Category Archives: Empower Texans v TEC

Texas Ethics Commission v. Empower Texans: Comprehensive Update and Preview of What’s to Come

Empower Texans (dba “Texans for Fiscal Responsibility”) is an influential 501(c)(4) nonprofit corporation dedicated to promoting free markets and limited government; Michael Quinn Sullivan is its President.  Empower sponsors a separate general-purpose committee (Empower Texans PAC, registered in 2007) as permitted under Texas law.  Also, since 2012, Empower Texans (the nonprofit) has elected to exercise its First Amendment rights to make its own independent expenditures for political activity, periodically endorsing candidates and measures under its own name.  One of Empower Texans’ signature, non-campaign activities since 2007 has been to compile a “Fiscal Responsibility Index” grading legislators based on their votes and sponsorship of legislation.  The Index is published online and sometimes distributed by mail to registered voters.

Two nominally-Republican legislators criticized by Empower were State Representatives Jim Keffer and Vicki Truitt.  In April 2012, Keffer and Truitt filed four complaints with the Texas Ethics Commission (TEC) against Empower and Sullivan.  Keffer and Truitt each lodged the same allegations against Sullivan and Empower.

As to Mr. Sullivan, they claimed he failed to register as a lobbyist after receiving compensation for contacting legislators on behalf of Empower Texans.

As to Empower Texans, Keffer and Truitt claimed that the group had violated the Election Code in one of two ways: either by engaging in campaign activity that turned the group into a “political committee” without having first appointed a campaign treasurer with the TEC; or, if Empower Texans did not qualify as a political committee, that it had nonetheless failed to file reports of independent expenditures, as required for corporations making campaign expenditures with their general treasury funds.

These complaints have spawned important litigation regarding many issues, including Texas campaign finance statutes, Texas lobbying statutes, the authority of the TEC and the TEC’s abuse of said authority.  These issues will be covered in more detail on this blog, but first it’s helpful to set out the background and current status of this sprawling litigation.

As to the complaints against Sullivan, the TEC held a formal hearing and issued a final decision on July 21, 2014.  The TEC issued a $10,000 civil fine against Sullivan, ruling that he failed to register as a lobbyist after directly communicating with legislators, on behalf of Empower Texans, in order to influence legislation. Sullivan appealed this decision in district court, and the proceedings are ongoing.

As to Empower Texans, the basic legal theory underlying the enforcement action was that, while Empower Texans is a 501(c)4 “social welfare” organization, it became a “political committee” under Texas law by engaging in activity regulated under Texas’s campaign finance statutes.  In an interesting and revealing twist, after a four-year investigation and multiple rounds of invasive subpoenas, the TEC suddenly dismissed the complaints against Empower Texans in October 2016.   Empower’s claims for declaratory judgment, which include constitutional challenges to the TEC’s theory as how a corporation can “morph” into a PAC, and for attorneys’ fees, remain pending. Future posts will explore how the TEC’s sudden change of heart, while welcome as the TEC finally dropped its ill-conceived enforcement, was disingenuous and self-preserving.

Sullivan Challenges the TEC finding that he violated lobbying disclosure statute

The TEC theory that Sullivan must register as a lobbyist is premised on his contact, on behalf of Empower Texans, with legislators seeking to influence legislation.  Sullivan (a former newpaper reporter) claims that Empower qualifies as a media organization and that he remains a journalist currently, and therefore is exempt under the media exception, which excepts from registration:

a person who owns, publishes, or is employed by a newspaper, any other regularly published periodical, a radio station, a television station, a wire service, or any other bona fide news medium that in the ordinary course of business disseminates news, letters to the editors, editorial or other comment, or paid advertisements that directly or indirectly oppose or promote legislation or administrative action, if the person does not engage in further or other activities that require registration under this chapter and does not represent another person in connection with influencing legislation or administrative action.

Tex. Gov’t Code 305.004(1).

After the TEC fined Sullivan on July 21, 2014 for failing to register, Sullivan sought review of  the agency’s decision in state district court under Texas Government Code § 571.133.  That statute provides for de novo review of final decisions of the Ethics Commission, which means that the court does not give any deference to the TEC’s factual or legal findings.  See Tex. Ethics Com’n v. Sullivan, No. 14-06508-16 (158th Jud. Dist., Denton Cnty.) (filed Aug. 22, 2014).

Sullivan filed the suit in Denton County.  In addition to claiming the media exemption, Sullivan argued that the TEC’s enforcement action should be dismissed under the Texas anti-SLAPP statute (the Texas Citizens’ Participation Act (TCPA), Texas Civil Practice & Remedies Code ch. 27), on the basis that the enforcement action was based on Sullivan’s exercise of his First Amendment rights, and sought attorneys’ fees under the TCPA.  The TEC hired a private investigator to collect evidence that Sullivan was not a resident of Denton County to support a motion to transfer venue to Travis County.  The TEC also argued that the TCPA was not applicable to an administrative-enforcement respondent’s appeal by trial de novo.

On February 18, 2015, Judge Steve Burgess denied the TEC’s motion to transfer venue, and granted Sullivan’s motion to dismiss under the TCPA.  However, five days after the February 18 ruling, the TEC filed a motion to recuse Judge Burgess, in part because the Judge followed Sullivan on Twitter.

The regional presiding judge granted the TEC’s motion to recuse and, on March 9, 2015, assigned Judge David Cleveland to preside in the case.  On March 11, 2015, Sullivan filed a motion for an award of attorneys’ fees based on Judge Burgess’s previous order dismissing the TEC complaints under the TCPA.  The TEC asked Judge Cleveland to reconsider the venue issue.  On March 18, 2015, Judge Cleveland granted Sullivan’s motion to dismiss but denied any court costs or attorneys’ fees, and effectively denied the TEC’s venue argument.

The TEC appealed the denial of its motion to transfer venue.  The Second Court of Appeals in Fort Worth held that the district court had erred as to venue, and ordered the case transferred to Travis County for further proceedings.  Tex. Ethics Com’n v. Sullivan, No. 02-15-00103, 2015 WL 6759306 (Tex. App.—Ft. Worth Nov. 5, 2015), pet. denied (No. 15-0917).   This case doesn’t appear in Travis County’s online docket system yet, but presumably will resume soon.  The issues Sullivan has raised are important, both as to the scope of the media exception and of the TCPA, and this case could yield important precedent.

TEC investigation of whether Empower Texans became a political committee; litigation ensues after “absurd” subpoenas

With characteristic overreach, the TEC kicked off its investigation of Empower Texans with an April 2013 subpoena demanding the “name and address of each person that made a contribution” to Empower in 2011, along with dates and amounts of contributions.  The TEC also demanded (among other things) the account number for every Empower bank account.  This initial subpoena immediately raises red flags, because the TEC doesn’t need the identities of all contributors in order to determine whether a nonprofit became a political committee under the theory advanced by the TEC.  Empower immediately objected and refused to provide the information.  Empower did provide some federal tax documents requested by the TEC, and appeared in two preliminary hearings.  Following these proceedings, the TEC recognized that “there is insufficient credible evidence of violations of laws administered and enforced by the commission,” but issued a Notice of Formal Hearing.

Empower and Sullivan participated in a Pre-Hearing Conference on February 12, 2014, and raised due process objections for the TEC’s failure to adopt procedural rules governing the upcoming formal hearing, despite being statutorily required to adopt such rules (Tex. Gov’t Code § 571.131(c)).  Ironically, that same day, TEC voted unanimously to issue new subpoenas to Empower and Sullivan, requesting documents by March 5, but providing that pre-hearing motions would not be heard until March 14 (i.e., after the deadline for compliance with the subpoenas).

These subpoenas were startlingly broad.  As to Empower, the TEC demanded, for a period of more than three years, “all written communications” sent by or on behalf of Empower Texans supporting and opposing candidates, officeholders and measures and “any” communications “regarding” Empower’s solicitation and use of political contributions and making political expenditures.  These requests are written such that they would require not only Empower’s solicitations themselves (that is, e.g., copies of emails sent to supporters seeking funds), but all drafts and internal communications related in any way to Empower’s solicitations, or even internal communications regarding their “acceptance” and “use” of “political contributions.”

Empower and Sullivan went to federal court on February 26, 2014, seeking to quash the subpoenas.  Empower asserted that the TEC’s theory—that a corporation that receives contributions and then makes “direct campaign expenditures” (independent expenditures) becomes a political committee because it is deemed to be working in concert with others (the contributors)—was being asserted for the first time and violated First Amendment rights.  Empower pointed out in its complaint that, on the same day the TEC issued the new subpoenas, it had also proposed a new rule expanding the disclosures required by nonprofits that make independent expenditures.  (Proposed Rule 20.68 would have presumed a contribution is a campaign contribution based on that contribution’s use by the recipient, irrespective of the contributor’s intent, contrary to the preexisting Election Code definition.) Empower and Sullivan alleged that “[t]he TEC is attempting to ‘out’ any source that have contacted Plaintiffs or had communications with them so that these sources may be silenced.”  Compl. para. 53.

Judge Sam Sparks held a temporary restraining order hearing and stated that the subpoenas were “absurd” and “overbroad,” but ultimately dismissed the case on abstention grounds, holding that Empower must raise its constitutional claims in the TEC enforcement proceedings before bringing them in a federal suit.  (This abstention holding is important because the court found that TEC administrative proceedings are an “adequate opportunity” for plaintiffs to present their constitutional claims.)

The TEC held a meeting on April 3, 2014 and withdrew its third-round subpoenas which a federal judge had described as “absurd” and served Empower Texans and Sullivan with a fourth round of subpoenas.  While the TEC maintains that the revised subpoenas were more narrowly drawn than the requests at issue in the federal lawsuit, in many ways they were broader and more objectionable.  These April subpoenas now defined “Empower Texans” to include “any other affiliated or subsidiary entities” (even though the complaint was filed only as to Empower), and requested many new invasive categories of information (e.g., “telephone and personnel directories”; “personnel files”; “records or evidence of incoming and outgoing telephone calls”; “accounting and bookkeeping records”; lists of recipients of Empower’s emails; and calendars and time records documenting Sullivan’s and other staff time.  [Note that Empower later pointed out that the TEC’s purpose in requesting time records later became clear, when TEC proposed a new definition of “principal purpose” (Rule 20.1(20)]).

Empower/Sullivan raised constitutional objections at the April 3 meeting, prompting TEC Counsel John Moore to advise the Commissioners that it’s not the TEC’s responsibility “to determine whether something is constitutional or not.”  See Transcript of Apr. 3, 2014 hrg.  Sullivan and Empower filed a lawsuit in Travis County district court on April 30, 2014, seeking an injunction against the subpoenas.  Tex. Ethics Com’n v. Empower Texans, Inc. and Michael Q. Sullivan, No. D-1-GN-14-001252 (53rd Dist. Ct., Travis Cnty.).  Empower and Sullivan asserted that the subpoenas should be quashed for violating First Amendment rights. They also argued the subpoenas were not supported by probable cause and thus violated the Fourth Amendment, and that the sworn complaint proceedings violated due process for lack of procedural rules.

Apparently inspired to take Empower’s objections a little more seriously now that their actions were under review in another court, the TEC discussed Empower/Sullivan’s objections in a meeting May 28, 2014, and pared back the subpoenas.  While these modifications did slightly scale back the scope of the requests, they still requested bounds of unnecessary information.  Empower and Sullivan filed renewed objections and responses with the TEC.

At this point, coincidentally, another Texas judicial decision was issued that burnished Empower’s position.  On December 19, 2014, the Third Court of Appeals in Austin released its opinion in the long-running case of Sylvester v. Texas Association of Business, 453 S.W.3d 519 (2014)Sylvester involved a similar claim that a nonprofit entity (TAB) had incurred regulation as a political committee by engaging in a limited amount of communications which losing legislative candidates argued were not merely “issue” ads but “campaign expenditures” in opposition to their respective candidacies.  Importantly, Sylvester applied a textually-sound interpretation to the political committee definition—holding that an entity can have only one “principal purpose”—and held that TAB could not be considered a political committee (even assuming, arguendo, that the ads were express advocacy) because TAB’s principal purpose was to be a trade association, not to influence elections.  Id. at 529-30.  Sylvester additionally explained that “[w]ere we to interpret ‘principal purpose’ in the definition of ‘political committee’ as suggested by appellants so that corporations making independent political expenditures morph into political committees under the Election Code…when they made the expenditures, the definition would be an affront to the First Amendment.”  Id. at 529.

Four days later, a senior TEC attorney emailed TEC legal staff and, with quite a dose of understatement, noted that Sylvestercould be used against us by those wishing to argue that a corporation cannot be a political committee.”  In fact, Sylvester stated directly that a corporation can have only one “principal purpose” for purposes of determining political committee status, directly precluding the TEC’s position that a committee can have multiple principal purposes.  It seems pretty clear that Empower’s principal purpose is to operate as a 501(c)(4) organization, with independent expenditures (and their supporting solicitations) constituting only a minor part of its overall activity.

Nonetheless, TEC staff argued in a memo on May 25, 2015, that the Commission should continue pressing its investigation and, specifically, should seek enforcement of the subpoenas in district court.

The TEC Goes on Offense

Following the staff’s recommendation, the TEC voted on June 11, 2015 to file a lawsuit against Empower/Sullivan, seeking a judicial order to enforce the subpoenas.  The suit was brought under Texas Government Code sections 571.137(c) and 2001.201.  Section 571.137(c) states that when “a person to whom a subpoena is directed” refuses to comply with the subpoena requests, the TEC must “report that fact to a district court in Travis County.” Section 2001.201 authorizes an administrative agency to file suit, in a district court in Travis County, to enforce an administrative subpoena.  The TEC filed their suit on October 5, 2015.  Tex. Ethics Com’n v. Empower Texans, Inc. and Michael Q. Sullivan, No. D-1-GN-15-004455 (345th Dist. Ct., Travis Cnty.).

In response to the TEC’s petition, Empower and Sullivan filed a counterclaim seeking declaratory judgment that a corporate entity cannot be turned into a political committee under the TEC’s “morph-into-pac” theory, and alleged that the TEC complaints were a frivolous claim by a state agency under Texas Civil Practice and Remedies Code, Chapter 105 and that TEC should be liable for Empower/Sullivan’s attorneys’ fees.  Essentially, these counterclaims advanced the same legal theories that Empower and Sullivan were simultaneously asserting in the lawsuit they filed against the TEC.

Empower/Sullivan’s Request for Injunctive Relief is Denied, but TEC Suddenly Drops Investigation

Meanwhile, the suit initially filed by Empower/Sullivan progressed.  In November 2015, Plaintiffs filed their Second Amended Petition.  Primarily, Empower/Sullivan argue that “the TEC does not have an authorized purpose [supporting its subpoenas] because there is no statute it can clearly identify EMPOWER may have broken pursuant to the complaints to authorize the issuance of a subpoena.”  “In fact,” Plaintiffs argue, apparently referring to the Sylvester holding as to principal purpose, “the law is conclusively decided against the TEC’s claim” that Empower may constitute a political committee.  Plaintiffs also sought judicial declarations restricting the definitions of “principal purpose,” “campaign expenditure,” “in connection with,” and “campaign contribution,” and declarations that Empower did not violate the Election Code based on the Keffer/Truitt allegations, and mandating that the TEC adopt certain procedural safeguards governing sworn complaints.  Plaintiffs also seek to force the TEC to pay their attorneys’ fees as a result of the TEC’s frivolous position ignoring governing caselaw. Plaintiffs argue:

[T]he Commissioners have known for one year [that] the interpretation of the Election Code they seek to apply against Empower has been directly disavowed by controlling case authority….Even with the knowledge of the controlling authority eviscerating its case, the Commissioners will not rule on the merits….Instead, they seek to harass the Plaintiffs with multiple subpoenas, hearings, and orders to obtain constitutionally privileged…documents, the result of which is to intentionally and knowingly cause an unnecessary expense of time, cost and attorneys’ fees to EMPOWER.

Second Amended Pet., para. 106.

A temporary injunction hearing was scheduled for December 21, 2015.  Four days before the hearing, the TEC once again modified its subpoenas.  This time the TEC was represented by an attorney from the Texas Attorney General’s office, and drastically reduced the scope of the requests, basically seeking only enough information as necessary to determine how much Empower received from contributors who intended to fund “independent expenditures” (as opposed to, e.g., general operations of the nonprofit, or issue ads) in response to five specific emails Empower had distributed requesting funds for that purpose.  This was now the fifth permutation of the subpoenas.

On December 29, 2015, the district court denied the request for an injunction, in an order stating that Empower/Sullivan’s pleadings were “without merit.”  The court order does not explain its reasoning.  Empower filed an interlocutory appeal.  See Empower Texans, Inc. and Michael Quinn Sullivan v. State of Texas Ethics Commission et al., No. 03–16–00019–CV (Tex. App.—Austin).

The TEC, in its appellate brief filed on June 30, 2016, stated that it would not go forth with any further proceedings related to the Keffer/Truitt complaints if Empower Texans either affirmed that there was no more responsive information, or affirmed that the total amount of funds raised from the solicitations for “independent expenditures” was less than $500.  TEC’s Brief at 2-3 (filed Jun. 30, 2016). (The “political committee” definition includes a $500 threshold.)  In a reply brief filed August 19, 2016, Empower affirmed that the total funds raised were less than $500:

Empower Texans did not request political contributions. Instead, it sent out five e-mails with a donate button, where the accompanying text read: “Our work is made possible only through the generous support of friends like you. Please consider making a monthly or one time contribution of $5, $10, or $25 to fund independent expenditure activities that promote conservative leadership in the Lone Star State.”  (E.g., RR4:DX16 at Ex. 3.) The complaints are based entirely on that statement’s appearing in five e-mails.  However, independent expenditure activities is not a defined term in the Texas Election Code and does not trigger TEC supervision or reporting obligations. Nonetheless, even if the term triggered an obligation to file reports with the TEC, the total amount of all electronic donations during the timeframe the donate button could have been used is $375 from 11 separate donations.  (RR4:DX15.) It is not possible to determine whether the e-mails’ donate button was ever used. The $375 is all electronic donations from every possible source.  If it is assumed that the donate button was used for all electronic donations, the total amount still falls below the $500 threshold that the TEC asserts applies.

After this reply, the TEC moved quickly to dismiss all remnants of the enforcement action regarding the claim that Empower Texans had become a political committee.  The TEC filed a notice of non-suit on September 6, 2016, dropping its request to enforce the subpoenas (in the 345th District Court) against Empower and Sullivan.  On October 13, 2016, the TEC dismissed the underlying Keffer/Truitt sworn complaints against Empower Texans.  A week later, on October 21, 2016, the TEC filed a plea to the jurisdiction requesting that the court dismiss certain of Empower/Sullivan’s counterclaims pending in the 345th, arguing that they were moot because the TEC had dismissed the Keffer/Truitt complaints.

The TEC also moved quickly to argue that, since it had now dismissed the underlying Keffer/Truitt complaints, the appeal in Empower Texans’ own case filed against the TEC (in the 53rd Dist. Ct.) was moot as well. The Third Court of Appeals agreed and, on November 22, 2016, dismissed Empower Texans’ appeal without ruling on any of the underlying legal issues.  Empower Texans, Inc. v. State of Tex. Ethics Com’n, No. 03-16-00019, 2016 WL 6946810 (Tex. App.—Austin Nov. 22, 2016).

Last week, the Attorney General’s office withdrew from the case, so the TEC is now represented only by Eric Nichols of Beck Redden LLP. There have been no other developments in this case since the Court of Appeals’ decision.  While the interlocutory appeal was dismissed, Empower/Sullivan’s underlying claims for relief remain pending.

TEC’s authority under the Texas Constitution: Legislative or Executive Agency?

As noted above, Empower and Sullivan have argued that the TEC’s underlying theory that Empower Texans could morph into a PAC was frivolous (based on Sylvester), and asked the courts in two separate cases to order the TEC to reimburse the attorneys’ fees incurred in defending against that theory.  Texas law allows a court to order a “state agency” to pay fees, expenses, and attorneys’ fees to an opposing party if the agency asserts a cause of action that is “frivolous, unreasonable, or without foundation.”  Tex. Civ. Prac. & Rem. Code § 105.002.  In order to be considered a “state agency” within the meaning of this provision, the agency must be “in the executive branch of state government.”  Id. § 105.001(3).

The TEC claimed that it could not be liable for attorneys’ fees and expenses because it is not an executive branch agency but is in fact a legislative branch agency.  The TEC is, in fact, established under the article of the Texas Constitution establishing the legislative branch.  Tex. Const. art. III (the “Legislative Department”), § 24a.  The TEC challenged the district court’s jurisdiction to hear several of Empower’s counterclaims, including this request for attorneys’ fees, arguing that the attorneys’ fees provision clearly did not apply since TEC is under the legislative branch.

Empower/Sullivan responded by arguing that the TEC was too cute by half: if the TEC is not an executive agency, then the TEC can have no authority to make rules, enforce laws, issue orders, or collect fines under the constitutional separation of powers.  Empower added a claim requesting that if the court found the TEC was not a “state agency,” to find that it was a legislative agency as claimed by TEC, and order that it therefore had no enforcement authority.

The district judge granted the TEC’s plea to the jurisdiction, but did not explain a rationale as to any provision dismissed.  Empower’s request for a declaratory judgment that TEC was an executive agency or, in the alternative, a legislative agency without enforcement authority, was dismissed; its request for attorneys’ fees for TEC’s allegedly frivolous theory was dismissed with prejudice.  Order Granting TEC’s Plea to the Jurisdiction (November 28, 2016), in Tex. Ethics Com’n v. Empower Texans, Inc., et al., No. D-1-GN-15-004455 (345th Jud. Dist., Travis Cnty.).

Empower/Sullivan filed an interlocutory appeal on December 19, 2016; the case is pending in the Third Court of Appeals as No. 03-16-00872-CV and all district court actions are stayed pending a decision on the interlocutory appeal.  Empower’s brief is due March 23, 2017.  Note that these same issues (raised in the plea to the jurisdiction) are still potentially live in the case Empower initiated in the 54th District Court, although it is unclear if any action will be taken there pending this appeal.

Empower Texans, “New Media,” and yesterday’s TEC hearing

One of the issues raised in yesterday’s hearing is the exemption for news media organizations from Texas’s lobbying registration statutes.  Sullivan is claiming that Empower Texans serves as a news medium as well as an advocacy arm, and that Empower Texans’ status as a “new media” organization exempts its employees (like Sullivan) from the registration requirement. There was a lot of interesting testimony on this point from Sullivan’s expert witness, who among other things pointed to the colonial pamphleteers, and the socialist and Muckraker journalists from around the turn of the century, as examples of the “old, old media,” which used journalism as a means of advocacy.

I think two of today’s mainstream media write-ups help make this point even better.  Whether you saw any of the hearing yesterday or not, I invite you to read David Rauf’s piece (SA Express-News and Houston Chronicle), and then read Chuck Lindell’s piece (Austin American-Statesman).

Rauf’s piece leaves out half the story (namely, Michael Quinn Sullivan’s half). There is nary a mention of the significant statutory and constitutional arguments raised by Joe Nixon (Sullivan’s attorney), which were a major focus of the hearing for anyone who listened.

If you compare those two pieces, one thing should be immediately clear: hard news reporters have just as much influence on public opinion–by the manner in which they cover stories–than do any of the best opinion writers or talking heads or advocacy organizations (like Empower Texans, to pick a random example).  In fact, most average voters, I would imagine, read things like the Chronicle website rather than policy or campaign pieces put out by left or right organizations.  Does that mean we should do away with the media exemption? Of course not. It means serious people should grapple with the fact that formally-disinterested hard news reporters and editors wield tremendous influence over public policy.  By determining whom to interview about a story, what questions to ask, and what angles to cover (and even what stories to cover in the first place), hard news writers–over time–undeniably shape the electorate.

This is why, in places like Russia and Venezuela right now and countless other places throughout history, autocratic governments always move to control news media (not just opinion writers). By controlling hard news reporting you control the narrative.

I was in my office in Houston, so I couldn’t attend, and the official House feed was not working. Thankfully, an outfit called Agendawise set up a live feed available for free on its website.  Agendawise is a conservative organization that you might refer to as “new media.”  Because of that feed, I was able to read and evaluate the two pieces that appeared today.

The duplicitous Texas Ethics Commission and Empower Texans

Today the Texas Ethics Commission (TEC) is scheduled to finally hold a hearing to consider its case against Empower Texans and Michael Quinn Sullivan.  David Rauf of the SA Express News has a story, though it doesn’t touch on some key points and background to put this whole sad affair into context.  I’ll fill in more of that as this overreaching investigation continues. The investigation, which was initiated by bare allegations lodged by two sitting state legislators with an assist from a registered lobbyist (and based on “information and belief,” rather than personal knowledge), focuses on two issues: (1) the allegation that Empower Texans, a 501(c)(4) organization, meets the definition of a “general purpose political committee” and therefore should be disclosing donors to the TEC; and (2) that Michael Quinn Sullivan, its director, meets the definition of “lobbyist” under Texas law and therefore should have registered, and paid an annual lobbying fee to the state, before advocating policy to the Legislature.

There is much that needs to be said about all of this, which the news media (like the TEC) is totally oblivious to. This morning, I at least thought it would be appropriate to point out the TEC’s duplicity on the issue of nonprofit disclosure.

The TEC has led a two-year-long witch hunt against the nonprofit Empower Texans, including the issuance of subpoenas for financial records, calendars, internal communications and the like, which a federal district judge described as “absurd.”  All of it aimed at determining whether Empower Texans meets the definition of “political committee,” which would require donor disclosure.

Now shift gears for a second. In a case called Catholic Leadership Coalition v. Reisman (as in David Reisman, former Exec. Dir. of the TEC), I’m representing three “general purpose political committees” in a First Amendment lawsuit challenging a Texas law (Elec. Code 253.037(a)) that requires general purpose committees to wait 60 days before spending $500 on political speech. Two of those groups have related nonprofit arms associated with them. This is common practice–a group of people want to engage in discussion, advocacy, and political action, so to comply with the law they set up a nonprofit to do what nonprofits do and a PAC to do what PACs do.  Realizing that there is no substantive argument that can sustain Texas’s two-month ban on spending by general purpose committees, the TEC decides to argue all the way through district court that my two clients with associated nonprofits should have just funded their election speech via the nonprofits, rather than having the gall to come into court to challenge Texas’s $500 speech limit. Citizens United–the TEC argues–validated the rights of independent nonprofits to spend on electioneering, so nonprofits should just do that, rather than set up a general purpose committee and complain about a two month blackout period.

We argued Catholic Leadership April 30 in the Fifth Circuit, and the TEC continued the same theme throughout its appellate briefing and even at oral argument (audio here).  (A decision could be released any day.)

Make no mistake: my clients in Catholic Leadership are not in the same category as Empower Texans.  The Catholic Leadership groups challenging the waiting period on PACs are undeniably PACs–they specifically solicit funds for express advocacy communications about candidates, which means those funds are “political contributions” and the group soliciting them is a PAC. Empower Texans does not do that.  In fact, it has a related PAC that exists for that purpose.

This situation reveals the true motivations and duplicity of the decision-makers at the TEC. Suspend your disbelief and consider the TEC’s positions in these two concurrent cases over the last two years:

  • In Empower Texans’ case, TEC pursues an aggressive investigation to determine whether a nonprofit became a political committee and violated the law by failing to register and disclose donors.  But:
  • In Catholic Leadership, TEC tries mightily to hoodwink two federal courts into believing that my clients–who have loudly proclaimed all along that they had to, and in fact did, solicit political contributions to fund their speech–should have simply spent the money through their nonprofits (which don’t disclose donors).

Where is the media to pick up on this blatant inconsistency? If my clients had taken the route the TEC has suggested in litigation, they would have found themselves in the chair next to Empower Texans today. Except that they would have deserved to be there, while Sullivan does not. Much more to come on this.

Hearing in Empower Texans case in Austin March 20

According to this article.  This is a huge case with very important implications for freedom of speech and association, specifically, the freedom to associate with like-minded persons without being subject to government demands for a list of group members or supporters.  Texas hasn’t seen the level of campaign finance or related political litigation that some other states have seen, but this is a big one that we will watch closely.

Empower Texans’ federal court complaint is available here.