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On January 31, 2011, Retired Rear Admiral James Carey, Kelly Eustis and the National Defense Political Action Committee (collectively, “the Plaintiffs”) filed suit against the FEC. The lawsuit sought a declaratory judgment that the contribution limits in 2 U.S.C. §§441a (a)(1)(C) and 441a(a)(3) violate the First Amendment to the extent such laws prohibit a nonconnected political committee from soliciting and accepting unlimited contributions to one bank account designated for independent expenditures, while maintaining a second, separate bank account designated for source- and amount-limited contributions to candidates and their authorized political committees. Plaintiffs also sought injunctive relief enjoining the Commission from enforcing the above-mentioned provisions as applied to Plaintiffs, and concurrently filed a Motion for Preliminary Injunction. On June 14, 2011, the U.S. District Court for the District of Columbia granted the Plaintiff's Motion Preliminary Injunction enjoining the Commission from enforcing the above-referenced provisions of Act.
On August 19, 2011, the United States District Court for the District of Columbia entered a Stipulated Order and Consent Judgment whereby the Commission agreed that it would not enforce 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) against the Plaintiffs with regard to contributions for independent expenditures.
Plaintiff Admiral Carey is the founder and treasurer of National Defense PAC (“NDPAC”). Kelly Eustis is a registered voter who resides in Sacramento, California. NDPAC is a nonconnected political committee registered with the FEC that raises and spends funds to support candidates for federal office who are military veterans and who agree with NDPAC’s goals.
On August 11, 2010, NDPAC submitted an advisory opinion (AO) request to the FEC asking whether, based on court decisions in Citizens United and SpeechNow, and the Commission’s conclusions in AOs 2010-09 (Club for Growth) and 2010-11 (Commonsense Ten), it could raise unlimited contributions from individuals, political committees, corporations and unions for the express purpose of making independent expenditures. Simultaneously, NDPAC would raise additional contributions from individuals and political committees subject to the $5,000 per calendar year contribution limit under 2 U.S.C. §441a(a) in order to make contributions to federal candidates. NDPAC proposed recording and segregating its contributions by type into separate bank accounts. The Commission considered draft responses to the request, but was unable to approve an AO by the required four affirmative votes.
As a result, NDPAC claims that it curtailed its activities during the 2010 election cycle. The committee states that it planned to make independent expenditures targeting several opponents of its endorsed candidates, but the constraints of the $5,000 per year contribution limit prevented it from gathering the necessary resources. NDPAC says it plans to make similar independent expenditures during the 2012 primary and general election periods and claims to have a donor (Mr. Eustis) willing to give $1,300 above the $5,000 statutory limit to fund those expenditures. NDPAC asserts that without the legal authority to solicit unlimited contributions, its speech will be abridged. In addition, the Plaintiffs maintain that NDPAC and Admiral Carey will face a threat of prosecution if they solicit or accept contributions to fund NDPAC’s independent expenditures, and that Mr. Eustis will face a threat of prosecution if he makes contributions above the $5,000 limit to fund NDPAC’s independent expenditures.
The Plaintiffs sought a declaratory judgment from the court that the contribution limits in 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) are unconstitutional as applied to them and to any other supporters who wish to make contributions to NDPAC for its independent expenditures. The Plaintiffs also sought preliminary and permanent injunctions enjoining the FEC from enforcing those provisions against them and against any supporters who wish to make contributions to NDPAC for its independent expenditures.
On June 14, 2011, the U.S. District Court for the District of Columbia granted a limited preliminary injunction to Plaintiffs enjoining the Commission from enforcing certain provisions of Act which limit the amount of contributions individuals may make and that NDPAC may accept into a separate bank account for the purpose of making independent expenditures.
The District Court held that the Plaintiffs have a high likelihood of partial success on the merits of their complaint. The court reasoned that since laws that burden political speech are subject to “strict scrutiny,” the Government must prove that restrictions further a compelling interest and are narrowly tailored to achieve that interest. The court held that the Government did not meet this burden because it did not adequately explain why NDPAC’s proposed separation of accounts does not satisfy the same objective as separate political action committees. The court also held that NDPAC’s proposal would comply with the D.C. Circuit Court of Appeals decision in EMILY’s List v. FEC (581 F.3d 1 (D.C. Cir. 2009)) by establishing separate accounts to 1) solicit and spend unlimited funds for independent federal expenditures (soft money); and 2) solicit and spend federally permissible funds on direct contributions to federal political candidates and/or political parties (hard money). The court further held that because the 2012 Presidential election cycle is under way, the Plaintiffs “must be freed immediately from the chill of possible FEC enforcement,” and that prior cases from the D.C. Circuit and Supreme Courts support the Plaintiffs’ position. The court concluded that the Plaintiffs demonstrate that the Commission’s interference with their First Amendment rights constitutes irreparable harm.
The court granted a preliminary injunction to the Plaintiffs that the Commission shall not enforce 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) against the Plaintiffs with regard to independent expenditures so long as NDPAC maintains separate bank accounts for its “hard money” and “soft money,” proportionately pays related administrative costs and complies with the applicable “hard money” limits for its PAC account that is used to make contributions directly to federal candidates.
On August 19, 2011, the court issued a Stipulated Order and Consent Judgment in which the FEC agreed that it would not enforce 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) against Plaintiffs with regard to contributions NDPAC receives to make independent expenditures, as long as NDPAC maintains separate bank accounts 1) to receive such contributions for independent expenditures, and 2) to receive source-and amount-limited contributions for the purpose of making candidate contributions. Further, each account must pay a percentage of administrative expenses that closely corresponds to the percentage of activity for that account, and must comply with the applicable limits for the contributions it receives for the purpose of making candidate contributions.
On October 5, 2011, the Commission issued a statement providing guidance for other political committees that maintain a "non-contribution" account. See FEC Statement on Carey v. FEC.