PAC GRASSROOTS ADVOCACY NON-PROFIT

January 4, 2012 Anthony Herman, Esq. General Counsel Federal Election Commission 999 E Street NW Washington, DC 20013

RE: Stop This Insanity, Inc. Employee Leadership Fund (ELF) Advisory Opinion Request

Dear Mr. Herman, Pursuant to 2 U.S.C. 437f, Stop This Insanity Inc. Employee Leadership Fund (ELF), a Connected Committee, requests an Advisory Opinion from the Federal Election Commission as to whether it may open a non-contribution account (hereinafter a Carey Account) to accept contributions from individuals, corporations, and unions that is not subject to the limitations and prohibitions of 2 U.S.C. 441a(a)(1)(C) or 441b (hereinafter, Carey Contributions) to conduct Independent Expenditures and proportionally pays an appropriately tailored share of administrative expenses.

I. INTRODUCTION Subsequent to Citizens United v. FEC, 130 S. Ct. 786 (2010), SpeechNow.org v. FEC, 599 F.3d 686 (D.C.Cir. 2010), and Carey v FEC, 791 F. Supp. 2d 121 (D.D.C. 2011), Stop This Insanity, Inc. (hereinafter STI) and its employees who would be within the restricted class are each constitutionally entitled to spend unlimited sums on Independent Expenditures themselves, to do so in conjunction with others, and to make Carey Contributions to the Carey Accounts of other, non-connected, PACs. Because they may each engage in any and all of these activities themselves, or in concert with others, there is neither a compelling government interest nor a rational basis to deny STI and its restricted class employees the speech and associational right to do so through a Carey Account within ELF and in conjunction with the general public, corporations, and unions. Such contributions and expenditures from ELFs Carey Account are subject to the reporting requirements at 2 U.S.C. 434(a), 11 C.F.R. 100.19 and 11 C.F.R. 104.4 and
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PAC GRASSROOTS ADVOCACY NON-PROFIT

the Commissions recent guidance on Carey Accounts and Carey Contributions in its October 5, 2011 FEC Statement on Carey v FEC.1

II. BACKGROUND Stop This Insanity, Inc. is a not-for-profit social welfare organization exempt from taxation under 501(c)(4) of the Internal Revenue Code. STI has chosen not to engage in Independent Expenditures itself, and may not make contributions to Candidates pursuant to 2 U.S.C. 441b(a). However, STI has now filed (attached) to establish, pursuant to 2 U.S.C. 441b(b)(4)(a)(i), a Connected PAC to allow its employees to engage in collective political contributions and activities through its Employee Leadership Fund (ELF). ELF is a Connected PAC, and its restricted class includes the executive and administrative employees of STI and their spouses. ELF, as distinct from STI, wishes to open a second bank account in its name to operate as a Carey Account into which it may solicit and receive Carey Contributions, including from STI and other individual, corporate, and union contributors, all of which contributions would be disclosed.

III. DISCUSSION Corporations, Unions, 501(c)4 organizations, the restricted class of all of these, and the general public may all individually spend unlimited sums for Independent Expenditures on their own. As the Supreme Court clearly and unequivocally stated, [W]e now conclude that independent expenditures, including those made by corporations, do not give rise to corruption or the appearance of corruption. Citizens United, 130 S. Ct. 876, 909 (2010) at 909. As a matter of law, Independent Expenditures do not create apparent, or actual, quid pro quo corruption. As a consequence, regulations burdening Independent Expenditure speech are outside the scope of the governments legitimate interest in preventing corruption, SpeechNow.org v FEC, 599 F.3d 686, 692 and are therefore independently subject to strict scrutiny. The SpeechNow.org court further clarified that what each of these parties may do themselves they may also do in free association with one another, through the vehicle of a Political Action Committee.
1 Reporting Guidance for Political Committees that Maintain a NonContribution Account,

http://www.fec.gov/press/Press2011/20111006postcarey.shtml
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In Carey v FEC, the Courts Preliminary Injunction held that Political Action Committees are constitutionally entitled to engage in, both, soliciting and accepting amount and source restricted contributions for use in direct candidate support, and soliciting and accepting Carey Contributions to a Carey Account. In sum, corporations, unions, 501(c)4 organizations, the restricted class of all of these, and the general public may all individually make Carey Contributions to the Carey Accounts of non-connected PACs for the purpose of conducting Independent Expenditures, and paying related administrative and operating expenses. Connected PACs may also make unlimited Independent Expenditures, or make Carey Contributions to the Carey Accounts of non-connected PACs. The distinction between Connected and Non-Connected PACs is the trade-off between the subsidized administrative and operating costs at 2 U.S.C. 441b(b)(2)(C) and the corresponding restriction on fundraising at 2 U.S.C. 441b(b)(4)(A)(i). Connected PACs benefit from the unlimited support of their administrative and operating expenses by the connected organization, the costs of which generally need not be disclosed. Conversely, Connected PACs are restricted to only raising funds from the restricted class of their connected organization. The principle behind this restriction is to prevent the subsidization of contributions made to candidates by the general public from what would, independently, be an unlawful corporate source. This is a fundamental maxim of the law one may not lawfully do through another what one is prohibited from doing oneself. Because a corporation may not contribute its own treasury funds to a candidate directly, it may not do so through individuals, and the statutory dispensation for Connected PACs does not alter this premise. Here, however, is a connected organization that may lawfully make unlimited Independent Expenditures itself (that it chooses not to is immaterial), and it may lawfully make Carey Contributions to the Carey Accounts of others as well. Similarly, any and all members of the restricted class of the organization may do so as well. There is no added nexus of corruption that arises from these parties engaging in this activity through a vehicle of their choosing the Carey Account of their Connected PAC. On the contrary, doing so would likely further the governments interest in disclosure of Independent Expenditure activity. Conversely, there is no rational basis nor legitimate governmental interest in prohibiting the restricted class of the organization, through their PAC, from engaging in this activity, nor is it Constitutional to do so post- Citizens United, SpeechNow.org, and Carey.

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PAC GRASSROOTS ADVOCACY NON-PROFIT

There is no compelling government interest in discriminating between the Independent Expenditure activities of non-connected PACs and the Independent Expenditure activity of Connected PACs and their restricted class and others in the general public who may lawfully engage in such activity themselves to do so would in effect discriminate against speakers based on how they choose to associate.

III. QUESTIONS PRESENTED 1. May a Connected PAC establish a non-contribution account (Carey Account) to solicit and accept contributions from the general public, corporations and unions (Carey Contributions) not subject to the restrictions of 2 U.S.C. 441b(b)(4)(A)(i) and 2 U.S.C. 441b(b)(4)(B)? 2. How must ELF report the administrative and operating expenses paid by STI, if any, in connection with ELFs Carey Account, particularly where such expenses may not be readily determinable?

IV. CONCLUSION Following Citizens United, EMILYs List, SpeechNow.org, and Carey, and as now recognized by the Commission, Independent Expenditures do not themselves give rise to actual or apparent quid pro quo corruption. Connected PACs should be entitled as a matter of right to open Carey Accounts and accept Carey Contributions for their Independent Expenditure activity, provided that the portion of administrative and operational costs related to activity within that Carey Account is kept separate from funds used to administer contributions to candidates, and is properly reported.

Sincerely,

Dan Backer, Esq. Counsel Stop This Insanity, Inc.

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