Van Hollen v. FEC (Appeals court 2012)

On September 18, 2012, the U.S. District Court of Appeals for the District of Columbia Circuit reversed the judgment of the District Court in Van Hollen v. FEC. The Court of Appeals found that the lower court erred in holding that Congress “spoke plainly” when it enacted 2 U.S.C. § 434(f) of the Bipartisan Campaign Reform Act, thus foreclosing any regulatory construction of the statute by the FEC.

The appeals court remanded the case with instructions to “refer the matter to the FEC for further consideration.” On September 20, 2012, the district court directed the Commission to inform the court by October 12, 2012, whether the Commission “intends to pursue rulemaking or defend its current regulation.”

Background

The Bipartisan Campaign Reform Act (BCRA) defines an electioneering communication as any broadcast, cable or satellite communication that refers to a clearly identified candidate for federal office, is publicly distributed within certain time periods before an election and is targeted to the relevant electorate. 2 U.S.C. §434(f)(3). Under the BCRA, every person who makes disbursements for an electioneering communication aggregating over $10,000 per year must file a report with the FEC identifying, among other things, the person who made the disbursement. 2 U.S.C. §434(f)(1), (2). If the disbursement is paid out of a segregated account consisting of funds contributed by individuals directly to the account for electioneering communications, then the report must disclose the names and addresses of all those who contributed an aggregate of $1,000 or more within a certain time period to the account. If the disbursements were not made from a segregated account, then the report must disclose the names and addresses of all contributors who contributed over $1,000 within a certain time period to the person making the disbursement. 2 U.S.C. §434(f)(2)(E).

At the time BCRA was passed, all labor unions and almost all corporations were prohibited from making electioneering communications, so Congress did not specify a particular disclosure regime for such communications. The regulation at issue in this case, 11 CFR 104.20(c)(9), was promulgated by the FEC in 2007 after the Supreme Court’s decision in Wisconsin Right to Life, which allowed corporations and unions to make certain types of electioneering communications for the first time. The regulation requires corporations or labor organizations that make WRTL-permitted electioneering communications to disclose the name and address of each person who made a donation aggregating $1,000 or more to the corporation or labor organization, which was made for the purpose of furthering electioneering communications. 104.20(c)(9). (Emphasis added.)

The District Court found that BCRA clearly requires every person who funds electioneering communications to disclose all contributors, “and there are no terms limiting that requirement to call only for the names of those who transmitted funds accompanied by an express statement that the contribution was intended for the purpose” of making electioneering communications. The court also stated that Congress did not delegate authority to the FEC to narrow BCRA’s disclosure requirement through agency rulemaking.

Analysis and decision

The Court of Appeals rejected this analysis and reversed the lower court’s decision. The Court of Appeals found that the lower court erred in holding that Congress spoke plainly in enacting 2 U.S.C. § 434(f). The appellate court concluded that 2 U.S.C. § 434(f) is “anything but clear, especially when viewed in the light of the Supreme Court’s decisions in [Citizens United v. FEC and WRTL v. FEC].” Instead, it found that 2 U.S.C. § 434(f)(2)(F) could be construed to include a “purpose” requirement since that subsection only applied to disbursements for the direct costs of producing and airing electioneering communications. The appellate court also noted that there was no indication that Congress anticipated the circumstances at issue in this case. The court found that it was “due to the complicated situation that confronted [the FEC in promulgating 104.20(c)(9)] in 2007 and the absence of plain meaning in the statute that the FEC acted pursuant to its delegated authority… to fill ‘a gap’ in the statute…" The FEC’s promulgation of 11 CFR 104.20(c)(9) reflects an attempt by the agency to provide regulatory guidance under the BCRA following the partial invalidation of the speech prohibition imposed on corporations and labor unions in the context of ‘electioneering communications.’”

The Court of Appeals stated that, since the FEC did not participate in the appeal, the court did not fully understand the FEC’s position and would not “divine how the FEC would resolve the many issues raised in the appeal.” Instead, the Court of Appeals vacated the District Court’s decision and remanded the case to the District Court with an order to refer the matter back to the FEC for a “prompt” decision on whether it intends to pursue a rulemaking or whether it will further defend the current regulation in District Court.

On September 20, 2012, the District Court issued an order referring the matter back to the FEC with instructions to file a status report on or before October 12, 2012. At that time, the FEC must advise the court of whether it intends to pursue a rulemaking or defend the current regulation.

The full text of the Court’s Judgment may be found at: https://transition.fec.gov/law/litigation/van_hollen_ac_judgment.pdf.

U.S. District Court of Appeals for the District of Columbia Circuit: Case 12:5117.

Resources:

• Van Hollen v. FEC litigation page