FEC Record: Litigation

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Carey v. FEC

On August 19, 2011, the United States District Court for the District of Columbia entered a Stipulated Order and Consent Judgment whereby the Commission agreed that it would not enforce 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) against the National Defense PAC (NDPAC) with regards to contributions it receives to make independent expenditures.

Background
NDPAC is a nonconnected political committee registered with the FEC that raises and spends funds to support candidates for federal office who are military veterans and who agree with NDPAC’s goals. Retired Rear Admiral James Carey is the founder and treasurer of NDPAC. Kelly Eustis is a registered voter who resides in Sacramento, California.

On August 11, 2010, NDPAC submitted an advisory opinion (AO) request to the FEC asking whether, based on court decisions in Citizens United and SpeechNow, and the Commission’s conclusions in AOs 2010-09 (Club for Growth) and 2010-11 (Commonsense Ten), it could raise unlimited contributions from individuals, political committees, corporations and unions for the purpose of making independent expenditures. Simultaneously, NDPAC would raise additional contributions from individuals and political committees subject to the $5,000 per calendar year contribution limit under 2 U.S.C. §441a(a) in order to make contributions to federal candidates. NDPAC proposed recording and segregating its contributions by type into separate bank accounts. The Commission considered draft responses to the request, but was unable to approve an AO by the required four affirmative votes.

On January 31, 2011, Retired Rear Admiral Carey, Kelly Eustis and NDPAC (collectively, “the Plaintiffs”) filed suit against the FEC. The lawsuit sought a declaratory judgment that the contribution limits in 2 U.S.C. §§441a (a)(1)(C) and 441a(a)(3) violate the First Amendment to the extent such laws prohibit a nonconnected political committee from soliciting and accepting unlimited contributions to one bank account designated for independent expenditures, while maintaining a second, separate bank account designated for source- and amount-limited contributions to candidates and their authorized political committees. Plaintiffs also sought injunctive relief enjoining the Commission from enforcing the above-mentioned provisions as applied to Plaintiffs and any supporters who wish to make contributions to NDPAC for its independent expenditures.

Preliminary Injunction
On June 14, 2011, the U.S. District Court for the District of Columbia granted a limited preliminary injunction to Plaintiffs enjoining the Commission from enforcing 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) against the Plaintiffs with regard to independent expenditures so long as NDPAC maintains separate bank accounts for its “hard money” and “soft money,” proportionately pays related administrative costs and complies with the applicable limits for the PAC account that is used to make contributions directly to federal candidates.

Stipulated Order and Consent Judgment
On August 19, 2011, the Court issued a Stipulated Order and Consent Judgment in which the FEC agreed that it would not enforce 2 U.S.C. §§441a(a)(1)(C) and 441a(a)(3) against Plaintiffs with regard to contributions NDPAC receives to make independent expenditures, as long as NDPAC maintains separate bank accounts 1) to receive such contributions for independent expenditures, and 2) to receive source-and amount-limited contributions for the purpose of making candidate contributions. Further, each account must pay a percentage of administrative expenses that closely corresponds to the percentage of activity for that account, and must comply with the applicable limits for the contributions it receives for the purpose of making candidate contributions.

U.S. District Court for the District of Columbia, 11-259-RMC.

(Posted 9/1/11; By: Zainab Smith)

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The FEC Record is produced by the Information Division, Office of Communications. Toll free 800-424-9530; Local 202-694-1100; E-mail info@fec.gov. Greg Scott, Director; Amy Kort, Asst. Director; Dorothy Yeager, Editor