COLORADOCOURTOFAPPEALS CourtAddress:101W.ColfaxAve.,Suite800 Denver,CO80202 DistrictCourt,CityandCountyofDenver HonorableJ.EricElliff,Judge CaseNos.2012CV2133and2012CV2153 ___________________________________ ___ Appellees/CrossAppellants:COLORADOETHICS WATCHandCOLORADOCOMMONCAUSE And Appellants/CrossAppellees:DAVIDPALADINO MICHAELCERBOPROCHOICECOLORADOPAC PPRMBALLOTISSUECOMMITTEEandCITIZENS FORINTEGRITY,INC.

FORINTEGRITY,INC. COURTUSEONLY ________________________ v. CaseNo.12CA1712 Appellant/CrossAppellee:SCOTTGESSLER,inhis officialcapacityasColoradoSecretaryofState

_______________________________________
AttorneysforColoradoEthicsWatch: LuisToro,#22093 MargaretPerl,#43106 1630WeltonStreet,Suite415 Denver,CO80202 Telephone:3036262100 Email:ltoro@coloradoforethics.org pperl@coloradoforethics.org AttorneysforColoradoCommonCause: JenniferH.Hunt,#29964 Hill&Robbins,PC 144118thStreet,Suite100 Denver,CO80202 Telephone:3032968100 Email:jhunt@hillandrobbins.com

JOINTOPENINGANSWERBRIEF

CERTIFICATEOFCOMPLIANCE IherebycertifythatthisbriefcomplieswithallrequirementsofC.A.R.28and C.A.R.32,includingallformattingrequirementssetforthintheserules. Specifically,Icertifythat: ThebriefcomplieswithC.A.R.28(g). Itcontains9,282words. Itdoesnotexceed30pages. ThebriefcomplieswithC.A.R.28(k). Forthepartyraisingtheissue: Itcontainsunderaseparateheading(1)aconcisestatementofthe applicablestandardofappellatereviewwithcitationtoauthorityand(2)a citationtothepreciselocationintherecord(R. ,p. ),nottoanentire document,wheretheissuewasraisedandruledon. Forthepartyrespondingtotheissue: Itcontains,underaseparateheading,astatementofwhethersuch partyagreeswiththeopponentsstatementsconcerningthestandardof reviewandpreservationforappeal,andifnot,whynot. Iacknowledgethatmybriefmaybestrickenifitfailstocomplywithanyofthe requirementsofC.A.R.28andC.A.R.32. s/JenniferH.Hunt JenniferH.Hunt AttorneyfortheAppellee/CrossAppellant ColoradoCommonCause

 TABLEOFCONTENTS I.STATEMENTOFISSUESPRESENTEDFORREVIEW...................................1 II.STATEMENTOFTHECASE .............................................................................1 III.SUMMARYOFARGUMENT ........................................................................ 10 IV.ARGUMENT.................................................................................................... 13 A. B. StandardofReview ............................................................................ 13 TheDistrictCourtProperlyInvalidatedRules1.10,1.12,1.18 and7.2asImpermissibleAttemptstoInjecttheSecretarys OwnInterpretationofFirstAmendmentCaseLawtoChange ConstitutionalandStatutoryRequirements. ...................................... 15 1. TheSecretarysPoliticalOrganizationDefinition(Rules 1.10and7.2)EffectivelyRepealsthePoliticalOrganization DisclosureStatute.......................................................................... 15 AddingaPercentageThresholdtotheIssueCommittee Definition(Rule1.12)ArbitrarilyReducestheScopeofthe ConstitutionalandStatutoryProvisions........................................ 23 ThePoliticalCommitteeDefinition(Rule1.18)Improperly LimitstheConstitutionalDefinition. ............................................ 27 TheDistrictCourtProperlyInvalidatedRule18.1.8as ExceedingtheSecretarysDelegatedAuthority. ............................... 29 TheDistrictCourtErredinUpholdingRule1.7................................ 31 1. 2. StandardofReview ....................................................................... 31 Rule1.7ModifiesandContravenestheColorado ConstitutionandStatutoryDefinitionsofElectioneering Communications. .......................................................................... 32 SimilaritytothePriorRuleisIrrelevanttotheAnalysisof WhetherRule1.7ViolatestheColoradoConstitutionand Statutes. ......................................................................................... 37 OtherCourtsHaveRejectedLimitsonElectioneering CommunicationsDisclosuresSimilartoRule1.7Pursuantto CitizensUnited. ............................................................................. 41 ii

2.

3. C. D.

3.

4.

V.CONCLUSION .................................................................................................. 42

iii

TABLEOFAUTHORITIES
Cases

AllianceforColoradosFamiliesv.Gilbert,172P.3d964(Colo.App.2007) ..... 29 Bd.ofCountyCommrsv.Colo.Pub.Utils.Commn,157P.3d10838(Colo. 2007).............................................................................................................. 14,40 Buckleyv.Valeo,424U.S.1(1976) ................................................................. 19,20 Cejav.Lemire,154P.3d1064(Colo.2007) .......................................................... 17 CenterforIndividualFreedomv.Madigan,697F.3d464(7thCir.2012) ............ 42 Cerbov.ProtectColoradoJobs,Inc.,240P.3d495(Colo.App.2010) ......... 24,25 CitizensUnitedv.F.E.C.,558U.S.310,130S.Ct.876(2010) ..................... passim Colo.CitizensforEthicsinGovtv.Comm.fortheAm.Dream,187P.3d 1207(Colo.App.2008) ...................................................................................... 35 Colo.EthicsWatchv.CleartheBenchColo.,2012COA42 ...................................3 Colo.EthicsWatchv.SenateMajorityFund,LLC,2012CO12.................... passim Colo.OfficeofConsumerCounselv.Colo.PublicUtils.Commn,2012CO 33(Colo.2012) ............................................................................................. 14,31 Colo.RighttoLifeComm.v.Coffman,498F.3d1137(10thCir.2007) .......... 28,35 ColoradoCitizensforEthicsinGovtv.Comm.forAm.Dream,187P.3d 1207(Colo.App.2008) ...................................................................................... 14 ColoradoCommonCausev.Gessler,DenverDist.Ct.CaseNo. 2011CV4164(Order,Nov.17,2011) .......................................................... passim F.E.C.v.WisconsinRighttoLife,551U.S.449(2007)....................... 33,34,35,36 Frazierv.People,90P.3d807(Colo.2004).......................................................... 23 Harwoodv.SenateMajorityFund,LLC,141P.3d962(Colo.App.2006)........... 35 HumanLifeofWashingtonv.Brumsickle,624F.3d990(9thCir.2010) ............... 41 InReInterrogatoriesPropoundedbyGovernorRitter,Jr.Concerningthe EffectofCitizensUnitedv.FederalElectionCommn,558U.S.___(2010) onCertainProvisionsofArticleXXVIIIofTheConstitutionoftheStateof Colorado,227P.3d892(Colo.2010)........................................................... 34,35 iv

IndependenceInstitutev.Coffman,209P.3d1130(Colo.App.2008)............ 24,26 Ingramv.Cooper,698P.2d1314(Colo1985) ................................................ 38,39 LeagueofWomenVotersofStatev.Davidson,23P.3d1266(Colo.Ct.App. 2001).................................................................................................................... 29 Marburyv.Madison,5U.S.137(1803)................................................................. 13 NatlOrg.forMarriage,Inc.v.CruzBustillo,2012U.S.App.Lexis9898 (11thCir.2012) .................................................................................................... 41 NatlOrg.forMarriage,Inc.v.McKee,649F.3d34(1stCir.2011)..................... 20 NMYouthOrganizedv.Herrera,611F.3d669(10thCir.2010) ........................... 29 PattersonRecallComm.,Inc.v.Patterson,209P.3d1210(Colo.App.2009)........4 Peoplev.Lowrie,761P.2d778(Colo.1988)......................................................... 13 RealTruthAboutAbortionv.F.E.C.,681F.3d544(4thCir.2012)....................... 41 Sampsonv.Buescher,625F.3d1247(10thCir.2010) .............................................5 Sangerv.Dennis,148P.3d404(Colo.App.2006) ......................................... 32,37 Statev.Nieto,993P.2d493(Colo.2000) .............................................................. 17 VermontRighttoLifev.Sorrell,875F.Supp.2d376(D.Vt.2012)..................... 41
Statutes

26U.S.C.527....................................................................................................... 18 C.R.S.145101,etseq. ..........................................................................................1 C.R.S.145103 ............................................................................................ passim C.R.S.145108 ............................................................................................ passim C.R.S.145111.5 ................................................................................................ 30 C.R.S.244106 ................................................................................. 14,26,32,38
OtherAuthorities

2010Colo.Sess.Laws1239 ................................................................................... 27 Colo.Const.art.XXVIII.................................................................................. passim FairCampaignPracticesAct .....................................................................................1

vi

I.STATEMENTOFISSUESPRESENTEDFORREVIEW 1. WhethertheSecretaryofStatesauthoritytoenactrulesto

administerandenforceArticleXXVIIIoftheColoradoConstitutionandtheFair CampaignPracticesActextendstorulesthatcontradictoramendthoselaws,based onhispersonalinterpretationoftheFirstAmendment. 2. WhethertheSecretaryofStateexceededhisauthoritywhenenactinga

rulethatplacesacaponfinesthatcanbeassessedforcertainlatefilingsunderthe ColoradoConstitutionandstatutes,regardlessofwhethertheviolatorappliesfora finewaiverordemonstratesgoodcause. 3. WhethertheDistrictCourterredinupholdingaSecretaryofState

Rulethatexcusedfromdisclosurerequirementsspendingonadvertisementsthat meettheconstitutionaldefinitionofelectioneeringcommunicationbutdonot engageinexpressadvocacyoritsfunctionalequivalentasdefinedbythatRule. II.STATEMENTOFTHECASE TheheartofthiscaseisthefundamentalprinciplethattheColorado SecretaryofStatedoesnothavetheauthoritytoimposehisownidiosyncratic interpretationoftheFirstAmendmentuponColoradocampaignfinancelaw throughrulemakingthateffectivelyamendstheColoradoConstitutionandtheFair CampaignPracticesAct(FCPA),C.R.S.145101118.

In2002,ColoradovoterspassedAmendment27,whichbecameArticle XXVIIIoftheColoradoConstitution.ArticleXXVIIIcreatesacomprehensive campaignandpoliticalfinancesystem,includingdisclosurerequirementsthat applytovariouscategoriesofparticipantsintheelectionsprocess,suchasissue committeesandpoliticalcommittees,andpublicdisclosurefilingsrequiredwhen certaintypesofadvertisementscalledelectioneeringcommunicationsare distributedinthelastweeksbeforeanelection.Section1ofArticleXXVIIIstates thattheinterestsofthepublicarebestservedby...providingforfullandtimely disclosureofcampaigncontributions. Consistentwiththispurpose,theFCPArequiresissuecommitteesand politicalcommitteestoregisterandreportallcontributions,thenamesand addressesofallpersonswhocontributetwentydollarsormore,andall expenditures.C.R.S.145108(1)(a)(I)(2011).Thestatementofregistration mustincludethenameofthecommitteethenameofaregisteredagentthe committeesaddressandtelephonenumbertheidentitiesofallaffiliated candidatesandcommitteesandthepurposeornatureofinterestofthe committee.C.R.S.145108(3).Issuecommitteeisdefined,inpart,asany groupthathasacceptedormadecontributionsorexpendituresinexcessoftwo hundreddollarstosupportoropposeanyballotissueorballotquestion.Colo.

Const.art.XXVIII,2(10)(a)(II).Politicalcommittee(sometimescolloquially referredtoasPACfromtheanalogousfederalterm,politicalaction committee)isdefined,inpart,asanygroupthathasacceptedormade contributionsorexpendituresinexcessoftwohundreddollarstosupportoroppose thenominationorelectionofoneormorecandidates.Colo.Const.art.XXVIII, 2(12)(a)seealsoColo.EthicsWatchv.CleartheBenchColo.,2012COA42, 12(hereinafterCleartheBench). Inresponsetoconcernsthatsocalled527groupswerespendingmoneyto influenceColoradoelectionswithoutexpresslysupportingoropposingcandidates andthereforewithoutdisclosureaspoliticalcommittees,theGeneralAssembly amendedtheFCPAin2007.SeeC.R.S.145103(14.5)and108.5.Section 103(14.5)definedasapoliticalorganizationanygroupthatisengagedin influencingorattemptingtoinfluencetheselection,nomination,election,or appointmentofanyindividualtoanystateorlocalpublicofficeinthestateand thatisexempt,orintendstoseekanyexemption,fromtaxationpursuanttosection 527oftheinternalrevenuecodeandSection108.5requirespolitical organizationstofilereportsofcontributionsandspendinginexcessoftwenty dollars.SeeColo.EthicsWatchv.SenateMajorityFund,LLC,2012CO12

(hereinafterSenateMajorityFund)(groupsthatwereproperlyregisteredas politicalorganizationswerenotrequiredtoregisteraspoliticalcommittees). Amendment27alsoestablishedatwotrackenforcementsystem.Late filingsaresubjecttoafineof$50perday,butmaybereducedbytheSecretary uponashowingofgoodcause.Colo.Const.art.XXVIII,10(2).Allother violationsofArticleXXVIIIandtheFCPAareenforcedonlythroughalitigation processpursuanttowhichanypersonmayfileacomplaintwiththeSecretary, whorefersthecasetoanadministrativelawjudgeforresolution.Colo.Const.art. XXVIII,9(2)(a).Courtsinsuchcasesmayimposefinesofupto$50perdayfor violationsofdisclosurerequirementsorfromdoubletofivetimestheamountofan illegalcontribution.Colo.Const.art.XXVIII,10(1)(2)seealsoPatterson RecallComm.,Inc.v.Patterson,209P.3d1210,1216(Colo.App.2009). ThisisthesecondcasetoreachthisCourtregardingthisSecretarys attemptstousehispersonalinterpretationoftheFirstAmendmentasavehicleto weakenColoradoscampaignfinancelaws.Thefirstcasearosefromthe SecretarysenactmentonMay13,2011ofCampaignandPoliticalFinanceRule 4.27,whichpurportedtorelieveissuecommitteesofanyobligationtoregisteror reportcontributionsandexpendituresuntiltheyhadraisedorspent$5000,not $200asexpresslystatedintheColoradoConstitution.TheSecretarycontended

thatthisrulewassupportedbyhisinterpretationofFirstAmendmentcaselaw, includingspecificallySampsonv.Buescher,625F.3d1247(10thCir.2010). ColoradoCommonCause(CCC)andColoradoEthicsWatch(EthicsWatch) filedsuitchallengingtheruleonthegroundthattheSecretarylackedauthority effectivelytorewritetheconstitutionaldefinitionofissuecommittee.On November17,2011theDenverDistrictCourtenteredjudgmentthatRule4.27was invalid.ColoradoCommonCausev.Gessler,DenverDist.Ct.CaseNo. 2011CV4164(Order,Nov.17,2011),acopyofwhichisintheAdministrative Record(AR),Tab542(Exhibit1tocommentsofEthicsWatch).After explainingthattheSecretarysexpansiveinterpretationofSampsonasstriking downthe$200reportingthresholdinallitsapplicationswasincorrect,thedistrict courtwentontoaddresstheSecretaryslimitedauthoritytoadministerand enforcecampaignfinancelaws,holdingthattheSecretarycouldnotpromulgate rulesthatabrogateexistingconstitutionalandstatutoryrequirements.Id.atpp.6 7. OnNovember15,2011,afteroralargumentbutjustbeforethedistrict courtsfinalorderintheissuecommitteethresholdcase,theSecretaryissueda NoticeofRulemakingHearingandProposedStatementofBasis,Purposeand SpecificStatutoryAuthority.(ARTab1.)Unliketheissuecommitteethreshold

rule,whichwaspromptedbytheTenthCircuitsrulinginSampson,this rulemakingwasnotpromptedbyanyparticularlegislativeorjudicialdirective,but togenerallyclarifyexistinglawsandregulationsandaddressquestionsarising underStatecampaignandpoliticalfinance.Seeid. TheSecretaryproposedrevisingtheentiretyoftheRulesConcerning CampaignandPoliticalFinanceat8C.C.R.15056(Rules)andincludedinthe proposalsubstantiveamendmentstonumerousRules.Arevisednoticeandsetof proposedruleswasissuedonDecember9,2011.(ARTabs2and3.)Pursuantto therevisednotice,apublichearingwasheldonDecember15,2011.(ARTabs4, 5and6.) Atthehearingandinwrittencommentssubmittedbyinterestedparties,the Secretarywasrepeatedlywarnedthatseveraloftheproposedrulechanges exceededhislegalauthoritytoadministerandenforceArticleXXVIIIandthe FCPAbyeffectivelyamendingthosedulyenactedlaws.SeeTranscriptof December15,2011RulemakingHearing(Trans.)at2528(testimonyofSenator JohnMorse)6871(testimonyofLuisToro)8094(testimonyofMartha Tierney)13134(testimonyofGraceLopezRamirez)ARTab52(commentsof PlannedParenthoodoftheRockyMountains)53(commentsofPlanned ParenthoodVotesColorado)510(commentsofTheBellPolicyCenter)511

(commentsofSenatorMorganCarroll)520(commentsofMarkGrueskin,Esq. forCitizensforIntegrity)532(commentsofCCC)536(commentsofMi FamiliaVotaEducationFund)541(commentsofMarthaTierney,Esq.for ColoradoDemocraticParty)542(commentsofEthicsWatch). Thesewarningswentunheeded.OnFebruary22,2012,theSecretaryissued thecompletelyrevisedandrecodifiedRules.Pertinenttothisaction,thenew Rulesprovidedthat:(1)a527groupneednotreportcontributionsorspending unlessitbothhadamajorpurposeofsupportingoropposingcandidatesin Coloradoanditengagedinexpressadvocacyfororagainstcandidates(2)that anissuecommitteeneednotregisterorreportunlessanduntilitspent30%ofits annualbudgetonaballotissue(3)thatapoliticalcommitteeneednotregister unlessanduntilitspentamajorityofitsannualbudgetonsupportingor opposingcandidatesforColoradooffice(4)thatcontributionsandspendingon electioneeringcommunicationsneednotbedisclosedunderavarietyof circumstances,suchaswhenthecommunicationmerelyurgesacandidatetotake apositionwithrespecttoanissueorurgesthepublictoadoptapositionand contactacandidatewithrespecttoanissue(5)thatapoliticalpartyinahome rulejurisdictioncouldestablishaseparateaccounttoraiseunlimitedcontributions forcountycommitteesinhomerulecountieswiththeirowncampaignfinance

lawsand(6)thatpenaltiesforfailuretofilemajorcontributorreportsunder C.R.S.145108(2.5)withintwentyfourhoursofreceivingacontributionof $1000ormoreduringthelastthirtydaysbeforeanelectionwouldstopaccruingon theearlierofElectionDayorthedatethecontributionwasdisclosedonaregular contributionandexpenditurereport.1TherulemakingalsorenumberedRule4.27, the$5000issuecommitteedisclosurerulethathadalreadybeenstruckdownby theDenverDistrictCourt,asRule4.1,andextendedthe$5000registrationand reportingthresholdtorecallcommittees.(ARTab8.) EthicsWatchandCCCtimelyfiledasuitforjudicialreviewanddeclaratory judgment,challengingseveralofthenewRulesasexceedingtheSecretaryof Statesauthority.(Complaint,CDpages116.)Thesuitwasconsolidatedwitha similarsuitfiledbyDavidPaladino,MichaelCerbo,ProChoiceColoradoPAC, PPRMBallotIssueCommittee,andCitizensforIntegrity,Inc.(thePaladino Parties).(Complaint,CDpages2136.) Whilethesuitwaspendingbeforethedistrictcourt,theSecretaryissued revisionstotheRulesthataffectedtwoissuesinthelawsuit.TheSecretarys revisionstotheRulesgoverningpoliticalpartiesoperatinginhomerulecounties renderedEthicsWatchsandCCCschallengetonewRule14.4regardingpolitical 1 TheRulesatissueinthiscaseareallincludedinAddendumAattachedtothe SecretarysOpeningBrief. 8

partycontributionlimitsmoot.(JointOpeningBrief,CDpage188n.1.)Theother revisionchangedRule4.1toclarifythatthe$5000thresholdforissueandrecall committeereportingwouldnottakeeffectunlessanduntiltheDenverDistrict CourtsdecisioninColoradoCommonCause,etal.v.Gessler(discussedabove) wasreversed. Afterbriefingandoralargument,thetrialcourtenteredjudgmentonAugust 10,2012,invalidatingnewRules1.101.121.187.2and18.1.8(regardingthe definitionsofpoliticalorganization,issuecommittee,politicalcommittee andacaponpenaltiesforfailuretofilemajorcontributorreports)ontheground thattheRulesimpermissiblycontradictedtheColoradoConstitutionortheFCPA. (Order,CDpages385395.)ContrarytotheSecretarysrepeatedcontention,the districtcourtdidnotholdthattheSecretarycannotpromulgaterulesorregulations tocodifylegalstandardsimposedbycontrollingcaseprecedent.Rather,the districtcourtdeterminedthattheserulesimproperlymodifiedorcontravened existingstatuteswithoutanylegalbasisorauthority,giventhattheapplicable statuteshadnotbeendeclaredfaciallyunconstitutional. Thecourtupheld,however,thenewRule1.7regardingthedefinitionof electioneeringcommunicationsonthegroundthat,inthecourtsview,therule wassimilarenoughtotherulethatprecededitthatitwasentitledtojudicial

deferencenotwithstandingtheargumentthatitcontradictedtheplainlanguageof theColoradoConstitution.Finally,thedistrictcourtfoundthatthechallengeto Rule4.1wasunripebecausethatrulehadbeensetasideinColo.CommonCause, etal.v.Gessler. OnAugust30,2012,thisCourtentereditsdecisioninColo.CommonCause v.Gessler,2012COA147,affirmingthedistrictcourtsrulingthatthe$5000issue disclosurerulewasinvalidbecauseitexceededtheSecretarysauthority. (ColoradoCommonCausev.GesslerCOAOpinion,CDpages456472). TheSecretaryappealsthedistrictcourtsinvalidationofRules1.10,1.12, 1.18,7.2and18.1.8andEthicsWatchandCCCcrossappealthedistrictcourts refusaltoinvalidateRule1.7. III.SUMMARYOFARGUMENT TheUnitedStatesandColoradoConstitutionsvestinthelegislaturethe powertomakelawsandthejudiciarythepowertointerpretthem.The fundamentalunderpinningoftheSecretarysargumentinsupportofhis rulemakingisthathewassimplyadoptingcontrollinglegalstandardsannouncedin federalandstatecourtdecision.However,asthedistrictcourtrecognized,the Secretarysrulesgobeyondtheincorporationofcontrollingcaselawandinfact attempttorewritecampaignfinancelawsbasedonhisinterpretationoftheFirst

10

Amendment,nodifferentfromaroguesheriffsclaimthatfirearmslawsdonot applyinhisorherjurisdictionbasedonthesheriffsownpersonalinterpretationof theSecondAmendment. AstraightforwardreviewoftheRulesillustratesthesignificant inconsistenciesbetweentheRulesandtheconstitutionalandstatutoryprovisions whichtheSecretaryhasadutytoadministerandenforce.Thiscaseis indistinguishablefromColoradoCommonCausev.Gessler,2012COA147, excepttherulechangesunderreviewheredonotevenhavethefigleafof justificationthattheTenthCircuitsSampsonrulingprovidedinColorado CommonCause.TheSecretaryspersonalinterpretationofFirstAmendmentcase lawsimplycannotjustifyrulesthatcontradictexpressprovisionsoftheColorado ConstitutionortheFCPA. TheoveralleffectoftheSecretaryschangesistonarrowthescopeof constitutionalandstatutoryrequirementstoregister,report,andsubmitto contributionlimitations.Reachingbackforjudicialprecedentstojustifythis powergrab,theSecretarydisregardedtestimonyintherulemakingprocess regardingthedecreaseintransparencythatwouldresultdirectlycontrarytovoter andgeneralassemblyintent.Farfromfillinggapsinthelaw,theserulesmake

11

differentpolicychoicesthanthegeneralassembly,eveninsituationswhere legislationhasspecificallyrespondedtojudicialprecedentbyamendingtheFCPA. Inthiscase,theSecretarysreadingofFirstAmendmentprecedentignores thesignificantdistinctionbetweencontributionlimitsanddisclosurerequirements. Becausecontributionlimitsarguablystiflespeechbylimitingtheamountofmoney availabletobroadcastpoliticalmessages,doctrineshaveemergedtolimitthe circumstancesunderwhichgovernmentsmaylawfullyenactsuchlimits.Allbut oneofthelawsthatwouldberewrittenbytheSecretarysRules,incontrast, merelyrequiredisclosureofcontributionsandpoliticalspending,whichthe SupremeCourthasrepeatedlyheldarenotsubjecttothesamescrutinyor boundariesascontributionlimits.YettherevisedRulestreatdisclosurerulesasif theywereidenticaltocontributionlimits,andimproperlyimportconceptsfrom contributionlimitcasestorestricttheapplicationofdisclosurelaws,thereby deprivingthepeopleoftheirrighttoknowwhospentmoneytoinfluencetheir vote. WhilethedistrictcourtproperlyheldthatRules1.10,1.12,1.18,7.2and 18.1.8exceedtheSecretarysrulemakingauthority,iterredinupholdingRule1.7. Thatruleradicallyrestrictsthedefinitionofelectioneeringcommunicationsin blatantdisregardoftheplainlanguageoftheColoradoConstitutionandtheU.S.

12

SupremeCourtsdecisioninCitizensUnitedv.F.E.C.,558U.S.310,130S.Ct. 876(2010),whichrejectedtheneedforsuchrestrictionsinthecontextof disclosurelaws. IV.ARGUMENT A. StandardofReview TheSecretarymischaracterizesboththestandardofreviewandthedistrict courtsapplicationofthatstandard.SeeSecretarysOpeningBr.at1112.The Secretaryisnotajudgewhomayinterpretthelaw,noralegislativebodythatcan translatethoseinterpretationsintoamendmentsofdulyenactedlaws.SeeMarbury v.Madison,5U.S.137,177(1803)(thejudicialbranchsroleistosaywhatthe lawis)Peoplev.Lowrie,761P.2d778,781(Colo.1988)(nondelegation doctrine,whichhasitssourceintheconstitutionalseparationofpowers,prohibits theGeneralAssemblyfromdelegatingitslegislativepowertosomeotheragency orperson).HeismerelyanadministratorofthelawsenactedbytheGeneral AssemblyorthePeopleexercisingtheirlegislativepowerthroughtheinitiative process. Thequestionisnot,astheSecretarywouldhaveit,whetherarulewithinthe Secretaryspowersispermissibleundergoverningstandards.SeeSecretarys OpeningBr.at13.Rather,areviewingcourtmayreverseanadministrative

13

agency'sactionifthecourtfindsthattheagencyexceededitsconstitutionalor statutoryauthorityormadeanerroneousinterpretationoflaw,bothofwhichare questionsoflawrevieweddenovo.Colo.CommonCause,2012COA147,15 16seealsoColo.OfficeofConsumerCounselv.Colo.PublicUtils.Commn, 2012CO33,9(Colo.2012)(Wereviewdenovoquestionsoflaw,butdeferto the[agencys]determinationoffactualissues). Inundertakingthisreview,thecourtshalldetermineallquestionsoflaw andinterpretthestatutoryandconstitutionalprovisionsinvolved.C.R.S.244 106(7)(standardsforjudicialreviewofagencyaction).Althoughthecourtdoes defertotheagencysinterpretationofthestatutesandconstitutionalprovisionsitis chargedwithadministering,itsinterpretationisnotbinding.Bd.ofCounty Commrsv.Colo.Pub.Utils.Commn,157P.3d1083,1088(Colo.2007) ColoradoCitizensforEthicsinGovtv.Comm.forAm.Dream,187P.3d1207, 1214(Colo.App.2008).Moreover,thislimiteddeferencedoesnotextendtothe SecretarysinterpretationorapplicationoftheFirstAmendment,whichdoesnot involveanyagencytechnicalexpertise.SeeBd.ofCountyComm'rs,157P.3dat 1089.Areviewingcourtisneverboundbytheagencysactionthathasresulted fromamisconstructionormisapplicationofthelaw.Colo.CitizensforEthicsin Govt,187P.3dat1214(anagencysdecisionshouldbereversediftheagency

14

erroneouslyinterpretedthelaworexceededitsconstitutionalorstatutory authority).Thedistrictcourtproperlyappliedthislevelofdenovoreviewand limiteddeferencewheninvalidatingRules1.10,1.12,1.18,7.2and18.1.8.(Order, CDpages386387.)2 Appellees/CrossAppellantsagreethattheissueswerepreservedforappeal. B. TheDistrictCourtProperlyInvalidatedRules1.10,1.12,1.18and7.2as ImpermissibleAttemptstoInjecttheSecretarysOwnInterpretationof FirstAmendmentCaseLawtoChangeConstitutionalandStatutory Requirements. 1. TheSecretarysPoliticalOrganizationDefinition(Rules1.10and 7.2)EffectivelyRepealsthePoliticalOrganizationDisclosure Statute.

InadoptingRules1.10and7.2,theSecretaryboldlycollapsedthedistinction betweenpoliticalcommitteesandpoliticalorganizations,effectivelyrewriting C.R.S.145103(14.5)and108.5byengraftingrestrictionspurportedlyjustified byfederalcontributionlimitcasesregardingPACsontoadisclosureonlyregime for527groups.Thedistrictcourtproperlycharacterizedthisusurpationof legislativeandjudicialpowerascontrarytothecleartermsofthestatuteandthe intentofthelegislatureandheldthattheseRulesexceed[dtheSecretarys] delegatedauthority.(Order,CDpage393). 2 Atanotherpointinhisbrief,theSecretaryconcedesthatagencydiscretionisnot unlimitedanddeferenceisnotabsolutewhenarulemakingproceedinginterprets caselaw.SeeSecretarysOpeningBr.at21. 15

UnderColoradolaw,politicalcommitteesareentitiessubjectto contributionlimitationsinadditiontoregistrationanddisclosurerequirements.See Colo.Const.art.XXVIII3(5).Politicalcommitteestatusistriggeredby acceptingormakingcontributionsorexpendituresinexcessof$200tosupport oropposecandidates.SeeColo.Const.art.XXVIII2(12)(a).Expenditureis alsoadefinedterminArticleXXVIII,meaningmoneysspentforthepurposeof expresslyadvocatingtheelectionordefeatofacandidateorballotmeasure.See Colo.Const.art.XXVIII2(8)(a).Thus,anorganizationisonlyrequiredto register,report,andcomplywithcontributionlimitationsasapoliticalcommittee whenitmakesexpressadvocacyexpenditures.SeeSenateMajorityFund,2012 CO12,1819. Recognizingthatsocalled527groupswereavoidingwordsofexpress advocacysoastoevadepoliticalcommitteeregistrationandreporting requirements,theGeneralAssemblyactedin2007tocreatedisclosureonlyrules forsuchgroups.Thenewstatutoryprovisionsin145103(14.5)and108.5 recognizeanewtypeofdisclosureonlyentitypoliticalorganizationswhich arenotsubjecttocontributionlimits. TheGeneralAssemblydeliberatelychosetoavoidthelegallysignificant termsexpenditureorexpressadvocacy,whichapplytopoliticalcommittees,

16

whendefiningpoliticalorganization.Instead,itdefinedapolitical organizationasagrouporganizedunderSection527oftheInternalRevenue Codeengagedininfluencingorattemptingtoinfluenceanycandidateelectionin Colorado.C.R.S.145103(14.5).Thestatutesimilarlyavoidedtheword expenditurebydefiningspendingasfundsexpendedinfluencingor attemptingtoinfluenceacandidateelection.C.R.S.145103(16.5). Theclearlanguageofthestatuteappliesmorebroadlythantheexpress advocacyexpendituresthatalreadydefinedpoliticalcommitteestatusunder ArticleXXVIII.Tosaythatattemptingtoinfluencemeansforthepurposeof expresslyadvocatingisalsotosaythatexpendituremeansspendingandthat C.R.S.145108.5doesnotrequireanydisclosuresotherthanthosealready requiredforpoliticalcommittees.[A]statuteshouldbeconstruedaswritten, givingfulleffecttothewordschosen,asitispresumedthattheGeneralAssembly meantwhatitclearlysaid.Cejav.Lemire,154P.3d1064,1066(Colo.2007) (citingStatev.Nieto,993P.2d493,500(Colo.2000)). TheSecretarysadditionofarequirementthata527groupmusthavea majorpurposeofinfluencingColoradoelectionsalsocontradictsthestatute. C.R.S.145103(14.5)appliestoanypoliticalorganizationasdefinedinsection 527(e)(1)ofthe[IRScode]thatisengagedininfluencingorattemptingto

17

influencetheselection,nomination,electionorappointmentofanyindividualto anystateorlocalpublicofficeinthestate.Thislanguageincludesany527 organizationthatisinvolvedincandidateelectionsinColoradothereisno thresholdregardinghowmuchofthegroupsactivitiesmustinbeColorado. 3 Rule1.10(incorporatedbyreferenceintoRule7.2),ontheotherhand, restrictsthedefinitionofpoliticalorganizationsnotonlytogroupsthatengagein expressadvocacybutalsoonlytogroupswhosemajorpurposeistoexpressly advocateinsupportofcandidates,anotherdefinedterminColoradocampaign financelawthatrefersonlytocandidatesforColoradooffices.Colo.Const.art. XXVIII,2(2).Thus,anational527groupcouldspendmillionsonadsto influenceColoradoelectionswithouttransparency,solongastheyavoidthe magicwordsofexpressadvocacyorcontinuetospendinotherstates.See SenateMajorityFund,2012CO12,38.Thisresultisdirectlycontrarytoboth thestatutorylanguageandlegislativeintent.SeeCommentofSen.Morgan

3 UndertheInternalRevenueCode,a527organizationmusthaveaprimary purposeofinfluencingtheelectionorappointmentofofficialsatthestateor federallevel.See26U.S.C.527(e)(1)(2).Thus,asingle527groupmayspend toinfluenceColoradoelections,federalelections,andelectionsinotherStates. 18

Carroll,ARTab5.11(statingnewRuleschangesrun180degreesoppositeofthe legislativeintentoflegislationsheauthoredmandating527disclosures). 4 TheSecretaryattemptstojustifythisresultbyrelyingonBuckleyv.Valeo, 424U.S.1(1976),whichconsideredtheconstitutionalityoffederalregulationof politicalcommitteeandexpendituresthroughcontributionlimitationsand outrightprohibitions.WhiletheBuckleyCourtusedtheconceptsofexpress advocacyandmajorpurposetolimitfederalstatutoryprovisionsunderFirst Amendmentprinciples,theBuckleyanalysisissimplynotrelevanttoColorados politicalorganizationstatute,whichcreatesonlydisclosureobligationsanddoes notlimitspeechthroughcontributionlimitationsorprohibitions.SeeSenate MajorityFund,2012CO12,78&n.1(explainingdifferencebetweenpolitical organizationsandpoliticalcommitteesandnotingthatcontributionlimitsapply onlytothelatter)id.at39(Buckleyadoptedtheexpressadvocacy requirementtodistinguishdiscussionofissuesandcandidatesfrommorepointed exhortationstovoteforparticularpersons)(furtherquotationomitted).Proofthat Buckleydoesnotcontrolthequestionpresentedisfoundinthe81portionofthe CitizensUnitedv.F.E.C.opinion,inwhichtheSupremeCourtheldthatno 4 Sen.CarrollalsostatedinherwrittencommentsthattheSecretary,thenaprivate citizen,wastheonlywitnesswhotestifiedagainstthepoliticalorganization disclosurebillincommittee,andadmonishedhimthat[r]ulemakingshouldnotbe anopportunitytorelegislateadifferentoutcome. 19

expressadvocacylimitationisconstitutionallyrequiredwhenalawrequiresonly disclosureofelectionrelatedspending.See558U.S.310,130S.Ct.876,at915 16. Regardless,theGeneralAssemblyspecificallyavoidedtheBuckley standardsofexpenditureandexpressadvocacywhendelineatingthetriggering conductforpoliticalorganizationsunderColoradolaw.TheSecretaryarguesthat byusingthewordinfluencingtheGeneralAssemblyimportedtheBuckley standardintothestatute.SecretarysOpeningBr.at4445.However, influencingisnotatechnicalterminterpretedbyBuckleyBuckleyinterpreted thetechnicaltermspoliticalcommitteeandexpenditurebynarrowingthemfor FirstAmendmentcompliancetotheuseofmoneytoengageinexpress advocacy.SeeBuckley,424U.S.at7880NatlOrg.forMarriage,Inc.v. McKee,649F.3d34,6466(1stCir.2011)(refusingtoapplyBuckleynarrowingto theterminfluencingwhenthetermispairedwithotherwordsinstatestatute). Rule1.10sattempttoaddanexpressadvocacystandardthatwasdeliberately avoidedbytheGeneralAssemblyisbeyondthescopeoftheSecretarysdelegated authority. TheSecretaryalternativelyarguesthatRule7.2onlyseekstocodifythe 527statutoryprimarypurposestandardinitsmajorpurposeprovision.

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SecretarysOpeningBr.at4243.Bydeemingthewordsprimaryandmajor tomeanthesamething,theSecretarysargumentignoresthesubstantive differencebetweenRule7.2slimitationandthestatutoryprovision.The527 primarypurposethresholdappliestoallcampaignactivityatthefederaland statelevel,acrossthecountry.Rule7.2placesanadditionallimitation:notonly musttheorganizationhaveageneralprimarypurposeofengaginginelection activityacrossthecountry(therebytriggering527taxstatus),butitsmajor purposemustbefocusedonColoradoelections.TheGeneralAssemblydefined thereachofthepoliticalorganizationdisclosurerequirementstoany527 organizationsoperatingorengagedinColoradostateorlocalcandidateraces. Rule7.2isnotanimplementationandclarificationofwhatitmeanstobea527 organizationitnarrowsthereachofthestatute.Becausethemajorpurpose limitationimposedbyBuckleyisnotapplicabletopoliticalorganizationsthatare notsubjecttocontributionlimits,thereisnootherjustificationforthenarrowingof thestatutethatresultsfromRule7.2smajorpurposerequirement. UndertheSecretarysRules,thecategoriesofpoliticalcommitteeand politicalorganizationcompletelyoverlap:bothonlycontainentitieswhosemajor purposeismakingexpressadvocacyexpendituresinColoradocandidateelections. Yet,thetwocategoriesmusthavedistinctandseparatecoveragebecausepolitical

21

committeesaresubjecttocontributionlimitsunderArticleXXVIIIandpolitical organizationsaredisclosureonlyentities. AconcreteexamplefromtherecentSenateMajorityFundcaseillustrates howRules1.10and7.2collapsethesetworegimes.Thetwo527groupsengaged incandidaterelatedactivityinthatcasewerebothregisteredaspolitical organizations,butthecomplaintallegedthatthegroupscrossedthelineand shouldhavebeensubjecttothecontributionlimitsofpoliticalcommittees.See SenateMajorityFund,2012CO12,7&n.1.TheColoradoSupremeCourt foundthatthevoterswhoenactedArticleXXVIIIintendedtoadoptBuckleys magicwordstesttodeterminewhenagroupwasengagedinexpressadvocacy becausethe527defendantsdidnotusesuchwords,theywerenotpolitical committees.Id.at29,40.TheCourtalsonoted,however,thatthe527s concededthattheywerepoliticalorganizationsandthattherewasnodisputethat theyweredisclosingpursuanttoC.R.S.145108.5.SenateMajorityFund,2012 CO12at7.IfthesesameorganizationswereoperatingunderthenewRules1.10 and7.2,thefactthattheywerenotengagedinexpressadvocacywouldalsohave excusedthemfromreportingunderC.R.S.145108.5.Theseparatestatutory categoryofpoliticalorganizationwouldhavebeenerasedbytheSecretary

22

chargedwithenforcingthatlawifitwerenotforthedistrictcourtsorderinthis case. TheRulesallowoutofstate527organizationstospendfreelyinColorado electionswithoutdisclosuresolongastheyaresufficientlyengagedinotherstates oratthefederallevelenoughtoavoidamajorpurposethresholdinColorado,or iftheyavoidtheuseofmagicwordsthatarethedefiningcharacteristicof politicalcommittees.EachoftheseresultsiscontrarytotheGeneralAssemblys intentandthestatutorylanguageitself.Astatutoryinterpretationleadingtoan illogicalorabsurdresultwillnotbefollowed.Frazierv.People,90P.3d807, 811(Colo.2004).ThedistrictcourtcorrectlyruledthatRules1.10and7.2are invalid. 2. AddingaPercentageThresholdtotheIssueCommitteeDefinition (Rule1.12)ArbitrarilyReducestheScopeoftheConstitutional andStatutoryProvisions

TheGeneralAssemblyhasamendedcampaignfinancestatutestoaddress andincorporatejudicialrulingsinaproperexampleoftheseparationofpowers betweenthebranchesofgovernment.However,theSecretarysadoptionofRule 1.12upsetsthisbalancebyimplementinghisinterpretationofjudicialprecedenton topofthedefinitionofissuecommitteeinC.R.S.145103(12)(b).Thedistrict courtcorrectlyheldthatRule1.12addsarestrictionnotfoundinthestatuteand

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notsupportedbytherecordtothedefinitionofissuecommitteeandisinvalid. (Order,CDpage390.) IssuecommitteeisdefinedinArticleXXVIIIasagroupwithamajor purposeofsupportingoropposinganyballotissueorballotquestion.Colo. Const.art.XXVIII2(10)(a)(I).ThisCourthastwiceinterpretedandappliedthe majorpurposetestforissuecommittees.SeeCerbov.ProtectColoradoJobs,Inc., 240P.3d495(Colo.App.2010)IndependenceInstitutev.Coffman,209P.3d 1130(Colo.App.2008).InIndependenceInstitute,thisCourtrejectedvagueness andoverbreadthchallengestothemajorpurposeprovisioninArticleXVIIIand articulatedsomeofthefactorsthatcouldbeconsideredbyacommitteeto determineifthemajorpurposetestwasmet.SeeIndependenceInstitute,209P.3d at1139.Twoyearslater,thisCourtobservedinCerbothatneitherstatutesnor regulationsfurtherdefinedthemajorpurposetestinArticleXVIII2(10)(a),but stillfoundnoimpermissibleambiguityinthephrase.SeeCerbo,240P.3dat501. Laterin2010afterthesetwodecisionstheGeneralAssemblyenacted clarifyinglegislationstatingthatmajorpurposecanbedeterminedthroughthe organizationsobjectivesinorganizationaldocumentsortheorganizations demonstratedpatternofconduct.C.R.S.145103(12)(b)(I)(II).Goingeven further,thestatutestatesthatthepatternofconductisbasedupon:

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(A)Annualexpendituresinsupportoforoppositiontoan ballotissueorballotquestionor (B) Production or funding, or both, of written or broadcast communications, or both, in support of or oppositiontoaballotissueorballotquestion. C.R.S.14510312(b)(II).TheGeneralAssemblyspecificallystatedthatthis newprovisionwasintendedtoincorporatethemajorpurposedefinitionas articulatedinIndependenceInstitute.SeeC.R.S.145103(12)(c). Thelegislativedecisiontocreateamajorpurposetestinstatutedidnot includesettingprecisepercentagesfortheamountoffunding,expenditures,or communicationsthatwouldautomaticallytriggerissuecommitteestatus.Rule 1.12ignoresthisdeliberatechoicebytheGeneralAssemblyandinsertsa30% thresholdintotherule.Nocourtcasehadfoundthestatutorymethodologytobe ambiguousbetweenitsenactmentandthe2012adoptionofRule1.12(orsince). TheSecretarysimplydisagreeswiththelegislativeimplementationandprefersthe brightlineofaset30%rulealinenocourtorstatutehasdrawn. TheSecretaryarguesthatthestatutestillleavesthequestionofhowthese factorsshouldbeweighedunanswered.SecretarysOpeningBr.at3031. However,thelegislaturedecidedthatacasespecificinquiryintoanorganizations patternofconductwastheappropriatetestratherthananacrosstheboardflat percentage.ThissameapproachwasendorsedbythisCourtinbothCerboand

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IndependenceInstituteandhasbeenfoundtosurviveconstitutionalscrutiny.The statuteisnotsilentandtherearenogapstofill.Thereisnojustificationforthe Secretarytosupplantthelegislativedecisioninstatutewiththetestheprefers.See Colo.CommonCause,2012COA147at2123(recognizingthattheSecretary hasnoauthoritytopromulgatearuletofillagapthatdoesnotexist). Moreover,thespecific30%thresholdwasadoptedwithnofactualbasisin therulemakingrecordandlittlejustificationofferedevennow.TheSecretary justifiesdrawingthislineat30%becauseitisanumberlessthan50%,butstill representingameaningfulportionofthecommitteesbudget.Secretarys OpeningBr.at35.Suchreasoningisthequintessentialexampleofanarbitraryor capriciousagencyaction.SeeC.R.S.244106(7).Itisespeciallyegregious thattheSecretaryadoptedthisstandardincompletedisregardofthetestimony duringtherulemaking,fromgroupsacrossthepoliticalspectrum,regardingthe disparateimpactsucharulehasbasedontheoverallsizeofacommittees spendingi.e.groupswithmoremoneytospendoverallwouldonlystartreporting theiractivityatahigherdollaramountthansmallergroupswhowouldhitthe30% marksooner.See,e.g.,ARTab52(commentsofPlannedParenthoodofthe RockyMountains)Tab511(commentsofTheBellPolicyCenter)Tab516 (commentsofMetroOrganizationforPeople)Tab522at3(commentsof

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CoalitionforSecularGovernment)Tab524(commentsofColoradoProgressive Coalition)Tab532at2(commentsofColoradoCommonCause)Tab541at2 (commentsofColoradoDemocraticParty)Tab546(commentsofColorado ConservationVoters). The2010legislationclarifyingthemajorpurposetestin145103(12) includedalegislativefindingthatalackofdisclosureinconnectionwith communicationssupportingoropposingballotissuesleadstoaperceptionof purposefullyanonymousinterestsattemptingtoinfluencetheoutcomeofthe electiononmeasuresthroughtheexpenditureoflargesumsofmoney.2010 Colo.Sess.Laws1239,1(e).Rule1.12underminesthepurposeofthestatuteby allowinglargesumsofmoneytobespentwithoutdisclosurebeneaththearbitrary 30%line. 3. ThePoliticalCommitteeDefinition(Rule1.18)ImproperlyLimits theConstitutionalDefinition.

ArticleXXVIIIsspecificdefinitionofpoliticalcommitteeappliestoany groupthathasmadeexpendituresorreceivedcontributionsinexcessof$200to supportoropposeacandidate.SeeColo.Const.art.XXVIII2(12)(a).Thevoters didnotincludeamajorpurposerequirementinthisdefinitionachoicethat mustbeseenasdeliberatesinceamajorpurposetestwasincludedinconstitutional definitionofissuecommittee.SeeColo.Const.art.XXVIII,2(10)(a)(I). 27

However,Rule1.18addsamajorpurposetestthatdoesnotexistinthe ConstitutionorstatutebasedagainontheSecretarysreadingofjudicialprecedent. Asthedistrictcourtobserved:[theSecretary]assumesasolutionwithout legislativeorvoterinput,andtherebyexceedshisdelegatedauthority.(Order, CDpages391392.) Itisthelegislatureorthevotersresponsibilityto

designandcodifyamajorpurposetest.TheSecretarysattempttocreatelawin Rule1.18exceedshisdelegatedauthority. Inanyevent,Rule1.18doesnotsimplyimplementthestandardfromColo. RighttoLifeComm.v.Coffman,498F.3d1137,114652(10thCir.2007),asthe Secretarycontends.SecretarysOpeningBr.at26.TheRule1.18testisnarrower thatthefactorsconsideredbytheTenthCircuitinthatcase.First,theRulelimits themajorpurposetesttoacomparisonoftheorganizationsexpenditurestototal spendingandcompletelyignoresanycalculationoftheorganizations contributionstocandidates.Surelymakingcontributionstopoliticalcandidates wouldbeindicativeofwhetherornotthegrouphadamajorpurposeofinfluencing candidateelections.Second,theRuleonlylookstowhattheorganizationstatesas toitspurposeinorganizingdocuments.Underthistest,anorganizationmaytalk aboutcandidatesonwebsitesandinsolicitationsandstillnottriggerthemajor purposetestsolongasthecorporatedocumentsdonotmentionapurposeof

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supportingoropposingcandidates.Thisisnotconsistentwiththetestasapplied bythecourts.Seeid.at1152(examiningtheorganizationscentralpurpose) seealsoNMYouthOrganizedv.Herrera,611F.3d669,678(10thCir.2010) (examiningactualactivitiesoforganizationstodetermineorganizationpurpose) LeagueofWomenVotersofStatev.Davidson,23P.3d1266,1275(Colo.Ct.App. 2001)(decliningtobeheldtoanalysisofgroupsselfservingstatementsof purposeunderpredecessorprovisionbeforeArticleXVIIIenactment). InthefiveyearssinceAllianceforColoradosFamiliesv.Gilbert,172P.3d 964(Colo.App.2007),firstinterpretedthemajorpurposetestforpolitical committees,theGeneralAssemblyorColoradovoterscouldhaverevisedthe FCPAorArticleXXVIII.Theychosenotto.Rule1.18exceedstheSecretarys authoritybyimplementingacontrarychoiceandthenarbitrarilynarrowingthe judiciallyconstructedtestitpurportstoincorporateintothelaw. C. TheDistrictCourtProperlyInvalidatedRule18.1.8asExceedingthe SecretarysDelegatedAuthority. ThedistrictcourtproperlydeterminedthatRule18.1.8exceedsthe Secretarysauthoritybysubstantiallydenudingthestatutorypenaltyimposedfor notfilingmajorcontributionreports.(Order,CDpage394).Coloradolaw requiresentitiestofileamajorcontributorreportinadditiontoanyregularly scheduledreportandassessesanautomaticpenaltyof$50perdayforeachdaythe 29

reportisnotfiledbetweenthe48hourdeadlineandwheneverthatspecific, separatereportisfiled.SeeC.R.S.145108(2.5),145111.5(c).Rule18.1.8 capspenaltiesassessedbystatuteintwowaysbystatingthatthe$50penalties simplystopaccruingoneitherthedatethecontributionisincludedona regularlyschedulereportorthedateofthegeneralelection.SeeRule18.1.8(A). TheSecretaryspowertoenforcetheFCPAdoesnotpermitthecreationofsuchan exceptiontothecivilpenaltiestoprotectnonfilers.Inbothrespects,Rule18.1.8 exceedstheSecretarysauthorityandcontradictstheplainlanguageofthestatute. TheSecretarycorrectlyassertsthatArticleXXVIIIgrantshimthepowerto setasideorreduceapenaltyalreadyassessedwhenpresentedwithawritten appealandwaiverrequest.Colo.Const.art.XXVIII10(2)(c).Notably,the Secretarymayonlygrantwaiversuponashowingofgoodcause.Id.Otherwise, waiverrequestsmustbesenttoanALJfordetermination.Id.10(2)(b)(I).Rule 18.1.8dispenseswithanygoodcauserequirementandeffectivelywaivesfines inadvance.ThisisbeyondtheSecretaryspower. Rule18.1.8isseparatefromtheotherportionsofRule18,whichgovernthe Secretarysexerciseofdiscretionwhenpresentedwithwaiverrequeststhatdo demonstrategoodcause.Itpurportstostopsuchpenaltiesfromeveraccruingafter eitherofthetwotriggerdatesobviatingtheneedforanyparticularcommitteeto

30

requestawaiverunderArticleXXVIII,10(2).Rule18.1.8isaseparate exceptionappliedacrosstheboardnotinaspecificwaiverrequestthatfines willneverbeappliedwhenacontributionisreportedonaregularlyscheduled reportorwhenthegeneralelectionhaspassed.Whetheritiswisetoimpose penaltiesforfailuretofilemajorcontributorreportsafterthecontributionhasbeen otherwisedisclosedisachoicefortheGeneralAssemblytomake,notthe Secretary.ThisruleisbeyondtheauthorityaccordedtotheSecretaryunderthe Constitutionandthestatute. D. TheDistrictCourtErredinUpholdingRule1.7. 1. StandardofReview

TheSecretarysargumentthatRule1.7snewlimitationson constitutionallyrequireddisclosurearenecessarytocomplywiththeFirst Amendmentpursuanttostateandfederalcourtdecisionsisalegalinterpretationof judicialprecedentnotentitledtodeferencebythisCourt.SeeColo.Common Causev.Gessler,2012COA147,22seealsoColo.OfficeofConsumerCounsel v.Colo.PublicUtils.Commn,2012CO33,9(Colo.2012).WithregardtoRule 1.7,thedistrictcourtimproperlyconductedthisdenovoreviewandgavetoomuch deferencetotheSecretarysRule.(Order,CDpage389).

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Thisappealofadistrictcourtsreviewofanagencyruledidnotrequire preservationandisproperlybroughtpursuanttoC.R.S.244106(9). 2. Rule1.7ModifiesandContravenestheColoradoConstitutionand StatutoryDefinitionsofElectioneeringCommunications.

TheplaintextofRule1.7explicitlyimposesarestrictionthatisnot supportedbythetextofArticleXXVIIIwhenitstates: Electioneering Communication is any communication that (1) meets the definition of electioneering communicationinArticleXXVIII,Section2(7), and(2) isthefunctionalequivalentofexpressadvocacy Rule1.7(emphasisadded)Sangerv.Dennis,148P.3d404,412(Colo.App. 2006).ThesechangesagainreflecttheSecretarysattempttograftstrictercase lawholdingsregardinglawsthatlimitorprohibitcontributionsontothedisclosure onlyprovisionsgoverningelectioneeringcommunicationsinColoradotoday.Far frombeingaFirstAmendmentrequiredlimitationonpublicdisclosure,the functionalequivalentstandardhasbeenrejectedasanunworkablestandardthat isnotnecessaryforprovisionsthatrequireonlyreporting. Theplainlanguageoftheelectioneeringcommunicationdefinitioninboth federalandColoradolawappliesbroadlytoregulateanycommunicationinthe 30/60daywindowbeforeaprimaryorgeneralelectionthatunambiguouslyrefers

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toanycandidate.Colo.Const.art.XXVIII,2(7)(a)2U.S.C.434(f)(3)(A). 5 In2007,thereachofthefederallawwastemporarilynarrowedtocommunications thatmeetthestatedrequirementsandcontainthefunctionalequivalentofexpress advocacybecausethoseprovisionsweretiedtoacorporateandlaborunion expenditurebanandthereforehadtobereadnarrowlyinordertoassuageFirst Amendmentconcerns.F.E.C.v.WisconsinRighttoLife,551U.S.449,481(2007) (WRTL).However,thisjudicialfilterlimitingthescopeoftheelectioneering communicationprovisionwasdisregardedasinadequateprotectionofspeechin 2010,whentheU.S.SupremeCourtoptedinsteadtostrikedowntheexpenditure prohibitionsinthefederallawentirely.CitizensUnited,130S.Ct.at913. Althoughthecorporateexpenditureprohibitionwasstruckdown,theCourt upheldtheelectioneeringcommunicationdisclosurerequirementwithoutany limitationofdisclaimeranddisclosurerequirementstoadsthatexpresslyadvocate fororagainstcandidates.Id.at91516.Moreover,theCourtexplicitlyrejected applicationofWRTLsfunctionalequivalentlimitationsontheremaining disclosureprovisions: 5 TheColoradostatutorydefinitionmerelystatesthatthetermshallhavethesame meaningassetforthinsection2(7)ofarticleXXVIIIofthestateconstitutionand hasnotberevisedbytheGeneralAssemblyinresponsetoanyofthecourtcases discussedinthissection.C.R.S.145103(9). 33

As a final point, Citizens United claims that, in any event, the disclosure requirements in 201 must be confined to speech that is the functional equivalent of expressadvocacy.TheprincipalopinioninWRTLlimited 2 U.S.C. 441b's restrictions on independent expenditures to express advocacy and its functional equivalent.551U.S.,at469476,127S.Ct.2652,168L. Ed. 2d 329 (opinion of Roberts, C. J.). Citizens United seeks to import a similar distinction into BCRA's disclosurerequirements.Werejectthiscontention. Id.at915.CitizensUnitedputanendtoattemptstoapplylimitationsfromcases involvingcontributionorexpenditurelimitsintodisclosurelawsjustassurelyas itsmorefamousholdingputanendtoattemptstolimitexpendituresby corporationsorlaborunions.Asaresult,campaignfinancelawhasbeen simplifiedconsiderably. TheCourtemphasizedtheimportanceofdisclosureasnecessaryforvoters tomakeinformeddecisionsandgiveproperweighttodifferentspeakersand messages.Id.at916.Theimpactofthis81decisionisclear:oncetheColorado electioneeringcommunicationsprovisionwaslimitedtodisclosureprovisions(as confirmedinColoradosprovisionbyInReInterrogatoriesPropoundedby GovernorRitter,Jr.ConcerningtheEffectofCitizensUnitedv.FederalElection Commn,558U.S.___(2010)onCertainProvisionsofArticleXXVIIIofThe ConstitutionoftheStateofColorado,227P.3d892(Colo.2010)),thefunctional equivalentstandardisnotapplicable.Eventhedistrictcourtinthiscasenoted 34

thatitmaybethatCitizensUnitedrendersbotholdandnewrulesobsolete beforeupholdingRule1.7basedonitscomparisontothepriorrule.(Order,CD page389).Undertheplainlanguageoftheelectioneeringcommunicationlaw, spendingonsomeofthemostnoxiousattackadsonesthatsmearacandidate personallyinthelastdaysbeforeanelectionmustbedisclosed.Duringthe2012 election,voterswereleftinthedarkaboutthoseadsthankstothedistrictcourts erroneousruling. NoColoradocasehasstatedthatthefunctionalequivalentlimitationfrom WRTLmustbeimposeduponArticleXXVIIIselectioneeringcommunications definitiontosurviveconstitutionalscrutiny.SeeInreInterrogatories,227P.3dat 893(leavingtheArticleXXVIIIdisclosurerequirementsundisturbed)Colo. CitizensforEthicsinGovtv.Comm.fortheAm.Dream,187P.3d1207,121417 (Colo.App.2008)(postWRTLcaseapplyingArticleXXVIIIdefinitionwithout functionalequivalentlimitation)Colo.RighttoLife,498F.3dat1152 (decliningtoconsiderfacialchallengetoColoradoselectioneering communicationsprovisionpostWRTLandlimitingholdingtoasappliedchallenge bycertainnonprofitorganization)Harwoodv.SenateMajorityFund,LLC,141 P.3d962,96466(Colo.App.2006)(preWRTLcaseapplyingArticleXXVIII definitiontopolls).TheSecretarysattempttocherrypickfromoutdatedfederal

35

campaignfinancecasestosupporthisregulatorynarrowingofdisclosurein Coloradoisbeyondthescopeofhisauthority. ThedistrictcourtsordererroneouslyrelieduponSenateMajorityFund, 2012CO12,asaffirmingWRTLsapplicabilitytoColoradoselectioneering communicationsdefinition.(Order,CDpage389.)SenateMajorityFund determinedthemeaningofexpressadvocacyaspartoftheconstitutional definitionofexpenditurewhichtriggerstherequirementstoregisterasapolitical committeeunderColoradolaw.Seeid.at19.Noclaimwasmadethattheads shouldhavebeendisclosedaselectioneeringcommunications.Id.at7n.1. WhiletheopinionrecognizedthatWRTLapprovedofafunctional equivalencetest,itonlystatesthatWRTLstandsforthepropositionthata broaderscopeofspeechcanberegulatedunderthetimelimitedelectioneering communicationsprovisionsthanasexpenditures.Id.at3435.TheColorado SupremeCourtdidnotstatethattheselimitationsappliedtoColoradosprovisions, nordiscussCitizensUnitedsimportastheseissueswerenotbeforethecourt.See id.at36&n.8.Ifanything,SenateMajorityFundisrelevanttothiscaseforits statementthattheWRTLfunctionalequivalenttestwhichEthicsWatchargued inSenateMajorityFundshoulddefineexpressadvocacyandwhichthe Secretaryargueshereshouldlimitelectioneeringcommunicationsmightbe

36

foundtocreateanunwieldystandardthatwouldbedifficulttoapplyand,asa result,potentiallyservetounconstitutionallychillprotectedpoliticalspeech.Id. at37. Inadditiontotheexplicitadditionofthefunctionalequivalentstandard, thespecificsafeharborsinRule1.7.3createregulatoryexemptionstothestatutory andconstitutionalreportingrequirements.Therulearbitrarilycarvesoutnumerous typesofadvertisementsthatrefertocandidatesandaredistributedwithinthefinal daysofanelectioninthedistrictwherethecandidateisrunningforofficefromthe publicinformationprovidedtovoters.Thedistrictcourterredinholdingit appearstheSecretarydidnotmodifyorcontraveneanexistingstatute.(Order, CDpage389.)Rule1.7exemplifiesthisCourtsstatementinSangerv.Dennis that[t]heSecretarysdefinitionismuchmorethananefforttodefinetheterm. Itcanbereadtoeffectivelyadd,tomodify,andtoconflictwiththeconstitutional provision.Sanger,148P.3dat413. 3. SimilaritytothePriorRuleisIrrelevanttotheAnalysisof WhetherRule1.7ViolatestheColoradoConstitutionand Statutes.

Initsorder,thedistrictcourtfocusedthemajorityofitsanalysisregarding Rule1.7onacomparisonbetweenthetextofthisruleandthepriorregulatory definitionofelectioneeringcommunicationsinformerRule9.4.Thecourtheld

37

thatnewruleaddsnosubstantiveadditionaltermsandimposesnoadditional restrictionsovertheoldruleandthatthechallengedruleissimilartotherule enactedbyDefendantspredecessor,anditthereforeisentitledtodeference (citingIngramv.Cooper,698P.2d1314(Colo1985)).(Order,CDpage389.) WhentheCourtinvalidatedtheotherregulationsatissueinthiscase,itdid notengageinsuchacomparisontopriorrulesgoverningpoliticalcommitteesor politicalorganizations.Instead,theCourtproperlyevaluatedthenewlyenacted regulationsstandingalonetoseeiftherulesexceedingtheSecretarysauthority, contradictedconstitutionalorstatutoryprovisions,orwerearbitraryandcapricious understandardsofadministrativereview.Thus,theextenttowhichRule1.7is similartoformerRule9.4isirrelevanttoadeterminationofthevalidityoftherule. UnderC.R.S.244106(7)thecourtmustholdanagencyruleinvalidifitis showntobearbitraryandcapriciousorcontrarytolawthereisnostatutory exceptionforrulesbasedonhowsimilarthenewlyenactedruleistoaprior regulation.Asseenabove,Rule1.7explicitlyaddsconditionstotheconstitutional definitionofelectioneeringcommunicationsandshouldbeheldinvalidwithout regardtothepreciselanguageofformerRule9.4. Norisacourtrequiredtoaccordheighteneddeferencetoarulebasedon lackofchallengetoasimilarruleinthepast.TheIngramcaserelieduponbythe

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districtcourtisnotcontrollinginthismatter.Theplaintiffsinthatcasechallenged theDepartmentofCorrectionscalculationofgoodtimecredits,whichhadbeen doneusingthesamemethodsince1935andhadbeenunchallengeduntilthe Ingramchallengein1982.Ingram,698P.2dat1316.Thatisnotthecircumstance oftheRulechallengedinthiscase.ProposedRule1.7srevisionofthedefinition ofelectioneeringcommunicationswasfirstpresentedforpubliccommentinthe Secretarys2011noticeofrulemaking.ThiswastheappropriatetimeforEthics Watch,CCCandmanyotherindividualsandgroupstoexpresstheirobjectionto thenewsubsectionsaddedintheproposedRule. Indeed,manycommenterspointedtothenewlanguageandinformedthe Secretaryhowtheseproposedchangeswouldlimitdisclosuresand,ultimately, informationtovoters.See,e.g.,ARTab53(commentsofPlannedParenthood VotesColorado)Tab520at2(commentsofCitizensforIntegrity)Tab532at2 (commentsofCCC)Tab541at2(commentsofColoradoDemocraticParty) Tab542at2(commentsofEthicsWatch)Tab546(commentsofColorado ConservationVoters)Tab547(commentsofOneColorado).Publictestimony alsoinformedtheSecretarythateightjusticesoftheU.S.SupremeCourtin CitizensUnitedheldthatelectioneeringcommunicationsdisclosureprovisions whichdonotprohibitcorporationsorlaborunionsfrommakingsuch

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communicationsarenotrequiredtobelimitedtoafunctionalequivalenttestin ordertocomplywiththeFirstAmendment.SeeARTab532at2(commentsof CCC)Tab541at2(commentsofColoradoDemocraticParty)Tab542at2 (commentsofEthicsWatch). Nonetheless,theSecretarymadeachoicetorevisetheregulatorydefinition inRule1.7fromthepriorlanguageinformerRule9.4.Thatchoiceisreviewable bythecourtunderanarbitraryorcapriciousorcontrarytolawstandardwithout anyextradeferencewhichwouldplaceathumbonthescaleinfavoroftherules validity.SeeBd.ofCountyCommrs,157P.3dat1089(deferenceisnot appropriateifagencyinterpretationdefeatsstatutoryintentorplainmeaningof statute). ButevenassumingthatitisrelevanttocompareRule1.7toformerRule9.4 asapartoftheAPAreview,thedistrictcourterredinholdingthatthenewrule doesnotimposesubstantiveadditionaltermsinthedefinitionofelectioneering communications.Rule1.7usesatermnotfoundinformerRule9.4the functionalequivalentofexpressadvocacyandproceedstoexplainwhatisand isnotencompassedbythatnewphrase.Rule1.7.3isawhollynewsubsection whichaddsaroadmapforgroupsseekingtoavoidconstitutionaldisclosureofthe moneyfinancingcampaignadvertising.Thesafeharboraddedtotherule

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providesagetoutofreportingfreecardforcommunicationsthatotherwisemeet theconstitutionaldefinitionofelectioneeringcommunications.Thisillustratesthe substantialchangesthatRule1.7madetothestandardsoftheformerRule. 4. OtherCourtsHaveRejectedLimitsonElectioneering CommunicationsDisclosuresSimilartoRule1.7Pursuantto CitizensUnited.

AftertheU.S.SupremeCourtsdecisionin2010,othercourtshavereviewed statelevelelectioneeringcommunicationsprovisionsandconsistentlyheldthatthe functionalequivalentlimitationneednotbegraftedontodisclosureonly regimes.See,e.g.,NatlOrg.forMarriage,Inc.,649F.3dat54(statingfunctional equivalentlineofcasescametoadefinitiveendwithCitizensUnited)Human LifeofWashingtonv.Brumsickle,624F.3d990,1016(9thCir.2010)(stating CitizensUnitedrefusedtoapplyfunctionalequivalentstandardtodisclosure) NatlOrg.forMarriage,Inc.v.CruzBustillo,2012U.S.App.Lexis9898(11th Cir.2012)(unpublished)(rejectingpercuriamchallengetostatedisclosurelimits citingCitizensUnitedandFirstCircuitNatlOrg.forMarriagecase)Vermont RighttoLifev.Sorrell,875F.Supp.2d376,386(D.Vt.2012)(statingCitizens Unitedrejectedtheargumentthatelectioneeringcommunicationsdisclosure provisionscouldonlycoverexpressadvocacyoritsfunctionalequivalent)see alsoRealTruthAboutAbortionv.F.E.C.,681F.3d544,552(4thCir.2012)(noting

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mandatorydisclosurerequirementsarepermissiblewhenappliedtoadsthat merelymentionacandidateinfederallawafterCitizensUnited). Sincethedistrictcourtsorderinthiscase,theU.S.CourtofAppealsforthe SeventhCircuitdiscussedthestateofelectioneeringcommunicationsandsimilar campaignfinancedisclosurelawsafterCitizensUnitedinafacialchallengeto Illinoissstatelaws.SeeCenterforIndividualFreedomv.Madigan,697F.3d464 (7thCir.2012).Thecourtnotedthatallfederalcourtofappealsthathavedecided postCitizensUnitedchallengestostatedisclosurestatuteshaveupheldthestatutes. Seeidat470.Thecourtalsoheldthatelectioneeringcommunicationsprovisions instatelawmayconstitutionallycovermorethanjustexpressadvocacyandits functionalequivalentunderCitizensUnited.Id.at484. TheSecretaryenactedRule1.7basedonhisownfaultyinterpretationof federalcampaignfinancelaw.ThisCourtsdenovoreviewneednotgive deferencetothisagencyanalysisandshouldholdthatsuchlimitationsarenot constitutionallyrequired.Thus,Rule1.7isinvalid. V.CONCLUSION Forthesereasons,andthereasonsstatedinthePaladinoPartiesAnswer Brief,theCourtshouldaffirmthedistrictcourtsjudgmentholdingvoidCampaign andPoliticalFinanceRules1.10,1.12,1.18,7.2and18.1.8ashavingbeenenacted

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inexcessoftheSecretaryofStatesauthority.EthicsWatchandCCCalso respectfullyrequestthattheCourtenteranorderreversingthedistrictcourts judgmentupholdingCampaignandPoliticalFinanceRule1.7,andremandingthis casetothatcourtwithinstructionstoenterjudgmentthattheruleisvoidas exceedingtheSecretaryofStatesrulemakingauthority.

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 RespectfullysubmittedonMarch8,2013. signedoriginalonfile signedoriginalonfile /s/JenniferH.Hunt___________ /s/MargaretPerl________________ JenniferH.Hunt LuisToro Hill&Robbins,P.C. MargaretPerl 144118thStreet,Suite100 ColoradoEthicsWatch Denver,CO802021256 1630WeltonStreet,Suite415 Denver,CO80202 AttorneyforAppellee/CrossAppellant ColoradoCommonCause AttorneysforAppellee/CrossAppellant ColoradoEthicsWatch

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 CERTIFICATEOFSERVICE Theundersignedherebycertifiesthatonthe8thdayofMarch,2013,service oftheforegoingJOINTOPENINGANSWERBRIEFwasmadeviaLexisNexis File&Serve,addressedasfollows: LeAnnMorrill FrederickR.Yarger MatthewGrove StateServicesSection OfficeoftheAttorneyGeneral 1525ShermanStreet,7thFloor Denver,CO80203 MarkGrueskin HeizerPaulGrueskinLLP 240115thStreet,Suite300 DenverCO80202 signedoriginalonfile s/RaeMacias

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