UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

____________________________________

)

CHRISTOPHER VAN HOLLEN, Jr., )

)

Plaintiff, )

)

v. ) Civil Action No. 11-0766 (ABJ)

)

FEDERAL ELECTION COMMISSION, )

)

Defendant. )

____________________________________)

MEMORANDUM OPINION

This case originated in 2011 when plaintiff Chris Van Hollen, Jr. – a member of the U.S. 

House of Representatives from the 8th Congressional District of the State of Maryland – filed a 

complaint challenging the authority of the Federal Election Commission to promulgate 11 C.F.R. 

§ 104.20(c)(9), which narrowed the disclosure requirements set forth in the Bipartisan Campaign 

Reform Act (“BCRA”), 52 U.S.C. § 30104(f)(d)(E)–(F) (2012),

1 for corporations and labor 

organizations that fund electioneering communications. Compl. ¶¶ 1, 9 [Dkt. # 1]. Applying the 

framework set forth in Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 

(1984), the Court found that the Commission had exceeded its authority, particularly because the 

problem it was trying to remedy was not – even as the agency characterized its task – to interpret 

an ambiguity in the statute, but rather, to address a problem not contemplated by the statute that 

was ostensibly created by the Supreme Court’s decisions in FEC v. Wisconsin Right to Life, Inc. 

(“WRTL II”), 551 U.S. 449 (2007), and Citizens United v. FEC, 588 U.S. 310 (2010). The Court 

 

1 At the time this case was filed, the BCRA was codified in Title 2 of the United States 

Code, at 2 U.S.C. § 434. It has since been transferred to Title 52, at 52 U.S.C. § 30104. 

Accordingly, the Court cites to the statute in this opinion as it now appears in Title 52 of the 

United States Code. 

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struck down 11 C.F.R. § 104.20(c)(9) at the first level of the Chevron analysis, and it did not 

then proceed to the second level of the Chevron test.

2

 See Van Hollen v. FEC, 851 F. Supp. 2d 

69, 89 (D.D.C.), rev’d sub nom. Ctr. for Individual Freedom v. Van Hollen, 694 F.3d 108 (D.C. 

Cir. 2012).

The FEC did not appeal the decision. But the intervenor-defendants, the Center for 

Individual Freedom (“CFIF”) and the Hispanic Leadership Fund (“HLF”) did, and the United 

States Court of Appeals for the District of Columbia Circuit held that the case should not have 

been decided at the first Chevron step. The Circuit Court found the BCRA’s disclosure 

provisions to be ambiguous, “especially when viewed in the light of the Supreme Court’s 

decisions” in Citizens United and WRTL II, and it remanded the case for consideration of the 

regulation at Chevron step two. Van Hollen, 694 F.3d at 110, 112.

The Court now concludes that the promulgation of 11 C.F.R. § 104.20(c)(9) was 

arbitrary, capricious, and contrary to law and that the regulation is an unreasonable interpretation 

of the BCRA for several reasons. First, the Commission initiated the rulemaking process for the 

stated purpose of responding to the decision in WRTL II, but nothing the Supreme Court did in 

that case provides a basis for narrowing the disclosure rules enacted by Congress. WRTL II dealt 

solely with the question of whether the statutory ban on corporate and labor organization funding 

of electioneering communications could withstand an as-applied constitutional challenge. And 

in answering that question, the Court did not find any need to address the BCRA’s disclosure 

requirements. 

 

2 Chevron instructs the reviewing court to consider first “whether Congress has directly 

spoken to the precise question at issue,” and if so, “the court, as well as the agency, must give 

effect to the unambiguously expressed intent of Congress.” 467 U.S. at 842–43. 

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Second, there is little or nothing in the administrative record that would support the 

Commission’s decision to introduce a limitation into the broad disclosure rules in the BCRA. 

Neither the petition for rulemaking nor the original notice of proposed rulemaking proposed 

altering the disclosure requirements for corporations and labor unions. None of the commenters 

asked the agency to amend the disclosure rules to include a purpose requirement, and the 

Commission did not incorporate the purpose requirement in the new rule until after the notice 

and comment period and the hearing had been concluded. The only post-hearing comment 

received in response to the newly incorporated language strongly opposed its inclusion.

Finally, the regulation’s purpose requirement is inconsistent with the statutory language 

and purpose of the BCRA. Congress passed the disclosure provisions of the BCRA to promote 

transparency and to ensure that members of the public would be aware of who was trying to 

influence their votes just before an election. The added purpose requirement in section 

104.20(c)(9) thwarts that objective by creating an easily exploited loophole that allows the true 

sponsors of advertisements to hide behind dubious and misleading names. Based on these 

considerations, the Court will vacate 11 C.F.R. § 104.20(c)(9), and it will grant plaintiff’s motion 

for summary judgment. 

BACKGROUND

Over the course of seven years, the Supreme Court of the United States weakened, and 

eventually invalidated entirely, the prohibition on the use of corporate and union treasury funds 

to finance electioneering communications. See Citizens United, 558 U.S. at 365; WRTL II, 551 

U.S. at 470–76; McConnell v. FEC, 540 U.S. 93, 93 (2003), overruled by Citizens United, 558 

U.S. at 310. In the midst of this changing legal environment, the Commission began a

rulemaking process and solicited public comment “generally regarding the effect of the 

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[WRTL II] decision on the Commission’s rules governing corporate and labor organization 

funding of electioneering communications, the definition of ‘electioneering communication,’ and 

the rules governing reporting of electioneering communications.”3

 Electioneering 

Communications, 72 Fed. Reg. 50261, 50262 (proposed Aug. 31, 2007). As part of that process, 

the Commission offered two alternative ways to implement the WRTL II decision: “The first 

alternative would incorporate the new exemption into the rules prohibiting the use of corporate 

and labor organization funds for electioneering communications in 11 [C.F.R.] part 114. The 

 

3 Section 30104(f)(2) of the BCRA requires the following disclosures:

(E) If the disbursements were paid out of a segregated bank account 

which consists of funds contributed . . . directly to this account for 

electioneering communications, the names and addresses of all 

contributors who contributed an aggregate amount of $1,000 or more to 

that account . . . . [; or]

(F) If the disbursements were paid out of funds not described in 

subparagraph (E), the names and addresses of all contributors who 

contributed an aggregate amount of $1,000 or more to the person making 

the disbursement during the period beginning on the first day of the 

preceding calendar year and ending on the disclosure date.

52 U.S.C. § 30104(f)(2)(E)–(F). 

Section 104.207(c)(7)–(8) of FEC’s implementing regulations generally tracks the 

language of section 30104(f)(2)(E)–(F), except that it substitutes the words “donor” and 

“donated” for “contributor” and “contributed.” It calls for the following disclosures:

(7)(i) If the disbursements were paid exclusively from a segregated bank 

account . . . , the name and address of each donor who donated an amount 

aggregating $1,000 or more to the segregated bank account, aggregating 

since the first day of the preceding calendar year; or . . . .

(8) If the disbursements were not paid exclusively from a segregated 

bank account described in paragraph (c)(7) of this section, . . . the name 

and address of each donor who donated an amount aggregating $1,000 or 

more to the person making the disbursement, aggregating since the first 

day of the preceding calendar year.

11 C.F.R. § 104.20(c)(7)(i), (c)(8) (2014). 

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second alternative would incorporate the new exemption into the definition of ‘electioneering 

communication’ in 11 [C.F.R.] § 100.29.” Id. Under the first alternative, corporations and labor 

organizations making the sorts of electioneering communications deemed permissible in WRTL 

II would be permitted to use general treasury funds for that purpose, but they would be subject to 

the same reporting requirements as other entities. Id. As part of that alternative, the agency also 

proposed changes to the rules that would enable those organizations to establish segregated bank 

accounts for the funding of electioneering communications as certain individuals were already 

permitted to do. Id. Adopting Alternative II would have exempted the WRTL II ads from the 

definition of electioneering communication in 11 C.F.R. § 100.29 entirely, thereby eliminating

both the disclosure and financing restrictions for those ads. Id. at 50263. 

In December 2007, the agency adopted a variant of the first alternative. It promulgated 

11 C.F.R. § 104.20(c)(9), which included the following language:

If the disbursements were made by a corporation or labor organization 

pursuant to 11 [C.F.R.] § 114.15, the name and address of each person 

who made a donation aggregating $1,000 or more to the corporation or 

labor organization, aggregating since the first day of the precedent 

calendar year, which was made for the purpose of furthering 

electioneering communications.

11 C.F.R. § 104.20(c)(9) (emphasis added). 

The Commission provided several explanations for adding this new “purpose” or “intent” 

requirement to the corporate and labor organization disclosure regulation. First, it noted that 

those entities’ “general treasury funds are often largely comprised of funds received from 

investors,” donors, customers, or members “who may not necessarily support the organization’s 

electioneering communications.” Electioneering Communications, Final Rule, 72 Fed. Reg. 

72899, 72911 (Dec. 26, 2007). And second, it stated that compliance with the disclosure rules as 

previously written would impose a heavy burden on corporations and labor organizations: 

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“[W]itnesses at the Commission’s hearing testified that the effort necessary to identify those 

persons who provided funds totaling $1,000 or more . . . would be very costly and require an 

inordinate amount of effort.” Id. The Commission then concluded that “the policy underlying 

the disclosure provisions of BCRA [was] properly met by requiring corporations and labor 

organizations to disclose and report only those persons who made donations for the purpose of 

funding [electioneering communications].” Id.

Plaintiff Chris Van Hollen – concerned that “corporations have exploited the enormous 

loophole [the new regulation] created,” Compl. ¶ 29 – filed this case against the FEC under the 

Administrative Procedure Act (“APA”). 5 U.S.C. § 706. He argued that the agency exceeded its 

statutory authority in promulgating that regulation and that the regulation is also arbitrary, 

capricious, and contrary to law under the APA. Two months after plaintiff filed his complaint, 

CFIF and HLF filed motions to intervene as defendants [Dkt. # 14 & 15], and the Court granted 

those motions pursuant to Federal Rule of Civil Procedure 24(a). Aug. 1, 2011 Minute Entry. 

Plaintiff, the Commission, and CFIF then filed cross-motions for summary judgment, Pl.’s Mot. 

for Summ. J. (“Pl.’s Mot.”) [Dkt. # 20]; Def.’s Cross-Mot. for Summ. J. (“Def.’s Mot.”) [Dkt. 

# 25]; CFIF’s Cross-Mot. for Summ. J. [Dkt. # 36], and HLF filed a motion to dismiss for lack of 

jurisdiction. HLF’s Mot. to Dismiss [Dkt. # 30].

On March 30, 2012, the Court entered an order granting plaintiff’s motion for summary 

judgment and denying the other three motions. Order [Dkt. # 47]. After determining that 

plaintiff had standing to bring his APA challenge, the Court conducted a Chevron analysis and 

struck down 11 C.F.R. § 104.20(c)(9) as inconsistent with text of the statute. The Commission

did not appeal the Court’s order, but intervenor-defendants CFIF and HLF did. Van Hollen, 694 

F.3d at 110. On September 18, 2012, the U.S. Court of Appeals for the District of Columbia 

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Circuit concluded that since the BCRA was ambiguous, the case should not have been decided at 

the first step of the Chevron test. Id. at 112.

The D.C. Circuit remanded the case with instructions to the District Court to refer the 

matter first to the Commission to ascertain whether the agency intended to engage in further 

rulemaking to clarify the regulatory regime. The judgment further provided: “[i]f the FEC elects 

instead to defend the current regulation, then the District Court should allow the parties to 

present arguments on Appellee’s claims that the regulation cannot survive review under Chevron 

step two or [Motor Vehicle Manufacturers Ass’n of the United States, Inc. v. State Farm Mutual 

Auto Insurance Co., 463 U.S. 29, 42–43 (1983)], and then decide these issues in the first 

instance.” Id.

On September 20, 2012, the Court referred the matter to the Commission and directed it 

to advise the Court on or before October 12, 2012, whether it intended to pursue a new 

rulemaking or defend the regulation. Order Referring Matter to Def. FEC for Further 

Consideration [Dkt. # 66]. In a status report filed on October 4, 2012, the Commission stated 

that it did not intend to pursue a rulemaking and that it would continue to defend 11 C.F.R. 

§ 104.20(c)(9) as written before the Court. FEC Status Report [Dkt. # 67]. But the following 

day, intervenor-defendant CFIF advised the Court that it had petitioned the FEC to engage in the

rulemaking that the agency had just informed the Court that it did not intend to undertake. CFIF 

Status Report [Dkt. # 68]. The matter was stayed pending the FEC’s consideration of CFIF’s

petition, and on March 12, 2013, the stay was lifted in light of the agency’s decision to deny the 

petition and forego further rulemaking. See Oct. 18, 2012 Minute Order Staying Case; Mar. 12, 

2013 Minute Order Lifting Stay. The Court permitted the parties to supplement their original 

memoranda with additional arguments on the Chevron step two issue, and it heard oral argument.

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ANALYSIS

I. The standard to be applied at Chevron step two

This Court is bound by the Circuit’s determination that section 30104(f)(2)(E)–(F) is 

ambiguous, and therefore, it must now address the question of whether the implementing 

regulation, 11 C.F.R. § 104.20(c)(9), is “based on a permissible construction of the statute.” 

Chevron, 467 U.S. at 843. At the second step of the Chevron analysis, the reviewing court must 

give “considerable weight” to an agency’s interpretation of a statutory scheme it has been 

“entrusted to administer;” the “court may not substitute its own construction of a statutory 

provision for a reasonable interpretation made by the administrator of an agency.” Id. at 844. As 

the D.C. Circuit put it in Serono Laboratories, Inc. v. Shalala, “under Chevron, courts are bound 

to uphold an agency interpretation [so] long as it is reasonable – regardless [of] whether there 

may be other reasonable, or even more reasonable, views.” 158 F.3d 1313, 1321 (D.C. Cir 

1998).

Here, the Court of Appeals specifically directed this Court to determine whether the 

regulation could survive review under the test prescribed in the State Farm opinion. Van Hollen, 

694 F.3d at 112. In State Farm, the Supreme Court reiterated that under the arbitrary and 

capricious standard, “a reviewing court may not set aside an agency rule that is rational, based on 

consideration of the relevant factors, and within the scope of the authority delegated to the 

agency by the statute.” 463 U.S. at 42. The Supreme Court went on to explain the process in 

greater detail:

The scope of review under the “arbitrary and capricious” standard is 

narrow and a court is not to substitute its judgment for that of the agency. 

Nevertheless, the agency must examine the relevant data and articulate a 

satisfactory explanation for its action including a “rational connection 

between the facts found and the choice made.” In reviewing that 

explanation, we must “consider whether the decision was based on a 

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consideration of the relevant factors and whether there has been a clear 

error of judgment.” Normally, an agency rule would be arbitrary and 

capricious if the agency has relied on factors which Congress has not 

intended it to consider, entirely failed to consider an important aspect of 

the problem, offered an explanation for its decision that runs counter to the 

evidence before the agency, or is so implausible that it could not be 

ascribed to a difference in view or the product of agency expertise. 

Id. at 43 (citations omitted). This, then, is the framework that must govern the Court’s decision. 

But as plaintiff points out, that analysis cannot be divorced from the context of the particular 

statutory scheme involved. 

Plaintiff Van Hollen cites Shays v. FEC (“Shays II”), 414 F.3d 76 (D.C. Cir. 2005), and 

Shays v. FEC (“Shays III”), 528 F.3d 914 (D.C. Cir. 2008), to the Court. Pl.’s Supplemental 

Briefing on Remanded Issues (“Pl.’s Supp.”) at 1–2 [Dkt. # 87]. He asserts that a reviewing 

court’s task is to determine whether agency regulations are reasonable “in light of the language, 

legislative history, and policies of the statute,” id. at 2, quoting Shays v. FEC, 337 F. Supp. 2d 

28, 78 (D.D.C. 2004), and he calls upon the Court to follow the approach “exemplified in Shays”

and to reject the regulations here on the grounds that they frustrate the policy behind the BCRA. 

Id. at 1–2, citing Shays III, 528 F.3d at 919.

The first Shays opinion cited is not helpful because it does not concern a Chevron step 

two exercise. In Shays II, the court addressed the standing question at length, and then it 

affirmed the District Court’s invalidation of a set of FEC rules as too lax. See 414 F.3d at 83–96. 

The first two rules failed at the threshold Chevron inquiry, as the court found that they 

contravened the unambiguously expressed intent of Congress, and the Circuit Court upheld the 

District Court’s invalidation of the other three rules on APA grounds, noting that it did not need 

to reach the second Chevron question of whether the rules were reasonable because the agency 

had failed to advance any justification for them. Id. at 96–97.

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But in Shays III, the Court of Appeals did directly address the second step of the Chevron 

analysis when it approved the District Court’s “thorough” rejection of a set of FEC rules based 

on the finding that they were “either contrary to BCRA’s purpose or arbitrary and capricious.” 

528 F.3d at 919. The Court stated: “[i]n applying Chevron’s second step and the APA, we must 

reject administrative constructions of [a] statute . . . that frustrate the policy that Congress sought 

to implement.” Id. (alterations in original) (internal quotation marks omitted).

So, under the precedent that this Court is bound to follow, the challenged rule must also 

be tested against the policy that BCRA was intended to advance.

II. The challenged regulation is not supported by the agency’s explanation for the 

regulation.

The starting point of the second step of the Chevron analysis must be the stated reason 

behind the regulation, which is illuminated by both the Notice of Proposed Rulemaking

(“NPRM”) and the Explanation and Justification that accompanied the announcement of the final 

rule. The rulemaking was supposed to be about one narrow subject: what to do to implement 

the Supreme Court’s decision in WRTL II. See 72 Fed. Reg. at 50261 (“These proposed rules 

would implement the Supreme Court’s decision in FEC v. Wisconsin Right to Life, Inc., which 

held that the prohibition on the use of corporate and labor organization funds for electioneering 

communications is unconstitutional as applied to certain types of electioneering 

communications.”); see also id. at 50262 (“The Commission is initiating this rulemaking to 

implement the Supreme Court’s decision in WRTL II. . . . The Commission is seeking public 

comment on two proposed alternative ways to implement the WRTL II decision in the rules 

governing electioneering communications.”). To assess the reasonableness of the regulations, 

then, one must first ascertain what the Supreme Court decided in that case that required 

implementation.

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WRTL II dealt with the constitutionality of section 203 of the BCRA, 2 U.S.C. 

§ 441(b)(2), as applied to particular advertisements that the Wisconsin advocacy organization

planned to broadcast. 551 U.S. at 449. At that time, section 203 made it a crime for a 

corporation or labor union to use its general treasury funds to pay for any “electioneering 

communication,” 2 U.S.C. § 441b(b)(2), that is, a broadcast, cable, or satellite communication 

that refers to a candidate for federal office and is aired within a prescribed time period before an 

election. 52 U.S.C. § 30104(f)(3)(A).

WRTL II was not the first time the Supreme Court addressed section 203: the opinion 

followed McConnell, in which the Court considered a series of facial challenges to multiple 

provisions of the statute. 540 U.S. at 114. As part of that exercise, the McConnell Court found 

the regulation of corporate and labor union expenditures in section 203 to be constitutional on its 

face. Id. at 203–09. The plaintiffs claimed that section 203 was overbroad and that it violated 

the First Amendment because it covered not only campaign speech, or “express advocacy,” but 

also more general “issue advocacy” that might mention a candidate for federal office. Id. at 205–

07. The Court disagreed and found that the compelling governmental interests that justified the 

imposition of restrictions on express campaign speech would also apply to advertisements that 

are the “functional equivalent” of express campaign speech. Id. at 204–06. Thus, it concluded

that even if one assumed that section 203 would “inhibit some constitutionally protected 

corporate and union speech,” plaintiffs had not met their heavy burden of establishing that the 

provision was overbroad and that it could never be constitutionally enforced. Id. at 207; see also 

WRTL II, 551 U.S. at 457 (“The [McConnell] Court concluded that there was no overbreadth 

concern to the extent the speech in question was the ‘functional equivalent’ of express campaign 

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speech.”). The McConnell opinion did not further define “functional equivalent” or undertake to 

resolve any future as-applied challenges to the law.

It was WRTL II that directly presented an as-applied challenge to section 203. The nonprofit issue advocacy corporation sought to broadcast radio advertisements that clearly identified 

a particular Senator running for re-election during the period when “electioneering 

communications” would be illegal under section 203. 551 U.S. at 458–61. The Supreme Court 

reviewed its decision in McConnell and explained that resolving an as-applied challenge required

it to determine at the outset “whether the speech at issue is the ‘functional equivalent’ of speech 

expressly advocating the election or defeat of a candidate for federal office, or instead a ‘genuine 

issue a[d].’” Id. at 457 (alteration in original), quoting McConnell, 540 U.S. at 206. The Court 

observed that McConnell did not adopt any test to be used as the standard for future as-applied 

challenges, and so, it found it necessary to do so. Id. at 464.

The Court determined that in order to safeguard First Amendment rights, it was necessary 

that the standard be an objective one, “focusing on the substance of the communication rather 

than amorphous considerations of intent and effect.” Id. at 469. 

It must entail minimal if any discovery, to allow parties to resolve disputes 

quickly without chilling speech through the threat of burdensome 

litigation. And it must eschew the open-ended rough-and-tumble of 

factors, which invites complex argument in a trial court and a virtually 

inevitable appeal. In short, it must give the benefit of any doubt to 

protecting rather than stifling speech.

In light of these considerations, a court should find that an ad is the 

functional equivalent of express advocacy only if the ad is susceptible of 

no reasonable interpretation other than as an appeal to vote for or against a 

specific candidate.

Id. (citations and internal quotation marks omitted).

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This then is the sole holding of WRTL II: that the section 203 prohibition against the use 

of a corporation’s or labor organization’s general funds for electioneering communications can 

only be applied to express campaign ads or to those issue ads that can only be reasonably 

interpreted as a plea to vote for or against a particular candidate.

Applying the new test, the majority concluded that the particular ads at issue were not the 

functional equivalent of express campaign speech, and that since the interests that would justify 

restricting corporate campaign speech or its functional equivalent do not support restrictions on 

issue advocacy, section 203 was unconstitutional as applied to WRTL’s ads. Id. at 457.4

Notably, the opinion in WRTL II said absolutely nothing about the reporting requirements

that attach when an individual or a group disburses funds to pay for express campaign ads or

those issue ads that fall within the definition of electioneering communications. The plaintiff 

had specifically disavowed any challenge to the reporting provisions, noting that the ads it 

sought to run would be subject to the transparency that was the goal of the BCRA. See In the 

matter of Electioneering Communications: Notice 2007-16 (“Rulemaking Hr’g”) (Oct. 17, 

2007), Administrative Record (“AR”) 622–23 [Dkt. # 17-5] (quoting WRTL’s brief: “Because 

WRTL does not challenge the disclaimer in the disclosure requirements there will be no ads done 

under misleading names. There will continue to be full disclosure of all electioneering 

communications both as to disclaimer and public reports. The whole system will be 

transparent.”). This raises the question: how did a Supreme Court opinion lifting the ban on 

 

4 The Court was sharply divided on this point. Justice Souter, in an opinion joined by 

Justices Stevens, Ginsburg, and Breyer, wrote: “it is beyond all reasonable debate that the ads 

are constitutionally subject to regulation under McConnell.” Id. at 525 (Souter, J., dissenting).

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WRTL’s ads prompt the agency to revise the reporting requirements? After all, the Supreme 

Court had already squarely addressed those reporting requirements in McConnell.

5

After the WRTL II decision was handed down, a petition for rulemaking was filed. The 

petition – filed by the James Madison Center for Free Speech, which was represented by the 

same counsel who had represented WRTL – did not call for a change in the disclosure

requirements either. Petition for Rulemaking: Protecting “Genuine Issue Ads” from the 

“Electioneering Communication” Prohibition & Repealing 11 C.F.R. § 100.22(b), James 

Madison Ctr. for Free Speech, AR 96 [Dkt. # 17-2]. Instead, the organization urged the agency 

to undertake a rulemaking to make two changes to the FEC’s regulations in the wake of WRTL

II: 1) to recognize the protection accorded to genuine issue ads in WRTL II by promulgating a 

rule limiting the ban on corporate spending on “electioneering communications” to ads that meet 

the WRTL II definition; and 2) to repeal 11 C.F.R. § 100.22(b), the Commission’s definition of 

“expressly advocating.” Id., AR 98–103.

In response to that petition, the agency published a NPRM and requested comments on 

proposed rules that “would implement the Supreme Court’s decision in FEC v. Wisconsin Right 

to Life, Inc.” 72 Fed. Reg. at 50261. Acknowledging that “[t]he plaintiff in [WRTL II] . . . did 

 

5 The McConnell plaintiffs had complained that the requirements should not extend to both 

express and issue advocacy, but the Supreme Court unequivocally rejected that contention, 

quoting the District Court opinion at length and noting its approval: 

We agree with the District Court that the important state interests that 

prompted the Buckley Court to uphold FECA’s disclosure requirements –

providing the electorate with information, deterring actual corruption and 

avoiding any appearance thereof, and gathering the data necessary to 

enforce more substantive electioneering restrictions – apply in full to 

BCRA. Accordingly, Buckley amply supports application of FECA 

§ 304’s disclosure requirements to the entire range of “electioneering 

communications.”

540 U.S. at 196 (footnote omitted). 

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not contest . . . the reporting requirement in section [30104](f)(1)” and therefore that the case did 

not directly impact the BCRA’s reporting requirements, id. at 50262, the agency nonetheless set 

out two alternative approaches for how it could revise the then-established disclosure 

requirements to apply to the newly allowed WRTL II ads.

Under the first alternative, the agency observed that “corporations and labor 

organizations that make [WRTL II] electioneering communications . . . totaling over $10,000 in a 

calendar year must file reports like other entities that make electioneering communications.” Id.

at 50271. It proposed amending subsection 104.20(c)(7), which deals with the use of segregated 

bank accounts to fund electioneering communications, to include separate subparts covering nonWRTL II and WRTL II ads so that corporations and labor unions would be authorized to create 

such accounts to fund the permissible ads and would report contributions to the accounts 

accordingly. Id. The FEC also recognized that under Alternative I, corporations and unions 

would be permitted to expend general treasury funds for WRTL II ads. Id. In contemplating that 

circumstance, it posed a series of questions about how the agency should administer the 

disclosure requirements established by section 104.20(c)(8) in that context:

Under the proposed regulations, how would a corporation or labor 

organization report an electioneering communication funded with general 

treasury funds? If the corporation or labor organization does not pay for 

the electioneering communication from an account described in proposed 

sections 104.20(c)(7)(ii) and 114.14(d)(2)(i), would the corporation or 

labor organization be required to report “the name and address of each 

donor who donated an amount aggregating $1,000 or more” to the 

corporation or labor organization during the relevant reporting period, as 

required by [52 U.S.C. § 30104(f)(2)(F)] and 11 [C.F.R. §] 104.20(c)(8)? 

If so, how would a corporation or labor organization determine which 

receipts qualify as “donations”? Should the Commission limit the 

“donation” reporting requirement to funds that are donated for the express 

purpose of making electioneering communications?

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Id. Although the agency posed this question, the first alternative set out in the Notice did not 

include any sort of limiting language. 

Alternative 2 embodied a simpler approach. Under that option, the agency proposed that

“a communication that qualifies for [the WRTL II] exemption in proposed section 100.29(c)(6) 

would be exempted from the definition of ‘electioneering communication.’” Id. at 50272. In 

other words, all WRTL II communications would be exempt from the “regulations imposing 

reporting requirements on persons making ‘electioneering communications,’” while “the 

reporting requirements applicable to all communications that continue to meet the definition of 

‘electioneering communication’ would remain unchanged.” Id. Thus, neither of the alternatives 

proposed in the FEC’s notice incorporated the specific limiting language that is the subject of 

this litigation. 

The Commission received twenty-seven written comments on the proposed rules, and it 

held a two day hearing at which fifteen witnesses testified. 72 Fed. Reg. at 72900. After the 

hearing and before it promulgated the final rule, the Commission added the language that is at 

issue in this case – “made for the purpose of furthering electioneering communications” – for the 

first time. See Memorandum on Draft Final Rule on Electioneering Communication to the 

Commission (Nov. 16, 2007), AR 1006 (setting forth its proposed draft B of the regulation). The 

agency received only one comment in response to the newly proposed language, which strongly 

opposed the proposal. Letter from the Campaign Legal Center to the Federal Election 

Commission (Nov. 19, 2007), AR 1024–25.

6

 

6 Another commenter recommended that the Commission adopt Draft A. AR 1018–19.

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This review of the procedural history tends to diminish the validity of the regulation

under the second level of the Chevron analysis because it demonstrates that the Commission’s 

action was unmoored from the stated basis for embarking on a rulemaking in the first place.7

 

Before WRTL II, the McConnell Court upheld the disclosure provisions on their face, 

with the understanding that they applied to individuals, to those corporations and unions using 

segregated bank accounts, and to “groups” that had many individual donors. The rules also

applied to some corporations, see FEC v. Mass. Citizens for Life, Inc., 479 U.S. 238 (1986), even 

if that group was small.

WRTL II left the reporting provisions untouched. 

And even after WRTL II, when the restrictions on corporate and labor union spending 

were struck down entirely in Citizens United, and the Supreme Court was well aware that the 

statutory reporting requirements would now apply to a large number of ads funded by those 

organizations, it again left the reporting requirements untouched. 558 U.S. at 368 (alterations in 

original) (citations omitted) (“[Citizens United] contends that the governmental interest in 

providing information to the electorate does not justify requiring disclaimers for any commercial 

advertisements, including the ones at issue here. We disagree. . . . The disclaimers required by 

 

7 Indeed, multiple witnesses at the rulemaking hearing specifically cautioned that it would 

be inappropriate for the Commission to take up a change to the disclosure rules when the sole 

purpose of the rulemaking was supposed to be to conform the existing regulations to the WRTL II 

opinion. See, e.g., Rulemaking Hr’g, AR 511 (testimony of Mark Elias) (imploring the agency 

to address the Supreme Court ruling on electioneering communications and do no more: “[y]ou 

are not faced with questions about disclosure”); id. 517 (testimony of Allison Hayward) (joining 

Elias and “counseling restraint”); id. 647–49 (testimony of Donald Simon) (arguing that the 

Commission was engaging in a “bait and switch” because “[t]he plaintiff in WRTL did not 

challenge the [s]ection 201 disclosure requirements and repeatedly reassured the Supreme Court 

that if it did permit corporations to make some electioneering communications there would 

continue to be full disclosure . . . . But now having won the [s]ection 203 argument on that basis 

many urge the Commission to reach out and eviscerate the disclosure requirement”); id. at 807–

08 (testimony of Brian Svoboda) (urging the Commission to proceed narrowly and do little more 

than WRTL II required and noting that WRTL II did not address disclosure).

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section 311 ‘provid[e] the electorate with information’ and ‘insure that the voters are fully 

informed’ about the person or group who is speaking.”). 

Therefore, the Court finds that it was unreasonable for the FEC to alter the statutory 

reporting requirements on the stated grounds that it was implementing the Supreme Court’s 

decision in WRTL II. There was nothing about implementing the new definition of “functional 

equivalent of express advocacy” for purposes of enforcing section 203 that required narrowing 

the disclosure requirements in 52 U.S.C. § 30104(f)(2).

III. The record does not reflect that the FEC examined the relevant data and 

articulated a rational connection between the facts found and the choice it made.

In addition to considering the regulation in light of its stated purpose, the Court must also

review the record to determine whether the agency fully explained how its choice was predicated 

upon data it accumulated during the rulemaking process. Here, the parties did not deal with the 

record before the agency in any detail in their briefs. So the Court found it necessary to review 

the record in its entirety in order to undertake the analysis described in State Farm. And it found 

that there is a very poor fit between the rule that was promulgated and both the question and the 

evidence that were before the agency at the time.

As an initial point, the Court notes that it was not until after the notice and comment 

period that the Commission announced that it had decided to depart from the proposed rules set 

forth in the NPRM and to do something entirely different – to limit corporate and labor union 

disclosure requirements to cover only the names and addresses of donors who intended to fund 

an electioneering communication. 72 Fed. Reg. at 72911 (“As discussed in detail below, after 

consideration of the comments, the Commission has decided to depart from the rules proposed in 

the NPRM . . . .”). Although the mere fact that changes were made to a proposed rule after the 

notice and comment period does not itself invalidate the rule or the process, see Air Transport 

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Ass’n of Am. v. Civil Aeronautics Bd., 732 F.2d 219, 224 (D.C. Cir. 1984), the chronology here 

has an impact upon this portion of the State Farm analysis. As the record stands, none of the 

comments received during the NPRM stage or at the Commission’s hearing addressed the 

language that the Commission eventually adopted, and the one post-hearing comment that did 

address the proposed course of action vehemently opposed it. The record is therefore largely 

devoid of evidence that supports the specific language that the Commission used to curtail the 

disclosure requirements in the case of corporations and labor organizations.

The record also lacks evidence that supports the Commission’s decision to alter the 

disclosure regulations in the first place. In the Explanation and Justification that accompanied 

the promulgation of the final rule, the Commission stated that the disclosure regulation 

governing corporations and labor organizations that paid for electioneering campaigns would be 

tailored so that those entities need “disclose only the identities of those persons who made a 

donation aggregating $1,000 or more specifically for the purpose of furthering [electioneering 

communications] made by that” entity. 72 Fed. Reg. at 72911 (emphasis added). It offered the 

following explanation in support of its decision:

A corporation’s general treasury funds are often largely comprised of 

funds received from investors such as shareholders who have acquired 

stock in the corporation and customers who have purchased the 

corporation’s products or services, or in the case of a non-profit 

corporation, donations from persons who support the corporation’s 

mission. These investors, customers, and donors do not necessarily 

support the corporation’s electioneering communications. Likewise, the 

general treasury funds of labor organizations and incorporated 

membership organizations are composed of member dues obtained from 

individuals and other members who may not necessarily support the 

organization’s electioneering communications.

Id. The agency also noted – without further specific citations to the record or testimony – that 

“witnesses at the Commission’s hearing testified that the effort necessary to identify those 

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persons who provided funds totaling $1,000 or more to a corporation or labor organization would 

be very costly and require an inordinate amount of effort.” Id. Based on those considerations, 

the agency then summarily concluded that “the policy underlying the disclosure provisions of 

BCRA [was] properly met by requiring corporations and labor organizations to disclose and 

report only those persons who made donations for the purpose of funding [electioneering 

communications].” Id. 

Plaintiff does not dispute the agency’s representation that at the time WRTL II was 

decided, it was anticipated that there would be a significant increase in the number of 

advertisements sponsored by corporations and labor unions. See 551 U.S. at 535–36 (Souter, J., 

dissenting). But the written comments submitted to the agency and the testimony at the hearing 

did not supply grounds for a narrowing of the reporting requirements. Although some 

commenters raised concerns about the burdens that the disclosure rules might impose, those 

concerns were generally presented in the context of urging the agency to define electioneering 

communications clearly and narrowly, so that neither the prohibition nor the reporting 

requirements would apply to genuine issue advertisements or commercial speech. No 

commenters provided data to quantify the burden that this change in the law might impose on 

corporations or labor unions, and no written submissions actually asked the Commission to limit 

the disclosure rules to contributions made for the purpose of funding electioneering 

communications.

Four of the commenters did not discuss the question of whether the reporting rules should 

be changed in their comments at all. See Comments of the James Madison Center for Free 

Speech, AR 96–103 (the organization that petitioned for the rulemaking); Comments of the 

American Cancer Society Cancer Action Network, Inc., AR 222–27; Comments of the Thomas 

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Jefferson Center for the Protection of Free Expression and Comments of the Media Institute, AR 

249–62. And although there were several commenters that did mention disclosure, they 

generally mentioned it in the context of advancing their position that their issue ads should not be 

subject to any regulation. They favored the approach embodied in Alternative 2 – establishing 

an exclusion to the definition of electioneering communications for the type of speech protected 

by WRTL II – and observed that excluding constitutionally protected communications from the 

definition of electioneering communications would also mean that the reporting requirements 

would not apply to them. See, e.g., Comments of National Association of Realtors, AR 376–82; 

see also Comments of Citizens United, AR 298–323.

8

For example, the American Association of Advertising Agencies, the American 

Advertising Federation, and the Association of National Advertisers sought clarification that 

their commercial and business advertisements were fully shielded by the Constitution and not 

subject to either the prohibitions or the reporting requirements in the BCRA. See Comments of 

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

the Association of National Advertisers, AR 231–41. They favored a broad safe harbor that 

would clearly distinguish commercial speech from prohibited communications and noted: 

“There is no legal rationale for subjecting to the electioneering communication reporting regime 

ads that are protected under the WRTL II decision. Further, such an obligation would impose 

 

8 Citizens United also mentioned disclosure in passing in its comments in favor of the 

adoption of Alternative 2 instead of Alternative 1. The organization was concerned that 

advertisements for its books and documentary films could include references to candidates for 

federal elective office. It took the position that the FEC was obligated by WRTL II to address 

general advertising for businesses, products, and services, and that it should do so by exempting 

business advertising from the definition of electioneering communications. In that context, it 

noted: “Also, from a practical standpoint, we believe the disclosure requirements of Alternative 

1 would be extremely difficult to implement because ads for products and services are often 

financed by investment capital and sales revenues, not reportable contributions.” Comments of 

Citizens United, AR 309. 

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significant burdens on advertisers and would chill the full exercise of their First Amendment 

rights.” Id. 239. The advertisers pointed out that “the legal underpinnings for reporting 

articulated in Buckley are wholly absent for ads protected by the WRTL II decision[,]” and 

concluded, “[a] reporting and disclosure regime is inconsistent with the zone of safety created by 

the Supreme Court for advertisements that can reasonably be interpreted as concerning 

something other than an election campaign.” Id. 240. 

The Free Speech Coalition, Inc. and the Free Speech and Education Fund, Inc. echoed 

those concerns, and they called for the promulgation of a narrow definition of “express advocacy 

and its functional equivalent” that would in turn limit the applicability of the reporting and 

disclosure requirements. Comments of the Free Speech Coalition, Inc. and the Free Speech & 

Education Fund, Inc., AR 325–35. “[I]f the funding limitations placed upon a broadcast of a 

genuine issue ad or any other broadcast communication is found to be unconstitutional, then the 

reporting and disclosure requirement that would otherwise be attached to the ad because it is the 

functional equivalent of express advocacy cannot be justified by the Buckley standard . . . .” Id. 

330. The two free speech organizations warned that disclosure and reporting requirements posed 

the same dangers and should be subject to the same strict scrutiny as absolute prohibitions if they 

imposed any burden on constitutionally protected speech. Id. 329; see also Comments of 

Independent Sector, AR 365 (advocating Alternative 2 – excluding issue ads from the definition 

of electioneering communications – over Alternative 1 because “issue advocacy is a fundamental 

right and purpose of nonprofit organizations” and a “distinction between the funding of ads, 

which the Supreme Court struck down, and the disclosure of funding for that right cannot be 

maintained. . . . Aside from the daunting complexity involved in following FEC procedures, 

donor disclosure requirements present significant privacy concerns that are not outweighed by 

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the government interest in disclosure. . . . We are also concerned about the chilling effect of 

proposed Alternative One on advocacy rights”); Comments of OMB Watch, AR 384–88 (calling 

for a more specific general rule exempting issue advocacy and grassroots lobbying from the 

statutory prohibitions and objecting to the imposition of any reporting requirements on 

broadcasts that should be exempt).9

And similarly, the American Taxpayers Alliance and Americans for Limited Government 

also warned that compelled disclosure could infringe upon or chill the exercise of First 

Amendment rights and rejected the notion that the Commission could regulate or impose 

reporting requirements on issue ads that fell short of express advocacy or its functional 

equivalent. Comments of the American Taxpayers Alliance and Comments of Americans for 

Limited Government, AR 416–29. 

In sum, the commenters who expressed concerns about the burdens or the 

constitutionality of the reporting requirements were primarily advancing the view that certain

advertising should fall outside of the scope of the regulatory regime altogether. None of them

called for or even discussed revising or narrowing of the reporting requirements for corporations 

and labor unions sponsoring genuine electioneering communications: their aim was to shrink the 

pool of advertisements to which those requirements would apply.

Meanwhile, on the other end of the spectrum, there were approximately a dozen

commenters who urged the Commission to keep the disclosure requirements intact. See 

Comments of S.B. Hornik, AR 167; Comments of Professors Richard L. Hasen of School of 

Law: Loyola University Chicago and Professor Richard Briffault of Columbia Law School, AR 

 

9 In light of the language in Citizens United and McConnell, the Court is not persuaded that 

there is much force to the constitutional objections raised to reporting requirements as opposed to 

the funding prohibitions. See Citizens United, 558 U.S. at 366–70; McConnell, 540 U.S. at 196; 

Van Hollen, 851 F. Supp. 2d at 88–89.

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184–88; Comments of Washington State Public Disclosure Commission, AR 190–92; Comments 

of Professor Allison Hayward of George Mason University Law School, AR 243–47; Comments 

of Democratic Senatorial Campaign Committee and Democratic Congressional Campaign 

Committee, AR 264–69; Comments of Common Cause, Public Citizen, and U.S. Public Interest 

Research Group (“PIRG”), AR 346–60; Comments of Senators McCain, Feingold, and Snowe

and Representative Shays, AR 369–74; Comments of Public Campaign, AR 390–91; Comments 

of the Campaign Legal Center, Democracy 21, Brennan Center for Justice, Common Cause,

League of Women Voters, and U.S. PIRG, AR 393–414; Comments of Campaign Legal Center 

and Robert F. Bauer, AR 431–33; Comments of Alliance for Justice, AR 435–51; Comments of 

American Federation of Labor and Congress of Industrial Organizations (“AFL-CIO”), 

American Federation of State, County, and Municipal Employees (“AFSCME”), National 

Education Association (“NEA”), and Service Employees International Union (“SEIU”), AR 

453–75.

10

The Center for Competitive Politics expressed strong views against revising the 

disclosure rules: 

To our knowledge, no plaintiff has challenged McConnell’s interpretation 

of BCRA’s reporting requirements for electioneering communications. 

Because the Commission has no new or additional basis for believing that 

electioneering communications run within the temporal windows cannot 

be subject to reporting, the Commission’s rulemaking in response to 

WRTL II must address the application of BCRA § 203 to its regulations 

and not application of other parts of BCRA. This means the Commission 

has guidance from the Court only to amend 11 CFR Part 114.

 

10 The comments made by Alliance for Justice as well as those submitted by American 

Federation of Labor and Congress of Industrial Organizations, American Federation of State, 

County, and Municipal Employees, National Education Association, and Service Employees 

International Union also contained an alternative position on what the agency should do in the 

wake of WRTL II if the Commission should ultimately decide that the disclosure rules should be 

changed. See Comments of Alliance for Justice, AR 444; Comments for American Federation of 

Labor and Congress of Industrial Organizations, et al., AR 457.

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Comments of Center for Competitive Politics, AR 339.

Similarly, Common Cause, Public Citizen, and U.S. PIRG admonished the Commission 

that WRTL II did not open the door to altering that portion of the statute:

The Commission should retain the reporting and disclosure requirements 

for electioneering communications that are express advocacy for a number 

of compelling reasons. First, the plaintiffs in both WRTL and the other 

major as-applied challenge to BCRA Section 203’s funding prohibition 

(Christian Civic League of Maine v. FEC) never contested BCRA’s 

reporting and disclosure requirements for electioneering communications. 

Indeed, they repeatedly told the courts that they were ready and willing to 

comply with the disclosure rules if permitted to fund the ads they wished 

to run.

Second, neither the controlling opinion nor concurring opinions in WRTL

mentioned the reporting and disclosure requirements of BCRA Section 

201. They certainly did not call into question the legality of the 

provisions. The FEC would therefore be entering uncharted waters.

Comments of Common Cause, et al., AR 351 (footnote omitted). That view was seconded by 

the Congressional sponsors of Title II of the BCRA, Senator John McCain, Senator Russell D. 

Feingold, Senator Olympia Snowe, and Representative Christopher Shays, who insisted that the 

Supreme Court’s holding finding some funding restrictions to be unconstitutional did not extend 

to the reporting requirements:

The reporting requirements were not at issue in [WRTL II]. The Court did 

not analyze their constitutionality, and if it had, an entirely different legal 

framework would have been implicated. The Commission should not 

undertake such an analysis on its own, especially since the Court in 

McConnell upheld the reporting requirement against a facial challenge. . . . 

One of the main purposes of Title II of BCRA was to make sure that the 

public was informed of the identity of persons making expenditures on 

electioneering communications. The legislative history of BCRA and the 

record in McConnell are replete with examples of ads run by organizations 

with benign sounding names and of unknown origin. The reporting 

requirements of Section 201 were a significant reform in and of 

themselves, completely independent of the prohibition contained in 

Section 203. Those disclosure provisions apply not only to corporations 

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and unions but to individuals and unincorporated associations who fund 

electioneering communications. And the severability clause in section 401 

of BCRA was meant to underscore congressional intent that even if 

Section 203 were declared unconstitutional, other sections of the bill, 

including Section 201, should survive. The Commission should not now 

effectively throw out Section 201 based on an as-applied challenge to 

Section 203 that specifically and explicitly disclaimed any challenge to 

Section 201. 

Comments of Senator McCain, et al., AR 371. 

Other commenters underscored the salutary purposes of disclosure and took the position 

that reporting requirements are much less burdensome than restrictions on expenditures. See 

Comments of Public Campaign, AR 390–91 (“Disclosure enhances transparency and can provide 

citizens with the information to determine how to vote or respond to calls for grassroots 

lobbying. . . . I urge the Commission to retain the extant disclosure requirements for all ads that 

meet the definition of ‘electioneering communication.’”).

After the written comments were submitted, there was a hearing to consider the NPRM. 

The hearing to consider the NPRM was held on October 17 and 18, 2007, and it consisted of a 

series of panels. The witnesses and the Commissioners considered many issues other than the 

possible narrowing of the disclosure rules, and those discussions that do not bear on the issue 

presented in this case are not summarized here. 

The first panel included James Bopp, who represented Wisconsin Right to Life in WRTL 

II, on behalf of the organization that filed the petition for rulemaking: The James Madison 

Center for Free Speech. He was joined by Marc Elias of Perkins Coie, representing the 

Democratic Senatorial Campaign Committee, and former FEC staff member and George Mason 

Law School faculty member, Allison Hayward. AR 503–632. While there was some discussion 

of disclosure issues during this panel, the bulk of the discussion was directed towards other 

issues, such as which of a series of sample ads should be considered to be the “functional 

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equivalent” of express advocacy, and whether the proposed rules would have the effect of 

regulating grassroots lobbying. It is true that Professor Hayward commented that if a 

corporation or labor union did not utilize a segregated account, the regulatory reporting 

requirements would require it to “open up [its] books,” which could impose a “real burden.” AR 

517. But she did not offer further specifics or quantification. When prompted to make a 

prediction, Professor Hayward stated that she anticipated that the Supreme Court might find 

disclosure requirements for WRTL II communications to be unconstitutional if presented with the 

right case, AR 592–93, but her central point was that WRTL II dealt only with the ban on 

corporate spending, and not disclosure, and therefore, the Commission should not tread into that 

area at all. AR 517–18.

Elias similarly “implored” the Commission to do what was necessary under WRTL II and 

no more; “you are not faced with questions about disclosure.” AR 511; 537. Elias also 

cautioned against attempting to predict how the Supreme Court would treat the disclosure of 

WRTL II communications. AR 594. 

Hayward’s general comments about the burdens of disclosure included her observation 

that the “contributors” to be disclosed under the statute would not include an organization’s 

commercial customers, those who pay for its services, or members who pay membership dues. 

AR 611. Elias agreed. AR 612; 616 (“Are there ‘contributors’ to Ford?”). So this panel did not 

supply evidence that compliance would be difficult for commercial enterprises or labor unions 

that did not elect to establish the segregated bank account. 

At least one of the Commissioners did express concerns about how the rule would affect 

non-profit organizations since they are not generally required to identify their contributors, and 

the delineation between dues and “donations” paid to them might be unclear. AR 616–19. But 

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much of the record consists of the Commissioners themselves thinking out loud about those 

issues – there was little data placed before them. And there was no testimony offered that 

suggested that the availability of the segregated bank account option would not alleviate any 

burdens or privacy concerns associated with imposing the disclosure requirements on a nonprofit or any other organization. 

Finally, as the Commission wrestled with the larger question of how it should administer 

the statutory disclosure requirements in the case of organizations that Congress did not anticipate 

would be funding electioneering communications in the first place, Elias urged the Commission 

to be guided by the approach that the BCRA is “a disclosure statute.” AR 599. He cautioned the 

Commission to address only section 203 issues, not issues related to section 201 disclosures. AR 

599–600. Even James Bopp, who was the most vocal member of the panel on behalf of 

grassroots advocacy organizations and who warned against adopting an approach that would 

chill their lobbying and issue advocacy, conceded that no change to the disclosure requirements 

was required by the WRTL II decision. AR 626. Instead, Bopp’s position was limited to 

advocating for Alternative 2, which would exclude WRTL II communications from the definition 

of electioneering communications all together. AR 601–04.

The second panel on October 17, 2007 included Jan Baran, representing the Chamber of 

Commerce; Larry Gold on behalf of the AFL-CIO; and Don Simon for Democracy 21, a nonprofit campaign finance reform organization. AR 632–720. Much of the discussion covered 

other issues, such as what the definitions of express advocacy and electioneering 

communications should be, and how to provide clear guidance about what would be permissible 

after WRTL II. See, e.g., AR 665–720. With respect to any changes to the disclosure provisions, 

Baran simply urged the FEC to create a safe harbor for the funding of issue ads that would be 

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sure to include all permissible speech, which would in turn have the effect of also eliminating 

reporting requirements for permissible speech and grassroots lobbying. AR 636–39.

Gold emphasized that the line of prohibition in the statute defined the line of disclosure, 

and he pressed for an approach along the lines of Alternative 2 that would narrowly define 

“electioneering communication” rather than a new regulation addressing the prohibition or the 

related disclosure rules directly. AR 641. In the event the agency took a different approach, 

Gold observed that the Commission was faced with a situation that had not been contemplated 

by Congress: “unions and corporations would never be in a position to have to report 

electioneering communications because they were simply banned from doing so.” Id. Gold also 

testified that the words “contribute” or “donate” connote a voluntary transfer without 

consideration, so under the terms of the statute, “such income [as] receipts, dues, investment 

income, damages awards and other commercial income and the like ought not to be subject to 

disclosure.” AR 645. He explained that taking a broader approach would impose “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 . . . which requires unions to disclose all

receipts at the $5,000 threshold.” AR 646 (referring to the $5,000 threshold for disclosure under 

the long-standing Labor Management Report and Disclosure Act). 

Simon urged the FEC to leave the disclosure requirement for electioneering 

communications untouched. 

The [WRTL II] court said nothing about disclosure and the analysis used to 

evaluate the “as applied” constitutionality of Section 203 cannot logically 

be extended to invalidate the disclosure required by Section 201. The 

standard of review is different. Strict scrutiny versus intermediate 

scrutiny. The nature of the burden is different – a ban on spending versus 

a disclosure of spending that, as the court previously said, “does not 

prevent anyone from speaking.” . . . Yet, notwithstanding these 

differences on every level of the analysis and notwithstanding the court’s 

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own silence on the matter in [WRTL II], and notwithstanding the court’s 

eight to one majority ruling in McConnell that the disclosure provision is 

facially constitutional, you are being asked to make a determination that 

Section 201 is unconstitutional. Surely the fact that Justices Scalia and 

Kennedy, as well as Chief Justice Rehnquist in McConnell, agreed that 

Section 201 was constitutional while at the same time voting to strike 

down Section 203, indicates that they think the analysis of the two 

provisions is completely different and there is nothing in [WRTL II] that 

indicates that they or any other member of the court has changed their 

mind on this question.

AR 649–651. Simon was asked whether the FEC could choose its first alternative and adopt 

language that would exempt business income and membership dues from disclosure. AR 654–

55. He opined that the agency could exempt business income, and he expressed some 

uncertainty about whether the agency could address union dues or whether that required a 

legislative fix. He acknowledged that membership dues paid to non-profit organizations might 

raise a different set of questions, but he warned against doing anything that would undermine the 

reporting requirements, and he directed the agency’s attention back to McConnell, where the 

Supreme Court had talked about the importance of donor disclosure in an era of advertisements 

sponsored by vague “false fronts.” AR 656–57. And he emphasized that Congress had already 

addressed the burdens that might arise out of the disclosure obligation by building in the $1000 

reporting amount and creating the option of a segregated bank account. AR 657–58. 

The Commissioners turned back to the union representative to ask if there were some 

way to exempt membership dues while still exposing those hiding behind vague monikers. The 

witness did not express a need for further regulation in the union context since he opined that 

dues would fall outside of the disclosure provisions as they were already written. “[T]he main 

point is that the statute talks in terms of ‘contributing contributions’ and you have interpreted it 

to mean ‘donating donations.’ Union dues are neither. Plainly they are neither.” AR 659–60. 

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But Gold did caution that an organization should not be required to reveal its members simply 

because it had engaged in a single electioneering communication: 

It seems to me that if somebody gives funds at the dues level – pays dues –

that is not a donation, that is not money contributed. If that individual 

voluntarily gives more, that is truly a donative act and then you are 

beginning to count perhaps towards the $1,000. But you do clearly have 

the authority to make these distinctions and you ought to do so. And the 

availability of the option that you’re suggesting in one of the alternatives –

a separate fund, even a union or corporation having a segregated fund, and 

just dealing with that – that doesn’t really address this issue completely. 

AR 660–61. 

The Chairman of the Commission observed that when WRTL II identified a new group of 

communications that could not be prohibited, it necessarily drew a broader group of entities into 

the regulatory regime, and then the panel went on to discuss with how it should define the class 

of communications that were protected. AR 665–721.

The third panel on October 17, 2007 consisted of Jessica Robinson of the American 

Federation of State, County, and Municipal Employees and Paul Ryan from the Campaign Legal 

Center. AR 721–790. Robinson’s remarks were directed to the need for a broad, clearly 

delineated safe harbor for permissible issue advocacy. She recommended that the Commission 

adopt Alternative 2, which would limit disclosure obligations by limiting the set of 

communications to which they would pertain. AR 721–26. She did say, though, that if the 

agency adopted Alternative 1, instead, it should simplify the disclosure requirements. She feared 

that the regulatory requirement to disclose “donations” could be applied to dues and therefore 

difficult to enforce and she concluded, “[t]he easiest way to address these issues is to require 

reporting only for those people who earmark funds to be used for WRTL II type communications 

and other funds should be reported just as a donation of the labor union.” AR 727.

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Ryan pointed out that while there were several commenters who proposed exempting 

WRTL II ads from the BCRA disclosure requirements, there was a large group of commenters, 

who came from groups with varying perspectives on campaign finance disclosure, who would all 

agree “that the plaintiff in WRTL did not challenge the disclosure requirements, the WRTL court 

did not address the constitutionality of the disclosure requirements, and the McConnell court by a 

large majority specifically upheld the constitutionality of these disclosure requirements.” AR 

730–31. For those reasons, and because there are different constitutional tests to be applied to 

funding restrictions and disclosure rules, there are broader governmental interests served by 

disclosure, and the burdens imposed by disclosure are less than those imposed by restrictions on 

expenditures, he urged the agency not to utilize the rulemaking to alter the BCRA disclosure 

requirements. AR 729–32. 

The panel then talked a great deal about the scope of any safe harbor and where the 

Supreme Court had drawn the line on permissible expenditures for issue ads, before it turned 

again to the disclosure issue. One Commissioner asked whether there would be any union 

members whose dues would exceed $1,000 per year, and the answer was yes, although no 

numbers were provided. AR 766–67. The Commissioner also posed questions about how to 

exempt legitimate dues from disclosure requirements without creating a loophole whereby an 

anonymous advocacy organization could simply structure itself to charge exorbitant “dues” and 

thereby shield the names of a limited set of individual donors. Robinson responded, “I suppose 

one thing you would look at is donative intent . . . . Union dues, they are not donations because 

they are required for union membership. So one of the ways you would look at it is you would 

look at the intent of the members of [the group]. Are they doing it so the organization can pay 

for electioneering communications?” AR 768–69. The specter of probing a contributor’s intent 

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prompted this comment by the Vice Chairman: “It’s one of those things that we would have to 

get into discovery for and that would be a bad thing.” AR 769. Robinson agreed, id., and the 

panel resumed its discussion about the content of WRTL II ads.

On October 18, 2007, the Commission heard from Brian Svoboda on behalf of the 

Democratic Congressional Campaign Committee, Jeremiah Morgan of William J. Olson, P.C., 

representing the Free Speech Coalition and Free Speech Defense and Education Fund, and 

Michael Trister for the Alliance for Justice. AR 797–899. Morgan took a strong stance against 

imposing disclosure requirements on entities sponsoring issue ads, and he argued that neither of 

the alternatives in the Notice would comport with the First Amendment. AR 798–805. Svoboda 

encouraged the Commission to proceed narrowly and to do little more than what WRTL II 

required, particularly in the disclosure arena, which was not addressed in the opinion at all and 

might require a different legal standard and method of legal review. AR 805–09. He maintained 

that this approach would reflect “fidelity to what it was that Congress passed,” AR 806, but in 

his remarks, Trister countered that the existing reporting requirements were not written for 

corporations or labor unions, so it would be impossible for the Commission to divine how 

Congress would have decided the question. Under those circumstances, he counseled the agency 

to adopt Alternative 2, excluding WRTL II communications from the definition of electioneering 

communications, and to leave the question of what reporting requirements should apply to the 

funding of this new particular category of speech up to the legislature. AR 812–16.

After the panelists discussed the safe harbor issue in depth, a Commissioner asked:

The comment that was most persuasive to me on this point was the one the 

labor unions filed, because it seems to me you would not even get very 

useful information out of making a labor union disclose the names of all of 

its members, anybody who has paid dues in the last year . . . . Now is 

there some way that we could preserve the disclosure piece of it, because I 

think it’s still on the books and we kind of have an obligation to do that, 

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and yet, define donation perhaps in some way to exclude union dues . . . 

and yet not open the door to . . . those sort of organizations that are always 

described as shady or shadowy because we do not know who the donors 

are behind them? That’s the sort of disclosure that I think Congress 

actually has historically been concerned about. Is there some way to catch 

one and not the other?

AR 833–34. 

Svoboda posited that Congress provided for the segregated account as one possible 

option for organizations that wanted to limit disclosure by disclosing only those who donated to 

the segregated account. AR 834–37. Trister suggested that the agency could call for the 

information that 501(c) organizations are already required to supply to the IRS. But he 

expressed the view that there should be a distinction between a general support grant, which an 

organization can use for any purpose, and an earmarked or special project grant, and he noted 

that general support grants, even if reportable to the IRS, should not be included within the FEC 

definition of donation. “If they gave it whenever they gave it and said, ‘Here’s $1,000 and I 

want you to run an ad,’ then they ought to report that. But if they give them $1,000 and say, 

‘here’s $1,000. I like your organization. Keep up the good work,’ which is essentially a general 

support grant, then it is unfair and it [is] misleading to the public to suggest that person was 

connected to the ad in some way, that they paid for the ad.” AR 839–40. Trister also noted that 

Congress had distinguished between earmarked and non-earmarked funds in other reporting 

contexts. AR 840.

Svoboda generally agreed with Trister as to unions, but he thought that an intent-based 

distinction would be problematic in the case of those non-profit organizations created for the 

primary purpose of running electioneering communications. He cautioned that such an approach 

would create an enormous hole in the statutory requirement, leaving both the public, and a 

candidate who might wish to respond to an attack, in the dark about who had sponsored an 

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advertisement at a critical time close to an actual election. AR 842–44. In response to a question 

by a Commissioner concerned about potential threats to those who might criticize an incumbent 

officeholder, Svoboda further explained that the identity of the speaker, and not simply the 

content of the speech, could play an important role in determining the nature of the response. 

AR 850–52. Trister took the position that Svoboda’s concerns were overstated, because such 

organizations would likely be required to disclose under the regulations for registered political 

committees anyway. AR 845.

The panel was then occupied by an extended legal discussion on the question of whether 

the justifications for campaign finance regulation set forth in the Supreme Court’s opinion in 

Buckley v. Valeo would apply to WRTL II ads and what Chief Justice Roberts meant on page 

2672 of the WRTL II opinion when he questioned whether issue ads that are not the functional 

equivalent of express advocacy raise the sort of corruption concern identified in Buckley as 

reason for campaign finance regulation. And Commissioner von Sakovsky asked, if WRTL II 

ads were not electoral activities, how did the FEC have any authority to call for disclosure of 

their sponsors at all? AR 853–56. Since the positions expressed by both the Commissioners and 

the witnesses during this and similar portions of the hearing were legal conclusions, they shed 

light on the agency’s thought processes and decision making but in the end, they do not provide 

“evidence” against which the decision can be tested.

The final panel consisted of Stephen Hoersting of the Center for Competitive Politics; 

John Sullivan of the Service Employees International Union; Heidi Abegg, on behalf of the 

American Taxpayers Alliance and Americans for Limited Government, and Michael Boos of 

Citizens United. AR 900; 902. Abegg urged the Commissioners to think about those 501(c)(4) 

organizations that may express unpopular opinions and generate strong adverse reactions from 

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both the government and the public. She took the position that disclosure requirements would 

raise privacy concerns and pose a risk of harassment and reprisals. She spoke of a longstanding 

tradition of anonymous public speech, and said that there would be no compelling governmental 

interest that would support disclosure regulations in the case of communications that are not 

express advocacy or its functional equivalent. Ultimately, Abegg urged the adoption of 

Alternative 2, which would have the effect of eliminating disclosure requirements for WRTL II

communications. AR 902–08. 

Boos of Citizens United also noted that Alternative 1 did not solve the problems related 

to those communications because it would leave the “burdensome” disclosure scheme that 

applies to electioneering communications intact. But Boos failed to elaborate on how disclosure 

was burdensome. AR 910. He took the position that the FEC should adopt Alternative 2 instead 

since it would exempt the ads in question – not only the WRTL II grassroots ads, but also 

Citizens United’s advertisements promoting the books and documentary films it produces – from 

the regulatory scheme altogether. Finally, he called for a broader safe harbor in Alternative 2. 

AR 908–14.

Stephen Hoersting agreed with the notion that “it would be absurd to have organizations 

Congress never intended to run ECs all of a sudden have to start reporting their electioneering 

communications,” but he cautioned: “it would be untenable for the Commission to invoke its 

administrative authority to stay application of Section 201, a facially valid provision, without 

some organization asserting the application of 201 violates the rights of speech and association. 

It would be unseemly for that question to be litigated in the posture of an agency defending its 

administrative prerogatives . . . with no factual background of a speaker who is actually chilled.” 

AR 915. See also AR 927–28. He concluded: “The Commission should therefore hold its nose 

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and apply Section 201 to issue advocates . . . . The word ‘contributes’ . . . should guide the 

Commission in crafting disclosure requirements even if disclosure comes down harder on 

nonprofit organizations whose ads are funded by contributors than it would for for-profit 

corporations.” AR 916.11 Finally, Hoersting underscored the importance of the need for a clear, 

narrow definition of express advocacy. AR 917–19.

The union witness explained that the SEIU, AFL, NEA, and AFSCME were all very 

active in the area of issue advocacy, spending considerable resources on federal and state 

legislative activities and spending “a tremendous amount of our members’ voluntary 

contributions on political activities.” AR 920. He argued that WRTL II required the agency to 

revise its regulations concerning the definition of electioneering communications since the 

Supreme Court had redefined the boundaries of the Commission’s authority, and he emphasized 

the important distinction between donations and dues.

Members pay dues to unions not to finance electioneering 

communications, but to finance and support the full range of activities that 

the union engages in, from collective bargaining representation, to 

servicing members, to engaging in advocacy both with their employers 

and with state and local officials around the country. And it would be, if 

not counterproductive, at least serving no particular purpose to report or 

disclose the names of people who did in fact not contribute to the 

financing of a particular electioneering communication.

AR 923–24. 

There was then considerable discussion by the panel about the extent of the safe harbor 

provisions in the regulations under consideration and the manner in which the agency could and 

should implement the WRTL II imperative to define the functional equivalent of express 

advocacy. AR 925–65. In response to a question from one of the Commissioners returning to 

 

11 Later, Abegg disagreed. AR 952–53 (“I am for ‘the tie goes to the speaker’ and not 

require another nonprofit to spend a lot of money bringing another lawsuit to challenge the 

disclosure provisions.”). 

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the disclosure issue, Stephen Hoersting suggested that the Commission could probably draw an 

inference from Congress’s rejection of amendments to the Honest Leadership Open Government 

Act that would have required the disclosure of donors to grassroots lobbying organizations that 

Congress did not intend that the FECA disclosure rules would apply to grassroots issue 

advertisements. AR 964–65. Boos, from Citizens United, stressed the fact that if the agency 

were to define electioneering communication to exempt certain ads, then those ads would be free 

of any the disclosure and reporting requirements as well. AR 967.

At the close of the hearing, the Vice Chairman asked Abegg to provide more information 

in support of her claim that disclosure could pose some threat to potential donors. AR 968. The 

witness reiterated that disclosure requirements might chill political speech, but she presented the 

Commission with no specifics:

I have particular examples, but I can’t share them. Some of them are 

businessmen who are active in one political party but there is an issue that 

is important to them so they want [to] give to effect change on that issue 

and they are afraid if they do so they will face harassment or reprisals 

from those in the other organizations with which they were associated.

AR 969–70. Abegg went on: 

Some of them just don’t want their names known. They don’t want any 

attention. They just want to do it anonymously and go about their way.

AR 970. She maintained that “[i]t is a very real concern” that could stop the flow of donations, 

and Hoersting echoed that sentiment. He indicated that he had been involved in conversations 

where “people stopped their activities because they heard about this disclosure aspect,” but his 

testimony on that point was similarly vague. AR 971.

Chairman Lenard: Could you just elaborate on exactly concretely what 

their concern is?

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Mr. Hoersting: Yes. Well, I am not sure that I could, actually. I just 

know when they heard disclosure they were not longer interested in 

pursuing that issue that had a nexus to candidates.

AR 971. Sullivan from SEIU reminded the Commission of the need to protect the names of 

union members from potential reprisals in the workplace. AR 973–74. And then finally, with 

respect to the disclosure issue, the Citizens United witness raised the question of the 

organization’s sales revenue and asked how, if the agency adopted Alternative 1, one would 

differentiate between such revenue and reportable “contributions” that would be used to fund 

advertisements. AR 974–75. At that point, the second day of hearings came to an end.

A month later, on November 16, 2007, the General Counsel to the Commission 

transmitted a Memorandum to the Commission which set forth two proposed draft final rules for 

the implementation of a WRTL II exemption. AR 1001–12. Draft A simply created an 

exemption from the definition of “electioneering communication.” AR 1002–04. But Draft B 

included changes to the electioneering communications reporting requirements in 11 CFR 

§104.20, adding the language at issue in this case. AR 1006. The agency received only one 

letter responding to the change in the reporting requirements, and in it, J. Gerald Hebert and Paul 

S. Ryan of the Campaign Legal Center expressed their strong objection. AR 1024–26 (“We 

believe it would be a mistake of historic proportions for the Commission to go beyond the text of 

the controlling opinion in WRTL.”).

12 The final rule was approved by the Commission on 

November 20, 2007.

Based upon this review of the entire record and the hearing transcript, the Court cannot 

conclude that the FEC “examine[d] the relevant data and articulate[d] a satisfactory explanation 

 

12 The Commission also received a letter strongly objecting to proposed language in the

draft Explanation and Justification which would have differentiated between for-profit 

corporations and qualified non-profit corporations when applying the new limitation to the 

reporting requirements. AR 1127–28. This language did not appear in the final rule.

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for its action including a ‘rational connection between the facts found and the choice made.’”

See State Farm, 463 U.S. at 43, quoting Burlington Truck Lines v. United States, 371 U.S. 156, 

168 (1962). It is hard to put one’s finger upon any data that prompted the particular rule in 

question, or the specific material in the transcript that supports the agency’s statement in the 

Explanation and Justification that “witnesses at the Commission’s hearing testified that the effort 

necessary to identify those persons who provided funds totaling $1,000 or more to a corporation 

or labor organization would be very costly and require an inordinate amount of effort.” 72 Fed. 

Reg. at 72911. There was no testimony about how many organizations now covered by the 

regulatory regime would be affected by the burdens involved with compliance, what those 

burdens would actually entail, and what the costs would be. 

The witnesses appeared to generally agree that neither the statute nor the existing 

regulations defining “contributors” as “donors” would call for the disclosure of the names of a 

for-profit corporation’s commercial customers and investors, or names of all labor union 

members, since none of those individuals could fairly be characterized as “donors.” Thus, the 

concerns that were expressed related largely to non-profit advocacy groups. In the Explanation 

and Justification that accompanied the final rule, the agency stated that a non-profit corporation’s 

coffers would include “donations from persons who support the corporation’s mission,” but that 

those “donors do not necessarily support the corporation’s electioneering communications.” 72 

Fed. Reg. at 72911. But no testimony indicated how many non-profit organizations, if any, 

collected contributions or dues or that would exceed the $1000 statutory threshold, how many 

individuals made donations or paid dues in those amounts, or how difficult it would be to keep 

track of them. No evidence was adduced that would suggest that individuals contributing more 

than $1000 to a non-profit would be likely to disagree with the messages to be conveyed by that 

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organization in its electioneering communications. And nothing explained why the segregated 

bank account was not a suitable solution for any of the problems that were identified. So the 

Court cannot find the regulation to be reasonable under the State Farm formulation.

IV. The regulation contravenes the language and the purpose of the statute.

It is true that at the second step of the Chevron analysis, the reviewing court is required to 

accord appropriate weight to an agency’s interpretation of a statutory scheme that falls within its 

bailiwick. 467 U.S. at 844. But an agency’s interpretation of an ambiguous statutory provision 

must still be reasonable “in light of the language, legislative history, and policies of the statute.” 

Shays v. FEC, 337 F. Supp. 2d 28, 78 (D.D.C. 2004), aff’d 414 F.3d 76 (D.C. Cir. 2005) 

(“Shays I”), quoting Republican National Committee v. FEC, 76 F.3d 400, 406 (D.C. Cir. 1996). 

Moreover, in Shays III, the Court of Appeals declared: “[i]n applying Chevron’s second step and 

the APA, we must reject administrative constructions of a statute that frustrate the policy that

Congress sought to implement.” 528 F.3d at 918 (internal quotations and edits omitted). In light 

of those precedents, the FEC’s decision to take it upon itself to “limit” the statutory disclosure 

requirements cannot be sustained, and for those reasons, in addition to those set forth above, the 

Court does not find section 104.20(c)(9) to be a reasonable interpretation of the BCRA. 

First, looking at the language of the statute, section 30104(f)(1) imposes its disclosure 

requirements on “[e]very person who makes a disbursement for the direct costs of producing and 

airing electioneering communications in an aggregate amount in excess of $10,000 during any 

calendar year.” 52 U.S.C. § 30104(f)(1). The BCRA defines “person” to include corporations 

and labor unions, 52 U.S.C. § 30101(11), and as the FEC acknowledged in its pleadings before 

this Court, even before WRTL II, the disclosure rules applied to some corporations, in particular, 

the non-profit corporations described in FEC v. Massachusetts Citizens for Life, Inc., 479 U.S. 

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238 (1986). See Def.’s Mem. [Dkt. # 24] at 6. And section 30104(f)(2) requires disclosure of 

“the names and addresses of all contributors who contributed an aggregate amount of $1,000 or 

more,” 52 U.S.C. § 30104(f)(2)(E)–(F) (emphasis added), with no limitation other than the 

threshold amount.

It is true that the Court of Appeals has already stated that the words “contributors” and 

“contributed” can, on their face, be construed to include a purpose requirement. Ctr. for 

Individual Freedom v. Van Hollen, 694 F.3d at 111. But an interpretation that narrows the 

application of the reporting provision would be inconsistent with the policies underlying the 

statute. There can be no dispute that the concept of disclosure and transparency is fundamental 

to the BCRA. As the Court set out in some detail in its prior opinion, the legislative history of 

the BCRA makes it clear that the purpose behind the disclosure requirements was to enable 

voters to be informed about who was trying to influence their decisions. 147 Cong. Rec. S3022-

05, S3034 (Mar. 28, 2001) (statement by Sen. Jeffords) (noting that Congress intended to 

“shine[] sunlight on the undisclosed expenditures for sham issue advertisements”); 147 Cong. 

Rec. S3233-06, S3238 (April 2, 2001) (statement of Sen. Feinstein) (“The attacks come and no 

one knows who is actually paying for them. I believe this is unethical. I believe it is unjust. I 

believe it is unreasonable and it must end.”). As the Supreme Court has explained, the disclosure 

provisions were intended to prevent independent groups from running advertisements “‘while 

hiding behind dubious and misleading names’” so that “citizens [could] ‘make informed choices 

in the political marketplace.’” Citizens United, 558 U.S. at 367, quoting McConnell, 540 U.S. at 

197.

Therefore, it was contrary to the policy goal that Congress intended to implement for the 

Commission to add limiting language to its regulations when the aim of that language was – as 

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the FEC put it – “to ensure that disclosure of the newly-permitted electioneering communications 

would be narrowly tailored . . . .” Def.’s Mem. at 10. Congress did not call for narrow tailoring; 

it called for just the opposite.

And the new rule serves to frustrate the aim of the statute because the introduction of a 

subjective test to the reporting regime creates an exception that has the potential to swallow the 

rule entirely. A donor can avoid reporting altogether by transmitting funds but remaining silent 

about their intended use. 

Moreover, the decision to reduce disclosure and transparency was not justified or 

necessitated by the reasons the agency identified when the final rule was promulgated. The 

Commission posited that the donative purpose limitation was needed because the general 

treasury of a corporation or labor organization is likely to contain funds derived from individuals 

who do not necessarily support the entity’s electioneering communications, and that therefore, 

disclosing the identity of those payors would not advance the goals underlying the reporting 

requirements. 72 Fed. Reg. at 72911. But the same rationale applies equally to partnerships, 

unincorporated entities, and any other “persons,” and Congress determined that they would all be 

bound by the disclosure requirements anyway. See also Citizens United, 558 U.S. at 351 (“All 

speakers, including individuals and the media, use money amassed from the economic 

marketplace to fund their speech.”). And, prior to WRTL II, the disclosure provisions already 

applied to some corporations – the MCFL organizations – which, like other non-profits, pursue a 

broad range of educational and advocacy activities beyond the mere funding of electioneering 

communications. Furthermore, the agency’s statement that it would be too burdensome to 

require organizations to identify all “persons who provided funds,” see 72 Fed. Reg. at 72911, is 

inconsistent not only with the statute, but with the agency’s own regulations, because that is not 

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who had to be identified under the existing regime in the first place. FEC regulations 

implementing the BCRA reporting provisions require the disclosure of “the name and address of 

each donor who donated an amount aggregating $1,000 or more,” 11 CFR §104.20(c)(8) 

(emphasis added), not “persons who provided funds.” The Commission failed to articulate why 

a for-profit corporation’s customers and investors, or a labor union’s members – all of whom 

transfer funds in return for some consideration in the form of goods or services or an ownership 

interest – would not be fully protected by the regulation’s limiting reporting requirements to 

“donors,” or why further elaboration on that term – rather than the interposition of an intent 

limitation that could eviscerate the reporting rules – would not alleviate any lingering confusion. 

In other words, the FEC had already clarified the ambiguous statutory term “contributors” in a 

manner that largely cured the potential problems it identified. And Congress had already 

prescribed a remedy for those organizations that found the identification of all individual donors 

to be too burdensome: the segregated bank account. See 52 U.S.C. § 30104(f)(2)(E).13 

Since nothing about the WRTL II decision altered the operation of those regulations, it 

was unreasonable to add an intent requirement that limited disclosure obligations for the 

supposed purpose of implementing the changes brought about by WRTL II. Indeed, the 

Commission explicitly acknowledged in the Explanation and Justification for the rule that WRTL 

II did not authorize it to eliminate the reporting requirements. See 72 Fed. Reg. at 72901 (“Thus, 

because McConnell has upheld the definition of ECs, as well as the reporting and disclaimer 

requirements, as facially valid, and because WRTL II did not address these provisions, the 

 

13 The fact that these accounts may be used to receive contributions from individual donors 

only does not make them an unsuitable vehicle for eliminating the burdens of organizational 

disclosure; it was the cost and effort that might be involved in reporting individual donations that 

was what troubled the agency.

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Commission has no mandate to revise the underlying definition of ‘electioneering 

communication’ or remove the reporting and disclaimer requirements.”)

Finally, the regulation cannot be supported on the grounds that the Commission fairly 

balanced the need for disclosure against sensitive First Amendment and privacy concerns. See 

Def.’s Mem. at 33–36; CIF Supplemental Mem. [Dkt. # 93] at 5–7. This was not a justification 

advanced in the Explanation and Justification, and more important, those arguments have been 

foreclosed by the Supreme Court. In Citizens United, the Court clearly found that the disclosure 

requirements in the BCRA – even those that apply to ads that are not express advocacy or its 

functional equivalent – do not impinge upon constitutional rights, see Citizens United, 558 U.S. 

at 367–69. See also Independence Institute v. FEC, Civ. Action No. 14-1500 (CKK), 2014 WL 

4959403 (D.D.C. Oct. 6, 2014); Def.’s Opp. at 7 (noting that in McConnell, the Supreme Court 

“upheld the electioneering communication disclosure requirements, noting that they did not 

suppress speech and that important state interests support the requirements”). Moreover, the 

record evidence on the need to address privacy concerns was extremely thin; the fact that some 

contributors “just don’t want their names known” does not provide grounds to override a clear 

Congressional choice in favor of transparency. AR 970. 

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CONCLUSION

For the reasons above, the Court finds that 11 C.F.R. § 104.20(c)(9) is unreasonable and 

therefore fails under the second step of the Chevron test, and that it is arbitrary, capricious, and 

contrary to law in violation of the APA. As a result, the Court will enter judgment in favor of 

plaintiff, and it will vacate 11 C.F.R. § 104.20(c)(9). A separate order will issue.

 

AMY BERMAN JACKSON

United States District Judge

DATE: November 25, 2014

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