[00:00:01] Speaker 00:
Case number 18-5261, Citizens for Responsibility and Ethics in Washington and L versus Federal Election Commission Crossroad Corrosion Policy Strategies of Power.

[00:00:12] Speaker 00:
Mr. Kirby with the appellate, Mr. McPhail, for the appellate.

[00:00:17] Speaker 05:
Mr. Kirby.

[00:00:19] Speaker 05:
May I please support?

[00:00:20] Speaker 05:
I'd like to reserve two minutes for rebuttal.

[00:00:24] Speaker 05:
Although it started out in a very different place, this case has really boiled down to the question

[00:00:31] Speaker 05:
of whether the district court properly invalidated the FEC's disclosure regulation.

[00:00:38] Speaker 05:
That's all that's left to be decided.

[00:00:39] Speaker 05:
And although the court has abundant briefing, I'm going to focus my oral argument here today on three reasons why the district court should not have invalidated that regulation.

[00:00:53] Speaker 05:
The first reason, simply, is the crew's complaint to the FEC

[00:00:59] Speaker 05:
did not challenge the validity of the regulation, did not fairly, squarely, and forcefully call upon the agency to consider that point, and therefore the issue was waived and they have not exhausted that issue administratively.

[00:01:16] Speaker 05:
And it was error for the court to decide that issue in the absence of a challenge before the agency and an opportunity for the agency to squarely and forcefully address the point.

[00:01:30] Speaker 05:
statute of limitations because it was crew and not the FEC that raised the regulation and because the FEC applied the regulation not to crew but to my client Crossroads GPS and because they applied the regulation giving it the meaning the crew said the regulation had there is no exception to the six-year statute of limitations for judicial review

[00:01:57] Speaker 05:
of this 30-something year old regulation.

[00:02:01] Speaker 05:
And therefore, it was error for the district court to invoke the exception that exists where a regulation is applied to the injury of a litigant.

[00:02:11] Speaker 05:
Thirdly, Cruz claimed that the plain language, the plain and ordinary language of the statute is inconsistent with the regulation, thus depriving the FEC of any Chevron discretion.

[00:02:26] Speaker 05:
to interpret the statute simply overlooks the fact that this is not plain, ordinary language in the statute.

[00:02:35] Speaker 05:
The critical language in the statute, which speaks of being for the purpose of influencing an election, the transfer for that purpose,

[00:02:43] Speaker 05:
comes directly from the pre-Buckley Federal Election Campaign Act.

[00:02:49] Speaker 05:
It was repeatedly construed in Buckley to have a very narrow, specific, and objective meaning rather than a natural and plain meaning.

[00:02:58] Speaker 05:
And Congress then retained that same language, that same language in the 1978 amendments,

[00:03:05] Speaker 05:
which then led to the regulation.

[00:03:07] Speaker 05:
So what we have here is not ordinary plain statutory language.

[00:03:13] Speaker 05:
What we have here is a term of art to be construed in light of the Buckley case, which required the FEC to understand the statute to impose objective, specific, and narrow

[00:03:27] Speaker 03:
I'd like to add a fourth possibility, although it's not one that you're necessarily going to like, and that is that full relief should have been available to crew just on the basis of a correct reading of E-16.

[00:03:44] Speaker 03:
Because I have to say, as I look at E-16, I can find no basis for the interpretation that the OGC adopted.

[00:03:56] Speaker 03:
And that was the basis of your victory at the commission level.

[00:04:03] Speaker 05:
I think you have to start, Your Honor, I will respond to the reading of E-16, but even before that, when you look at what

[00:04:11] Speaker 05:
crew should have perceived and what was available to it, you have to look at what they said to the FEC and what they asked the FEC to do and what relief they asked.

[00:04:21] Speaker 05:
If you look at the FEC complaint followed by crew, it starts off by saying... Before you do that, could you answer, Judge, William's question?

[00:04:30] Speaker 02:
Do you agree... That statute turns on the meaning of the concept... Wait, hold on a second.

[00:04:34] Speaker 02:
I'm sorry.

[00:04:34] Speaker 02:
I believe what he's asking is, should you have lost on a correct reading of the regulation anyway?

[00:04:41] Speaker 02:
of the regulation.

[00:04:42] Speaker 05:
That's right.

[00:04:43] Speaker 05:
No.

[00:04:44] Speaker 05:
The regulation clearly at least can be read the way the agency read it.

[00:04:50] Speaker 05:
It's the way the crew read it when they described it in their complaint.

[00:04:54] Speaker 05:
And it's a correct reading of the regulation.

[00:04:57] Speaker 03:
I mean, it essentially requires a report of a contribution made for the purpose of furthering the reported independent expenditure.

[00:05:06] Speaker 03:
That's correct.

[00:05:07] Speaker 03:
Six.

[00:05:08] Speaker 03:
Then if you work up in E1,

[00:05:12] Speaker 03:
You get to three, which talks about the exact language.

[00:05:26] Speaker 03:
The amount date and purpose of each expenditure.

[00:05:30] Speaker 03:
So at the stage of one, three, we have each expenditure to be identified.

[00:05:37] Speaker 03:
And then all the other ones, all the successive subparagraphs, appear to refer back to that.

[00:05:44] Speaker 03:
So it would seem that all one needs is that an expenditure be made for the purpose of advancing an expenditure as identified and listed under three.

[00:05:59] Speaker 05:
Crossroads reported its expenditures, Your Honor.

[00:06:01] Speaker 05:
It reported each of it.

[00:06:02] Speaker 05:
My client, Crossroads, reported

[00:06:05] Speaker 05:
each of its expenditures, the money that it spent for express advocacy, that's what an expenditure is, we reported.

[00:06:12] Speaker 05:
The issue then is did we have to report contributions that we received for the purpose of making those specific express expenditures and the answer is there were not.

[00:06:25] Speaker 03:
reading of the statute evidently endorsed, although based on a decision that isn't disclosed to us.

[00:06:34] Speaker 03:
Your reading of six is that it requires that the, not simply that the donor have the purpose of furthering Crossroads program of independent expenditures of which it had seen samples,

[00:06:53] Speaker 03:
but that it approved the very one that you were the subject of interest here.

[00:07:03] Speaker 05:
That's the way that regulation has been understood since dirt.

[00:07:08] Speaker 05:
I don't think crew challenged that understanding of that regulation.

[00:07:12] Speaker 03:
Well, it certainly did claim multiple times in its administrative complaint that the non-disclosure by crossroads was a violation of, it referred more broadly to 10-1 rather than, I think it's 10, yeah, 10-1 rather than particular subsections of 10-1, but it seems to me a

[00:07:41] Speaker 03:
natural reading of that would be to encompass subsection six.

[00:07:46] Speaker 05:
Crossroads in paragraph 16 in this administrative complaint says that the FEC's regulation reflects the FEC's interpretation of the statute.

[00:07:58] Speaker 05:
It drops a footnote and it says we actually think the language might be broader than the statute, but that doesn't go anywhere and you don't present or exhaust an issue on a footnote in a background part of the brief.

[00:08:08] Speaker 05:
But then when they make their further allegations,

[00:08:12] Speaker 05:
that Crossroads has violated the law.

[00:08:15] Speaker 05:
They first use the language of the regulation, which has been understood since forever, to require a tie between a particular contribution and a particular statement.

[00:08:25] Speaker 03:
A tie is one thing, an absolute one-to-one

[00:08:30] Speaker 03:
concrete link of the sort that appears to be what the Commission insists on is quite a different thing.

[00:08:38] Speaker 03:
And it seems to me it has no basis in the language of the regulation naturally understood.

[00:08:44] Speaker 05:
Well, Your Honor, I guess I would say we respectfully disagree.

[00:08:48] Speaker 05:
Of course, you're the judge.

[00:08:49] Speaker 05:
And that gives you a certain advantage in this discussion.

[00:08:51] Speaker 05:
But we do respectfully disagree with that.

[00:08:54] Speaker 05:
Secondly, it doesn't matter here.

[00:08:56] Speaker 05:
Because where that would lead you is to a conclusion

[00:09:00] Speaker 05:
that we should have had to disclose something.

[00:09:03] Speaker 05:
But that is all out of this case.

[00:09:05] Speaker 05:
After the district court decision.

[00:09:07] Speaker 03:
Well, that's an interesting question.

[00:09:10] Speaker 03:
Proof has conceded.

[00:09:11] Speaker 03:
3111E protects you from sanctions who acted on the basis of regulations.

[00:09:19] Speaker 03:
And let's assume you did.

[00:09:23] Speaker 03:
acting on the basis of a particular interpretation of a regulation might be different.

[00:09:27] Speaker 03:
But anyway, the commission certainly appealed or applied 3011E to you.

[00:09:36] Speaker 03:
Is it a sanction to order you to disclose information which, by hypothesis, I know you object to a hypothesis, you ought to have disclosed?

[00:09:46] Speaker 05:
I don't think you have to even go there, Your Honor, for crew to try to force us to disclose something.

[00:09:53] Speaker 05:
They have to challenge the FEC's second dismissal of the administrative complaint that occurred after the district court judgment.

[00:10:01] Speaker 05:
They didn't do that within the time frame available.

[00:10:04] Speaker 05:
They now are no longer able to challenge that dismissal.

[00:10:08] Speaker 05:
Those issues have been dismissed.

[00:10:10] Speaker 05:
They're over.

[00:10:11] Speaker 05:
They're gone.

[00:10:11] Speaker 05:
They're dead.

[00:10:12] Speaker 05:
And CREW acknowledges that in its brief.

[00:10:15] Speaker 05:
All we have left here is an APA facial ruling that the regulation itself is invalid.

[00:10:24] Speaker 05:
And it's that.

[00:10:25] Speaker 03:
You say that's all we have, but we're operating in a context where we get to the validity of the regulation only because it's the regulation under a particular interpretation that inflicts an injury on crew, right?

[00:10:45] Speaker 05:
Well, if we get there, I don't think we do, but that's their theory, yes.

[00:10:49] Speaker 03:
If it's the case that it's only a misinterpretation of the regulation that gets us to this injury on crew, then it seems to me that basis for judicial invalidation of the regulation drops out.

[00:11:07] Speaker 05:
And if the basis for invalidating the regulation drops out, the regulation shouldn't be invalidated, Your Honor.

[00:11:11] Speaker 05:
That's the problem.

[00:11:13] Speaker 03:
They are no longer here seeking... Perhaps so.

[00:11:18] Speaker 05:
They are no longer seeking disclosure from us.

[00:11:20] Speaker 02:
They can seek disclosure from us.

[00:11:21] Speaker 02:
If we said that on the basis that Judge Williams is suggesting, then back in action would be a regulation interpreted the way Judge Williams is interpreting it in a way that you don't agree with, correct?

[00:11:34] Speaker 02:
You don't agree that

[00:11:38] Speaker 02:
requirement of the link to a specific reported expenditure should be dropped out.

[00:11:44] Speaker 02:
Judge Williams is saying that the regulation should be interpreted that way.

[00:11:48] Speaker 02:
So you would not gain anything if we accepted Judge Williams' position, is that right?

[00:11:52] Speaker 05:
we would not gain if you accepted their decision, but Judge Williams said the regulation is invalid on its face.

[00:11:58] Speaker 05:
That's the judgment that's under review here.

[00:12:00] Speaker 05:
Excuse me.

[00:12:01] Speaker 05:
No, I didn't say that.

[00:12:02] Speaker 05:
I'm sorry.

[00:12:03] Speaker 04:
Heaven forbid, Your Honor, I was confusing you with the district court judge, and that's something I should... No one is arguing that the regulation should be construed in a way other than the way you're understanding it.

[00:12:16] Speaker 05:
That's what my understanding is, that everyone accepted the way the regulation had been construed by the FEC since the beginning.

[00:12:24] Speaker 05:
And the issue then became, did the fact, initially the issue was claimed by crew, the fact showed that precisely that kind of exact link had occurred.

[00:12:35] Speaker 05:
Then when the FEC said no, and therefore the regulation hasn't been violated, and therefore the statute hasn't been violated, because this is how we interpret the statute, crew went to court.

[00:12:46] Speaker 05:
who went to court, and it sort of morphed, but through their district court pleadings, they ended up claiming, among other things, that the regulation perhaps had been improperly construed by the FEC.

[00:13:00] Speaker 05:
But the way they presented their claim to the FEC was my client, Crossroads, had reported specific independent expenditures.

[00:13:12] Speaker 05:
According to the press,

[00:13:13] Speaker 05:
My client Crossroads had received money for the specific purpose of funding those specific independent expenditures and therefore my client Crossroads had violated the regulation and with it the two underlying provisions of the statute.

[00:13:29] Speaker 05:
And the FEC's response was, no, the facts simply don't bear it out.

[00:13:34] Speaker 05:
And then we have Crossroads, excuse me, group in court and they're saying to the district judge,

[00:13:43] Speaker 05:
we want to invalidate this regulation even though we never challenged this validity before the agency and we want to do it because the agency has applied this regulation to our detriment even though the regulation applied it at their invitation and giving it the construction that they asked for.

[00:14:02] Speaker 05:
I see by the way that I'm going to my rebuttal time.

[00:14:06] Speaker 03:
Let's assume that no one questioned

[00:14:09] Speaker 03:
the FEC reading of E-16.

[00:14:13] Speaker 03:
That's entirely true, but anyway, let's assume it.

[00:14:16] Speaker 03:
It's still a case that Krew and you were only before the district court in order to

[00:14:25] Speaker 03:
assess the validity of the FEC action in response to the crew complaint, right?

[00:14:34] Speaker 03:
Well, no.

[00:14:35] Speaker 03:
And we get to that the, certainly the court would get to the validity of the regulation only on the justification that

[00:14:51] Speaker 03:
it's necessary to resolve this complaint.

[00:14:53] Speaker 03:
I suppose it isn't necessary to resolve this complaint.

[00:14:56] Speaker 03:
I suppose it's completely unnecessary.

[00:15:00] Speaker 05:
Pardon me for my cough here, Your Honor, but no, we were before the Court on two claims.

[00:15:06] Speaker 05:
One, a FECA claim that the dismissal was wrong, and two, an APA type claim that the regulation was invalid.

[00:15:13] Speaker 05:
And it's that claim that led to this ruling

[00:15:18] Speaker 05:
that is now really in dispute.

[00:15:20] Speaker 05:
The issue of whether the FEC complaint was properly dismissed is out of the case.

[00:15:26] Speaker 05:
We're now left simply with their APA account challenging the regulation facially, even though there's a six-year statute of limitations.

[00:15:34] Speaker 03:
Well, that's from saying that you have the statute or bar, and there's a way around that under standard cases of this circuit, I assume elsewhere.

[00:15:46] Speaker 03:
where it's necessary to consider the validity of the regulation in order to resolve a specific complaint.

[00:15:57] Speaker 03:
But that disappears if the regulation has been misinterpreted.

[00:16:03] Speaker 05:
The way this Court has gotten around the statute of limitations, I don't mean any majority since there, but the exception that has been carved out has been

[00:16:12] Speaker 05:
where the agency reached out and applied a regulation to the injury of a litigant.

[00:16:19] Speaker 05:
And the litigant says, the professor of the crew is walking down the street.

[00:16:23] Speaker 05:
The FEC says, this regulation lets me take your hat.

[00:16:27] Speaker 05:
They say, Congress never authorized you to take my hat.

[00:16:30] Speaker 05:
FEC says, well, it's an old regulation.

[00:16:32] Speaker 05:
The statute is run.

[00:16:33] Speaker 03:
They say, we always can say Congress never authorized that.

[00:16:37] Speaker 03:
I think it's true that the cases generally, perhaps universally, have involved

[00:16:42] Speaker 03:
the application against a party in order to push it around, but it was applied against crew here to prevent crew from getting relief, otherwise crew would have been entitled to it.

[00:16:55] Speaker 05:
It was provided, it was applied just the way crews asked for it.

[00:16:59] Speaker 05:
If this is allowed, think for example of all the environmental regulations where parties can simply file a complaint saying a regulation has been violated, mumble some facts,

[00:17:12] Speaker 05:
They lose, and then they go to court and say, we want judicial review of that regulation, even though the statute is long since run, because they applied the regulation.

[00:17:22] Speaker 05:
That's not the way it has worked, Your Honor.

[00:17:24] Speaker 05:
It has worked when somebody is reaching out and doing something bad to somebody with a regulation, and they're saying Congress never authorized that.

[00:17:32] Speaker 05:
Here they came into the agency and said- I think yours is a gloss on our cases.

[00:17:37] Speaker 05:
I haven't found any case where a party

[00:17:41] Speaker 05:
has been able to come into an agency, invoke a regulation, specify the way they want to interpret it, the agency applies it that way, finds they lose on the facts, and then they're given an exemption from the statute of limitations.

[00:17:53] Speaker 05:
If they have such a case, I don't think they disclose it to us in a brief.

[00:17:58] Speaker 05:
I'm not aware of it.

[00:17:59] Speaker 05:
And I think to allow that would just enormously expand the opportunity for attacking regulations basically facially

[00:18:08] Speaker 05:
without regard for the statute of limitations that Congress has established.

[00:18:13] Speaker 05:
And for that reason, as well as the other reasons I mentioned at the beginning of my argument, Your Honor.

[00:18:18] Speaker 04:
Can I just, before you sit down, so let's just assume, I know you have your threshold arguments about why we should never get to the merits, but let's just, for purposes of this, just assume that we get past those arguments, including the statute of limitations one.

[00:18:29] Speaker 04:
I just want to make sure I understand your argument on the merits, on the construction of C-1.

[00:18:35] Speaker 04:
So when you look at the words of C-1,

[00:18:37] Speaker 04:
What's your argument that under the words of C-1, there isn't a requirement to disclose the person, date, and amount?

[00:18:51] Speaker 05:
Only of a contribution.

[00:18:53] Speaker 05:
And a contribution then is defined as a transfer, let's see if I can find the language here, for the purpose of influencing an election.

[00:19:03] Speaker 05:
That language in Buckley is construed very narrowly.

[00:19:06] Speaker 05:
It's got to be an objective test.

[00:19:08] Speaker 05:
It's got to be no question that it's electoral in nature.

[00:19:11] Speaker 05:
It boils down to it's got to be a contribution directly tied to express advocacy.

[00:19:18] Speaker 05:
And that's what happened if you look at the FEC's explanation of this regulation.

[00:19:22] Speaker 02:
But I don't understand where that... The statute defines contribution.

[00:19:24] Speaker 02:
It doesn't define it the way you... Post-Buckley, it defines it as for the purposes of influencing an election.

[00:19:32] Speaker 02:
It defines it that way and that... I'm sorry.

[00:19:33] Speaker 02:
It doesn't define it the way you're defining it.

[00:19:35] Speaker 05:
No, it does.

[00:19:36] Speaker 05:
Well, it doesn't.

[00:19:37] Speaker 05:
But that language comes from the pre-Buckley FICA statute, which Buckley repeatedly said,

[00:19:45] Speaker 05:
is over broad, over vague, and can't stand in this area of regulating core First Amendment activity unless we narrowly construe it.

[00:19:53] Speaker 05:
Buckley said that in 76.

[00:19:54] Speaker 05:
In 78, Congress passes this amendment, retaining that language that Buckley has narrowly construed.

[00:20:03] Speaker 05:
In 80, when the FEC puts out the regulation,

[00:20:07] Speaker 05:
They say, we're doing the regulation this way because that's what the amendment says.

[00:20:13] Speaker 05:
Just look at the language, because everybody remembered Buckley at that point.

[00:20:16] Speaker 05:
And they sent that up to Congress.

[00:20:18] Speaker 05:
Congress didn't object.

[00:20:20] Speaker 05:
They sent the forms up to Congress.

[00:20:22] Speaker 02:
So the Supreme Court in 1986 and the Massachusetts Citizen for Life apparently forgot your interpretation, is that what you're saying?

[00:20:35] Speaker 05:
Far be it for me to say that the Supreme Court merely forgets anything, anywhere.

[00:20:39] Speaker 05:
But that was a passing comment.

[00:20:42] Speaker 02:
It wasn't passing.

[00:20:43] Speaker 02:
It was, I mean, I understand the idea of dicta that's drive-by, that is, where it has no application to the case.

[00:20:51] Speaker 02:
But the Supreme Court's statement was its defense of its own opinion against an FEC claim

[00:20:58] Speaker 02:
Finally, the FEC maintains that the inapplicability of Section 441B to MFCFL would open the door to massive undisclosed political spending.

[00:21:09] Speaker 02:
The Court says, we see no such danger because MCFL will be required to identify all contributors who annually provide in the aggregate $200 in funds intended to influence elections.

[00:21:22] Speaker 05:
Well, that's right.

[00:21:23] Speaker 05:
And to influence in elections is to be understood in the Buffett sense.

[00:21:27] Speaker 05:
And that means it's got to be an express tie.

[00:21:30] Speaker 05:
to express advocacy.

[00:21:31] Speaker 02:
If it actually meant that, why would it go on in the same sentence to say, and will be bound to identify all persons making contributions over $200 who request that the bunny be used for independent expenditure?

[00:21:45] Speaker 02:
That's clearly making two separate statements, one about influence elections and one about being used for independent expenditure.

[00:21:53] Speaker 05:
I think they used the language twice because this is, as you know, the 78th Amendment

[00:21:58] Speaker 05:
is an inartfully drawn amendment, and it actually has sort of two clauses there.

[00:22:03] Speaker 05:
But it turns out they both turn on what the meaning of contribution is, and they both require under Buckley an express and clear and objective tie to express advocacy.

[00:22:17] Speaker 05:
And that explains all of this.

[00:22:18] Speaker 02:
And that's why... Do you think the opinion of the panel that addressed the stay, which said that you were unable to demonstrate any likelihood of success and interpreted the matter in the way that crew does, also simply forgot the meaning of contributions?

[00:22:36] Speaker 05:
Far be it from me to suggest that the panel forgot anything, Your Honor.

[00:22:40] Speaker 05:
But that was a stay ruling on an emergency basis where we had to pick

[00:22:45] Speaker 05:
trying to get immediate emergency relief, what arguments and what arguments and supportive arguments we could make quickly, succinctly get emergency relief.

[00:22:56] Speaker 05:
And that was their reaction to those arguments.

[00:22:58] Speaker 02:
Well, you think that the panel did not read Judge Howell's district court opinion because it was such an emergency that they couldn't read the district court opinion?

[00:23:08] Speaker 05:
I recognize that that opinion is there.

[00:23:10] Speaker 05:
I recognize that this court is going to look at it and think about what was said there.

[00:23:17] Speaker 05:
On the other hand, if you take a look at the Van Hollen case, which is a predecessor case to this that clearly points

[00:23:23] Speaker 05:
in our direction, there we too, and we should be perhaps making a habit of this, but there we lost a stay effort.

[00:23:30] Speaker 05:
And nonetheless, the panel came out ruling in our favor.

[00:23:34] Speaker 05:
I don't think we are bound by what the Court of Appeals said, what that motion, what that's not a motions panel, the state panel said.

[00:23:42] Speaker 05:
I think it deserves respectful consideration by this court, obviously.

[00:23:47] Speaker 05:
But we're now before this court on full briefing and full argument and full amicus participation and an oral presentation for whatever little good it may have done.

[00:23:57] Speaker 05:
And the issue is now for this court to come through the statute.

[00:24:02] Speaker 04:
I have one follow-up question, which is, so even under your interpretation, I'm not quite sure how you get to a particular independent expenditure.

[00:24:13] Speaker 05:
Because if it's not a particular independent expenditure,

[00:24:16] Speaker 05:
then the linkage issue becomes difficult.

[00:24:20] Speaker 05:
If you look at Buckley between pages 40 and 80, they say each step along the way has to be clear so that people aren't engaging in core speech and later surprised to find themselves in violation of the law.

[00:24:35] Speaker 05:
If you don't know which expenditure, which ad you're talking about,

[00:24:43] Speaker 05:
if you're not linking that particular one, then it's hard to say that you know clearly what the consequences are going to be.

[00:24:51] Speaker 04:
But suppose that it's a situation in which there's 14 pilot ads, and then the contributor just says, I don't care which one.

[00:25:00] Speaker 04:
I'm not worried about that.

[00:25:01] Speaker 04:
They all look perfectly fine to me.

[00:25:04] Speaker 04:
Here's my contribution.

[00:25:06] Speaker 04:
Just do with it what you will.

[00:25:08] Speaker 05:
OK.

[00:25:08] Speaker 05:
You're suggesting where the contributor doesn't specify one,

[00:25:11] Speaker 05:
that specifies a group from which one is selected.

[00:25:14] Speaker 04:
Or doesn't even specify the group.

[00:25:16] Speaker 04:
Just as this kind of thing seems fine to me, this is what I want to contribute to.

[00:25:19] Speaker 05:
There may be a little fuzzy line somewhere.

[00:25:23] Speaker 05:
That's not what's involved in our case here.

[00:25:25] Speaker 04:
But if you have those circumstances, as I understand the regulatory interpretation that is accepted by, to this point, by the parties and by the FEC,

[00:25:39] Speaker 04:
there would be no requirement of disclosure in that situation.

[00:25:42] Speaker 05:
If the person didn't say, I want that ad or that group one from that group of ads, but said, I want something kind of like that, I don't think it's ever been confronted by the IVC.

[00:25:55] Speaker 05:
I don't think this court has to speculate about it.

[00:25:57] Speaker 05:
We would say that wouldn't be enough, but that's just us.

[00:26:01] Speaker 03:
Compose a sentence in ordinary language, a sort of hypothetical, someone being sent to a store to get something or authorized to make an improvement on a house where your narrow construction would be applied.

[00:26:16] Speaker 03:
I just, the concept, providing money for the furtherance of some purpose or project,

[00:26:23] Speaker 03:
is naturally pretty broad.

[00:26:26] Speaker 03:
And someone who said, did you provide the money for that, and they had provided the money for it, although they hadn't spelled out every detail, would be a liar if you said no.

[00:26:37] Speaker 05:
Your Honor, if you get to the, if you get, there's always that little gray area, right?

[00:26:43] Speaker 05:
But if one reads Buckley, and I'm sure the Court has, and Buckley, as it was drawing down, it was squeezing,

[00:26:53] Speaker 05:
this test as far down as it could without having to say we're overturning it.

[00:26:57] Speaker 05:
They demanded, in the express advocacy context, very precise, very narrow, very direct linkages.

[00:27:06] Speaker 05:
We don't have that kind.

[00:27:07] Speaker 05:
And the argument hasn't been to this court that there was a misunderstanding as to the nature of these ads.

[00:27:15] Speaker 05:
That's all dropped out.

[00:27:16] Speaker 05:
All that's before the court right now is simply the

[00:27:23] Speaker 05:
the broader challenge.

[00:27:26] Speaker 05:
And on the broader challenge, they lose women.

[00:27:32] Speaker 02:
All right.

[00:27:32] Speaker 02:
We'll hear from Krueger now.

[00:27:33] Speaker 02:
Thank you.

[00:27:44] Speaker 01:
Good morning, Your Honor.

[00:27:45] Speaker 01:
May it please the Court.

[00:27:47] Speaker 01:
As this Court's questions, I think, this morning demonstrated, the FEC regulation issue here squeezes the Federal Election Campaign Act's disclosure obligations beyond what the plain statutory text can bear.

[00:28:00] Speaker 01:
As this Court read from the MCFL decision, the FECA opposes two distinct disclosure obligations on those who make independent expenditures, which I'll refer to as IEs.

[00:28:10] Speaker 01:
First, to disclose – can you speak a little louder?

[00:28:12] Speaker 01:
Oh, I'm sorry – decisions over $200 received in the calendar year.

[00:28:17] Speaker 01:
and to disclose all contributions over $200 for the purpose of furthering an independent expenditure.

[00:28:25] Speaker 01:
Well, opposing counsel attempts to confuse this issue and bring in arguments that aren't in the brief, saying that the word contribution somehow has been now defined solely as money given toward express reported independent expenditure.

[00:28:38] Speaker 01:
But that's not true.

[00:28:39] Speaker 01:
And the facts of this case demonstrate that.

[00:28:42] Speaker 01:
On remand here, the FEC recognized that all the money that was involved in the underlying administrative proceeding were contributions that should have been disclosed under the FECA.

[00:28:51] Speaker 01:
First, money that was given to crossroads.

[00:28:54] Speaker 01:
that said, I like Josh Mandel, here's three million dollars to help elect him.

[00:29:01] Speaker 01:
And Crossroads knew, instead of an affidavit, it knew that money was being given to it to help it elect Josh Mandel.

[00:29:08] Speaker 01:
The FEC recognized on remand, that is a contribution.

[00:29:11] Speaker 01:
Even if it's not directed to an independent expenditure, or how crossroads will actually use that money to elect Josh Mandel, it was given expressly for the purpose of influencing the election of Josh Mandel.

[00:29:22] Speaker 01:
Crossroads knew that, and in fact used that money for that purpose.

[00:29:26] Speaker 01:
They ran, eventually, IE's in that race, but they also ran election year in communications and did some other activity that's also covered by the FECA's electoral activity.

[00:29:35] Speaker 01:
Secondly, as this court recognized, there were contributions given to Crossroads at a fundraiser.

[00:29:41] Speaker 01:
After the donors watched about 14 example ads, they were asked to give money to help fund those type of ads because the cost of airing those ads was going up.

[00:29:53] Speaker 01:
We understand they did so.

[00:29:54] Speaker 01:
Crossroads had never served, they did not receive money from that.

[00:29:58] Speaker 01:
On remand, the FTC recognized those were not only contributions that should be disclosed and received one,

[00:30:03] Speaker 01:
were further contributions should have been identified under C2C as given for the purpose of furthering an independent expenditure.

[00:30:09] Speaker 01:
Even though there were no facts that they saw one ad they decided to fund, a specific ad, or that there was a set of ads that they said, choose one of those five ads, they saw ads that already aired,

[00:30:21] Speaker 01:
So we'd like that.

[00:30:23] Speaker 01:
Please take our money to make more ads like that in the future.

[00:30:26] Speaker 01:
And then FC recognized the remand.

[00:30:28] Speaker 01:
Those are contributions to be now disclosed under C1, but identified as given for the purpose of furthering an independent expenditure under C2C.

[00:30:36] Speaker 04:
So I didn't understand Crossroads to be disagreeing with anything you said, because I thought the argument that was being made was that might well be true under what we understand a contribution to be to me now.

[00:30:48] Speaker 04:
But that's not what contribution meant at the relevant time.

[00:30:52] Speaker 01:
I don't believe so.

[00:30:53] Speaker 01:
I think that's not, I don't understand the crossroads to be arguing that.

[00:30:56] Speaker 01:
I just across to say that Buckley essentially put constitutional limits on contribution such that any money given in a way that's not expressed at earmarked for one independent expenditure could not be a contribution under the statute.

[00:31:09] Speaker 01:
And that's just not right.

[00:31:10] Speaker 01:
Obviously, FTC and remand recognize that.

[00:31:12] Speaker 01:
Also, I think opposing counsel confuses the discussion of Buckley of independent expenditures, the trigger.

[00:31:18] Speaker 01:
where the court was very strict in limiting that activity to ads that use express advocacy or things that have a similar meaning, versus contributions, which the court said was not vague, and that everyone understood meant money given to candidates, given to political committees, money spent in coordination with candidates,

[00:31:35] Speaker 01:
and money spent at your mark for any political purpose, not independent expenditures.

[00:31:40] Speaker 01:
It just defined that word.

[00:31:41] Speaker 01:
It could have used it.

[00:31:41] Speaker 01:
It did not.

[00:31:42] Speaker 01:
It's at any political purpose.

[00:31:44] Speaker 01:
And the FECA regulates a number of political activities beyond independent expenditures.

[00:31:49] Speaker 01:
Part is in getting out the vote activities, part is in registration activities, election year communications now after FICRA are all regulated political activities.

[00:31:57] Speaker 01:
as even the FC recognized in the rulemaking in the Van Hollen Statition that the word contribution had some influence and impact on money given for election year and communications as well.

[00:32:09] Speaker 01:
So it's not the case that after Buckley that contribution must only be money given for independent expenditures and definitely not the meaning that it has to be given for one particular independent expenditure in the way given.

[00:32:20] Speaker 03:
particularly in light of that, and I suspect you don't want to win on my theory and whether Mr. Kirby wants to lose on it, can you explain to me why E-16, read in a perfectly straightforward manner, would not have required Crossroads to disclose the information that you were seeking?

[00:32:44] Speaker 01:
Well, we did allege below that the facts showed, at least gave reason to believe the regulation had been violated.

[00:32:49] Speaker 01:
The FEC rejected that theory.

[00:32:50] Speaker 01:
If the court were to say that the regulation is unambiguous, so there's no hour deference issue for the FEC, requires all disclosure required by the FECA, which means all questions.

[00:33:04] Speaker 03:
Well, that sort of begs the question in a way that isn't, or presumably should.

[00:33:08] Speaker 03:
But why don't we just look at the regulation as it's written?

[00:33:14] Speaker 03:
Well, your Honor, the regulation has written.

[00:33:16] Speaker 03:
Wouldn't that be a good place to start?

[00:33:18] Speaker 03:
I apologize.

[00:33:18] Speaker 03:
Wouldn't that be a good place to start?

[00:33:20] Speaker 01:
I absolutely agree.

[00:33:21] Speaker 01:
But it does say, money given, contribution given for the purpose of influencing the reported independent expenditure.

[00:33:27] Speaker 01:
So I think any reasonable reading of that would say there has to be reported independent expenditure.

[00:33:33] Speaker 03:
That's interesting.

[00:33:37] Speaker 03:
What about the application of E-1-3 here?

[00:33:43] Speaker 03:
Was that?

[00:33:44] Speaker 01:
My understanding, E-13, I believe, requires the independent expenditure maker to disclose information about the expenditure itself, so where the money was spent.

[00:33:53] Speaker 03:
And those were made, right?

[00:33:56] Speaker 01:
Yes, I believe the process did disclose its expenditures as far as we know.

[00:34:00] Speaker 03:
So that sets up the successive...

[00:34:04] Speaker 03:
subsections of E1, culminating in E16, which asks for, fundamentally, the source of each expenditure.

[00:34:21] Speaker 03:
I grant you it involves all kinds of fascinating interpretations or interpretive questions because of the fungibility of money, but on the facts that you appear to have, it looks pretty direct.

[00:34:40] Speaker 01:
Well, Your Honor, I think here, for example, a Josh Mandel situation.

[00:34:44] Speaker 01:
Crossroads took money to help elect Josh Mandel.

[00:34:47] Speaker 01:
That was a contribution covered by the act.

[00:34:50] Speaker 01:
The act requires that money to be disclosed, regardless of whether that money was ever targeted toward any independent expenditure, regardless of whether Crossroads used that money in the independent expenditure.

[00:35:02] Speaker 01:
The trigger, of course, is running an independent expenditure.

[00:35:04] Speaker 01:
That's what triggers the obligation to disclose.

[00:35:07] Speaker 01:
But the scope that the FECA sets out, then, is crossroads must disclose all contributions over $200 in the calendar year.

[00:35:17] Speaker 01:
If you read the regulations covering that, we would understand that would be a very different situation if the regulation requires disclosure as the FECA sets out.

[00:35:27] Speaker 01:
But we understand that's not the interpretation that FEC gave to it below.

[00:35:31] Speaker 03:
Can you just take me through

[00:35:32] Speaker 03:
the subsections of E1, 3 through 6, and explain why, on the facts of this case, it doesn't cover the Mandel IEs?

[00:35:45] Speaker 01:
Of the regulation?

[00:35:46] Speaker 01:
Yeah, yeah.

[00:35:48] Speaker 01:
Well, start, Your Honor.

[00:35:50] Speaker 03:
You've got it invalidated, but it's worth looking at what it says.

[00:35:55] Speaker 01:
First, it says of E1 and subsection 1, reporting person's name, which would be crossroads, and information about them.

[00:36:03] Speaker 01:
The identification of the person to whom the expenditure was made, so that's who Crossroads paid.

[00:36:11] Speaker 01:
We understand that was, I believe, covered.

[00:36:13] Speaker 01:
The amount, the purpose of each expenditure, so that would be how much the Crossroads spend on an ad.

[00:36:17] Speaker 03:
So you're going to have a bunch of expenditures for a particular EIS.

[00:36:22] Speaker 01:
That's correct, Your Honor.

[00:36:23] Speaker 01:
Then, a statement indicates whether such expenditure was in support of opposition to a candidate.

[00:36:29] Speaker 01:
That tells you who was the candidate referenced and whether it was supporting or opposing.

[00:36:34] Speaker 01:
A verification of the independent expenditure is in fact independent.

[00:36:38] Speaker 01:
A coordinated expenditure would be a contribution under different laws.

[00:36:42] Speaker 01:
And finally, for relevance here, the identification of each person who made a contribution in excess of $200 to the person filing this report, which contribution was made for the purpose of furthering the reported independent expenditure.

[00:36:55] Speaker 01:
The FEC has interpreted that, obviously, here below and under other matters.

[00:36:59] Speaker 01:
It's to the reported, the reporter referring back to the independent expenditure that's been disclosed here.

[00:37:04] Speaker 01:
So it's money given for this independent expenditure.

[00:37:06] Speaker 01:
When Crossroads ran an ad supporting Josh Mandel's, who gave money for that one ad you ran?

[00:37:12] Speaker 01:
So as they said, express link.

[00:37:15] Speaker 01:
So really they had to watch that ad and say, I like that ad, here's money for it.

[00:37:19] Speaker 03:
So that suppose crossroads activity in Ohio had one contributor and one independent expenditure.

[00:37:31] Speaker 03:
And that's all we know.

[00:37:35] Speaker 03:
Would E-16 not require identification of

[00:37:42] Speaker 03:
the donor there?

[00:37:44] Speaker 01:
That very well could in those facts that you're on.

[00:37:46] Speaker 01:
There may be a situation where even on the efficacy test, that might be an express link, but here that wasn't the facts below.

[00:37:53] Speaker 01:
There were multiple donors.

[00:37:55] Speaker 01:
The donation for Josh Mandel was actually a matching challenge, and we know about a million more dollars.

[00:38:00] Speaker 01:
We don't know where that came from.

[00:38:02] Speaker 01:
Maybe one or more donors was going to Josh Mandel, and we know crossroads engage in activity beyond independent expenditures, I believe, in Ohio.

[00:38:10] Speaker 01:
And the statute intends to capture all of that.

[00:38:14] Speaker 01:
So if there's any daylight between the statutory requirements to disclose all contributions over $200 received in the calendar year, or all contributions over $200 to further independent expenditures, regardless of whether they're reported or not, and this regulation, then the regulations inconsistent with the statute.

[00:38:32] Speaker 04:
So when you said that you had made the argument that the regulation was not complied with when you made that argument below, were you saying that the FEC was misconstruing its own regulation, or were you saying that even if you construed the regulation in the way the FEC did, there were disclosures that were required to be made here?

[00:38:51] Speaker 01:
We allege that things are helpful to understand the process here, Your Honor.

[00:38:55] Speaker 01:
To start an efficacy investigation, there's a requirement that you allege facts to show a reasonable leave, which essentially is kind of like a motion to dismiss automatically.

[00:39:03] Speaker 01:
So all we need to allege is facts to show that one could go out and go to an investigation to then prove up a violation.

[00:39:10] Speaker 01:
We thought there were no facts there to at least warn an investigation to ask them, why did you give money?

[00:39:15] Speaker 01:
Was it for this ad?

[00:39:17] Speaker 04:
Was it for this ad?

[00:39:18] Speaker 04:
So in other words, that's buying in to the FEC's interpretation of its regulations.

[00:39:25] Speaker 01:
That's a regulatory violation, you're right, Ron.

[00:39:28] Speaker 01:
We also alleged, of course, they violated the statute.

[00:39:30] Speaker 04:
Yeah, no, I get that.

[00:39:31] Speaker 04:
That's the issue that's before us in abstract terms.

[00:39:33] Speaker 04:
But I just think when you were answering Judge Williams earlier and you talked about the fact that you raised an argument that the regulation wasn't complied with,

[00:39:40] Speaker 04:
As I understood it, it's not that it wasn't complied with because the way Judge Williams is construing the regulation is the way that you construed it.

[00:39:47] Speaker 04:
It's that even if you disagree with the way he's construing it or suggesting it be construed and are agreeing with the way the FEC construed it, then it still was not complied with.

[00:39:57] Speaker 04:
That's the argument that you were making.

[00:39:58] Speaker 01:
We did make that argument that essentially, yes, under the FEC's own interpretation, there were facts to show an investigation was warranted, but as we alleged in the complaints,

[00:40:06] Speaker 01:
There was also separate obligations of the C-1 and C-2C, which we laid out.

[00:40:10] Speaker 01:
So we said the regulation was inconsistent with those.

[00:40:13] Speaker 01:
And I want to address Crossroads' argument that we didn't forcefully raise that issue in the administrative proceeding.

[00:40:21] Speaker 01:
It's saying a very different tune below, where in the administrative proceeding, it said Cruz challenges, quote, obviously a suggestion the commission should disregard the plain language of regulation, unquote, because it was inconsistent with the statutory section we were laying out.

[00:40:32] Speaker 02:
Let me just ask again with respect to Judge Williams' question.

[00:40:36] Speaker 02:
The question of whether it was furthering an expenditure or an independent expenditure, if the facts were close and it's a question of what the motive was, I take it that in addition to that you have a separate string to your bow which was the C1 requirement that has any contribution

[00:41:04] Speaker 02:
regardless of whether it was intended to be furthering.

[00:41:07] Speaker 02:
So on Judge Williams' interpretation, that would not have given you the full result that you got from the district court.

[00:41:15] Speaker 03:
I believe that's correct, though I wasn't sure if you were trying to interpret the... I mean, you'd still have to claim directly under the statute.

[00:41:23] Speaker 01:
Well, in our reading, what happened below was the regulation was applied to dismiss our claim under the statute.

[00:41:28] Speaker 01:
And that's what gave rise to our injury here to challenge that regulation.

[00:41:31] Speaker 02:
And in defense...

[00:41:34] Speaker 02:
Under any theory, the FEC reads the regulation as not applying C-1 at all.

[00:41:41] Speaker 01:
That's what the FEC's position was below in the administrative proceeding.

[00:41:44] Speaker 01:
We recognize in the record when it was adopted... Yes, the General Counsel said it.

[00:41:50] Speaker 01:
Well, in the Federal Register, when they said it's one sentence explaining the amendment, they said this implements both C-1 and C-1.

[00:41:57] Speaker 01:
I understand, but there isn't any way to read the regulation as including C-1.

[00:42:01] Speaker 01:
I don't think there would be any way to read the regulation.

[00:42:03] Speaker 01:
Of course, this is important.

[00:42:04] Speaker 01:
If we were to do so, that would be a very different reading.

[00:42:07] Speaker 01:
I think that would, of course, be setting out the law, what that regulation means.

[00:42:10] Speaker 01:
But I would position it would be very hard to read the regulation to capture C1's requirement to disclose all contributions over $200 in a calendar year.

[00:42:19] Speaker 03:
On the ambiguity that

[00:42:22] Speaker 03:
Mr. Kirby stresses, using language like, for the purpose of furthering independent expenditure, why doesn't that, I'm quoting from C2C, why doesn't that create as much of a problem for you, potentially, if the commission is determined on this path, as the regulatory language?

[00:42:49] Speaker 03:
In other words,

[00:42:51] Speaker 03:
If the Commission is really dedicated to this view, it's going to insist that in order to determine whether it was for the purpose of furthering an independent expenditure, it's got to have a contributor and an independent expenditure and the contributor saying,

[00:43:11] Speaker 03:
I like that ad, run it.

[00:43:13] Speaker 03:
I'll pay for it.

[00:43:14] Speaker 01:
Well, Your Honor, here in remand, that's actually not what happened.

[00:43:17] Speaker 01:
The example of individuals attending a fundraiser, watching example ads and saying, I like this kind of work, here's some money to go do more of that, without saying, here's the one ad to pay for, pay for ad 67, tacking this candidate on this line of attack, merely they saw example ads,

[00:43:35] Speaker 01:
and said, I like that work, here's some money.

[00:43:37] Speaker 01:
And that fact was enough for the FTC and remand to say, those contributions were given for the purpose of furthering an independent expenditure, even if they were not given for the purpose of furthering any particular one, and even if none of the independent expenditures ever actually ran.

[00:43:51] Speaker 01:
So which is the difference in, I apologize, maybe we go over time, if you'll let me finish.

[00:43:58] Speaker 01:
Go ahead.

[00:43:58] Speaker 01:
On the prior statute, you had to report when you made a contribution, even if the IE never actually ran.

[00:44:04] Speaker 01:
So that's the sentiments captured by C2C.

[00:44:07] Speaker 01:
If you give money thinking, I like independent expenditures, I like your work, here's some money to help that work, that money has to be reported whenever the disclosure is triggered, even if there's no tie between that intent and the ad that eventually runs.

[00:44:22] Speaker 04:
Can I see?

[00:44:23] Speaker 04:
Oh, sorry.

[00:44:23] Speaker 04:
Oh, can I ask a question about C1, just to get back to C1 for a second?

[00:44:26] Speaker 04:
So under your interpretation of C1, if you have an entity that does a bunch of stuff and a sliver of what they do is independent expenditures, but they do all kinds of other work too, some of which maybe has nothing to do with campaigns at all, then the way you read C1 is if they spend more than $250 a year on a particular independent expenditure, then C1 requires disclosure of every contributor to the organization.

[00:44:51] Speaker 01:
Contributor, but not donor.

[00:44:52] Speaker 01:
Those are different words.

[00:44:54] Speaker 01:
Yes.

[00:44:54] Speaker 04:
So contributor brings in the statutory definition of contributor, which then ties it to?

[00:45:00] Speaker 01:
Exactly.

[00:45:00] Speaker 01:
And that's why the money given for Josh Mandel was qualified.

[00:45:03] Speaker 01:
That was money given to help that election.

[00:45:05] Speaker 01:
But in the hypothetical crossroads raised, it's somewhere to give money to crossroads to help it build a shelter for puppies.

[00:45:11] Speaker 04:
Now, there's nothing to do with the statutory definition of contribution, so that's a donor.

[00:45:14] Speaker 01:
Exactly.

[00:45:15] Speaker 04:
Yeah.

[00:45:16] Speaker 04:
OK.

[00:45:16] Speaker 04:
Any further questions, Your Honor?

[00:45:19] Speaker 02:
No.

[00:45:19] Speaker 02:
Thank you.

[00:45:20] Speaker 02:
Thank you, Your Honor.

[00:45:21] Speaker 02:
I know you have no time left, but we let each side go over a bit, so I want you to take another minute.

[00:45:26] Speaker 05:
I believe I've said what I think I need to say.

[00:45:29] Speaker 05:
I'd be happy to answer questions.

[00:45:31] Speaker 05:
Otherwise, I submit.

[00:45:33] Speaker 02:
Excellent.

[00:45:34] Speaker 02:
Thank you very much.

[00:45:35] Speaker 02:
We'll take the matter under submission.