This blog post was written by Foley Hoag Summer Associate, Nicholas Hanel
Does federal election law preempt state AG investigations against Political Action Committees? WinRed believes so – the GOP fundraising platform has recently filed suit in the District of Minnesota seeking declaratory relief stating that only the Federal Election Commission (FEC) has enforcement power over the organization. A favorable court decision holding that federal law preempts the AGs’ investigations here could create a serious obstacle to future state investigations.
WinRed has recently come under fire for its alleged deceptive practices involving the recurring billing of donors. The issue? Automatically pre-filled checkboxes signing up the donor for weekly or monthly recurring donations. Donors were inadvertently giving far more than they had intended.
After an article in the New York Times detailing the issue, Attorneys General from New York, Connecticut, Maryland, and Minnesota sent a letter last April to WinRed requesting information on the use of automatically recurring donations, such as which candidates had pre-filled checkboxes, as well as the resulting contributions. The basis for the state investigations was a possible violation of state consumer-protection laws.
Sensing an impending enforcement action, WinRed went to federal court. The organization wants a declaration that state consumer protection laws, as applied to online political fundraising organizations, are preempted by the Federal Election Campaign Act (FECA). WinRed is also seeking an injunction stopping any further AG investigations on this issue.
WinRed’s argument relies on the FECA’s preemption provision, which says that the FECA (and regulations by the FEC) “supersede[s] and preempt[s] any provision of State law with respect to election to Federal office.” WinRed says that this blocks any investigatory or enforcement powers of the AGs over the organization. The Attorneys General responded to WinRed’s argument by citing an FEC document stating that FEC does not believe they had the power to address the pre-filed checkbox issue under the FECA. WinRed does not directly address this FEC document in their complaint, instead pointing to numerous advisory opinions in which the FEC has asserted jurisdiction over internet based campaign contributions. WinRed argues that these advisory opinions, along with the FECA’s preemption provision, foreclose the possibility that state AGs have authority over campaign fundraising platforms.
The District of Minnesota’s future decision here could hamstring the investigative and enforcement powers of AGs nationwide. While the outcome in this case rests on a standard interpretation of the FECA, a decision favorable to WinRed may become precedent for broadening the scope of federal preemption of state AG investigations more generally. Such a decision would undoubtedly make AG investigations more vulnerable to preemption challenges.
We will continue to closely monitor this case for any further developments.