested parties, the Secretary was repeatedly warned that several of the proposed rule changes exceeded his legal authority to administer and enforce Article XXVIII and the FCPA by effectively amending those duly enacted laws. See Transcript of December 15, 2011 Rulemaking Hearing (“Trans.”) at 2528 (testimony of Senator John Morse); 6871 (testimony of Luis Toro); 8094 (testimony of Martha Tierney); 13134 (testimony of Grace Lopez Ramirez); AR Tab 52 (comments of Planned Parenthood of the Rocky Mountains); 53 (comments of Planned Parenthood Votes Colorado); 510 (comments of The Bell Policy Center); 511
(comments of Senator Morgan Carroll); 520 (comments of Mark Grueskin, Esq. for Citizens for Integrity); 532 (comments of CCC); 536 (comments of Mi Familia Vota Education Fund); 541 (comments of Martha Tierney, Esq. for Colorado Democratic Party); 542 (comments of Ethics Watch). These warnings went unheeded. On February 22, 2012, the Secretary issued the completely revised and recodified Rules. Pertinent to this action, the new Rules provided that: (1) a 527 group need not report contributions or spending unless it both had a “major purpose” of supporting or opposing candidates in Colorado and it engaged in “express advocacy” for or against candidates; (2) that an “issue committee” need not register or report unless and until it spent 30% of its annual budget on a ballot issue; (3) that a “political committee” need not register unless and until it spent “a majority” of its annual budget on supporting or opposing candidates for Colorado office; (4) that contributions and spending on “electioneering communications” need not be disclosed under a variety of circumstances, such as when the communication “merely urges a candidate to take a position with respect to an issue” or “urges the public to adopt a position and contact a candidate with respect to an issue”; (5) that a political party in a home rule jurisdiction could establish a separate account to raise unlimited contributions for county committees in home rule counties with their own campaign finance
laws; and (6) that penalties for failure to file “major contributor” reports under C.R.S. § 145108(2.5) within twentyfour hours of receiving a contribution of $1000 or more during the last thirty days before an election would stop accruing on the earlier of Election Day or the date the contribution was disclosed on a regular contribution and expenditure report.1 The rulemaking also renumbered Rule 4.27, the $5000 issue committee disclosure rule that had already been struck down by the Denver District Court, as Rule 4.1, and extended the $5000 registration and reporting threshold to recall committees. (AR Tab 8.) Ethics Watch and CCC timely filed a suit for judicial review and declaratory judgment, challenging several of the new Rules as exceeding the Secretary of State’s authority. (Complaint, CD pages 116.) The suit was consolidated with a similar suit filed by David Paladino, Michael Cerbo, ProChoice Colorado PAC, PPRM Ballot Issue Committee, and Citizens for Integrity, Inc. (the “Paladino Parties”). (Complaint, CD pages 2136.) While the suit was pending before the district court, the Secretary issued revisions to the Rules that affected two issues in the lawsuit. The Secretary’s revisions to the Rules governing political parties operating in home rule counties rendered Ethics Watch’s and CCC’s challenge to new Rule 14.4 regarding political 1 The Rules at issue in this case are all included in Addendum A attached to the Secretary’s Opening Brief. 8
party contribution limits moot. (Joint Opening Brief, CD page 188 n.1.) The other revision changed Rule 4.1 to clarify that the $5000 threshold for issue and recall committee reporting would not take effect unless and until the Denver District Court’s decision in Colorado Common Cause, et al. v. Gessler (discussed above) was reversed. After briefing and oral argument, the trial court entered judgment on August 10, 2012, invalidating new Rules 1.10; 1.12; 1.18; 7.2; and 18.1.8 (regarding the definitions of “political organization,” “issue committee,” “political committee” and a cap on penalties for failure to file major contributor reports) on the ground that the Rules impermissibly contradicted the Colorado Constitution or the FCPA. (Order, CD pages 385395.) Contrary to the Secretary’s repeated contention, the district court did not hold that the Secretary cannot promulgate rules or regulations to codify legal standards imposed by controlling case precedent. Rather, the district court determined that these rules improperly modified or contravened existing statutes without any legal basis or authority, given that the applicable statutes had not been declared facially unconstitutional. The court upheld, however, the new Rule 1.7 regarding the definition of “electioneering communications” on the ground that, in the court’s view, the rule was similar enough to the rule that preceded it that it was entitled to judicial
deference notwithstanding the argument that it contradicted the plain language of the Colorado Constitution. Finally, the district court found that the challenge to Rule 4.1 was unripe because that rule had been set aside in Colo. Common Cause, et al. v. Gessler. On August 30, 2012, this Court entered its decision in Colo. Common Cause v. Gessler, 2012 COA 147, affirming the district court’s ruling that the $5000 issue disclosure rule was invalid because it exceeded the Secretary’s authority. (Colorado Common Cause v. Gessler COA Opinion, CD pages 456472). The Secretary appeals the district court’s invalidation of Rules 1.10, 1.12, 1.18, 7.2 and 18.1.8 and Ethics Watch and CCC crossappeal the district court’s refusal to invalidate Rule 1.7. III. SUMMARY OF ARGUMENT The United States and Colorado Constitutions vest in the legislature the power to make laws and the judiciary the power to interpret them. The fundamental underpinning of the Secretary’s argument in support of his rulemaking is that he was simply adopting controlling legal standards announced in federal and state court decision. However, as the district court recognized, the Secretary’s rules go beyond the incorporation of controlling case law and in fact attempt to rewrite campaign finance laws based on his interpretation of the First
Amendment, no different from a rogue sheriff’s claim that firearms laws do not apply in his or her jurisdiction based on the sheriff’s own personal interpretation of the Second Amendment. A straightforward review of the Rules illustrates the significant inconsistencies between the Rules and the constitutional and statutory provisions which the Secretary has a duty to administer and enforce. This case is indistinguishable from Colorado Common Cause v. Gessler, 2012 COA 147, except the rule changes under review here do not even have the fig leaf of justification that the Tenth Circuit’s Sampson ruling provided in Colorado Common Cause. The Secretary’s personal interpretation of First Amendment case law simply cannot justify rules that contradict express provisions of the Colorado Constitution or the FCPA. The overall effect of the Secretary’s changes is to narrow the scope of constitutional and statutory requirements to register, report, and submit to contribution limitations. Reaching back for judicial precedents to justify this power grab, the Secretary disregarded testimony in the rulemaking process regarding the decrease in transparency that would result – directly contrary to voter and general assembly intent. Far from filling “gaps” in the law, these rules make
different policy choices than the general assembly, even in situations where legislation has specifically responded to judicial precedent by amending the FCPA. In this case, the Secretary’s reading of First Amendment precedent ignores the significant distinction between contribution limits and disclosure requirements. Because contribution limits arguably stifle speech by limiting the amount of money available to broadcast political messages, doctrines have emerged to limit the circumstances under which governments may lawfully enact such limits. All but one of the laws that would be rewritten by the Secretary’s Rules, in contrast, merely require disclosure of contributions and political spending, which the Supreme Court has repeatedly held are not subject to the same scrutiny or boundaries as contribution limits. Yet the revised Rules treat disclosure rules as if they were identical to contribution limits, and improperly import concepts from contribution limit cases to restrict the application of disclosure laws, thereby depriving the people of their right to know who spent money to influence their vote. While the district court properly held that Rules 1.10, 1.12, 1.18, 7.2 and 18.1.8 exceed the Secretary’s rulemaking authority, it erred in upholding Rule 1.7. That rule radically restricts the definition of “electioneering communications” in blatant disregard of the plain language of the Colorado Constitution and the U.S.
Supreme Court’s decision in Citizens United v. F.E.C., 558 U.S. 310, 130 S. Ct. 876 (2010), which rejected the need for such restrictions in the context of disclosure laws. IV. ARGUMENT A. Standard of Review The Secretary mischaracterizes both the standard of review and the district court’s application of that standard. See Secretary’s Opening Br. at 1112. The Secretary is not a judge who may interpret the law, nor a legislative body that can translate those interpretations into amendments of duly enacted laws. See Marbury v. Madison, 5 U.S. 137, 177 (1803) (the judicial branch’s role is to “say what the law is”); People v. Lowrie, 761 P.2d 778, 781 (Colo. 1988) (“nondelegation doctrine, which has its source in the constitutional separation of powers, prohibits the General Assembly from delegating its legislative power to some other agency or person”). He is merely an administrator of the laws enacted by the General Assembly or the People exercising their legislative power through the initiative process. The question is not, as the Secretary would have it, whether a rule within the Secretary’s powers is “permissible under governing standards.” See Secretary’s Opening Br. at 13. Rather, a “reviewing court may reverse an administrative
agency's action if the court finds that the agency exceeded its constitutional or statutory authority or made an erroneous interpretation of law,” both of which are questions of law reviewed de novo. Colo. Common Cause, 2012 COA 147, ¶¶ 15 16; see also Colo. Office of Consumer Counsel v. Colo. Public Utils. Comm’n, 2012 CO 33, ¶ 9 (Colo. 2012) (“We review de novo questions of law, but defer to the [agency’s] determination of factual issues”). In undertaking this review, the court “shall determine all questions of law and interpret the statutory and constitutional provisions involved.” C.R.S. § 244 106(7) (standards for judicial review of agency action). Although the court does defer to the agency’s interpretation of the statutes and constitutional provisions it is charged with administering, its interpretation is not binding. Bd. of County Comm’rs v. Colo. Pub. Utils. Comm’n, 157 P.3d 1083, 1088 (Colo. 2007); Colorado Citizens for Ethics in Gov’t v. Comm. for Am. Dream, 187 P.3d 1207, 1214 (Colo. App. 2008). Moreover, this limited deference does not extend to the Secretary’s interpretation or application of the First Amendment, which does not involve any agency technical expertise. See Bd. of County Comm'rs, 157 P.3d at 1089. A reviewing court is never bound by the agency’s action that has resulted from a misconstruction or misapplication of the law. Colo. Citizens for Ethics in Gov’t, 187 P.3d at 1214 (an agency’s decision should be reversed if the agency
erroneously interpreted the law or exceeded its constitutional or statutory authority). The district court properly applied this level of de novo review and limited deference when invalidating Rules 1.10, 1.12, 1.18, 7.2 and 18.1.8. (Order, CD pages 386387.)2 Appellees/CrossAppellants agree that the issues were preserved for appeal. B. The District Court Properly Invalidated Rules 1.10, 1.12, 1.18 and 7.2 as Impermissible Attempts to Inject the Secretary’s Own Interpretation of First Amendment Case Law to Change Constitutional and Statutory Requirements. 1. The Secretary’s Political Organization Definition (Rules 1.10 and 7.2) Effectively Repeals the Political Organization Disclosure Statute.
In adopting Rules 1.10 and 7.2, the Secretary boldly collapsed the distinction between political committees and political organizations, effectively rewriting C.R.S. §§ 145103(14.5) and 108.5 by engrafting restrictions purportedly justified by federal contribution limit cases regarding PACs onto a disclosureonly regime for 527 groups. The district court properly characterized this usurpation of legislative and judicial power as “contrary to the clear terms of the statute and the intent of the legislature” and held that these Rules “exceed[d the Secretary’s] delegated authority.” (Order, CD page 393). 2 At another point in his brief, the Secretary concedes that agency discretion is not unlimited and deference is not absolute when a rulemaking proceeding interprets case law. See Secretary’s Opening Br. at 21. 15
Under Colorado law, “political committees” are entities subject to contribution limitations in addition to registration and disclosure requirements. See Colo. Const. art. XXVIII § 3(5). Political committee status is triggered by accepting or making “contributions” or “expenditures” in excess of $200 to support or oppose candidates. See Colo. Const. art. XXVIII § 2(12)(a). “Expenditure” is also a defined term in Article XXVIII, meaning moneys spent “for the purpose of expressly advocating” the election or defeat of a candidate or ballot measure. See Colo. Const. art. XXVIII § 2(8)(a). Thus, an organization is only required to register, report, and comply with contribution limitations as a political committee when it makes express advocacy expenditures. See Senate Majority Fund, 2012 CO 12, ¶¶1819. Recognizing that socalled “527” groups were avoiding words of “express advocacy” so as to evade political committee registration and reporting requirements, the General Assembly acted in 2007 to create disclosureonly rules for such groups. The new statutory provisions in §§ 145103(14.5) and 108.5 recognize a new type of disclosureonly entity – “political organizations” – which are not subject to contribution limits. The General Assembly deliberately chose to avoid the legally significant terms “expenditure” or “express advocacy,” which apply to political committees,
when defining “political organization.” Instead, it defined a “political organization” as a group organized under Section 527 of the Internal Revenue Code “engaged in influencing or attempting to influence” any candidate election in Colorado. C.R.S. § 145103(14.5). The statute similarly avoided the word “expenditure” by defining “spending” as “funds expended influencing or attempting to influence” a candidate election. C.R.S. § 145103(16.5). The clear language of the statute applies more broadly than the “express advocacy” expenditures that already defined political committee status under Article XXVIII. To say that “attempting to influence” means “for the purpose of expressly advocating” is also to say that “expenditure” means “spending” and that C.R.S. § 145108.5 does not require any disclosures other than those already required for political committees. “[A] statute should be construed as written, giving full effect to the words chosen, as it is presumed that the General Assembly meant what it clearly said.” Ceja v. Lemire, 154 P.3d 1064, 1066 (Colo. 2007) (citing State v. Nieto, 993 P.2d 493, 500 (Colo. 2000)). The Secretary’s addition of a requirement that a 527 group must have a “major purpose” of influencing Colorado elections also contradicts the statute. C.R.S. § 145103(14.5) applies to any “political organization as defined in section 527(e)(1) of the [IRS code] that is engaged in influencing or attempting to
influence the selection, nomination, election or appointment of any individual to any state or local public office in the state.” This language includes any 527 organization that is involved in candidate elections in Colorado – there is no threshold regarding how much of the group’s activities must in be Colorado. 3 Rule 1.10 (incorporated by reference into Rule 7.2), on the other hand, restricts the definition of “political organizations” not only to groups that engage in “express advocacy” but also only to groups whose major purpose is to expressly advocate in support of “candidates,” another defined term in Colorado campaign finance law that refers only to candidates for Colorado offices. Colo. Const. art. XXVIII, § 2(2). Thus, a national 527 group could spend millions on ads to influence Colorado elections without transparency, so long as they avoid the “magic words” of “express advocacy” or continue to spend in other states. See Senate Majority Fund, 2012 CO 12, ¶ 38. This result is directly contrary to both the statutory language and legislative intent. See Comment of Sen. Morgan
3 Under the Internal Revenue Code, a 527 organization must have a “primary purpose” of influencing the election or appointment of officials at the state or federal level. See 26 U.S.C. § 527 (e)(1)(2). Thus, a single 527 group may spend to influence Colorado elections, federal elections, and elections in other States. 18
Carroll, AR Tab 5.11 (stating new Rules changes “run 180 degrees opposite of the legislative intent” of legislation she authored mandating 527 disclosures). 4 The Secretary attempts to justify this result by relying on Buckley v. Valeo, 424 U.S. 1 (1976), which considered the constitutionality of federal regulation of “political committee” and “expenditures” through contribution limitations and outright prohibitions. While the Buckley Court used the concepts of “express advocacy” and “major purpose” to limit federal statutory provisions under First Amendment principles, the Buckley analysis is simply not relevant to Colorado’s political organization statute, which creates only disclosure obligations and does not limit speech through contribution limitations or prohibitions. See Senate Majority Fund, 2012 CO 12, ¶¶ 78 & n.1 (explaining difference between political organizations and political committees and noting that contribution limits apply only to the latter); id. at ¶ 39 (“Buckley adopted the ‘express advocacy’ requirement to distinguish discussion of issues and candidates from more pointed exhortations to vote for particular persons”) (further quotation omitted). Proof that Buckley does not control the question presented is found in the 81 portion of the Citizens United v. F.E.C. opinion, in which the Supreme Court held that no 4 Sen. Carroll also stated in her written comments that the Secretary, then a private citizen, was the only witness who testified against the political organization disclosure bill in committee, and admonished him that “[r]ulemaking should not be an opportunity to relegislate a different outcome.” 19
“express advocacy” limitation is constitutionally required when a law requires only disclosure of electionrelated spending. See 558 U.S. 310, 130 S. Ct. 876, at 915 16. Regardless, the General Assembly specifically avoided the Buckley standards of expenditure and express advocacy when delineating the triggering conduct for political organizations under Colorado law. The Secretary argues that by using the word “influencing” the General Assembly imported the Buckley standard into the statute. Secretary’s Opening Br. at 4445. However, “influencing” is not a technical term interpreted by Buckley – Buckley interpreted the technical terms “political committee” and “expenditure” by narrowing them for First Amendment compliance to the use of money to engage in “express advocacy.” See Buckley, 424 U.S. at 7880; Nat’l Org. for Marriage, Inc. v. McKee, 649 F.3d 34, 6466 (1st Cir. 2011) (refusing to apply Buckley narrowing to the term “influencing” when the term is paired with other words in state statute). Rule 1.10’s attempt to add an express advocacy standard that was deliberately avoided by the General Assembly is beyond the scope of the Secretary’s delegated authority. The Secretary alternatively argues that Rule 7.2 only seeks to codify the § 527 statutory “primary purpose” standard in its “major purpose” provision.
Secretary’s Opening Br. at 4243. By deeming the words “primary” and “major” to mean the same thing, the Secretary’s argument ignores the substantive difference between Rule 7.2’s limitation and the statutory provision. The § 527 “primary purpose” threshold applies to all campaign activity at the federal and state level, across the country. Rule 7.2 places an additional limitation: not only must the organization have a general primary purpose of engaging in election activity across the country (thereby triggering §527 tax status), but its “major purpose” must be focused on Colorado elections. The General Assembly defined the reach of the political organization disclosure requirements to any 527 organizations operating or “engaged” in Colorado state or local candidate races. Rule 7.2 is not an implementation and clarification of what it means to be a 527 organization – it narrows the reach of the statute. Because the “major purpose” limitation imposed by Buckley is not applicable to political organizations that are not subject to contribution limits, there is no other justification for the narrowing of the statute that results from Rule 7.2’s “major purpose” requirement. Under the Secretary’s Rules, the categories of “political committee” and “political organization” completely overlap: both only contain entities whose major purpose is making express advocacy expenditures in Colorado candidate elections. Yet, the two categories must have distinct and separate coverage because “political
committees” are subject to contribution limits under Article XXVIII and “political organizations” are disclosureonly entities. A concrete example from the recent Senate Majority Fund case illustrates how Rules 1.10 and 7.2 collapse these two regimes. The two 527 groups engaged in candidaterelated activity in that case were both registered as “political organizations,” but the complaint alleged that the groups crossed the line and should have been subject to the contribution limits of “political committees.” See Senate Majority Fund, 2012 CO 12, ¶ 7 & n.1. The Colorado Supreme Court found that the voters who enacted Article XXVIII intended to adopt Buckley’s “magic words” test to determine when a group was engaged in express advocacy; because the 527 defendants did not use such words, they were not “political committees.” Id. at ¶¶ 29, 40. The Court also noted, however, that the 527s conceded that they were “political organizations” and that there was no dispute that they were disclosing pursuant to C.R.S. § 145108.5. Senate Majority Fund, 2012 CO 12 at ¶ 7. If these same organizations were operating under the new Rules 1.10 and 7.2, the fact that they were not engaged in express advocacy would also have excused them from reporting under C.R.S. § 145108.5. The separate statutory category of “political organization” would have been erased by the Secretary
charged with enforcing that law if it were not for the district court’s order in this case. The Rules allow outofstate 527 organizations to spend freely in Colorado elections without disclosure so long as they are sufficiently engaged in other states or at the federal level enough to avoid a “major purpose” threshold in Colorado, or if they avoid the use of “magic words” that are the defining characteristic of political committees. Each of these results is contrary to the General Assembly’s intent and the statutory language itself. “A statutory interpretation leading to an illogical or absurd result will not be followed.” Frazier v. People, 90 P.3d 807, 811 (Colo. 2004). The district court correctly ruled that Rules 1.10 and 7.2 are invalid. 2. Adding a Percentage Threshold to the Issue Committee Definition (Rule 1.12) Arbitrarily Reduces the Scope of the Constitutional and Statutory Provisions
The General Assembly has amended campaign finance statutes to address and incorporate judicial rulings in a proper example of the separation of powers between the branches of government. However, the Secretary’s adoption of Rule 1.12 upsets this balance by implementing his interpretation of judicial precedent on top of the definition of “issue committee” in C.R.S. § 145103(12)(b). The district court correctly held that Rule 1.12 “adds a restriction not found in the statute and
not supported by the record” to the definition of “issue committee” and is invalid. (Order, CD page 390.) “Issue committee” is defined in Article XXVIII as a group with “a major purpose of supporting or opposing any ballot issue or ballot question.” Colo. Const. art. XXVIII § 2(10)(a)(I). This Court has twice interpreted and applied the major purpose test for issue committees. See Cerbo v. Protect Colorado Jobs, Inc., 240 P.3d 495 (Colo. App. 2010); Independence Institute v. Coffman, 209 P.3d 1130 (Colo. App. 2008). In Independence Institute, this Court rejected vagueness and overbreadth challenges to the major purpose provision in Article XVIII and articulated some of the factors that could be considered by a committee to determine if the major purpose test was met. See Independence Institute, 209 P.3d at 1139. Two years later, this Court observed in Cerbo that neither statutes nor regulations further defined the major purpose test in Article XVIII § 2(10)(a), but still found no impermissible ambiguity in the phrase. See Cerbo, 240 P.3d at 501. Later in 2010 – after these two decisions – the General Assembly enacted clarifying legislation stating that “major purpose” can be determined through the organization’s objectives in organizational documents or the organization’s “demonstrated pattern of conduct.” C.R.S. § 145103(12)(b)(I)(II). Going even further, the statute states that the pattern of conduct is based upon:
(A) Annual expenditures in support of or opposition to an ballot issue or ballot question; or (B) Production or funding, or both, of written or broadcast communications, or both, in support of or opposition to a ballot issue or ballot question. C.R.S. § 14510312(b)(II). The General Assembly specifically stated that this new provision was intended to incorporate the “major purpose” definition as articulated in Independence Institute. See C.R.S. § 145103(12)(c). The legislative decision to create a major purpose test in statute did not include setting precise percentages for the amount of funding, expenditures, or communications that would automatically trigger issue committee status. Rule 1.12 ignores this deliberate choice by the General Assembly and inserts a 30% threshold into the rule. No court case had found the statutory methodology to be ambiguous between its enactment and the 2012 adoption of Rule 1.12 (or since). The Secretary simply disagrees with the legislative implementation and prefers the “bright line” of a set 30% rule – a line no court or statute has drawn. The Secretary argues that the statute still leaves the question of how these factors should be weighed unanswered. Secretary’s Opening Br. at 3031. However, the legislature decided that a casespecific inquiry into an organization’s pattern of conduct was the appropriate test rather than an acrosstheboard flat percentage. This same approach was endorsed by this Court in both Cerbo and
Independence Institute and has been found to survive constitutional scrutiny. The statute is not silent and there are no gaps to fill. There is no justification for the Secretary to supplant the legislative decision in statute with the test he prefers. See Colo. Common Cause, 2012 COA 147 at ¶¶ 2123 (recognizing that the Secretary has no authority to promulgate a rule to fill a gap that does not exist). Moreover, the specific 30% threshold was adopted with no factual basis in the rulemaking record and little justification offered even now. The Secretary justifies drawing this line at 30% because it is a number less than 50%, but still representing “a meaningful portion” of the committee’s budget. Secretary’s Opening Br. at 35. Such reasoning is the quintessential example of an “arbitrary or capricious” agency action. See C.R.S. § 244106(7). It is especially egregious that the Secretary adopted this standard in complete disregard of the testimony during the rulemaking, from groups across the political spectrum, regarding the disparate impact such a rule has based on the overall size of a committee’s spending; i.e. groups with more money to spend overall would only start reporting their activity at a higher dollar amount than smaller groups who would hit the 30% mark sooner. See, e.g., AR Tab 52 (comments of Planned Parenthood of the Rocky Mountains); Tab 511 (comments of The Bell Policy Center); Tab 516 (comments of Metro Organization for People); Tab 522 at 3 (comments of
Coalition for Secular Government); Tab 524 (comments of Colorado Progressive Coalition); Tab 532 at 2 (comments of Colorado Common Cause); Tab 541 at 2 (comments of Colorado Democratic Party); Tab 546 (comments of Colorado Conservation Voters). The 2010 legislation clarifying the major purpose test in § 145103(12) included a legislative finding that a lack of disclosure in connection with communications supporting or opposing ballot issues “leads to a perception of purposefully anonymous interests attempting to influence the outcome of the election on measures…through the expenditure of large sums of money.” 2010 Colo. Sess. Laws 1239, §1(e). Rule 1.12 undermines the purpose of the statute by allowing large sums of money to be spent without disclosure beneath the arbitrary 30% line. 3. The Political Committee Definition (Rule 1.18) Improperly Limits the Constitutional Definition.
Article XXVIII’s specific definition of “political committee” applies to any group that has made expenditures or received contributions in excess of $200 to support or oppose a candidate. See Colo. Const. art. XXVIII § 2(12)(a). The voters did not include a “major purpose” requirement in this definition – a choice that must be seen as deliberate since a major purpose test was included in constitutional definition of “issue committee.” See Colo. Const. art. XXVIII, § 2(10)(a)(I). 27
However, Rule 1.18 adds a major purpose test that does not exist in the Constitution or statute based again on the Secretary’s reading of judicial precedent. As the district court observed: “[the Secretary] assumes a solution without legislative or voter input, and thereby exceeds his delegated authority.” (Order, CD pages 391392.) It is the legislature – or the voters’ – responsibility to
design and codify a major purpose test. The Secretary’s attempt to create law in Rule 1.18 exceeds his delegated authority. In any event, Rule 1.18 does not simply implement the standard from Colo. Right to Life Comm. v. Coffman, 498 F.3d 1137, 114652 (10th Cir. 2007), as the Secretary contends. Secretary’s Opening Br. at 26. The Rule 1.18 test is narrower that the factors considered by the Tenth Circuit in that case. First, the Rule limits the major purpose test to a comparison of the organization’s expenditures to total spending and completely ignores any calculation of the organization’s contributions to candidates. Surely making contributions to political candidates would be indicative of whether or not the group had a major purpose of influencing candidate elections. Second, the Rule only looks to what the organization states as to its purpose “in organizing documents.” Under this test, an organization may talk about candidates on websites and in solicitations and still not trigger the major purpose test so long as the corporate documents do not mention a purpose of
supporting or opposing candidates. This is not consistent with the test as applied by the courts. See id. at 1152 (examining the “organization’s central purpose”); see also NM Youth Organized v. Herrera, 611 F.3d 669, 678 (10th Cir. 2010) (examining actual activities of organizations to determine organization purpose); League of Women Voters of State v. Davidson, 23 P.3d 1266, 1275 (Colo. Ct. App. 2001) (declining to be held to analysis of group’s selfserving statements of purpose under predecessor provision before Article XVIII enactment). In the five years since Alliance for Colorado’s Families v. Gilbert, 172 P.3d 964 (Colo. App. 2007), first interpreted the major purpose test for political committees, the General Assembly or Colorado voters could have revised the FCPA or Article XXVIII. They chose not to. Rule 1.18 exceeds the Secretary’s authority by implementing a contrary choice and then arbitrarily narrowing the judicially constructed test it purports to “incorporate” into the law. C. The District Court Properly Invalidated Rule 18.1.8 as Exceeding the Secretary’s Delegated Authority. The district court properly determined that Rule 18.1.8 exceeds the Secretary’s authority by “substantially denuding the statutory penalty” imposed for not filing major contribution reports. (Order, CD page 394). Colorado law requires entities to file a major contributor report “in addition” to any regularly scheduled report and assesses an automatic penalty of $50 per day for each day the 29
report is not filed between the 48hour deadline and whenever that specific, separate report is filed. See C.R.S. § 145108(2.5), § 145111.5(c). Rule 18.1.8 caps penalties assessed by statute in two ways by stating that the $50 penalties simply “stop accruing” on either the date the contribution is included on a regularlyschedule report or the date of the general election. See Rule 18.1.8(A). The Secretary’s power to enforce the FCPA does not permit the creation of such an exception to the civil penalties to protect nonfilers. In both respects, Rule 18.1.8 exceeds the Secretary’s authority and contradicts the plain language of the statute. The Secretary correctly asserts that Article XXVIII grants him the power to “set aside or reduce” a penalty already assessed when presented with a written appeal and waiver request. Colo. Const. art. XXVIII § 10(2)(c). Notably, the Secretary may only grant waivers “upon a showing of good cause.” Id. Otherwise, waiver requests must be sent to an ALJ for determination. Id. § 10(2)(b)(I). Rule 18.1.8 dispenses with any “good cause” requirement and effectively waives fines in advance. This is beyond the Secretary’s power. Rule 18.1.8 is separate from the other portions of Rule 18, which govern the Secretary’s exercise of discretion when presented with waiver requests that do demonstrate good cause. It purports to stop such penalties from ever accruing after either of the two trigger dates – obviating the need for any particular committee to
request a waiver under Article XXVIII, § 10(2). Rule 18.1.8 is a separate exception applied across the board – not in a specific waiver request – that fines will never be applied when a contribution is reported on a regularlyscheduled report or when the general election has passed. Whether it is wise to impose penalties for failure to file major contributor reports after the contribution has been otherwise disclosed is a choice for the General Assembly to make, not the Secretary. This rule is beyond the authority accorded to the Secretary under the Constitution and the statute. D. The District Court Erred in Upholding Rule 1.7. 1. Standard of Review
The Secretary’s argument that Rule 1.7’s new limitations on constitutionallyrequired disclosure are necessary to comply with the First Amendment pursuant to state and federal court decisions is a legal interpretation of judicial precedent not entitled to deference by this Court. See Colo. Common Cause v. Gessler, 2012 COA 147,¶ 22; see also Colo. Office of Consumer Counsel v. Colo. Public Utils. Comm’n, 2012 CO 33, ¶ 9 (Colo. 2012). With regard to Rule 1.7, the district court improperly conducted this de novo review and gave too much deference to the Secretary’s Rule. (Order, CD page 389).
This appeal of a district court’s review of an agency rule did not require preservation and is properly brought pursuant to C.R.S. § 244106(9). 2. Rule 1.7 Modifies and Contravenes the Colorado Constitution and Statutory Definitions of Electioneering Communications.
The plain text of Rule 1.7 explicitly “imposes a restriction that is not supported by the text of Article XXVIII” when it states: “Electioneering Communication” is any communication that (1) meets the definition of electioneering communication in Article XXVIII, Section 2(7), and (2) is the functional equivalent of express advocacy… Rule 1.7 (emphasis added); Sanger v. Dennis, 148 P.3d 404, 412 (Colo. App. 2006). These changes again reflect the Secretary’s attempt to graft stricter case law holdings regarding laws that limit or prohibit contributions onto the disclosure only provisions governing electioneering communications in Colorado today. Far from being a First Amendmentrequired limitation on public disclosure, the “functional equivalent” standard has been rejected as an unworkable standard that is not necessary for provisions that require only reporting. The plain language of the “electioneering communication” definition in both federal and Colorado law applies broadly to regulate any communication in the 30/60day window before a primary or general election that “unambiguously refers
to any candidate.” Colo. Const. art. XXVIII, § 2(7)(a); 2 U.S.C. § 434(f)(3)(A). 5 In 2007, the reach of the federal law was temporarily narrowed to communications that meet the stated requirements and contain “the functional equivalent of express advocacy” because those provisions were tied to a corporate and labor union expenditure ban and therefore had to be read narrowly in order to assuage First Amendment concerns. F.E.C. v. Wisconsin Right to Life, 551 U.S. 449, 481 (2007) (WRTL). However, this judicial filter limiting the scope of the electioneering communication provision was disregarded as inadequate protection of speech in 2010, when the U.S. Supreme Court opted instead to strike down the expenditure prohibitions in the federal law entirely. Citizens United,130 S. Ct. at 913. Although the corporate expenditure prohibition was struck down, the Court upheld the electioneering communication disclosure requirement without any limitation of disclaimer and disclosure requirements to ads that expressly advocate for or against candidates. Id. at 91516. Moreover, the Court explicitly rejected application of WRTL’s “functional equivalent” limitations on the remaining disclosure provisions: 5 The Colorado statutory definition merely states that the term “shall have the same meaning as set forth in section 2(7) of article XXVIII of the state constitution” and has not be revised by the General Assembly in response to any of the court cases discussed in this section. C.R.S. § 145103(9). 33
As a final point, Citizens United claims that, in any event, the disclosure requirements in § 201 must be confined to speech that is the functional equivalent of express advocacy. The principal opinion in WRTL limited 2 U.S.C. § 441b's restrictions on independent expenditures to express advocacy and its functional equivalent. 551 U.S., at 469476, 127 S. Ct. 2652, 168 L. Ed. 2d 329 (opinion of Roberts, C. J.). Citizens United seeks to import a similar distinction into BCRA's disclosure requirements. We reject this contention. Id. at 915. Citizens United put an end to attempts to apply limitations from cases involving contribution or expenditure limits into disclosure laws just as surely as its more famous holding put an end to attempts to limit expenditures by corporations or labor unions. As a result, campaign finance law has been simplified considerably. The Court emphasized the importance of disclosure as necessary for voters to “make informed decisions and give proper weight to different speakers and messages.” Id. at 916. The impact of this 81 decision is clear: once the Colorado electioneering communications provision was limited to disclosure provisions (as confirmed in Colorado’s provision by In Re Interrogatories Propounded by Governor Ritter, Jr. Concerning the Effect of Citizens United v. Federal Election Comm’n, 558 U.S.___ (2010) on Certain Provisions of Article XXVIII of The Constitution of the State of Colorado, 227 P.3d 892 (Colo. 2010)), the “functional equivalent” standard is not applicable. Even the district court in this case noted 34
that “it may be that Citizens United renders both old and new rules obsolete” before upholding Rule 1.7 based on its comparison to the prior rule. (Order, CD page 389). Under the plain language of the “electioneering communication” law, spending on some of the most noxious attack ads – ones that smear a candidate personally in the last days before an election – must be disclosed. During the 2012 election, voters were left in the dark about those ads thanks to the district court’s erroneous ruling. No Colorado case has stated that the “functional equivalent” limitation from WRTL must be imposed upon Article XXVIII’s “electioneering communications” definition to survive constitutional scrutiny. See In re Interrogatories, 227 P.3d at 893 (leaving the Article XXVIII disclosure requirements undisturbed); Colo. Citizens for Ethics in Gov’t v. Comm. for the Am. Dream, 187 P.3d 1207, 121417 (Colo. App. 2008) (postWRTL case applying Article XXVIII definition without “functional equivalent” limitation); Colo. Right to Life, 498 F.3d at 1152 (declining to consider facial challenge to Colorado’s electioneering communications provision postWRTL and limiting holding to asapplied challenge by certain nonprofit organization); Harwood v. Senate Majority Fund, LLC, 141 P.3d 962, 96466 (Colo. App. 2006) (preWRTL case applying Article XXVIII definition to polls). The Secretary’s attempt to cherrypick from outdated federal
campaign finance cases to support his regulatory narrowing of disclosure in Colorado is beyond the scope of his authority. The district court’s order erroneously relied upon Senate Majority Fund, 2012 CO 12, as affirming WRTL’s applicability to Colorado’s electioneering communications definition. (Order, CD page 389.) Senate Majority Fund determined the meaning of “express advocacy” as part of the constitutional definition of “expenditure” which triggers the requirements to register as a political committee under Colorado law. See id. at ¶ 19. No claim was made that the ads should have been disclosed as electioneering communications. Id. at ¶ 7 n.1. While the opinion recognized that WRTL approved of a “functional equivalence test,” it only states that WRTL stands for the proposition that a “broader scope of speech” can be regulated under the timelimited electioneering communications provisions than as “expenditures.” Id. at ¶¶ 3435. The Colorado Supreme Court did not state that these limitations applied to Colorado’s provisions, nor discuss Citizens United’s import as these issues were not before the court. See id. at ¶ 36 & n.8. If anything, Senate Majority Fund is relevant to this case for its statement that the WRTL “functional equivalent” test – which Ethics Watch argued in Senate Majority Fund should define “express advocacy” and which the Secretary argues here should limit “electioneering communications” – “might be
found to create an unwieldy standard that would be difficult to apply and, as a result, potentially serve to unconstitutionally chill protected political speech.” Id. at ¶ 37. In addition to the explicit addition of the “functional equivalent” standard, the specific safe harbors in Rule 1.7.3 create regulatory exemptions to the statutory and constitutional reporting requirements. The rule arbitrarily carves out numerous types of advertisements that refer to candidates and are distributed within the final days of an election in the district where the candidate is running for office from the public information provided to voters. The district court erred in holding “it appears the Secretary did not modify or contravene an existing statute.” (Order, CD page 389.) Rule 1.7 exemplifies this Court’s statement in Sanger v. Dennis that “[t]he Secretary’s ‘definition’ is much more than an effort to define the term. It can be read to effectively add, to modify, and to conflict with the constitutional provision.” Sanger, 148 P.3d at 413. 3. Similarity to the Prior Rule is Irrelevant to the Analysis of Whether Rule 1.7 Violates the Colorado Constitution and Statutes.
In its order, the district court focused the majority of its analysis regarding Rule 1.7 on a comparison between the text of this rule and the prior regulatory definition of “electioneering communications” in former Rule 9.4. The court held
that “new rule adds no substantive additional terms and imposes no additional restrictions over the old rule” and that “the challenged rule is similar to the rule enacted by Defendant’s predecessor, and it therefore is entitled to deference” (citing Ingram v. Cooper, 698 P.2d 1314 (Colo 1985)). (Order, CD page 389.) When the Court invalidated the other regulations at issue in this case, it did not engage in such a comparison to prior rules governing political committees or political organizations. Instead, the Court properly evaluated the newly enacted regulations standing alone to see if the rules exceeding the Secretary’s authority, contradicted constitutional or statutory provisions, or were arbitrary and capricious under standards of administrative review. Thus, the extent to which Rule 1.7 is similar to former Rule 9.4 is irrelevant to a determination of the validity of the rule. Under C.R.S. § 244106(7) the court must hold an agency rule invalid if it is shown to be arbitrary and capricious or contrary to law – there is no statutory exception for rules based on how similar the newly enacted rule is to a prior regulation. As seen above, Rule 1.7 explicitly adds conditions to the constitutional definition of “electioneering communications” and should be held invalid without regard to the precise language of former Rule 9.4. Nor is a court required to accord heightened deference to a rule based on lack of challenge to a similar rule in the past. The Ingram case relied upon by the
district court is not controlling in this matter. The plaintiffs in that case challenged the Department of Corrections’ calculation of goodtime credits, which had been done using the same method since 1935 and had been unchallenged until the Ingram challenge in 1982. Ingram, 698 P.2d at 1316. That is not the circumstance of the Rule challenged in this case. Proposed Rule 1.7’s revision of the definition of “electioneering communications” was first presented for public comment in the Secretary’s 2011 notice of rulemaking. This was the appropriate time for Ethics Watch, CCC and many other individuals and groups to express their objection to the new subsections added in the proposed Rule. Indeed, many commenters pointed to the new language and informed the Secretary how these proposed changes would limit disclosures and, ultimately, information to voters. See, e.g., AR Tab 53 (comments of Planned Parenthood Votes Colorado); Tab 520 at 2 (comments of Citizens for Integrity); Tab 532 at 2 (comments of CCC); Tab 541 at 2 (comments of Colorado Democratic Party); Tab 542 at 2 (comments of Ethics Watch); Tab 546 (comments of Colorado Conservation Voters); Tab 547 (comments of One Colorado). Public testimony also informed the Secretary that eight justices of the U.S. Supreme Court in Citizens United held that electioneering communications disclosure provisions which do not prohibit corporations or labor unions from making such
communications are not required to be limited to a “functional equivalent” test in order to comply with the First Amendment. See AR Tab 532 at 2 (comments of CCC); Tab 541 at 2 (comments of Colorado Democratic Party); Tab 542 at 2 (comments of Ethics Watch). Nonetheless, the Secretary made a choice to revise the regulatory definition in Rule 1.7 from the prior language in former Rule 9.4. That choice is reviewable by the court under an “arbitrary or capricious” or contrary to law standard without any extra deference which would place a thumb on the scale in favor of the rule’s validity. See Bd. of County Comm’rs, 157 P.3d at 1089 (deference is not appropriate if agency interpretation defeats statutory intent or plain meaning of statute). But even assuming that it is relevant to compare Rule 1.7 to former Rule 9.4 as a part of the APA review, the district court erred in holding that the new rule does not impose “substantive additional terms” in the definition of “electioneering communications.” Rule 1.7 uses a term not found in former Rule 9.4 – “the functional equivalent of express advocacy” – and proceeds to explain what is and is not encompassed by that new phrase. Rule 1.7.3 is a wholly new subsection which adds a roadmap for groups seeking to avoid constitutional disclosure of the money financing campaign advertising. The “safe harbor” added to the rule
provides a getoutofreportingfree card for communications that otherwise meet the constitutional definition of electioneering communications. This illustrates the substantial changes that Rule 1.7 made to the standards of the former Rule. 4. Other Courts Have Rejected Limits on Electioneering Communications Disclosures Similar to Rule 1.7 Pursuant to Citizens United.
After the U.S. Supreme Court’s decision in 2010, other courts have reviewed statelevel electioneering communications provisions and consistently held that the “functional equivalent” limitation need not be grafted onto disclosureonly regimes. See, e.g., Nat’l Org. for Marriage, Inc., 649 F.3d at 54 (stating functional equivalent line of cases “came to a definitive end with Citizens United”); Human Life of Washington v. Brumsickle, 624 F.3d 990, 1016 (9th Cir. 2010) (stating Citizens United refused to apply functional equivalent standard to disclosure); Nat’l Org. for Marriage, Inc. v. CruzBustillo, 2012 U.S. App. Lexis 9898 (11th Cir. 2012) (unpublished) (rejecting per curiam challenge to state disclosure limits citing Citizens United and First Circuit Nat’l Org. for Marriage case); Vermont Right to Life v. Sorrell, 875 F. Supp. 2d 376, 386 (D. Vt. 2012) (stating Citizens United rejected the argument that electioneering communications disclosure provisions could only cover express advocacy or its functional equivalent); see also Real Truth About Abortion v. F.E.C., 681 F.3d 544, 552 (4th Cir. 2012) (noting
“mandatory disclosure requirements are permissible when applied to ads that merely mention a candidate” in federal law after Citizens United). Since the district court’s order in this case, the U.S. Court of Appeals for the Seventh Circuit discussed the state of electioneering communications and similar campaign finance disclosure laws after Citizens United in a facial challenge to Illinois’s state laws. See Center for Individual Freedom v. Madigan, 697 F.3d 464 (7th Cir. 2012). The court noted that all federal court of appeals that have decided postCitizens United challenges to state disclosure statutes have upheld the statutes. See id at 470. The court also held that electioneering communications provisions in state law “may constitutionally cover more than just express advocacy and its functional equivalent” under Citizens United. Id. at 484. The Secretary enacted Rule 1.7 based on his own faulty interpretation of federal campaign finance law. This Court’s de novo review need not give deference to this agency analysis and should hold that such limitations are not constitutionally required. Thus, Rule 1.7 is invalid. V. CONCLUSION For these reasons, and the reasons stated in the Paladino Parties’ Answer Brief, the Court should affirm the district court’s judgment holding void Campaign and Political Finance Rules 1.10, 1.12, 1.18, 7.2 and 18.1.8 as having been enacted
in excess of the Secretary of State’s authority. Ethics Watch and CCC also respectfully request that the Court enter an order reversing the district court’s judgment upholding Campaign and Political Finance Rule 1.7, and remanding this case to that court with instructions to enter judgment that the rule is void as exceeding the Secretary of State’s rulemaking authority.
Respectfully submitted on March 8, 2013. signed original on file signed original on file /s/ Jennifer H. Hunt___________ /s/ Margaret Perl________________ Jennifer H. Hunt Luis Toro Hill & Robbins, P.C. Margaret Perl 1441 18th Street, Suite 100 Colorado Ethics Watch Denver, CO 802021256 1630 Welton Street, Suite 415 Denver, CO 80202 Attorney for Appellee/CrossAppellant Colorado Common Cause Attorneys for Appellee/CrossAppellant Colorado Ethics Watch
CERTIFICATE OF SERVICE The undersigned hereby certifies that on the 8th day of March, 2013, service of the foregoing JOINT OPENINGANSWER BRIEF was made via LexisNexis File & Serve, addressed as follows: LeAnn Morrill Frederick R. Yarger Matthew Grove State Services Section Office of the Attorney General 1525 Sherman Street, 7th Floor Denver, CO 80203 Mark Grueskin Heizer Paul Grueskin LLP 2401 15th Street, Suite 300 Denver CO 80202 signed original on file s/Rae Macias
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