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FEDERAL ELECTION COMMISSIONW A S H I N G T O N , D.C. 20463

BEFORE THE FEDERAL ELECTION COMMISSION

Nancy Pelosi for Congress an d Paul Pelosi )in his official capacity as treasurer ) MUR 6020Representative Nancy Pelosi )T he Alliance fo r Climate Protection )

STATEMENT OF REASONS OFCHAIRMAN STEVEN T. WALTHER,VICE CHAIRMAN MATTHEW S. PETERSEN,

and COMMISSIONERS CYNTHIA L. BAUERLY,CAROLINE C. HUNTER ANDDONALD F. McGAHN II

I. INTRODUCTIONThis matter was generated by a complaint filed with the Federal Election Commission("Commission'") by Judicial Watch and a sua sponte submission by the Alliance fo r ClimateProtection (the ''Alliance'*) pursuant to the Commission's Policy Regarding Self-Reporting ofCampaign Finance Violations. See 2 U.S.C. 437g(a)(l); 72 Fed. Reg. 16,695 (Apr. 5,2007).O n Apri l 30,2009, we rejected the Office of General Counsel's ("OGC") recommendation that(1 ) we find reason to believe the Respondents violated 2 U.S.C. 441b(a) by making an daccepting a prohibited in-kind corporate contribution resulting from coordinatedcommunications, and (2) that Nancy Pelosi fo r Congress, an d Paul Pelosi in his official capacity

as treasurer, violated 2 U.S.C. 434(b) by failing to report an in-kind contribution resulting fromcoordinated communications.

Even if the advertisements in issue met the payment, content, and conduct prongs of theCommission's coordinated communications regulations, under all the circumstances, theCommission determined that it would not be worthwhile to expend additional Commissionresources on this matter. Accordingly, we voted to dismiss this matter in an exercise of ourprosecutorial discretion. See Heckler v.Chaney, 470 U.S. 821, 831 (1985).

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Statement of Reasons in MUR 6020Page 2 of6

II. DISCUSSIONA. Factual SummaryT he A lliance for Climate Protection (the "Alliance") is a domestic non-profit corporationregistered in the District of Columbia and organized unde r Section 50l(c)(3) of the InternalRevenue Code (2 6 U.S.C. 50l(c)(3)). According to its sua sponte submission, in 2007, theAlliance hired the Martin A gency, an advertising agency, to produce a series of advertisementsfeaturing "unlikely pairs" of individuals appearing together "to talk about clima te change and theneed fo r action" fo r Alliance's "W e Campaign." At 2 . According to the submission, one of thepairs considered tor an advertisement included Speaker of the House Pelosi and former SpeakerGingrich, who agreed to appear together to demonstrate their mutual interest in and support o fthe goals of the "We Campaign." Id. at 6.The submission indicates that Former Vice President A l G ore, founder and Chairman ofthe Board of the Alliance, first contacted Speaker Pelosi by telephone about possibly appearingin the proposed advertising campaign on February 11,2008, and she agreed to appear at thattime. Id. at 7; Conference w ith A lliance counsel, O ct. 9,2008. O ne other "unlikely pair1* whoagreed and was selected to participate in this particular advertising camp aign was R everend P atRobertson and Reverend A l Sharpton. Id. at 2. The All iance and the Martin Agency alsodeveloped and produced o ther advertisemen ts for the "W e Campaign" durin g this tim e period.According to the A lliance, when S peaker Pelosi agreed to appear in the advertisements,no decisions ha d been made by the Alliance as to when to run any of the specific "W eCampaign'1 advertisements. Id. at 6. Documents provided by the A lliance show that the MartinAgency, acting as an agent of the A lliance, made general media buys fo r both national printmedia and national network and cable television in February 2008 before any "unlikely pairs"scripts were written or advertisements produced; the print media buys were m ade before SpeakerPelosi had been asked to participate in the "We Campaign." Id. at 3.T he television buy s were for blocks of time and the print med ia buys were for spacerather than for specific advertisements because final, and in some cases even preliminary,decisions on the specific "unlikely pairs" advertisements had not yet been made. Id. at 2-3. T heAlliance states in its sua sponte submission, and documents provided by the A lliance show, thatit purchased only national airtime and "did no t target the communications to specific states ormarkets." Id. at 6. The sua sponte submission states, "[t]he Alliance was responsible for all

decisions regarding the production, cost and placement of the ad," as well as all media buys,although its counsel later clarified that the Alliance also delegated authority to the MartinA gency, which "drove the logistics'' of and made the decisions regarding actual "ad placementand sequence" within the time slots and spaces alread y purchased. Id. at 6; Conference withA lliance counsel, Sept. 16, 2008.The Alliance states that it and the M artin A gency communicated with S peaker Pelosi'sHouse leadership office, where Drew Hammil l was the primary contact, and did not

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Statement of Reasons in MUR 6020Page 3 of6communicate with her district or political staff.1 S ua sponte submission at 9. The Alliance furtherstates that there was no discussion or consideration of politics. Speaker Pelosi's candidacy, orSpeaker Pelosi's primary election, and that the comm unications with Speaker Pelosi's"Leadership office focused solely on the tim in g of the ad, coordination with [former] SpeakerGingrich's schedule, the content of the script, and other logistical details." Id. at 6.

Between February 26 and March 17, 2008, there were a number of email and telephonecomm unications between H amm ill and Carol G ordon, a Martin A gency employee, primaril yconcerning scheduling, although an email dated February 27,2008 from the Martin Agency toHammill attached an initial script. After the M artin A gency sent scripts to Speaker Pelosi andformer Speaker G ingrich on March 24,2008, Speaker Pelosi's House leadership office staffsuggested revisions to include "more substance about the issue" that were discussed with theAlliance on March 31, 2008. Id. at 7. H amm ill stated in an email to Gordon on March 31,2008,that Speaker Pelosi "liked the first script we were shown," but that he anticipated there weresome things she would want to change. These changes were included in the script on Apri l 1,2008.2 Id. The M artin A gency forwarded the final scripts to Speaker Pelosi and former SpeakerGingrich, and they were approved on Apr i l 2 , 2008.The script for the television advertisement, which was filmed on April 3,2008, is asfollows:[Pelosi]: H i. I'm N ancy Pelosi, life lon g Democrat andSpeaker of the House.[Gingrich]: And, I 'm Newt Gingrich, lifelong Republican and Iused to be Speaker.[Pelosi]: W e don't always see eye-to-eye, do we, Newt?[G ingrich]: N o, but we do agree that our country must takeaction to address climate change.[Pelosi]: W e need cleaner forms of energy and we need themfast.[Gingrich]: If enough of us demand action from ou r leaders, wecan spark the innovation we need.[Pelosi]: Go to wecansolveit.org. Together, we can do this.T he print advertisement featured a photograph of Speaker Pelosi and former SpeakerGingrich sitting together o n a small couch in front of the United States Capitol. Speaker Pelosi isidentified under the photograph as "Speaker Nancy Pelosi (D)."

1 Hammil l is listed in the Congressional T elephone Book as an employee of the H ouse Leadership O ffice, but he hasalso been referred to as Speaker Pelo si's "spokesman" in several news articles regarding election matters. See. e.g.,Cindy Sheehan Qualifies to Challenge Pelosi, T he W ashington Post, A ug. 11,2008. at AS , availableathttp://www.washingtonpost.com/.2 T he Alliance has been unable to locate all of the drafts of the scripts show ing these revisions or provide detailedinformation as to the content of the revisions.

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Statement of Reasons in MUR 6020Page 4 of6A ccording to the Allian ce, other "W e Campaign" television advertisements, which wereproduced and "in the can" before the Pelosi/Gingrich advertisement, began running on television

in early and mid-Apri l .Id. at 5; Conference with Alliance counsel, Sept. 16.2008. T hePelosi/Gingrich advertisement was "rotated in" and broadcast from A pril 17 through A pril 30,2008 (47 days before the June 3, 2008 primary election in Speaker Pelosi's district), and was runat the same time as the Sharpton/Robertson advertisement. Suasponte submission at 8;Conference with Alliance counsel, Sept. 16 , 2008. T he Alliance states, and emailcommunications provided by the Alliance appear to confirm, that Speaker Pelosi's leadershipoffice was inform ed that the Pelosi/Gingrich television advertisement w ould begin runnin g twodays before it was first broadcast. Conferen ce with A lliance counsel, Sept. 16,2008.

A ccording to the A llianc e, it decided to run the advertisement again on M ay 6,2008, on anumber of national networks because it was a ''big night" for the Democratic primaries. Id. TheAlliance hoped the advertisement would catch the attention of "political junkies" of both partieswatching the returns and would draw people watching the returns to the "W e Campaign." Id .T he A lliance claims, however, that there was no consideration that the advertisement might drawpeople watching the returns in Speaker Pelosi's district to vote for her. Id.

The Alliance admits to paying for the media buys and production costs of the televisionadvertisement. S ua sponte submission at 2-3. D ocuments provided by the Alliance disclose thatthe Pelosi/G ingrich advertisements ultim ately constituted 12.7% of the aggregated cost of thetelevision advertisements and 6.4% of the aggregated cost of the print media advertisements incomparison to the other advertisements for this phase of the "W e Campaign," representing 9.6%of the total amount spent on television and print advertisements.Since the television advertisement was carried nationally, its broadcast area included

Speaker Pelosi's Congressional district in California, where it was broadcast within 90 days ofthe June 3,2008 Calif ornia Congressional primary election in which she was a candidate. Printversions of the advertisement ran in national magazines, including People, Scientific American,the N ew Yorker, T he Economist and Rolling Stone, whose distribution areas included SpeakerPelosi's Congressional district, between May 5 and M ay 23,2008, which was also within 90days of the primary election.

In their joint response to the complaint, Speaker Pelosi and the Committee state they"understood that the A lliance wou ld comply w ith all laws and regulations that migh t affect thecontent or placement of the ad." A t 2. Their response further states that the advertisements were"distributed nationa lly withou t targeting the Speaker's district" an d that the advertisements"placed her next to a famous Republican who was an anathema to her Democratic primaryvoters." Id. The response further states that neither Pelosi nor the Committee requested orsuggested the advertisement or "assented to its distribution in the [Speaker's Congressional]District," and that there was "no discussion of campaign plans, projects, activities or needs." Id .at 3.

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Statement of Reasons in MUR 6020Page 5 of6B. Legal AnalysisThe Federal Election Campaign Act of 1971, as amended (the "Act"), subjects

contributions and expenditures to certain restrictions, limitations, and reporting requirements.Seegenerally 2 U.S.C. 44la, 434b. Contributions can be monetary or "in-kind."In-kindcontributions include an expenditure made by any person "in cooperation, consultation, orconcert, with, or at the request or suggestion of, a candidate, his authorized political committees,or their agents/' and are subject to the same restrictions and reporting requirements as othercontributions. 2 U.S.C. 441a(a)(7)(A), (B)(i); 11C.F.R. 100.52(d)(l), 109.21(b). TheCommission's regulations at 11C.F.R. 109.21 provide that coordinated communicationsconstitute in-kind contributions from the party paying fo r such communications to the candidate,candidate's authorized committee, or political party committee which coordinates thecommunication.3

T he criteria for a coordinated communication consist of three prongs - paymentbysomeone other than the candidate or the candidate's authorized committee (or the political partycommittee, where applicable); satisfaction of one or more content standards; and satisfaction ofone or more conduct standards. A ll three prongs must be met for a communication to beconsidered coordinated.4 11C.F.R. 109.21.In this matter, even if the advertisement met the coordinated communication standards, itappears to us that under all the circumstances, further pursuit of this matter would not be aprudent use of the Commission's limited resources. Speaker Pelosi agreed to participate in theadvertisement months before her primary election, at a time when no decisions had been madeabout when or where the ads would run. The Alliance selected Speaker Pelosi and formerSpeaker Gingrich to appear in the nation-wide advertisement because it believed the two would

fit into the Alliance's humorous ad campaign featuring "unlikely pairs" allied for a commonpurpose and would further of its goal of focusing public attention on a policy issue, rather thanfor any reason pertaining to Speaker Pelosi in her role as a candidate. Accordingly, relative toother matters on our docket, we believe this matter is a low priority and voted to dismiss this

3 In Shays v. F.E.C. ("Shays //"), the U.S. District Court for the D istrict of Columbia held that the Commission'srevisions of the content and conduct standardsof the coordinatedcommunications regulation at 11C.F.R. 109.21 (c) and (d) violated the Administrative Procedure Act; however, the court did not enjoin the Commissionfrom enforcing the regulations. SOS F . Supp. 2d 10 (D.D.C. Sept. 12,2007) (granting in part and denying in part therespective parties1 motions for summary judgment). The D.C. Circuit affirmed the district court with respect to, interalia, the current standard for public communications made before the time frames specified in the standard, and therule fo r when former campaign employeesand common vendors ma y share material information with other personswho finance public communications. S ee Shays v. F.E.C. ("Shays ///"). N o. 07-5360, 2008 W L 2388661 (D.C. Cir.June 13 . 2008).4 T he Commission'sregulations at 11 C.F.R. I09.2l(g)(2) provide a safe harbor fo r charitable solicitationsthatotherwise might constitute coordinated communications. However, because Speaker Pelosi did not solicit anydonations to the A lliance in the ads in question, the safe harbor is inapplicable in this matter.

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Statement of Reasons in MUR 6020Page 6 of 6matter and close the file as a matter of prosecutorial discretion.3 S ee Heckler v. Chaney, 470U.S. 821,831(1985).

Date Steven T.WaltherChairman

5/u/Date ' Matthews, retersen

Vice Chairman

Date CynthikI/ . BauerlyCommissioner

Date Caroline C. HunterCommissioner

Donald F. McGahn IICommissioner

5 See MUR SS9S, Statement of Reasons of Chairman Michael E. Toner, Vice Chairman Robert D. Lenhard, andCommissioners David M. Mason, H ans A. von Spakovsky, Steven T. W alther, and Ellen L. W eintraub (dismissingas a matter of prosecutorial discretion a "technical violation" of the Act's electioneering com munication an ddisclaimer requirements for a gun show ad referring to the "carry/Kerry permit," where the "primary purpose andeffect of the advertisement was to encourage attendance at an upcoming gun show in Indianapolis").