Client Alert
Political Law
Political Law
January 28, 2016
DC Circuit Upholds FEC’s Limited Disclosure
Rule for Corporations and Labor Unions
By Frederick K. Lowell, Anita D. Stearns Mayo and Kathryn E. Donovan
On January 21, 2016, the United States Court of Appeals for the District of
Columbia Circuit upheld the Federal Election Commission’s (FEC) rule
requiring corporations and labor organizations to disclose on an electioneering
communications report only those donations made to their respective treasury
funds that were “made for the purpose of furthering electioneering
communications.” Christopher Van Hollen, Jr. v. Federal Election Commission,
No. 15-5016, slip op (D.C. Cir., January 21, 2016).
Brief Overview
In 2002, Congress passed the Bipartisan Campaign Reform Act (“BCRA”) which, in part, regulated a new
category of political advertising called “electioneering communications” (commonly referred to as issue
ads) defined as follows: any broadcast, cable, or satellite communication which refers to a clearly identified
federal candidate and is made within: (a) 60 days before a general, special, or runoff election for the office
sought by the candidate; or (b) 30 days before a primary or preference election, or a convention or caucus
of a political party that has the authority to nominate a candidate, for the office sought by the candidate;
and (c) for a communication which refers to a Congressional candidate, is targeted to the relevant
electorate. 52 U.S.C. Sec. 30104(f)(3)(A)(i).
BCRA included a ban on corporate and union expenditures for electioneering communications; however,
through a series of U.S. Supreme Court cases culminating in Citizens United v. FEC, 558 U.S. 310 (2010),
the ban on corporate and union expenditures for electioneering communications was invalidated, but the
disclosure requirements were upheld. The FEC then had to decide how BCRA’s electioneering
communications disclosure requirements would apply to corporations and unions.
Under BCRA, every person who spends more than $10,000 in any calendar year to produce and air
electioneering communications must file a report with the FEC within 24 hours of publicly distributing the
communication. Each subsequent distribution of a communication will trigger the filing of another report if
the $10,000 threshold has been exceeded. The report must include the names and addresses of (a) all
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Client Alert
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contributors who contributed an aggregate of $1,000 or more since the first day of the preceding calendar
year to a special segregated bank account for electioneering communications, or (b) all contributors who
contributed an aggregate of $1,000 or more since the first day of the preceding calendar year to the person
making the expenditure for the electioneering communication. 52 U.S.C. Sec. 30104(f)(1), (2)(F); 11
C.F.R. Sec. 104.20(a)-(b).
In applying BCRA’s disclosure obligations to corporations and unions, the FEC issued a rule limiting the
disclosure requirement to the name and address of each person who made a donation aggregating $1,000
or more since the first day of the preceding calendar year to the corporation or labor union “which was
made for the purpose of furthering electioneering communications.” 11 C.F.R. Sec. 104.20(c)(9).
A member of the House of Representatives challenged the FEC’s “purpose requirement” rule as an
impermissible construction of BCRA and an arbitrary and capricious use of the FEC’s regulatory authority.
The Court’s Decision
In addressing the first issue, the Court explained that when construing a statute, only a reasonable
interpretation by an agency, and not the best, is required. Furthermore, since Congress left the meaning of
the term “contributor” ambiguous, this omission resulted in an implicit delegation from Congress to the FEC
to fill in the statutory gaps. “It is a transfer of authority to the FEC, whose task it then became not to find
the best meaning of the text, but to formulate legally binding rules to fill in gaps based on policy judgments
made by the agency rather than Congress.” Citing to Michigan v. EPA, 135 S. Ct. 2699, 2713 (2015).
Since the FEC filled the gap left in BCRA with the same purpose requirement Congress adopted in related
contexts, the Court concluded that the adopted rule was not an impermissible construction of BCRA.
The Court also rejected Van Hollen’s argument that the purpose requirement rule was arbitrary and
capricious. First, since the federal courts had overturned BCRA’s ban on the use of corporate and labor
union funds for electioneering communications, these previously silenced speakers were now subject to
BCRA’s disclosure requirements, and the FEC had the authority to decide how to apply the disclosure
requirements to corporations and unions. Second, the FEC adequately explained its decision to adopt the
new rule. Based on the foregoing, the Court held that the rule was neither arbitrary nor capricious.
What the Decision Means
By upholding the “purpose requirement” rule of the FEC, the limited disclosure requirements imposed on
corporations and labor unions that make electioneering communications have not changed. Once the
expenditures for electioneering communications exceed $10,000 in any calendar year, the corporation or
labor union must file a report with the FEC within 24 hours of distributing the electioneering
communication. If the expenditures were made from the corporation’s or labor union’s general treasury
funds, the report must disclose, among other things, only the names and addresses of donors who
donated an aggregate of $1,000 or more since the first day of the preceding calendar year to the
corporation or labor union for the purpose of furthering the electioneering communications.
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Client Alert
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If you have any questions about the content of this alert please contact the Pillsbury attorney with whom
you regularly work, or the authors below.
Frederick K. Lowell (bio)
San Francisco
+1.415.983.1585
[email protected]
Anita D. Stearns Mayo (bio)
San Francisco
+1.415.983.6477
[email protected]
Kathryn E. Donovan (bio)
Sacramento
+1.916.329.4714
[email protected]
Emily B. Erlingsson (bio)
San Francisco
+1.415.983.1347
[email protected]
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