Administrative Law - Judicial Review - District Court for the District of Columbia Invalidates Regulations Implementing Bipartisan Campaign Reform Act

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ADMINISTRATIVE LAW--JUDICIAL REVIEW--DISTRICT COURT FOR THE DISTRICT OF COLUMBIA INVALIDATES REGULATIONS IMPLEMENTING BIPARTISAN CAMPAIGN REFORM ACT.--Shays v. FEC, 337 F. Supp. 2d 28 (D.D.C. 2004).

Between 1977 and 2002, Federal Election Commission (FEC) regulations allowed unregulated and unrestricted contributions to political parties--soft money--to influence federal elections. (1) Concerned about the corrupting influence of soft money, Congress passed the Bipartisan Campaign Reform Act of 2002 (2) (BCRA or the Act), often referred to as McCain-Feingold. Recently, in Shays v. FEC, (3) the United States District Court for the District of Columbia invalidated fifteen FEC regulations implementing BCRA. (4) Among the regulations invalidated was the FEC's interpretation of a BCRA provision that allowed federal candidates and officeholders, notwithstanding the Act's other restrictions, to "attend, speak, or be a featured guest at" certain fundraising events. (5) The FEC interpreted this language to permit politicians to solicit soft money while at such events--conduct otherwise prohibited. (6) Although the court struck down this regulation because of flaws in the rulemaking process, (7) it should have invalidated the agency interpretation at Step One of the Chevron analysis. (8) Properly interpreted, the statute's meaning is clear: it merely guarantees that politicians can attend, speak, or be featured guests at such fundraisers without per se violating BCRA.

In 2002, after seven years of legislative battles, (9) a ride on the Straight Talk Express, (10) and a winter of corporate scandals, (11) BCRA's sponsors (12) persuaded Congress to "plug the soft-money loophole" (13) with the Act. Under the Federal Election Campaign Act of 1971 (14) (FECA), soft money contributions were exempt from donation limits and could be used to influence federal elections. (15) A bipartisan 1998 Senate investigation found that soft money had undermined campaign finance laws; (16) both parties exchanged access for contributions. (17) Public outrage at such practices sparked a grassroots movement (18) that led to BCRA.

The FEC promulgated the challenged regulations soon after BCRA's passage. (19) Congressmen Christopher Shays and Martin Meehan, cosponsors of the House bill, filed suit in the United States District Court for the District of Columbia, challenging the FEC's implementation of BCRA's provisions on soft money, coordinated communications, and electioneering communications. (20)

On cross-motions for summary judgment, Judge Kollar-Kotelly reviewed nineteen provisions of the FEC regulations. (21) The court upheld four. (22) The court invalidated four regulations at Step One of Chevron because Congress had "directly spoken to the precise question at issue" (23) and the FEC had not listened. (24) The court invalidated five rules at Step Two of Chevron, finding that they were impermissible interpretations of ambiguous statutory language, (25) in part because some "unduly compromise[d] the Act's purposes." (26) The court found that the six remaining regulations survived Chevron review but failed to comport with the requirements of the Administrative Procedure Act (27) (APA): four were "arbitrary and capricious" under the APA and Motor Vehicle Manufacturers Ass'n v. State Farm Mutual Automobile Insurance Co., (28) and two were invalid because their notice of proposed rulemaking was inadequate under the APA. (29) The court remanded the fifteen invalidated regulations to the FEC for action consistent with the opinion. (30)

Among the regulations the court found permissible under Chevron but unacceptable under State Farm was 11 C.F.R. [section] 300.64(b). (31) The court began its consideration of this regulation by examining the relevant statutory language: "Notwithstanding [the Act's restrictions on solicitation and other activity], a candidate or an individual holding Federal office may attend, speak, or be featured guests at a fundraising event for a State, district, or local committee of a political party. …