Appellate Court Decision in Van Hollen v. FEC Disclosure Litigation

The D.C. Circuit Court of Appeals issued an opinion today overturning a lower court holding that invalidated the Federal Election Commission’s (“FEC”) regulations governing the disclosure of of donors by groups sponsoring electioneering communications in Van Hollen v. FEC.  The lower court held that the FEC regulations limiting the disclosure of donors by groups sponsoring electioneering communications were contrary to law under the Administrative Procedure Act.  After the lower court’s decision, the FEC issued a press release, yes a press release and not a rulemaking or a policy statement, implementing the lower court decision. 

Well, today’s appellate court decision contains some interesting statements that should spark robust debates in campaign finance circles. 

First, the court states that it cannot divine the FEC’s position on fundamental issues in the case because the FEC did not participate as a party to the appeal.  Specifically, the court stated:

The FEC’s failure to participate in this appeal makes it impossible for the court to fully understand the agency’s position on numerous issues that have been raised by the parties with respect to the meaning of the statute, the intended reach of the disputed regulation, and the import of the Supreme Court’s decisions addressing campaign finance law.

Today’s decision by the federal appellate court reverses the lower court’s decision, vacates the summary judgment handed down by the lower court in favor of Congressman Van Hollen, and remands the case to the District Court.  The District Court must now refer the matter to the FEC for further consideration.  The FEC can either initiate a new rulemaking or better explain the meaning and scope of the challenged regulation. 

The court has placed the ball squarely in the FEC’s court.  In all likelihood, however, this issue will not be resolved anytime soon by the FEC and it remains to be seen whether the FEC will issue any press releases or other guidance in the wake of today’s developments.  The issues in this case are important.  The regulated community is entitled to clear guidance from the FEC, especially since it did not participate in the appeal.  With less than two months to go before the November general election, the Commission now has the obligation to publish clear guidance so that groups sponsoring advertisements subject to the disputed regulation have clear notice concerning the disclosure requirements.

Second, the appellate court signaled that the FEC needs to explain this regulation in the wake of the recent Supreme Court campaign finance decisions that have changed the political ecosystem.

After reviewing the record with care, we conclude that the District Court erred in holding that Congress spoke plainly when it enacted 2 U.S.C. 434(f), thus foreclosing any regulatory construction of the statute by the FEC.  The statute is anything but clear, especially when viewed in the light of the Supreme Court’s decisions in Citizens United v. FEC, and FEC v. Wis. Right to Life, Inc.  (citations omitted)

The court’s reference to Citizens United is an interesting one in light of the fact that the FEC has failed to adopt a rulemaking implementing the Supreme Court’s holding in that case.  It’s also interesting since the Citizens United decision was handed down approximately three years after the challenged FEC regulation was adopted.  Interesting tea leaf for folks who follow these matters.

 Finally, the court’s decision poses another interesting question that should not go unnoticed.  Specifically, the court wonders:

The FEC promulgation of 11 C.F.R. 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.”  Unfortunately, the parties arguments in this case have revealed, the angency’s adoption of section 104.20(c)(9) has raised as many questions as it purported to resolve.  For example, neither the court nor the parties understand the reference to 11 C.F.R. 114.15 in section 104.20(c)(9).

11 C.F.R. 114.15 is the regulation setting forth the definition of a permissible electioneering communication and an electioneering communication in the wake of the WRTL II.  Could the court be signalling that permissible electioneering communications, which under the Supreme Court’s holding are issue ads and not campaign-related, be subject to lesser or no disclosure requirements, or should they somehow be treated in an entirely different manner?  This will be an interesting issue to watch as this matter unfolds.

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