UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA 

CHRIS VAN HOLLEN, 

 Plaintiff, 

 v. 

FEDERAL ELECTION COMMISSION, 

 Defendant. 

Civil Action No. 1:11-cv-00766 (ABJ) 

REPLY TO DEFENDANT FEC’S OPPOSITION TO 

PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 

AND OPPOSITION TO 

DEFENDANT FEC’S CROSS-MOTION FOR SUMMARY JUDGMENT

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TABLE OF CONTENTS 

ARGUMENT...................................................................................................................................1 

I. UNDER SETTLED PRINCIPLES OF ADMINISTRATIVE LAW, THE FEC CANNOT NOW 

INVOKE THE ARGUMENT THAT BCRA’S TERM “CONTRIBUTOR” IS AMBIGUOUS,

BECAUSE THE FEC DID NOT RELY ON THAT PROPOSITION WHEN IT 

PROMULGATED THE CHALLENGED REGULATION .................................................................1 

II. EVEN ASSUMING THE FEC CAN NOW RELY ON ITS AMBIGUITY ARGUMENT, THE 

FEC ERRS IN CONTENDING THAT THE COURT CANNOT AND SHOULD NOT 

RESOLVE PLAINTIFF’S CHALLENGE TO THE REGULATION IN QUESTION AT 

CHEVRON STEP ONE .............................................................................................................2 

A. A Disposition Pursuant To Chevron Step One Is Appropriate And 

Required Because BCRA Speaks Clearly To The Precise Question At 

Issue .........................................................................................................................2

B. The Term “Contributor” Is Not Ambiguous, And The Challenged 

Regulation Is Inconsistent With Its Plain Meaning .................................................7 

III. EVEN ASSUMING THE FEC CAN NOW RELY ON ITS AMBIGUITY ARGUMENT, THE 

CHALLENGED REGULATION ALSO FAILS AT CHEVRON STEP TWO AND IS 

ARBITRARY AND CAPRICIOUS ............................................................................................10 

A. A Regulation That Implements Only Half Of BCRA’s Requirements Is 

Not Reasonable ......................................................................................................10 

B. The FEC’s Burden Rationale Is Arbitrary And Capricious...................................11 

C. Subsequent Legislative Inaction Has No Bearing On Whether The 

Challenged Regulation Is Reasonable ...................................................................15 

IV. VACATUR IS APPROPRIATE WHERE, AS HERE, THE CHALLENGED REGULATION IS 

CONTRARY TO LAW............................................................................................................17 

CONCLUSION..............................................................................................................................19 

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TABLE OF AUTHORITIES

CASES

Aaron v. SEC, 

446 U.S. 680 (1980)...........................................................................................................16 

Allied-Signal v. United States Nuclear Regulatory Comm’n, 

988 F.2d 146 (D.C. Cir. 1993)...........................................................................................17 

Anacostia Riverkeeper, Inc. v. Jackson, 

713 F. Supp. 2d 50 (D.D.C. 2010).....................................................................................17 

Barnhart v. Walton, 

535 U.S. 212 (2002).............................................................................................................3 

Bob Jones Univ. v. United States, 

461 U.S. 574 (1983)...........................................................................................................16 

Bowen v. Georgetown Univ. Hosp., 

488 U.S. 204 (1988).............................................................................................................2 

*Chevron U.S.A. Inc. v. Natural Resources Defense Council, 

467 U.S. 837 (1984)................................................................................................... passim

Citizens United v. FEC, 

130 S. Ct. 876 (2010).........................................................................................................11 

Cobell v. Norton, 

428 F.3d 1070 (D.C. Cir. 2005).........................................................................................16 

Engine Mfrs. Ass’n v. EPA, 

88 F.3d 1075 (D.C. Cir. 1996).............................................................................................3 

Esch v. Yeutter, 

876 F.2d 976 (D.C. Cir. 1989)...........................................................................................11 

FEC v. Massachusetts Citizens for Life, 

479 U.S. 238 (1986).............................................................................................................5 

FEC v. Wisconsin Right to Life, Inc., 

551 U.S. 449 (2007).............................................................................................................1 

Illinois Public Telecommunications Ass’n v. FCC, 

123 F.3d 693, 693 (D.C. Cir. 1997).............................................................................11, 17 

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IMS, P.C. v. Alvarez, 

129 F.3d 618 (D.C. Cir. 1997)...........................................................................................11 

Massachusetts v. EPA, 

549 U.S. 497 (2007).......................................................................................................4, 16

McConnell v. FEC, 

540 U.S. 93 (2003).........................................................................................................5, 11 

Missouri Pub. Serv. Comm’n v. FERC, 

337 F.3d 1066 (D.C. Cir. 2003).........................................................................................13 

Morales v. Trans World Airlines, Inc., 

504 U.S. 374 (1992).............................................................................................................9 

National Ass’n of Clean Air Agencies v. EPA, 

489 F.3d 1221 (D.C. Cir. 2007)...........................................................................................7 

National Gypsum Co. v. EPA, 

968 F.2d 40 (D.C. Cir. 1992)............................................................................................13 

*Natural Resources Defense Council v. EPA, 

489 F.3d 1250 (D.C. Cir. 2007)...................................................................................11, 17 

*Pennsylvania Dep’t of Corrections v. Yeskey, 

524 U.S. 206 (1998).............................................................................................................3 

Robinson v. Shell Oil Co., 

519 U.S. 337 (1997).............................................................................................................7 

*SEC v. Chenery Corp., 

318 U.S. 80 (1943)...............................................................................................................2 

Shays v. FEC, 

337 F. Supp. 2d 28 (D.D.C. 2004).....................................................................................18 

*Shays v. FEC (“Shays I”), 

414 F.3d 76 (D.C. Cir. 2005)...........................................................................7, 8, 9, 10, 18 

Shays v. FEC, 

508 F. Supp. 2d 10 (D.D.C. 2007) ....................................................................................18 

*Shays v. FEC (“Shays III”), 

528 F.3d 914 (D.C. Cir. 2008)...............................................................................11, 15, 18 

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United States v. Judicial Watch, 

266 F. Supp. 2d 1 (D.D.C. 2002).......................................................................................13 

United States v. Price, 

361 U.S. 304 (1960)...........................................................................................................16 

Williams Gas Processing - Gulf Coast Co., L.P. v. FERC, 

373 F.3d 1335 (D.C. Cir. 2004)...........................................................................................2 

STATUTES

*2 U.S.C. § 431(8) ...........................................................................................................................9 

*2 U.S.C. § 431(11) .....................................................................................................................5, 7 

*2 U.S.C. § 434(f)(1) ...................................................................................................................5, 7 

*2 U.S.C. § 434(f)(2)(E)................................................................................................................12 

*2 U.S.C. § 434(f)(2)(F) ........................................................................................................ passim

2 U.S.C. § 434(f)(3) .........................................................................................................................8 

2 U.S.C. § 441b(c)(2).......................................................................................................................6 

2 U.S.C. § 441b(c)(6).......................................................................................................................6 

*2 U.S.C. § 454................................................................................................................................6 

REGULATIONS 

FEC, Final Rule and Explanation and Justification on Electioneering Communications, 

11 C.F.R. Part 104, 114, 72 Fed. Reg. 72899 (Dec. 26, 2007) (“E & J”)........................1, 5, 12, 13 

11 C.F.R. § 104.20(c)(8)................................................................................................8, 13, 15, 18 

11 C.F.R. § 104.20(c)(9)......................................................................................................8, 11, 19 

FEC, Notice of Proposed Rulemaking, 68 Fed. Reg. 404 (Jan. 3, 2003) ........................................9 

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ARGUMENT 

I. UNDER SETTLED PRINCIPLES OF ADMINISTRATIVE LAW, THE FEC CANNOT NOW 

INVOKE THE ARGUMENT THAT BCRA’S TERM “CONTRIBUTOR” IS AMBIGUOUS,

BECAUSE THE FEC DID NOT RELY ON THAT PROPOSITION WHEN IT PROMULGATED 

THE CHALLENGED REGULATION

The FEC apparently did not discover that the term “all contributors” was assertedly 

ambiguous until it had to defend this case. The FEC did not rely on or discuss the supposed 

ambiguity in the statutory language in the Explanation and Justification it published when it 

promulgated the rule in question. See FEC, Final Rule and Explanation and Justification on 

Electioneering Communications, 11 C.F.R. Part 104, 114, 72 Fed. Reg. 72899 (Dec. 26, 2007) 

(“E & J”). The FEC considered whether 2 U.S.C. § 434(f)(2)(F) survived FEC v. Wisconsin 

Right to Life, Inc., 551 U.S. 449 (2007) (“WRTL”), and concluded, correctly, that it did. See 72 

Fed. Reg. 72901. But the question whether that statutory provision could be enforced at all is a 

very different question from what its terms—in particular, the words “all contributors”—mean 

and whether there is ambiguity in those words. 

The E & J is devoid of any analysis of the text of the statute. The FEC did not say that 

either the word “all” or the word “contributor” was ambiguous. The rationale the FEC proffered 

for promulgating the “purpose” test was not premised on the statutory language, or any asserted 

ambiguity about what those words meant. Rather, the FEC’s rationale was that it saw merit in 

reaching what it (wrongly) considered to be a middle course as a policy matter, in order to 

alleviate perceived administrative burdens on corporations and labor organizations. See FEC Br. 

28-32 [Dkt. No. 24]. 

That the FEC did not invoke statutory ambiguity as a decisional ground in the rulemaking 

proceeding has two consequences here: 

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First, under well settled principles of administrative law, that argument in defense of the 

challenged regulation is now unavailable to the FEC. Because the E & J failed to identify any 

ambiguity in the statute—and in particular, in the words “all contributors”—the FEC cannot 

defend the challenged regulation on that basis in this litigation. Williams Gas Processing - Gulf 

Coast Co., L.P. v. FERC, 373 F.3d 1335, 1345 (D.C. Cir. 2004) (“It is axiomatic that [a court] 

may uphold agency orders based only on reasoning that is fairly stated by the agency in the order 

under review ...; ‘post hoc rationalizations by agency counsel will not suffice.’” (quoting SEC v. 

Chenery Corp., 318 U.S. 80, 88 (1943)). 

Second, the absence of any reliance in the E & J on the asserted ambiguity of the key 

statutory terms substantively impeaches the argument the FEC’s litigation counsel advance today 

in defense of the challenged regulation. It exposes the FEC’s ambiguity contention for what it 

is—a tactical rearguard defense of a regulatory policy judgment that flouts a clear statutory 

mandate. See Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 213 (1988) (“Deference to what 

appears to be nothing more than an agency’s convenient litigating position would be entirely 

inappropriate.”). 

II. EVEN ASSUMING THE FEC CAN NOW RELY ON ITS AMBIGUITY ARGUMENT, THE FEC

ERRS IN CONTENDING THAT THE COURT CANNOT AND SHOULD NOT RESOLVE 

PLAINTIFF’S CHALLENGE TO THE REGULATION IN QUESTION AT CHEVRON STEP ONE

A. A Disposition Pursuant To Chevron Step One Is Appropriate And Required 

Because BCRA Speaks Clearly To The Precise Question At Issue 

The FEC argues that the Court cannot adjudicate the regulation’s validity at Chevron

Step One because, the FEC says, Congress did not “speak to the issue” presented. To support 

this mistaken argument, the FEC posits that Congress in enacting BCRA had not “envisioned” 

the post-WRTL environment in which more corporations could make “electioneering 

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communications” than before. See FEC Br. 18-21, 27-29, 35, 36. This circumstance, the FEC 

says, “was never contemplated by Congress.” FEC Br. 18; see also id. at 20-21. 

This argument fails for two reasons. First, the relevant consideration for the Court is not 

whether Congress foresaw the future but whether the words Congress used are themselves 

ambiguous. Second, there are ample grounds to conclude that Congress did enact 2 U.S.C. 

§ 434(f)(2)(F) with the understanding that it might become applicable to a wide range of 

corporations. 

1. The relevant inquiry at Chevron Step One is whether the statute is 

ambiguous, not whether Congress envisioned all of the circumstances in 

which the statute might apply 

The first step in determining whether Congress has spoken directly to the precise 

question at issue—that is, whether the case is appropriate for disposition under Chevron Step 

One—is to examine the statutory language. If the statutory language is clear—as it is here, see

Pl’s Br. 18-21 [Dkt. No. 20]—then Congress has spoken to the issue within the meaning of 

Chevron, and the Court’s inquiry is at an end. See Barnhart v. Walton, 535 U.S. 212, 217-218 

(2002) (“[I]f the statute speaks clearly to the precise question at issue, we must give effect to the 

unambiguously expressed intent of Congress.” (internal quotation marks omitted)); Engine Mfrs. 

Ass’n v. EPA, 88 F.3d 1075, 1089 (D.C. Cir. 1996) (“[F]or the EPA to avoid a literal 

interpretation at Chevron step one, it must show either that, as a matter of historical fact, 

Congress did not mean what it appears to have said, or that, as a matter of logic and statutory 

structure, it almost surely could not have meant it.”). 

Whether there is statutory ambiguity does not turn on whether Congress actually 

“envisioned” the application of the statute before the Court (FEC Br. 28, 29, 35, 36). In 

Pennsylvania Dep’t of Corrections v. Yeskey, 524 U.S. 206 (1998), the Supreme Court rejected 

the same argument the FEC makes here, holding that, even if “Congress did not ‘envision that 

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the ADA would be applied to state prisoners,’” that fact would be “irrelevant” “in the context of 

an unambiguous statutory text.” Id. at 212 (internal brackets in first quotation omitted); cf. 

Massachusetts v. EPA, 549 U.S. 497, 532 (2007) (rejecting agency’s argument that it lacked 

authority to regulate greenhouse gases because Congress “might not have appreciated the 

possibility that burning fossil fuels could lead to global warming”). The FEC cites no authority 

in support of its argument. See FEC Br. 18-23. 

Moreover, the issue the FEC now says Congress did not foresee and speak to directly is 

the issue of whether corporations are subject to the reporting requirements at all, not what they 

must report if they are. And the FEC has correctly resolved any supposed ambiguity regarding 

the former question by concluding that corporations that engage in “electioneering 

communications” are subject to the reporting requirements applicable to any person who makes 

an “electioneering communication.” With that question resolved, there is no further gap for the 

FEC to fill because there is no doubt that Congress directly spoke to the issue of what it is that 

persons subject to the reporting requirement must report: they must report (among other things) 

“all contributors.” The FEC points to no ambiguity in the manner in which Congress addressed 

that question. And any doubts the FEC claims to have about whether it correctly resolved the 

question of the reporting requirements’ applicability cannot serve as a basis for altering the 

nature of those requirements once it has found them applicable. 

Thus, there is no merit to the FEC’s argument that Chevron Step One analysis is 

inappropriate here because Congress did not “foresee[]” (FEC Br. 19) the circumstances in 

which the agency promulgated the challenged regulation. As we next show, the premise of the 

FEC’s erroneous legal contention—that Congress has not foreseen these circumstances—lacks 

merit as well. 

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2. Congress, in any event, understood that BCRA’s disclosure provisions 

would apply to a broad array of corporations 

As the FEC acknowledged in its E & J, Congress demonstrably understood that 

§ 434(f)(2)(F) and its “all contributors” language could apply to corporations. See FEC Br. 9 

(“The Commission rejected the contention that BCRA did not contemplate any reporting by 

corporations and labor organizations, even though BCRA did not generally permit corporations 

and labor organizations to finance electioneering communications.” (citing 72 Fed. Reg. 72901)). 

The FEC correctly reached this conclusion because BCRA “requires every ‘person’ that finances 

electioneering communications to file disclosure reports” that include “all contributors.” Id.

(citing 2 U.S.C. § 431(11)). The definition of “person,” as referenced in the E & J, is not limited 

to particular types of corporations or labor organizations. See 2 U.S.C. §§ 431(11) (defining 

“person”); 434(f)(1) (reporting requirements for every “person” who makes “electioneering 

communications”). 

The FEC argues now that Congress “envisioned” the application of its reporting statute to 

only one particular type of corporation—namely, non-profit corporations meeting criteria set out 

in FEC v. Massachusetts Citizens for Life, 479 U.S. 238 (1986) (“MCFL”)—because BCRA 

prohibited other types of corporations from making “electioneering communications.” See FEC 

Br. 6, 18, 21. The FEC’s concession that Congress understood and intended that MCFL 

corporations could make “electioneering communications” (FEC Br. 6 (citing McConnell v. 

FEC, 540 U.S. 93, 209-212 (2003)) undermines its argument here. Those MCFL corporations, 

like other non-profit entities, could have “members” who might pay dues without announcing or 

otherwise manifesting an explicit “purpose” to further “electioneering communications.” Before 

WRTL, such MCFL corporations were required to disclose “all contributors” in accordance with 

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§ 434(f)(2)(F). The challenged regulation, however, exempts all corporations, including MCFL

corporations, from compliance with the “all contributors” provision of § 434(f)(2)(F). 

Moreover, Congress did “contemplate” that certain non-MCFL corporations would be 

able to make “electioneering communications” under 2 U.S.C. § 441b(c)(2) (part of the “SnoweJeffords Amendment”) if a court were to invalidate 2 U.S.C. § 441b(c)(6) (the “Wellstone 

Amendment”), thereby triggering BCRA’s severability provision (“[i]f any provision of 

[BCRA], or the application thereof to any person or circumstance, is held invalid, the validity of 

the remainder of the Act and the application of such provision to other persons and 

circumstances shall not be affected thereby.” 2 U.S.C. § 454). See Pl’s Br. 24-25. Contrary to 

the FEC’s suggestion, the Snowe-Jeffords Amendment was no mere “proposal,” see FEC Br. 24-

25 & n.9. Congress enacted Snowe-Jeffords as part of BCRA—it appears in Title 2 of the 

United States Code. Thus, there is no basis for the FEC’s contention that Snowe-Jeffords is 

irrelevant to determining whether Congress, in enacting BCRA, contemplated that § 434(f)(2)(F) 

might in certain circumstances apply to a broader array of corporations (even assuming, 

arguendo, that the inquiry is itself relevant to a Chevron Step One analysis). BCRA’s sponsors 

in Congress reminded the FEC of this provision and Congress’s intent in their comments on the 

proposed rulemaking. See Dkt. No. 17-3 at VH0371 (Comments from Sen. McCain et al. re: 

Notice 2007-16: Electioneering Communications, (Oct. 1, 2007) (reasoning that BCRA’s 

disclosure provision, Section 201, is “completely independent of the prohibition in Section 203” 

and that “the severability clause in Section 401 [2 U.S.C. § 454] was meant to underscore 

congressional intent that even if Section 203 were declared unconstitutional, other sections of the 

bill, including Section 201, should survive.”)). 

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B. The Term “Contributor” Is Not Ambiguous, And The Challenged 

Regulation Is Inconsistent With Its Plain Meaning 

The FEC—whose views receive no deference in the Chevron Step One analysis, see, e.g.,

National Association of Clean Air Agencies v. EPA, 489 F.3d 1221, 1228 (D.C. Cir. 2007)—has 

failed to rebut Plaintiff’s argument that the terms “contributor” and “contributed” (2 U.S.C. 

§ 434(f)(2)(F)) are not ambiguous. A “contributor” is one who gives money without expectation 

of service or property or legal right in return. Pl’s Br. 20. The FEC does not meet this 

conclusion head on, see FEC Br. 19-23. Rather, the FEC defends its position by arguing that it 

promulgated the challenged regulation because, after WRTL, it was “presented” with “a range of 

novel issues” concerning who had “contributed” to a corporation or labor organization “because 

of the complex finances of these organizations.” FEC Br. 22. As can be seen, the challenged 

regulation is not premised on the FEC’s close parsing of an assertedly ambiguous statutory text, 

but on a purportedly pragmatic policy judgment. 

The FEC’s reliance on policy judgments is misplaced in light of the clear statutory text. 

Whether the term “contributor” permits a construction that excludes persons who give money to 

a corporation or labor organization but who have not announced or otherwise adequately 

manifested a purpose to further “electioneering communications” must be analyzed using “the 

traditional tools of statutory construction.” Shays v. FEC, 414 F.3d 76, 105 (D.C. Cir. 2005) 

(“Shays I”); see also Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997) (“The plainness or 

ambiguity of statutory language is determined by reference to the language itself, the specific 

context in which that language is used, and the broader context of the statute as a whole.”). 

There can be no dispute that BCRA requires every “person” who makes an “electioneering 

communication” to disclose “all contributors,” 2 U.S.C. § 434(f)(1), (f)(2)(F), and that Congress 

defined the term “person” to include corporations and labor organizations, id. § 431(11). And 

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nothing in the language, context, or purpose of BCRA supports an interpretation of the term 

“contributor” that excludes certain donations to persons making “electioneering 

communications.” Nor has the FEC attempted to explain why the term “contributor” means a 

person with a purpose to further “electioneering communications” when that person donates to a 

corporation or labor organization, but not when that person donates to an individual, 

unincorporated association, partnership, or other group of persons. Compare 11 C.F.R. 

§ 104.20(c)(9) (purpose requirement), with id. § 104.20(c)(8) (no purpose requirement). 

The reasoning of the Court of Appeals in Shays v. FEC, holding at Chevron Step One that 

the FEC’s definition of “electioneering communication” was contrary to law, is instructive here. 

In that case, the Court struck down an FEC regulation that purported to add a qualification to an 

unqualified statutory term. Specifically, the Court considered whether the FEC’s interpretation 

of the term “made” violated the plain language of the statute, i.e., 2 U.S.C. § 434(f)(3). See 414 

F.3d at 107-08. The statutory definition of “electioneering communication” covered “‘any 

broadcast, cable, or satellite communication’ that ... ‘is made within’ 60 days before a general 

election or 30 days before a primary ....’” Shays I, 414 F.3d at 107 (quoting 2 U.S.C. 

§ 434(f)(3), emphasis added). The FEC’s regulation defined “‘made’ to mean ‘publicly 

distributed,’” and defined “‘publicly distributed’ to mean ‘aired, broadcast, cablecast or 

otherwise disseminated for a fee.’” Id. (emphasis in Shays). Focusing on the text of the statute, 

the Court concluded that the ordinary meaning of the term “made”—an undefined term—did not 

include a “for a fee” qualification. See Shays I, 414 F.3d at 108. 

As in Shays, the FEC here has promulgated a regulation that adds an additional 

requirement that the plain meaning, context, and purpose of the authorizing statute rule out—

here, a “purpose” requirement. See Pl’s Br. 18-23. Moreover, as in Shays, the FEC makes 

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virtually no argument that the challenged regulation, and in particular its “purpose” requirement, 

is required by the statute, focusing instead on purported burdens on corporations. Compare 

Shays I, 414 F.3d at 109 (“Rather than focusing on these textual problems, the FEC’s briefs 

emphasize the ‘risk’ that without its limiting construction, BCRA’s electioneering 

communication restrictions could chill [speech].”), with FEC Br. 21-22 (reasoning that without 

its limiting construction, BCRA’s disclosure requirements might implicate “customers, investors, 

or comparable sources of revenue that might have little or no connection to political activity”). 

Departing from the Commission’s own previous view, the FEC now argues that the term 

“contributor” should be regarded as ambiguous because it resembles the term “contribution” 

which is found and defined in a different statute, the Federal Election Campaign Act (“FECA”),

see FEC Br. 20. That argument lacks merit, and the FEC itself has previously rejected it. BCRA 

provides that “contributor” is not a term that encompasses only a person who makes a 

“contribution” as FECA defines that term. 2 U.S.C. § 431(8). As the FEC itself concedes, the 

term “contribution” includes any payment made “for the purpose of influencing any election for 

Federal office,” whereas an “electioneering communication” includes ads not made for the 

purpose of influencing an election. FEC Br. 20; see also Pl’s Br. 21. The term “contributor,” 

therefore, must have been intended to cover persons who contributed money without a purpose to 

influence elections. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384 (1992) (“[I]t is 

a commonplace of statutory construction that the specific governs the general”); accord FEC Br. 

20. The FEC previously reached precisely this conclusion, see FEC, Notice of Proposed 

Rulemaking, 68 Fed. Reg. 404, 413 (Jan. 3, 2003), and affirms it here, see FEC Br. 20. Its 

contradictory assertion that the definition of “contribution” lends ambiguity to “contributor” 

cannot be squared with its own recognition that the two terms are quite distinct. 

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III. EVEN ASSUMING THE FEC CAN NOW RELY ON ITS AMBIGUITY ARGUMENT, THE 

CHALLENGED REGULATION ALSO FAILS AT CHEVRON STEP TWO AND IS ARBITRARY 

AND CAPRICIOUS

Because the disclosure requirements are not “ambiguous,” the Court need not reach 

Chevron Step Two and the overlapping arbitrary and capricious standard under the APA. If the 

Court reaches Chevron Step Two, however, it should conclude that the FEC’s regulation is 

unreasonable and that its explanation and justification for it is arbitrary and capricious. While 

the FEC is generally entitled to deference in Chevron Step Two where the statutory provision at 

issue is, unlike here, ambiguous, the FEC must still demonstrate that its interpretation of the 

statute is “reasonable.” See Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 

837, 844 (1984); Shays I, 414 F.3d at 97. It has failed to do so here by a wide margin. 

A. A Regulation That Implements Only Half Of BCRA’s Requirements Is Not 

Reasonable 

The Commission suggests that the Court should defer to its regulation as reasonable 

because it charts a middle course between the two proposed policy alternatives the FEC said it 

would consider in its Notice of Proposed Rule-Making (“NPRM”), leaving intact part of the 

BCRA disclosure requirements. The Commission lamely says that its regulation should be 

upheld because it requires “disclosure of critical information about who is making disbursements 

for electioneering communications, how much those persons are spending, and who is providing 

the funds to be used for the communications.” FEC Br. 32. But § 434(f)(2)(F) prescribes 

disclosure of the “all contributors” to the persons making “electioneering communications,” not 

just of the persons making “electioneering communications” and those contributors who have 

seen fit to manifest their “purpose.” 

The FEC’s argument highlights a core problem with the challenged regulation—by 

requiring disclosure only of those who spend money on “electioneering communications” 

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without requiring that those spenders disclose “all contributors,” it allows the spenders to run 

“election-related advertisements ‘while hiding behind dubious and misleading names.’” Citizens 

United v. FEC, 130 S. Ct. 876, 914 (2010) (quoting McConnell, 540 U.S. at 197)). The 

challenged regulation has thus re-created the very problem that the Court in McConnell said 

BCRA intended to solve. See 540 U.S. at 196-97; FEC Answer ¶ 30 (admitting that “filings with 

the FEC by persons making electioneering communications disclosed the sources of less than 

10% of the $79.9 million in electioneering communications made in 2010, that the ten persons 

spending the most on electioneering communications during that period disclosed the sources of 

approximately 5% of the funds used for their electioneering communications ....”); id. ¶ 31 

(admitting that certain non-profit corporations disclosed none of their contributors).1

B. The FEC’s Burden Rationale Is Arbitrary And Capricious 

In promulgating 11 C.F.R. § 104.20(c)(9), the FEC not only failed to consider (or more 

likely, ignored the likelihood) that it was creating a loophole that would undermine the 

effectiveness of BCRA, the FEC also irrationally concluded that complying with § 434(f)(2)(F) 

would impose undue administrative burden on corporations and labor organizations. That 

conclusion is unsupported by persuasive evidence and is not entitled to judicial deference. 

 

1

 As set forth above, the FEC’s answer in this case admits that disclosure of contributors to corporations making 

“electioneering communications” has dropped drastically after promulgation of the challenged regulation. At the 

same time, the FEC argues that the Court may not in its Chevron Step Two analysis consider the very information 

the FEC has admitted in this case because that information is outside the administrative record. The cases do, 

however, give the court some leeway to consider such information to determine whether the agency considered all 

the relevant factors or fully explicated its course of conduct or grounds of decision. See Esch v. Yeutter, 876 F.2d 

976, 991 (D.C. Cir. 1989); see also IMS, P.C. v. Alvarez, 129 F.3d 618, 624 (D.C. Cir. 1997). As noted in Plaintiff’s 

opening brief (Pl’s Br. 14-15), it is appropriate for the Court to consider the actual effect of the challenged 

regulation as part of its consideration whether the Commission failed to consider whether the regulation would 

create a loophole and thereby undermine BCRA, a critical failure, given that “savvy campaign operators” will 

exploit any loophole in these laws “to the hilt.” Shays v. FEC, 528 F.3d 914, 927-28 (D.C. Cir. 2008) (“Shays III”). 

Even if the court decides it cannot consider the FEC’s admissions in connection with its Chevron Step Two analysis, 

however, it may and should consider them as relevant to the vacatur issue discussed in Part IV, infra. See Illinois 

Public Telecommunications Ass’n v. FCC, 123 F.3d 693, 693 (D.C. Cir. 1997) (comparing vacatur decision to 

decision “whether to grant a preliminary injunction”); cf. Natural Resources Defense Council v. EPA, 489 F.3d 

1250, 1263 (D.C. Cir. 2007) (Randolph, J., concurring) (arguing that courts should vacate and then entertain a 

motion for a stay in order to hear “evidence needed to assess the consequences” of the order). 

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First, corporations and labor organizations that make “electioneering communications” 

could avoid the “burden” the FEC identified by taking the simple step of establishing a 

segregated account pursuant to § 434(f)(2)(E), and using funds contributed to that account to pay 

for “electioneering communications.” Defendant’s sole response is that a segregated account is 

insufficient to relieve the “potential burden” on corporations that wish to fund their 

“electioneering communications” with donations from other corporations. This rationale is 

unpersuasive. The FEC made no factual findings to support any such conclusion; there is no 

evidence in the administrative record to support any such conclusion; and the FEC did not rely 

on that conclusion in its E & J. No corporation or labor organization that submitted comments 

claimed it expected to receive substantial donations from persons other than individuals to fund 

its “electioneering communications” and therefore could not avail itself of the segregated 

account option. 

Second, the FEC’s statement that corporations and labor organizations cannot “identify 

those persons who provided funds totaling $1,000 or more” without an “inordinate amount of 

effort” (72 Fed. Reg. 72911) is irrational and unsupported by evidence in the administrative 

record. As a preliminary matter, the FEC premises its burden concern by positing the untenable 

proposition that the word “contributor” could or does include persons who make investments, 

loans, and purchases. The FEC’s E & J did not provide any basis – by, for example, reference to 

dictionary definitions of the word “contributor” – to support such an, at best, counter-intuitive 

assumption (it assumes, but does not actually say that “contributor” means a person who make 

any payment whatsoever, 72 Fed. Reg. 72910-11). 

Absent that bizarre assumption, there is not much left to the FEC’s burden argument: 

corporations and labor organizations would be required to report the same information that 

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individuals, partnerships, and unincorporated organizations report under 11 C.F.R. 

§ 104.20(c)(8): namely, the identity of those who make gratuitous gifts to them. The FEC has 

not ever posited that the “all contributors” requirement of 2 U.S.C. § 434(f)(2)(F) imposes undue 

burdens on individuals, partnerships, and unincorporated organizations.

But even if one suspends disbelief and accepts the notion that 2 U.S.C. § 434(f)(2)(F)’s 

reference to “contributors” sweeps in any transferor of funds, the FEC’s calls for deference to its 

“burden” determination ring hollow because the E & J simply does not support its conclusion 

with any information, data, or estimates concerning the assertedly “inordinate” cost of 

compliance. Nor does it provide any concrete examples of the supposed burden. See Missouri 

Pub. Serv. Comm’n v. FERC, 337 F.3d 1066, 1070 (D.C. Cir. 2003) (holding agency action was 

arbitrary and capricious where agency failed to “fully explain the assumptions it relied on to 

resolve unknowns and the public policies behind those assumptions” (citation omitted)); 

National Gypsum Co. v. EPA, 968 F.2d 40, 47 (D.C. Cir. 1992) (vacating agency decision as 

arbitrary and capricious because it failed to offer a “reasoned explanation for its assumption”). 

In the E & J and in its brief, the FEC relies heavily on conclusory, vague remarks of selfinterested commenters. See 72 Fed. Reg. 72911; FEC Br. 11 (citing Gold, AFL-CIO, VH0660; 

Sullivan, SEIU, VH0924). Not one of the 25 comments the FEC received, however, was 

submitted by a for-profit corporation that has business revenue, customers, and investors. See 

Dkt. No. 17-2, 17-3, 17-4. The only corporations that submitted comments were § 501(c) 

organizations which either do not have business revenue, customers, or investors, or must 

already distinguish donations from unrelated business taxable income and other revenue sources 

on their tax returns in order to maintain their tax-exempt status. See United States v. Judicial 

Watch, 266 F. Supp. 2d 1, 19 (D.D.C. 2002) (“[T]ax laws and regulations require tax-exempt 

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organizations to report annually to the IRS ‘the total of all contributions and gifts received by it 

during the year,’ ... and to list ‘the names and addresses of all persons who contributed, 

bequeathed, or devised $ 5,000 or more ... during the taxable year.’” (quoting 26 U.S.C. § 

6033(b)(5) & Treas. Reg. § 1.6033-2(a)(2)(ii)(f), respectively)), aff’d, 371 F.3d 824 (D.C. Cir. 

2004). 

Only two of the corporations and labor organizations that submitted comments—Citizens 

United and Alliance for Justice—claimed that distinguishing between donations and other 

revenues would be difficult and/or burdensome. These commenters did not specify the supposed 

burden nor provide evidence concerning the cost or effort thought to be required: 

• Citizens United submitted comments claiming that reporting the name and address of 

each $1,000 donor would “likely prove difficult, if not impossible.” It continued: “The 

difficulties of compliance would be most acute where revenues are generated through 

sales, investment capital or a combination thereof, which is generally the case with a 

commercial business.” Dkt. No. 17-2 [VH0312-VH0313]. 

• Alliance for Justice commented that “Nonprofit corporations making electioneering 

communications under the WRTL II exception may receive funds into their general 

treasuries from a wide variety of sources: membership dues; admission fees, 

subscriptions, sales of educational materials and other revenue from their exempt 

activities; interest, dividends and other income from investments; and income from 

unrelated business activities.” Dkt. No. 17-4 [VH0445]. 

 Three of the corporations and labor organizations that submitted comments noted other 

potential “administrative burdens” but none of the three explained what the burden of identifying 

contributors would entail: 

• American Association of Advertising Agencies, American Advertising Federation, and 

the Association of National Advertisers: “an advertiser would have to set up a 

compliance system that tracks the cost of its ads at the commencement of each blackout 

period, compute each $10,000 increment of such ads, and then make the requisite filings 

at the FEC.” Dkt. No. 17-2 [VH0240]. 

• National Association of Realtors: referring generally to “the administrative burdens 

associated with reporting” Dkt. No. 17-3 [VH0378]. 

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• AFL-CIO, AFSCME, NEA, SEIU: “It would be ... burdensome for the Commission to 

require unions to disclose the names and addresses of members whose dues happen to 

have accumulated to $1,000 since the beginning of the preceding calendar year.” Dkt. 

No. 17-4 [VH0461]. 

 And at the rulemaking hearing, only one of the witnesses representing corporations or 

labor organizations mentioned potential burdens, again failing to explain why identifying 

contributors would be burdensome: 

• Lawrence Gold, AFL-CIO: “[T]here would be a tremendous burden on unions in 

particular. The obligation to report income at the $1,000 level would be remarkable in 

comparison to a regulatory requirement by the Labor Department under a long-standing 

law, the Labor Management Report and Disclosure Act, which requires unions to disclose 

all receipts at the $5,000 threshold.” Dkt. No. 17-5 [VH0646]. 

To the extent that these generalizations provide any support at all, the comments are 

insufficient to require judicial deference to the FEC’s finding that, absent imposition of a 

“purpose” requirement not found in the text of the statute, compliance with the regulation would 

be unduly burdensome for non-MCFL corporations or labor organizations. After all, individuals, 

partnerships, or unincorporated associations who make “electioneering communications” are 

expected to do so without relying on a “purpose” test, see 11 C.F.R. § 104.20(c)(8), and those 

spenders, like corporations, frequently receive payments that are not donations, e.g., loans, 

paychecks, dividends, interest payments, tax refunds, and so forth. See, e.g., Shays v. FEC, 528 

F.3d 914, 928-29 (D.C. Cir. 2008) (“Shays III”) (affirming ruling that FEC’s revised regulation 

was arbitrary and capricious where the Commission implemented changes based on complaints 

that “the regulation was unnecessarily cumbersome” without supporting “its decision with 

reasoning and evidence”). 

C. Subsequent Legislative Inaction Has No Bearing On Whether The 

Challenged Regulation Is Reasonable 

Defendant argues that because Congress did not enact the DISCLOSE Act in 2010, the 

Court should infer that Congress tacitly approves of § 104.20(c)(9). However, the Supreme 

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Court has held that congressional inaction is entitled to little, if any, weight. See Massachusetts 

v. EPA, 549 U.S. 497, 529-30 (2007) (“That subsequent Congresses have eschewed enacting 

binding emissions limitations to combat global warming tells us nothing about what Congress 

meant when it amended § 202(a)(1) in 1970 and 1977” (citing United States v. Price, 361 U.S. 

304, 313 (1960) (holding that “the views of a subsequent Congress form a hazardous basis for 

inferring the intent of an earlier one”); Cobell v. Norton, 428 F.3d 1070, 1075 (D.C. Cir. 2005) 

(“[P]ost-enactment legislative history is not only oxymoronic but inherently entitled to little 

weight”))). 

The Commission relies on Bob Jones University v. United States, 461 U.S. 574 (1983), in 

which the IRS interpretation of § 501(c)(3) of the Tax Code was at issue. This reliance is 

surprising given that Bob Jones was an exceptional case readily distinguishable from this one. 

The Court in Bob Jones noted, “Ordinarily, and quite appropriately, courts are slow to attribute 

significance to the failure of Congress to act on particular legislation,” id. at 600 (citing Aaron v. 

SEC, 446 U.S. 680, 694 n.11 (1980)), but went on to find that the facts of Bob Jones made it 

anything but the “ordinary case.” Congress’s “non-action” regarding § 501(c)(3) was 

“significant” because over 12 years, 13 bills had been introduced specifically to overturn the 

particular IRS interpretation at issue, none of which emerged from any committee. 

Here, unlike in Bob Jones, the DISCLOSE Act was not a targeted Congressional effort to 

overrule a specific regulation. Rather, the Act was a broad and comprehensive response to the 

Citizens United decision that proposed disclosure provisions with broader coverage than the 

current statute and that had a number of nondisclosure provisions. Thus, this is not the rare case 

where a court may properly draw inferences from Congressional inaction. 

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IV. VACATUR IS APPROPRIATE WHERE, AS HERE, THE CHALLENGED REGULATION IS 

CONTRARY TO LAW

Remand without vacatur to “permit the Commission to more fully explain the existing 

regulation” (FEC Br. 44) would be futile where, as here, the agency’s regulation is inconsistent 

with the unambiguous terms of a statute. See Natural Resources Defense Council v. EPA, 489 

F.3d 1250, 1261 (D.C. Cir. 2007) (vacating rule; remand without vacatur inappropriate where 

rule could not survive court’s decision); Illinois Public Telecommunications Ass’n v. FCC, 123 

F.3d 693, 693 (D.C. Cir. 1997) (vacating rule; “When this court remands a rule to an agency for 

further consideration with little or no prospect of the rule’s being readopted upon the basis of a 

more adequate explanation of the agency’s reasoning, the practice of the court is ordinarily to 

vacate the rule.”); Anacostia Riverkeeper, Inc. v. Jackson, 713 F. Supp. 2d 50, 52 (D.D.C. 2010) 

(vacating rule; remand without vacatur inappropriate where agency would “be unable to justify 

the challenged [rule] in a manner that is consistent with the statute.” (internal quotation marks 

omitted)). 

The FEC contends that Allied-Signal v. United States Nuclear Regulatory Comm’n, 988 

F.2d 146 (D.C. Cir. 1993), supports remand without vacatur. See FEC Br. 43-44. But the Court 

in Allied-Signal did not hold that the regulation before it was inconsistent with the statute. 

Rather, the Court held that the agency had failed to give sufficient reasons for its rule. See

Allied-Signal, 988 F.2d at 150 (deciding whether to vacate an “inadequately supported rule” 

(emphasis added)); id. at 151 (“[T]here is at least a serious possibility that the Commission will 

be able to substantiate its decision on remand.”). 

The FEC claims that vacating its regulation would leave corporations and labor 

organizations without adequate guidance. See FEC Br. 44. This is spurious. As the FEC admits, 

a corporation can set up a segregated account. But even if one assumes that this option is 

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insufficient, there is no reason to assume that corporations and labor organizations cannot make 

“electioneering communications” in accordance with § 434(f)(2)(F). See supra pp. 12, 14. If the 

challenged regulation is invalidated, corporations need only abide by the plain text of the statute, 

and the existing standard applicable to individuals, partnerships, and other unincorporated 

entities under 11 C.F.R. § 104.20(c)(8) demonstrates that they can do so. 

Finally, the FEC contends that the Court should not retain jurisdiction to enforce its 

judgment because “there is no reason to doubt that, in the event of remand, the Commission 

would proceed in a timely way.” FEC Br. 45. Regrettably, experience teaches the opposite. 

Following enactment of BCRA in 2002, the FEC issued implementing regulations. In 

October 2002, Representatives Christopher Shays and Martin Meehan, the chief House sponsors 

of BCRA, filed suit against the FEC challenging the regulations, including the FEC’s 

“coordination” rules. In September 2004, the district court invalidated fifteen FEC regulations, 

including the coordination regulation. Shays v. FEC, 337 F. Supp. 2d 28 (D.D.C. 2004), aff’d, 

414 F.3d 76 (D.C. Cir. 2005). 

Two years later, in 2006, the FEC issued a revised coordination regulation, and 

Representatives Shays and Meehan challenged it and five other regulations promulgated. In 

September 2007, the district court struck down five of the new regulations, including the 

coordination regulation. Shays v. FEC, 508 F. Supp. 2d 10 (D.D.C. 2007). The Court of 

Appeals upheld the district court’s decision to invalidate four of the regulations, including the 

coordination regulation, reinstated one of the regulations, and struck down the one regulation 

that the district court left standing. Shays III, 528 F.3d 914 (D.C. Cir. 2008). In all, it took six 

years, two lawsuits, and four winning court decisions to overturn the coordination regulation 

adopted to implement BCRA. 

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For these reasons, the FEC is not entitled to any presumption that it will proceed in a 

timely manner with respect to “electioneering communications” absent continued judicial 

oversight. 

CONCLUSION 

For the reasons stated, we respectfully urge the Court to grant Plaintiff’s motion for 

summary judgment and deny the FEC’s cross motion; declare that the challenged regulation, 11 

C.F.R. § 104.20(c)(9), is contrary to law and arbitrary and capricious; vacate the challenged 

regulation; and direct the FEC to promulgate promptly a revised regulation consistent with this 

Court’s ruling and declaratory judgment with reasonable expediency. We also respectfully urge 

the Court to retain jurisdiction until the Court’s judgment is satisfied. 

Dated this 30th day of August, 2011. 

Respectfully submitted, 

Fred Wertheimer (Bar No. 154211) 

DEMOCRACY 21 

2000 Massachusetts Ave, N.W. 

Washington, D.C. 20036 

(202) 355-9610 

/s/ Roger M. Witten 

Roger M. Witten (Bar No. 163261) 

Brian A. Sutherland 

Fiona J. Kaye 

WILMER CUTLER PICKERING

 HALE AND DORR LLP

399 Park Avenue 

New York, NY 10022 

(212) 230-8800 

Donald J. Simon (Bar No. 256388) 

SONOSKY CHAMBERS SACHSE

 ENDRESON & PERRY, LLP

1425 K Street, N.W. 

Suite 600 

Washington, D.C. 20005 

(202) 682-0240 

Trevor Potter (Bar No. 413778) 

J. Gerald Hebert (Bar No. 447676) 

Paul S. Ryan (Bar No. 502514) 

Tara Malloy (Bar No. 988280) 

CAMPAIGN LEGAL CENTER

215 E Street N.E. 

Washington, D.C. 20002 

(202) 736-2200 

Attorneys for Plaintiff Chris Van Hollen 

Case 1:11-cv-00766-ABJ Document 35 Filed 08/30/11 Page 24 of 24