Shays v. FEC III

On July 11, 2006, U.S. Representatives Christopher Shays and Martin Meehan (the plaintiffs) filed a complaint in the U.S. District Court for the District of Columbia. The complaint challenges the FEC’s recently amended regulations governing coordinated communications, federal election activity (FEA) and solicitations by federal candidates and officeholders at state party fundraising events. The plaintiffs claim that the rules do not comply with the judgment in Shays I or with the Bipartisan Campaign Reform Act of 2002 (BCRA). The complaint also alleges the FEC did not adequately explain and justify its actions.

Court complaint

In response to the court decisions and judgment in Shays I, the FEC held rulemaking proceedings during 2005 and 2006 to revise a number of its BCRA regulations, including the rules governing coordinated communications, certain definitions of FEA, and the solicitation of soft money by federal officeholders and candidates at state party fundraising events. For more information, see the August 2005 Record, page 1, the March 2006 Record, page 2 and the July 2006 Record, page 1. With respect to these challenged regulations, the plaintiffs allege that the FEC:

• Did not adequately address the questions and instructions of the district court and D.C. Circuit in Shays I;
• Failed to promulgate new rules that comply with BCRA and the Shays I mandate; and
• Provided inadequate explanation and justification for its actions.

The plaintiffs contend, among other things, that the Commission’s revised regulations undermine the purposes of the BCRA by allowing soft money to continue to flow into federal elections and the federal political process.

Coordinated communications

The plaintiffs charge that the Commission’s revised “content standard” impermissibly reduces the pre-election window for coordinated communications¹ in House and Senate races from 120 days to 90 days, in violation of the decision in Shays I. The plaintiffs also argue that the Commission impermissibly retained the election year “gap period” in Congressional races (which begins on the day of the primary and runs until 90 days before the general election) and preserved the Presidential 120- day pre-primary window that was struck down by the court in Shays I. The cumulative effect of these actions, the plaintiffs charge, is to permit unregulated spending by candidates, political parties and others on coordinated communications in many states during much of the election year, provided the communications do not contain republished campaign materials or “express advocacy.”

Agency action arbitrary and capricious

According to the plaintiffs, the Commission relied almost exclusively on a set of data from TNS Media Intelligence / CMAG to support its revised coordination regulations. The plaintiffs allege that the Commission’s use of the data was both arbitrary and capricious because the data do not support the revised regulations and, in some instances, actually undermine them. The plaintiffs further allege that, given the volume and complexity of the CMAG data and the fact that the Commission gave only five business days for public comment in its Supplemental Notice of Proposed Rulemaking, the Commission violated the APA by failing to afford interested parties a meaningful opportunity to participate in the rulemaking.

Definitions of Federal Election Activity

In Shays I, the court held that the Commission had not provided adequate notice of the approach it took in defining FEA “voter registration” and FEA “GOTV activity.” The plaintiffs allege that the Commission unlawfully left intact the limitation that only activities that “assist voters by individualized means” may constitute FEA “voter registration” or FEA “GOTV” activity, and did not revise its definition of voter registration activity, thereby allowing state and local parties to fund substantial amounts of activities that influence federal elections with soft money in violation of BCRA’s “language, structure and purpose.” The plaintiffs also argue that the Commission failed to provide notice in the Notice of Proposed Rulemaking that it might limit the scope of “voter registration” and “GOTV” activities in this manner, which effectively denied parties the opportunity to offer comments that could persuade the agency to modify its rule.

Candidate and officeholder solicitation at state party fundraisers

In Shays I, the court found that the Commission failed to articulate a satisfactory explanation for its regulation governing candidate and officeholder solicitations at state party fundraisers. In its revised Explanation & Justification, the Commission contends that distinguishing between “informational speech” and “solicitations” at a state party fundraising events is more difficult than in other contexts and suggests that the unique difficulty arises largely from the special relationship between federal officeholders and candidates and their state parties. The plaintiffs argue that the Commission failed to explain why the broad exemption is uniquely necessary in the state party fundraising context and contend that the Commission’s failure to provide a reasoned basis for the exemption fails to meet the APA’s requirements for reasoned decision-making.

Relief

The plaintiffs ask the court to declare the referenced regulations to be contrary to law, arbitrary and capricious, and an abuse of discretion.

The plaintiffs also ask the court to:

• Enjoin the operation of the regulations and order the Commission to commence expedited rulemaking proceedings;
• Direct the Commission to adopt appropriate interim regulations during its rulemaking proceedings; and
• Retain jurisdiction over the matter to ensure the Commission’s timely and sufficient compliance with the court’s decision.

U.S. District Court for the District of Columbia, 1:06CV01247

¹ A communication that satisfies the payment, content and conduct prongs of the “coordinated communication test” is an in-kind contribution from the entity paying for the communication. 11 CFR 109.21.