Van Hollen v. Fed. Election Comm'n
| Decision Date | 30 March 2012 |
| Docket Number | Civil Action No. 11–0766 (ABJ). |
| Citation | 851 F.Supp.2d 69 |
| Parties | Chris VAN HOLLEN, Jr., Plaintiff, v. FEDERAL ELECTION COMMISSION, Defendant. |
| Court | U.S. District Court — District of Columbia |
OPINION TEXT STARTS HERE
Roger Michael Witten, Fiona J. Kaye, Wilmer Cutler Pickering Hale & Dorr LLP, New York, NY, for Plaintiff.
Plaintiff Chris Van Hollen, Jr., brings this lawsuit under the Administrative ProcedureAct (“APA”), 5 U.S.C. § 706, challenging a regulation promulgated by defendant Federal Election Commission (“FEC”) defining the disclosure requirements for corporations and labor unions that fund electioneering communications. Plaintiff contends that the regulation, 11 C.F.R. § 104.20(c)(9), which was promulgated in the wake of the Supreme Court's decision in FEC v. Wisconsin Right to Life, Inc. (“WRTL”), 551 U.S. 449, 127 S.Ct. 2652, 168 L.Ed.2d 329 (2007), is contrary to the disclosure regime set forth in the Bipartisan Campaign Reform Act (“BCRA”), 2 U.S.C. § 434, , subsections (f)(2)(E) and (F). Therefore, he submits that the regulation should be declared invalid on the grounds that the agency exceeded its statutory authority. 5 U.S.C. § 706(2)(C). Plaintiff also claims that the regulation is otherwise arbitrary, capricious, and contrary to law under the APA. Id. § 706(2)(A).
This case presents what appears to be the novel question of whether an agency may promulgate regulations that narrow a statutory provision for the stated purpose of curing a perceived ambiguity or change in the statute's reach that was created by new legal precedent. Both sides direct the Court to the two step analysis set forth in Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), and neither party has presented the Court with authority that directly addresses the question of what administrative law principles apply when the Supreme Court has altered the landscape. But there is some case law that states that if the language of a statute is clear, it must govern even unforeseen circumstances, and that the agency has no power to amend it on its own. And, a close reading of Chevron itself reveals that the fundamental APA inquiry is whether Congress—either explicitly or implicitly—delegated authority to the agency to clarify a particular provision through regulation, not whether a provision has become unwieldy or even unwise for some other reason. Since the Court concludes that the language of the statutory provision in question is not ambiguous, the FEC's attempt to tailor it to new circumstances cannot stand, even if its approach may have been reasonable. When the agency determined in this instance that the statute should be revised in light of legal developments, it undertook a legislative, policymaking function that was beyond the scope of its authority and that fails at the first step of the Chevron test.
Accordingly, the Court will grant plaintiff's motion for summary judgment [Dkt. # 20] and will deny defendant's cross motion for summary judgment [Dkt. # 25]. The Court will also deny intervenor-defendant Hispanic Leadership Fund's motion to dismiss [Dkt. # 30] and intervenor-defendant Center for Individual Freedom's cross motion for summary judgment [Dkt. # 36].
Plaintiff Chris Van Hollen is a member of the U.S. House of Representatives from the 8th Congressional District of the State of Maryland. Compl. ¶ 9. Plaintiff, who was first elected in 2002, has expressed an intention to seek re-election in November 2012 and communications related to that election will be subject to the regulation at issue in this case. Id. Defendant is a federal agency created pursuant to the Federal Election Campaign Act of 1971 (“FECA”), 2 U.S.C. § 437c, and it is charged with administering and enforcing federal campaign finance laws such as the FECA and BCRA. Def.'s Mem. in Support of Its Mot. for Summ. J. and Opp. to Pl.'s Mot. for Summ. J. (“Def.'s Mem.”) at 2.
Congress enacted the BCRA as an amendment to FECA in 2002, and under the terms of the statute, persons who make disbursements to fund “electioneering communications” are subject to certain reporting obligations. The BCRA defines an electioneering communication as “any broadcast, cable, or satellite communication” that “refers to a clearly identified candidate for Federal office,” is made within 30 days of a primary or 60 days of a general election, and is geographically targeted to the relevant electorate. 2 U.S.C. § 434(f)(3)(A).
Under the BCRA, every “person” who makes disbursements for the direct cost of producing and airing electioneering communications in an aggregate amount that exceeds $10,000 per year must file a report with the Commission. Id. § 434(f)(1), (2). The report must contain, among other things, the “identification of the person making the disbursement, of any person sharing or exercising direction or control over the activities of such person, and of the custodian of the books and accounts of the person making the disbursement.” Id. More significantly for purposes of this case, the BCRA also requires the “person” to disclose the following:
(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.
There is no dispute among the parties that the definition of the word “person” in the statute specifically includes organizations such as corporations and labor organizations. 2 U.S.C. § 431(11). As originally enacted, though, section 203 of the BCRA prohibited most corporations and labor organizations from making electioneering communications with corporate or union general treasury funds. 2 U.S.C. § 441b, invalidated by Citizens United v. FEC, 558 U.S. 310, 130 S.Ct. 876, 913–16, 175 L.Ed.2d 753 (2010).1
Following the enactment of the BCRA, the FEC promulgated regulations implementing the disclosure provisions. 67 Fed.Reg. 65,190 (Oct. 23, 2002); 68 Fed.Reg. 404 (Jan. 3, 2003). The regulation tracked the same two options for reporting the sources of the funds used to make electioneering communications, but the agency substituted the words “donor” and “donated” for “contributor” and “contributed.” It called for the following disclosures:
(7) 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) (effective until Dec. 26, 2007); 68 Fed.Reg. 404, 419 (Jan. 3, 2003). As the FEC explains, “[b]ecause BCRA prohibited corporations from making electioneering communications unless they met the strict criteria of “MCFL corporations,” the new regulation applied to very few corporations (and no unions).” Def.'s Mem. at 6, citing MCFL, 479 U.S. at 263–64, 107 S.Ct. 616;McConnell v. FEC, 540 U.S. 93, 209–12, 124 S.Ct. 619, 157 L.Ed.2d 491 (2003), overruled in part by Citizens United, 130 S.Ct. 876;see note 1, supra.
In 2003, the Supreme Court rejected the first facial challenge to section 203 of the BCRA in McConnell v. FEC, and it upheld the prohibition on the use of general treasury funds by corporations and labor organizations to pay for electioneering communications. 540 U.S. at 93, 124 S.Ct. 619. In WRTL, though, the Court held that the prohibition embodied in section 203 was unconstitutional as applied to expenditures by corporations and unions for advertisements that did not constitute “express advocacy” or the “functional equivalent of express advocacy.” 551 U.S. at 470–76, 127 S.Ct. 2652. The Court explained that a communication is the “functional equivalent of express advocacy” only if it “is susceptible of no reasonable interpretation other than as an appeal to vote for or against a specific candidate.” Id. at 470, 127 S.Ct. 2652. Thus, following WRTL, corporations and labor organizations were permitted to make expenditures for electioneering communications that did not constitute express advocacy or its functional equivalent (“ WRTL ads ”). Id. at 476–82, 127 S.Ct. 2652.
Subsequently, in 2010, the Supreme Court finished the job and completely invalidated the prohibition on the use of corporate and union treasury funds to finance electioneering communications in Citizens United, 130 S.Ct. 876 at 913. At the same time, though, the Court upheld section 201 of the BCRA—the disclosure provision—because “the public has an interest in knowing who is speaking about a candidate shortly before an election.” Id. at 915.
Soon after the WRTL decision, the FEC issued a Notice of Proposed Rulemaking (“NPRM”) “to implement the Supreme Court's decision in WRTL.” 72 Fed.Reg. 50261 (Aug. 31, 2007). The FEC requested public comment “generally regarding the effect of the [WRTL] decision on the Commission's rules governing corporate and labor organization funding of...
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...In 2012, the D.C. District Court first invalidated the FEC regulation for impermissibly altering the meaning of BCRA. Van Hollen v. FEC, 851 F.Supp.2d 69 (D.D.C.2012). The FEC did not appeal this ruling, but the Center for Individual Freedom intervened. The D.C. Circuit reversed, holding th......