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Transcript of Court of Appeals Joint Answer-Opening Brief
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COLORADO COURT OF APPEALSCourt Address: 101 W. Colfax Ave., Suite 800Denver, CO 80202
District Court, City and County of Denver
Honorable J. Eric Elliff, JudgeCase Nos. 2012CV2133 and 2012CV2153
______________________________________Appellees/Cross-Appellants: COLORADO ETHICSWATCH and COLORADO COMMON CAUSE
And
Appellants/Cross-Appellees: DAVID PALADINOMICHAEL CERBO PRO-CHOICE COLORADO PACPPRM BALLOT ISSUE COMMITTEE and CITIZENS
FOR INTEGRITY, INC.
v.
Appellant/Cross-Appellee: SCOTT GESSLER, in hisofficial capacity as Colorado Secretary of State
_______________________________________Attorneys for Colorado Ethics Watch:Luis Toro, #22093Margaret Perl, #431061630 Welton Street, Suite 415
Denver, CO 80202Telephone: 303-626-2100Email: [email protected]
Attorneys for Colorado Common Cause:Jennifer H. Hunt, #29964Hill & Robbins, PC1441 18th Street, Suite 100Denver, CO 80202Telephone: 303-296-8100
Email: [email protected]
COURT USE ONLY ________________________
Case No. 12 CA 1712
JOINT OPENING-ANSWER BRIEF
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CERTIFICATE OF COMPLIANCE
I hereby certify that this brief complies with all requirements of C.A.R. 28 andC.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 theapplicable standard of appellate review with citation to authority and (2) acitation to the precise location in the record (R. , p. ), not to an entiredocument, 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 suchparty agrees with the opponents statements concerning the standard ofreview 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 therequirements of C.A.R. 28 and C.A.R. 32.
s/ Jennifer H. Hunt
Jennifer H. HuntAttorney for the Appellee/Cross-AppellantColorado Common Cause
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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. Standard of Review ............................................................................ 13
B. The District Court Properly Invalidated Rules 1.10, 1.12, 1.18and 7.2 as Impermissible Attempts to Inject the SecretarysOwn Interpretation of First Amendment Case Law to Change
Constitutional and Statutory Requirements. ...................................... 15
1. The Secretarys Political Organization Definition (Rules1.10 and 7.2) Effectively Repeals the Political OrganizationDisclosure Statute.......................................................................... 15
2. Adding a Percentage Threshold to the Issue CommitteeDefinition (Rule 1.12) Arbitrarily Reduces the Scope of theConstitutional and Statutory Provisions........................................ 23
3. The Political Committee Definition (Rule 1.18) Improperly
Limits the Constitutional Definition. ............................................ 27C. The District Court Properly Invalidated Rule 18.1.8 as
Exceeding the Secretarys Delegated Authority. ............................... 29
D. The District Court Erred in Upholding Rule 1.7................................ 31
1. Standard of Review ....................................................................... 31
2. Rule 1.7 Modifies and Contravenes the ColoradoConstitution and Statutory Definitions of ElectioneeringCommunications. .......................................................................... 32
3. Similarity to the Prior Rule is Irrelevant to the Analysis ofWhether Rule 1.7 Violates the Colorado Constitution andStatutes. ......................................................................................... 37
4. Other Courts Have Rejected Limits on ElectioneeringCommunications Disclosures Similar to Rule 1.7 Pursuant toCitizens United. ............................................................................. 41
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V. CONCLUSION.................................................................................................. 42
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TABLE OF AUTHORITIES
Cases
Alliance for Colorados Families v. Gilbert, 172 P.3d 964 (Colo. App. 2007) ..... 29
Bd. of County Commrs v. Colo. Pub. Utils. Commn, 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 Govt v. Comm. for the Am. Dream , 187 P.3d1207 (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. Commn , 2012 CO33 (Colo. 2012) ............................................................................................. 14, 31
Colo. Right to Life Comm. v. Coffman, 498 F.3d 1137 (10th
Cir. 2007) .......... 28, 35Colorado Citizens for Ethics in Govt 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 Commn, 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
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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
Natl Org. for Marriage, Inc. v. Cruz-Bustillo, 2012 U.S. App. Lexis 9898(11th Cir. 2012).................................................................................................... 41
Natl 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)........4People 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
Sangerv. 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
Statutes
26 U.S.C. 527....................................................................................................... 18
C.R.S. 1-45-101, et seq. ..........................................................................................1
C.R.S. 1-45-103 ............................................................................................ passim
C.R.S. 1-45-108 ............................................................................................ passim
C.R.S. 1-45-111.5 ................................................................................................ 30
C.R.S. 24-4-106 ................................................................................. 14, 26, 32, 38
Other Authorities
2010 Colo. Sess. Laws 1239 ................................................................................... 27
Colo. Const. art. XXVIII.................................................................................. passim
Fair Campaign Practices Act .....................................................................................1
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I. STATEMENT OF ISSUES PRESENTED FOR REVIEW
1. Whether the Secretary of States 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. 1-45-101 118.
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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. 1-45-108(1)(a)(I) (2011). The statement of registration
must include the name of the committee the name of a registered agent the
committees 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. 1-45-108(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.
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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 alsoColo. Ethics Watch v. Clear the Bench Colo., 2012 COA 42,
12 (hereinafter Clear the Bench).
In response to concerns that so-called 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. 1-45-103(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
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(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 two-track 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 Secretarys
attempts to use his personal interpretation of the First Amendment as a vehicle to
weaken Colorados campaign finance laws. The first case arose from the
Secretarys 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
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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 5-42 (Exhibit 1 to comments of Ethics Watch). After
explaining that the Secretarys expansive interpretation ofSampson as striking
down the $200 reporting threshold in all its applications was incorrect, the district
court went on to address the Secretarys 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
courts 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
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rule, which was prompted by the Tenth Circuits 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. 1505-6 (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 25-28 (testimony of Senator
John Morse) 68-71 (testimony of Luis Toro) 80-94 (testimony of Martha
Tierney) 131-34 (testimony of Grace Lopez Ramirez) AR Tab 5-2 (comments of
Planned Parenthood of the Rocky Mountains) 5-3 (comments of Planned
Parenthood Votes Colorado) 5-10 (comments of The Bell Policy Center) 5-11
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(comments of Senator Morgan Carroll) 5-20 (comments of Mark Grueskin, Esq.
for Citizens for Integrity) 5-32 (comments of CCC) 5-36 (comments of Mi
Familia Vota Education Fund) 5-41 (comments of Martha Tierney, Esq. for
Colorado Democratic Party) 5-42 (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
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laws and (6) that penalties for failure to file major contributor reports under
C.R.S. 1-45-108(2.5) within twenty-four 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
States authority. (Complaint, CD pages 1-16.) The suit was consolidated with a
similar suit filed by David Paladino, Michael Cerbo, Pro-Choice Colorado PAC,
PPRM Ballot Issue Committee, and Citizens for Integrity, Inc. (the Paladino
Parties). (Complaint, CD pages 21-36.)
While the suit was pending before the district court, the Secretary issued
revisions to the Rules that affected two issues in the lawsuit. The Secretarys
revisions to the Rules governing political parties operating in home rule counties
rendered Ethics Watchs and CCCs challenge to new Rule 14.4 regarding political
1 The Rules at issue in this case are all included in Addendum A attached to theSecretarys Opening Brief.
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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
Courts 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 385-395.) Contrary to the Secretarys repeated contention, the
district court did not hold that the Secretary cannot promulgate rules or regulations
to codify legal standards imposed by controllingcase 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 courts view, the rule
was similar enough to the rule that preceded it that it was entitled to judicial
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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 courts ruling that the $5000 issue
disclosure rule was invalid because it exceeded the Secretarys authority.
(Colorado Common Cause v. Gessler COA Opinion, CD pages 456-472).
The Secretary appeals the district courts invalidation of Rules 1.10, 1.12,
1.18, 7.2 and 18.1.8 and Ethics Watch and CCC cross-appeal the district courts
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 Secretarys 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
Secretarys 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
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Amendment, no different from a rogue sheriffs claim that firearms laws do not
apply in his or her jurisdiction based on the sheriffs 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 Circuits Sampson ruling provided in Colorado
Common Cause. The Secretarys 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 Secretarys 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
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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 Secretarys 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 Secretarys 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 Secretarys 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.
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Supreme Courts 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 ReviewThe Secretary mischaracterizes both the standard of review and the district
courts application of that standard. See Secretarys Opening Br. at 11-12. 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 branchs 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
Secretarys powers is permissible under governing standards. See Secretarys
Opening Br. at 13. Rather, a reviewing court may reverse an administrative
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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-
16see alsoColo. Office of Consumer Counsel v. Colo. Public Utils. Commn ,
2012 CO 33, 9 (Colo. 2012) (We review de novo questions of law, but defer to
the [agencys] 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. 24-4-
106(7) (standards for judicial review of agency action). Although the court does
defer to the agencys interpretation of the statutes and constitutional provisions it is
charged with administering, its interpretation is not binding. Bd. of County
Commrs v. Colo. Pub. Utils. Commn, 157 P.3d 1083, 1088 (Colo. 2007)
Colorado Citizens for Ethics in Govt v. Comm. for Am. Dream, 187 P.3d 1207,
1214 (Colo. App. 2008). Moreover, this limited deference does not extend to the
Secretarys interpretation or application of the First Amendment, which does not
involve any agency technical expertise. SeeBd. of County Comm'rs, 157 P.3d at
1089. A reviewing court is never bound by the agencys action that has resulted
from a misconstruction or misapplication of the law. Colo. Citizens for Ethics in
Govt, 187 P.3d at 1214 (an agencys decision should be reversed if the agency
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erroneously interpreted the law or exceeded its constitutional or statutory
authority). The district court properly applied this level ofde novo review and
limited deference when invalidating Rules 1.10, 1.12, 1.18, 7.2 and 18.1.8. (Order,
CD pages 386-387.)2
Appellees/Cross-Appellants agree that the issues were preserved for appeal.
B. The District Court Properly Invalidated Rules 1.10, 1.12, 1.18 and 7.2 asImpermissible Attempts to Inject the Secretarys Own Interpretation of
First Amendment Case Law to Change Constitutional and StatutoryRequirements.
1. The Secretarys Political Organization Definition (Rules 1.10 and7.2) 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. 1-45-103(14.5) and 108.5 by engrafting restrictions purportedly justified
by federal contribution limit cases regarding PACs onto a disclosure-only 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 Secretarys]
delegated authority. (Order, CD page 393).
2At another point in his brief, the Secretary concedes that agency discretion is not
unlimited and deference is not absolute when a rulemaking proceeding interpretscase law. See Secretarys Opening Br. at 21.
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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, 18-19.
Recognizing that so-called 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 disclosure-only rules
for such groups. The new statutory provisions in 1-45-103(14.5) and 108.5
recognize a new type of disclosure-only 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,
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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. 1-45-103(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. 1-45-103(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. 1-45-108.5 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 Secretarys addition of a requirement that a 527 group must have a
major purpose of influencing Colorado elections also contradicts the statute.
C.R.S. 1-45-103(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
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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 groups 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
3Under the Internal Revenue Code, a 527 organization must have a primary
purpose of influencing the election or appointment of officials at the state orfederal level. See 26 U.S.C. 527 (e)(1)-(2). Thus, a single 527 group may spendto influence Colorado elections, federal elections, and elections in other States.
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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 theBuckley Court used the concepts of express
advocacy and major purpose to limit federal statutory provisions under First
Amendment principles, theBuckley analysis is simply not relevant to Colorados
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, 7-8 & 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 8-1 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 privatecitizen, was the only witness who testified against the political organizationdisclosure bill in committee, and admonished him that [r]ulemaking should not bean opportunity to re-legislate a different outcome.
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express advocacy limitation is constitutionally required when a law requires only
disclosure of election-related 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 theBuckley
standard into the statute. Secretarys Opening Br. at 44-45. However,
influencing is not a technical term interpreted byBuckley 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. SeeBuckley, 424 U.S. at 78-80Natl Org. for Marriage, Inc. v.
McKee, 649 F.3d 34, 64-66 (1st Cir. 2011) (refusing to applyBuckley narrowing to
the term influencing when the term is paired with other words in state statute).
Rule 1.10s attempt to add an express advocacy standard that was deliberately
avoided by the General Assembly is beyond the scope of the Secretarys 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.
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Secretarys Opening Br. at 42-43. By deeming the words primary and major
to mean the same thing, the Secretarys argument ignores the substantive
difference between Rule 7.2s 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 byBuckley 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 7.2s major purpose requirement.
Under the Secretarys 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
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committees are subject to contribution limits under Article XXVIII and political
organizations are disclosure-only entities.
A concrete example from the recent Senate Majority Fundcase illustrates
how Rules 1.10 and 7.2 collapse these two regimes. The two 527 groups engaged
in candidate-related 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 Buckleys
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. 1-45-108.5. 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. 1-45-108.5. The separate statutory
category of political organization would have been erased by the Secretary
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charged with enforcing that law if it were not for the district courts order in this
case.
The Rules allow out-of-state 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 Assemblys
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 Secretarys 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. 1-45-103(12)(b). The district
court correctly held that Rule 1.12 adds a restriction not found in the statute and
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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). InIndependence 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
organizations objectives in organizational documents or the organizations
demonstrated pattern of conduct. C.R.S. 1-45-103(12)(b)(I)-(II). Going even
further, the statute states that the pattern of conduct is based upon:
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(A) Annual expenditures in support of or opposition to anballot issue or ballot question or
(B) Production or funding, or both, of written orbroadcast communications, or both, in support of oropposition to a ballot issue or ballot question.
C.R.S. 1-45-103-12(b)(II). The General Assembly specifically stated that this
new provision was intended to incorporate the major purpose definition as
articulated inIndependence Institute. See C.R.S. 1-45-103(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. Secretarys Opening Br. at 30-31.
However, the legislature decided that a case-specific inquiry into an organizations
pattern of conduct was the appropriate test rather than an across-the-board flat
percentage. This same approach was endorsed by this Court in both Cerbo and
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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 21-23 (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 committees budget. Secretarys
Opening Br. at 35. Such reasoning is the quintessential example of an arbitrary or
capricious agency action. See C.R.S. 24-4-106(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 committees
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 5-2 (comments of Planned Parenthood of the
Rocky Mountains) Tab 5-11 (comments of The Bell Policy Center) Tab 5-16
(comments of Metro Organization for People) Tab 5-22 at 3 (comments of
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Coalition for Secular Government) Tab 5-24 (comments of Colorado Progressive
Coalition) Tab 5-32 at 2 (comments of Colorado Common Cause) Tab 5-41 at 2
(comments of Colorado Democratic Party) Tab 5-46 (comments of Colorado
Conservation Voters).
The 2010 legislation clarifying the major purpose test in 1-45-103(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 measuresthrough 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 Limitsthe Constitutional Definition.
Article XXVIIIs 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).
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However, Rule 1.18 adds a major purpose test that does not exist in the
Constitution or statute based again on the Secretarys 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 391-392.) It is the legislature or the voters responsibility to
design and codify a major purpose test. The Secretarys 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, 1146-52 (10th Cir. 2007), as the
Secretary contends. Secretarys 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 organizations expenditures to total
spending and completely ignores any calculation of the organizations
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
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supporting or opposing candidates. This is not consistent with the test as applied
by the courts. Seeid. at 1152 (examining the organizations 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 groups self-serving statements of
purpose under predecessor provision before Article XVIII enactment).
In the five years sinceAlliance for Colorados 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 Secretarys
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 theSecretarys Delegated Authority.
The district court properly determined that Rule 18.1.8 exceeds the
Secretarys 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
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report is not filed between the 48-hour deadline and whenever that specific,
separate report is filed. See C.R.S. 1-45-108(2.5), 1-45-111.5(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
regularly-schedule report or the date of the general election. See Rule 18.1.8(A).
The Secretarys power to enforce the FCPA does not permit the creation of such an
exception to the civil penalties to protect non-filers. In both respects, Rule 18.1.8
exceeds the Secretarys 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 Secretarys power.
Rule 18.1.8 is separate from the other portions of Rule 18, which govern the
Secretarys exercise of discretion when presented with waiver requests that do
demonstrate good cause. It purports to stop such penaltiesfrom ever accruingafter
either of the two trigger dates obviating the need for any particular committee to
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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 regularly-scheduled
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 ReviewThe Secretarys argument that Rule 1.7s new limitations on
constitutionally-required 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, 22see also Colo. Office of Consumer Counsel
v. Colo. Public Utils. Commn, 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 Secretarys Rule. (Order, CD page 389).
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This appeal of a district courts review of an agency rule did not require
preservation and is properly brought pursuant to C.R.S. 24-4-106(9).
2. Rule 1.7 Modifies and Contravenes the Colorado Constitution andStatutory 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 electioneeringcommunication in Article XXVIII, Section 2(7), and (2)is the functional equivalent of express advocacy
Rule 1.7 (emphasis added) Sangerv. Dennis, 148 P.3d 404, 412 (Colo. App.
2006). These changes again reflect the Secretarys 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 Amendment-required 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
30/60-day window before a primary or general election that unambiguously refers
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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 915-16. Moreover, the Court explicitly rejected
application ofWRTLs functional equivalent limitations on the remaining
disclosure provisions:
5 The Colorado statutory definition merely states that the term shall have the samemeaning as set forth in section 2(7) of article XXVIII of the state constitution andhas not be revised by the General Assembly in response to any of the court casesdiscussed in this section. C.R.S. 1-45-103(9).
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As a final point, Citizens United claims that, in anyevent, the disclosure requirements in 201 must be
confined to speech that is the functional equivalent ofexpress advocacy. The principal opinion in WRTL limited2 U.S.C. 441b's restrictions on independentexpenditures to express advocacy and its functionalequivalent. 551 U.S., at 469-476, 127 S. Ct. 2652, 168 L.Ed. 2d 329 (opinion of Roberts, C. J.). Citizens Unitedseeks to import a similar distinction into BCRA'sdisclosure requirements. We reject this contention.
Id. at 915. Citizens Unitedput 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 8-1 decision is clear: once the Colorado
electioneering communications provision was limited to disclosure provisions (as
confirmed in Colorados provision byIn Re Interrogatories Propounded by
Governor Ritter, Jr. Concerning the Effect of Citizens United v. Federal Election
Commn, 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
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that it may be that Citizens Unitedrenders 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 courts
erroneous ruling.
No Colorado case has stated that the functional equivalent limitation from
WRTL must be imposed upon Article XXVIIIs 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 Govt v. Comm. for the Am. Dream , 187 P.3d 1207, 1214-17
(Colo. App. 2008) (post-WRTL case applying Article XXVIII definition without
functional equivalent limitation) Colo. Right to Life, 498 F.3d at 1152
(declining to consider facial challenge to Colorados electioneering
communications provision post-WRTL and limiting holding to as-applied challenge
by certain nonprofit organization)Harwood v. Senate Majority Fund, LLC, 141
P.3d 962, 964-66 (Colo. App. 2006) (pre-WRTL case applying Article XXVIII
definition to polls). The Secretarys attempt to cherry-pick from outdated federal
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campaign finance cases to support his regulatory narrowing of disclosure in
Colorado is beyond the scope of his authority.
The district courts order erroneously relied upon Senate Majority Fund,
2012 CO 12, as affirming WRTLs applicability to Colorados 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 time-limited electioneering
communications provisions than as expenditures. Id. at 34-35. The Colorado
Supreme Court did not state that these limitations applied to Colorados provisions,
nor discuss Citizens Uniteds import as these issues were not before the court. See
id. at 36 & n.8. If anything, Senate Majority Fundis relevant to this case for its
statement that the WRTL functional equivalent test which Ethics Watch argued
in Senate Majority Fundshould define express advocacy and which the
Secretary argues here should limit electioneering communications might be
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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 Courts statement in Sanger v. Dennis
that [t]he Secretarys 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 ofWhether 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
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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 Defendants predecessor, and it therefore is entitled to deference
(citingIngram 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 Secretarys 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. 24-4-106(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. TheIngram case relied upon by the
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district court is not controlling in this matter. The plaintiffs in that case challenged
the Department of Corrections calculation of good-time 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 1.7s revision of the definition
of electioneering communications was first presented for public comment in the
Secretarys 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 5-3 (comments of Planned Parenthood
Votes Colorado) Tab 5-20 at 2 (comments of Citizens for Integrity) Tab 5-32 at 2
(comments of CCC) Tab 5-41 at 2 (comments of Colorado Democratic Party)
Tab 5-42 at 2 (comments of Ethics Watch) Tab 5-46 (comments of Colorado
Conservation Voters) Tab 5-47 (comments of One Colorado). Public testimony
also informed the Secretary that eight justices of the U.S. Supreme Court in
Citizens Unitedheld that electioneering communications disclosure provisions
which do not prohibit corporations or labor unions from making such
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communications are not required to be limited to a functional equivalent test in
order to comply with the First Amendment. See AR Tab 5-32 at 2 (comments of
CCC) Tab 5-41 at 2 (comments of Colorado Democratic Party) Tab 5-42 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 rules
validity. See Bd. of County Commrs, 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
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provides a get-out-of-reporting-free 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 ElectioneeringCommunications Disclosures Similar to Rule 1.7 Pursuant to
Citizens United.
After the U.S. Supreme Courts decision in 2010, other courts have reviewed
state-level electioneering communications provisions and consistently held that the
functional equivalent limitation need not be grafted onto disclosure-only
regimes. See, e.g., Natl 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 Unitedrefused to apply functional equivalent standard to disclosure)
Natl Org. for Marriage, Inc. v. Cruz-Bustillo, 2012 U.S. App. Lexis 9898 (11th
Cir. 2012) (unpublished) (rejectingper curiam challenge to state disclosure limits
citing Citizens Unitedand First CircuitNatl Org. for Marriage case) Vermont
Right to Life v. Sorrell, 875 F. Supp. 2d 376, 386 (D. Vt. 2012) (stating Citizens
Unitedrejected 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
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mandatory disclosure requirements are permissible when applied to ads that
merely mention a candidate in federal law afterCitizens United).
Since the district courts 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 afterCitizens Unitedin a facial challenge to
Illinoiss 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
post-Citizens Unitedchallenges to state disclosure statutes have upheld the statutes.
See idat 470. The court also held that electioneering communications provisions
in state law may constitutionally cover more than just express advocacy and its
functional equivalent underCitizens United. Id. at 484.
The Secretary enacted Rule 1.7 based on his own faulty interpretation of
federal campaign finance law. This Courts 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 courts judgment holding void Campaign
and Political Finance Rules 1.10, 1.12, 1.18, 7.2 and 18.1.8 as having been enacted
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in excess of the Secretary of States authority. Ethics Watch and CCC also
respectfully request that the Court enter an order reversing the district courts
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 States rulemaking authority.
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Respectfully submitted on March 8, 2013.
signed original on file/s/ Jennifer H. Hunt___________Jennifer H. HuntHill & Robbins, P.C.1441 18th Street, Suite 100Denver, CO 80202-1256
Attorney for Appellee/Cross-AppellantColorado Common Cause
signed original on file
/s/Margaret Perl________________Luis ToroMargaret PerlColorado Ethics Watch1630 Welton Street, Suite 415Denver, CO 80202
Attorneys for Appellee/Cross-Appellant
Colorado Ethics Watch
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CERTIFICATE OF SERVICE
The undersigned hereby certifies that on the 8
th
day of March, 2013, serviceof the foregoing JOINT OPENING-ANSWER BRIEF was made via LexisNexisFile & Serve, addressed as follows:
LeAnn MorrillFrederick R. YargerMatthew GroveState Services SectionOffice of the Attorney General1525 Sherman Street, 7th Floor
Denver, CO 80203
Mark GrueskinHeizer Paul Grueskin LLP2401 15th Street, Suite 300Denver CO 80202
signed original on file
s/Rae Macias