[00:00:01] Speaker 00: Case number 14-1194 at L, New York Republican State Committee at L Petitioners versus Securities and Exchange Commission. [00:00:10] Speaker 00: Mr. Torszynski for the petitioners. [00:00:12] Speaker 00: Mr. Berger for the respondent. [00:00:23] Speaker 05: Good morning, Your Honors. [00:00:25] Speaker 05: Jason Torszynski on behalf of the New York and Tennessee Republican parties. [00:00:29] Speaker 05: May it please the Court? [00:00:31] Speaker 05: We're here today because the Securities and Exchange Commission enacted a regulation that exceeds the statutory authority given to it by Congress. [00:00:39] Speaker 05: In addition to exceeding the statutory authority given to it by Congress, the rule also violates the Constitution. [00:00:45] Speaker 05: But we're before you today because the SEC convinced the District Court to ignore the plain language of the statute and to dismiss the case for lack of subject matter jurisdiction. [00:00:54] Speaker 05: The normal default rule in this circuit is that challenges to agency action are brought in the district court, and that is where this case belongs. [00:01:02] Speaker 05: The sole case on which the SEC relies to rebut this rule has never been extended to the Advisors Act, and this court should not do so here. [00:01:17] Speaker 02: At page 19 of the commission's brief, they cite a case called Goldstein versus SEC? [00:01:24] Speaker 02: Yes, Your Honor. [00:01:28] Speaker 02: Yeah. [00:01:28] Speaker 02: The jurisdiction issue was briefed in that case, and yet we considered it an order and heard it on appellate review. [00:01:41] Speaker 05: That's true, Your Honor. [00:01:43] Speaker 05: This court did hear Goldstein? [00:01:44] Speaker 05: Right. [00:01:45] Speaker 02: Isn't that the same? [00:01:46] Speaker 02: It's section 213. [00:01:47] Speaker 05: That's right. [00:01:48] Speaker 05: The court did hear Goldstein, but in the decision, there was no discussion or analysis. [00:01:52] Speaker 02: But it was fully briefed, and courts have obligations to assure themselves of their own jurisdiction. [00:01:57] Speaker 05: That's true, but this court has told us in American Portland Cement that when jurisdictional issues aren't addressed by the court, that those decisions aren't presidential. [00:02:06] Speaker 05: So, yes, the court did hear a petition reviewing a regulation directly under ADV 13 in Goldstein, but there was no discussion or analysis in the decision as to the reasons as a result. [00:02:18] Speaker 01: Mr. Tartusky, why is an investment company really very squarely on point here? [00:02:23] Speaker 01: I mean, I know there are cases that have [00:02:25] Speaker 01: seem to go otherwise, and you cite a few in your brief, but this is a statute that was really the companion statute to the statute at issue in investment company. [00:02:35] Speaker 01: It's passed the very same year. [00:02:37] Speaker 01: It's before the Administrative Procedure Act, which creates, you know, pre-enforcement review of rules, and so it's understandable that it's referring to orders, and investment company has been, you know, has been our law for years. [00:02:52] Speaker 05: I think the reason is that investment company doesn't control because the Investment Advisors Act differs in three significant ways from the Bank Holding Company Act. [00:03:00] Speaker 05: First, the Advisors Act repeatedly differentiates the Commission's authority to act by rules and regulations from its authority to act by orders. [00:03:08] Speaker 05: For example, 203A sub C, 205E or 210A. [00:03:13] Speaker 05: And in 203A sub C actually says the commission may permit registration by rule or regulation upon its own motion or by order upon application. [00:03:24] Speaker 05: The Advisors Act includes extensive language that would be superfluous if you read orders to mean regulations in all cases. [00:03:32] Speaker 05: And the Advisors Act makes clear that orders follows an adjudicatory process. [00:03:36] Speaker 05: By contrast, in the Bank Holding Company Act, there's no distinction or even the [00:03:42] Speaker 05: The Act consistently uses the phrase orders or regulations consistently throughout the Bank Holding Company Act. [00:03:50] Speaker 05: The phrase orders or regulations never appears in the same way in the Investment Advisors Act. [00:03:55] Speaker 05: So Congress might have passed them at the same. [00:03:57] Speaker 01: But doesn't that strengthen the argument against you that even though the Bank Holding Company Act uses orders and regulations and it uses orders only in the jurisdictional provision, the jurisdictional provision is understood to also cover rules? [00:04:09] Speaker 05: But the structures of the two acts are very different. [00:04:12] Speaker 05: In the Bank Holding Company Act, you know, orders and regulations are used interchangeably throughout the Act. [00:04:19] Speaker 05: In the Investment Advisors Act, they're not. [00:04:21] Speaker 05: For example, you know, in 202A, it's ADB 15 USC, ADB 2. [00:04:28] Speaker 05: You know, there are certain things that the commission can only do by order or regulation, and there are certain things that it can do, sorry, by rule or regulation, and there are certain things that it's only entitled to do by orders. [00:04:38] Speaker 05: And the other important distinction is in 2 USC 80B 11, [00:04:45] Speaker 05: The statute itself distinguishes between rulemakings and then orders that happen after notice and opportunity for hearing. [00:04:55] Speaker 05: In the Bank Holding Company Act, by contrast, the heading in 12 USC 1844 actually says orders or regulations and sort of treats them the same. [00:05:06] Speaker 05: It is, in fact, the text of the Advisors Act that treats them differently. [00:05:09] Speaker 01: Now if we rule against you on that ground, and if we were to find no kind of equitable tolling, I notice you in your complaint you cite 1331. [00:05:19] Speaker 01: Do you have an independent basis for district court jurisdiction, given that you're raising a First Amendment claim? [00:05:26] Speaker 01: And if so, can you tell us a little bit about that? [00:05:31] Speaker 05: Sure. [00:05:32] Speaker 05: Our First Amendment claim is that this rule essentially chills speech by harming the First Amendment rights of the political parties and its members. [00:05:40] Speaker 05: It would be probably general subject matter jurisdiction of the district courts. [00:05:44] Speaker 05: It would be an independent basis for relief. [00:05:46] Speaker 05: But because we're challenging the rulemaking, we're not in an enforcement context. [00:05:52] Speaker 05: We're seeking to be heard in front of the district court under the Administrative Procedure Act because we're bringing a facial challenge to the regulation. [00:06:00] Speaker 01: So you don't think you have a pre-enforcement challenge separately because you're trying to challenge the rulemaking. [00:06:07] Speaker 05: Your Honor, I think we phrase this as a facial challenge to the regulation. [00:06:11] Speaker 05: I guess we could argue a pre-enforcement challenge as well if that need erodes. [00:06:18] Speaker 03: We have case law that says that if there's subject matter jurisdiction, if you're wrong in this position, you can't take an alternative route to 1331. [00:06:26] Speaker 03: You've got to challenge it as the statute requires. [00:06:29] Speaker 03: So if we read orders to include this kind of a challenge, you're out of time. [00:06:33] Speaker 03: You don't have a 1331 option. [00:06:36] Speaker 05: That is true, Your Honor. [00:06:37] Speaker 05: And the only way then to challenge this rule would be for somebody to challenge it in an enforcement proceeding. [00:06:42] Speaker 05: I know the Commission has offered an alternative route, which is, oh, well, file a petition for reconsideration with us. [00:06:47] Speaker 05: And after however long it takes us to review that petition for reconsideration, then you could come back to court if we deny your petition for reconsideration when the agency has already said over and over again they don't think that anything's changed since they've issued this rule. [00:07:01] Speaker 05: But in that circumstance, Your Honor, we would be back before you [00:07:04] Speaker 05: in a situation where the only thing we could challenge was their grounds for denial of that petition, as this Court has made clear in numerous APA cases involving petitions for rulemakings. [00:07:14] Speaker 05: So if we are not able to be heard before the District Court, with the exception of someone challenging this in an actual enforcement action, it would be very difficult for any plaintiff to challenge this regulation. [00:07:26] Speaker 05: Except in an enforcement action. [00:07:27] Speaker 05: Except in an enforcement action. [00:07:29] Speaker 05: But, Your Honor, this is also the First Amendment context where you're not supposed to have to violate the rule in order to bring a challenge to the rule. [00:07:37] Speaker 03: Where do we have case law that says that? [00:07:40] Speaker 03: The Supreme Court, on numerous occasions, I mean, just, I mean... In the administrative law context, that's not my understanding. [00:07:47] Speaker 03: That's true in the administrative law context. [00:07:49] Speaker 03: I mean, you used to have some case law, like Aslan and others, where we [00:07:55] Speaker 03: For a short period of time, we said if you're talking about the authority of the agency, you can bypass the normal route. [00:08:02] Speaker 03: But we've long since abandoned that. [00:08:04] Speaker 05: That is true, Your Honor. [00:08:07] Speaker 03: So what am I supposed to shrug my shoulders and say you're stuck to wait for an enforcement action? [00:08:12] Speaker 05: Well, I would hope not, Your Honor. [00:08:13] Speaker 05: I would hope that the Court would recognize, like this Court did in national mining, like this Court did in American Petroleum Institute, that there is a significant difference between the structure of the Bank Holding Company Act and the Investment Advisers Act. [00:08:25] Speaker 03: That's on your original claim, but I'm going to stop there. [00:08:27] Speaker 03: assuming you lose that, then you have to wait for an enforcement action. [00:08:30] Speaker 05: Yes, and you have to – not only that, Your Honor, you have to wait for an enforcement action for somebody who – you know, where the person that is sort of – where the object of the enforcement action is also willing to fight it rather than settle with the commission. [00:08:43] Speaker 05: And obviously, you know, these investment advisors often deal with very large numbers, and it's often a lot less expensive to settle than it is to challenge the rules. [00:08:51] Speaker 03: Well, that's kind of the life of existence of dealing with agencies, right? [00:08:55] Speaker 05: That is true. [00:08:56] Speaker 03: I don't know what we can do about that. [00:08:58] Speaker 03: I mean, that's the law. [00:09:00] Speaker 03: If the law is, as my colleague has suggested, that there is a time limit and you missed it, we're not here to correct that. [00:09:10] Speaker 03: That's what the law is. [00:09:11] Speaker 05: That's right, Your Honor. [00:09:12] Speaker 05: We're not asking you to correct it. [00:09:13] Speaker 05: We're asking you to send it back to the district court and reverse her on that point because the Investment Advisors Act is so dramatically different. [00:09:20] Speaker 02: We can't do that. [00:09:22] Speaker 02: to order if, in fact, we have jurisdiction. [00:09:26] Speaker 02: In other words, if your argument is circular, you have to deal with that first. [00:09:30] Speaker 05: No, Your Honor, our argument isn't particularly circular. [00:09:34] Speaker 05: Our argument is that the Administrative Procedures Act makes a distinction. [00:09:38] Speaker 02: You only get a remand if order needs regulation, right? [00:09:42] Speaker 05: That is correct, Your Honor. [00:09:44] Speaker 02: Let me ask you something about the investment company. [00:09:46] Speaker 02: I know you think the statute's different there than the case here, but the court there said that it was the availability of an administrative record for review. [00:09:59] Speaker 02: In other words, if the administrative record is available for review without any more development in the Court of Appeals, I'm sorry, without any more development, [00:10:07] Speaker 02: If you don't need a district court proceeding, if the administrative record can be directly reviewed, then that's the touchstone. [00:10:16] Speaker 02: So what about the record here? [00:10:19] Speaker 02: I didn't see anything in your brief suggesting that the record wasn't suitable. [00:10:23] Speaker 02: In other words, if you had filed on time, we could have reviewed the complete record. [00:10:31] Speaker 02: You don't need district court proceedings to supplement in any way, do you? [00:10:37] Speaker 05: Your Honor, in the proceedings below in the district court here, the district judge actually questioned some of our evidentiary assertions, namely whether we saw, whether the plaintiffs here, you know, saw a reduction in contributions from people that were covered under the rule. [00:10:51] Speaker 05: And so you could, I mean, we don't think it's necessary, but you could see a situation where a district court would find that some additional factual development would actually help to supplement the record on making a final decision below. [00:11:02] Speaker 05: And so [00:11:03] Speaker 01: Wasn't it your duty, I'm not sure if you're referring to the adequacy of the record on standing, but it was your duty to come forward in the district court with enough evidence to support standing. [00:11:13] Speaker 01: Can you address why under our precedence you have standing when nobody that's before the court is a directly regulated party? [00:11:22] Speaker 05: Your Honor, because this regulation goes directly at the political party's ability to associate with its own members. [00:11:29] Speaker 05: And so as a result, having an individual investment advisor in front of the court was not necessary under this court's standing precedence because of the associational standing rules. [00:11:38] Speaker 05: In addition, we also have in the record affidavits from [00:11:43] Speaker 05: an affidavit from Senator Tracy who had two identified investment advisors, one of whom only gave him up to the de minimis contribution limit and one of whom sought a refund down to the de minimis contribution limit because they couldn't give to him because of this rule. [00:11:58] Speaker 01: So McManus doesn't have a declaration before the court. [00:12:02] Speaker 01: It seems like you're still at one remove from what the statute is actually regulating. [00:12:07] Speaker 01: It's just unclear whether we can rely on what you've put in. [00:12:12] Speaker 05: Your honor, I believe you can. [00:12:13] Speaker 05: I mean, the rule itself acknowledges that it's going to diminish the ability of people to make contributions. [00:12:19] Speaker 05: And this court, both in taxpayers without representation v. Reagan and in the lower court in Buckley v. Valeo, or in the in-bomb decision of Buckley v. Valeo, found standing for parties that were [00:12:30] Speaker 05: that had a demonstration that showed that they were going to have reduced contributions as a result of government action. [00:12:37] Speaker 05: In Buckley v. Valeo, it was the New York Civil Liberties Union who, I mean, their whole claim was, we think people are going to give less to us if they have to be disclosed. [00:12:43] Speaker 05: It wasn't even that they couldn't give to us. [00:12:45] Speaker 05: And this court found standing for the New York Civil Liberties Union. [00:12:48] Speaker 05: And taxpayers without representation v. Reagan, this court found standing because [00:12:54] Speaker 05: They said, you know, it's obvious that the rule will essentially diminish the ability of this organization to collect contributions and essentially fulfill its mission. [00:13:03] Speaker 05: And you have the same thing with Republican parties. [00:13:05] Speaker 05: As the Supreme Court has acknowledged, one of the fundamental functions of political parties is pooling resources so as to achieve its political purposes. [00:13:12] Speaker 05: And that was in Colorado Republican. [00:13:14] Speaker 05: So I think there's, I think we have more than enough in the record to support standing. [00:13:17] Speaker 01: Does it make any difference here that, in effect, this rule is responding to a collective action problem? [00:13:22] Speaker 01: That the good investment advisors, the ones who will get the contracts based on their competitive merit in the market, want this rule because they don't want to have to throw away money contributing to the people who their less qualified competitors will contribute to. [00:13:37] Speaker 01: And so in a sense, you're not holding back anybody who has a legitimate interest, actually, in giving. [00:13:44] Speaker 05: Your Honor, I think that's actually not quite the way I would view this case. [00:13:50] Speaker 05: For example, there's an application pending right now in front of the SEC for an exemption under this rule where someone who used to work with now Governor Bruce Rauner in his prior life actually as an investment advisor [00:14:00] Speaker 05: made a contribution to his campaign. [00:14:02] Speaker 05: And is that a firm that does business with the state of Illinois and made a contribution not realizing that this rule covered him? [00:14:07] Speaker 05: And there you have a situation where, I mean, they live in the same neighborhood. [00:14:11] Speaker 05: It's a personal friendship. [00:14:12] Speaker 05: And that's why the guy is clear from even the record in front of the SEC that that's why the guy made the contribution. [00:14:17] Speaker 05: Yet because of this rule that is so broad and so essentially prophylaxis upon prophylaxis, that the commission has just flat said, if you're in this industry, we're going to limit your First Amendment rights. [00:14:27] Speaker 05: And that's why we think that this rule should be struck down by the court. [00:14:30] Speaker 02: Thank you. [00:14:54] Speaker 04: Good morning, Your Honors. [00:14:55] Speaker 04: Jeff Berger for the Securities and Exchange Commission. [00:14:58] Speaker 04: May it please the Court, this challenge to the Commission's pay-to-play rule has finally reached the right forum, but this Court lacks jurisdiction because petitioners have arrived more than four years too late and they do not have standing. [00:15:10] Speaker 04: As such, this Court should not reach the merits. [00:15:13] Speaker 04: Let me go right to ICI. [00:15:15] Speaker 04: ICI is directly on point here. [00:15:18] Speaker 04: The Bank Holding Company Act, Section 9, 12 U.S.C. [00:15:22] Speaker 04: 1848 is nearly identical to Section 213. [00:15:24] Speaker 04: The main difference is that in ICI, the time limit was 30 days rather than 60 days, but other than that, they're almost word for word the same. [00:15:32] Speaker 04: And ISAT is controlling here. [00:15:36] Speaker 04: It has been applied by this court consistently, which has construed the term order when it appears in the special review statute to include challenges to regulations. [00:15:47] Speaker 01: Mr. Berger, is it not concerning that we have here First Amendment rights of a high order and a very short limitations period, 60 days, and so there's, even though there's potential chill, there's really very, very narrow opportunity to challenge it. [00:16:06] Speaker 01: Do you see, you know, along the same lines as what I was asking your opponent, do you see any opportunity here to go into federal court under 1331 and just bring an injunctive action? [00:16:17] Speaker 04: Let me answer that a couple different ways. [00:16:21] Speaker 04: A few different answers. [00:16:23] Speaker 04: I mean, the first is this court hasn't hesitated to apply the 60-day rule when there's constitutional issues, so that alone... First Amendment issues? [00:16:32] Speaker 04: I do believe some of the cases weren't First Amendment issues, and I take that. [00:16:38] Speaker 01: Okay. [00:16:39] Speaker 01: I'd be interested in citations if you have them. [00:16:41] Speaker 04: There's two in the brief, and I do think those are not First Amendment cases. [00:16:45] Speaker 04: So you're right. [00:16:45] Speaker 04: Those are constitutional cases, but not First Amendment cases. [00:16:50] Speaker 04: But as for 1331, I mean, this Court has said that the jurisdiction is exclusive. [00:16:55] Speaker 04: So if the special review statute funnels challenges for regulations to this Court, that ends the inquiry. [00:17:01] Speaker 04: I mean, that has been this Court's law. [00:17:03] Speaker 04: Well, it was discussed in ICI, and it was certainly strongly reaffirmed and tracked. [00:17:08] Speaker 04: That's an acronym. [00:17:09] Speaker 04: I apologize. [00:17:09] Speaker 04: I can't remember. [00:17:10] Speaker 04: The name is TRAC versus FCC. [00:17:15] Speaker 04: But I don't think the constitutional component would be, or the First Amendment aspect would be a limitation or a reason to not apply the 60-day rule. [00:17:26] Speaker 04: I'd also mention that even if for some reason this court were to consider diverging from precedent and [00:17:33] Speaker 04: using some equitable tolling doctor or something like that. [00:17:36] Speaker 04: This isn't a case where these particular petitioners filed on the 63rd day. [00:17:40] Speaker 04: They filed in 2014. [00:17:41] Speaker 04: This is a 2010 rule. [00:17:44] Speaker 04: You know, they suggest in their brief that they needed to know the full effect of the rule, but this is a facial challenge. [00:17:49] Speaker 04: It's hard to really understand what it is about the rule that couldn't have been known in 2010 [00:17:55] Speaker 04: but as known in 2014, the rule was passed in July 2010 during an election cycle, not a presidential cycle, but an election cycle, and 2012 came and went again without any challenge to this rule. [00:18:09] Speaker 04: So four years is an awful long time. [00:18:11] Speaker 04: I'd also just mention that I don't think folks have had difficulties, and I shouldn't use folks, it's a little too colloquial, I apologize, but folks challenging rules have not had difficulty, particularly challenging commission rules, [00:18:22] Speaker 04: have not had difficulty meeting the 60-day rule, including when First Amendment issues are at stake. [00:18:28] Speaker 04: API is an example. [00:18:30] Speaker 04: Now, the court in API dealt with a different sort of statute, but I think the operative point there, and it's my understanding that the petitioners in that case sought review of that rule, which did have First Amendment implications within 60 days. [00:18:43] Speaker 04: I just don't think this has been a problem for people trying to challenge rules. [00:18:47] Speaker 04: particularly when the First Amendment is involved, given the sensitivity of the rights under the First Amendment. [00:18:55] Speaker 04: If I could also just mention one other thing about sort of foreclosing all review, or the idea this is a little bit what Judge Edwards was asking about, the enforcement or ability to challenge this. [00:19:09] Speaker 04: The idea that applying the 60 days here will somehow insulate this rule from all challenge simply is not correct. [00:19:16] Speaker 04: A challenge could be raised on an enforcement – in an appeal from an enforcement action. [00:19:22] Speaker 04: It could also be challenged in an appeal from an application for an exemption. [00:19:26] Speaker 04: As my friend mentioned, there is an exemptive process. [00:19:30] Speaker 01: I was a little curious to see that in an area that touches on the First Amendment, that it seems like this very discretionary exemption, and I wasn't sure that that made it better, or maybe even made it worse, given the discretion on the part of the commission. [00:19:46] Speaker 04: Sure, and there's factors that are listed in the rule, including whether there's been any sort of past violations of the rule, the circumstances of a particular contribution, the circumstances or structure of the particular investment advisor. [00:19:59] Speaker 04: But in addition to a challenge to an example application, there is also the challenge along the lines of the process described in the ICI. [00:20:08] Speaker 04: This isn't something we came up with, the idea of going back to the commission. [00:20:12] Speaker 04: This is something this court talked about in ICI. [00:20:15] Speaker 04: And as far as I can tell, it has reaffirmed that that is a path to go. [00:20:19] Speaker 04: And I think that's a better path to take rather than sort of waiving a 60-day requirement. [00:20:24] Speaker 04: Well, they can also petition for rule. [00:20:27] Speaker 04: Yes. [00:20:28] Speaker 03: Yes, that's correct. [00:20:29] Speaker 03: Your reasons are then subject to review. [00:20:31] Speaker 03: It's a favorable standard for you, but nonetheless, that certainly would be a raise if it's a legitimate First Amendment challenge. [00:20:40] Speaker 03: I can petition for remaking on the grounds of the rule of law and its constitution. [00:20:44] Speaker 04: That's correct. [00:20:44] Speaker 04: That's my understanding as well. [00:20:46] Speaker 04: And I think that is a better course than waiting the 60-day or somehow finding a way to waive the 60-day limitation in section 213. [00:20:55] Speaker 04: And then- Actually, Mike, [00:20:58] Speaker 02: have a better record after a couple of years. [00:21:00] Speaker 02: What's that? [00:21:01] Speaker 02: They might have a better record for their case after a couple of years. [00:21:05] Speaker 04: Sorry, don't mean to interrupt your judge's table. [00:21:06] Speaker 02: That's OK. [00:21:07] Speaker 02: I think you're saying the same thing. [00:21:08] Speaker 04: Yes, I think that's right. [00:21:09] Speaker 04: And I think if there is somehow new information out there about the application of the rule, that's something that should come back to the commission first, as opposed to this court using it as a basis. [00:21:19] Speaker 04: When the commission, for instance, one of the amicus briefs, or the only amicus brief filed in support of petitioners, [00:21:25] Speaker 04: mentioned some new information, but they concede that that information wasn't before the Commission at all. [00:21:31] Speaker 04: The Commission would be kind of difficult to defend a rule based on information that wasn't before it, and if there really is some change, the rule, the better path is to come back to the Commission. [00:21:40] Speaker 01: Delay is generally an ameliorative factor when we're talking about administrative processes and seeing how they unfold, but it's not something that we typically welcome when we're dealing with potential First Amendment harm. [00:21:52] Speaker 01: To that end, I'd actually like you to talk a little bit about the standing question. [00:21:57] Speaker 01: Are these parties that are, you know, the proper parties to challenge this rule? [00:22:03] Speaker 04: I think the issue here and the fundamental problem is that there are no declarations from covered associates or investment advisors, the people directly regulated by the rule. [00:22:13] Speaker 04: We're not trying to make the argument that a political party would never have standing in a hypothetical case. [00:22:19] Speaker 04: The problem is these particular petitioners have not done the work to develop the information needed to support standing. [00:22:28] Speaker 04: They have a few different theories of standing. [00:22:31] Speaker 04: And this problem affects both theories, both the direct standing and the associational standing. [00:22:36] Speaker 04: If you want to talk about the direct standing, [00:22:38] Speaker 04: Again, petitioners are not the direct object of the regulation. [00:22:41] Speaker 04: There's no declarations from covered associates or investment advisors. [00:22:45] Speaker 04: And there's no declarations about anything that says that a particular covered associate or investment advisor, one who would be affected by this rule, wants to give money but can't. [00:22:55] Speaker 04: With regard to the political parties, I think the reason you don't see such a declaration is that the rule doesn't prevent investment advisors or covered associates from making contributions directly to political parties. [00:23:06] Speaker 04: The adopting release says that several times. [00:23:09] Speaker 04: We talked about that in district court as well. [00:23:12] Speaker 04: So this isn't a situation where the rule would even prevent the harm that the political parties are claiming. [00:23:18] Speaker 04: When you get to associational standing, we recognize that that changes things a little, but you're essentially looking through the association to determine whether the members upon whose interests or whose argument [00:23:31] Speaker 04: association or members or entity is advancing, whether they themselves are standing in their own right. [00:23:37] Speaker 04: And the problem is, once again here, that there are no declarations from covered associates or investment advisors. [00:23:42] Speaker 04: My friend spoke a little bit about the Tracy affidavit. [00:23:46] Speaker 04: I mean, there are two, excuse me, I should say covered associates identified in that. [00:23:51] Speaker 04: But there's multiple problems with that declaration in terms of establishing standing. [00:23:55] Speaker 04: One is the chill they're talking about is only subjective chill, which is insufficient for standing. [00:24:01] Speaker 04: Two, there's not enough information in that declaration. [00:24:05] Speaker 04: And again, there's not even the declaration from the investment advisors discussed in the Tracy Declaration. [00:24:10] Speaker 04: Tracy's not an investment advisor. [00:24:11] Speaker 04: Tracy was a state senator running for the United States Congress. [00:24:16] Speaker 04: There's not enough information about whether those individuals even worked for investment advisors who provide services to a Tennessee government entity such that the timeout [00:24:26] Speaker 04: could even serve its role of deterring contributions. [00:24:31] Speaker 04: Not to mention that there is the issue that Jim Tracy – excuse me, I should say Senator Jim Tracy – is not a government official who would be covered by the rules. [00:24:38] Speaker 04: So there are – there's a cascade of problems with that particular declaration that means associational standing hasn't been established either. [00:24:45] Speaker 04: I mean, petitioners in their brief repeatedly say things like standing is self-evident, it's obvious, they sort of talk about going through the academic exercise, but in some ways that's what standing is. [00:24:58] Speaker 04: You have to go through that. [00:24:59] Speaker 04: The Supreme Court made it clear in Summers and probably more obliquely in Lujan that it's not enough to sort of say there's a probability that there's someone out there. [00:25:08] Speaker 04: You have to show that there's someone out there. [00:25:10] Speaker 04: Petitioners, I mentioned in their brief that this is New York. [00:25:14] Speaker 04: We're the New York Republican Party. [00:25:15] Speaker 04: There's lots of investment advisors in New York. [00:25:17] Speaker 04: Well, they need to come up with someone. [00:25:21] Speaker 04: They need to identify someone to give facts upon which the court can hang this facial challenge to the rule. [00:25:26] Speaker 04: So for those reasons, a little long-winded answer, that's why I don't think they've established standing. [00:25:31] Speaker 04: But the issue really here is a lack of information, not that a political party can never have standing. [00:25:38] Speaker 04: If you guys have no further questions on any of the threshold issues, I yield to balance my time. [00:25:47] Speaker 02: Thank you. [00:25:49] Speaker 02: Did Mr. Torchinski have any time left? [00:25:57] Speaker 05: Thank you, Your Honors. [00:25:58] Speaker 05: I just want to address a couple of points. [00:26:00] Speaker 05: One, campaign finance jurisprudence has changed significantly since this rule was issued. [00:26:04] Speaker 05: And in 2014, the Supreme Court decided McCutcheon v. FEC. [00:26:08] Speaker 05: And McCutcheon changed the campaign finance landscape for candidates and party committees in a very, very significant way. [00:26:14] Speaker 05: The Court lifted the aggregate contribution caps. [00:26:17] Speaker 05: prior to the aggregate, when the aggregate contribution caps were in effect on the, and this is where you had about 70 some odd thousand dollars you could give to Paxton party committees over two years and about 40 some odd thousand that you could give to candidates. [00:26:29] Speaker 05: When the caps were in place, people in the investment advisor or financial industry would tend to give to incumbent members of Congress who were not covered by the rule or would give to national party committees. [00:26:41] Speaker 05: With the Supreme Court striking down those aggregate limits in the spring of last year, we brought the challenge to the middle of last year, [00:26:47] Speaker 05: It really changed the world for political parties and non-federal incumbent candidates who were running for federal office because it totally changed the contribution limits that major donor types and wealthy individuals were applicable to. [00:27:00] Speaker 05: So there was a significant intervening change in the campaign finance law here that the SEC is attempting to insulate from review. [00:27:06] Speaker 05: And I see that my time has expired. [00:27:08] Speaker 05: Thank you. [00:27:09] Speaker 05: Case is submitted.