court of appeals joint answer-opening brief

7/29/2019 Court of Appeals Joint Answer-Opening Brief

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COLORADO COURT OF APPEALSCourt Address: 101 W. Colfax Ave., Suite 800Denver, CO 80202

District Court, City and County of Denver

Honorable J. Eric Elliff, JudgeCase Nos. 2012CV2133 and 2012CV2153

______________________________________Appellees/Cross-Appellants: COLORADO ETHICSWATCH and COLORADO COMMON CAUSE

And

Appellants/Cross-Appellees: DAVID PALADINOMICHAEL CERBO PRO-CHOICE COLORADO PACPPRM BALLOT ISSUE COMMITTEE and CITIZENS

FOR INTEGRITY, INC.

v.

Appellant/Cross-Appellee: SCOTT GESSLER, in hisofficial capacity as Colorado Secretary of State

_______________________________________Attorneys for Colorado Ethics Watch:Luis Toro, #22093Margaret Perl, #431061630 Welton Street, Suite 415

Denver, CO 80202Telephone: 303-626-2100Email: [email protected]

[email protected]

Attorneys for Colorado Common Cause:Jennifer H. Hunt, #29964Hill & Robbins, PC1441 18th Street, Suite 100Denver, CO 80202Telephone: 303-296-8100

Email: [email protected]

COURT USE ONLY ________________________

Case No. 12 CA 1712

JOINT OPENING-ANSWER BRIEF


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CERTIFICATE OF COMPLIANCE

I hereby certify that this brief complies with all requirements of C.A.R. 28 andC.A.R. 32, including all formatting requirements set forth in these rules.Specifically, I certify that:

The brief complies with C.A.R. 28(g).

It contains 9,282 words.

It does not exceed 30 pages.

The brief complies with C.A.R. 28(k). For the party raising the issue:

It contains under a separate heading (1) a concise statement of theapplicable standard of appellate review with citation to authority and (2) acitation to the precise location in the record (R. , p. ), not to an entiredocument, where the issue was raised and ruled on. For the party responding to the issue:

It contains, under a separate heading, a statement of whether suchparty agrees with the opponents statements concerning the standard ofreview and preservation for appeal, and if not, why not.

I acknowledge that my brief may be stricken if it fails to comply with any of therequirements of C.A.R. 28 and C.A.R. 32.

s/ Jennifer H. Hunt

Jennifer H. HuntAttorney for the Appellee/Cross-AppellantColorado Common Cause


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TABLE OF CONTENTS

I. STATEMENT OF ISSUES PRESENTED FOR REVIEW...................................1

II. STATEMENT OF THE CASE .............................................................................1

III. SUMMARY OF ARGUMENT ........................................................................ 10

IV. ARGUMENT.................................................................................................... 13

A. Standard of Review ............................................................................ 13

B. The District Court Properly Invalidated Rules 1.10, 1.12, 1.18and 7.2 as Impermissible Attempts to Inject the SecretarysOwn Interpretation of First Amendment Case Law to Change

Constitutional and Statutory Requirements. ...................................... 15

1. The Secretarys Political Organization Definition (Rules1.10 and 7.2) Effectively Repeals the Political OrganizationDisclosure Statute.......................................................................... 15

2. Adding a Percentage Threshold to the Issue CommitteeDefinition (Rule 1.12) Arbitrarily Reduces the Scope of theConstitutional and Statutory Provisions........................................ 23

3. The Political Committee Definition (Rule 1.18) Improperly

Limits the Constitutional Definition. ............................................ 27C. The District Court Properly Invalidated Rule 18.1.8 as

Exceeding the Secretarys Delegated Authority. ............................... 29

D. The District Court Erred in Upholding Rule 1.7................................ 31

1. Standard of Review ....................................................................... 31

2. Rule 1.7 Modifies and Contravenes the ColoradoConstitution and Statutory Definitions of ElectioneeringCommunications. .......................................................................... 32

3. Similarity to the Prior Rule is Irrelevant to the Analysis ofWhether Rule 1.7 Violates the Colorado Constitution andStatutes. ......................................................................................... 37

4. Other Courts Have Rejected Limits on ElectioneeringCommunications Disclosures Similar to Rule 1.7 Pursuant toCitizens United. ............................................................................. 41


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


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TABLE OF AUTHORITIES

Cases

Alliance for Colorados Families v. Gilbert, 172 P.3d 964 (Colo. App. 2007) ..... 29

Bd. of County Commrs v. Colo. Pub. Utils. Commn, 157 P.3d 10838 (Colo.2007).............................................................................................................. 14, 40

Buckley v. Valeo, 424 U.S. 1 (1976)................................................................. 19, 20

Ceja v. Lemire, 154 P.3d 1064 (Colo. 2007) .......................................................... 17

Center for Individual Freedom v. Madigan, 697 F.3d 464 (7th Cir. 2012) ............ 42

Cerbo v. Protect Colorado Jobs, Inc., 240 P.3d 495 (Colo. App. 2010) ......... 24, 25

Citizens United v. F.E.C., 558 U.S. 310, 130 S. Ct. 876 (2010) ..................... passim

Colo. Citizens for Ethics in Govt v. Comm. for the Am. Dream , 187 P.3d1207 (Colo. App. 2008) ...................................................................................... 35

Colo. Ethics Watch v. Clear the Bench Colo., 2012 COA 42 ...................................3

Colo. Ethics Watch v. Senate Majority Fund, LLC, 2012 CO 12.................... passim

Colo. Office of Consumer Counsel v. Colo. Public Utils. Commn , 2012 CO33 (Colo. 2012) ............................................................................................. 14, 31

Colo. Right to Life Comm. v. Coffman, 498 F.3d 1137 (10th

Cir. 2007) .......... 28, 35Colorado Citizens for Ethics in Govt v. Comm. for Am. Dream, 187 P.3d

1207 (Colo. App. 2008) ...................................................................................... 14

Colorado Common Cause v. Gessler, Denver Dist. Ct. Case No.2011CV4164 (Order, Nov. 17, 2011) .......................................................... passim

F.E.C. v. Wisconsin Right to Life, 551 U.S. 449 (2007)....................... 33, 34, 35, 36

Frazier v. People, 90 P.3d 807 (Colo. 2004).......................................................... 23

Harwood v. Senate Majority Fund, LLC, 141 P.3d 962 (Colo. App. 2006)........... 35

Human Life of Washington v. Brumsickle, 624 F.3d 990 (9th Cir. 2010) ............... 41

In Re Interrogatories Propounded by Governor Ritter, Jr. Concerning the

Effect of Citizens United v. Federal Election Commn, 558 U.S.___ (2010)on Certain Provisions of Article XXVIII of The Constitution of the State of

Colorado, 227 P.3d 892 (Colo. 2010)........................................................... 34, 35


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Independence Institute v. Coffman, 209 P.3d 1130 (Colo. App. 2008)............ 24, 26

Ingram v. Cooper, 698 P.2d 1314 (Colo 1985) ................................................ 38, 39

League of Women Voters of State v. Davidson, 23 P.3d 1266 (Colo. Ct. App.2001).................................................................................................................... 29

Marbury v. Madison, 5 U.S. 137 (1803)................................................................. 13

Natl Org. for Marriage, Inc. v. Cruz-Bustillo, 2012 U.S. App. Lexis 9898(11th Cir. 2012).................................................................................................... 41

Natl Org. for Marriage, Inc. v. McKee, 649 F.3d 34 (1st Cir. 2011)..................... 20

NM Youth Organized v. Herrera, 611 F.3d 669 (10th Cir. 2010) ........................... 29

Patterson Recall Comm., Inc. v. Patterson, 209 P.3d 1210 (Colo. App. 2009)........4People v. Lowrie, 761 P.2d 778 (Colo. 1988)......................................................... 13

Real Truth About Abortion v. F.E.C., 681 F.3d 544 (4th Cir. 2012)....................... 41

Sampson v. Buescher, 625 F.3d 1247 (10th Cir. 2010) .............................................5

Sangerv. Dennis, 148 P.3d 404 (Colo. App. 2006) ......................................... 32, 37

State v. Nieto, 993 P.2d 493 (Colo. 2000) .............................................................. 17

Vermont Right to Life v. Sorrell, 875 F. Supp. 2d 376 (D. Vt. 2012)..................... 41

Statutes

26 U.S.C. 527....................................................................................................... 18

C.R.S. 1-45-101, et seq. ..........................................................................................1

C.R.S. 1-45-103 ............................................................................................ passim

C.R.S. 1-45-108 ............................................................................................ passim

C.R.S. 1-45-111.5 ................................................................................................ 30

C.R.S. 24-4-106 ................................................................................. 14, 26, 32, 38

Other Authorities

2010 Colo. Sess. Laws 1239 ................................................................................... 27

Colo. Const. art. XXVIII.................................................................................. passim

Fair Campaign Practices Act .....................................................................................1


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I. STATEMENT OF ISSUES PRESENTED FOR REVIEW

1. Whether the Secretary of States authority to enact rules to

administer and enforce Article XXVIII of the Colorado Constitution and the Fair

Campaign Practices Act extends to rules that contradict or amend those laws, based

on his personal interpretation of the First Amendment.

2. Whether the Secretary of State exceeded his authority when enacting a

rule that places a cap on fines that can be assessed for certain late filings under the

Colorado Constitution and statutes, regardless of whether the violator applies for a

fine waiver or demonstrates good cause.

3. Whether the District Court erred in upholding a Secretary of State

Rule that excused from disclosure requirements spending on advertisements that

meet the constitutional definition of electioneering communication but do not

engage in express advocacy or its functional equivalent as defined by that Rule.

II. STATEMENT OF THE CASE

The heart of this case is the fundamental principle that the Colorado

Secretary of State does not have the authority to impose his own idiosyncratic

interpretation of the First Amendment upon Colorado campaign finance law

through rulemaking that effectively amends the Colorado Constitution and the Fair

Campaign Practices Act (FCPA), C.R.S. 1-45-101 118.


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In 2002, Colorado voters passed Amendment 27, which became Article

XXVIII of the Colorado Constitution. Article XXVIII creates a comprehensive

campaign and political finance system, including disclosure requirements that

apply to various categories of participants in the elections process, such as issue

committees and political committees, and public disclosure filings required when

certain types of advertisements called electioneering communications are

distributed in the last weeks before an election. Section 1 of Article XXVIII states

that the interests of the public are best served by . . . providing for full and timely

disclosure of campaign contributions.

Consistent with this purpose, the FCPA requires issue committees and

political committees to register and report all contributions, the names and

addresses of all persons who contribute twenty dollars or more, and all

expenditures. C.R.S. 1-45-108(1)(a)(I) (2011). The statement of registration

must include the name of the committee the name of a registered agent the

committees address and telephone number the identities of all affiliated

candidates and committees and the purpose or nature of interest of the

committee. C.R.S. 1-45-108(3). Issue committee is defined, in part, as any

group that has accepted or made contributions or expenditures in excess of two

hundred dollars to support or oppose any ballot issue or ballot question. Colo.


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Const. art. XXVIII, 2(10)(a)(II). Political committee (sometimes colloquially

referred to as PAC from the analogous federal term, political action

committee) is defined, in part, as any group that has accepted or made

contributions or expenditures in excess of two hundred dollars to support or oppose

the nomination or election of one or more candidates. Colo. Const. art. XXVIII,

2(12)(a)see alsoColo. Ethics Watch v. Clear the Bench Colo., 2012 COA 42,

12 (hereinafter Clear the Bench).

In response to concerns that so-called 527 groups were spending money to

influence Colorado elections without expressly supporting or opposing candidates

and therefore without disclosure as political committees, the General Assembly

amended the FCPA in 2007. See C.R.S. 1-45-103(14.5) and 108.5. Section

103(14.5) defined as a political organization any group that is engaged in

influencing or attempting to influence the selection, nomination, election, or

appointment of any individual to any state or local public office in the state and

that is exempt, or intends to seek any exemption, from taxation pursuant to section

527 of the internal revenue code and Section 108.5 requires political

organizations to file reports of contributions and spending in excess of twenty

dollars. See Colo. Ethics Watch v. Senate Majority Fund, LLC, 2012 CO 12


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(hereinafter Senate Majority Fund) (groups that were properly registered as

political organizations were not required to register as political committees).

Amendment 27 also established a two-track enforcement system. Late

filings are subject to a fine of $50 per day, but may be reduced by the Secretary

upon a showing of good cause. Colo. Const. art. XXVIII, 10(2). All other

violations of Article XXVIII and the FCPA are enforced only through a litigation

process pursuant to which any person may file a complaint with the Secretary,

who refers the case to an administrative law judge for resolution. Colo. Const. art.

XXVIII, 9(2)(a). Courts in such cases may impose fines of up to $50 per day for

violations of disclosure requirements or from double to five times the amount of an

illegal contribution. Colo. Const. art. XXVIII, 10(1)-(2)see also Patterson

Recall Comm., Inc. v. Patterson, 209 P.3d 1210, 1216 (Colo. App. 2009).

This is the second case to reach this Court regarding this Secretarys

attempts to use his personal interpretation of the First Amendment as a vehicle to

weaken Colorados campaign finance laws. The first case arose from the

Secretarys enactment on May 13, 2011 of Campaign and Political Finance Rule

4.27, which purported to relieve issue committees of any obligation to register or

report contributions and expenditures until they had raised or spent $5000, not

$200 as expressly stated in the Colorado Constitution. The Secretary contended


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that this rule was supported by his interpretation of First Amendment case law,

including specifically Sampson v. Buescher, 625 F.3d 1247 (10th Cir. 2010).

Colorado Common Cause (CCC) and Colorado Ethics Watch (Ethics Watch)

filed suit challenging the rule on the ground that the Secretary lacked authority

effectively to rewrite the constitutional definition of issue committee. On

November 17, 2011 the Denver District Court entered judgment that Rule 4.27 was

invalid. Colorado Common Cause v. Gessler, Denver Dist. Ct. Case No.

2011CV4164 (Order, Nov. 17, 2011), a copy of which is in the Administrative

Record (AR), Tab 5-42 (Exhibit 1 to comments of Ethics Watch). After

explaining that the Secretarys expansive interpretation ofSampson as striking

down the $200 reporting threshold in all its applications was incorrect, the district

court went on to address the Secretarys limited authority to administer and

enforce campaign finance laws, holding that the Secretary could not promulgate

rules that abrogate existing constitutional and statutory requirements. Id. at pp. 6-

7.

On November 15, 2011, after oral argument but just before the district

courts final order in the issue committee threshold case, the Secretary issued a

Notice of Rulemaking Hearing and Proposed Statement of Basis, Purpose and

Specific Statutory Authority. (AR Tab 1.) Unlike the issue committee threshold


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rule, which was prompted by the Tenth Circuits ruling in Sampson, this

rulemaking was not prompted by any particular legislative or judicial directive, but

to generally clarify existing laws and regulations and address questions arising

under State campaign and political finance. See id.

The Secretary proposed revising the entirety of the Rules Concerning

Campaign and Political Finance at 8 C.C.R. 1505-6 (Rules) and included in the

proposal substantive amendments to numerous Rules. A revised notice and set of

proposed rules was issued on December 9, 2011. (AR Tabs 2 and 3.) Pursuant to

the revised notice, a public hearing was held on December 15, 2011. (AR Tabs 4,

5 and 6.)

At the hearing and in written comments submitted by interested parties, the

Secretary was repeatedly warned that several of the proposed rule changes

exceeded his legal authority to administer and enforce Article XXVIII and the

FCPA by effectively amending those duly enacted laws. See Transcript of

December 15, 2011 Rulemaking Hearing (Trans.) at 25-28 (testimony of Senator

John Morse) 68-71 (testimony of Luis Toro) 80-94 (testimony of Martha

Tierney) 131-34 (testimony of Grace Lopez Ramirez) AR Tab 5-2 (comments of

Planned Parenthood of the Rocky Mountains) 5-3 (comments of Planned

Parenthood Votes Colorado) 5-10 (comments of The Bell Policy Center) 5-11


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(comments of Senator Morgan Carroll) 5-20 (comments of Mark Grueskin, Esq.

for Citizens for Integrity) 5-32 (comments of CCC) 5-36 (comments of Mi

Familia Vota Education Fund) 5-41 (comments of Martha Tierney, Esq. for

Colorado Democratic Party) 5-42 (comments of Ethics Watch).

These warnings went unheeded. On February 22, 2012, the Secretary issued

the completely revised and recodified Rules. Pertinent to this action, the new

Rules provided that: (1) a 527 group need not report contributions or spending

unless it both had a major purpose of supporting or opposing candidates in

Colorado and it engaged in express advocacy for or against candidates (2) that

an issue committee need not register or report unless and until it spent 30% of its

annual budget on a ballot issue (3) that a political committee need not register

unless and until it spent a majority of its annual budget on supporting or

opposing candidates for Colorado office (4) that contributions and spending on

electioneering communications need not be disclosed under a variety of

circumstances, such as when the communication merely urges a candidate to take

a position with respect to an issue or urges the public to adopt a position and

contact a candidate with respect to an issue (5) that a political party in a home

rule jurisdiction could establish a separate account to raise unlimited contributions

for county committees in home rule counties with their own campaign finance


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laws and (6) that penalties for failure to file major contributor reports under

C.R.S. 1-45-108(2.5) within twenty-four hours of receiving a contribution of

$1000 or more during the last thirty days before an election would stop accruing on

the earlier of Election Day or the date the contribution was disclosed on a regular

contribution and expenditure report.1 The rulemaking also renumbered Rule 4.27,

the $5000 issue committee disclosure rule that had already been struck down by

the Denver District Court, as Rule 4.1, and extended the $5000 registration and

reporting threshold to recall committees. (AR Tab 8.)

Ethics Watch and CCC timely filed a suit for judicial review and declaratory

judgment, challenging several of the new Rules as exceeding the Secretary of

States authority. (Complaint, CD pages 1-16.) The suit was consolidated with a

similar suit filed by David Paladino, Michael Cerbo, Pro-Choice Colorado PAC,

PPRM Ballot Issue Committee, and Citizens for Integrity, Inc. (the Paladino

Parties). (Complaint, CD pages 21-36.)

While the suit was pending before the district court, the Secretary issued

revisions to the Rules that affected two issues in the lawsuit. The Secretarys

revisions to the Rules governing political parties operating in home rule counties

rendered Ethics Watchs and CCCs challenge to new Rule 14.4 regarding political

1 The Rules at issue in this case are all included in Addendum A attached to theSecretarys Opening Brief.


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party contribution limits moot. (Joint Opening Brief, CD page 188 n.1.) The other

revision changed Rule 4.1 to clarify that the $5000 threshold for issue and recall

committee reporting would not take effect unless and until the Denver District

Courts decision in Colorado Common Cause, et al. v. Gessler(discussed above)

was reversed.

After briefing and oral argument, the trial court entered judgment on August

10, 2012, invalidating new Rules 1.10 1.12 1.18 7.2 and 18.1.8 (regarding the

definitions of political organization, issue committee, political committee

and a cap on penalties for failure to file major contributor reports) on the ground

that the Rules impermissibly contradicted the Colorado Constitution or the FCPA.

(Order, CD pages 385-395.) Contrary to the Secretarys repeated contention, the

district court did not hold that the Secretary cannot promulgate rules or regulations

to codify legal standards imposed by controllingcase precedent. Rather, the

district court determined that these rules improperly modified or contravened

existing statutes without any legal basis or authority, given that the applicable

statutes had not been declared facially unconstitutional.

The court upheld, however, the new Rule 1.7 regarding the definition of

electioneering communications on the ground that, in the courts view, the rule

was similar enough to the rule that preceded it that it was entitled to judicial


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deference notwithstanding the argument that it contradicted the plain language of

the Colorado Constitution. Finally, the district court found that the challenge to

Rule 4.1 was unripe because that rule had been set aside in Colo. Common Cause,

et al. v. Gessler.

On August 30, 2012, this Court entered its decision in Colo. Common Cause

v. Gessler, 2012 COA 147, affirming the district courts ruling that the $5000 issue

disclosure rule was invalid because it exceeded the Secretarys authority.

(Colorado Common Cause v. Gessler COA Opinion, CD pages 456-472).

The Secretary appeals the district courts invalidation of Rules 1.10, 1.12,

1.18, 7.2 and 18.1.8 and Ethics Watch and CCC cross-appeal the district courts

refusal to invalidate Rule 1.7.

III. SUMMARY OF ARGUMENT

The United States and Colorado Constitutions vest in the legislature the

power to make laws and the judiciary the power to interpret them. The

fundamental underpinning of the Secretarys argument in support of his

rulemaking is that he was simply adopting controlling legal standards announced in

federal and state court decision. However, as the district court recognized, the

Secretarys rules go beyond the incorporation of controlling case law and in fact

attempt to rewrite campaign finance laws based on his interpretation of the First


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Amendment, no different from a rogue sheriffs claim that firearms laws do not

apply in his or her jurisdiction based on the sheriffs own personal interpretation of

the Second Amendment.

A straightforward review of the Rules illustrates the significant

inconsistencies between the Rules and the constitutional and statutory provisions

which the Secretary has a duty to administer and enforce. This case is

indistinguishable from Colorado Common Cause v. Gessler, 2012 COA 147,

except the rule changes under review here do not even have the fig leaf of

justification that the Tenth Circuits Sampson ruling provided in Colorado

Common Cause. The Secretarys personal interpretation of First Amendment case

law simply cannot justify rules that contradict express provisions of the Colorado

Constitution or the FCPA.

The overall effect of the Secretarys changes is to narrow the scope of

constitutional and statutory requirements to register, report, and submit to

contribution limitations. Reaching back for judicial precedents to justify this

power grab, the Secretary disregarded testimony in the rulemaking process

regarding the decrease in transparency that would result directly contrary to voter

and general assembly intent. Far from filling gaps in the law, these rules make


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different policy choices than the general assembly, even in situations where

legislation has specifically responded to judicial precedent by amending the FCPA.

In this case, the Secretarys reading of First Amendment precedent ignores

the significant distinction between contribution limits and disclosure requirements.

Because contribution limits arguably stifle speech by limiting the amount of money

available to broadcast political messages, doctrines have emerged to limit the

circumstances under which governments may lawfully enact such limits. All but

one of the laws that would be rewritten by the Secretarys Rules, in contrast,

merely require disclosure of contributions and political spending, which the

Supreme Court has repeatedly held are not subject to the same scrutiny or

boundaries as contribution limits. Yet the revised Rules treat disclosure rules as if

they were identical to contribution limits, and improperly import concepts from

contribution limit cases to restrict the application of disclosure laws, thereby

depriving the people of their right to know who spent money to influence their

vote.

While the district court properly held that Rules 1.10, 1.12, 1.18, 7.2 and

18.1.8 exceed the Secretarys rulemaking authority, it erred in upholding Rule 1.7.

That rule radically restricts the definition of electioneering communications in

blatant disregard of the plain language of the Colorado Constitution and the U.S.


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Supreme Courts decision in Citizens United v. F.E.C., 558 U.S. 310, 130 S. Ct.

876 (2010), which rejected the need for such restrictions in the context of

disclosure laws.

IV. ARGUMENT

A. Standard of ReviewThe Secretary mischaracterizes both the standard of review and the district

courts application of that standard. See Secretarys Opening Br. at 11-12. The

Secretary is not a judge who may interpret the law, nor a legislative body that can

translate those interpretations into amendments of duly enacted laws. See Marbury

v. Madison, 5 U.S. 137, 177 (1803) (the judicial branchs role is to say what the

law is)People v. Lowrie, 761 P.2d 778, 781 (Colo. 1988) (nondelegation

doctrine, which has its source in the constitutional separation of powers, prohibits

the General Assembly from delegating its legislative power to some other agency

or person). He is merely an administrator of the laws enacted by the General

Assembly or the People exercising their legislative power through the initiative

process.

The question is not, as the Secretary would have it, whether a rule within the

Secretarys powers is permissible under governing standards. See Secretarys

Opening Br. at 13. Rather, a reviewing court may reverse an administrative


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agency's action if the court finds that the agency exceeded its constitutional or

statutory authority or made an erroneous interpretation of law, both of which are

questions of law reviewed de novo. Colo. Common Cause, 2012 COA 147, 15-

16see alsoColo. Office of Consumer Counsel v. Colo. Public Utils. Commn ,

2012 CO 33, 9 (Colo. 2012) (We review de novo questions of law, but defer to

the [agencys] determination of factual issues).

In undertaking this review, the court shall determine all questions of law

and interpret the statutory and constitutional provisions involved. C.R.S. 24-4-

106(7) (standards for judicial review of agency action). Although the court does

defer to the agencys interpretation of the statutes and constitutional provisions it is

charged with administering, its interpretation is not binding. Bd. of County

Commrs v. Colo. Pub. Utils. Commn, 157 P.3d 1083, 1088 (Colo. 2007)

Colorado Citizens for Ethics in Govt v. Comm. for Am. Dream, 187 P.3d 1207,

1214 (Colo. App. 2008). Moreover, this limited deference does not extend to the

Secretarys interpretation or application of the First Amendment, which does not

involve any agency technical expertise. SeeBd. of County Comm'rs, 157 P.3d at

1089. A reviewing court is never bound by the agencys action that has resulted

from a misconstruction or misapplication of the law. Colo. Citizens for Ethics in

Govt, 187 P.3d at 1214 (an agencys decision should be reversed if the agency


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erroneously interpreted the law or exceeded its constitutional or statutory

authority). The district court properly applied this level ofde novo review and

limited deference when invalidating Rules 1.10, 1.12, 1.18, 7.2 and 18.1.8. (Order,

CD pages 386-387.)2

Appellees/Cross-Appellants agree that the issues were preserved for appeal.

B. The District Court Properly Invalidated Rules 1.10, 1.12, 1.18 and 7.2 asImpermissible Attempts to Inject the Secretarys Own Interpretation of

First Amendment Case Law to Change Constitutional and StatutoryRequirements.

1. The Secretarys Political Organization Definition (Rules 1.10 and7.2) Effectively Repeals the Political Organization Disclosure

Statute.

In adopting Rules 1.10 and 7.2, the Secretary boldly collapsed the distinction

between political committees and political organizations, effectively rewriting

C.R.S. 1-45-103(14.5) and 108.5 by engrafting restrictions purportedly justified

by federal contribution limit cases regarding PACs onto a disclosure-only regime

for 527 groups. The district court properly characterized this usurpation of

legislative and judicial power as contrary to the clear terms of the statute and the

intent of the legislature and held that these Rules exceed[d the Secretarys]

delegated authority. (Order, CD page 393).

2At another point in his brief, the Secretary concedes that agency discretion is not

unlimited and deference is not absolute when a rulemaking proceeding interpretscase law. See Secretarys Opening Br. at 21.


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Under Colorado law, political committees are entities subject to

contribution limitations in addition to registration and disclosure requirements. See

Colo. Const. art. XXVIII 3(5). Political committee status is triggered by

accepting or making contributions or expenditures in excess of $200 to support

or oppose candidates. See Colo. Const. art. XXVIII 2(12)(a). Expenditure is

also a defined term in Article XXVIII, meaning moneys spent for the purpose of

expressly advocating the election or defeat of a candidate or ballot measure. See

Colo. Const. art. XXVIII 2(8)(a). Thus, an organization is only required to

register, report, and comply with contribution limitations as a political committee

when it makes express advocacy expenditures. See Senate Majority Fund, 2012

CO 12, 18-19.

Recognizing that so-called 527 groups were avoiding words of express

advocacy so as to evade political committee registration and reporting

requirements, the General Assembly acted in 2007 to create disclosure-only rules

for such groups. The new statutory provisions in 1-45-103(14.5) and 108.5

recognize a new type of disclosure-only entity political organizations which

are not subject to contribution limits.

The General Assembly deliberately chose to avoid the legally significant

terms expenditure or express advocacy, which apply to political committees,


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when defining political organization. Instead, it defined a political

organization as a group organized under Section 527 of the Internal Revenue

Code engaged in influencing or attempting to influence any candidate election in

Colorado. C.R.S. 1-45-103(14.5). The statute similarly avoided the word

expenditure by defining spending as funds expended influencing or

attempting to influence a candidate election. C.R.S. 1-45-103(16.5).

The clear language of the statute applies more broadly than the express

advocacy expenditures that already defined political committee status under

Article XXVIII. To say that attempting to influence means for the purpose of

expressly advocating is also to say that expenditure means spending and that

C.R.S. 1-45-108.5 does not require any disclosures other than those already

required for political committees. [A] statute should be construed as written,

giving full effect to the words chosen, as it is presumed that the General Assembly

meant what it clearly said. Ceja v. Lemire, 154 P.3d 1064, 1066 (Colo. 2007)

(citing State v. Nieto, 993 P.2d 493, 500 (Colo. 2000)).

The Secretarys addition of a requirement that a 527 group must have a

major purpose of influencing Colorado elections also contradicts the statute.

C.R.S. 1-45-103(14.5) applies to any political organization as defined in section

527(e)(1) of the [IRS code] that is engaged in influencing or attempting to


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influence the selection, nomination, election or appointment of any individual to

any state or local public office in the state. This language includes any 527

organization that is involved in candidate elections in Colorado there is no

threshold regarding how much of the groups activities must in be Colorado. 3

Rule 1.10 (incorporated by reference into Rule 7.2), on the other hand,

restricts the definition of political organizations not only to groups that engage in

express advocacy but also only to groups whose major purpose is to expressly

advocate in support of candidates, another defined term in Colorado campaign

finance law that refers only to candidates for Colorado offices. Colo. Const. art.

XXVIII, 2(2). Thus, a national 527 group could spend millions on ads to

influence Colorado elections without transparency, so long as they avoid the

magic words of express advocacy or continue to spend in other states. See

Senate Majority Fund, 2012 CO 12, 38. This result is directly contrary to both

the statutory language and legislative intent. See Comment of Sen. Morgan

3Under the Internal Revenue Code, a 527 organization must have a primary

purpose of influencing the election or appointment of officials at the state orfederal level. See 26 U.S.C. 527 (e)(1)-(2). Thus, a single 527 group may spendto influence Colorado elections, federal elections, and elections in other States.


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Carroll, AR Tab 5.11 (stating new Rules changes run 180 degrees opposite of the

legislative intent of legislation she authored mandating 527 disclosures).

4

The Secretary attempts to justify this result by relying on Buckley v. Valeo,

424 U.S. 1 (1976), which considered the constitutionality of federal regulation of

political committee and expenditures through contribution limitations and

outright prohibitions. While theBuckley Court used the concepts of express

advocacy and major purpose to limit federal statutory provisions under First

Amendment principles, theBuckley analysis is simply not relevant to Colorados

political organization statute, which creates only disclosure obligations and does

not limit speech through contribution limitations or prohibitions. See Senate

Majority Fund, 2012 CO 12, 7-8 & n.1 (explaining difference between political

organizations and political committees and noting that contribution limits apply

only to the latter) id. at 39 (Buckley adopted the express advocacy

requirement to distinguish discussion of issues and candidates from more pointed

exhortations to vote for particular persons) (further quotation omitted). Proof that

Buckley does not control the question presented is found in the 8-1 portion of the

Citizens United v. F.E.C. opinion, in which the Supreme Court held that no

4 Sen. Carroll also stated in her written comments that the Secretary, then a privatecitizen, was the only witness who testified against the political organizationdisclosure bill in committee, and admonished him that [r]ulemaking should not bean opportunity to re-legislate a different outcome.


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express advocacy limitation is constitutionally required when a law requires only

disclosure of election-related spending. See 558 U.S. 310, 130 S. Ct. 876, at 915-

16.

Regardless, the General Assembly specifically avoided the Buckley

standards of expenditure and express advocacy when delineating the triggering

conduct for political organizations under Colorado law. The Secretary argues that

by using the word influencing the General Assembly imported theBuckley

standard into the statute. Secretarys Opening Br. at 44-45. However,

influencing is not a technical term interpreted byBuckley Buckley interpreted

the technical terms political committee and expenditure by narrowing them for

First Amendment compliance to the use of money to engage in express

advocacy. SeeBuckley, 424 U.S. at 78-80Natl Org. for Marriage, Inc. v.

McKee, 649 F.3d 34, 64-66 (1st Cir. 2011) (refusing to applyBuckley narrowing to

the term influencing when the term is paired with other words in state statute).

Rule 1.10s attempt to add an express advocacy standard that was deliberately

avoided by the General Assembly is beyond the scope of the Secretarys delegated

authority.

The Secretary alternatively argues that Rule 7.2 only seeks to codify the

527 statutory primary purpose standard in its major purpose provision.


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Secretarys Opening Br. at 42-43. By deeming the words primary and major

to mean the same thing, the Secretarys argument ignores the substantive

difference between Rule 7.2s limitation and the statutory provision. The 527

primary purpose threshold applies to all campaign activity at the federal and

state level, across the country. Rule 7.2 places an additional limitation: not only

must the organization have a general primary purpose of engaging in election

activity across the country (thereby triggering 527 tax status), but its major

purpose must be focused on Colorado elections. The General Assembly defined

the reach of the political organization disclosure requirements to any 527

organizations operating or engaged in Colorado state or local candidate races.

Rule 7.2 is not an implementation and clarification of what it means to be a 527

organization it narrows the reach of the statute. Because the major purpose

limitation imposed byBuckley is not applicable to political organizations that are

not subject to contribution limits, there is no other justification for the narrowing of

the statute that results from Rule 7.2s major purpose requirement.

Under the Secretarys Rules, the categories of political committee and

political organization completely overlap: both only contain entities whose major

purpose is making express advocacy expenditures in Colorado candidate elections.

Yet, the two categories must have distinct and separate coverage because political


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committees are subject to contribution limits under Article XXVIII and political

organizations are disclosure-only entities.

A concrete example from the recent Senate Majority Fundcase illustrates

how Rules 1.10 and 7.2 collapse these two regimes. The two 527 groups engaged

in candidate-related activity in that case were both registered as political

organizations, but the complaint alleged that the groups crossed the line and

should have been subject to the contribution limits of political committees. See

Senate Majority Fund, 2012 CO 12, 7 & n.1. The Colorado Supreme Court

found that the voters who enacted Article XXVIII intended to adopt Buckleys

magic words test to determine when a group was engaged in express advocacy

because the 527 defendants did not use such words, they were not political

committees. Id. at 29, 40. The Court also noted, however, that the 527s

conceded that they were political organizations and that there was no dispute that

they were disclosing pursuant to C.R.S. 1-45-108.5. Senate Majority Fund, 2012

CO 12 at 7. If these same organizations were operating under the new Rules 1.10

and 7.2, the fact that they were not engaged in express advocacy would also have

excused them from reporting under C.R.S. 1-45-108.5. The separate statutory

category of political organization would have been erased by the Secretary


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charged with enforcing that law if it were not for the district courts order in this

case.

The Rules allow out-of-state 527 organizations to spend freely in Colorado

elections without disclosure so long as they are sufficiently engaged in other states

or at the federal level enough to avoid a major purpose threshold in Colorado, or

if they avoid the use of magic words that are the defining characteristic of

political committees. Each of these results is contrary to the General Assemblys

intent and the statutory language itself. A statutory interpretation leading to an

illogical or absurd result will not be followed. Frazier v. People, 90 P.3d 807,

811 (Colo. 2004). The district court correctly ruled that Rules 1.10 and 7.2 are

invalid.

2. Adding a Percentage Threshold to the Issue Committee Definition(Rule 1.12) Arbitrarily Reduces the Scope of the Constitutional

and Statutory Provisions

The General Assembly has amended campaign finance statutes to address

and incorporate judicial rulings in a proper example of the separation of powers

between the branches of government. However, the Secretarys adoption of Rule

1.12 upsets this balance by implementing his interpretation of judicial precedent on

top of the definition of issue committee in C.R.S. 1-45-103(12)(b). The district

court correctly held that Rule 1.12 adds a restriction not found in the statute and


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not supported by the record to the definition of issue committee and is invalid.

(Order, CD page 390.)

Issue committee is defined in Article XXVIII as a group with a major

purpose of supporting or opposing any ballot issue or ballot question. Colo.

Const. art. XXVIII 2(10)(a)(I). This Court has twice interpreted and applied the

major purpose test for issue committees. See Cerbo v. Protect Colorado Jobs, Inc.,

240 P.3d 495 (Colo. App. 2010)Independence Institute v. Coffman, 209 P.3d

1130 (Colo. App. 2008). InIndependence Institute, this Court rejected vagueness

and overbreadth challenges to the major purpose provision in Article XVIII and

articulated some of the factors that could be considered by a committee to

determine if the major purpose test was met. See Independence Institute, 209 P.3d

at 1139. Two years later, this Court observed in Cerbo that neither statutes nor

regulations further defined the major purpose test in Article XVIII 2(10)(a), but

still found no impermissible ambiguity in the phrase. See Cerbo, 240 P.3d at 501.

Later in 2010 after these two decisions the General Assembly enacted

clarifying legislation stating that major purpose can be determined through the

organizations objectives in organizational documents or the organizations

demonstrated pattern of conduct. C.R.S. 1-45-103(12)(b)(I)-(II). Going even

further, the statute states that the pattern of conduct is based upon:


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(A) Annual expenditures in support of or opposition to anballot issue or ballot question or

(B) Production or funding, or both, of written orbroadcast communications, or both, in support of oropposition to a ballot issue or ballot question.

C.R.S. 1-45-103-12(b)(II). The General Assembly specifically stated that this

new provision was intended to incorporate the major purpose definition as

articulated inIndependence Institute. See C.R.S. 1-45-103(12)(c).

The legislative decision to create a major purpose test in statute did not

include setting precise percentages for the amount of funding, expenditures, or

communications that would automatically trigger issue committee status. Rule

1.12 ignores this deliberate choice by the General Assembly and inserts a 30%

threshold into the rule. No court case had found the statutory methodology to be

ambiguous between its enactment and the 2012 adoption of Rule 1.12 (or since).

The Secretary simply disagrees with the legislative implementation and prefers the

bright line of a set 30% rule a line no court or statute has drawn.

The Secretary argues that the statute still leaves the question of how these

factors should be weighed unanswered. Secretarys Opening Br. at 30-31.

However, the legislature decided that a case-specific inquiry into an organizations

pattern of conduct was the appropriate test rather than an across-the-board flat

percentage. This same approach was endorsed by this Court in both Cerbo and


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Independence Institute and has been found to survive constitutional scrutiny. The

statute is not silent and there are no gaps to fill. There is no justification for the

Secretary to supplant the legislative decision in statute with the test he prefers. See

Colo. Common Cause, 2012 COA 147 at 21-23 (recognizing that the Secretary

has no authority to promulgate a rule to fill a gap that does not exist).

Moreover, the specific 30% threshold was adopted with no factual basis in

the rulemaking record and little justification offered even now. The Secretary

justifies drawing this line at 30% because it is a number less than 50%, but still

representing a meaningful portion of the committees budget. Secretarys

Opening Br. at 35. Such reasoning is the quintessential example of an arbitrary or

capricious agency action. See C.R.S. 24-4-106(7). It is especially egregious

that the Secretary adopted this standard in complete disregard of the testimony

during the rulemaking, from groups across the political spectrum, regarding the

disparate impact such a rule has based on the overall size of a committees

spending i.e. groups with more money to spend overall would only start reporting

their activity at a higher dollar amount than smaller groups who would hit the 30%

mark sooner. See, e.g., AR Tab 5-2 (comments of Planned Parenthood of the

Rocky Mountains) Tab 5-11 (comments of The Bell Policy Center) Tab 5-16

(comments of Metro Organization for People) Tab 5-22 at 3 (comments of


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Coalition for Secular Government) Tab 5-24 (comments of Colorado Progressive

Coalition) Tab 5-32 at 2 (comments of Colorado Common Cause) Tab 5-41 at 2

(comments of Colorado Democratic Party) Tab 5-46 (comments of Colorado

Conservation Voters).

The 2010 legislation clarifying the major purpose test in 1-45-103(12)

included a legislative finding that a lack of disclosure in connection with

communications supporting or opposing ballot issues leads to a perception of

purposefully anonymous interests attempting to influence the outcome of the

election on measuresthrough the expenditure of large sums of money. 2010

Colo. Sess. Laws 1239, 1(e). Rule 1.12 undermines the purpose of the statute by

allowing large sums of money to be spent without disclosure beneath the arbitrary

30% line.

3. The Political Committee Definition (Rule 1.18) Improperly Limitsthe Constitutional Definition.

Article XXVIIIs specific definition of political committee applies to any

group that has made expenditures or received contributions in excess of $200 to

support or oppose a candidate. See Colo. Const. art. XXVIII 2(12)(a). The voters

did not include a major purpose requirement in this definition a choice that

must be seen as deliberate since a major purpose test was included in constitutional

definition of issue committee. See Colo. Const. art. XXVIII, 2(10)(a)(I).


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However, Rule 1.18 adds a major purpose test that does not exist in the

Constitution or statute based again on the Secretarys reading of judicial precedent.

As the district court observed: [the Secretary] assumes a solution without

legislative or voter input, and thereby exceeds his delegated authority. (Order,

CD pages 391-392.) It is the legislature or the voters responsibility to

design and codify a major purpose test. The Secretarys attempt to create law in

Rule 1.18 exceeds his delegated authority.

In any event, Rule 1.18 does not simply implement the standard from Colo.

Right to Life Comm. v. Coffman, 498 F.3d 1137, 1146-52 (10th Cir. 2007), as the

Secretary contends. Secretarys Opening Br. at 26. The Rule 1.18 test is narrower

that the factors considered by the Tenth Circuit in that case. First, the Rule limits

the major purpose test to a comparison of the organizations expenditures to total

spending and completely ignores any calculation of the organizations

contributions to candidates. Surely making contributions to political candidates

would be indicative of whether or not the group had a major purpose of influencing

candidate elections. Second, the Rule only looks to what the organization states as

to its purpose in organizing documents. Under this test, an organization may talk

about candidates on websites and in solicitations and still not trigger the major

purpose test so long as the corporate documents do not mention a purpose of


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supporting or opposing candidates. This is not consistent with the test as applied

by the courts. Seeid. at 1152 (examining the organizations central purpose)

see also NM Youth Organized v. Herrera, 611 F.3d 669, 678 (10th Cir. 2010)

(examining actual activities of organizations to determine organization purpose)

League of Women Voters of State v. Davidson, 23 P.3d 1266, 1275 (Colo. Ct. App.

2001) (declining to be held to analysis of groups self-serving statements of

purpose under predecessor provision before Article XVIII enactment).

In the five years sinceAlliance for Colorados Families v. Gilbert, 172 P.3d

964 (Colo. App. 2007), first interpreted the major purpose test for political

committees, the General Assembly or Colorado voters could have revised the

FCPA or Article XXVIII. They chose not to. Rule 1.18 exceeds the Secretarys

authority by implementing a contrary choice and then arbitrarily narrowing the

judicially constructed test it purports to incorporate into the law.

C. The District Court Properly Invalidated Rule 18.1.8 as Exceeding theSecretarys Delegated Authority.

The district court properly determined that Rule 18.1.8 exceeds the

Secretarys authority by substantially denuding the statutory penalty imposed for

not filing major contribution reports. (Order, CD page 394). Colorado law

requires entities to file a major contributor report in addition to any regularly-

scheduled report and assesses an automatic penalty of $50 per day for each day the


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report is not filed between the 48-hour deadline and whenever that specific,

separate report is filed. See C.R.S. 1-45-108(2.5), 1-45-111.5(c). Rule 18.1.8

caps penalties assessed by statute in two ways by stating that the $50 penalties

simply stop accruing on either the date the contribution is included on a

regularly-schedule report or the date of the general election. See Rule 18.1.8(A).

The Secretarys power to enforce the FCPA does not permit the creation of such an

exception to the civil penalties to protect non-filers. In both respects, Rule 18.1.8

exceeds the Secretarys authority and contradicts the plain language of the statute.

The Secretary correctly asserts that Article XXVIII grants him the power to

set aside or reduce a penalty already assessed when presented with a written

appeal and waiver request. Colo. Const. art. XXVIII 10(2)(c). Notably, the

Secretary may only grant waivers upon a showing of good cause. Id. Otherwise,

waiver requests must be sent to an ALJ for determination. Id. 10(2)(b)(I). Rule

18.1.8 dispenses with any good cause requirement and effectively waives fines

in advance. This is beyond the Secretarys power.

Rule 18.1.8 is separate from the other portions of Rule 18, which govern the

Secretarys exercise of discretion when presented with waiver requests that do

demonstrate good cause. It purports to stop such penaltiesfrom ever accruingafter

either of the two trigger dates obviating the need for any particular committee to


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request a waiver under Article XXVIII, 10(2). Rule 18.1.8 is a separate

exception applied across the board not in a specific waiver request that fines

will never be applied when a contribution is reported on a regularly-scheduled

report or when the general election has passed. Whether it is wise to impose

penalties for failure to file major contributor reports after the contribution has been

otherwise disclosed is a choice for the General Assembly to make, not the

Secretary. This rule is beyond the authority accorded to the Secretary under the

Constitution and the statute.

D. The District Court Erred in Upholding Rule 1.7.1. Standard of ReviewThe Secretarys argument that Rule 1.7s new limitations on

constitutionally-required disclosure are necessary to comply with the First

Amendment pursuant to state and federal court decisions is a legal interpretation of

judicial precedent not entitled to deference by this Court. See Colo. Common

Cause v. Gessler, 2012 COA 147, 22see also Colo. Office of Consumer Counsel

v. Colo. Public Utils. Commn, 2012 CO 33, 9 (Colo. 2012). With regard to Rule

1.7, the district court improperly conducted this de novo review and gave too much

deference to the Secretarys Rule. (Order, CD page 389).


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This appeal of a district courts review of an agency rule did not require

preservation and is properly brought pursuant to C.R.S. 24-4-106(9).

2. Rule 1.7 Modifies and Contravenes the Colorado Constitution andStatutory Definitions of Electioneering Communications.

The plain text of Rule 1.7 explicitly imposes a restriction that is not

supported by the text of Article XXVIII when it states:

Electioneering Communication is any communication

that (1) meets the definition of electioneeringcommunication in Article XXVIII, Section 2(7), and (2)is the functional equivalent of express advocacy

Rule 1.7 (emphasis added) Sangerv. Dennis, 148 P.3d 404, 412 (Colo. App.

2006). These changes again reflect the Secretarys attempt to graft stricter case

law holdings regarding laws that limit or prohibit contributions onto the disclosure-

only provisions governing electioneering communications in Colorado today. Far

from being a First Amendment-required limitation on public disclosure, the

functional equivalent standard has been rejected as an unworkable standard that

is not necessary for provisions that require only reporting.

The plain language of the electioneering communication definition in both

federal and Colorado law applies broadly to regulate any communication in the

30/60-day window before a primary or general election that unambiguously refers


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to any candidate. Colo. Const. art. XXVIII, 2(7)(a) 2 U.S.C. 434(f)(3)(A).5

In 2007, the reach of the federal law was temporarily narrowed to communications

that meet the stated requirements and contain the functional equivalent of express

advocacy because those provisions were tied to a corporate and labor union

expenditure ban and therefore had to be read narrowly in order to assuage First

Amendment concerns. F.E.C. v. Wisconsin Right to Life, 551 U.S. 449, 481 (2007)

(WRTL). However, this judicial filter limiting the scope of the electioneering

communication provision was disregarded as inadequate protection of speech in

2010, when the U.S. Supreme Court opted instead to strike down the expenditure

prohibitions in the federal law entirely. Citizens United,130 S. Ct. at 913.

Although the corporate expenditure prohibition was struck down, the Court

upheld the electioneering communication disclosure requirement without any

limitation of disclaimer and disclosure requirements to ads that expressly advocate

for or against candidates. Id. at 915-16. Moreover, the Court explicitly rejected

application ofWRTLs functional equivalent limitations on the remaining

disclosure provisions:

5 The Colorado statutory definition merely states that the term shall have the samemeaning as set forth in section 2(7) of article XXVIII of the state constitution andhas not be revised by the General Assembly in response to any of the court casesdiscussed in this section. C.R.S. 1-45-103(9).


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As a final point, Citizens United claims that, in anyevent, the disclosure requirements in 201 must be

confined to speech that is the functional equivalent ofexpress advocacy. The principal opinion in WRTL limited2 U.S.C. 441b's restrictions on independentexpenditures to express advocacy and its functionalequivalent. 551 U.S., at 469-476, 127 S. Ct. 2652, 168 L.Ed. 2d 329 (opinion of Roberts, C. J.). Citizens Unitedseeks to import a similar distinction into BCRA'sdisclosure requirements. We reject this contention.

Id. at 915. Citizens Unitedput an end to attempts to apply limitations from cases

involving contribution or expenditure limits into disclosure laws just as surely as

its more famous holding put an end to attempts to limit expenditures by

corporations or labor unions. As a result, campaign finance law has been

simplified considerably.

The Court emphasized the importance of disclosure as necessary for voters

to make informed decisions and give proper weight to different speakers and

messages. Id. at 916. The impact of this 8-1 decision is clear: once the Colorado

electioneering communications provision was limited to disclosure provisions (as

confirmed in Colorados provision byIn Re Interrogatories Propounded by

Governor Ritter, Jr. Concerning the Effect of Citizens United v. Federal Election

Commn, 558 U.S.___ (2010) on Certain Provisions of Article XXVIII of The

Constitution of the State of Colorado, 227 P.3d 892 (Colo. 2010)), the functional

equivalent standard is not applicable. Even the district court in this case noted


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that it may be that Citizens Unitedrenders both old and new rules obsolete

before upholding Rule 1.7 based on its comparison to the prior rule. (Order, CD

page 389). Under the plain language of the electioneering communication law,

spending on some of the most noxious attack ads ones that smear a candidate

personally in the last days before an election must be disclosed. During the 2012

election, voters were left in the dark about those ads thanks to the district courts

erroneous ruling.

No Colorado case has stated that the functional equivalent limitation from

WRTL must be imposed upon Article XXVIIIs electioneering communications

definition to survive constitutional scrutiny. See In re Interrogatories, 227 P.3d at

893 (leaving the Article XXVIII disclosure requirements undisturbed) Colo.

Citizens for Ethics in Govt v. Comm. for the Am. Dream , 187 P.3d 1207, 1214-17

(Colo. App. 2008) (post-WRTL case applying Article XXVIII definition without

functional equivalent limitation) Colo. Right to Life, 498 F.3d at 1152

(declining to consider facial challenge to Colorados electioneering

communications provision post-WRTL and limiting holding to as-applied challenge

by certain nonprofit organization)Harwood v. Senate Majority Fund, LLC, 141

P.3d 962, 964-66 (Colo. App. 2006) (pre-WRTL case applying Article XXVIII

definition to polls). The Secretarys attempt to cherry-pick from outdated federal


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campaign finance cases to support his regulatory narrowing of disclosure in

Colorado is beyond the scope of his authority.

The district courts order erroneously relied upon Senate Majority Fund,

2012 CO 12, as affirming WRTLs applicability to Colorados electioneering

communications definition. (Order, CD page 389.) Senate Majority Fund

determined the meaning of express advocacy as part of the constitutional

definition of expenditure which triggers the requirements to register as a political

committee under Colorado law. See id. at 19. No claim was made that the ads

should have been disclosed as electioneering communications. Id. at 7 n.1.

While the opinion recognized that WRTL approved of a functional

equivalence test, it only states that WRTL stands for the proposition that a

broader scope of speech can be regulated under the time-limited electioneering

communications provisions than as expenditures. Id. at 34-35. The Colorado

Supreme Court did not state that these limitations applied to Colorados provisions,

nor discuss Citizens Uniteds import as these issues were not before the court. See

id. at 36 & n.8. If anything, Senate Majority Fundis relevant to this case for its

statement that the WRTL functional equivalent test which Ethics Watch argued

in Senate Majority Fundshould define express advocacy and which the

Secretary argues here should limit electioneering communications might be


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found to create an unwieldy standard that would be difficult to apply and, as a

result, potentially serve to unconstitutionally chill protected political speech. Id.

at 37.

In addition to the explicit addition of the functional equivalent standard,

the specific safe harbors in Rule 1.7.3 create regulatory exemptions to the statutory

and constitutional reporting requirements. The rule arbitrarily carves out numerous

types of advertisements that refer to candidates and are distributed within the final

days of an election in the district where the candidate is running for office from the

public information provided to voters. The district court erred in holding it

appears the Secretary did not modify or contravene an existing statute. (Order,

CD page 389.) Rule 1.7 exemplifies this Courts statement in Sanger v. Dennis

that [t]he Secretarys definition is much more than an effort to define the term.

It can be read to effectively add, to modify, and to conflict with the constitutional

provision. Sanger,148 P.3d at 413.

3. Similarity to the Prior Rule is Irrelevant to the Analysis ofWhether Rule 1.7 Violates the Colorado Constitution and

Statutes.

In its order, the district court focused the majority of its analysis regarding

Rule 1.7 on a comparison between the text of this rule and the prior regulatory

definition of electioneering communications in former Rule 9.4. The court held


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that new rule adds no substantive additional terms and imposes no additional

restrictions over the old rule and that the challenged rule is similar to the rule

enacted by Defendants predecessor, and it therefore is entitled to deference

(citingIngram v. Cooper, 698 P.2d 1314 (Colo 1985)). (Order, CD page 389.)

When the Court invalidated the other regulations at issue in this case, it did

not engage in such a comparison to prior rules governing political committees or

political organizations. Instead, the Court properly evaluated the newly enacted

regulations standing alone to see if the rules exceeding the Secretarys authority,

contradicted constitutional or statutory provisions, or were arbitrary and capricious

under standards of administrative review. Thus, the extent to which Rule 1.7 is

similar to former Rule 9.4 is irrelevant to a determination of the validity of the rule.

Under C.R.S. 24-4-106(7) the court must hold an agency rule invalid if it is

shown to be arbitrary and capricious or contrary to law there is no statutory

exception for rules based on how similar the newly enacted rule is to a prior

regulation. As seen above, Rule 1.7 explicitly adds conditions to the constitutional

definition of electioneering communications and should be held invalid without

regard to the precise language of former Rule 9.4.

Nor is a court required to accord heightened deference to a rule based on

lack of challenge to a similar rule in the past. TheIngram case relied upon by the


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district court is not controlling in this matter. The plaintiffs in that case challenged

the Department of Corrections calculation of good-time credits, which had been

done using the same method since 1935 and had been unchallenged until the

Ingram challenge in 1982. Ingram, 698 P.2d at 1316. That is not the circumstance

of the Rule challenged in this case. Proposed Rule 1.7s revision of the definition

of electioneering communications was first presented for public comment in the

Secretarys 2011 notice of rulemaking. This was the appropriate time for Ethics

Watch, CCC and many other individuals and groups to express their objection to

the new subsections added in the proposed Rule.

Indeed, many commenters pointed to the new language and informed the

Secretary how these proposed changes would limit disclosures and, ultimately,

information to voters. See, e.g., AR Tab 5-3 (comments of Planned Parenthood

Votes Colorado) Tab 5-20 at 2 (comments of Citizens for Integrity) Tab 5-32 at 2

(comments of CCC) Tab 5-41 at 2 (comments of Colorado Democratic Party)

Tab 5-42 at 2 (comments of Ethics Watch) Tab 5-46 (comments of Colorado

Conservation Voters) Tab 5-47 (comments of One Colorado). Public testimony

also informed the Secretary that eight justices of the U.S. Supreme Court in

Citizens Unitedheld that electioneering communications disclosure provisions

which do not prohibit corporations or labor unions from making such


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communications are not required to be limited to a functional equivalent test in

order to comply with the First Amendment. See AR Tab 5-32 at 2 (comments of

CCC) Tab 5-41 at 2 (comments of Colorado Democratic Party) Tab 5-42 at 2

(comments of Ethics Watch).

Nonetheless, the Secretary made a choice to revise the regulatory definition

in Rule 1.7 from the prior language in former Rule 9.4. That choice is reviewable

by the court under an arbitrary or capricious or contrary to law standard without

any extra deference which would place a thumb on the scale in favor of the rules

validity. See Bd. of County Commrs, 157 P.3d at 1089 (deference is not

appropriate if agency interpretation defeats statutory intent or plain meaning of

statute).

But even assuming that it is relevant to compare Rule 1.7 to former Rule 9.4

as a part of the APA review, the district court erred in holding that the new rule

does not impose substantive additional terms in the definition of electioneering

communications. Rule 1.7 uses a term not found in former Rule 9.4 the

functional equivalent of express advocacy and proceeds to explain what is and

is not encompassed by that new phrase. Rule 1.7.3 is a wholly new subsection

which adds a roadmap for groups seeking to avoid constitutional disclosure of the

money financing campaign advertising. The safe harbor added to the rule


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provides a get-out-of-reporting-free card for communications that otherwise meet

the constitutional definition of electioneering communications. This illustrates the

substantial changes that Rule 1.7 made to the standards of the former Rule.

4. Other Courts Have Rejected Limits on ElectioneeringCommunications Disclosures Similar to Rule 1.7 Pursuant to

Citizens United.

After the U.S. Supreme Courts decision in 2010, other courts have reviewed

state-level electioneering communications provisions and consistently held that the

functional equivalent limitation need not be grafted onto disclosure-only

regimes. See, e.g., Natl Org. for Marriage, Inc., 649 F.3d at 54 (stating functional

equivalent line of cases came to a definitive end with Citizens United)Human

Life of Washington v. Brumsickle, 624 F.3d 990, 1016 (9th

Cir. 2010) (stating

Citizens Unitedrefused to apply functional equivalent standard to disclosure)

Natl Org. for Marriage, Inc. v. Cruz-Bustillo, 2012 U.S. App. Lexis 9898 (11th

Cir. 2012) (unpublished) (rejectingper curiam challenge to state disclosure limits

citing Citizens Unitedand First CircuitNatl Org. for Marriage case) Vermont

Right to Life v. Sorrell, 875 F. Supp. 2d 376, 386 (D. Vt. 2012) (stating Citizens

Unitedrejected the argument that electioneering communications disclosure

provisions could only cover express advocacy or its functional equivalent)see

also Real Truth About Abortion v. F.E.C. , 681 F.3d 544, 552 (4th Cir. 2012) (noting


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mandatory disclosure requirements are permissible when applied to ads that

merely mention a candidate in federal law afterCitizens United).

Since the district courts order in this case, the U.S. Court of Appeals for the

Seventh Circuit discussed the state of electioneering communications and similar

campaign finance disclosure laws afterCitizens Unitedin a facial challenge to

Illinoiss state laws. See Center for Individual Freedom v. Madigan, 697 F.3d 464

(7th Cir. 2012). The court noted that all federal court of appeals that have decided

post-Citizens Unitedchallenges to state disclosure statutes have upheld the statutes.

See idat 470. The court also held that electioneering communications provisions

in state law may constitutionally cover more than just express advocacy and its

functional equivalent underCitizens United. Id. at 484.

The Secretary enacted Rule 1.7 based on his own faulty interpretation of

federal campaign finance law. This Courts de novo review need not give

deference to this agency analysis and should hold that such limitations are not

constitutionally required. Thus, Rule 1.7 is invalid.

V. CONCLUSION

For these reasons, and the reasons stated in the Paladino Parties Answer

Brief, the Court should affirm the district courts judgment holding void Campaign

and Political Finance Rules 1.10, 1.12, 1.18, 7.2 and 18.1.8 as having been enacted


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in excess of the Secretary of States authority. Ethics Watch and CCC also

respectfully request that the Court enter an order reversing the district courts

judgment upholding Campaign and Political Finance Rule 1.7, and remanding this

case to that court with instructions to enter judgment that the rule is void as

exceeding the Secretary of States rulemaking authority.


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Respectfully submitted on March 8, 2013.

signed original on file/s/ Jennifer H. Hunt___________Jennifer H. HuntHill & Robbins, P.C.1441 18th Street, Suite 100Denver, CO 80202-1256

Attorney for Appellee/Cross-AppellantColorado Common Cause

signed original on file

/s/Margaret Perl________________Luis ToroMargaret PerlColorado Ethics Watch1630 Welton Street, Suite 415Denver, CO 80202

Attorneys for Appellee/Cross-Appellant

Colorado Ethics Watch


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CERTIFICATE OF SERVICE

The undersigned hereby certifies that on the 8

th

day of March, 2013, serviceof the foregoing JOINT OPENING-ANSWER BRIEF was made via LexisNexisFile & Serve, addressed as follows:

LeAnn MorrillFrederick R. YargerMatthew GroveState Services SectionOffice of the Attorney General1525 Sherman Street, 7th Floor

Denver, CO 80203

Mark GrueskinHeizer Paul Grueskin LLP2401 15th Street, Suite 300Denver CO 80202

signed original on file

s/Rae Macias

court of appeals joint answer-opening brief

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