United States District Court, D. New Mexico
PEOPLE FOR PEARCE and STEVE E. PEARCE, U.S. Representative for New Mexico's Second Congressional District, Plaintiffs,
MAGGIE T. OLIVER, in her individual capacity and her official capacity as Secretary of State of the State of New Mexico; HECTOR H. BALDERAS, JR., in his individual capacity and his official capacity as Attorney General of the State of New Mexico; and DIANNA LUCE, in her official capacity as Fifth Judicial District Attorney of New Mexico, Defendants.
MEMORANDUM OPINION AND ORDER
August 31, 2017, Plaintiffs People for Pearce and Steve E.
Pearce (“Plaintiffs”) filed a Motion for
Preliminary Injunction and Memorandum Brief in Support (ECF
No. 16). Plaintiffs seek a preliminary injunction against
enforcement of certain provisions of the New Mexico Campaign
Reporting Act (the “CRA”), codified at N.M. Stat.
§ 1-19-25 to -36, the restrictions of which are
described in an advisory opinion letter dated July 19, 2017
issued by Defendant Secretary of State of the State of New
Mexico Maggie T. Oliver (the “Secretary of State”
or “Defendant Oliver”). Plaintiffs assert that
the Secretary of State's interpretation of the CRA to
impose the individual contribution limits in an election
cycle on the transfer of funds from their federal campaign
committee account to their state campaign committee account
is an unconstitutional infringement of their First Amendment
free speech and free association rights. Defendant Attorney
General Hector H. Balderas (“Defendant Balderas”)
filed a Motion to Dismiss Complaint for Failure to State a
Claim, Lack of Standing, and Immunity (ECF No. 26), and
Defendant Oliver filed a Motion to Dismiss Claims against the
Secretary of State in her Individual Capacity and Claims for
Injunctive Relief (ECF No. 36). The Court held a hearing on
the motion for preliminary injunction and Defendant
Balderas' motion to dismiss. The parties represented at
the hearing that an additional hearing to consider Defendant
Oliver's motion to dismiss was not warranted. Having
considered the parties' motions, briefs, oral arguments,
evidence, and applicable law, the Court will grant
Plaintiffs' motion for preliminary injunction and will
deny the motions to dismiss.
The Federal Election Campaign Act and the New Mexico Campaign
Federal Election Campaign Act of 1971, as amended, 2 U.S.C.
§§ 431 et seq. (“FECA”),
regulates federal campaign money and preempts any state laws
with respect to election to federal office. See 52
U.S.C. § 30143(a); 11 C.F.R. § 108.7(b). In
enacting FECA, Congress sought to limit and regulate
political contributions and independent expenditures on
behalf of candidates for federal office. See Buckley v.
Valeo, 424 U.S. 1, 12-13 (1976). At all relevant times,
FECA has required public disclosure of donors contributing
more than $200 within the calendar year or election cycle.
See 52 U.S.C. § 30104(b)(3)(A), (F)-(G).
requires that all contributions received and expenditures
made go through a principal campaign committee. See
Id. §§ 30102(e)(1), (f)(1), (h)(1). A
“principal campaign committee” under FECA is
“a political committee designated and authorized by a
candidate” under § 30102(e)(1). Id.
§ 30101(5). Reporting under FECA for New Mexico-based
candidates is required to both the Federal Election
Commission (“FEC”) and the New Mexico Secretary
of State. See 52 U.S.C. §§ 30104 &
30113(a)-(b). Congress limited the contributions any person
could make to a candidate with respect to an election to an
aggregate of $2, 000, adjusted by the consumer price index.
See Id. § 30116(a)(1)(A) and (c). The parties
agree that from 2009-2018 FECA contributions limits ranged
from $2, 400 to $2, 700 for individuals and PACs.
See Decl. of Andrea Todd-Goff ¶ 5, ECF No.
16-2; Hr'g Tr. 51:5-12, 141:22-142:1, Oct. 16, 2017
(hereinafter “Hr'g Tr.”).
FECA, candidates have to report to the FEC each donor's
name, occupation, employer, amount donated, address, and
their aggregate donation amount in the two-year election
cycle, all of which is available to the public on the FEC
website. See Hr'g Tr. 47:20-49:12, 53:7-14. FECA
has a method of measuring pass-through contributions made by
a donor's business entities, so that, for example, the
sum total of all contributions given by the donor personally
and all of his companies can be tracked. See Id.
51:13-52:17; Decl. of Andrea Todd-Goff ¶ 9, ECF No.
16-2. FECA does not permit corporate contributions. Hr'g
contains disclosure provisions for state campaigns, requiring
public disclosure of the identities of all donors, except
those donors giving anonymous cash donations of less than
$100. See N.M. Stat. Ann. §§ 1-19-31(A),
-34(B). The CRA requires that all contributions received and
expenditures made go through a campaign committee for
reporting purposes, but reporting is only to the New Mexico
Secretary of State. See Id. § 1-19-26(Q), -27.
The CRA's provisions do not apply to any federal
candidate subject to FECA. See Id. § 1-19-37.
Mexico legislature amended the CRA in 1993 to add a provision
expressly prohibiting the use in state election campaigns of
contributions received in a federal election campaign.
See 1993 N.M. Laws Ch. 46, § 6 (later codified
at N.M. Stat. § 1-19-29.1(C)). Then-Congressman Bill
Richardson challenged the constitutionality of this
provision. New Mexicans for Bill Richardson v.
Gonzales, No. Civ. 93-1135 JP, Mem. Op. and Order (ECF
No. 73), (D.N.M. Aug. 2, 1996). The Honorable James A. Parker
ruled that § 1-19-29.1(C) violated the First Amendment
because the provision's “[l]imitations on political
campaign expenditures” infringed on core First
Amendment rights and was not sufficiently narrowly tailored.
Id. at 2-3. Judge Parker explained that, to further
New Mexico's stated interest in shining the beneficial
light of disclosure on sources of contributions, the
legislature could have more carefully limited the
statute's wording to say that a person can use funds
acquired in federal election campaigns in state campaigns
only if that person complies with state disclosure laws.
Id. at 3.
2009, New Mexico enacted campaign contribution limits for
statewide and non-statewide elections. Republican Party
of New Mexico v. King, 741 F.3d 1089, 1091 (10th Cir.
2013). The legislation was introduced in response to numerous
pay-to-play corruption scandals involving New Mexico
politicians. See Hr'g Tr. 83:8-91:25. These
corruption scandals were widely and extensively reported in
the news. See id.; Def.'s Hr'g Ex.
11-13. The scandals had provoked considerable
hostility by the public towards public officials.
See Hr'g Tr. 94:25-95:19.
its effective date of November 3, 2010, the CRA prohibits
persons and political committees from knowingly soliciting or
accepting contributions in excess of the contribution limits
provided for in the CRA. See N.M. Stat. Ann. §
1-19-34.7(C). The CRA defines a contribution to include
“a … deposit of money … that is made or
received for a political purpose….” Id.
§ 1-19-26(F). In contrast, the CRA defines
“expenditure” as “a payment, transfer or
distribution or obligation or promise to pay, transfer or
distribute any money or other thing of value for a political
purpose.” Id. § 1-19-26(J). A
“political purpose” in turn means
“influencing or attempting to influence an election or
pre-primary convention.” Id. §
1-19-34.7 of the CRA limits a person and a “political
committee” from making contributions greater than $5,
000 in aggregate during a primary election or $5, 000 in
aggregate during a general election to a candidate for
statewide office, including the candidate's campaign
committee. See N.M. Stat. Ann. §
1-19-34.7(A)(1) & (2). The contribution amounts are
indexed for inflation, see Id. § 1-19-34.7(D),
and it has not been disputed that the CRA contribution limits
in 2009 were $4, 800, increasing every two years, to the
current limit of $5, 500 for any person, corporation, and
political committee, including for a PAC, donating to a
candidate running for statewide office. See Decl. of
Andrea Todd-Goff ¶¶ 8, ECF No. 16-2; Hr'g Tr.
151:2-13, 210:19-211:9. The CRA defines a “political
committee” as “two or more persons, other than
members of a candidate's immediate family or campaign
committee or a husband and wife who make a contribution out
of a joint account, who are selected, appointed, chosen,
associated, organized or operated primarily for a political
purpose.” Id. § 1-19-26(L). The CRA
separately defines a “campaign committee” as
“two or more persons authorized by a candidate to
raise, collect or expend contributions on the candidate's
behalf for the purpose of electing the candidate to office,
” id. § 1-19-26(D), but the meaning of
“candidate” is limited to a person seeking office
in an election covered by the CRA, id. §
generally more stringent than the CRA, with stricter
contribution limits than the CRA at all points relevant to
this case. See Decl. of Andrea Todd-Goff
¶¶ 5, 8, ECF No. 16-2. Because the CRA does not
forbid corporate donations, unlike FECA, the CRA currently
permits a wealthy donor to donate up to $11, 000 of personal
funds in an election cycle, and give up to $11, 000 for every
single corporation and company he or she owns. See
Hr'g Tr. 53:15-54:10. The CRA, unlike FECA, does not
require campaign reports to contain the donor's employer
or the aggregate amount for the election cycle. See
id. 55:16-56:25; Pl.'s Hr'g Ex. B.
the CRA, a candidate for one state elective office may
transfer contributions received to an account for a different
state elective office. See N.M. Stat. Ann. §
1-19-29.1(A)(5) (permitting candidate to make expenditures of
contributions received for “expenditures incurred by
the candidate when seeking election to another public office
covered by [the Act]”). See also Hr'g Tr.
112:19-24, 213:3-12, 257:5-13; Office of the Secretary of
State, Candidate Information for Campaign Reporting,
nformationforCampaignReportingv21.pdf (last visited October
4, 2017) (providing, in campaign report form, box to check to
“Please transfer my current remaining campaign balance
listed in CFIS to my new campaign indicated below”).
The Secretary of State's office has not instituted
enforcement actions against candidates for state races who
have transferred funds in excess of $11, 000 from one state
campaign account to another. See Hr'g Tr.
73:5-80:23, 226:4-228:8. The position of the Secretary of
State's office is the transfers are permitted under the
CRA because all transferred funds were raised pursuant to the
CRA. See Id. 213:3-22, 226:4-228:8. Nevertheless,
because it is not uncommon for supporters to contribute to a
candidate each time he or she runs for office, it is possible
that the transfers of funds between accounts for different
state elective office contain contributions, which if
aggregated, could potentially have exceeded the individual
contributions limits under the CRA. See Id. 77:4-23,
person who violates the CRA may face civil and criminal
penalties. See N.M. Stat. Ann. §§
1-19-34.6, -36. If the secretary of state reasonably believes
that a person has committed or is about to commit a violation
of the CRA, she “shall refer the matter to the attorney
general or a district attorney for enforcement.”
Id. § 1-19-34.6(A). See also Id.
§ 1-19-34.4(G) (“The secretary of state may refer
a matter to the attorney general or a district attorney for a
civil injunctive or other appropriate order or for criminal
enforcement.”). The CRA gives both the attorney general
and district attorney authority to institute a civil action
for any violation of the CRA or to prevent a CRA violation
that involves an unlawful solicitation or the making or
acceptance of an unlawful contribution. Id. §
1-19-34.6(B). They may seek civil penalties and forfeiture of
any contribution received as a result of an unlawful
solicitation or contribution, id. §
1-19-34.6(B)-(C), and institute criminal prosecutions for
violations of the CRA, id. § 1-19-36.
secretary of state also has authority granted by the CRA to
“adopt and promulgate rules and regulations to
implement the provisions of the [CRA];” id.
§ 1-19-26.2, “initiate investigations to determine
whether any provision of the [CRA] has been violated, ”
id. § 1-19-34.4(B), and conduct a thorough
examination of filed reports to determine compliance with the
CRA, id. § 1-19-32.1(A). “The secretary
of state, in consultation with the attorney general, shall
issue advisory opinions, when requested in writing to do so,
on matters concerning” the CRA. Id. §
1-19-34.4(A). The secretary of state may levy administrative
penalties for violations of the CRA, which may be reviewed in
arbitration. See Id. § 1-19-34.4(D)-(F).
Representative Pearce's Federal Campaign Funds
Steve E. Pearce is a sitting United States Congressman
representing New Mexico's Second Congressional District
in the House of Representatives, serving in this capacity
from 2003 to 2009 and from 2011 to the present. Def.
Oliver's Answer ¶ 10, ECF No. 27. People for Pearce
(“PFP”) is Representative Pearce's principal
campaign committee, which is registered with and reports to
the FEC and which he has used since 2009 to raise and spend
funds in support of his federal campaigns for election and
reelection. See Decl. of Andrea Todd-Goff
¶¶ 3-4, ECF No. 16-2; Def.'s Hr'g Ex. 1-7.
Congressional election cycles are every two years and
encompass a primary election usually in June and a general
election in November, both in the same even years. Hr'g
FECA does not require disclosure of the identities of
contributors giving less than $200, PFP has tracked this
information in order to reconcile their records with their
bank account, and is able to disclose the information.
See Id. at 62:11-63:21; Decl. of Andrea Todd-Goff
¶ 6, ECF No. 16-2. PFP has less than approximately $100
of truly anonymous contributions. See Decl. of
Andrea Todd-Goff ¶ 6, ECF No. 16-2.
FECA, it is permissible for PFP to carry over contributions
given during one election cycle for use in a subsequent
election cycle. See Decl. of Andrea Todd-Goff ¶
10, ECF No. 16-2. As of the date of the hearing, PFP's
account contained approximately $910, 000 in campaign
contributions. Hr'g Tr. 50:2-7, 160:5-10. At no time when
soliciting or accepting contributions for PFP did
Representative Pearce or anyone associated with PFP ever
promise or assert that the contribution would be used only in
one specific election cycle or in pursuit of one specific
elective office. See Hr'g Tr. 70:19-71:1; Decl.
of Andrea Todd-Goff ¶ 7, ECF No. 16-2.
made to PFP beginning in 2009 and going forward were
deposited into one PFP account, and expenditures for each
campaign cycle were made from the same account. See
Hr'g Tr. 127:20-134:23. After each election cycle, PFP
had some leftover funds that it rolled over for the next
election cycle. See Id. Each contribution was not
earmarked by the campaign to be spent for a particular
purpose, so with each rollover, it is not possible to
attribute the specific amounts rolled over to a particular
contributor's donation or to attribute specific donations
to particular expenditures made. See Id. By way of
example, the Ernst & Young PAC gave Representative Pearce
$5, 000 in aggregate donations in 2010, and gave additional
donations to Representative Pearce in subsequent election
cycles, in accordance with FECA, for a total aggregate
donation amount of $30, 000 from 2010 through 2016.
See Hr'g Tr. 142:5-150:9; Def.'s Ex. 1-7.
Because expenditures were not earmarked from specific
contributors, it is unknown how much of the $910, 000
Representative Pearce seeks to transfer come from a specific
donor, such as Ernst & Young PAC. See Hr'g
Tr. 150:12-151:22. This uncertainty similarly exists for
funds rolled over from one campaign to another under the CRA.
See Id. 77:4-23, 178:8-19. No contributions made
before 2009 remain in the PFP account, and PFP stopped
accepting contributions after the election day of
Representative Pearce's last run for Congress to avoid
receiving contributions arguably towards his gubernatorial
run in a FECA account to prevent donors from being able to
effectively contribute twice to his gubernatorial campaign by
giving to PFP and then later to PFNM. See Decl. of
Andrea Goff ¶ 3, ECF No. 16-2.
Representative Pearce's Gubernatorial Campaign
Pearce has announced his intention to run for the 2018 New
Mexico gubernatorial election. Def. Oliver's Answer
¶ 10, ECF No. 27. A campaign committee under the CRA was
set up for Representative Pearce's gubernatorial
election, Pearce for New Mexico (“PFNM”). Decl.
of Andrea Todd-Goff ¶ 8, ECF No. 16-2. Representative
Pearce began fundraising for his gubernatorial election in
July 2017, and as of October 9, 2017, he had raised a little
more than one million dollars. See Hr'g Tr.
153:10-20; Pls.' Hr'g Ex. B. In the most recent
reporting period under the CRA, Representative Pearce
reported approximately $88, 000 in expenditures. See
Hr'g Tr. 125:8-22; Pls.' Hr'g Ex. B.
Pearce's gubernatorial campaign currently has two
full-time staffers working in New Mexico, Andrea Todd-Goff, a
senior advisor to and finance director for Representative
Pearce, and Paul Smith, Campaign Manager for PFNM. Hr'g
Tr. 44:17-20, 158:8-14, 181:7-8. Representative Pearce's
campaign would like to hire four more campaign staffers: a
press secretary, two field directors, and a social media
assistant. Hr'g Tr. 158:8-160:4, 164:12-22, 185:1-5. The
positions would assist the campaign to increase Congressman
Pearce's name recognition statewide, to develop
relationships with the press, and to determine how best to
get out the campaign's message. See Id.
185:12-189:1. Two dark-money groups launched attack ads
against Representative Pearce shortly after he entered the
gubernatorial race, and had he had his PFP funds, the
campaign would have paid for response ads to counteract the
one-sided messaging. See Id. 166:7-167:11,
Pearce's campaign has refrained from hiring the four
positions and paying for ads, despite having around $900,
000, because of the nature of political campaigns. See
Id. 158:8-161:2, 167:23-168:17. In political campaigns,
large amounts of funds are needed near the time of the
election to get out the vote and to advertise, so a campaign
tries to preserve funds to ensure it has enough money for
those crucial subsequent needs. See Id.
167:23-168:17. In New Mexico, state-wide television
advertisements cost about $200, 000 per week, so campaigns
need to hold onto the vast majority of their funds for later
in the race. See Id. 189:12-21, 200:1-201:5.
funds also serve as a demonstration of the strength of a
candidate, particularly early in the race before polling
begins, and large funds may deter additional opponents from
deciding to run against the candidate. See id.
169:20-170:22, 182:23-183:14; Decl. of Andrea Todd-Goff
¶¶ 15, ECF No. 16-2. Although Representative Pearce
does not currently have a challenger in the primary, the
campaign needs to plan its budget for the possibility.
See Hr'g Tr. 170:10-171:2. The strength of a
candidate, measured early in the campaign largely by campaign
funds, affects recruiting for campaign staff, as the top
staffers generally want to work for strong campaigns with the
greatest chance of winning. See Id. 183:5-24,
186:9-187:19. The pool of talent shrinks closer to the
election, so the sooner a campaign can afford to bring on
staffers, the better the chance of recruiting top,
experienced talent. See Id. Representative Pearce
wishes to transfer the campaign contributions in his PFP
account into his PFNM account to use in his gubernatorial
campaign immediately to hire the additional staff and pay for
advertising. See Id. 158:8-161:2, 172:12-22,
of comparison, New Mexico Congresswoman Michelle Lujan
Grisham is also currently running for New Mexico governor.
Hr'g Tr. 123:13-24. On October 9, 2017, Representative
Lujan Grisham reported having over $1.3 million in
contributions and total expenditures of over $519, 000.
See Pl.'s Ex. K; Hr'g Tr. 125:8-22. She has
raised approximately $2.2 million total with approximately
$1.6 million on hand. See Hr'g Tr. 192:11-15.
Representative Pearce has considered Congresswoman Lujan
Grisham's campaign funds in determining his own campaign
expenditures, and if he had his federal funds, the campaign
would be more comfortable increasing its expenditures.
See Id. at 192:2-193:13. Although there are multiple
challengers vying for the Democratic nomination for governor,
the money they spend increasing their own name recognition
gives an advantage over Representative Pearce, so he would
like to spend money on advertising now. See Id.
The July Advisory Opinion
Representative Pearce declared his candidacy for governor, in
April 2016 William Canfield, counsel for PFP, asked the
Secretary of State whether transfers from a candidate's
FECA account into a CRA account were permitted, and if so, if
they were subject to restrictions or limitations.
See Letter from Amy B. Bailey dated June 15, 2016,
ECF No. 1-2 at 72 of 82; Letter from William B. Canfield III
dated June 20, 2017, ECF No. 76 of 82. On June 15, 2016, Amy
B. Bailey, General Counsel for the Office of the Secretary of
State, responded affirmatively that a federal officeholder
may transfer funds from a FECA candidate campaign committee
to a state candidate campaign committee, noting that the
Section 1-19-29.1(C) restriction had been declared
unconstitutional in a federal court. See Letter from
Amy B. Bailey dated June 15, 2016, ECF No. 1-2 at 72-73 of
82. Ms. Bailey, however, stated that there were restrictions
on the transfer of such funds, citing Section 1-19-34.7's
limitations on contributions a candidate or political
committee may receive, and giving as an example the $5, 400
maximum aggregate contribution limit from a single donor for
each election during the cycle. Id. In response to
Mr. Canfield's inquiry whether the balance of funds in a
FECA campaign committee could be considered the
candidate's personal funds, Ms. Bailey replied,
“No. The FECA candidate campaign committee is a
campaign committee under the CRA.” Id. Ms.
Bailey further stated that any contribution that is not a
candidate's personal funds is subject to the limits of
Section 1-19-34.7(A). Id.
PFP sought the current Secretary of State's position on
the same issues, and after back-and-forth correspondence,
see Compl. Ex. B, ECF No. 1-2 at 74-79 of 82, New
Mexico Deputy Secretary of State John Blair wrote a letter to
Mr. Canfield dated July 19, 2017, setting forth Secretary of
State Oliver's position (hereinafter “the July 2017
Advisory Opinion”), see Id. at 80-82 of 82.
Mr. Blair stated, “[T]he official position of this
office continues to be that Congressman Steve Pearce may
transfer $5, 500 from his FECA account to a CRA account for a
gubernatorial campaign both for the 2018 primary election and
for the 2018 general election.” Id. at 80 of
82. Mr. Blair wrote that the CRA “only contemplates the
term ‘transfer' in terms of an expenditure made
under the CRA when seeking an election for an office covered
by the CRA, ” and that the CRA does not provide any
process or guidance whereby funds can be transferred into a
campaign account governed by the CRA from a campaign account
not governed by the CRA. Id. at 81 of 82. He
explained that Section 1-19-34.7(A)(2)(b) uses the term
“contribution” when discussing the limits of a
contribution from one political committee to another, and
that because “contribution” under the CRA
includes a “deposit of money, ” the Secretary of
State concluded that the desired “transfer” from
the FECA account is a “deposit of money” subject
to contribution limits. Id. Mr. Blair concluded:
“Your request to transfer the entirety of Congressman
Pearce's FECA account would be to do so without
restriction or limitation in direct contravention of Ms.
Bailey's letter and the CRA.” Id. at 82 of
Secretary of State's office also advised Congresswoman
Lujan Grisham that the transfer of her federal campaign funds
were likewise subject to the CRA contribution limits.
See Hr'g Tr. 213:23-215:9.
20, 2017, People for Pearce and Representative Pearce filed a
Complaint for Injunctive and Declaratory Relief, and
Attorneys' Fees against, according to the caption,
Secretary of State Oliver in her individual and official
capacities, Attorney General Balderas in his individual and
official capacities, and Fifth Judicial District Attorney of
New Mexico Dianna Luce in her official capacity. Compl. 1,
ECF No. 1. In the body of the Complaint, Plaintiffs assert
claims for declaratory and injunctive relief against all
Defendants in their official capacities for violations of the
First Amendment and the Equal Protection Clause. See
Id. ¶¶ 64-80. They seek to enjoin ...