Four Democratic state attorneys general are investigating the online fundraising practices of WinRed, a Republican-affiliated political action committee (PAC), and ActBlue, a Democratic-affiliated PAC. WinRed recently punched back by filing a declaratory judgment action, asserting that federal campaign finance laws preempt the state attorneys general’s investigation. This article outlines WinRed’s response and discusses how this investigation provides another example of state attorneys general expanding their inquiries to national matters already regulated by the federal government.
A Test Case for the Preemption Argument: WinRed and ActBlue
In April 2021, New York Attorney General Letitia James led attorneys general from Connecticut, Maryland, and Minnesota in consumer protection and deceptive trade practice inquiries of WinRed’s and ActBlue’s online fundraising activities, which allegedly automatically enrolled donors in recurring — rather than one-time — donations. In response, WinRed sought a declaratory judgment, holding that under the Supremacy Clause of the Constitution, these investigations are preempted by federal law (the Federal Election Campaign Act) because WinRed is a federally registered PAC. WinRed explains that “by enacting FECA, Congress set out ‘to make certain that Federal law is construed to occupy the field with respect to elections to federal office and that the Federal law will be the sole authority under which such elections will be regulated.'”
WinRed argues that express, implied, and conflict preemption all exist. First, it claims that express preemption applies because FECA preempts any provision of state law involving election to federal office. Second, it argues that implied preemption applies because FECA and the FEC were intended to “occupy the field” in which WinRed operates since the FECA has thoroughly regulated federal campaign fundraising via disclosures and warnings on political advertisements, recurring payments, credit card payments, and payments made over the internet. Finally, it asserts conflict preemption applies because the FEC has expressly approved recurring payment arrangements, and it also stated that state law cannot mandate warnings and disclosures on political advertisements beyond that required by FECA and the FEC.
Broader Implications of Preemption Arguments
The WinRed and ActBlue investigations reflect a trend toward state attorneys general reaching beyond their state’s borders where — as the attorneys general see it — the federal government has neglected its enforcement obligations. For example, in the last few years, states have brought enforcement actions where federal agencies are the primary regulator of an industry, including related to COVID-19 working conditions (OSHA), medicinal disclosures (FDA), and failure to provide notice of vehicle defects (NHTSA).
One potential weakness for this approach, however, is that state attorneys general may seek to regulate a company or an industry in a manner inconsistent with federal directives. This provides an opportunity for others to follow WinRed’s and ActBlue’s lead and argue that federal preemption prevents the state investigations. Where federal law does in fact preempt state consumer protection laws, companies have a powerful tool to combat increased state enforcement.
According to the National Association of Attorneys General (NAAG), “One of the most important issues state attorney general offices litigate is whether federal law preempts particular state laws and enforcement actions.” These cases can raise difficult questions, including:
- What is the scope of an express preemption provision?
- Is it really impossible to comply with both federal and state law?
- What do the federal and state laws substantively mean?
- What were Congress’ objectives in enacting the federal law?
- Does the state law burden the federal objectives and, if so, to what extent?
- Did Congress have any preemptive intent?
Is the obstacle the state law imposes on federal objectives significant enough to warrant preempting the state law?
We expect state attorneys general to continue scrutinizing business practices even if a federal regulatory regime exists. Stay tuned as we continue to monitor state attorneys general investigations and litigations (including the WinRed/Act Blue matter) that bear on state attorneys general enforcement authority.
 Compl. for Declaratory Relief, WinRed, Inc. v. Ellison et al., No. 0:21-cv-01575 (D. Minn. July 7, 2021).
 U.S. Const. art. VI., § 2.
 52 U.S.C. §§ 30101 et seq. (FECA).
 H.R. Rep. No. 1239, 93d Cong., 2d Sess. 10-11 (1974), reprinted in Legislative History of the Federal Election Campaign Act Amendments of 1974, 644-45 (1977).
 Citing 52 U.S.C.§ 30143(a).
 See https://www.naag.org/issues/supreme-court/preemption/.
*Abby Hylton is a 2021 summer associate with Troutman Pepper and not licensed to practice law in any jurisdiction.