Hawaii Right to Life, Inc. v. FEC (1:02CV02313)

On November 26, 2002, the U.S. District Court for the District of Columbia granted the motions of Hawaii Right to Life, Inc., (HRTL) for a temporary restraining order and a preliminary injunction. The order and injunction bar the Commission from acting inconsistently with the court's finding that HRTL is currently a so-called "MCFL-corporation," and is thus exempt from the Federal Election Campaign Act's (the Act) ban on corporate expenditures in connection with federal elections. On December 16, 2002, the court entered a final order that effectively converted the preliminary injunction into a permanent injunction.

Court complaint

In a complaint filed on November 22, 2002, the plaintiff asked the court to find that it qualifies for a constitutionally-mandated exception from the Act's prohibition on corporate expenditures in connection with a federal election. See FEC v. Massachusetts Citizens for Life, Inc. (MCFL), 479 U.S. 238 (1986). In the alternative, HRTL challenged the constitutionality of the Commission's definitions of "electioneering communication" and "expressly advocating." 11 CFR 100.29 and 100.22. HRTL planned, among other things, to air radio ads in advance of the Hawaii special elections to fill the remainder of the late Patsy Mink's term in the current Congress and her seat in the next Congress.

HRTL asserted that it could run these ads because it met the requirements of a protected nonprofit corporation under MCFL, even though it did not meet the test of a "qualified nonprofit corporation" under the Commission's regulations at 11 C.F.R. 114.10(c). HRTL also claimed that these ads would contain issue advocacy rather than express advocacy, and that it would be unable to participate in its planned activity unless the court enjoined the Commission from enforcing against HRTL the "electioneering communication" and "expressly advocating" regulations.

Qualified nonprofit corporations

Under Commission regulations a corporation is considered a "qualified nonprofit corporation" if it meets the following criteria:

• Its only express purpose is the promotion of political ideas;
• It cannot engage in business activities;
• It has no shareholders and no persons who are offered or receive any benefit that is a disincentive to disassociate from the corporation on the basis of the corporation's position on a political issue;
• It was not established by a business corporation and does not directly or indirectly accept donations or anything of value from business corporations; and
• It is described in the Internal Revenue Code at 26 U.S.C. §501(c)(4). 11 CFR 114.10(c).

HRTL alleged that it meets some but not all of these criteria because it engages in business activities, such as selling pins and T-shirts, and because it hopes to receive some contributions from business corporations. The plaintiff contended that the Commission's criteria for identifying "qualified nonprofit corporations" are too narrow and that, because its business activities and corporate contributions are de minimis, it should qualify for the exemption under the Supreme Court's decision in MCFL.

Requested relief

HRTL asked that the court, among other things:

• Declare that HRTL is an "MCFL-corporation";
• Declare the definition of a "qualified nonprofit corporation" at 11 CFR 114.10(c) is unconstitutional, unlawful and invalid; and
• Preliminarily enjoin the Commission from enforcing 11 CFR 114.10(c) with respect to broadcast communications by HRTL concerning federal candidates in the November and January Hawaii special elections.

In case the court did not find that HRTL is an "MCFL-corporation," HRTL asked the court to find, in the alternative, that the Commission's definitions of "electioneering communication" at 11 CFR 100.29 and "expressly advocating" at 11 CFR 100.22(b) are unconstitutional, unlawful, invalid and beyond the Commission's statutory authority.

Based on the allegations in HRTL's complaint and motions, the Commission conceded that HRTL should be treated as a "qualified nonprofit corporation" for 2002. Nonetheless, HRTL submitted an affidavit declaring that it had received contributions, or commitments for contributions, from business corporations in an amount not expected to exceed $50, which it claimed prevented it from qualifying under the regulations as a "qualified nonprofit corporation."

Preliminary injunction and final order

The court ruled that HRTL currently is a nonprofit organization that qualifies under the MCFL decision (as interpreted in the D.C. Circuit) for the exemption from the ban on corporate expenditures, despite the fact that it engages in de minimis business activities and receives insubstantial sums from business corporations. In FEC v. National Rifle Association, the court held that $1,000 in contributions from for-profit corporations in a single year was de minimis, and therefore did not disqualify the NRA from treatment as an exempt "MCFL-corporation" during that year.[1] 254 F.3d 173 (D.C. Cir. 2001).

On December 16, 2002 , at the request of the parties, the court entered a final order, which declares that, as of the time of this ruling, HRTL qualifies as an "MCFL-corporation," and enjoins the Commission from acting inconsistently with the order. The court chose not to rule at any time on HRTL's challenge regarding the constitutionality of Commission regulations.

FOOTNOTES:

[1] See the August 2001 Record article

Source:   FEC Record — January 2003.