Characterizations, editorial comments, abbreviations and shorthand references are solely PPA Highlights author Barnaby Zall’s, and do not represent the views or positions of the Public Policy Legal Institute or the First Tuesday Lunch Group or their members and participants. Suggestions and corrections welcome.
Another “Concealment Strategy” Complaint Filed Against FEC, While Other Cases Are “A Mess:” Another lawsuit has been filed against the Federal Election Commission alleging that three Commissioners (Weintraub, Broussard and Walther) intentionally concealed from the public and parties to actions the results of Federal Election Commission votes, thus preventing what was assertedly final action by the FEC from being recognized by parties to proceedings. The complaint in this case, filed by 45Committee, Inc., is that this failure to release FEC paperwork, resulted, inter alia, in the U.S. District Court for D.C. permitting a private complainant to pursue a private enforcement action against 45Committee, and was a violation of the Administrative Procedures Act and various court rules.
Meanwhile, Heritage Action, which had filed a similar suit in May alleging that the same “concealment policy” had injured it, filed an opposed motion in the U.S. Court of Appeals for the D.C. Circuit to hold appellate review in abeyance pending the consideration of its motion to dismiss a similar private suit filed against it. On June 6, the District Court for D.C. denied as too filed too late Heritage Action’s motion to intervene, saying “What a procedural mess.” Slip op., at 2. The Court stress that its denial:
says nothing about the validity of Heritage Action’s arguments about whether the Commission acted on CLC’s administrative complaint, whether any failure was contrary to law, or whether the Commission conformed with the Court’s order to act. Nor does it condone the Commission’s unseemly failure to appear and defend itself in this Court, or what Heritage Action casts as a scheme to hide its activity and leave regulated parties in legal limbo. Those issues will have to be addressed in other cases. See Campaign Legal Ctr. v. Heritage Action for Am., No. 22-cv-01248 (CJN) (CLC’s direct lawsuit); see also Heritage Action v. FEC, No. 22-cv-01422 (CJN) (Heritage Action’s APA suit against the Commission).
Three Commissioners (Dickerson, Cooksey and Trainor) released a Statement Regarding Freedom of Information Act Litigation filed by organizations trying to get FEC decisional documents on their own cases: “Because the vote certifications and statements of reasons for these complaints are neither predecisional nor deliberative, and because there is no foreseeable harm that could result from their release to these parties, FOIA requires the Commission to produce them. The plaintiffs in these actions—and similarly situated plaintiffs in the future—deserve to prevail under the law.”
Comments Due by July 14 on FEC’s Proposed Response to Deadlock Over How to Revise Regulations on Reporting Donors to Organizations Which Make Independent Expenditures: On June 14, the FEC published an interim final rule on reporting independent expenditures in the Federal Register and requested public comment by July 14. The interim final rule is intended to comply with the decision in CREW v. FEC, 971 F.3d 340 (D.C. Cir 2020), aff’g, 316 F. Supp. 3d 349 (D.D.C. 2018), holding that a disclosure regulation (11 CFR 109.10(e)(1)(vi)) was inconsistent with the statute because the regulation did not require the disclosure of all significant donors to organizations which made independent expenditures rather than only disclosing those who indicated their contributions were intended to support the IEs. Id., at 350-51. After the FEC deadlocked over how to comply with the D.C. Circuit’s ruling, the new interim final rule simply strikes the regulation. Commenters are encouraged to submit comments electronically, referencing REG 2020-05. Alternatively, commenters may submit comments in paper form, addressed to the Federal Election Commission, Attn.: Mr. Robert M. Knop, Assistant General Counsel, 1050 First Street NE, Washington, DC 20463. Covington reports.
“Interpretive and Policy Statement” of Three FEC Commissioners on Conflict Between Federal Circuits Over How to Report Donors to Organizations Which Make Independent Expenditures: The proposed amended regulation leaves practitioners in a quandary: what, exactly, do you tell clients, including donors and prospective donors, about what will be reported? Three Commissioners (Dickerson, Cooksey and Trainor) wrote an interpretive and policy statement on how they view and will vote on the proper scope and enforcement of the donor disclosure requirement under § 30104(c). Unlike the D.C. Circuit’s opinion in Crew v. FEC, 971 F.3d 340 (D.C. Cir. 2020), the Commissioners’ Statement looks more broadly, including at the limited jurisdiction of the FEC, at constitutional norms for Due Process and fairness, and at the impact on donors who did not intend to engage in political activity.
“[T]he FEC deals with “the behavior of individuals and groups only insofar as they act, speak and associate for political purposes.” Policy Statement, at 7. When there are conflicting decisions and an ambiguous statute, these three Commissioners see as most important the “fundamental pillars of due process: ‘first, that regulated parties should know what is required of them so they may act accordingly; second, [that] precision and guidance are necessary so that those enforcing the law do not act in an arbitrary or discriminatory way.’” Id.
The Statement gives public notice of the Commissioners’ reasoning and their intended general future course of decision-making, given due deference to principles of fundamental fairness. They recognize the D.C. Circuit’s decision as binding, but also agree “with the reasoning” of FEC v. Survival Education Fund, Inc., 65 F.3d 285, 294 (2d Cir. 1995), a conflicting decision of the Second Circuit that considers not just those who were, in fact, clearly acting, speaking and associating “for political purposes,” but the larger group of persons who were not. This is a destination test, something the FEC has often used over its existence (though not exclusively), and is consistent not just with the D.C. Circuit’s decision, but also the Supreme Court’s in Amer. For Prosperity Fndtn/TMLC v. Bonta and Munson, NAACP v. Alabama, and other cases.
For example, as the Supreme Court recently wrote in striking down an FEC regulation in Ted Cruz for Senate v. FEC, No. 21-12 (May 16, 2022): “The First Amendment ‘has its fullest and most urgent application precisely to the conduct of campaigns for political office.’ Monitor Patriot Co. v. Roy, 401 U. S. 265, 272 (1971).” Cruz, slip op., at 11. Statutes that “inhibit” these fundamental and “urgent” rights likely violate the First Amendment. Slip op., at 1, 10, 11, 12-13. Disclosure of persons who do not “act, speak and associate for political purposes” likely will inhibit at least some non-political donors. As pointed out in footnote 23 of the Commissioners’ Policy Statement:
See, Ams. for Prosperity Found. v. Bonta, 141 S. Ct. 2373, 2388 (2021) (observing that a “disclosure requirement ‘creates an unnecessary risk of chilling’ in violation of the First Amendment” when it “indiscriminately sweep[s] up the information of every major donor with reason to remain anonymous”) (quoting Sec’y of State of Md. v. Joseph H. Munson Co., 467 U.S. 947, 968 (1984)); Buckley, 424 U.S. at 66 (“[C]ompelled disclosure has the potential for substantially infringing the exercise of First Amendment rights.”); NAACP v. Ala. ex rel. Patterson, 357 U.S. 449, 462 (1958) (“It is hardly a novel perception that compelled disclosure of affiliation with groups engaged in advocacy may constitute as effective a restraint on freedom of association as [other] forms of governmental action.”).
As a lesson for practitioners, Congress must not just be clear about who should and should not be disclosed, but also precise enough to avoid the obvious unconstitutional inhibitions on those who should NOT be disclosed. The D.C. Circuit decision was not so precise nor protective; the Second Circuit was. As an agency, the FEC must navigate that thin path toward the regulatory interpretations that protect all the rights involved, not just the informational right that disclosure feeds. That is what the three Commissioners’ Statement tried to do.
No Fishing in the Press Pool – “Conclusory”, “Unsourced”, “Anonymous” Media Stories Not Sufficient to Rebut Respondents’ Factual Statements: It’s a declaration against interest, but a number of our FEC practitioners’ practices include making or defending claims of violations of federal law based on media reports. The usual practice is to defend by showing that the media reports are unreliable or untrue. But is that enough either to justify the Federal Election Commission’s decisions to take or, just as important, NOT to take enforcement action? Under Heckler v. Chaney, 470 U.S. 821, 822-23, 831-32, 835 (1985), “An agency’s decision not to take enforcement action … has traditionally been ‘committed to agency discretion,’ and it does not appear that Congress, in enacting the APA, intended to alter that tradition. Accordingly, such a decision is unreviewable unless Congress has indicated an intent to circumscribe agency enforcement discretion, and has provided meaningful standards for defining the limits of that discretion.”
Three Commissioners (Dickerson, Cooksey and Trainor) used Heckler’s 37-year old analysis to explain why they chose to vote against enforcement proceeding in MUR 7784 (Make America Great Again PAC, f/k/a Donald Trump for President) not to begin enforcement proceedings against the successor organization to Donald Trump for President under a complaint filed only on the basis of media reports that were: “imprecise and credit ‘anonymous sources’ for key assertions. In fact, media reports citing ‘anonymous sources’ provide the only support for OGC’s conclusions. … Unsourced reports are not a proper basis for Commission enforcement action (particularly where, as here, they are heavily characterized, conclusory, and laden with innuendo).” Statement of Reasons, supra, at 8-9. The Statement notes that, pursuant to 11 C.F.R. § 111.4(c) and (d)(2), the FEC does not accept or credit anonymous complaints. An opposing Statement of Reasons by Commissioners Broussard and Weintraub contends that “We reject this attempt to discredit news reports as appropriate sources of information for complaints and appropriate bases for investigations under the Federal Election Campaign Act. … This agency might not exist were it not for some exceptional reporting relying on an anonymous source then known to the public only as ‘Deep Throat.’ It is ironic, ahistorical, arbitrary, and capricious for Commissioners to refuse to consider information derived from analogous sources.” Statement, at 5.
This MUR is important for two reasons: first, there has long been a fundamental divide between those who believe that anonymous media reports (or even media reports in general) are not sufficient grounds for subjecting a respondent to a costly and intrusive investigation, and this exchange clarifies the positions with substantive references to underlying law. But, perhaps more importantly, this exchange shows counsel what they must do to present or attack an anonymously-sourced allegation: it is not enough to have a “mountain” of evidence, or a “meticulously documented 81-page Complaint, which cites 80 different sources in its 131 footnotes,” if those “different sources” do not meet the standards in 52 U.S.C. § 30109(a)(1), and 11 C.F.R. § 111.4(c) and (d)(2). In other words, to be a credible and sufficient source, somebody must have either “personal knowledge and statements based upon information and belief,” or “Statements [in a complaint] which are not based upon personal knowledge should be accompanied by an identification of the source of information which gives rise to the complainants’ belief in the truth of such statements.” You can’t just allege something that you hope the agency will investigate and substantiate; in other words, no fishing expeditions. Otherwise, Heckler counsels the agency that it has discretion that may well be unreviewable over whether or not to begin enforcement.
Calls for Commissioner Trainor to Recuse Because Someone Else Said He Was Conflicted: FEC Commissioner Trey Trainor worked as a lawyer for the 2016 Trump presidential campaign, yet has not recused himself from FEC votes on Trump 2020 campaign questions, notes Business Insider. “Trainor told Insider that what guides him in determining if he should recuse himself from a case is whether or not he has knowledge that may personally impact him in the outcome. He said he hasn’t done any paid work for Trump’s presidential campaign since a brief post-election legal fight in 2016 that has never come before the FEC.” Nevertheless, last November, the Denton County, Texas, Republican Party described Trainor in an ad for his appearance as a speaker as a member of the “Trump Elections Team” rather than as an FEC Commissioner. This has led, according to Insider, to some “campaign finance experts” suggesting that Trainor “should recuse himself from adjudicating matters involving the Trump campaign while he continues to serve with the FEC,” even though they “disagreed as to whether he broke any rule or law.”
Federal District Court Orders Release of “Missing” Lois Lerner and Holly Paz Depositions From IRS Targeting Scandal: Remember the comments by Sen. Sheldon Whitehouse and others that the IRS targeting scandal never happened? One reason for those false claims may be because some of the background testimony from the top IRS officials behind the scandal has never been released. On June 22, U.S. District Court Judge Michael Barrett from the Southern District of Ohio ordered the release of some of the depositions of Lois Lerner and Holly Paz, four years after he sealed the trial materials following credible claims of threats being made against the two IRS officials and their families.
NorCal Tea Party Patriots v. IRS, the main court case after the scandal, was settled in 2017 with settlement payments of $3.5 million to the affected tax-exempt organizations who were wrongfully screened through the “Be On The Look Out” (“BOLO”) project of the IRS Tax-Exempt Division, and an admission by the IRS of abusing its power. Then-Attorney General Jeff Sessions said at the time:
The IRS’ use of these criteria as a basis for heightened scrutiny was wrong and should never have occurred. It is improper for the IRS to single out groups for different treatment based on their names or ideological positions. Any entitlement to tax exemption should be based on the activities of the organization and whether they fulfill requirements of the law, not the policy positions adopted by members or the name chosen to reflect those views.
But the underlying case lives on, as Judicial Watch and other organizations seek more information on the IRS scandal. Judge Barrett’s June 22 Order said, in part:
The difficulty for the Court is that any time Lerner and Paz are placed in the public spotlight, they seem to be at risk, regardless of what they have actually said in their depositions. This is because the comments, letters and death threats they and their families have received are untethered from the facts and legal issues in this case. Instead, members of the public have chosen to use this case as an opportunity to air any grievances they might have with the government.
While the balance between the public’s interest in these documents and the potential for violence is a tough call, the Court is hopeful that the passage of time will protect Lerner, Paz and their families. In addition, any references to personal information in the depositions and summary judgment materials shall remain under seal so that the sealed portions of the documents are narrowly tailored to the concerns for the safety and privacy of Lerner, Paz and their families.
Slip op., at 11, 13.
Are the Newbie IRS Agents Auditing Tax-Exempt Organizations Adequately Prepared? Richard Caputo and Brian Bernhardt of Fox Rothchild have posted a June 27 Alert to beware of a new wave of Internal Revenue Service audits of tax-exempt organizations with agents who are “newer and less-experienced. It may be that the Tax-Exempt and Government Entity (TE/GE) Division is also hiring new agents and assigning these new Revenue Agents ‘learning experience’ audits. Unfortunately, charities, including our clients, are the ones suffering from this training.”
New York Times Investigating “How – and How Well – the IRS Is Guarding The Gate:” On June 14, the NYT sent out a request for information: “Do You Have Insight Into How the I.R.S. Vets New Charities? The Times is looking for tips about how the Internal Revenue Service scrutinizes new nonprofits — and what they might miss.”
No First Amendment Cause of Action Against Law Enforcement Officials Personally Under Bivens: Bivens actions seeking personal liability against law enforcement officials for violations of First Amendment rights are rare, and now likely will go extinct. Tucked away at the end of the elegantly-named Egbert v. Boule, No. 21-147 (June 8, 2022), an opinion about whether law enforcement officials can be personally sued for violations of constitutional rights under the long-standing decision in Bivens v. Six Unknown Fed. Narcotics Agents, 403 U. S. 388 (1971), comes a unanimous refusal by the Supreme Court to extend that doctrine to the invasion of First Amendment rights, with dueling explanations for why not. “[W]e hold that there is no Bivens action for First Amendment retaliation. There are many reasons to think that Congress, not the courts, is better suited to authorize such a damages remedy.” Slip op., at 14. The case was widely reported because it involved a claim by the owner of a bed-and-breakfast inn on the Canadian border that a Border Patrol officer assaulted him during the apprehension of an alleged illegal immigrant, but announcement of a new First Amendment defense doctrine seems to have flown under the radar, except by the perspicacious student editors at the Willamette Law Review Online.
Though the First Amendment portion of the opinions was unanimous in result, the rationales were split, with the majority noting that any Bivens process leads to costs and burdens and the cost-benefit question would be better decided by Congress:
A plaintiff can turn practically any adverse action into grounds for a retaliation claim. And, “[b]ecause an official’s state of mind is easy to allege and hard to disprove, insubstantial claims that turn on [retaliatory] intent may be less amenable to summary disposition.” Crawford-El v. Britton, 523 U. S. 574, 584–585 (1998) (internal quotation marks omitted). Even a frivolous retaliation claim “threaten[s] to set off broad-ranging discovery in which there is often no clear end to the relevant evidence.” Nieves v. Bartlett, 587 U. S. ___, ___ (2019) (slip op., at 11) (internal quotation marks omitted).
“[U]ndoubtedly,” then, the “prospect of personal liability” under the First Amendment would lead “to new difficulties and expense.” Schweiker, 487 U. S., at 425. Federal employees “face[d with] the added risk of personal liability for decisions that they believe to be a correct response to improper [activity] would be deterred from” carrying out their duties. Bush, 462 U. S., at 389. We are therefore “convinced” that, in light of these costs, “Congress is in a better position to decide whether or not the public interest would be served” by imposing a damages action. Id., at 390.
[J]ust because plaintiffs often plead unlawful retaliation to establish a First Amendment violation is not a reason to afford them a cause of action to sue federal officers for money damages. If anything, that retaliation claims are common, and therefore more likely to impose “a significant expansion of Government liability,” Meyer, 510 U. S., at 486, counsels against permitting Bivens relief.
Justice Sotomayor, dissenting with Justice Breyer and Kagan, agreed with the First Amendment result, but disagreed on the new “single-step” deference to Congress on a First Amendment cause of action. Slip op., at Dissent 13-14. In practice, however, her rationale seems quite close to the majority’s concern for impact on officials:
Unlike the constitutional rights this Court has recognized as cognizable under Bivens, First Amendment retaliation claims could potentially be brought against many different federal officers, stretching substantially beyond the “common and recurrent sphere of law enforcement” to reach virtually all federal employees. Ziglar, 582 U. S., at ___ (slip op., at 11). Under such circumstances, this Court’s precedent holds that “‘evaluat[ing] the impact of a new species of litigation’” on the efficiency of civil service is a task for Congress, not the courts. Wilkie, 551 U. S., at 562; see also Ziglar, 582 U. S., at ___ (slip op., at 13). I therefore concur in the judgment as to the Court’s reversal of the Court of Appeals’ conclusion that Boule’s First Amendment Bivens action may proceed, not for the reasons the Court identifies, ante, at 13–16, but because precedent requires it.
Supreme Court Rejects Chevron Deference Without Mentioning the Name of That Oil Company: American Hospital Ass’n v. Becerra, No. 20-1114, June 15, 2022 had long been expected to affect courts’ deference to expertise of regulatory agencies (Chevron deference). The first question the Supreme Court chose to review in Amer. Hospital Ass’n was: “whether Chevron deference permits HHS to set reimbursement rates based on acquisition cost and vary such rates by hospital group if it has not collected adequate hospital acquisition cost survey data.” (emphasis added). The Court said no, because deference does not protect an agency which depends on guesses (even educated or experience-based speculation) instead of data. The Court did not mention Chevron because it wanted to make the point that the case could be decided on the basis of simple statutory interpretation without regard to whatever expertise the agency could bring to bear. “The statute expressly authorizes HHS to vary rates by hospital group if HHS has conducted such a survey. But the statute does not authorize such a variance in rates if HHS has not conducted a survey. …But absent that survey data, as Congress determined, HHS may not make billion-dollar decisions differentiating among particular hospital groups.” Slip op., at 10 (cleaned up).
Possible applications of this new “no guessing” standard? Tax and political regulators’ guesses. Example: Cruz for Senate, No. 21-12 (FEC campaign finance regulation rejected for lack of evidence of a governmental interest sufficient to outweigh the negative effect on candidates, especially challengers and low-income candidates).
New Jersey Legislation Tries to Reduce Incentives to Evade Campaign Contribution Limits: NJ campaign finance laws overhaul bill, S2866, would trade off higher campaign finance limits and less “pay to play” restrictions for more rapid disclosure of major contributions. One supporter, Republican State Sen. Vince Polistina (Atlantic City) explained his motivation to Politico Pro (paywall): ““They’re going to find ways around every campaign finance reform you try to do. So I think transparency is the key. I think it’s more transparent when you have it going directly to candidates as opposed to super PACs or any other entity.” Now, progressive groups are trying to slow the bill, Politico (New Jersey) notes, “focusing largely on the fact that it would curtail the state’s pay-to-play laws.”
New LA Prohibition on Campaign Contributions by Restricted Developers and Property Owners With Pending Matters: Venable reports on sweeping Los Angeles Gag Rule that affects “Any applicant or property owner associated with a “significant planning entitlement” filing in the city of Los Angeles qualifies as a “restricted developer” and is subject to the new restriction. “Significant planning entitlement” is defined broadly, capturing many discretionary applications filed with the Los Angeles Department of City Planning, including zoning issues and general plan amendments.” Those with “significant planning entitlements” must register their senior management, owners and representatives, and those registrants are barred from contributing to city candidates for the duration of their pending applications or matters, plus 12 months.
Eric Wang Goes After Sen. Whitehouse’s Latest Justification – “Dark Money Fueled Jan. 6” – for DISCLOSE Act: Writing in the Washington Examiner, long-time FTLG participant Eric Wang of the Gober Group notes that Sen. Sheldon Whitehouse, who is proposing to use his long-stalled DISCLOSE legislation to go after donors who allegedly funded the January 6 Capitol Hill riot:
posits that the planning and implementation of the riot constitute ‘political activity’ that is reportable to the IRS and FEC under nonprofit and campaign finance laws. … The Jan. 6 riot may have been, in a generic and colloquial sense, ‘political activity,’ just as any violent attempt to overthrow the government is a ‘political activity.’ However, these are not at all the types of activities that campaign finance and nonprofit political activity laws are designed to regulate. Such laws require groups spending money to influence voters in the lead-up to elections to report their spending and, under certain circumstances, their donors.
Legal Proceedings From 2020 Protests Continue: The oft-used phrase “the wheels of justice grind slowly but exceedingly fine,” paraphrases 3rd Century Greek philosopher Sextus Empiricus, but it appears true in the violent wake of 2020 protests. The Portland Examiner reported that 91% of those arrested for rioting were not prosecuted. But the U.S. Attorney for Oregon announced that “An Indiana man was sentenced to federal prison [June 21] for repeatedly and intentionally jeopardizing the lives of police officers, destroying public property, and encouraging others to commit violence during protests that occurred in Portland in 2020.” FBI Portland Special Agent in Charge Kieran Ramsey said, “Malik Fard Muhammad intentionally planned and committed acts of violence that threatened other protestors, members of the public, and law enforcement officers. This type of violence has no place in our community.” The OUSA release cited substantial evidence of Muhammad’s violent rampage through Portland, including a shopping list on his phone, DNA evidence on various weapons and incendiary devices, and video of Muhammad throwing a Molotov cocktail that burned a police officer. “Muhammad’s trip to Portland does not appear to be an isolated event. Investigators obtained evidence that he traveled to Louisville, Kentucky in August 2020 to meet with anti-government and anti-authority violent extremist groups to conduct firearms and tactical training. Investigators also obtained several public social media posts by Muhammad promoting violence toward law enforcement in other cities including Kenosha, Wisconsin, and Chicago.” Meanwhile, six protestors filed a lawsuit challenging an Oklahoma law passed in the wake of 2020 protests increasing penalties for blocking roadways and immunizing drivers who injure or kill rioters; the lawsuit claims the law goes far beyond the “true threats” exception to the First Amendment.
More on Claims of Partisan Differences in Gmail Spam Filtering: Axios reports that the Republican National Committee is claiming even more precisely how Google’s Gmail spam filters adversely affect its fundraising: “Ordinarily, the [RNC] said, Gmail flags up to 10% of its emails as spam. But it says during the final four days of every month since December 2021 — a crucial period for digital fundraising operations — that number has skyrocketed to 100% or close to it, even as the rate of emails marked as spam by recipients remains steady.” Google’s response, also from Axios: “Google has asked the Federal Election Commission to green light a program that could keep campaign emails from ending up in spam folders.”
NJ Police Frustrated — Justice Alito Moved Away 15 Years Ago – Stop Sending Threatening Packages to That Address: West Caldwell Police Department – Home | Facebook