UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

)

REPRESENTATIVE CHRISTOPHER )

SHAYS AND )

REPRESENTATIVE MARTIN MEEHAN, )

)

Plaintiffs, )

)

) Civ. No. 04-1597 (EGS)

)

v. )

)

)

FEDERAL ELECTION COMMISSION, )

)

Defendant. )

__________________________ )

)

BUSH-CHENEY ‘04, INC., )

)

Plaintiff, )

)

) Civ. No. 04-1612 (EGS)

)

v. )

)

)

FEDERAL ELECTION COMMISSION, )

)

Defendant. )

_____________________________ )

MEMORANDUM OPINION

Plaintiffs, Representatives Christopher Shays and Martin

Meehan, and Bush-Cheney ‘04, filed this action pursuant to the

Administrative Procedure Act (“APA”), 5 U.S.C. § 706(2)(A),(C)-

(D), claiming that the Federal Election Commission’s (“FEC”)

failure to issue a rule governing when section 527 groups must

register as political committees is arbitrary and capricious. 
Plaintiffs ask the Court to remand the case to the FEC to

promulgate necessary and appropriate regulations defining the

term “political committee” and defining when a 527 group must

register as a political committee. 

Pending before the Court are the parties’ cross Motions for

Summary Judgment, defendant’s Motion to Strike Plaintiff’s

Exhibits and Arguments, and defendant’s Motion to Strike Amici. 

A hearing on the motion was held on December 13, 2005. 

Supplemental briefing was filed on December 19 and 23. Upon

careful consideration of the parties’ motions, the responses and

replies thereto, oral arguments, the governing statutory and case

law, and the entire record, the Court concludes that defendant

failed to consider the relevant factors and its decision does not

reflect reasoned decisionmaking. Prof’l Drivers Council v.

Bureau of Motor Carrier Safety, 706 F.2d 1216, 1220 (D.C. Cir.

1983). The Court is not persuaded, however, that the compelling

circumstances are present to require defendant to promulgate a

rule. WWHT, Inc. v. FCC, 656 F.2d 807, 818 (D.C. Cir. 1981). 

Rather, this case is remanded to the FEC either to articulate its

reasoning for its decision to proceed by case-by-case

adjudication or to promulgate a rule if necessary. Accordingly,

plaintiff's motion is GRANTED IN PART AND DENIED IN PART,

defendant’s motion is DENIED, and the case is REMANDED to the FEC

for further proceedings consistent with this Memorandum Opinion.
3

I. BACKGROUND

At issue in this case are groups registered as “527

political organizations” (“527 groups”). These groups receive

various tax exemptions from that status, but they do not register

as “political committees” under the Federal Election Campaign Act

of 1971 (“FECA”), 86 Stat. 11, as amended, 2 U.S.C. § 431 et seq.

and Buckley v. Valeo, 424 U.S. 1 (1976), thereby avoiding various

FECA requirements. Plaintiffs argue that 527 groups have emerged

as a new vehicle for raising vast amounts of soft money for the

purpose of influencing federal elections. Plaintiffs contend

that the FEC acted arbitrarily and capriciously when it decided,

after initiating rule-making, not to issue a rule addressing when

a 527 group is captured by the definition of “political

committee.” The FEC responds that after considering proposed

final rules and the public’s comments, it concluded that adopting

a rule on this issue was inadvisable and, instead, it would

evaluate the status of a 527 group on a case-by-case basis.

A. The Parties

Plaintiff Christopher Shays is a member of the United States

House of Representatives from the 4th Congressional District of

the State of Connecticut. April 27, 2005, Declaration of

Christopher Shays ¶ 1(“Shays Decl.”). Representative Shays was

first elected in 1987, re-elected in 1988, and every two years

thereafter, and next faces re-election in November of 2006. Id.
4

Plaintiff Martin Meehan is a member of the United States House of

Representatives from the 5th Congressional District of the

Commonwealth of Massachusetts. April 27, 2005 Declaration of

Martin Meehan ¶ 1 (“Meehan Decl.”). Representative Meehan

was first elected in 1992, re-elected every two years thereafter,

and next faces re-election in November of 2006. Id. Both

representatives were principal House sponsors of the Bipartisan

Campaign Reform Act (“BCRA”). First Amended Complaint (“Shays

FAC”) at ¶¶ 14-15.

Plaintiffs Shays and Meehan are both citizens of the United

States, members of Congress, candidates, voters, recipients of

campaign contributions, fundraisers, and political party members.

Shays Decl. ¶ 3; Meehan Decl. ¶ 3. In those capacities, each

plaintiff is subject to regulation under FECA, BCRA, and the

Commission’s implementing rules, and their activities are also

directly affected by the fact that others, including their

potential contributors and supporters, their potential election

opponents, contributors to and supporters of their opponents, and

contributors to and supporters of both political parties are

subject to the same regulation under FECA, BCRA, and the

Commission’s implementing rules. Id.

If any of the campaign finance laws embodied in FECA and

BCRA are subverted, eroded, or circumvented by the FEC’s

implementing regulations, including its regulation defining the
5

term “political committee,” plaintiffs Shays and Meehan believe

they will be forced once again to raise money, campaign, and

attempt to discharge their important public responsibilities in a

system that is widely perceived to be, and they believe in many

respects will be, significantly corrupted by the influence of

special- interest money. Shays Decl. ¶ 4; Meehan Decl. ¶ 4.

Plaintiff Bush-Cheney ’04, Inc. (“BC ’04”) was the principal

campaign committee of George W. Bush and Richard B. Cheney for

the 2004 general election campaign for President and Vice

President of the United States. See Def. Mot. for Sum. Jmt., Ex.

A and B. President Bush and Vice President Cheney accepted

public funding to finance their 2004 general election campaign. 

See Press Release, “FEC Certifies Public Funds For Bush-Cheney

Ticket” (Sept. 2, 2004). As a precondition for that funding,

they agreed, inter alia, to accept no contributions, limit their

expenditures, and consent to the Commission’s conducting a

detailed post-election examination and audit of BC ‘04’s

finances. See Presidential Election Campaign Fund Act (“Fund

Act”), 26 U.S.C. 9001, 9003. See also 11 C.F.R. 9002.11(a)(1),

9004.11, 9007.2(b)(3). Under the Fund Act, the Commission has

until November 2007 — a year after the November 2006 elections —

to complete the audit and notify President Bush and BC ’04 of any

repayments they must make. See 26 U.S.C. § 9007(c) (three-year

deadline). At least until that process is completed, BC ’04
6

remains a publicly financed principal campaign committee for the

2004 general election and cannot convert into a multicandidate

political committee. See 2 U.S.C. 432(e)(3); 11 C.F.R. 102.13(c)

(multicandidate committee cannot serve as a candidate’s principal

campaign committee). President Bush and Vice-President Cheney

are not parties to this litigation, nor are Mr. Bush’s other

political committees, Bush-Cheney ’04 (Primary), Inc. and BushCheney ’04 Compliance Committee. Defendant’s Statement of

Material Facts Not in Dispute (“Def. Statement”) at ¶ 9.

Defendant is an agency of the United States with exclusive

jurisdiction over the administration, interpretation, and civil

enforcement of the Federal Election Campaign Act of 1971

(“FECA”). Def. Statement at ¶ 10. The FEC is authorized to

institute investigations of possible violations of FECA, and has

exclusive jurisdiction to initiate civil actions in the United

States district courts to obtain judicial enforcement of FECA. 2

U.S.C. §§ 437 g(a)(1)-(2), 437c(b)(1), 437d(e).

B. Section 527 Political Organizations (“527 groups”)

Section 527 of the Internal Revenue Code permits income tax

exemptions for a “political organization.” 26 I.R.C. § 527 (a)

(“A political organization shall be considered an organization

exempt from income taxes for the purpose of any law which refers

to organizations exempt from income taxes.”). A political

organization is defined as a “party, committee, association,
7

fund, or other organization (whether or not incorporated)

organized and operated primarily for the purpose of directly or

indirectly accepting contributions or making expenditures, or

both, for an exempt function.” Id. at § 527 (e)(1). An “exempt

function” is “the function or influencing or attempting to

influence the selection, nomination, election, or appointment of

any individual to any Federal, State, or local public office or

office in a political organization, or the election of

Presidential or Vice Presidential electors.” Id. at § 527

(e)(2). In McConnell v. FEC, the Supreme Court construed Section

527 organizations, unlike 501(c) groups, as “organized for the

express purpose of engaging in partisan political activity.” 540

U.S. 93, 174 n.67 (2003).

C. Political Committees

As distinguished from “political organizations,” FECA and

related campaign finance laws regulate “political committees.” 2

U.S.C. § 431(4)(defining “political committee” as “any committee,

club, association, or other group of person which receives

contributions aggregating in excess of $1,000 during a calendar

year or which makes expenditures aggregating in excess of $ 1,000

during a calendar year.”). Once an organization is defined as a

political committee, it is subject to a host of regulations: it

must file a “statement of organization” with the FEC, 2 U.S.C. §

433; file periodic disclosure reports of its receipts and
8

disbursements, id. at § 434; and adhere to contribution limits,

id. at § 441a-1(a)(1)-(2). A political committee is subject to

these regulations even if it is engaged only in spending

independent from a particular political party or candidate. 11

C.F.R. § 110.1(n). 

The Supreme Court has construed “political committee” only

to “encompass organizations that are under the control of a

candidate or the major purpose of which is the nomination or

election of a candidate.” Buckley v. Valeo, 424 U.S. 1, 79

(1976) (emphasis added). A decade later, the Court held that a

group becomes a political committee when its “independent

spending become[s] so extensive that the organization’s major

purpose may be regarded as campaign activity. . . As such, it

would automatically be subject to the obligations and

restrictions applicable to those groups whose primary objective

is to influence political campaigns.” FEC v. Massachusetts

Citizens for Life, Inc., 479 U.S. 238, 262 (1986). 

The Buckley test is commonly referred to as the “major

purpose” test, and the FEC has never codified it in a regulation. 

Instead, the FEC has adopted a “case by case” approach or a

“gloss” on the regulations. In other words, the FEC includes the

test when it interprets and enforces the statute vis-a-vis

individual organizations. See, e.g., FEC v. Malenick, 310 F.

Supp. 2d 230, 234-35 (D.D.C. 2004) amended on reconsideration,
9

2005 WL 588222 (D.D.C. Mar. 7, 2005); FEC v. GOPAC, Inc., 917 F.

Supp. 851, 851-62 (D.D.C. 1996). 

Since the 1970s, Congress has not amended the definition of

“political committee” or addressed the application of FECA to

section 527 organizations. Def. Statement at ¶ 12. Presently,

at least two different bills are pending in Congress that would

amend the Act to address, for the first time, the circumstances

under which section 527 organizations are to be treated as

“political committees” under the FECA. Id. at 16. In the House

of Representatives, plaintiffs Shays and Meehan introduced H.R.

513, the “527 Reform Act of 2005,” which would amend FECA’s

definition of “political committee” to include “any applicable

527 organization,” which is defined to include a “committee,

club, association, or group of persons that . . . is an

organization described in section 527.” Id. Plaintiffs’ bill

would exempt organizations “whose election or nomination

activities relate exclusively to . . . elections where no

candidate for Federal office appears on the ballot.” See H.R.

513 (as introduced in the House on Feb. 2, 2005). An identical

bill, S. 271, was introduced in the Senate by John McCain and

Russ Feingold. See S. 271 (introduced Feb. 2, 2005). Neither of

these proposals has reached the floor of the House or Senate.

Def. Statement at ¶ 16. 
In 2001, the FEC issued an Advance Notice of Proposed Rule- 1

making seeking, inter alia, “comment on the scope and meaning of

the major purpose test” for political committees. “Definition of

Political Committee,” 66 Fed. Reg. 13,681 (Mar. 7, 2001)). Six

months later, the Commission voted to hold the rule-making in

“abeyance pending changes in legislation, future judicial

decisions, or other action.” 69 Fed. Reg. 11,736, 11,737 n.3

(March 11, 2004). The NPRM in the present proceeding stated that

“this NPRM is a separate proceeding” from the aborted 2001

rulemaking. Id.

10

D. FEC’s Rulemaking Proceeding

On March 11, 2004, the FEC published a Notice of Proposed

Rulemaking (“NPRM”), seeking public comment on a variety of

issues involving the definitions of “political committee,”

“contribution,” and “expenditure.” Political Committee Status;

Proposed Rule, 69 Fed. Reg. 11,736-60 (March 11, 2004).1

According to the NPRM, the Commission undertook the rulemaking

“to revisit the issue of whether the current definition of

‘political committee’ adequately encompasses all organizations

that should be considered political committees subject to the

limitations, prohibitions, and reporting requirements of FECA.”

Id. at 11,736. The NPRM also requested comments on possible

“tests” to determine the “major purpose” of an entity. NPRM at

11,745-49. 

The FEC received more than 100,000 comments from political

committees, political parties, non-profit organizations,

individuals, campaign finance organizations, and members of

Congress. 69 Fed. Reg. 68,056 (Nov. 23, 2005). Thirty-one
The Thomas-Toner proposal stated: 2 

For purposes of [the “major purpose” test], a

committee, club, association or group of persons that

is organized under Section 527 . . . has the nomination

or election of one or more Federal or non-Federal

candidates as its major purpose, unless it is a type of

organization described as follows:

(i) The campaign organization of an individual seeking

nomination, election, appointment or selection to

a non-Federal office;

(ii) A committee, club, association or group of persons

that is organized solely for the purpose of

promoting the nomination or election of candidates

to one or more non-Federal office;

(iii) A committee, club, association or group of

persons whose nomination or election activities

relate solely to elections where no candidate for

Federal office appears on the ballot;

(iv) A committee, club, association or group of persons

that is organized solely for the purpose of

influencing state ballot initiatives or referenda;

or

11

witnesses who had submitted written comments testified at public

hearings held on April 14 and 15, 2004. Def. Statement at ¶ 24. 

Commenters expressed a variety of viewpoints about the

definitions of “political committee” and “expenditure,” the

impact of the proposed tests on political issue advocacy, and the

necessity and practicability of a proposed rule. Id.

On August 12, 2004, the FEC considered two separate draft

Final Rules that revised the definition of “political committee.” 

Def. Statement at ¶ 34. Commissioners Thomas and Toner reintroduced their proposed standards governing when a 527

organization was required to register as a political committee 

(the “Thomas-Toner proposal”). Def. Statement at ¶ 36, FEC 2
(v) A committee, club, association or group of persons

that is organized solely for the purpose of

influencing the nomination or appointment of

individuals to one or more non-elected offices, or

the nomination, election, or selection of

individuals to leadership positions within a

political party.

FEC Agenda Document 04-75-A at 2-3.

 The Commission did adopt two other recommendations made by 3

the General Counsel that did not address the “major purpose” or

527 issues.

12

Agenda Document 04-75-A at 2-3. General Counsel had also

proposed a regulation which would have applied to all groups,

including 527 groups. Def. Statement at ¶ 35. General Counsel 3

recommended that FEC adopt final rules that would set forth a new

regulatory definition of “major purpose” as part of the

definition of “political committee” and detailed when 527 groups

needed to register. FEC Agenda Document 04-75 at 37-41. The

proposal contained a multitude of aspirations regarding the

regulation of 527 groups. General Counsel observed, “an

organization’s decision to avail itself of 527 status is

inherently indicative of its choice to engage principally in

electoral activity.” Id. at 14. The purpose of the draft rules

was to “establish practical bright lines to ensure that

organizations can predict with a high level of certainty how the

Commission will view their various activities, while still

providing for a measure of flexibility in appropriate

circumstances.” Id. at 3. 
13

The General Counsel advised the Commission “to promulgate a

‘major purpose’ rule to address certain issues regarding the

scope and application of this judicial construct,” including

“which types of campaign activity counts toward a group’s major

purpose,” and how “‘major purpose’ may be demonstrated through an

examination of the group’s fundraising and/or spending . . .

[and] a group’s public statements.” Id. at 4-5. The General

Counsel “reasoned that it is eminently fair to impute the purpose

of an organization, and therefore the purpose for which it

gathers and uses funds, from how the organization describes

itself to the public.” Id. at 7.

In the end, however, both the Thomas-Toner and General

Counsel’s proposals were rejected by a 4-2 vote. FEC Minutes,

FEC Agenda Document 04-77 (Aug. 19, 2004) at 9. The FEC

published its Explanation and Justification (“E&J”) on November

23, 2004, explaining why it took no action to re-define

“political committee.” See “Political Committee Status,

Definition of Contribution, and Allocation for Separate

Segregated Funds and Nonconnected Committees,” 69 Fed. Reg.

68,056, 68,065 (Nov. 23, 2004). The Commission reasoned:

The comments raise valid concerns that lead the

Commission to conclude that incorporating a “major

purpose” test into the definition of “political

committee” may be inadvisable. Thus, the Commission

has decided not to adopt any of the foregoing proposals

to revise the definition of “political committee.” As

a number of commenters noted, the proposed rules might

have affected hundreds or thousands of groups engaged
14

in non-profit activity in ways that were both farreaching and difficult to predict, and would have

entailed a degree of regulation that Congress did not

elect to undertake itself when it increased the

reporting obligations of 527 groups in 2000 and 2002

and when it substantially transformed campaign finance

laws through BCRA. Furthermore, no change through

regulation of the definition of “political committee”

is mandated by BCRA or the Supreme Court's decision in

McConnell. The “major purpose” test is a judicial

construct that limits the reach of the statutory

triggers in FECA for political committee status. The

Commission has been applying this construct for many

years without additional regulatory definitions, and it

will continue to do so in the future.

Id.

II. DISCUSSION

Plaintiffs argue that the FEC’s decision not to regulate 527

groups was arbitrary and capricious because first, it is selfevident that 527 groups operate as political committees, 

undermining the BCRA’s ban on soft money and, second, because the

FEC did not state a reasoned basis for its decision. Defendants

first respond that the Court has no jurisdiction because

plaintiffs do not have standing and their claims are not ripe. 

In response to plaintiffs’ challenge regarding the FEC’s

decision, the Commission argues that it made a reasoned decision

to evaluate 527 organizations on a case-by-case basis and that

its decision is entitled to deference. 
15

A. Standard of Review

1. Summary Judgment

Pursuant to Federal Rule of Civil Procedure 56, summary

judgment should be granted only if the moving party has shown

that there are no genuine issues of material fact and that the

moving party is entitled to judgment as a matter of law. See

Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 325

(1986); Waterhouse v. District of Columbia, 298 F.3d 989, 991

(D.C. Cir. 2002). In determining whether a genuine issue of

material fact exists, the court must view all facts in the light

most favorable to the non-moving party. See Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The

non-moving party’s opposition, however, must consist of more than

mere unsupported allegations or denials and must be supported by

affidavits or other competent evidence setting forth specific

facts showing that there is a genuine issue for trial. Fed. R.

Civ. P. 56(e); see Celotex Corp., 477 U.S. at 324.

Likewise, in ruling on cross-motions for summary judgment,

the court shall grant summary judgment only if one of the moving

parties is entitled to judgment as a matter of law upon material

facts that are not genuinely disputed. See Rhoads v. McFerran,

517 F.2d 66, 67 (2d Cir. 1975). The parties in this case agree

that there is no genuine issue of material fact in dispute and,

therefore, that it can be resolved by summary judgment.
16

 2. Arbitrary and Capricious Review

When reviewing agency action pursuant to the APA, the Court

must determine whether the challenged decision is “arbitrary,

capricious, an abuse of discretion, or otherwise not in

accordance with law.” 5 U.S.C. § 706(2)(A); NLRB v. Bell

Aerospace Co., 416 U.S. 267, 294 (1974) (holding that an agency’s

decision to choose either rule-making or case-by-case

adjudication is subject to reversal only if the agency committed

an “abuse of discretion or a violation of [law].”). In applying

the “arbitrary and capricious” standard, a court “may not supply

a reasoned basis for the agency's action that the agency itself

has not given,” Motor Vehicle Mfrs Ass’n v. State Farm Mut. Auto

Ins. Co., 463 U.S. 29, 43 (1983), but a court should “uphold a

decision of less than ideal clarity if the agency's path may

reasonably be discerned.” Id. (quoting Bowman Transp. Inc. v.

Arkansas-Best Freight System Inc., 419 U.S. 281, 286 (1974).

Upon review of an agency's action, the Court must engage in

a "thorough, probing, in-depth review" to determine "whether the

decision was based on a consideration of the relevant factors and

whether there has been a clear error of judgment." Citizens to

Preserve Overton Park v. Volpe, 401 U.S. 402, 415-16 (1971). 

While the Court's inquiry must be "searching and careful," the

standard of review is also a highly deferential one; the agency's

actions are "entitled to a presumption of regularity," and the
At oral argument, the parties agreed that no lesser 4

standard of deference is appropriate in this case. Motions Hr’g

Tr. at 19, Dec. 13, 2005 (“Tr. 12/13/05").

17

Court cannot "substitute its judgment for that of the agency."4

Id. at 415-16. 

Courts in this Circuit have repeatedly recognized that

summary judgment is an appropriate procedure when a court reviews

an agency's administrative record. See, e.g., Bloch v. Powell,

227 F. Supp. 2d 25, 30-31 (D.D.C. 2002) (citing Fund for Animals

v. Babbitt, 903 F. Supp. 96, 105 (D.D.C. 1995)).

 B. Standing

To satisfy the case or controversy requirement under Article

III, a plaintiff must show (1) that it has suffered a concrete

and particularized injury that is actual or imminent not merely

conjectural or hypothetical; (2) that the injury is fairly

traceable to the challenged action of the defendant; and (3) that

injury is fairly redressable by a decision of this Court. See,

e.g., Friends of the Earth v. Laidlaw Environmental Services, 528

U.S. 167, 180-81 (1992); Lujan v. Defenders of Wildlife, 504 U.S.

555, 560-61 (1992). 

1. Shays and Meehan

Defendants argue that Shays and Meehan cannot demonstrate a

concrete and particularized injury traceable to the FEC’s

rulemaking and decision to proceed on a case-by-case basis.
18

In Shays I, the D.C. Circuit found that plaintiffs Shays and

Meehan had standing to challenge FEC’s regulations implementing

BCRA. Shays and Meehan v. FEC, 414 F.3d 76, 83-95 (D.C. Cir.

2005)(hereinafter “Shays I”). The Circuit held that Shays and

Meehan’s injury was to their competitive interests in contests

untainted by BCRA-banned practices. Id. “[W]hen regulations

illegally structure a competitive environment – whether an agency

proceeding, a market, or a reelection race – parties defending

concrete interests (e.g. retention of elected office) in that

environment suffer legal harm under Article III.” Id. at 87. In

the present case, defendant has not provided the Court with any

reason to depart from the Circuit’s clear statement that

“retention of an elected office” is a concrete interest. 

Therefore, for substantially the reasons detailed by the Shays I

court, the Court finds that plaintiffs have satisfied the first

element of the standing requirements.

Defendants distinguish Shays I on the second element,

however, arguing that plaintiffs in this case face no risk that

an adverse party will cause harm through exploitation of a “safe

harbor” created by any “challenged rule.” Plaintiffs do

challenge, however, “safe harbors” created by a failure to issue

a rule. Standing can be found if agency inaction causes

plaintiffs cognizable harm. See Capital Legal Found. v.

Commodity Credit Corp., 711 F.2d 253, 258 (D.C. Cir. 1983)
19

(“Injury in fact, caused by the substance of an agency’s action

or inaction, is an essential element of a plaintiff’s

complaint.”); Univ. Med. Ctr. of S. Nevada v. Shalala, 5 F. Supp.

2d 4, 7-8 (D.D.C. 1998) (“As a general rule, [w]hen government

action or inaction is challenged by a party who is a target or

object of that action . . . . there is ordinarily little question

that the action or inaction has caused him injury, and that a

judgment preventing or requiring the action will redress

it.”)(internal quotation marks omitted)(alterations in

original)). In this case, plaintiffs argue that the FEC’s

failure to issue a rule created a “loophole” or safe harbor,

permitting 527 organizations to raise and spend soft money in

ways that will impact plaintiffs reelection campaigns. This is

sufficient to demonstrate causation for standing purposes. 

2. Bush-Cheney ‘04 (“BC ‘04")

The FEC also challenges the standing of BC ‘04, arguing that

because BC ‘04 filed its claim with only seven weeks before the

November 2004 election, no action by the Court could have

redressed BC ‘04's alleged harm before the end of the election. 

The FEC argues that the doctrine of “capable of repetition yet

evading review,” as applied in Johnson v. FCC, 829 F.2d 157 (D.C.

Cir. 1987), is inapplicable in this case because that doctrine

relates only to mootness claims. Here, the FEC does not argue

that BC ‘04's claims are moot, but rather at the time that the

action was filed, no Court was capable of redressing any wrong.
20

Just because defendants have uttered the word

“redressibility” instead of “mootness,” however, does not change

the fact that defendants are raising, at heart, a mootness

challenge. The redressibilty requirement assures that the

parties have brought their claims to the appropriate forum. 

Florida Audubon Soc. v. Bensten, 94 F.3d 658, 663 (D.C. Cir.

1996). In contrast, defendants in this case raise what is

essentially a timing issue: there was not enough time to remedy

BC ‘04's in the seven weeks between when the case was filed and

the end of the election. This is a mootness challenge because

the end of the election would also mark the end of the

justiciable controversy. Therefore, the appropriate analysis is

whether the doctrine of “capable of repetition yet evading

review” applies to BC ‘04.

The Circuit applied this doctrine under virtually identical

circumstances in Johnson v. FCC, 829 F.2d 157 (D.C. Cir. 1987). 

In Johnson, the Circuit held that “[e]ven though the 1984

election is now over,” a former third-party presidential

candidate could challenge the rules governing presidential

debates because, “[t]he issues properly presented, and their

effects on minor-party candidacies, will persist in future

elections, and within a time frame too short to allow resolution

through litigation.” Johnson, 829 F.2d at 159 n.7. The Circuit

did not require the candidate herself to show she could be

injured in the future; rather, plaintiff had standing based on
21

“the effects on minority party candidacies.” Id. 

Defendant insists that subsequent case law requires

plaintiffs to show “there was a reasonable expectation that the

same complaining party would be subjected to the same action

again.” Pharmachemie B.V. v. Barr Labs., Inc., 276 F.3d 627, 633

(D.C. Cir. 2002)(emphasis in original). This Circuit, however,

has not overruled Johnson. Given the unique circumstances of

election law, the Court is not persuaded that it should abandon

unquestioned and binding precedent in order to follow a case

factually dissimilar to the case at bar. The Court concludes,

therefore, that BC ‘04 has satisfied the requirements for Article

III standing. 

C. Ripeness

To determine whether an administrative action is ripe for

review, courts must “evaluate (1) the fitness of the issues for

judicial decision and (2) the hardship to the parties of

withholding court consideration.” National Park Hospitality

Ass’n v. Department of Interior, 538 U.S. 803, 808 (2003)

(citation omitted). Under the first prong, the Court must

evaluate “whether the issue is purely legal, whether

consideration of the issue would benefit from a more concrete

setting, and whether the agency’s action is sufficiently final. .

. .” National Ass’n of Home Builders v. U.S. Army Corp. of

Engineers, No. 04-5221-04-5224 at *8 (D.C. Cir. Feb. 3, 2006)
22

(internal quotations omitted). Under the second, the Court must

consider “not whether [the parties] parties have suffered any

‘direct hardship,’ but rather whether postponing judicial review

would impose an undue burden on them or would benefit the court.” 

Id. (internal quotations omitted) (emphasis in original).

The FEC argues that the issue of whether it will apply

permissible criteria in enforcing FECA is unfit for judicial

review unless and until at least one plaintiff files an

administrative complaint. The issue in this case, however, is

not whether the FEC will apply permissible criteria in an

individual case, but whether FEC’s decision to evaluate

compliance with FECA through rulemaking or adjudication was

arbitrary and capricious. Regardless of the concrete

circumstances, plaintiffs challenge the FEC’s very approach to

regulating 527 groups as unlawful. As such, the ripeness

doctrine is inapplicable; plaintiffs’ claim “rests not on the

assumption that the agency will exercise its discretion

unlawfully in applying the regulation but on whether its faithful

application would carry the agency beyond its statutory mandate.” 

Id. at *10 (internal quotations omitted).

The FEC also maintains that plaintiffs have not demonstrated

that they would suffer hardship if the Court does not rule on the

merits. Only if the Court has doubts about the fitness of the

issue for judicial resolution, however, must the Court balance

the institutional interests in postponing review against the
See Definition of Political Committee, 66 Fed. Reg. at 5

13,686 n.8 (“the number of 527 organizations is thought to have

increased substantially, with a concomitant increase in their

spending on federal elections”); id. (“Concern remains that

Commission action is needed to clarify when an organization

becomes a political committee under the FEC . . . The Commission

is seeking comment as to how this rule-making should address 527

organizations and organizations that are not yet organized under

26 U.S.C. 527”). 

23

hardship to the parties that will result from delay. Id. at *10-

11. In this case, plaintiffs’ challenge is of a sort routinely

brought and adjudicated before the Court, and the Court has no

concern about the fitness of this issue for resolution. 

D. The FEC failed to articulate a reasoned basis for its

decision to regulate 527 groups through case-by-case

adjudication

 

1. FEC’s decision

Plaintiffs first argue that FEC has not enforced the “major

purpose” test either by rulemaking or by case-by-case

adjudication. FEC’s thirty year “case-by-case” adjudication

policy, plaintiffs contend, has in reality been a policy of

failing to regulate 527 groups at all. Plaintiffs first point to

the FEC’s actions in 2001, when defendant initiated and conducted

a rule-making. Defendants sought comments on, among other

things, “the scope and meaning of the ‘major purpose’ test for

political committees.” Definition of Political Committee, 66

Fed. Reg. 13,681, 13,682 (Mar. 7, 2001). Despite the concerns5

that prompted the Commission to begin the 2001 process, FEC

decided to hold the rule-making in abeyance. Plaintiffs then

point to the second, “expedited” rule-making begun in early 2004,
24

which they argue also amounted to nothing. In addition,

plaintiffs maintain, many complaints filed against 527

organizations have been pending before FEC for over a year, and

that it has failed to rule on any complaints arising from the

2004 campaign. According to plaintiffs, therefore, the FEC’s

track record indicates that the FEC has long known case-by-case

adjudication was ineffective but has done nothing about it.

The FEC counters that its case-by-case adjudication process

is a meaningful one. It argues that rather than “doing nothing”

after initiating rulemaking in 2004, it made an affirmative

decision to continue to adjudicate 527 groups on a case-by-case

basis. Its decision not to adopt a final rule was the result of

reviewing the entire record and deciding that a final rule was

not a wise course, and it contends that this decision is well

within its discretion. The FEC emphasizes that it did not

conclude that 527 groups are not regulated by FECA. Rather, the

FEC decided to evaluate which 527 groups are required to register

in the concrete setting of the actual activities and

circumstances of each group brought into question, rather than

promulgating in the abstract a rule of general application. In

further response to plaintiffs’ claim that it has “done nothing,”

the FEC points to various regulatory steps it has taken,

including the adjudication of several cases in which it applied

FECA’s “political committee” provision to a 527 group. 

The Court finds that, although vague, the FEC did articulate
Judge Friendly noted that the Chenery II court, while 6

upholding the Commission’s decision to issue an individual order,

gave the “rather pointed hint” that rule-making is preferable to

adjudication. “Since an administrative agency has the ability to

make new law prospectively through the exercise of its rule25

a decision in its E & J to proceed on a case-by-case basis. The

FEC stated that it “decided not to adopt any of the foregoing

proposals to revise the definition of ‘political committee.’” 69

Fed. Reg. at 68,065. This can reasonably be construed as a

decision not to issue a general rule. The FEC also stated that

it “has been applying [the major purpose test] for many years

without additional regulatory definitions, and it will continue

to do so in the future.” Id. The Court understands this to mean

that FEC chose to continue to conduct determinations of whether a

527 group is a “political committee” via case-by-case

applications of the major purpose test.

2. FEC’s explanation of its decision

Having found that the FEC did articulate a decision to

determine the status of 527 groups through adjudication rather

than rulemaking, the Court next turns to whether FEC provided a

reasoned basis for that decision.

The decision of whether to proceed through case-by-case

adjudication or by general rule-making lies largely within the

agency’s discretion. SEC v. Chenery Corp., 332 U.S. 194, 203

(1947) (“Chenery II”) (“the choice made between proceeding by

general rule or by individual, ad hoc litigation is one that lies

primarily in the informed discretion of the agency) ; National 6
making powers, it has less reason (than a court) to rely upon ad

hoc adjudication to formulate new standards of conduct . . .The

function of filling in the interstices of the [Holding Company

Act] should be performed, as much as possible, through quasilegislative promulgation or rules to be applied in the future.”

NLRB v. Majestic Weaving Co., 355 F.2d 854, 860 (2d Cir. 1966)

(quoting SEC v. Chenery Corp., 332 U.S. at 202). 

26

Small Shipments Traffic Conference, Inc. v. I.C.C., 725 F.2d

1442, 1447 (D.C. Cir. 1984). 

It is possible, however, that an agency’s reliance on

adjudication can amount to an abuse of discretion. NLRB v. Bell

Aerospace Co., 416 U.S. 267, 294 (1974). In Trans-Pac. Freight

Conference of Japan/Korea v. Fed. Mar. Comm’n, the court noted:

Rule-making is an essential component of the administrative

process and indeed is often the preferred procedure for the

evolution of agency policies. Rule-making permits more

precise definition of statutory standards than would

otherwise arise through protracted, piecemeal litigation of

particular issues. It allows all those who may be affected

by a rule an opportunity to participate in the deliberative

process, while adjudicatory proceedings normally afford no

such protection to nonparties. And because rule-making is

prospective in operation and general in scope, rather than

retroactive and condemnatory in effect, interested parties

are given advance notice of the standards to which they will

be expected to conform in the future, and uniformity of

result is achieved. 

Trans-Pac. Freight Conference of Japan/Korea v. Fed. Mar. Comm’n,

650 F.2d 1235, 1244-45 (D.C. Cir. 1980). Notwithstanding these

words of caution against adjudication, however, courts are

generally reluctant to second-guess an agency’s decision. 

Plaintiffs argue that in this case, FEC’s choice, in and of

itself, to rely on adjudication instead of rulemaking was an

abuse of discretion. Plaintiffs principally rely on two cases in
27

support of their argument. Plaintiff’ Supplemental Brief at 5-8

(Dec. 23, 2005)(citing Am. Horse Protection Ass’n v. Lyng, 812

F.2d 1 (D.C. Cir. 1987); Curry v. Block, 738 F.2d 1556 (11th Cir.

1984)). Those cases, however, are inapposite. In those cases,

the Agencies’ discretion had already been significantly limited

by a direct statutory mandate from Congress to remedy a specific

and urgent problem. In contrast, the BCRA in the present case

contains no similar mandate regarding the regulation of 527

organizations. 

In Lyng, the D.C. Circuit held that the U.S. Department of

Agriculture (“USDA”) abused its discretion when it denied a

petition to initiate a rulemaking and refused to revise its

regulations regarding “soring” practices for show horses, a

practice banned by the Horse Protection Act. Am. Horse

Protection Ass’n v. Lyng, 812 F.2d at 6-7. The Lyng court found

that the Act “was clearly designed to end soring” and that

remarks by the Secretary of Agriculture “strongly suggest[] that

he has been blind to the nature of his mandate from Congress.” 

Id. at 7. 

In Curry v. Block, the Eleventh Circuit held that the

Consolidated Farm and Rural Development Act (“CFRA”) imposed a

mandatory duty on the Secretary of Agriculture to implement,

through rulemaking, certain loan servicing and foreclosure

avoidance mechanisms. Curry, 738 F.2d at 1562-64. The Eleventh
28

Circuit reasoned that, “the urgent need Congress perceived for

deferral relief to farmers . . .render it a bit late to begin the

accumulation of decisional guides.” Id. at 1563 (citing Matzke

v. Block, 732 F.2d 799, 802 (10th Cir. 1984)(internal quotations

omitted)).

Plaintiffs in this case lack the statutory mandate

identified by the courts in the Horse Protection Act and the

CFRA. Unlike the Horse Protection Act, which specifically banned

soring practices, and the CFRA, which specifically created a

deferral relief program, the BCRA does not contain similar

requirements regarding 527 organizations. Rather, plaintiffs

raise the more general challenge that 527 groups are

circumventing BCRA’s “overarching purpose . . . to close softmoney loopholes.” Plaintiffs’ Mot. For Sum. Jmt. at 40 (Apr. 28,

2005). The discretion of the Agencies in Curry and Lyng was

circumscribed by clear mandates in the Acts to address and

implement discreet policies. Here, in contrast, the BCRA places

no such parameters on the Agencies treatment of 527 groups. 

Therefore, the Court is not persuaded that the Agency’s decision

to pursue adjudication over rulemaking is, per se, an abuse of

discretion.

The case of Common Cause v. FEC, 692 F. Supp. 1391 (D.D.C.

1987), relied upon by both parties, further illustrates that a

statutory mandate is a crucial component to a finding that an

agency’s reliance on adjudication was arbitrary and capricious. 
29

In Common Cause, plaintiffs raised two distinct challenges. 

First, they argued that FEC’s interpretations of sections of FECA

pertaining to “soft money” were contrary to law. Id. at 1393.

Second, plaintiffs maintained that the FEC’s denial of

plaintiffs’ rulemaking petition based on insufficiency of

supporting evidence was arbitrary and capricious because the

Commission had ample evidence to justify a rulemaking. Id. at

1394. On the first challenge, the Court agreed with the

plaintiffs, holding that “the agency interpret[ed] its statute in

a way that flatly contradicts Congress’ express purpose.” Id. at

1396. In its arbitrary and capricious review, however, the Court

held that FEC’s decision not to initiate rule-making did not

constitute the “exceptional situation of egregious error”

required to find the FEC’s action arbitrary and capricious. Id.

at 1397. Thus, the Court remanded the matter to FEC to

reconsider its petition for rulemaking.

Here, plaintiffs have only raised the equivalent to the

Common Cause plaintiffs’ second claim. Plaintiffs in this case

do not challenge FEC’s interpretation of FECA or BCRA. Rather,

their sole challenge is on the grounds that there is sufficient

evidence on the record to require a rulemaking and, therefore,

that FEC’s failure to promulgate a rule is arbitrary and

capricious. This claim was rejected by the Common Cause court,

and the Court is not persuaded that the circumstances of this
30

case present the “exceptional situation” required to reach a

different conclusion here. Id.

The Court is troubled, however, by FEC’s lack of explanation

for its conclusion that adjudication is preferable to rulemaking

for regulating 527 groups. Despite the aid of thirty-one

witnesses and 100,000 comments, the single paragraph that

comprises the FEC’s reasoning meekly notes what appear to be only

three reasons that rulemaking “may be inadvisable”: (1) “the

proposed rules might have affected hundreds or thousands of

groups engaged in non-profit activity in ways that were both far

reaching and difficult to predict”; (2) the regulations “would

have entailed a degree of regulation that Congress did not elect

to undertake itself when it increased the reporting obligations

of 527 groups in 2000 and 2002 and when it substantially

transformed campaign finance laws through BCRA”; and (3) “no

change through regulation or definition of ‘political committee’

is mandated by BCRA or the Supreme Court’s decision in

McConnell.” 69 Fed. Reg. at 68,065.

These “reasons,” while perhaps sufficient to summarize the

complexities of rulemaking, do not explain why adjudication

avoids these or additional complexities. Indeed, the only

conclusion that can be drawn from this reasoning is that the

regulation of 527 groups is complicated. The Court does not

disagree with that conclusion. What the E & J fails to explain,

however, is how the problem becomes any less complicated or any
31

more manageable if the FEC pursues case-by-case adjudication. 

The E & J does not, for instance, discuss whether First

Amendment or due process concerns might impair its ability to

bring enforcement actions against 527 groups in the absence of a

regulation providing clear guidance as to when those groups must

register as a political committee. In fact, FECA provides a

defense to “any person” who relies in “good faith” on FEC rules.

2 U.S.C. § 438(e). The FEC also did not discuss whether, or why,

case-by-case adjudication would be more effective than a rule at

preventing the flow of soft money into federal campaigns. 

Indeed, judging from FEC’s track record in the 2004 election,

case-by-case adjudication appears to have been a total failure. 

The FEC also did not explain how piecemeal adjudication

could be executed on a sufficiently timely basis to be effective. 

The FEC’s track record indicates the opposite is true. Cases

arising from the 2004 campaign have languished on the

Commission’s enforcement docket for as long as 23 months, with no

end in sight, even as the 2006 election campaign has begun. 

Indeed, the Commission itself emphasizes that it has no legal

obligation to bring a case to the close in an election cycle. 

See FEC Supp. Br. at 3 n.2. This merely demonstrates the patent

inadequacy of the case-by-case approach. The FEC can take years

to complete an administrative action, and penalties, if they come

at all, come long after the money has been spent and the election

decided.
32

Nor did the Commission discussed whether the adjudication of

individual cases that are resolved on particular facts and legal

theories would be effective as a means to provide guidance to 527

groups generally. For instance, the Club for Growth complaint

recently filed by the Commission seeks to require one 527 group

to register as a political committee. Yet the Commission’s

complaint is based entirely on facts specific to the activities

and statements of that one group, and depends in no way on the

group’s status as a “political organization” under section 527.

Even if the Commission wins the case, it would likely have no

bearing on any other group registered under section 527.

In short, the Commission asks the Court to defer to its

decision to proceed by adjudication yet fails to explain why the

Court should do so. The Commission’s only response is that FEC

authorizes the agency to decide matters by enforcement actions

(or decide advisory opinions) on a case-by-case basis. FEC Supp.

Br. at 8-9. This truism is beside the point: so too, the FECA

authorizes the Commission to promulgate rules. See 2 U.S.C. §

437d(a)(8). The question, therefore is not whether the

Commission has statutory authority to bring enforcement actions,

but whether it acted rationally here by refusing to promulgate a

rule in favor of its purported preference for piecemeal

adjudications to enforce the FECA and BCRA prohibitions on the

spending of soft money in federal elections. The Commission’s

failure to provide a reasoned explanation is simply fatal here
33

under hornbook administrative law. E.g., Chamber of Commerce v.

FEC, 69 F.3d 600, 606 (D.C. Cir. 1995) (finding arbitrary and

capricious a final rule which provided “no explanation” for

“differential treatment” of union members and farm cooperatives);

Williams Natural Gas, 872 F.2d at 450 (remanding where agency

failed to offer a satisfactory explanation for termination of

rulemaking proceeding); Am. Wildlands v. Norton, 193 F. Supp. 2d

244, 251 (D.D.C. 2002) (remanding where the agency “entirely

failed to consider an important aspect of the problem”) (internal

quotation omitted).

E. The circumstances are not sufficiently compelling for this

Court to require the FEC to promulgate a rule

Plaintiffs seek an order directing the FEC to promulgate a

rule defining the term “political committee” and when a 527 group

must register as a political committee. This remedy, however, is

reserved for “only the rarest and most compelling of

circumstances.” See American Horse Protection Association v.

Lyng, 812 F.2d 1, 7 (D.C. Cir. 1987) (quoting WWHT, 656 F.2d at

818). Such circumstances are not present here. Rather, the more

appropriate remedy is to remand the case to the agency to explain

its decision or institute a new rulemaking. Id. 

IV. CONCLUSION

For the foregoing reasons, the Court concludes that the FEC

has failed to present a reasoned explanation for its decision

that 527 organizations will be more effectively regulated through
34

case-by-case adjudication rather than general rule. Therefore,

plaintiffs’ Motion for Summary Judgment is GRANTED IN PART AND

DENIED IN PART, defendant’s motion is DENIED, and the case is

REMANDED to the FEC for further proceedings consistent with this

Memorandum Opinion. An appropriate Order accompanies this

Memorandum Opinion.

Signed: Emmet G. Sullivan

United States District Judge

March 29, 2006