Petition for Writ of Certiorari — Independence Institute Institute v. Buescher (No. 09-265)

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SUNT Ii) LADUE, bt.

FILED

99-265 AUG 31 2009

QEPICE-OE THE CLERK

Witla K. Suter, Clerk

In The

Supreme Court of the United States

INDEPENDENCE INSTITUTE,

Petitioner,

Vv.

BERNIE BUESCHER, SECRETARY OF STATE,

STATE OF COLORADO,

Respondent.

On Petition For A Writ Of Certiorari

To The Supreme Court Of Colorado

PETITION FOR WRIT OF CERTIORARI

INSTITUTE FOR JUSTICE

WILLIAM H. MELLOR

WILLIAM R. MAURER*

STEVEN M. SIMPSON

901 North Glebe Road, Suite S900

Arlington, VA 22203

(703) 682-9320

Counsel for Petitioner

“Counsel of Record

COCKLE LAW BRIEF PRINTING ¢

) CALI 9

OR CALL COLLECT (402) 3

QUESTIONS PRESENTED

1. Whether the First and Fourteenth Amend-

ments forbid Colorado from imposing registration,

administrative, and continuous reporting regulations

on policy organizations that comment on state ballot

measures but do not have the support or opposition of

such measures as their central major purpose.

2. Whether Colorado’s disclosure requirements

for donors to ballot measure campaigns in which there

is no chance of quid pro quo corruption violate the right

to engage In anonymous speech and association.

PARTIES TO THE PROCEEDING &

CORPORATE DISCLOSURE STATEMENT

Petitioner is the Independence Institute, a Colorado

non-profit corporation and plaintiff-appellant below. It

has no parent corporation and no publicly held

company owns stock in it.

Respondent is Bernie Buescher in his official

capacity as Secretary of State, State of Colorado,

defendant-appellee below.

TABLE OF CONTENTS

QUESTIONS PRESENTED

PARTIES TO THE PROCEEDING & CORPO-

RATE DISCLOSURE STATEMENT

TABLE OF AUTHORITIES

OPINIONS BELOW

JURISDICTION

CONSTITUTIONAL AND STATUTORY PRO-

Pe BEN SPINY LED voc cccsscsscccesecssensssonscosesseceees

STATEMENT OF THE CASE

A. Factual Background

B. Procedural Background

REASONS FOR GRANTING THE WRIT

I. REVIEW IS REQUIRED BECAUSE THE

LOWER COURT DID NOT FOLLOW

THIS COURT'S DECISION IN BUCKLEY

REGARDING THE DEFINITION OF

POLITICAL OR ISSUE COMMITTEE,

CAUSING A SPLIT BETWEEN IT AND

THE FOURTH CIRCUIT AND CREATING

INCONSISTENT PROTECTIONS FOR

FREE SPEECH ACROSS THE COUN-

IT.

TABLE OF CONTENTS - Continued

Page

A. BUCKLEY ESTABLISHED A CLEAR

STANDARD FOR WHEN AN OR-

GANIZATION MAY BE REGULATED

AS A POLITICAL OR ISSUE COM-

MITTEE

B. BUCKLEY’S STANDARD IS THE

LAW IN THE SECOND AND FOURTH

CIRCUITS AND HAS BEEN APPLIED

BY FEDERAL DISTRICT COURTS

ACROSS THE COUNTRY

>. THE DECISION BELOW CONFLICTS

WITH THE FOURTH CIRCUIT'S

DECISION IN NCRTL AND ESTAB-

LISHES AMBIGUOUS, OVERLY

BROAD STANDARDS THAT CAN

HAVE GRAVE CONSEQUENCES

FOR FREE SPEECH ACROSS THE

COUNTRY

REVIEW IS NECESSARY TO RESOLVE

WHETHER THE GOVERNMENT MAY

REQUIRE DISCLOSURE OF CONTRIB-

UTORS TO BALLOT MEASURE CAM-

PAIGNS THAT HAVE NO POSSIBILITY

OF QUID PRO QUO CORRUPTION

A. THIS CASE RAISES IMPORTANT

ISSUES OF FEDERAL LAW RE-

GARDING THE APPLICATION OF

DISCLOSURE RULES IN THE BAL-

LOT MEASURE CONTEXT

TABLE OF CONTENTS — Continued

Page

B. THE CONSTITUTIONALITY OF

LAWS MANDATING DISCLOSURE

IN THE BALLOT MEASURE CON-

TEXT IS A RECURRING ISSUE OF

SIGNIFICANT IMPORTANCE ACROSS

EE RIOR UE ov iecceecentscvcsarcarnieicvecvess. 26

ee arins ss sana clecsciscoseceeenies duvack buaskansones 29

APPENDIX

Independence Institute v. Mike Coffman, No.

07CA1151, slip op. (Colo. Ct. App., Nov. 26,

I lok saucaisucci ssdsbechsavacedatasaissaaaniossqeasiumauaiaes App. 1

Independence Institute v. Mike Coffman, No.

05CV7604, slip op. (Colo. Dist. Ct., May 3,

ieee der cast rearaes carioieua in tvelakineossmietiene an App. 33

Independence Institute v. Mike Coffman, No.

05CV7604, slip op. (Colo. Dist. Ct., Dec. 14,

I aces cats sistance inate skid ma adan i danansonaceeonPiecaaeeess App. 40

In the Matter of the Complaint Filed By

Richard Evans Regarding Alleged Campaign

and Political Ftnance Violations by the

Independence Institute and Vote No; It’s Your

Dough, No. OS 20050020, Agency Decision

I Pen NE ids ns csc ecu appiasaneianisdouiasasacaupencued App. 42

Independence Institute v. Richard Evans, et al.,

No. 05CV7604, slip op. (Colo. Dist. Ct., Oct.

Rape RNa ae EO an ea Tae eRTn ee App. 83

TABLE OF CONTENTS - Continued

Page

Independence Institute v. Buescher, No. 2009SC26

(Colo., June 1, 2009) (Denial of Petition for

I er CIEE seissciscesscncsicssescecovssecssasscesss App. 95

Fe, COIIET , BENOTIG. Linc cssceerccsesssescees eniieeenenaeeds App. 98

Se NE EE, EME EEE cicoscssvacascsscreccrxenecsevane App. 99

CoLo. REV. STAT. § 1-45-108 .............. ccc cece eeee ees App. 127

COLo. REV. STAT. § 1-45-1039 ................sceecseeeee App. 134

CoLo. REV. Stat. § 1-45-111.5.......... err veces dD, 1460

8 COLO. CODE REGS. § 1505-6(1)...................... App. 142

8 COLO. CODE REGS. § 1505-6(3)............ eevee App. 146

8 COLO. CODE REGS. § 1505-6(4)............ ee. App. 150

PITIGBAVIE OF POT COIGOPA 00.00.0005 cccecscrescveesceseeees App. 163

PTAGAVIG OF PUG TROISKAN..........00000s0sccessesussereees App. 175

House Bill 09-1153, Sessions Law of Colorado

2009, First Regular Session, 67th General

Assembly ........ BRE Atala rac yeisaiuss saves Saco App. 181

> a. a A. ttl, ll, tla — —

TABLE OF AUTHORITIES

Page

CASES

Am. Civil Liberties Union v. Jennings, 366

PF, UD. BOGE CERIN LG. BETES ccsscccssvecivecrssesecsssens 13, 15

Broward Coalition of Condominiums, Home-

owners Ass’ns & Cty. Orgs. Inc. v. Browning,

2008 U.S. Dist. LEXIS 91591 (N.D. Fla. Oct.

Bs I ccrcacacucue tcc ddeenvhceeuokeuisen uve auskiaesaned aanecskneaks 18

Britt v. Supertor Court of San Diego, 574 P.2d

Fe le BI chinisadkscinsthiseieniriesipinammentnamn 23

Brown v. Socialist Workers ’74 Campaign Comm.,

Ee Grae ET © IE chktk kvtesiniicsisnriesiaiticctasve 23, 26, 28

Buckley v. Am. Constitutional Law Found.,

FIRE Tee he es Se CI ibis cascnatsscenesscanscsvensenisetesessi 24

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

California Pro-Life Council, Inc. v. Getman,

325 F.00 1086 (Sth Cir. ZOOS) .......ccccccocsseseccseses 24, 25

California Pro-Life Council, Inc. v. Randolph,

OE Fee Be Ce Ok Ce BE hn aveiccenevccsszexssesessexinins 25

Canyon Ferry Rd. Baptist Church v. Unsworth,

Cte ee EU d CCE CAE OOD ve cvanicccasssnasenssvanccen cons 29

Citizens Against Rent Control v. City of Berkley

re FCI Fas aiec saccicvessccsiscvensscvotcssapacncscseiews 24

Ctr. For Individual Freedom, Inc. v. Ireland,

613 &. Supp. 24 777 (S.D.W.V. 2008) .oiccvcssscesssscesese 18

Davis v. Fed. Election Comm’n, _ US. __.,

ee Bs Gh | ern

Vill

TABLE OF AUTHORITIES — Continued

Page

Fed. Election Comm'n v. Massachusetts Citizens

for Life, Inc., 479 U.S. 238 (1986)............ eerie 15

Fed. Election Comm'n v. Wisc. Right to Life,

ee re I IT Pe ccsaesssivsoncsencasesslhdscancccesesses 25

First Nat'l Bank v. Bellotti, 435 U.S. 765 (1978)....... 24

Human Life of Washington v. Brumsickle, 2009

U.S. Dist. LEXIS 4289 (W.D. Wash. Jan. 8,

IS IRRR ipo SAG eromer os eR tl el eR 21

McConnell v. Fed. Election Comm’n, 540 U.S.

ER GT SARIS BESO AR ON Ree TIED REE 15, 23, 25

McIntyre v. Ohio Elections Comm., 514 U.S.

IT orcs rates idaas phan ca Gonsgnuieytoniceseuaombes condeeces passim

NAACP v. Alabama, 357 U.S. 449 (1958).................. 23

Natl Right to Work Legal Defense & Educ.

Found., Inc. v. Herbert, 581 F. Supp. 2d 1132

re I oto sce uae enna dues ape son ccadenavareuvwerteect 19

North Carolina Right to Life v. Leake, 525 F.3d

Io occcscsaivcsecsasscainbedasenandininéncnis passim

ProtectMarriage.com v. Bowen, 599 F. Supp. 2d

Blk) ©) eR). : aia Caieunia aia tenvessel 27

Protect Marriage Washington v. Reed, No. 09-

5456BHS (W.D. Wash. July 29, 2009)..............0.. 27

Real Truth About Obama, Inc. v. Fed. Election

Comm’n, 2009 U.S. App. LEXIS 17437 (4th

er oe aeayuadessavestianepee 18

Shays v. Fed. Election Comm’n, 511 F. Supp. 2d

ME ve cissccaiersseacsavcsvessachaneapevenconisnsbadones 16

TABLE OF AUTHORITIES — Continued

Page

Staats v. Am. Cuivil Liberties Union, 422 U.S.

BUR CEE) ccesacciexsccce couadncsapscnadivdvendajenda ssa 13

U.S. v. Nat'l Comm. for Impeachment, 469 F.2d

1135 (2d Cir. 1972)...... caieapunacisuceel ane 13, 14, 15, 17

CONSTITUTIONAL PROVISIONS

UF ee ST, NING, F va cksscsvecesicccsvcnoteasceeeee 1,2,8

©) ce, COMET. GROIN, Fad Va Ob -ccsccencsesssserssacereeee 2,8

COLO. COOMBT. Gxt. dk Y LEE coccccccssccceccses tea a Os WO. A ee

Co.Lo. Const. art. XXVIII, § 2(10)(a)....00000... ee

COLO. CONST. art. AAV ILL, & BBM) ococccocccccccocserssces 7,18

CODES, REGULATIONS, RULES AND STATUTES

8 COLO. CODE RBG. S LODO CL) vccvscevascccvescssysessasanenl 3

8 CoLo. CODE REGS. § 1505-6(1.7(D))...........cccecsssscssscoeedDd

8 COLO. CODE REGS. § 1506-6(3S) ..............ccccccccessveesevvoostd

§ Coo. CODE REGS. & 1506-04) 5. cscceccsaccccascasccccepnseccnnan

8 CoLo. CODE REGS. § 1505-6(4.15) ............scecsccssessvcevestd

BO UAC. 8 TES TB) ve cecicscnssivesdcdassackereiceeeeeeee l

COLO. REV. BTAT. © 2-0 R ui iisccssssecissccnune cue 2,6, 8

COLO. REV. STAT. § 1-45-108(3)........... 6

Coo. REV. STAT. $ 1-46~EOGCG MD). ooceccccccvaccoscscaescten 6

COLO. BEV. BTAT. © 1-GO+ Ee ccivcssccccvesesssscancssanns ceuieal 2,6

COLO. REV. STAT. 9 1-43-E3 1B vcckccccececsinessuatsuss ee 2

TABLE OF AUTHORITIES — Continued

Page

I 2B ss sauusenussucopaneanaledooreus 1]

Sup. Ct. R. 12(c)... aedencenssussiacec aes aan

OTHER PUBLICATIONS

Amy Bounds, Gay rights advocates picket Boulder

Cineplex, Rocky MOUNTAIN News, Nov. 30,

ne GEE SORES eae sno ee eee

Associated Press, John Kerry Grills Belgium

Ambassador Nominee Over Swift Boat Dona

cd cadnesihececesccscnvess at

John R. Lott, Jr. and Bradley Smith, Donor

Disclosure Has Its Downsides: Supporters of

California’s Prop. 8 Have Faced a Backlash,

WALL ST. J., Dec. 26, 2008 .......... Seo CAO SP SOD 27

Political Committee Status, Supplemental Ex

planation and Justification, 72 Fed. Reg.

aoe ick si aaudrasacenneouuseuesinesieenesss 15

OPINIONS BELOW

The decision of the Colorado Supreme Court

denying certiorari was issued June 1, 2009, and is not

reported in P.3d but is reprinted in the Appendix

(“App.”) at 96. The decision of the Colorado Court of

Appeals was issued November 26, 2008, and appears

at 209 P.3d 11380. App. 1. The Colorado District

Court’s order of May 3, 2007, granting Respondent’s

motion for summary judgment and denying Peti-

tioner’s motion for the same is reprinted at App. 33,

but is not otherwise published. The Administrative

Law Judge’s decision finding that Petitioner is not an

“issue committee” appears at App. 42 and is not

otherwise published.

JURISDICTION

Petitioner seeks review of the judgment and

opinion issued by the Colorado Court of Appeals on

November 26, 2008. This Court has jurisdiction

pursuant to 28 U.S.C. § 1257(a) after the Supreme

Court of Colorado denied Petitioner’s request for

review by that court on June 1, 2009.

— —__ ._-—- @ —— ee

CONSTITUTIONAL AND

STATUTORY PROVISIONS INVOLVED

The First Amendment to the United States

Constitution provides that “Congress shall make no

law ... abridging the freedom of speech, or of the

press....” U.S. CONST. amend. I. The Fourteenth

Amendment states that “No State shall ... deprive

any person of life, liberty, or property, without due

process of law... .” U.S. CONST. amend. XIV, § 1.

The Colorado Constitution includes the following

definition:

“Issue committee” means any person, other

than a natural person, or any group of two or

more persons, including natural persons:

(I) That has a major purpose of supporting

or opposing any ballot issue or ballot

question; or

(II) That has accepted or made contri-

butions or expenditures in excess of two

hundred dollars to support or oppose any

ballot issue or ballot question.

CoLo. Const. art. XXVIII, § 2(10)a); App. 105.

Additional provisions of the Colorado Constitution

regulate the contributions issue committees may

accept and establish the reporting regulations to

Which they are subject. These provisions are

reproduced in the Appendix. COLO. CONST. art

XXVIII; App. 99-126. Statutory provisions likewise

impose contribution, expenditure and_ reporting

conditions on issue committees. These provisions are

reproduced in the Appendix. CoLo. REv. STAT. §§ 1-45-

108, 109, 111.5 (2008); App. 127-141. Finally, the

Colorado Secretary of State has adopted regulations

that affect the application of these constitutional and

statutory provisions. These provisions are reproduced °

in the Appendix. 8 CoLo. CoDE Recs. § 1505-6(1), (3)-

(4) (2006); App. 142-162.

STATEMENT OF THE CASE

The State of Colorado extends its campaign

finance regulations far beyond what this Court’s

precedents have allowed. This approach has resulted

in inconsistent protections for free speech and

association, varying from jurisdiction to jurisdiction.

Under Colorado law, any group of persons

“supporting or opposing” a ballot issue must comply

with registration, administrative and_ reporting

requirements regardless of whether the group’s

primary or central purpose is campaign activity. The

law thus imposes significant burdens on groups that

wish to speak out about ballot issues. The law also

denies contributors the right to engage in anonymous

speech and association once they have contributed

as little as $20 to the organization. Petitioner, the

Independence Institute, a state-based policy organi-

zation, became ensnared in the laws when it spoke

out against two tax and finance referenda in 2005.

A. Factual Background

Peutioner Independence Institute (the “Institute”)

is a non-profit policy research organization located in

Colorado. App. 164. It has served the same mission

since its founding over two decades ago: “educate the

public about the benefits of the free market and the

dangers of expansive government.” App. 2. Its

educational work includes commenting on proposed

legislation, including initiatives. App. 167.

In the spring of 2005, the Colorado Legislature

referred two taxing and financing issues — Referenda

C and D —- to the November ballot. App. 2. Both

referenda affected, to varying degrees, Colorado’s

“Taxpayer Bill of Rights” (TABOR) and were designed

to allow the state to keep and spend more money than

it otherwise would have been able to under TABOR.

App. 2. Believing the referenda would weaken

TABOR, the Institute set out to educate the public

about the State’s budget shortfall, TABOR’s benefits,

and the referenda’s impact on taxes and government

spending. App. 168-169. The Institute published issue

papers and op-eds about the referenda and collected

information about the measures (both pro and con)

and made it available on a website, www.taxincrease.

org. App. 168-169. It also aired three radio advertise-

ments concerning the measures. The advertisements

did not urge a vote for or against the referenda, or for

anyone to contact any elected officials, but instead

urged listeners to go to the taxincrease.org website.

App. 169.’

Campaigns for and against the referenda were

intense. On August 4, 2005, Richard Evans, a

' The texts of the advertisements are reproduced at App.

53-57.

member of the campaign organization “Vote Yes on C

and D,” filed a complaint against the Institute with

the Colorado Secretary of State. App. 3. The

complaint alleged that the Institute was an “issue

committee” within the meaning of the Colorado

Constitution and Colorado’s Fair Campaign Practices

Act and therefore needed to comply with those laws

and the regulations promulgated pursuant to them.

App. 3.

Under Article XXVIII of the Colorado Consti-

tution, an “issue committee” is a corporation or group

comprised of two or more persons “(I) That has a

major purpose of supporting or opposing any ballot

issue or ballot question; or’ (II) 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. CONST. art. XXVIII,

§ 2(10)(a); App. 105. The definition’s use of the

indefinite article “a” to modify “major purpose” means

that organizations can have multiple major purposes,

any one of which can trigger issue committee status.

That is, the definition is not confined to organizations

with a central organizing purpose of supporting or

opposing ballot measures, but includes groups that

occasionally engage in ballot measure advocacy. The

law does not contain any guidance on how much

“ Respondent has issued an administrative rule that

interprets this provision in the conjunctive so that both sections

(1) and (J) must be met before a group may be considered an

“issue committee.” See 8 CoLo. CoprE Reus. § 1505-6 (1.7(b)),

reproduced at App. 144.

ballot measure advocacy might establish “a major

purpose” and thereby trigger the law’s registration

and disclosure obligations.

The consequences of being designated an “issue

committee” under Colorado law are substantial. Issue

committees must register with the Secretary of State;

set up a separate bank account for contributions

related to ballot issues; track and report their

contributions, including names and addresses of each

person who has contributed $20 or more; track and

report any expenditures made and any obligations

entered into by the committee; and track and report

the employer and occupation of anyone who con-

tributes more than $100 to the committee. CoLo. REV.

STaT. § 1-45-108 & -109; App. 127-140. It must

appoint a registered agent. COLO. REv. STAT. § 1-45-

108(3)(b); App. 132. In its registration statement, the

organization must also disclose the specific “purpose

or nature of interest of the committee,” and it may

spend money only in connection with the ballot issues

covered by that specific purpose, unless it amends its

registration statement. CoLo. Rev. StaT. § 1-45-

108(3); App. 132.”

' As of the date of this Petition, Colorado law requires an

issue committee to register with the State prior to accepting or

making any contributions, so an organization that could be

classified as an issue committee must predict in advance

whether its activities include “a major purpose” of supporting or

opposing a ballot measure. COLO. Rev. STaT. § 1-45-108(3); App.

132. However, as of September 1, 2009, issue committees must

instead register within ten days of accepting or making

(Continued on following page)

The burden of complying with these rules made

the matter very significant for the Institute, and it

hired lawyers to defend against the complaint. App.

170. The complaint resulted in an administrative

hearing because, under Colorado law, the mere

accusation that an organization is an “issue com-

mittee” automatically subjects that organization to an

administrative hearing. See CoOLo. CONST. §art.

XXVIII, § 9(2)(a); App. 121-122. After considering “the

relative value assigned to the credible evidence,” the

Administrative Law Judge concluded that the Institute

was not an issue committee because of its long

existence and variety of activities. App. 72. This

evidence showed that the Institute did not have “a

major purpose” of opposing Referenda C and D and

the ALJ therefore dismissed the complaint. App. 82.

Each party bore its own costs and fees. App. 82.

B. Procedural Background

Before the Institute prevailed in the adminis-

trative hearings, it filed the present suit in Colorado

state court against Respondent,’ the state official

charged with enforcing the issue committee pro-

visions, challenging the constitutionality of Colorado’s

regulations. The Institute alleged, among other

contributions or expenditures in excess of $200 to support or

oppose any ballot measure. App. 182.

* Mr. Evans was originally a defendant to this suit, but was

voluntarily dismissed.

things, that the definition of “issue committee” in the

Colorado Constitution is vague and overbroad under

the First and Fourteenth Amendments to the U.S.

Constitution. App. 105-106. It also alleged that the

disclosure requirements in COLO. REv. STAT. § 1-45-

108 represented an unconstitutional infringement on

the right to engage in anonymous speech and

association. App. 127-134.°

The parties cross-moved for summary judgment.

Before the motions were resolved, the Secretary

issued “emergency” rules creating a new breed of

regulated entity, “multi-purpose issue committees,”

addressing organizations whose activities placed

them between an unregulated organization and a

fully regulated “issue committee.” 8 COLO. CODE REGS.

§ 1505-6(4.15) (2007); App. 157-158. The new rules

modified, but did not remove, regulations on

organizations whose sole major purpose was not the

support or opposition of ballot measures. Under the

Secretary’s rules, “multi-purpose issue committees”

must (i) report only those contributions made to

support or oppose a ballot issue, (11) segregate into

separate accounts those contributions accepted to

* Prior to the resolution of the administrative hearing,

Respondent moved to dismiss the Institute’s claims on the basis

of the doctrine of primary jurisdiction. App. 40. After the

Administrative Law Judge dismissed the administrative

complaint, the district court issued an order that denied the

motion, but provided that “[the court’s}] determination in this

action shall be limited to ... facial challenges and shall not

extend to any as-applied challenges.” App. 40.

support or oppose a ballot issue, and (iil) for any

general donations that are used for support of or

opposition to a ballot issue, place them in a separate

account and report them as contributions from the

committee to itself. App. 157-158.

The district court denied the Institute’s motion

for summary judgment and granted Respondent’s

motion. App. 33-39. The Institute appealed and the

Colorado Court of Appeals upheld the district court’s

conclusions on the substantive constitutional issues.

App. 1-32. In particular, the court of appeals found

that the use of the term “a major purpose” in the

definition of “issue committee” did not render the

provision unconstitutionally vague or overbroad. App.

12-20. In doing so, the court explicitly disagreed with

the decision of the Fourth Circuit in North Carolina

Right to Life v. Leake, 525 F.3d 274, 289 (4th Cir.

2008) (““NCRTL”). App. 13-20. In that case, the Fourth

Circuit addressed a law that defined “political

committee” using the term “a major purpose.” The

Fourth Circuit concluded that this phrase was

impermissibly vague and overbroad. NCRTL, 525

F.3d at 289-90. The Colorado court instead adopted

the reasoning in the dissenting opinion of Judge

Michael in NCRTL. See NCRTL, 525 F.3d at 328-29

(Michael, J., dissenting); App. 15-17. In particular,

the Colorado court concluded that the law was not

vague because, in identifying “a major purpose”

or “the major purpose” of an organization, the

government would consider the same evidence in

determining whether’ ballot measure advocacy

constitutes a considerable or principal portion of the

organization’s total activities. App. 17. The court

noted that to determine whether an organization has

“a major purpose” of engaging in ballot measure

advocacy, the organization “could look to and

compare” the purposes stated in its charter, articles of

incorporation, and by-laws; the purposes of its

activities and annual expenditures; and the scope of

issues addressed in its print and_ electronic

publications. App. 17. The court also concluded that

the phrase “a major purpose” was not unconstitu-

tionally overbroad because Respondent's “multi-

purpose issue committee” rules, combined with the

court’s fact-specific inquiry of its vagueness analysis,

“provide sufficient guidance as to when a multi-

purpose group has ‘a major purpose’ of supporting or

opposing a ballot measure.” App. 19-20.

The Colorado court also rejected the Institute’s

anonymous speech claims. App. 23-28. The court

concluded that the Institute had not presented any

evidence that the compelled disclosure of its

contributors would subject such contributors to

threats, harassment, or reprisals from other govern-

ment officials or private parties. App. 27.

The Institute sought review at the Colorado

Supreme Court, which, in a divided order, declined to

review the appellate court’s decision. App. 96-97.

Chief Justice Mullarkey and Justice Eid dissented

and would have granted review on the questions of

whether the definition of “issue committee” in Article

XXVIII was vague or overbroad and whether the

}]

disclosure requirements violated the right to engage

in anonymous speech and association. App. 96-97.

REASONS FOR GRANTING THE WRIT

The decision of the Colorado Court of Appeals

that the definition of “issue committee” in Article

XXVIII of the Colorado Constitution was not vague or

overbroad conflicts with this Court’s decision in

Buckley v. Valeo, 424 U.S. 1, 79 (1976), which held

that political committee regulation may only reach

organizations whose central organizing purpose is

“the nomination or election of a candidate.” The

decision below also conflicts with, among others, the

decision of the United States Court of Appeals for the

Fourth Circuit in NCRTL, which held that this Court

meant what it said in Buckley when it concluded that

political committee regulation may only extend to

organizations “the major purpose” of which is

campaign related. Certiorari is therefore appropriate

under Supreme Court Rule 12(b) & (c).

This Court should also grant the Writ because

the decision below concluded that Colorado’s

registration and disclosure laws, which apply to issue

committee donors, do not violate the right to engage

in anonymous speech and association, an important

question of federal law that has not been, but should

be, settled by this Court. Alternatively, the decision

below conflicts with this Court’s decision in McIntyre

v. Ohio Elections Comm., 514 U.S. 334, 347 (1995),

which recognized that anonymous speech and asso-

ciation are fundamental] rights and, outside of the

candidate context, any regulations affecting them

must be narrowly tailored to promote a compelling

government interest. Put another way, there is an

inherent tension between this Court’s decision in

McIntyre and other cases protecting anonymous

speech and dicta from other decisions from this Court

discussing the informational value of such disclosure

laws in the ballot measure context. This tension has

led lower courts, including the court below, to grant

such dicta primacy over the holdings of McIntyre and

other cases. As on-line information regarding citizens’

political contributions to controversial ballot measures

increasingly enables harassment and retribution by

ideological opponents, it is now time for this issue to

be definitively settled by this Court and Certiorari is

therefore appropriate on this issue under Supreme

Court Rule 12(c).

REVIEW IS REQUIRED BECAUSE THE

LOWER COURT DID NOT FOLLOW THIS

COURT’S DECISION IN BUCKLEY RE-

GARDING THE DEFINITION OF POLIT-

ICAL OR ISSUE COMMITTEE, CAUSING A

SPLIT BETWEEN IT AND THE FOURTH

CIRCUIT AND CREATING INCONSISTENT

PROTECTIONS FOR FREE SPEECH

ACROSS THE COUNTRY.

A. BUCKLEY ESTABLISHED A CLEAR

STANDARD FOR WHEN AN ORGANI-

ZATION MAY BE REGULATED AS A

POLITICAL OR ISSUE COMMITTEE.

In Buckley, this Court considered the reporting

requirements for “political committees” and others in

Sections 434(a) and (e) of the Federal Election

Campaign Act of 1971 (FECA). In so doing, this Court

interpreted the term “political committee” to “only

encompass organizations that are under the control of

a candidate or the major purpose of which is the

nomination or election of a candidate.” Buckley, 424

U.S. at 79. The Court adopted this interpretation

from two lower court decisions construing the term

“political committee” not to apply to organizations

that do not campaign for candidates. /d. at 79 n.106

(citing U.S. v. Nat'l Comm. for Impeachment, 469 F.2d

1135, 1139-42 (2d Cir. 1972) and Am. Civil Liberties

Union v. Jennings, 366 F. Supp. 1041, 1055-57

(D.D.C. 1973) (three-judge panel), vacated as moot,

Staats v. Am. Civil Liberties Union, 422 U.S. 1030

(1975)). In each of those cases, the lower courts

narrowly defined “political committee” to apply only

to those groups “organized or at least authorized by a

particular candidate and whose principal focus is a

specific campaign” in order to comply with Congress's

primary concern in passing the law and to avoid

“serious constitutional issues” that could result in a

“dampening effect on first amendment rights and the

potential for arbitrary administrative action.” Nat'l

Comm. for Impeachment, 469 F.2d at 1140-42; see also

Jennings, 366 F. Supp. at 1057 (concluding that the

judges were “in full agreement” with the decision in

National Committee for Impeachment). As the Second

Circuit explained, this interpretation was necessary

to ensure that “every position on any issue ... and

any comment upon it in, say, a newspaper editorial or

an advertisement would [not] be subject to proscrip-

tion unless the registration and disclosure regulations

of the Act in question were complied with.” Nat'l

Comm. for Impeachment, 469 F.2d at 1142.’

The Institute does not argue that the political speech of

organizations having “the major purpose” of nominating or

electing candidates can be regulated in all instances or that the

burden of such regulation cannot be accounted for in considering

the constitutionality of government restrictions on political or

issue committees. Rather, the Institute’s position is that the

question of whether, or to what extent, an organization may be

regulated as a political or issue committee should not even arise

unless that organization has as its central purpose election

related activities. In other words, having “the major purpose” is

a condition precedent for political or issue committee status in

the first place and an organization that does not have as its

(Continued on following page)

This Court has continued to use the Buckley

Jennings-National Committee for Impeachment inter-

pretation of “political committee.” See Fed. Election

Comm'n v. Mass. Citizens for Life, Inc., 479 U.S. 238,

262 (1986) (““MCFL”) (“[S]hould MCFL’s independent

spending become so extensive that the organization’s

major purpose may be regarded as campaign activity,

the corporation would be classified as a _ political

committee.”); McConnell v. Fed. Election Comm'n,

540 U.S. 93, 170 n.64 (2003) (citing Buckley). Similarly,

the Federal Election Commission has recognized that

this Court adopted the major purpose test because

the test allowed the Court to avoid issues of vague-

ness and overbreadth. See Political Committee Status,

Supplemental Explanation and Justification, 72 Fed.

Reg. 5595, 5597 (Feb. 7, 2007) (In Buckley, “the

Supreme Court mandated that an additional hurdle

was necessary to avoid Constitutional vagueness

concerns; only organizations whose ‘major purpose’ is

the nomination or election of a Federal candidate can

be considered ‘political committees’ under the Act.

The court deemed this necessary to avoid the

central organizing principle campaign-related activities cannot

be regulated as a political or issue committee at all

In MCFL, this Court noted that MCFL was not a “political

committee” under Buckley because its “central organizational

purpose is issue advocacy, although it occasionally engages in

activities on behalf of political candidates.” MCFL, 479 U.S. at

253 n.6. This Court also noted that, under the law at issue in

that case, “all MCFL independent expenditure activity is

regulated as though the organization’s major purpose is _ to

further the election of candidates.” Jd. at 253

regulation of activity ‘encompassing both issue dis

cussion and advocacy of a political result.’”) (quoting

Buckley, 424 U.S. at 79); see also Shays v. Fed.

Election Comm'n, 511 F. Supp. 2d 19, 26 (D.D.C

2007) (noting that, “In Buckley, the Court addressed

constitutional concerns that the statutory definition

of ‘political committee’ was overbroad and, to the

extent it incorporated the definition of ‘expenditure,’

vague as well.”).

B. BUCKLEY’S STANDARD IS THE LAW

IN THE SECOND AND FOURTH CIR-

CUITS AND HAS BEEN APPLIED BY

FEDERAL DISTRICT COURTS ACROSS

THE COUNTRY.

It should come as no surprise then that when the

Fourth Circuit addressed a state statute that diluted

this requirement for political committees, the court

struck it down as vague and overly broad. In NCRTL,

the court examined a_ state statute that, like

Colorado’s Article XXVIII, extended “political com

mittee” status to any two or more individuals who

have “a major purpose to support or oppose the nom

ination or election of one or more clearly identified

candidates.” NCRTL, 525 F.3d at 286. Like the

Institute, the plaintiffs in NCRTL argued that the

use of the definite article was crucial to the

constitutionality of the statute and that extending

political committee regulation to a group that had

more than one major purpose of supporting or

opposing the nomination of a clearly defined candi-

date violated this Court’s decision in Buckley. As the

Second Circuit did in National Commuttee for

Impeachment, the Fourth Circuit concluded that the

term “political committee” must be defined in a

narrow way if the government is to avoid vagueness

and overbreadth problems.

The Fourth Circuit noted that:

If organizations were regulable merely for

having the support or opposition of a

candidate as “a major purpose,” political

committee burdens could fall on organi-

zations primarily engaged in speech on

political issues unrelated to a particular

candidate. This would not only contravene

both the spirit and the letter of Buckley’s

“unambiguously campaign related” test, but

it would also subject a large quantity of

ordinary political speech to regulation.

Id. at 287-288 (emphasis in original). The court held

that “we are convinced that the Court in Buckley did

indeed mean exactly what it said when it held that an

enti:y must have ‘the major purpose’ of supporting or

opposing a candidate to be designated a political

committee.” Jd. at 288 (emphasis in original). The

court then concluded that, unless Buckley’s holding is

strictly adhered to, it would be impossible for

organizations to know when one of their purposes

was sufficiently “major” to bring them within the

reach of the statute and that such an amorphous law

would leave such groups subject to partisan or

ideological abuse. Id. at 290.° This reasoning applies

with even greater force to Colorado’s law, because

groups supporting or opposing ballot measure issues

are, by definition, engaged in issue advocacy.

Other decisions have likewise held that only

those groups with a central organizing purpose of

campaigning can be required to become political

committees. See Real Truth About Obama, Inc. v. Fed.

Election Comm'n, No. 08-1977, 2009 WL 2408735 at

*6 (4th Cir. Aug. 5, 2009) (“The major purpose test is

intended to exempt from regulation organizations

that expend or contribute money for express advocacy

but do not have as the major purpose of their

existence the election or defeat of a particular can-

didate.”); Ctr. for Individual Freedom, Inc. v. Ireland,

613 F. Supp. 2d 777, 795 (S.D.W.V. 2009) (applying

NCRTL and holding that a statute that applied

political committee status to organization “the purpose”

of which was campaign-related meant the law was more

narrow than the law at issue in NCRTL); Broward

Coalition of Condominiums, Homeowners Ass’ns &

Cty. Orgs. Inc. v. Browning, 2008 U.S. Dist. LEXIS

91591, at *41 (N.D. Fla. Oct. 29, 2008) (applying

* The exposure to such partisan or ideological abuse is

compounded in Colorado because of the law’s requirement that a

complaint automatically result in an administrative hearing. See

CoLo. Const. amend. XXVIII, § 9(2)(a); App. 121-122. Thus, the

mere accusation that an organization is an “issue committee”

subjects that organization to a burdensome administrative

hearing, and depending on the result of that hearing, significant

administrative, disclosure, and reporting requirements.

NCRTL and holding that “The Supreme Court has

made absolutely clear that the burdensome structural

and reporting requirements that apply to PACs may

only be visited on groups ‘the major purpose of which

is the nomination or election of a candidate.’”)

(quoting Buckley, 424 U.S. at 79)); Natl Right to Work

Legal Defense & Educ. Found., Inc., 581 F. Supp. 2d

1132, 1153 (D. Utah 2008) (applying NCRTL and

concluding that, “Utah does not even attempt to

comply with Buckley’s ‘major purpose’ requirement,

and has pushed the reach of political committee

regulation beyond constitutional limits.”).

C. THE DECISION BELOW CONFLICTS

WITH THE FOURTH CIRCUIT’S DE-

CISION IN NCRTL AND ESTABLISHES

AMBIGUOUS, OVERLY BROAD STAN-

DARDS THAT CAN HAVE GRAVE CON-

SEQUENCES FOR FREE SPEECH

ACROSS THE COUNTRY.

Nonetheless, despite this Court’s and the lower

federal courts’ clear guidance that only organizations

whose principal focus is unambiguously campaign

focused may be constitutionally regulated as political

committees, the State of Colorado extends its cam-

paign finance regulations to organizations with only

“a major purpose of supporting or opposing any ballot

issue or ballot question.” COLO. CONST. art. XXVIII,

§ 2(10)(a). The Colorado Court of Appeals found that

this formulation was not vague or overbroad. App. 10-

20. In so doing, the court adopted the dissenting view

of Judge Michael in NCRTL, who concluded that

there was nothing in Buckley that saia that the

definite article was required. NCRTL, 525 F.3d at 309

(Michael, J., dissenting); App. 15.

The court did not, presumably because it could

not, state what weight multi-purpose organizations

such as the Institute (or its ideological or political

opponents when they seek to have the Institute

declared an “issue committee”) are to give to each

factor, nor did the court explain how to determine

when an organization has too many factors weighing

against it, or how long these factors must be in place,

before an organization is transformed into an issue

committee.’ But the court of appeals’ test, like Judge

Michael’s test in NCRTL, ignores the fact that

speakers, such as the Institute, must be able to

determine in advance not whether they, themselves,

* The court also concluded that the last-minute rules issued

by Respondent limited the disclosure and _ termination

requirements for “multi-purpose issue committees” and over-

came any problems with overbreadth in the law. App. 19.

However, these standards merely altered the consequences of

regulation; they did not change the fact that the law expands far

beyond the organizations this Court said could be regulated as

political committees in Buckley. In other words, Respondent’s

regulations merely attempt to mitigate the severity of the

constitutional violation; they do not cure it. Indeed, Respon-

dent’s last-minute regulations actually demonstrate how

amorphous and prone to abuse the Colorado law’s standards are.

The fact that Respondent felt compelled to adopt regulations

radically altering the extent and consequences of the law itself

suggests that the law sets no concrete, easily comprehensible

standards.

think they have a major purpose, but whether, as a

matter of law, they do. The legal consequences of

hav'«.g “a major purpose” may be determined by the

government or potential complainants regardless of

what the Institute itself concludes about its activities.

None of the court of appeals’ test, Judge Michael’s

dissent, or the approach taken by the ALJ provide

any objective or predictable means of deciding

whether a group is an issue committee before an

enforcement action may be brought against it. In

other words, the question of whether one of a groups

purposes is “major” is a matter of opinion, while the

question of whether a group’s primary organizing

principle is campaigning is not.

Even with the clear impact on free speech and

free association inherent in such an amorphous

standard, the decision below is not the only case

rejecting NCRT'L. The Colorado court’s approach is

similar to the conclusion adopted by another federal

district court. See Human Life of Wash. v. Brumsickle,

2009 U.S. Dist. LEXIS 4289 (W.D. Wash. Jan. 8,

2009) (adopting Judge Michael’s dissent in NCRTL

and concluding that any vagueness problems can be

addressed because “parties can request prior inter-

pretations from” the regulatory agency). That case is

currently on appeal before the Ninth Circuit.

The decision below thus conflicts with the

narrowing interpretation adopted by this Court and

employed by the Fourth Circuit. Unless this split is

resolved, the residents of some states, like Colorado

and Washington, will be subject to vague, overbroad

regulations on their ideological and issue-oriented

activities in a way that residents of other states, such

as North Carolina and Florida, are not. But the First

Amendment mandates that the entire country be able

to engage in free speech and free association without

having to guess as to when one of their “major

purposes” pushes them too far towards regulation.

This Court’s review is therefore necessary to (i)

reaffirm that only organizations that have election-

related activities as their central organizing purpose

are subject to regulation as political or issue com-

mittees, and (ii) to provide clear standards to protect

free speech and association for issue-oriented

organizations across the entire nation.

il. REVIEW IS NECESSARY TO RESOLVE

WHETHER THE GOVERNMENT MAY

REQUIRE DISCLOSURE OF CONTRIB-

UTORS TO BALLOT MEASURE CAMPAIGNS

THAT HAVE NO POSSIBILITY OF QUID

PRO QUO CORRUPTION.

A. THIS CASE RAISES IMPORTANT IS-

SUES OF FEDERAL LAW REGARDING

THE APPLICATION OF DISCLOSURE

RULES IN THE BALLOT MEASURE

CONTEXT.

This case implicates two disparate themes in this

Court’s free speech jurisprudence.

First, in McIntyre v. Ohio Elections Commission,

this Court struck down a law that required the

disclosure of one’s identity on written election

communications. 514 U.S. 334, 357 (1995). This Court

held that individuals have a right to anonymous

speech and that a law requiring them to disclose their

views on controversial issues violated that right. Jd.

“([A]ln author’s decision to remain anonymous, like

other decisions concerning omissions or additions to

the content of a publication, is an aspect of the

freedom of speech protected by the First Amend-

ment.” Jd. at 342. This Court also emphasized the

importance of anonymity in protecting the rights to

speech and association. “Anonymity is a shield from

the tyranny of the majority” that “exemplifies the

purpose behind the Bill of Rights, and of the First

Amendment in particular: to protect unpopular

individuals from retaliation — and their ideas from

suppression — at the hand of an intolerant society.”

Id.; see also Brown v. Socialist Workers ’74 Campaign

Comm., 459 U.S. 87, 92 (1982); NAACP v. Alabama,

357 U.S. 449, 462 (1958); Britt v. Superior Court of

San Diego, 574 P.2d 766, 771 (Cal. 1978) (noting that

“numerous cases establish that compelled disclosure

of an individual’s private associational affiliations

and activities ... poses one of the most serious

threats to the free exercise of this constitutionally

endowed right.”).

Second, this Court has nonetheless upheld

various mandatory disclosure requirements for

contributions in political candidate elections. See, e.g.,

McConnell, 540 U.S. at 196-99; Buckley, 424 U.S. at

68 (assuming that “disclosure requirements certainly

in most applications appear to be the least restrictive

means of curbing the evils of campaign ignorance and

corruption Congress found to exist”). This Court has

not, however, specifically addressed whether the

mandatory disclosure of political contributions in the

ballot measure context is constitutionally permissible.

This Court has suggested in dicta, though, that

disclosure in such circumstances may be valuable “so

that the people will be able to evaluate the arguments

to which they are being subjected.” First Nat'l Bank v.

Bellotti, 435 U.S. 765, 792 n.32 (1978); accord Buckley

v. Am. Constitutional Law Found., Inc., 525 U.S. 182,

203 (1999); Citizens Against Rent Control v. City of

Berkley, 454 U.S. 290, 299-300 (1991). This was

despite this Court’s recognition that ballot measure

elections do not present the same opportunity for

quid pro quo corruption present in candidate

elections and that the government has less interest in

regulating speech in such circumstances. Sev, e.g.,

Bellotti, 435 U.S. at 790 (“The risk of corruption

perceived in cases involving candidate elections ...

simply is not present in a popular vote on a public

issue.”).

The court below found the dicta from Bellotti,

American Constitutional Law Foundation, and Citizens

Against Rent Control, to be more persuasive than the

reasoning of McIntyre. App. 26-27." The Colorado

The court was also persuaded by the Ninth Circuit’s

decision in California Pro-Life Council, Inc. v. Getman, 328 F.3d

1088, 1161 (9th Cir. 2003), which held that express ballot

(Continued on following page)

court held that, because the Institute had not demon-

strated that compelled disclosure of its contributors

would subject them to threats, harassment or reprisals

from government officials or private parties, the

Colorado statute was constitutional. App. 27. The

court never examined whether the government had

met its burden of demonstrating either a compelling

government interest in disclosure or whether the

Colorado statute was narrowly tailored to achieve

that interest. See Fed. Election Comm’n v. Wisc. Right

to Life, Inc., 551 U.S. 449, 464 (2007) (“[T]he Govern-

ment must prove that applying [the law] furthers a

compelling governmental interest and is narrowly

tailored to achieve that interest.”) (emphasis in

original).

The inherent tension between this Court’s

decision in McIntyre, on one hand, and the holdings of

McConnell and Buckley and the dicta discussed

above, on the other, has led courts, such as the court

below, to give primacy to disclosure over the

fundamental right to engage in anonymous speech

and association in the ballot measure context. The

measure advocacy may be regulated, provided that the state has

a compelling interest and that the regulations are narrowly

tailored to advance the relevant interest. App. 27. The Ninth

Circuit, after remanding Getman, ultimately concluded that

disclosure of contributions to organizations promoting ballot

measures was supported by a compelling government interest

and that California’s regulations were narrowly tailored to

achieve that interest. Cal. Pro-Life Council, Inc. v. Randolph,

507 F.3d 1172, 1178-87 (9th Cir. 2007).

Institute believes that this tension fundamentally

undermines the rights recognized in McIntyre and

this Court should resolve this disparity by rec-

ognizing, as it has in the past, that ballot measure

elections do not present the same concerns about quid

pro quo corruption that candidate elections do and

that the government’s interest in disclosure recognized

in Buckley applies only to candidate elections. See

Brown, 459 U.S. at 92 (stating that the Court in

Buckley found three interests sufficient to justify

mandatory disclosure: “enhancement of voters’

knowledge about a candidate’s possible allegiances

and interests, deterrence of corruption, and the

enforcement of contribution limitations.”)''

B. THE CONSTITUTIONALITY OF LAWS

MANDATING DISCLOSURE IN THE

BALLOT MEASURE CONTEXT IS A

RECURRING ISSUE OF SIGNIFICANT

IMPORTANCE ACROSS THE COUNTRY.

Two recent trends have highlighted’ the

importance of this Court’s resolving the tension in its

precedents in favor of affirming the fundamental

First Amendment right to anonymous speech and

association in the ballot measure context. First,

' This Court recently affirmed that preventing corruption

or the appearance of corruption is the only legitimate and

compelling government interest thus far identified for

restricting campaign finances. Davis v. Fed. Election Comm'n, __

U.S. ___, 128 S. Ct. 2759, 2773 (2008).

technological developments have lowered the cost of

identifying one’s political opponents and publicizing

their identities. Second, ballot measures often involve

the most controversial issues of the day, including

same-sex marriage, government assistance for

undocumented immigrants, assisted suicide, and

embryonic stem cell research. In combination, these

two trends have produced conscious efforts to chill

speech.

Advocates have begun using the disclosure

informaticn posted on government websites to launch

campaigns of harassment and retribution against

contributors to the opposing side in controversial

ballot campaigns. See Protect Marriage Washington v.

Reed, No. 09-5456BHS (W.D. Wash. July 29, 2009)

(granting temporary restraining order against dis-

closure of individuals’ identities who oppose gay

marriage); ProtectMarriage.com v. Bowen, 599 F. Supp. 2d

1197, 1199-1205 (E.D. Cal. 2009) (documenting the

retaliation faced by supporters of California’s recent

Proposition 8, including death threats, harassing

emails and phone calls, broken windows, and economic

retaliation); John R. Lott, Jr. and Bradley Smith,

Donor Disclosure Has Its Downsides: Supporters of

California’s Prop. 8 Have Faced a Backlash, WALL SY’.

J., Dec. 26, 2008; Amy Bounds, Gay rights advocates

picket Boulder Cineplex, Rocky MOUNTAIN NEws, Nov.

30, 2008 (business picketed and boycotted based on

CEO’s personal donation); Associated Press, John

Kerry Grills Belgium Ambassador Nominee Over

Swift Boat Donation, Feb. 28, 2007 (“A Senate

hearing that began with glowing tributes to a St.

Louis businessman and his qualifications to become

ambassador to Belgium turned bitterly divisive

Tuesday after he was criticized for supporting a

controversial conservative group.”).

The potential for such harassment increases in

the ballot measure context because, unlike a

contribution to a candidate, a contribution to a ballot

measure committee directly discloses the contributors’

views on what may be an extremely contentious

issue, raising the chances that ideological opponents

will use that information to select specific targets for

harassment. See Brown, 459 U.S. at 96 n.14 (“The

preservation of unorthodox political affiliations in

public records substantially increases the potential

for harassment above and beyond the risk that an

individual faces simply as a result of having worked

for an unpopular party at one time.”). This trend

certainly suggests that this Court’s conclusion in

Buckley that disclosure imposes a minima] infringe-

ment on the right of association simply does not apply

in the ballot measure context, especially in light of

recent technological changes.

The easy accessibility of information about one’s

political leanings, address, employer, and occupation,

and the increasing abuse of that information, makes

review by this Court all the more pressing. The lower

courts have been applying contradictory standards

and generally failing to give the right to engage in

anonymous speech and association its proper respect.

At the very least this Court should grant the petition

here, vacate the decision of the Colorado Court of

Appeals, and remand this case to the trial court with

instructions to consider whether Respondent can

demonstrate a compelling government interest in the

disclosure of contributors to ballot measure cam-

paigns and whether, or to what extent, Colorado’s law

is narrowly tailored. See Canyon Ferry Rd. Baptist

Church v. Unsworth, 556 F.3d 1021, 1034 (9th Cir.

2009) (striking down the application of Montana’s

disclosure laws for “incidental committees” in the

ballot measure context where organization’s election

related activities were de minimis).

CONCLUSION

For the reasons stated, Petitioner Independence

Institute respectfully requests that this Court grant

its petition for certiorari.

Respectfully submitted,

INSTITUTE FOR JUSTICE

WILLIAM H. MELLOR

WILLIAM R. MAURER?*

STEVEN M. SIMPSON

901 North Glebe Road, Suite 900

Arlington, VA 22203

(703) 682-9320

( ‘ounsel for Petitioner

“( ‘OUNS« l of Record

August 31, 2009

App. ]

COLORADO COURT OF APPEALS

Court of Appeals No.: 07CA1151

City and County of Denver District

Court No. 05CV7604

Honorable Herbert L. Stern, III, Judge

Independence Institute, a Colorado non-profit

corporation,

Plainitff-Appellant,

Mike Coffman, in his official capacity as

Secretary of State of the State of Colorado

Appellee.

JUDGMENT AFFIRMED

Division I]

Opinion by: JUDGE TAUBMAN

Carparelli, J., concurs

Connelly, J., specially concurs

Announced: November 26, 2008

Jackson Kelly PLLC, Shayne M. Madsen, Denver,

Colorado; William H. Mellor, III, Steven M. Simpson,

Arlington, Virginia, for Plaintiff-Appellant

John W. Suthers, Attorney General, Maurice G

Knaizer, Deputy Attorney General, Monica M

App. 2

Marquez, Assistant Solicitor General, Denver,

Colorado, for Appellee.

In this campaign finance law dispute, plaintiff,

the Independence Institute, appeals the summary

judgment entered by the trial court in favor of Mike

Coffman, in his official capacity as Secretary of State

of Colorado. Because we conclude the definition of “a

major purpose” in article XXVIII, section 2(10), of the

Colorado Constitution is not unconstitutionally vague

or overbroad on its face, we affirm the trial court’s

judgment.

I. Background

Founded in 1985, the Independence Institute is a

nonprofit policy research organization located in

Golden, Colorado. Its purpose is “to educate the

public about the benefits of the free market and the

dangers of expansive government.” To do so, the

Independence institute provides policy makers,

legislators, business leaders, the media, and Colorado

citizens with educational materials about policy

issues with which it is concerned.

In the spring of 2005, the General Assembly

referred two tax and financing issues — Referenda C

and D — to the November ballot. Referendum C would

allow the state to retain revenues over a five-year

period that would otherwise have to be refunded to

taxpayers under the Taxpayer Bill of Rights

(TABOR), Colo. Const. art. X, § 20. Referendum D

was intended to work in_ conjunction’ with

App. 3

Referendum C, allowing the state to issue bonds for

certain projects and to trigger provisions in Refer-

endum C to allow the state to spend an additional

$100 million each year if Referendum D passed.

Amid wide-ranging campaigns supporting and

opposing the adoption of Keferenda C and D, the

Independence Institute, through its fiscal policy

center, initiated an education campaign to inform the

public about the impact of Referenda C and D on

taxes and government spending. As part of its edu-

cation campaign, the Independence Institute aired

three radio commercials, which provided information

on the tax implications of Referendum C, directed

listeners to a website to learn more information, but

did not explicitly ask listeners to vote yes or no on the

referendum. Subsequently, the voters approved

Referendum C but not Referendum D.

This dispute began in August 2005 when Richard

Evans, an agent of “Vote Yes on C and D,” an issue

committee promoting the adoption of statewide refer-

enda during the 2005 election, filed an administrative

complaint with the Secretary of State. Evans alleged

that the Independence Institute was an _ issue

committee opposed to those referenda and had failed

to comply with registration, reporting, and disclosure

requirements of article XXVIII and the Fair Cam-

paign Practices Act (FCPA), sections 1-45-101 to -113,

C.R.S. 2008. As required by section 9(2)(a) of article

XXVIII, the Secretary referred Evans’s complaint to

the Office of Administrative Courts for an adminis-

trative hearing.

App. 4

While the administrative proceedings were pend-

ing, the Independence Institute filed this lawsuit

against Coffman’s predecessor, alleging constitutional

challenges to article XXVIII and the disclosure pro-

visions of the FCPA. The trial court denied the

Independence Institute’s request for preliminary

injunction to enjoin the administrative hearing

scheduled for October 12, 2005. Accordingly, the

administrative hearing went forward, and a few days

after the election, the administrative law judge (ALJ)

issued a decision concluding that the Independence

Institute was not an “issue committee” with respect

to its activities concerning Referenda C and D and

therefore had not violated the registration and

disclosure provisions in article XXVIII or the FCPA.

Notwithstanding its favorable decision from the

ALJ, the Independence Institute pursued this litiga-

tion, maintaining that the constitutional and statu-

tory provisions at issue were unconstitutional on

their face. In May 2007, the district court granted

summary judgment in favor of Coffman on all of the

Independence Institute’s claims.

Issue Committee Provisions

Article XXVIII establishes Colorado’s campaign

and political finance laws as constitutional provi-

sions. The purpose of the article is to require certain

disclosures of contributions madc to influence election

outcomes not only as to political candidates, but as to

ballot issues as well. See Colo. Const. art. XXVIII, § 1.

App. 5

The requirements ensure that large contributions

made to influence election outcomes are not con-

cealed, and that special interest groups cannot dis-

proportionately influence elections outcomes. Id; see

also Colorado Citizens for Ethics in Gov't v. Comm. for

Am. Dream, 187 P.3d 1207, 1215-16 (Colo. App. 2008)

(CCEG).

Article XXVIII defines an issue committee as:

any person, other than a natural person, or

any group of two or more persons, including

natural persons:

(I) [tlhat has a major purpose of supporting

or opposing any ballot issue or ballot

question; or

(II) [t]hat has accepted or made

contributions or expenditures in excess of

two hundred dollars to support or oppose any

ballot issue or ballot question.

Colo. Const. art. XXVIII, § 2(10)(a) (emphasis added).

By regulation, Coffman has interpreted the empha-

sized word “or” to mean “and.” See Sec’y of State

Campaign & Political Finance Rules 1.7, 8 Code Colo.

Regs. 1505-6. When an organization is deemed an

issue committee, it must fully comply with reporting

requirements set forth in article XXVIII and the

FCPA.

Among the requirements, all issue committees

must register witn the Secretary of State before

accepting or making any contributions and disclose

the name and address of each person who contributed

App. 6

$20 or more, including the occupation and employer

of each person who has made a contribution of $100

or more. § 1-45-108(1)(a)(1)-(II), C.R.S. 2008.

All issue committees must regularly report to the

Secretary of State the balance of funds at the

beginning of the reporting period, the amounts of

contributions received, and expenditures made during

the reporting period. § 1-45-108(2)(b), C.R.S. 2008.

Additionally, “[a]ln issue committee shall be con-

sidered open and active until [it] affirmatively” termi-

nates its designation as an issue committee with the

state. Colo. Const. art. XXVIII, § 2(10)(c).

The provisions at issue here concern “multi-

purpose issue committees.” Although that term is not

defined in article XXVIII, it was defined in a regu-

lation adopted by the Secretary of State after the ALJ

issued her administrative ruling but before the

district court ruled on the parties’ cross-motions for

summary judgment. The regulation defines a multi-

purpose issue committee as “an issue committee

whose purposes are not limited to supporting or

opposing ballot issues or ballot questions.” See

Secretary of State Campaign & Political Finance

Rules 3.8, 8 Code Colo. Regs. 1505-6. The parties here

agree that the Independence Institute is not a single-

purpose issue committee.

The questions before us now relate only to the

propriety of the trial court’s summary judgment.

Neither the trial court’s denial of the Independence

Institute’s motion for preliminary injunction nor the

App. 7

ALJ’s decision in favor of the Independence Institute

is before us here.

III. Standard of Review

We review a trial court’s grant of summary

judgment de novo. Aspen Wilderness Workshop, Inc. v.

Colo. Water Conservation Bd., 901 P.2d 1251, 1526

(Colo. 1995). Summary judgment is appropriate only

if the pleadings and supporting documents demon-

strate there is no genuine issue as to any material

fact and the moving party is entitled to judgment as a

matter of law. Id.; see C.R.C.P. 56(c).

Interpretation of a constitutiona! provision is a

question of law that we review de novo. Rocky

Mountain Animal Defense v. Colo. Div. of Wildlife,

100 P3d 508, 513 (Colo. App. 2004) (RMAD). In

addition, since the judgment relates to political

speech, we review the entire record “to ensure that

the judgment rendered does not intrude on the right

of free speech.” See Holliday v. Reg’l Transp. Dist., 43

P.3d 676, 681 (Colo. App. 2001).

IV. Vagueness and Overbreadth

The Independence Institute argues that Colorado

Constitution article XX VITI, § 2(10)(a), which defines

“issue committee,” is unconstitutionally vague and

overbroad on its face. We disagree.

In construing a constitutional amendment, we

must ascertain and give effect to the intent of the

App. 8

electorate adopting the amendment. Zaner v. City of

Brighton, 917 P.2d 280, 283 (Colo. 1996); CCEG, 187

P.3d at 1215 (citing RMAD, 100 P.3d at 513-14). To

determine that intent, we first look at the plain and

ordinary meaning of the words in the amendment

without engaging in narrow or overly technical

constructions. RMAD, 100 P.3d at 514. We may also

discern the electorate’s intent by considering the

ballot title, the submission clause, the Bluebook, and

other materials. Jd. Moreover, if the language is

ambiguous or reasonably susceptible of more than

one interpretation, then we consider the objective to

be accomplished and the “mischief to be avoided.”

Zaner, 917 P.2d at 283. Finally, we must consider the

amendment as a whole, and if possible, interpret the

provision in harmony with other provisions to avoid a

conflict. Jd.

General rules of statutory construction apply

when interpreting citizen-initiated measures. RMAD,

100 P.3d at 514; see also Bickel v. City of Boulder, 885

P.2d 215, 228 n.10 (Colo. 1994) (courts may interpret

citizen-initiated measures using the general rules of

statutory construction); Nevada Tax Comm’n uv.

Bernhard, 683 P.2d 21, 23 (Nev. 1984) (laws approved

by referendum are interpreted using general rules of

statutory construction).

State constitutional provisions that violate

federal constitutional law can be held invalid facially

or as applied. Alliance for Colorado’s Families v.

Gilbert, 172 P.3d 964, 968 (Colo. App. 2007). As-

applied constitutional challenges attempt to

App. 9

invalidate a law only in the circumstances in which a

party has acted or proposes to act; thus, a law that is

held invalid as applied is not rendered completely

inoperative. Sanger v. Dennis, 148 P.3d 404, 410

(Colo. App. 2006). In contrast, a party who brings a

facial challenge must establish that the law is invalid

in all respects and cannot be constitutionally applied

in any circumstance. /d. at 411. A party challenging

a constitutional amendment must show it to be

unconstitutional beyond a reasonable doubt. Evans v.

Romer, 854 P.2d 1270, 1274 & n.6 (Colo. 1993)

(presumption of constitutionality of amendment to

Colorado Constitution is more forceful than similar

presumption with respect to statutes, in recognition

of “the broad powers which our state constitution

places in the people”); People ex rel. Tate v. Prevost, 55

Colo. 199, 134 P. 129 (1913).

We are also mindful that facia] challenges are

disfavored. Wash. State Grange v. Wash. Republican

Party, __ U.S. ___, 128 S.Ct. 1184, 1191, 170 L.Ed.2d

151 (2008). Facial challenges are disfavored because

(1) courts may be forced to rely on speculation, (2)

there is a risk of premature statutory interpretation,

(3) courts may have to anticipate questions of

constitutional law when unnecessary, (4) courts may

have to formulate constitutional rules broader than

those required by the precise facts to which they

would be applied, and (5) they may prevent the

implementation of laws that embody the will of the

people. /d.

App. 10

As discussed below, we conclude that article

XXVIII, §2(10)a) is neither facially vague nor

overbroad.

A. Vagueness

Initially, the Independence Institute asserts that

the trial court erred in using an improper standard of

vagueness, rather than the stricter standard that

applies in First Amendment cases. Coffman does not

dispute that the trial court erred in this regard, but

simply contends that the Independence Institute has

not articulated how the stricter test dictates a

different result here. Accordingly, we apply the

stricter vagueness test applicable to First Amend-

ment cases.

A law that is unduly vague violates the Due

Process Clause of the Fourteenth Amendment.

Parrish v. Lamm, 758 P.2d 1356, 1367 (Colo. 1988)

(citing Village of Hoffman Estates v. Flipside,

Hoffman Estates, Inc., 455 U.S. 489, 497 (1982)). The

vagueness doctrine helps to ensure that a law is

sufficiently definite so that citizens will be alerted to

the conduct that is proscribed and they may act

accordingly, and so that the law will not be arbitrarily

applied. Regency Services Corp. v. Bd. of County

Comm'rs, 819 P.2d 1049, 1055 (Colo. 1991).

A law is vague where persons of ordinary

intelligence must necessarily guess as to its meaning

and differ as to its application. People v. Gomez, 843

P.2d 1321, 1322 (Colo. 1993); People v. Becker, 759

App. 11

P.2d 26, 31 (Colo. 1988). However, laws concerning

First Amendment protected activities are analyzed

under stricter vagueness terms. Parrish, 758 P.2d at

1366 (citing Flipside, 455 U.S. at 498-99). The First

Amendment demands specificity in a law so that

individuals may assess the burden on their rights to

free speech and free association and make informed

decisions before acting. Common Sense Alliance ov.

Davidson, 995 P.2d 748, 756 (Colo. 2000).

We must construe a constitutional provision

consistent with its purpose, “to avoid the shoals of

vagueness.” See Buckley v. Valeo, 424 U.S. 1, 77-78

(1976). Because a constitutional provision must be

specific enough to give fair warning of the proscribed

conduct and, at the same time, be general enough to

address the essential problem under varied cir-

cumstances, due process does not require that the

provision be drafted with mathematical exactitude.

See People ex rel. City of Arvada v. Nissen, 650 P.2d

547, 550 (Colo. 1982).

When reviewing a vagueness challenge, the

court’s duty is to construe the challenged provision

“so as to uphold its constitutionality whenever a

reasonable and practical construction may be applied

to the statute.” Loonan v. Woodley, 882 P.2d 1380,

1389 (Colo. 1994) (quoting People v. Buckallew, 848

P.2d 904, 907 (Colo. 1993)); see also Buckley, 424 U.S.

at 77-78 (construing provisions of Federal Election

Campaign Act of 1971 narrowly to avoid facial

invalidity based on grounds of vagueness and

overbreadth); Natl Right to Work Legal Defense &

App. 12

Educ. Foundation, Inc. v. Herbert, _ F. Supp. 2d

_, 2008 WL 4181336, at *13 (D. Utah Sept. 8, 2008)

(similarly imposing narrowing construction on Utah

election statutes).

The Independence Institute contends that the

definition of issue committee restricts freedom of

speech and association because it provides no

guidance as to when multi-purpose issue committees

must comply with the constitutional and statutory

registration, reporting, and disclosure provisions.

More specifically, it asserts that the phrase “a major

purpose” in article XXVIII, § 2(10)(a)(1) is uncon-

stitutionally vague because it lacks the precision

accorded the phrase “the major purpose” in Buckley.

We disagree.

Because article XXVIII does not define the

phrase “a major purpose,” we first look at the

ordinary and plain meaning of the phrase. While the

Independence Institute focuses on the alleged

vagueness of “a” and Coffman relies on the apparent

clarity of “major” and “purpose,” we focus on the

language of the entire phrase. This is the approach

used by the United States Supreme Court in Buckley

in defining “the major purpose” as the one, central

purpose for which an organization is created. Buckley,

424 U.S. at 79.

There is no dispute that the phrase “a major

purpose” applies when a group has one central

purpose to support or oppose a ballot initiative.

However, the Independence Institute argues that for

App. 13

groups that have multiple purposes, the deter-

mination of whether one of those purposes is “major”

requires a subjective determination of the relative

status of that purpose. It argues that article XXVIII

does not provide guidance to multi-purpose groups in

this regard. Thus, it contends, a multi-purpose

organization cannot determine whether any of its

> « : ” . .

purposes is “major,” thereby subjecting it to the

registration, reporting, and disclosure requirements

of article XXVIII and the FCPA.

In Buckley, the IJnited States Supreme Court

held that defining the phrase “the major purpose” to

designate groups that have a single major purpose of

campaigning is appropriate to ensure that all entities

subjected to the burdens of political committee desig

nation are engaged primarily in regulable, election-

related speech. See North Carolina Right to Life, Inc.

v. Leake, 525 F.3d 274, 289 (4th Cir. 2008) (NCRL)

In NCRL, the Fourth Circuit struck down as

unconstitutionally vague the definition of political

committee in a North Carolina statute that, like the

constitutional provision at issue here, used the term

“a major purpose.” The majority held that “if an

organization explicitly states, in its bylaws or

elsewhere, that influencing elections is its primary

objective, or if the organization spends the majority of

its money on supporting or opposing candidates, that

organization is under ‘fair warning’ that it may fall

within the ambit of Buckley’s test.” Id

App. 14

However, the NCRL court concluded that

the

North Carolina statute “provides absolutely no direc-

tion

as to how North Carolina determines

organization’s ‘major purposes.’” Jd. The court noted

that NCRL had many objectives other than sup-

porting or opposing political candidates. /d

The court continued

In this sort of setting, it becomes difficult to

understand when the “purpose” of sup

porting or opposing a candidate becomes “a

major purpose.” Is a purpose “major” if an

organization has only one or two other

purposes? Is there a share of total expen-

ditures that determines when a purpose is

“major”? An absolute dollar amount? Or

perhaps frequency of participation is the

relevant criteria: maybe if an organization

engages in electoral advocacy three times

during one election cycle then the support or

opposition of a candidate is “a major pur-

pose”? Given the vagueness of [the statute’s|

test, it is hard to argue with the plaintiff’s

contention that, in designating organizations

as political committees, North Carolina is

essentially handing out speeding tickets

without “telling anyone . the speed limit.”

at 290.

Finally, the court noted that a party might

persuaded not to exercise its right to engage

political speech if faced with the costly and time-

consuming process of complying with the state's

App. 15

regulatory requirements. In _ short, it concluded,

“(uJnguided regulatory discretion and the potential

for regulatory abuse are the very burdens to which

political speech must never be subject.” /d.

In contrast, the dissenting judge in NCRL

concluded that the phrase “a major purpose” was not

unconstitutionally vague. According to the dissent,

‘

whether a regulator is identifying “a major purpose”

or “the major purpose” of an organization, he or she

considers the same evidence in determining whether

electoral advocacy constitutes a considerable or

principal portion of the organization’s total activities

Thus, the dissent concluded, “an crganization is just

as able to determine whether electoral advocacy

comprises one of its major purposes as it is able to

determine whether such activity is ‘the major

purpose.” NCRL, 525 F.3d at 328-29 (Michael, J.,

dissenting)

The dispute between the majority and the dissent

in NCRL can be placed in context by considering the

more recent opinion in National Right to Work Legal

Defense & Education Foundation, Inc. v. Herbert,

which reaffirmed “the major purpose” test in Buckley,

and suggested that some regulation of protected

speech might be constitutionally permissible. There,

the federal district court struck down as_ uncon-

stitutional a Utah statute that defines a “political

issues committee” as an entity that makes any

disbursements to influence. or to intend to influence.

directly or indirectly a ballot proposal F. Supp. 2d

at , 2008 WL 4181336, at * 17. The court held that

App. 16

limiting the definition of “political issues committee”

as in Buckley to entities whose primary or only

activity is within the core of Congress’s power to

regulate politically protected speech is not uncon-

stitutional. It concluded, “[wlith such a _ broad

definition, Utah does not even attempt to comply with

Buckley’s ‘major purpose’ requirement, and has

pushed the reach of political committee regulation

beyond constitutional limits.” Jd.

In CCEG, another division of this court recently

interpreted the section of article XXVIII concerning

electioneering communications. 187 P.3d at 1216.

That division narrowly interpreted the “regular

business” exception in section 2(7)(b)(III) in a manner

consistent with the electorate’s intent in adopting it.

Similarly, “a major purpose” can be applied to give

effect to the electorate’s intent in adopting article

XXVIII to require disclosure of contributions made to

entities that exist to influence election outcomes as to

ballot issues, and not to require disclosure of con

tributions to entities that do not have such influence

as a Major purpose.

Here, article XXVIII uses “a major purpose”

instead of Buckley’s “the major purpose.” Coffman

argues, and we agree, that the phrase “a major

purpose,” is not inherently vague. We perceive no

basis to conclude that this phrase is invalid in all

respects or that it cannot be constitutionally applied

to any multi-issue committee.

App. 17

To determine whether it has, as “a major

purpose,” engaging in ballot advocacy, a multi-issue

committee, for example, could look to and compare

the purposes stated in its charter, articles of incor-

poration, and by-laws; the purposes of its activities

and annual expenditures; and the scope of issues

addressed in its print and electronic publications.

Constitutional provisions need not be so exact as to

eliminate any need for such fact-specific analysis.

Thus, the fact that a multi-purpose committee would

have to look to its own circumstances does not render

the phrase “a major purpose” unconstitutional. To the

contrary, the obvious relevance and ready availability

of such information means that any multi-issue

committee can assess the burden on its rights to free

speech and free association and make an informed

decision before undertaking ballot advocacy.

Here, the ALJ considered the length of time the

Independence Institute had been in existence, its

original purpose, its organizational structure, the

various issues with which it had been involved, and

the amount of money expended on the radio ads in

proportion to its annual budget. The trial court relied

on this fact-specific inquiry to address the Inde

pendence Institute’s vagueness challenge.

Accordingly, we conclude that the Independence

Institute has not proved that the term “a major

purpose” is invalid in all respects and cannot be con-

stitutionally applied in any circumstances. Therefore,

we conclude that article XXVIII is not uncon-

stitutionally vague on its face. Thus, as a matter of

App. 18

law, the trial court correctly granted Coffman’s

motion for summary judgment on this issue.

B. Overbreadth

The Independence Institute similarly contends

that the definition of issue committee in article

XXVIII is unconstitutionally overbroad on its face

because it reaches groups, like the Independence

Institute, that do not have a single major purpose of

opposing or supporting ballot initiatives. We disagree.

A law is facially overbroad if it sweeps within its

reach a substantial amount of activity that is con-

stitutionally protected. People v. Shepard, 983 P.2d 1,

3 (Colo. 1999) (citing Broadrick v. Oklahoma, 413

U.S. 601, 615 (1973)). A law that substantially

burdens speech and other protected First Amendment

conduct is overbroad. Bd. of Educ. v. Wilder, 960 P.2d

695, 702-03 (Colo. 1998) (citing Broadrick, 413 U.S.

601); Aguilar v. People, 886 P.2d 725, 727 (Colo.

1994).

Further, any party can bring an overbreadth

facial challenge to protect the rights of third parties

whose First Amendment rights may be “chilled” by

the law. People ex rel. Tooley v. Seven Thirty-Five East

Colfax, Inc., 697 P.2d 348, 355 (Colo. 1985).

Normally, a facial overbreadth challenge must

establish that no set of circumstances exists under

which the act would be valid. Wash. State Grange v.

Wash. State Republican Party, __ U.S. at __, 128

App. 19

S.Ct. at 1190. However, in the First Amendment

context, a party may establish a law is facially

overbroad when a “substantial number” of its appli-

cations are unconstitutional in relation to the

statute’s plainly legitimate sweep. /d. at __, 128

S.Ct. at 1191 n.6 (citing New York v. Ferber, 458 U.S.

747, 769-71 (1982)).

A law will be invalidated when it threatens to

deter others from engaging in First Amendment

protected activities. People v. Ryan, 806 P.2d 935, 939

(Colo. 1991). We must be cautious in invalidating a

law as facially overbroad and do so only as a last

resort. Jd. (citing Broadrick, 413 U.S. at 613).

The Independence Institute argues that article

XXVIII is overbros on its face because if an entity

erred on the side of caution, it would report itself as a

multi-purpose issue committee and thereby be

regulateJ in its activities that might not otherwise be

regulable under the First Amendment. Conversely, if

such an entity determined that it did not have a

major purpose of ballot advocacy, yet participated in

some ballot advocacy, it would then be subject to fines

and penalties if il were later determined to fall under

the definition of issue committee.

As noted, Coffman promulgated rules to limit the

disclosure and termination requirements for multi-

purpose issue committees. Those rules, which define

a “multi-purpose” issue committee, combined with the

fact-specific inquiry discussed in our vagueness

analysis, provide sufficient guidance as to when a

App. 20

multi-purpose group has “a major purpose” of sup-

porting or opposing a ballot measure.

As so interpreted, article XXVIII, section 2(10)(a)

does not sweep a substantial amount of protected

speech within its application.

We are aware that some multi-purpose organ-

izations may decline to engage in ballot advocacy for

fear of being subject to a complaint and attendant

administrative proceedings; however, as the dissent

in NCRL reasoned, we conclude that article XXVIII,

section 2(10)(a), does not burden a_ substantial

amount of constitutionally protected speech. NCRL,

525 F.3d at 289.

Accordingly, we hold that the i1rdependence

Institute has not proved the definition of issue

committee is invalid in all respects and cannot be

constitutionally applied in any circumstances. There-

fore, we conclude that the definition is not

unconstitutionally overbroad on its face. Thus, as a

matter of law, the trial court correctly granted

Coffman’s motion for summary judgment on this

issue.

V. Burdensomeness of Registration and Dis-

closure Requirements

The Independence Institute maintains that the

registration and disclosure requirements contained in

section 1-45-108 and article XXVIII, section 3(9)

unconstitutionally burden First Amendment rights.

App. 21

Although we conclude that the trial court erred in

dismissing this claim on the basis that the Inde-

pendence Institute lacks standing, we also conclude

that this claim is now barred by an order of the trial

court.

The trial court rejected the Independence

Institute’s contention “that the registration and

reporting requirements of the FCPA are onerous and

unduly burdensome because they disproportionately

impact small educational groups and issue advocacy

organizations.”

It then concluded that while the Independence

Institute had asserted a facial constitutional claim,

upon closer examination the challenge was really an

as-applied argument and therefore, the Independence

Institute lacked standing to raise it.

On appeal, the Independence Institute asserts

that it had standing to bring this claim because

standing is assessed at the time a lawsuit is filed,

and, when the Independence Institute filed its

complaint, it was subject to an actual, ongoing

prosecution for violation of the FCPA’s reporting

requirements.

A party’s standing is assessed at the time a

lawsuit is filed. Grossman v. Dean, 80 P.3d 952, 958

(Colo. App. 2003). Mootness, in contrast, requires

courts to look at circumstances that have arisen after

a complaint has been filed. See Clark v. City of

Lakewood, 259 F.3d 996, 1006 (9tii Cir. 2001).

App. 22

Here, the Independence Institute had standing to

assert its claim when it filed the lawsuit because it

was then subject to administrative proceedings on the

basis of an alleged failure to comply with article

XXVIII and the FCPA. Coffman has not asserted that

this issue is moot, and therefore, we do not address

the question of mootness.

Nevertheless, Coffman argues that we should not

address the Independence Institute’s claim on the

merits because it is barred by an order of the trial

court. We agree.

On appeal, the Independence Institute has recast

its claim regarding the burdensomeness of the

registration and disclosure requirements. It now

argues that article XXVIII, section 3(9) and section 1-

45-108 unconstitutionally burden groups, like the

Independence Institute, that only occasionally engage

in ballot issue advocacy but lack a central organizing

or major purpose of supporting or opposing ballot

issues. It no longer maintains that the reporting and

registration requirements are unduly burdensome

because they disproportionately impact small

educational groups and issue advocacy organizations.

However, on December 14, 2005, about one

month after the ALJ’s decision, the trial court issued

an order noting that the Secretary of State had

withdrawn the motion to dismiss as it related to the

Independence Institute’s facial constitutional chal-

lenges. The court added “that its determination in

App. 23

this action shall be limited to such facial challenges

and shall not extend to any as-applied challenges.”

On appeal, the Independence Institute now

contends that the registration and disclosure re-

quirements “are unconstitutional as-applied to multi-

purpose issue committees.” Under these circumstances,

we conclude that (1) the Independence Institute has

modified this claim frorn a facial to an as-applied

challenge to the registration and reporting require-

ments, and (2) as an as-applied argument, it may not

be raised for the first time on appeal. See Estate of

Stevenson v. Hollywood Bar & Cafe, Inc., 832 P.2d

718, 721 (Colo. 1992).

Accordingly, we conclude, albeit for a different

reason, that the trial court properly rejected the

Independence Institute’s burdensomeness claim. See

Stuart v. Bd. of County Comm’rs, 699 P.2d 978 (Colo.

App. 1985) (court may affirm for reasons different

from those stated by the trial court).

VI. Violation of Right to Anonymous Speech and

Association

The Independence Institute contends that the

disclosure requirements in section 1-45-108 violate

the right to engage in anonymous speech and

association by requiring those who contribute as little

as $20 to support or oppose ballot issues to disclose

their identities and addresses on the Secretary of

State’s website and requiring those who contribute

App. 24

$100 or more also to disclose their occupations and

employers. We disagree.

The United States Supreme Court has recognized

that anonymous speech and association are fun-

damental rights and, outside the context of campaign

finance laws that apply to political candidates, a state

must demonstrate a compelling interest and narrow

tailoring to avoid infringing on those rights. See

McIntyre v. Ohio Elections Comm’n, 514 U.S. 3384,

343, 347, 357 (1995); Buckley, 424 U.S. at 64-66

(compelled disclosure implicates privacy of asso-

ciation and belief); NAACP v. Alabama, 357 U.S. 449,

462 (1958).

However, the Supreme Court has also recognized

that while disclosure of contributions to candidates

and parties may deter some potential contributors,

and may even expose some to harassment and

retaliation, disclosure requirements often appear to

be the least restrictive means of curbirz the evils of

campaign ignorance and corruption that Congress

found to exist in enacting the Federal Election

Campaign Act of 1971. Buckley, 424 U.S. at 68.

Therefore, the Buckley Court required chal-

lengers to disclosure requirements to show “a

reasonable probability that the compelled disclosure

of a party’s contributors’ names. would subject them to

threats, harassment, or repris«ls from either Govern-

ment officials or private parties.” Jd. at 74. The

Supreme Court indicated that such proof could

include specific evidence of past or _ present

App. 25

harassment of members of an organization or

harassment directed against the organization itself

Id.

While the Supreme Court has approved dis-

closure requirements for contributors to political

candidates, it has not expressly addressed the

propriety of disclosure requirements for contributors

to ballot initiatives and referenda. However, as

discussed below, we conclude that dicta in several

Supreme Court opinions and decisions of other courts

support the conclusion that the Buckley standard

should also apply to ballot initiatives and referenda.

The Independence Institute contends that the

McIntyre Court made clear that disclosure laws

applicable in the context of political candidate

elections do not apply in other contexts, such as the

election referenda here. We agree with Coffman that

the Independence Institute has given too expansive a

reading to McIntyre. There, the Supreme Court

struck down part of an Ohio law that required

speakers to reveal their identity on handbills dis-

tributed to the public and intended to influence the

electoral process. Although the McIntyre Court held

that such provision of the Ohio law was an

impermissible direct regulation of the content of

speech, it did not hold impermissible any statute

requiring disclosure of contributors to ballot

initiatives and referenda.

On the contrary, it acknowledged such disclosure

requirements favorably its dicta in First National

App. 26

Bank v. Bellotti, 435 U.S. 765 (1978). There, the

Supreme Court reversed a judgment of the Supreme

Judicial Court of Massachusetts sustaining a state

law that prohibited corporate expenditures designed

to influence the vote on referendum proposals. 435

U.S. at 767. In McIntyre, the Court observed that in

Bellotti, it had noted the prophylactic effect of

requiring identification of the source of corporate

advertising. More specifically, the McIntyre Court

quoted as follows from Bellotti: “Corporate adver-

tising, unlike some methods of participation in

political campaigns, is likely to be highly visible.

Identification of the source of advertising may be

required as a means of disclosure, so that the people

will be able to evaluate the arguments to which they

are being subjected.” McIntyre, 514 U.S. at 354 n.18.

Similarly in Citizens Against Rent Control v. City

of Berkeley, 454 U.S. 290, 299-300 (1981), the

Supreme Court held, while striking down a $250 limit

on contributions to committees formed to support or

oppose ballot measures, that “[t]he integrity of the

political system will be adequately protected if

contributors are identified in a public filing revealing

the amounts contributed; if it is thought wise,

legislation can outlaw anonymous contributions.”

In Buckley v. American Constitutional Law

Foundation, Inc., 525 U.S. 182 (1999) (ACLF), the

Supreme Court struck down a provision of a Colorado

statute requiring, among other things, that petition

circulators wear identification badges. Nevertheless,

the ACLF Court noted that “[t]hrough the disclosure

App. 27

requirements that remain in place, voters are

informed of the source and amount of money spent by

proponents to get a measure on the ballot; in other

words, voters will be told ‘who has proposed la

measure], and ‘who has provided funds for its

circulation.’” ACLF, 525 U.S. at 203.

Further, other courts have expressly held that

the Buckley standard applies to ballot initiatives and

referenda. In California Pro-Life Council, Inc. 1

Getman, 328 F.3d 1088, 1101 (9th Cir. 2003), the

court held that express ballot measure advocacy may

be regulated, provided that the state has a compelling

interest and that the regulations imposed are

narrowly tailored to advance the relevant interest.

See also Nat'l Right to Work Legal Defense & Educ.

Foundation, _ F.Supp.2d at _—, 2008 WL

4181336, at *9; Richey v. Tyson, 120 F. Supp. 2d 1298,

1310 (S.D. Ala. 2000); Volle v. Webster, 69 F. Supp. 2d

171, 173-74 (D. Me. 1999).

Based on the reasoning in the above cases, we

conclude that the disclosure requirements contained

in § 1-45-108 do not violate the right to engage in

anonymous speech and association and that dis

closure of the identity of contributors to ballot

measures may constitutionally be required under the

standards set forth in Buckley. Specifically, we note,

as did the trial court, that the Independence Institute

has not alleged that compelled disclosure of its

contributors subjected them to threats, harassment,

or reprisals from other government officials or private

parties. Accordingly, we conclude that the trial court

App. 28

did not err in rejecting the Independence Institute’s

claim for relief on this issue

Vil Attorney Fees

The Independence Institute requests that, pur-

suant to C.A.R. 39.5, we award it attorney fees “as

provided for by Colorado law.” Because the Inde-

pendence Institute has not prevailed in _ this

litigation, we deny its request

The judgment is affirmed

JUDGE CARPARELLI concur:

JUDGE CONNELLY specially concurs

JUDGE CONNELLY specially concurring.

The majority upholds Colorado’s financial dis-

closure requirements on “issue committees” sup-

porting or opposing ballot issues. I concur in the

results reached by the majority but write separately

because my analysis differs in some respects

As the majority explains, this 1s a constitutional!

challenge to Colorado’s requirements on their face

rather than as applied to a particular organization. A

facial challenger has the daunting burden of showing

“no set of circumstances exists under which the Act

would be valid, t.e. that the law is unconstitutional in

all of its applications.” Washington State Grange v

Washington State Republican Party, U.S. , 128

App. 29

5S. Ct. 1184, 1190 (2008) (internal punctuation

omitted); compare McConnell v. FEC, 540 U.S. 93

(2003) (upholding facial constitutionality of Bipar-

tisan Campaign Reform Act of 2002 provision

outlawing certain corporate “electioneering commu-

nications”), with Wisconsin Right to Life, Inc. v. FEC,

546 US. 410 (2006) (holding McConnell did not

foreclose as-applied challenges to same provision),

and FEC v. Wisconsin Right to Life, Inc., 551 U.S.

127 S.Ct. 2652 (2007) (holding same _ provision

unconstitutional as applied).

Colorado’s definition of an issue committee is not

vague “in all of its applications,” Washington State

Grange, U.S. at , 128 S.Ct. at 1190. The

vagueness challenge turns on one word: “a” rather

than “the” before “major purpose.” Independence

Institute contends ‘he major purpose of an organ-

ization “is easily determinable in advance,” but a

major purpose is “inherently vague.” Such a cate-

gorical contention is demonstrably incorrect. Take, for

example, an “organization that has four equally

important purposes, only one of which is electoral

advocacy.” North Carolina Right to Life, Inc. v. Leake,

525 F.3d 274, 303 (4th Cir. 2008) (NCRL). It will be

easier, not harder, to determine “a” rather than “the”

major purpose of that organization.

[ cannot subscribe to the discussion in the

majority opinion that in my view goes further than

necessary or appropriate to reject this facial chal

lenge. The majority opinion contains an extended

discussion of cases that have “narrowly” construed

App. 30

provisions to avoid vagueness problems, and it

outlines factors pertinent to a “fact-specific inquiry”

into whether an organization is or is not an issue

committee. But in my view the Colorado definition

easily withstands a facial challenge without any

narrowing construction beyond what the Secretary of

State already provided. Discussion of factors relevant

to determining whether an organization is an issue

committee should be reserved for a case in which the

legal definition must be applied to a particular

organization under a given set of facts. In such a case,

a multi-purpose organization would remain free to

raise an as-applied constitutional challenge.

Next, I agree with the majority’s rejection of the

overbreadth challenge but again remain concerned

with any suggestions the challenge fails because of

some judicial interpretation of the definition. Ad-

ministrative regulations, not judicial construction,

have obviated the only real overbreadth concern by

reauiring multipurpose issue committees to report

only ballot-specific contributions and expenditures.

Secretary of State Campaign and Political Finance

Rules 4.15, 8 Code Colo. Regs. 1505-6.

The Supreme Court has not — in Buckley v. Valeo,

424 U.S. 1 (1976); in FEC v. Massachusetts Citizens

for Life, Inc., 479 U.S. 238 (1986); or in any other

decision — accorded talismanic constitutional sig-

nificance to whether “the” or “a” modifies major

purpose. To the contrary, in a related context, it has

upheld regulation of lobbyists where “one of the matin

purposes of such ‘person,’ or one of the main purposes

App. 31

of such contributions” was to influence legislation.

United States v. Harriss, 347 U.S. 612 (1954)

(emphases added).

Next, I concur with the majority’s holding that

the reporting requirements do not violate the First

Amendment right to speak anonymously on ballot

issues. I write separately to opine that Independence

Institute’s contentions on this point are more

substantial than its vagueness and overbreadth

challenges.

Anonymous speech has a long and vital tradition

predating the Constitution (as in the Federalist

Papers), and at least in some circumstances it is

constitutionally protected. See McIntyre v. Ohio

Elections Comm’n, 514 U.S. 3384, 341-57 (1995).

Moreover, one of the most compelling interests justi-

fying disclosure of political candidate contributions,

that of “deterring actual corruption and avoiding any

appearance thereof,” McConnell, 540 U.S. at 196,

does not apply to ballot issues. See California Pro-Life

Council, Inc. v. Randolph, 507 F.3d 1172, 1179 n.9

(9th Cir. 2007). The only applicable state interest —

educating the electorate about financial interests

behind ballot issues — is much less weighty than the

interest in avoiding actual or apparent corruption of

politicians. See Common Sense Alliance v. Davidson,

995 P.2d 748, 755 (Colo. 2000) (“identity of supporters

and opponents of a ballot initiative would be

potentially helpful to the electorate, but the

information is not nearly as critical as the identity of

candidate supporters’ ).

App. 32

Nonetheless, as set forth in the majority opinion,

Supreme Court dicta and lower court holdings have

approved ballot issue disclosure requirements. Under

these cases, a state’s interest in disclosing financial

interests behind ballot issues is sufficiently com-

pelling (albeit less so than in the political candidate

context) to overcome the right to speak anonymously.

I therefore concur in the majority opinion on this

point and in the rest of its opinion rejecting

Independence Institute’s case-specific appellate argu-

ments.

App. 33

District Court, City and

County of Denver, Colorado

1437 Bannock Street

Denver, Colorado 80202

Plaintiff: INDEPENDENCE Case Number:

INSTITUTE, a Colorado non-profit O5CV7604

corporation

Courtroom: 7

Defendant: MIKE COFFMAN, in his

official capacity as SECRETARY OF

STATE, STATE OF COLORADO

ORDER RE: CROSS MOTIONS

FOR SUMMARY JUDGMENT

(Filing Date: May 3 2007)

This Matter is before the Court pursuant to

Plaintiff and Defendant’s Cross Motions for Summary

Judgment filed July 21, 2006 and August 7, 2006

respectively. Ora) argument on the Motions was held

on January 26, 2007 with proposed orders to follow.

The Court, having considered the pleadings, the evi-

dence presented, the file, and applicable authorities,

hereby Finds and Orders as follows:

INTRODUCTION AND BACKGROUND

1. In 2005, a complaint was submitted by

Richard Evans to the Colorado Secretary of State

against the Independence Institute (“institute”) al-

leging, inter alia, that the Institute had violated

App. 34

Article XXVIII of the Colorado Constitution (“Article

XXVIII”), which governs campaign finance laws and

portions of Colorado’s Fair Campaign Practices Act,

C.R.S. 1-45-101, et seg. (“FCPA”) by failing to register

as an “issue committee” or file the statutorily re-

quired reports. The Institute then filed this action in

District Court challenging the constitutionality of the

relevant provisions of Article XXVIII and the FCPA.

The motions for summary judgment followed.

2. “The purpose of summary judgment is to per-

mit the parties to pierce the forma] allegations of the

pleadings and save the time and expense connected

with trial, when as a matter of law, based on undis-

puted facts, one party could not prevail.” Curragh

Queensland Min. Ltd. v. Dresser Industries, 55 P.3d

235, 239 (Colo. App. 2002) (quoting Peterson v. Hal-

sted, 829 P.2d 373,375 (Colo. 1992). A motion for

summary judgment shall be granted “if the pleadings,

depositions, answers to interrogatories, and admis-

sions on file, together with affidavits, if any, show

that there is no genuine issue as to any material fact

and that that the moving ~arty is entitled to judg-

ment as a matter of law.” C.R.C.P. 56(c); Casey uv.

Christie Lodge Owners Ass’n., Inc., 923 P.2d 365, 366

(Colo. App. 1996). Here, the parties agree to the facts

and the matter is appropriate for summary judgment

determination.

App. 35

VAGUENESS

3. Plaimtiff asserts that the definition of “issue

committee” under Article XXVIII Section 2(10)(a)(I) is

unconstitutionally void for vagueness. In order to

mount a facial constitutional challenge based upon

vagueness, Plaintiff must show that the disputed

language is “so utterly void of a standard of conduct

that it simply has no core and cannot be validly ap-

plied to any conduct.” United States v. Powell, 423

U.S. 87, 96 (1975). The mere fact that “clearer and

more precise language” might have been used does

not render the provision unconstitutional. Jd. at 94.

Article XXVIII defines an “issue committee” as one

which has a “major purpose” of supporting or op-

posing a ballot issue or question. The Institute argues

the definition of “issue committee” is unconstitu-

tionally vague because there is no clear guidance as

to how to determine a group’s “major purpose” In

particular, Plaintiff argues that an “issue committee”

may have multiple “major purposes” and therefore no

group will be able to determine if it is subject to the

requirements of Article XXVIII prior to speaking.

4. How to determine a group’s “major purpose”

was addressed by the Administrative Law Judge

(“ALJ”) in the administrative complaint proceedings

involving these parties. It is apparent from the ALJ’s

ruling that discerning a group’s “major purpose” did

not prove overly difficult. The ALJ employed a total-

ity of the circumstances analysis in arriving at the

conclusion that the Institute did not have a “major

purpose” that would render it an “issue committee.”

App. 36

Additionally, the particular phrase “major purpose” is

not a novel term in the camnaign finance context and

numerous other courts have been able to interpret

the phrase. See, e.g. McConnell v. Federal Election

Comm’n, 540 U.S. 93 (2003); Buckley v. Valeo, 424

U.S. 1 (1976). Therefore, the Court finds that the defi-

nition of “issue committee” is not unconstitutionally

vague.

OVERBREADTH

5. Plaintiff also argues that the definition of

“issue committee” under Article XXVIII is overbroad

because it extends to organizations whose purpose

goes beyond just supporting or opposing ballot issues.

Plaintiff further states that the disclosure and regis-

tration requirements of the FCPA are _ similarly

overbroad because they require compliance from

groups not engaged solely in campaigning. Language

that appears to be overbroad may still be constitu-

tional if the scope can be narrowed by a limiting

instruction. Broadrick v. Oklahoma, 413 U.S. 601

(1973). Here, the Colorado Secretary of State has

issued two rules that narrow the constitutional

definition of “issue committee” and limit the type of

groups that must comply with the FCPA require-

ments. Rules 3.8 and 4.16 of the Ru'es Concerning

Campaign and Political Finance address Plaintiff’s

argument pertaining to organizations that may have

multiple purposes and therefore be considered an

“issue committee” in certain circumstances. Rule 3.8

App. 37

defines a “multi-purpose issue committee” and ad-

dresses its formation and termination. Rule 4.16 sets

out the specific reporting requirements of a “multi-

purpose issue cummittee” and distinguishes such

requirements from those of “pure issue committees.”

Therefore, the Court finds that neither the definition

of “issue committee” nor the FCPA’s reporting,

registration, and _ disclosure requirements are

unconstitutionally overbroad.

FAIR CAMPAIGN PRACTICES

ACT - BURDENSOME

6. Plaintiff’s mext contention is that the

registration and reporting requirements of the FCPA

are onerous and unduly burdensome because they

disproportionately impact small educational groups

and issue advocacy organizations. Plaintiff offers

evidence that compliance with the FCPA’s

requirements regarding separation of funds used to

support or oppose ballot issues and the filing of

registration and termination statements will be a

“nightmare” for small groups. Pl. Cross-Motion for

Summ. Judgment at 25. However, the Institute has

brought a facial constitutional claim on the basis that

the challenged provisions are incapable of being

applied constitutionally in any context. A facial

challenge is distinguishable from an “as applied

challenge wherein an otherwise constitutional statute

may be found to be unconstitutional under a

particular set of circumstances. Sanger v. Dennis, 148

P.3d 404 (Colo.App. 2006). Such a challenge may only

App. 38

be raised by a party who has actually been adversely

impacted by the statute and therefore has standing.

Plaintiff’s argument regarding the burden placed on

small groups by the FCPA’s reporting requirements

is, upon closer examination, an “as applied” argument

and therefore, the Institute lacks standing to raise

this argument.

FAIR CAMPAIGN PRACTICES

ACT —~ CHILLING

7. Finally, Plaintiff argues that the statutory

disclosure provisions of the FCPA violate the U.S.

Constitutional First Amendment rnghts to anonymous

speech and association. Plaintiff relies on the line of

Supreme Court cases stemming from the decision in

Broadrick v. Oklahoma, 413 U.S. 601 (1973) which

stand for the proposition that some laws may be

struck down simply because they threaten to chill

speech. Jd. at 612. However, these cases also state

that mere predictions of the effects of prohibiting

certain speech cannot justify invalidating a statute on

its face if the regulated conduct is within the State’s

power to proscribe. /d. Additionally, the Court has

found that the reasonable probability that disclosure

of contributors’ names will subject them to threats or

harassment may be shown in a variety of ways,

including by specific evidence of past incidents or

specific manifestations of public hostility. Buckley at

74. Plaintiff here has failed to offer sufficient

evidence, beyond speculation, that such threats exist.

App. 39

Therefore, the Court hereby GRANTS Defen-

dant’s Motion for Summary Judgment and DENIES

Plaintiff’s Motion for Summary Judgment, each side

to bear their own fees and costs.

Dated this 3rd day of May 2007.

By the Court:

/s/ Herbert L. Stern III

Herbert L. Stern III

District Court Judge

(For Courtroom 7)

Attorney for Plaintiff

Attorney for Defendant

App. 40

DISTRIC. GOURT, CITY AND

COUNTY OF DENVER, COLORADO

1437 Bannock Street

Denver, CO 80202

Plaintiff: _

HAASE

INDEPENDENCE INSTITUTE, a Number:

Colorado non-profit corporation 05CV7604

Vv. Ctrm: 7

Defendants:

RICHARD EVANS and GIGI DENNIS,

in her capacity as SECRETARY OF

STATE, STATE OF COLORADO

ORDER

(Re: Secretary of State’s Motion to Dismiss)

(Filing Date: Dec 14, 2005)

THIS MATTER is before the Court on the Secre

tary of State’s Motion to Dismiss. Upon consideration

of the motion, the response and reply thereto, and

having reviewed the Court’s file and applicable

authorities and being sufficiently advised in the

premises, the Court finds and orders as follows

In light of the resolution of this matter by the

administrative law judge, the Secretary of State has

withdrawn its motion as it relates to Plaintiff’s facial

challenges. The Court further agrees that its determ1-

nation in this action shall be limited to such facial

challenges and shall not extend to any as-applied

challenges.

App. 41

Accordingly, the motion is granted in part.

SO ORDERED this 14th day of December, 2005

BY THE COURT

s/ Martin Egelhoff

Martin Egelhoff

District Court Judge

App. 42

BEFORE THE SECRETARY OF STATE

STATE OF COLORADO

CASE NO. OS 20050020

AGENCY DECISION

IN THE MATTER OF THE COMPLAINT FILED

BY RICHARD EVANS REGARDING ALLEGED

CAMPAIGN AND POLITICAL FINANCE VIOLA-

TIONS BY THE INDEPENDENCE INSTITUTE

AND VOTE NO; [T’S YOUR DOUGH

This matter is before the Office of Administrative

Courts (“OAC”) on the complaint of Richard Evans

(“Complainant”) against the Independence Institute

(“Institute”) and Vote No; It’s Your Dough (“Vote No”

or “Committee”). The complaint was filed with the

Colorado Secretary of State (“Secretary”) on August 4,

2005. On August 5, 2005, the Secretary referred the

complaint to OAC as required by Colo. Const. art

XXVIII, §9(2)(a). Complainant is represented by

Mark G. Grueskin, Esq. and Edward T. Ramey, Esq

The Institute is represented by Richard C. Kaufman,

Esq. and Shayne M. Madsen, Esq. The Committee is

represented by Shawn Mitchell, Esq. Hearing on the

complaint was conducted in Denver, Colorado, on

October 12, 2005, before Administrative Law Judge

(“ALJ”) Michelle A. Norcross. The hearing was digi

tally recorded in Courtroom 1. At hearing, the Ald

admitted Complainant exhibits 1 through 32, 34

App 43

through 45, and the institute’s exhibits R-1 through

R-9 and R-11 through R-20 into evidence. The record

was held open until October 19, 2005 for receipt of

closing briefs.

2arties’ Positions

Complainant: Complainant alleges that the

Institute became an “issue committee” as defined in

the Colorado Constitution by engaging in efforts to

oppose ballot measures C and D (“Referenda C and

D”) including paying for and airing three radio

advertisements (“ads”) concerning Referenda C and

D. And, as such, the Institute is subject to the dis

closure requirements of the Fair Campaign Practices

Act (“FCPA”) and must disclose the name of the

donor(s) who paid for the ads and/or made contribu-

tions to the Institute. Complainant argues that the

Institute has violated the Colorado Constitution and

the FCPA by failing to register as an issue committee,

by failing to disclose contributions and expenditures

for its activities, and by failing to open a separate

bank account for its C and D activitie

On October 21, 2005, Complainant’s counsel submitted

the following supplemental exhibits addressed at hearnng

exhibits used at the deposition of Mr. Jon Caldara that were not

ippended to the deposition submitted at hearing (Mr. Caldara

deposition is admitted as exhibit 45); a copy of Judge Egelhoff’

decision denying the Institute’s request for preliminary

injunction (Judge Egelhoff's decision is admitted as exhibit R

20); and a Word compatible version of exhibit 36 that includ:

io advertisement ind one television advertisement

App. 44

With respect to Vote No, Complainant alleges

that the Committee violated the Colorado Constitu-

tion and the FCPA by failing to report all the contri-

butions it received from the Institute.

The Institute: The Institute admits that it ran

three radio ads and published materials on its web-

site concerning Referenda C and D. The Institute

denies that it has a major purpose of opposing Refer-

enda C and D and further denies that its radio ads

and/or website spensorship constitute express advo-

cacy. Therefore, it contends that it is not an issue

committee and is not subject to the disclosure re-

quirements of the FCPA. The Institute has also raised

constitutional challenges to Article XXVIII of the

Colorado Constitution and the FCPA that are the

subject of a complaint filed in Denver District Court.

Vote No: The Committee denies that it received

any non-reported contributions from the Institute. It

argues that it has fully complied with Colorado’s cam-

paign laws by properly registering as an issue com-

mittee and accu: utely reporting its contributions and

expenditures, including all contributions it received

from the Institute.

Pre-hearing Motions

Complainant's Motion to Continue. This case was

originally set for hearing on August 15, 2005. Com-

plainant filed a motion to continue the August 15

hear:ag on the basis of a medical emergency on the

part of counsel. The motion was unopposed and based

App. 45

upon a thirty-day extension of time requested by the

Institute the case was reset for hearing on October 5,

2005.

Complainant’s Motion to Accept First Amended

Complaint. On September 26, 2005, Complainant

filed a motion to amend his complaint along with his

First Amended Complaint. The only change from the

original complaint is the addition of Complainant’s

mailing address and the addition of Vote No in the

caption and in the introductory paragraph of the

complaint. In all other respects, the First Amended

Compiaint is identical to the original complaint and

no additional claim of relief is requested as a result of

the amendments. Neither the Institute nor Vote No

objected to the motion. Accordingly, on September 30,

2005, the ALJ granted Complainant’s motion and

accepted Complainant’s First Amended Complaint.

Institute’s Motion to Stay. On September 27,

2005, the Institute filed a Motion to Stay Adminis-

trative Proceedings, which was joined by Vote No.

The Institute requested a stay of the administrative

proceedings for the following reason: On September

26, 2005, the Institute filed a complaint in Denver

District Court raising facial constitutional challenges

to Article XXVIII of the Colorado Constitution and

statutory provisions of the FCPA, specifically, the

Institute challenges the definition of an “issue

committee” and portions of the FCPA’s disclosure

requirements. The Institute argued that absent a

stay of the administrative proceedings it could not

obtain complete and adequate remedies since the

App. 46

matters in controversy are matters of law that the

agency lacks the jurisdiction to determine.

On September 28, 2005, Complainant filed a

response opposing the request for a stay. The Insti-

tute filed its reply on September 30, 2005. The ALJ

convened a telephone hearing on September 30, 2005,

to take argument on the motion. Following oral

argument, the ALJ denied the Institute’s motion to

stay the administrative proceeding for the following

reasons: (a) OAC has jurisdiction to hear and rule on

the merits of complaint; (b) OAC is charged with

holding a hearing and rendering a decision in these

cases on an expeditious basis; and (c) the ALJ has the

authority and discretion to fashion a remedy, in-

cluding a protective order, to protect the Institute

from disclosure of its members and/or donors during

the administrative process, as well as the authority

and discretion to stay enforcement of any order

requiring disclosure pending any appeal of an adverse

order.

Complainant’s Motion to Compel and for Sanc-

tions. On September 29, 2005, Complainant filed a

motion to compel Ethan Eilon, a part-time volunteer

for the Vote No committee, and the custodian of the

records for Vote No, to provide testimony and pxoduce

documents pursuant to subpoenas served on Septem-

ber 22, 2005. During the telephone hearing on

September 30, 2005, Complainant’s counsel, Mr.

Grueskin, informed the ALJ that the parties had

come to an agreement regarding the deposition of Mr.

Eilon as well as the production of documents referenced

App. 47

in the motion to compel, rendering the motion to

compel moot. Mr. Grueskin requested that he be

allowed to renew his request for sanctions at the

merits hearing and that the ALJ consider his motion

at that time. The ALJ granted the request to delay a

ruling on the motion for sanctions. Complainant did

not renew his request for sanctions at the October 12

hearing. Accordingly, the ALJ denies Complainant’s

motion for sanctions as moot.

Institute’s Motion to Vacate Octoder 12, 2005

Hearing. On October 5, 2005, the Institute filed a

motion to vacate the October 12, 2005 hearing and

requested a status conference to be held on October

12, 2005. Complainant filed an opposition to the mo-

tion on October 6, 2005. The basis for the motion to

vacate was two-fold: (a) Jon Caldara, President of the

Institute, and the primary witness in the case was

un*vailable to appear on October 12, 2005; and (b)

the earliest date available in Denver District Court

for a hearing on the Institute’s motion for preliminary

injunction was October 11, 2005. On October 11,

2005, the ALJ set up a telephone hearing with the

parties to discuss the pending motion. However, the

ALJ was unable to proceed with the hearing because

the parties were unavailable; they were in Denver

District Court presenting argument on the motion for

preliminary injunction. On the morning of October

12, 2005, the parties appeared before the ALJ and

informed her that Denver District Court Judge

Martin Egelhoff denied the motion for preliminary

injunction. The Institute withdrew its motion to

App. 48

vacate and the case proceeded to hearing on the

merits.

Motions made at Hearing

Complainant’s Request for Disclosure of Donor(s)

for Radio Ads. Complainant requested that the ALJ

allow him to inquire of Mr. Caldara the specific

identity of the donor(s) who paid for and/or contri-

buted money to the Institute for the radio ads that

are the subject of this complaint. The Institute

objected. The ALJ denied the request on the basis

that, prior to requiring disclosure of any contributors,

Complainant must first establish that the Institute is

an issue committee. If Complainant met that burden,

the ALJ, in her decision, would order the Institute to

fully comply with the FCPA’s disclosure require-

ments. The ALJ further ruled that, prior to such a

determination, disclosure of the Institute’s donors

and/or contributors would be premature and could

result in irreparable harm to the Institute and its

members.

Motion for Directed Verdict. At the close of

Complainant’s case-in-chief, Vote No moved for dis-

missal of the complaint on the basis that Com-

vlainant failed to prove, by a preponderance of the

evidence, that either the Institute or Vote No violated

Colorado’s campaign laws. The ALJ denied the

motion, but agreed to accept counsel’s legal argu-

ments for purposes of rendering the Agency Decision.

App. 49

Post-hearing Motion

Vote No’s Motion for One-Night Extension of Time

to File Closing Brief: On October 19, 2005, Vote No

requested a one-night extension to file its closing

brief. Along with the motion, it filed its closing brief

on the morning of October 29. 2005. In its motion,

Vote No represents that Compliunant objects to the

one-night extension; however, the ALJ did not receive

Complainant’s response. On October 20, 2005, the

ALJ granted Vote No’s motion and accepted its

written closing argument as part of the record.

FINDINGS OF FACT

Based upon the evidentiary record, the ALJ

makes the following Findings of Fact:

The Institute

1. The Institute was founded in 1985. It is

registered with the Internal Revenue Service as a

501(c)(3), non-partisan, non-profit policy research or-

ganization. It is located in Golden, Colorado and its

current President is Jon Caldara.

2. As a non-profit organization, the Institute

receives its funding from individual monetary dona-

tions. The donations are tax deductible. A gift of $100

allows an individual to become a member of the

Institute and receive free weekly e-mails, news-

letters, copies of policy papers and invitations to

special events. Members who contribute $1,000 or

App. 50

more become members of the “Circle of Independence”

and receive invitations to special and exclusive events

with state and national policy leaders. Aside from a

small monetary donation, there are no formal mem-

bership requirements. The Institute also accepts

charitable and anonymous donations. The Institute’s

budget for the prior year was $1 million. Mr. Caldara

estimates that the Institute’s current-year budget will

be between $1.3 and $1.4 million.

3. Since 1985, it has been the mission of the

Institute to help promote the ideals of limited govern-

ment in free markets and to promote personal and

economic liberty. In furtherance of this mission, the

Institute provides policy makers, legislators and citi-

zens of Colorado with educational materials ad-

dressing a broad spectrum of policy issues, including

public education, transportation, and taxation.

4. Since its inception, the Institute has used all]

available media to further its educational mission, in-

cluding, but not limited to, disseminating “issue

papers” and “issue backgrounders,” publishing

weekly opinion-editorials (“op-eds”), establishing a

website, and hosting a weekly television interview

program on Colorado Public Television, KBDI Chan-

nel 12, called Independent Thinking.

5. The vast majority of the Institute’s material

is available on its website, www.i2i.org. The Institute

also hosts other websites including www.taxincrease.

org. Taxincrease.org was created several years ago by

the Institute to provide information to the public

App. 51

about issues specifically related to taxation and

government spending.

6. In addition to its publications, the Institute

also presents speeches, publishes reviews, hosts sym-

posia, produces advertising, holds public debates,

hosts monthly member events, presents legislative

briefings, and presents public forums. The Institute

focuses on several core policy areas through its six

“policy centers.” The Institute’s policy centers include:

(a) the Education Policy Center; (b) the Health Care

Policy Center; (c) the Second Amendment Project; (d)

the Center for the American Dream; (e) the Campus

Accountability Project, and (f) the Fiscal Policy

Center. Each policy center is headed by its own

director and supported by one or more policy analysts

and research associates. These six policy centers have

been in existence for many years.

7. The Education Policy Center focuses on

school choice, school accountability and teachers’

rights. The Health Care Policy Center focuses on free-

market alternatives to problems with the current

health care system. The Second Amendment Project

addresses legal precedents, news, and opinions pro-

viding a constitutional prospective on gun control and

gun rights. The Center for the American Dream

addresses planning efforts that attempt to engineer

lifestyles through subsidies, regulation and limits on

personal and economic freedom. The Campus Ac-

countability Project serves as a watchdog to ensure

universities observe and protect the individual rights

of faculty, staff and students. And, the Fiscal Policy

App. 52

Center works to find a balance between taxation and

liberty and, since 1992, to defend the Taxpayer’s Bill

of Rights (“TABOR”).

8. Including Mr. Caldara, the Institute has

fourteen senior staff involved in its six policy centers.

Much of the material used by the Institute comes

from its research fellows, staff, and contributing

professors. ‘n the last several years, the Institute has

published over twenty issue papers dealing with

topics such as public school reform, improving trans-

portation, balancing Colorado’s budget, improving the

state’s prison system, promoting privatization of

government functions, and implementing taxing and

spending limits.

Referenda C and D

9. In the spring of 2005, the General Assembly

referred two measures to be included on the ballot for

the November 2005 election. ‘These measures are

known as Referenda C and D. Referenda C and D

impact TABOR; if passed, they permit the state to

retain funds that would otherwise be returned to the

citizens of Colorado through tax refunds and permit

the state to issue bonds for specified projects.

10. The Institute, through its Fiscal Policy

Center, has a twenty-one year history of involvement

in various taxation issues, which, for the past five

months, have included C and D. As far as the Insti-

tute is concerned, C and D have no positive impacts

on the citizens of Colorado. Some of the activities

App. 53

undertaken by the Institute concerning C and D

include, issuing op-ed pieces, posting polling results,

analyzing the state’s budget proposals, and hosting

debates. Through these activities, the Institute has

attempted to educate the public about C and D and

encouraged voters to learn more about the measures.

ll. For the past five months, on its website

www.taxincrease.org, the Institute has _ published

documents relating to Referenda C and D and has

included reports and information from other sources

regarding C and D, including links to other policy

think tanks (Americans for Tax Reform, Colorado

Club for Growth, Freedom Works, and the Heritage

Foundation) as well as groups supporting C and D

(the Bell Policy Center and Proponents of C and D).

12. Mr. Caldara serves as the spokesman for

the Institute on C and D and has participated in the

writing of press releases for the Institute as well as

the drafting of three radio ads relating to Referenda

C and D. Since C and D were referred, Mr. Caldara

has spent one-third of his time as President of the

Institute on activities related to C and D. And for the

past several months, the Institute’s Fiscal Policy

Center has been focused on C and D.

Radio Ads

13. In the summer of 2005, the Institute was

involved in the preparation and airing of three radio

ads concerning Referenda C and D. The first radio ad

is called, “The Sky is Falling.” The second radio ad is

App. 54

‘alled, “Hi Ho, it’s off to Tax we go.” And the third

radio ad is called, “Whoops there Goes Another One.”

14. “The ils is relling aired as follows:

[Background (Muted screams of terror)

Crowd

lst Male Voice Aagh, the State’s out of money.

Government is starving. We gotta

pass Referendum C this fall or

we’re doomed. It’s a crisis!

Female Voice Crisis? Hardly. Colorado’s budget

has never been larger.

jst Male Voice Huh?

'Wemale Voice The Chicken Littles claim the

state’s sky high budget is falling.

But the fact is, Colorado’s budget

is at a record high. They have so

much money, they just gave

across-the-board pay increases to

all government employees. You

call that a budget crisis?

lst Male Voice But they say C isn’t a tax in-

crease. |

i\f’emale Voice Not a tax increase? It takes away

not most, but all of our tax re-|

| funds for the next 5 years. That’s|

| billions from us taxpayers. That,

my friend, is what we call a tax!

‘increase. And Ref C ratchets up)

government spending forever.

| —

| lst Male Voice \Forever' ) |

App 55

Female Voice It’s not just a five-year tax in-

icrease, it’s a forever tax increase. |

| lst Male Voice Oh, now I am scared.

2nd Male Voice |Learn more about the Taxpayers|

|Bill of Rights and this Fall’s Ref. |

‘erendum C at www.taxincrease

Ors: Paid for by the Independence

Institute |

15. The Institute paid for the production and

airing of “The Sky is Falling” with funds from its

corporate account. The production and airtime costs

totaled $35,000.

16. The second ad, “Hi-Ho, it’s off to Tax we go”

aired as follows:

[Chorus (Sung to the tune of Disney's 7

dwarves Hi-Ho song) Hi-ho, hi-ho, |

it’s off to tax we go, more for gov

| ernment, less for families (sound of

cash register ka-ching) Hi-ho, it’s off;

| to tax we go... |

ist Male Voice |Stop that. Do you want the voters to|

| learn the truth about Referendum|

| C?

App. 56

'2nd Male Voice |The truth about what’s really inside|

Referendum C? The tax and spend-|

ers want billions more of your tax

dollars to grow a state government

ithat refuses to show’ spending)

restraint and common sense. For

lexample, the Rocky Mountain News

reports, the state spent over $600

|per truck for an oil change. We've all |

‘been told C is more than $3 billion|

ltax increase over 5 years, but it’s |

leven worse. C is a Trojan horse con-|

jcealing the forever tax increase,|

|forever raising how much of your

imoney the state can spend. Colo

irado’s budget increased over 7%

from last year, twice as fast as the

cost of living

Chorus (Singing) It’s off to tax we go.

2nd Male Voice | Learn more about Referendum C

jthe forever tax increase, at

itaxincrease.org. Paid for by the

\Independence Institute

17. The third ad, “Whoops there Goes Another

One”, aired as follows

lst Male Voice |First. the politicians tried to tell us

Ref C is not a tax increase

2nd Male Voice |(Sung to tune of Oops there goes

lanother Rubber Tree Plant) Oops

there goes another one

App. 57

| 1st Male Voice ‘But the indisputable truth, C is

| more than a three and half billion

| ‘dollar tax increase in just the first

five years, permanently raising job-

killing taxes. Now the politicians say

C is required, or school, roads and

children will face spending cuts

|2nd Male Voice |(Singing) Whoops there goes another

One

t Male Voice |But even their own Budget Office

| proves that statement false. And

lhow C's permanent tax increase

would be spent is completely up to

the whim of the politicians. If the

past is a guide, that means more

thousand dollar office chairs and

half a million dollar state-paid bar|

tabs

> ‘

2nd Male Voice |(Singing) Whoops there goes another}

One

lst Male Voice |But C would increase taxes more

than $3,200 per family of four. It’s

basic economics. If you want to cre

ate jobs, you cut taxes. If you want}

to kill jobs, you raise taxes. Learn|

more about C at taxincrease.org

Paid for by the Independenc«

Institute

ld The second and third radio ads (“Hi Ho, it’

off to Tax we go” and “Whoops there Goes Another

One") were paid for, on behalf of the Institute, by an

undisclosed not for profit agency The ec WoO ad were

App. 58

in-kind contributions made to the Institute by a sin-

gle donor. Mr. Caldara assisted in the writing of the

scripts for radio ads two and three. The Institute

accepted an in-kind contribution of $100,000 from the

unnamed donor for the production and airtime costs

associated with the second radio ad. At the time of

hearing, Mr. Caldara had not yet determined the

exact value of the in-kind contribution associated

with the production and airtime costs of the third

radio ad, but believed it would be similar to the cost

of the second ad ($100,000).

19. These three radio ads are available on the

Institute’s website. The Institute produced and aired

the radio ads as part of its education campaign. These

ads were produced for the benefit of the Institute and

are publicly available on its website.

20. The Institute does not charge anyone or

receive compensation from any persons, agencies,

groups who access the Institute’s website.

Focus of the Institute

21. The Institute, through these ads and other

means, continued to be involved in C and D; however,

Referenda C and D were not the sole or main focus of

the Institute and not the only concern of its members.

Referenda C and D are only a recent focus of the

Institute.

22. Since the referral of C and D, the Institute’s

five other policy centers have continued to work on

_ | 3? @'? 2» 2s -s2 Powe we eve 2 oo se <

App. 59

topics and issues not involving C and D or TABOR.

And prior to the referral of C and D, the Institute was

actively engaged in efforts to educate the public about

Colorado’s budget, government spending, and the

effect TABOR has had on both.

23. Since May 16, 2005, the Institute has pro-

duced thirty op-ed pieces on various topics including:

school funding, government spending as affected by

Referendum C, state projected budget shortfalls, the

appointment of school officials, and state’s rights as

affected by recent Supreme Court decisions. Only two

of the thirty op-ed articles posted on the Institute’s

website since May 16, 2005, discuss Referendum C.

24. For twenty-one years, the Institute has pro-

vided educational research and analysis of topics of

public concern from a free-market, pro-freedom per-

spective through its six core policy centers. There is

no evidence that the primary mission of the Institute

will change following the November 2005 election.

There is also no evidence that it will alter its funda-

mental policies regardless of the fate of C and D.

Finally, there is no evidence that the Institute will

dissolve or in any other way cease to continue after

the voters have cast their votes for C and D.

25. Over the years, different issues have taken

on varying priorities at the Institute. For the past five

months, Referenda C and D have taken priority over

other issues, but they are not a major purpose or

focus of the Institute.

SS ae @ ay a oe Des ae fs Sse Ss" > oS Se «<

App. 60

Vote No Issue Committee

26. In the spring of 2005, the Institute estab-

lished a committee called Vote No, it’s Your Dough.

Vote No is registered with the Secretary as an issue

committee. Because it is the policy of the Institute to

educate, not advocate, Mr. Caldara formed the Com-

mittee as a vehicle to expressly advocate the defeat of

C and D. Mr. Caldara serves as the chairman and

spokesman for Vote No.

27. In his capacity as chairman of Vote No, Mr.

Caldara has met with representatives of other issue

committees and organizations that oppose C and D.

He has appeare? publicly to oppose these ballot

issues, helped raise money for the Committee, as-

sisted in preparing press releases, and performed

other types of grass-root campaign efforts for the

Committee.

28. Elizabeth Clark is the Committee’s register

agent; she is a volunteer. The Committee has only one

paid staff member, John Reynolds. Mr. Reynolds

receives compensation from the Committee for his

fieldwork in Northern Colorado. The remainder of the

work done on behalf of the Committee is performed

by volunteers. Several Committee volunteers are em-

ployees of the Institute. Other than Mr. Reynolds, the

volunteers are not paid by the Committee or the

Institute for their time spent on Committee activities.

29. One of the Committee’s key volunteers is

Ethan Filon. Mr. Eilon has helped set up debates,

delivered “No Refund For You!” bumper stickers, and

App. 61

been in contact with people to help the Committee

make its presentations. Mr. Eilon has also, on occa-

sion, been the press contact and accepted contribu-

tions for and on behalf of the Committee.

30. As Committee chairman, Mr. Caldara has

fielded occasional calls about Referenda C and D from

his office at the Institute. He has also used the

Institute’s office equipment (i.e., fax machine, copier,

and computers) on occasion for the benefit of Vote No

for such activities as responding to e-mails and

making copies of Vote No materials. Mr. Caldara is

not compensated by the Institute or the Committee

for his efforts as chairman of Vote No. Mr. Caldara’s

services as chairman of the Committee are provided

on a volunteer basis. For the past several months, he

has spent about 2 hours a day assisting the Com-

mittee.

31. The Committee accepted its first monetary

contribution on June 3, 2005. It has filed Reports of

Contributions and Expenditures with the Secretary

for the following periods: May 27, 2005 — June 25,

2005; June 26, 2005 — July 26, 2005; July 27, 2005 —

August 31, 2005; September 1, 2005 — September 14,

2005; and September 15 — September 28, 2005. These

were the only reports available at the time of hearing.

32. In its report for the reporting period July

27, 2005 — August 31, 2005, Vote No disclosed a $250

non-monetary contribution from the Institute. This

non-monetary contribution represents the occasional

App. 62

use of the Institute’s facilities and office equipment

for the benefit of the Committee.

33. The Committee maintains a website. The

website address is www.defeatc.com. On its website,

the Committee has links to the websites of other

groups and organizations opposing Referenda C and

D. The Committee also has links to the Institute’s

website and the three radio ads paid for by the

Institute.

34. The Committee did not compensate the

Institute for the use of the radio ads nor did the

Institute charge the Committee for its use of them.

There is no evidence that the institute donated or

gifted the ads to the Committee for its use or created

the ads for the Committee’s benefit. The ads are

publicly available.

DISCUSSION

I. Is the Institute an issue committee, as

defined in Article XXVIII, § 2(10)(a).

Complainant alleges that the Institute has be-

come an “issue committee” as defined in the Colorado

Constitution. Article XXVIII, § 2(10)(a) defines issue

committee as:

[A]ny person, other than a natural person, or

any group of two or more persons, including

natural persons:

App. 63

(I) That has a major purpose of supporting

or opposing any ballot issue or ballot

question; or

(II) That has accepted or made contri-

butions or expenditures in excess of two

hundred dollars to support or oppose any

ballot issue or ballot question.

The Colorado Secretary of State has enacted Rule

1.6(b), 8 CCR 1505-6, which specifies that both condi-

tions listed in subparagraphs (I) and (II) above must

be met in order for an entity to be an ‘

”

tee’.

‘issue commit-

A person or group of persons is an issue

committee only if it meets both of the con-

ditions in Article XXVIII, Section 2(10)(a)(I)

and 2(10)(a)(ID).

8 CCR 1505-6, § 1.6 (emphasis in original).

The Secretary’s Rule 1.6(b) was extended by

Senate Bill 05-183 and is presently in effect. See

Continuation of 2004 Rules of Executive Agencies,

S.B. 05-183 § 1(p), 65th Gen. Assem., Reg. Sess. (Colo.

2005). A rule of the Secretary of State must be con-

strued as presumptively valid. Colo. Ground Water

Comm'n v. Eagle Peak Farms, Ltd., 919 P.2d 212, 217

(Colo. 1996). And since the Secretary is the govern-

ment official responsible for the administration of

campaign finance laws, her construction is entitled to

great weight. Mile High Greyhound Park, Inc. v. Colo.

Racing Comm’n, 12 P.3d 351 (Colo.App. 2000) See

also, Davis v. Conour, 178 Colo. 376, 497 P2d 1015

App. 64

(1972) (in interpreting a statute one should look to

the contemporaneous construction of the act by the

public officials charged with its administration.) Addi-

tionally, Colorado law permits “or” to be construed as

“and” when necessary to implement the plain mean-

ing or intent of a law. Armintrout v. People, 864 P.2d

576, 581 (Colo. 1993); Thomas v. City of Grand

Junction, 56 P. 665 (1899).

Counsel for the Institute, in his closing brief,

quotes from a memorandum prepared by William A.

Hobbs, Deputy Secretary of State, for the Committee

on Legal Services 5, dated December 14, 2004, sup-

porting the Secretary’s construction of Rule 1.6(b). In

his December 14 memo, Mr. Hobbs states that the

Secretary adopted Rule 1.6(b) to avoid the absurd

result and the unconstitutional infringement on con-

stitutional rights of association and free expression if

a disjunctive reading of subsections (I) and (II) is

required. This memorandum was not submitted at

the hearing and is not part of the evidentiary record

in this case. However, for the purpose of determining

the intent of the law and harmonizing the Secretary’s

rules with Article XXVIII, the ALJ finds the

argument persuasive and adopts the Secretary’s

construction. See, Ragsdale Bros. Roofing v. United

Bank, 744 P.2d 750 (Colo.App. 1987) (statutes should

be interpreted, if possible, to harmonize and give

meaning to other potentially conflicting laws.)

ay AF > = - : Ga M4 4. 2 seme We Doe ee 2

App. 65

Defining an Issue Committee

At least three of the elements in the definition of

an “issue committee” are not in dispute in this case.

First, the Institute, as a non-profit corporation, satis-

fies the definition of “person” in Colo. Const. art.

XXVIII, § 2(11). Second, the Institute spent more

than $200 on the radio ads at issue in this case. And

third, Referenda C and D are ballot issues or ballot

questions. Therefore, the remaining issues that must

be resolved by the ALJ are: (1) does the Institute have

a “major purpose” of supporting or opposing Refer-

enda C and D; and, if so, (2) are the Institute’s actions

to “support or oppose” Referenda C and D.

Does the Institute have a major purpose of

supporting or opposing Referenda C and D?

Article XXVIII of the Colorado Constitution does

not define the term “major purpose” and the United

States Supreme Court’s cases concerning campaign

finance laws are not instructive when determining

this phrase. The Supreme Court cases interpret the

phrase “the major purpose” in the context of the de-

fining “political committees.” See Buckely v. Valeo,

424 U.S. 1 (1976) and Federal Election Comm’n v.

Massachusetts Citizens for Life, Inc., 479 U.S. 238

(1986). In this case, the ALJ must interpret the

phrase “major purpose” in the context of an “issue

committee.”

In order to determine the meaning of “major

purpose,” the court must look to ascertain and give

App. 66

effect to the intent of the voters and interpret the

words in light of their plain meaning. Coffman uv.

Colorado Common Cause, 102 P.2d 999, 107 (Colo.

2004); Common Sense Alliance v. Davidson, 995 P.2d

748, 754 (Colo. 2000)). Furthermore, it is a well-

established principle in the area of statutory con-

struction that words and phrases are to be construed

according to their familiar and generally accepted

meaning, Allstate Ins. Co., v. Smith, 902 P.2d 1386

(Colo. 1995), while reaching a just and reasonable

result. See, § 2-4-201(1)(b), C.R.S. (2005).

A plain reading of the definition of an issue

committee in Article XXVIII, § 2(10)(a)(I) reveals that

the “major purpose” provision does not require that

the only purpose or even the primary purpose of an

entity be to support or oppose a ballot question. Rath-

er, the definition requires only a determination that

the entity has “a” major purpose of supporting or

opposing a ballot measure. As such, the use of the

word “a” does not restrict the number of major pur-

poses an entity may have. Any analysis to determine

a major purpose of the Institute must begin with a

discussion about the history of the organization and

its founding mission.

The institute was founded in 1985 as a non-

partisan, non-profit public policy research organiza-

tion. Its mission is to provide policy makers, legisla-

tors, and the citizens of Colorado with educational

and analytical materials on a broad spectrum of

issues from a free-market perspective. It does this by

producing and publishing educational materials from

App. 67

each of its six core policy centers. In the last several

years, the Institute has published over twenty issue

papers dealing with topics such as public school

reform, improving transportation, balancing Colo-

rado’s budget, improving the state’s prison system,

promoting privatization of government functions, and

implementing taxing and spending limits. Only one of

the Institute’s six policy centers (the Fiscal Policy

Center) focuses on taxation issues.

The Fiscal Policy Center has been in existence for

many years. Since 1992, its focus has included issues

related to TABOR. During the past five months,

Referenda C and D have taken on significance for this

center. However, arguably, even within the Fiscal

Policy Center, C and D have not been the major focus;

they are only of recent importance. The institute,

through this policy center, has been involved in

taxation issues long before the enactment of TABOR

and the referral of Referenda C and D. And, all

reasonable inferences suggest that the Institute’s

Fiscal Policy Center will remain involved in matters

of general taxation and TABOR long after the fate of

C and D are determined. There is no evidence that

after the election, the mission or purpose of the Fiscal

Policy Center or the Institute will be fundamentally

altered or that it will cease to exist, as might be

expected if its major purpose were linked to the out-

come of an election. The fact that Referenda C and D

are issues that align with one of the Institute’s policy

centers does not make Referenda C and D a major

purpose of the Institute. This is further supported by

App. 68

the fact that, during the past five months, Mr. Cal-

dara, as President of the institute, has spent two-

thirds of his time on issues not related to C and D.

And, during the past several months, the Institute’s

remaining senior staff members have continued to

work on issues not related to C and D.

In the spring of 2005, the Institute paid directly

for and received in-kind contributions for three radio

ads costing a total amount of $235,000. Complainant

argues that the sheer amount of money spent by the

Institute indicates what its “major” purposes are. In

support of this argument, Complainant cites to a

recent federal court decision dealing with Colorado’s

regulation of political committees. Colorado Right to

Life Committee, Inc. v. Davidson, Civ. Action No. 03-

CV-145 (slip op.).”

In Colorado Right to Life Committee, Judge

Walker Miller struck down the application of the

political committee definition to a 501(c)(3) organiza-

tion because no “major purpose” test could be applied

to that definition. The definition of “political commit-

tee” renders a person or entity a political committee if

he or it contributes or expends more than $200 to

Support or oppose a candidate. See Colo. Const. art

XXVIII, § 2(12)(a). In his opinion, Judge Miller found

that the $200 threshold in the definition of a political

* Colorado Right to Life Committee decision was admitted

as exhibit R-15 in this case.

App. 69

committee was incompatible with a major purpose

test.

Consequently, an _ entity that spends

$200,000 on various non-political activities

and donates $200 ('/i0 of 1% of its budget) to a

candidate is deemed a political committee.

Furthermore, the amount of money an or-

ganization must accept or spend — $200 — is

not substantial and would, as a matter of

common sense, operate to encompass a vari-

ety of entities based on expenditure that is

substantial in relation to their overall

budgets.

Id. at 30.

In this case, Complainant argues that the

amount spent by the Institute on the three radio ads

is substantial ('A« of this year’s budget — $235,000/

$1.4 million) and reflects how important C and

D’s defeat is to the Institute. “Using Judge Miller’s

quantitative analysis as the touchstone, the purpose

associated with this activity must be considered to be

‘major’.” (Complainant’s Closing Brief, page 8). For

the following reasons, the ALJ does not find this

argument persuasive.

The issues raised in the Colorado Right to Life

fon)

Commitlee case concern the definition of a political

committee, not an issue committee. The Court, in

Colorado Right to Life Committee, looked to the $200

trigger as a way of determining whether it could

App. 70

construe § 2(12) as including a major purpose test.” In

this case, the relevant section of Article XXVIII is

§ 2(10), which expressly incorporates a major purpose

test; therefore, the analysis undertaken by Judge

Miller, while thoughtful, does not have direct applica-

tion to this case. The amount of money spent by the

Institute for radio ads is only one of many factors to

be considered when ascertaining a major purpose.

In his closing brief, Complainant suggests that

little weight should be given to Mr. Caldara’s descrip-

tion of the institute’s activities in determining the

Institute’s major purpose because, “|t/o rely on such

representations from the party subject to regulation

would permit conduct that is intended to be covered

‘to escape regulation merely because the stated pur-

poses were misleading, ambiguous, fraudulent, or all

three’” (Complainant’s Closing Brief, page 7, citing

League of Women Voters v. Davidson, 23 P.3d 1266,

1275 (Colo.App. 2001)). Yet, Complainant introduced

no evidence refuting Mr. Caldara’s testimony re-

garding the primary mission of the Institute, the

objectives of the Institute or the various activities it

has been involved in over the past twenty-one years.

The ALJ finds no reason to discount the testimony of

Mr. Caldara, particularly as to the Institute’s activi-

ties as those activities are well supported by the

documents introduced at hearing

This argument was raised by the Secretary of State to

provide justification for the state’s regulation of political com-

mittees. Colorado Right to Life Committee, page 29.

App. 71

The Institute was established twenty-one years

ago with the purpose of promoting free-market based

ideas in several areas, only one of which includes

taxation and spending. The Institute’s purposes of

opposing taxation and government spending long

predate Referenda C and D.

In determining the issues raised in Complain-

ant’s complaint, it is the role of the ALJ to weigh the

evidence and from the evidence reach conclusions.

The “weight of the evidence” is the relative value

assigned to the credible evidence offered by a party to

support a particular position. The weight of the evi-

dence is not quantifiable in an absolute sense and is

not a question of mathematics, but rather depends on

its effect in inducing a belief. The standard of proof

that applies in this administrative proceeding is “by a

preponderance.” This standard has been explained as

follows:

The preponderance standard requires

that the prevailing factual conclusions must

be based on the weight of the evidence. If the

test could be quantified, the test would say

that a factual conclusion must be supported

by 51% of the evidence. A softer definition,

however, seems more accurate.; the prepon-

derance test means that the fact finder must

be convinced that the factual conclusion it

chooses is more likely than not.

Koch, Administrative Law and Practice, Vol. 1 at 49]

( 1985 ).

App. 72

In the instant case, the facts do not support the

argument that opposition to Referenda C and D was a

major purpose of the Institute. Having considered the

length of time the Institute has been in existence, the

purpose for which is was established, the various

issues it has been involved with, and its multifaceted

organizational structure (i.e. the six policy centers),

the ALJ concludes that Complainant has failed to

establish, by a preponderance of the evidence, that

the Institute had a “major purpose” of opposing Refer-

enda C and D.

Common Sense Alliance v. Davidson

Even if the ALJ were to find that the Institute

had a major purpose of opposing C and D, consistent

with the Colorado Supreme Court’s holding in Com-

mon Sense Alliance, 995 P.2d 748, 753 (Colo. 2000),

the ALJ would not so broadly construe the definition

of issue committee to include the Institute. In

Common Sense Alliance, the Court was required to

determine whether an organization formed for other

purposes may later become an issue committee as

defined by the FCPA. At that time, the FCPA defined

“issue committee” as two or more persons who have

associated themselves for the purpose of supporting

or opposing a ballot initiative. Although the definition

of issue committee that currently appears in Article

XXVIII, § 2(10)(a) has changed from the former

section in the FCPA, the policy and constitutional

concerns raised by the Court have not.

App. 73

First, in Common Sense Alliance, the Court

concluded that the statute was insufficiently clear to

include CS Alliance within the reach of the issue

committee definition. In doing so, the Court held that:

the statute contained no guidance as to when a com-

mittee formed for another purpose would be deemed

to become an issue committee; when its contributors

would become subject to the disclosure requirements;

or even which of its contributors would need to be

disclosed. Jd. at 749.

Were we to interpret the statute broadly, any

political or special interest organization

could become an issue committee through a

decision of its leadership to support or op-

pose a ballot initiative without the assent or

perhaps even the knowledge of its members.

Such a decision would then trigger the re-

porting and financial contributions of the

members of the organization. Because consti-

tutional rights concerning freedom of associ-

ation and freedom of speech are implicated,

we decline to give the statute that broad

reading and decline to provide judicial

answers to the questions left unanswered in

the statute.

Id.

Second, in applying a narrow interpretation to

the definition of an issue committee, the Court looked

to the larger purpose behind the campaign laws and

in so doing held:

App. 74

As currently written, the FCPA assures

disclosure of information regarding large

contributions to candidate campaigns. The

purposes served by disclosure of that infor-

mation do not propel a conclusion that CS

Alliance should also be subject to the same

disclosure provisions. The identity of sup-

porters and opponents of a ballot initiative

would be potentially heipful to the electorate,

but the information is not nearly as critical

as the identity of candidate supporters. As

the Supreme Court has stated: “The risk of

corruption perceived in cases involving can-

didate elections simply is not present in a

popular vote on a public issue.” First Nat'l

Bank v. Bellotti, 435 U.S. 765, 790 (1978)...

This is because “ballot initiatives do not

involve the risk of ‘quid pro quo’ corruption

present when money is paid to, or for,

candidates.” Buckley v. American Constitu-

tional Law Found., Inc., 525 U.S. 182, 203

(1999).

Common Sense Alliance, at 755.

Finally, with respect to the requirement that CS

Alliance would have to disclose the identity of its

members if it were found to be an issue committee,

the Court held:

[T]itle members of CS Alliance should have

advance notice of the consequences of their

political activities and be able to anticipate

the extent to which their political associa-

tions and activities will become a matter of

public knowledge. If we construe the FCPA to

App. 75

permit CS Alliance to evolve into an issue

committee, the supporters of the CS Alliance

will not have had the benefit of choosing

whether they wish to contribute to an organi-

zation required to make public disclosures

[TjJhe right of the electorate to be

informed on how public issue campaigns are

financed, and by whom, must be balanced

against the rights of free association and free

speech of an organization’s members.

Id. at 756, 757.

The parallels between the instant case and

Common Sense Alliance are striking. If the Institute

were deemed to be an issue committee, its members

would not have advance notice that their political

associations and activities will become matters of

public knowledge. Further, the definition of an issue

committee in Article XXVIII contains no guidance as

to when a committee formed for another purpose

would be deemed to become an issue committee; when

its contributors would become subject to the disclo-

sure requirements; or even which of its contributors

would need to be disclosed. For these reasons, the

ALJ adopts, in its entirety, the Court’s analysis in

Common Sense Alliance and declines to expand the

definition of issue committee to include the Institute,

even if it had a major purpose of opposing Referenda

C and D.

App. 76

Secretary of State’s Rules

The position that a non-profit membership or-

ganization, with a major purpose other than the

support or opposition of a ballot issue, or one with

multiple major purposes, should not be deemed an

issue committee is further supported by the definition

of an issue committee and the Secretary’s rules.

Pursuant to § 2(10)(c), Article XXVIII, “laln issue

committee shall be considered open and active until

affirmatively closed by such committee or by action of

the appropriate authority.” The Secretary’s rules

permit the closing of an issue committee only after it

is completely de-funded and when it no longer in-

tends to receive contributions or make expenditures.

See, Rule 3.4, 8 CCR 1505-6.

If a non-profit organization, formed for a purpose

other than supporting or opposing a ballot issue or

one with multiple purposes, evolved into an issue

committee, under the Secretary’s rules, it would. be

forced to dispose of its assets, pay any outstand-

ing debt and eliminate its members. Such broad

interpretation of the definition of an issue committee

culminates in an absurd result, and one that cannot

have been intended. In fact, if the actions of the

Institute are found to be within the definition of an

issue committee, the same standard could be applied

to a myriad of other similarly situated groups,

ranging from the Children’s Campaign, to Bell Policy

institute, to the Red Cross, simply by undertaking

efforts to support or oppose ballot issues or questions.

App. 77

Did the Institute accept or make contributions or

expenditures in excess of two hundred dollars to sup-

port or oppose any ballot issue or ballot question?

In light of the ALJ’s conclusions, that the

Institute does not have a major purpose of opposing

Referenda C and D and that, under Common Sense

Alliance, the definition of issue committee cannot be

expanded to include the Institute even if it has a

major purpose of opposing these ballot measures, the

ALJ does not need to address whether the Institute

accepted or made contributions or expenditures in

excess of $200 to support or oppose a ballot issue or

ballot question.

II. Did Vote No fail to report the contri-

butions it received from the Institute?

In his First Amended Complaint, Complainant

asserts that Vote No violated § 1-45-108(1), C.R.S. by

failing to disclose its receipt of the Institute’s below-

market value of its contributions of goods, services,

and participation at campaign events. (First Amend-

ed Complaint, page 3, { 16). It his closing brief,

Complainant narrows his argument and more specifi-

cally alleges that the three radio ads became non-

monetary contributions to the Committee by the

Institute that were never disclosed. Complainant con-

tends that these ads were a gift of property (i.e., the

amount of money that would have been required to be

spent by Vote No to produce and air these ads) made

to Vote No. Accordingly, Complainant asserts that

Vote No violated the FCPA by failing to disclose the

App. 78

Institute as the non-monetary contributor of $35,000

worth of radio ads and the name of the in-kind non-

profit agency as the non-monetary contributor of the

$200,000 worth of radio ads.

Article XXVIII, § 2(5)(a) defines “contribution” as:

(I) The payment, loan, pledge, gift, or ad-

vance of money, or guarantee of a loan, made

to any ...issue committee... ;

(II) Any payment made to a third party for

the benefit of any... issue committee. .

= 9

(III) The fair market value of any gift or

loan of property made to any... issue com-

mittee...;

The three radio ads in question were posted on

the Institute’s website and made available to other

groups, including Vote No. Vote No included a link to

these ads on its website, along with links to the

websites of other groups

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