Shays v. Federal Election Commission

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 5, 2008 Decided June 13, 2008

No. 07-5360

CHRISTOPHER SHAYS,

APPELLEE/CROSS-APPELLANT

v.

FEDERAL ELECTION COMMISSION,

APPELLANT/CROSS-APPELLEE

Consolidated with 07-5361

Appeals from the United States District Court

for the District of Columbia

(No. 06cv01247)

David Kolker, Associate General Counsel, Federal

Election Commission, argued the cause for appellant/cross-

appellee. With him on the briefs was Vivien Clair, Attorney.

Gregory J. Mueller, Attorney, entered an appearance.

Sean P. Trende was on the brief of amicus curiae Center

for Competitive Politics in support of appellant urging

reversal.

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Charles G. Curtis, Jr. argued the cause for

appellee/cross-appellant. With him on the briefs were

Michelle M. Umberger, David L. Anstaett, Lissa R. Koop,

Roger M. Witten, Randolph D. Moss, Fred Wertheimer, and

Donald J. Simon.

J. Gerald Hebert and Paul S. Ryan were on the brief of

amicus curiae U.S. Senator Russell D. Feingold in support of

appellee.

Before: TATEL, GARLAND, and GRIFFITH, Circuit Judges.

Opinion for the court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: Congress passed the McCain-

Feingold Act, formally known as the Bipartisan Campaign

Reform Act of 2002 (BCRA), Pub. L. No. 107-155, 116 Stat.

81, in an effort to rid American politics of two perceived

evils: the corrupting influence of large, unregulated donations

called “soft money,” and the use of “issue ads” purportedly

aimed at influencing people’s policy views but actually

directed at swaying their views of candidates. The Federal

Election Commission promulgated regulations implementing

the Act, but in Shays v. FEC, 414 F.3d 76 (D.C. Cir. 2005)

(“Shays II”), we rejected several of them as either contrary to

the Act or arbitrary and capricious, concluding that the

Commission had largely disregarded the Act in an effort to

preserve the pre-BCRA status quo. Now the FEC has revised

the regulations we earlier rejected and issued several new

ones, three of which are before us here: (1) a “coordinated

communication” standard, the original version of which we

rejected in Shays II; (2) definitions of “get-out-the-vote

activity” and “voter registration activity”; and (3) a rule

allowing federal candidates to solicit soft money at state party

fundraisers. Although we uphold one part of the coordinated

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communication standard known as the “firewall safe harbor,”

we reject the balance of the regulations as either contrary to

the Act or arbitrary and capricious. We remand these

regulations in the hope that, as the nation enters the thick of

the fourth election cycle since BCRA’s passage, the

Commission will issue regulations consistent with the Act’s

text and purpose.

I.

Because both we and the Supreme Court have provided

detailed histories of campaign finance regulation, see

generally McConnell v. FEC, 540 U.S. 93, 115-32 (2003);

Shays II, 414 F.3d at 79-82, here we provide only the

background necessary to understand this case. Since long

before BCRA, the Federal Election Campaign Act (FECA), 2

U.S.C. §§ 431-455, has regulated many aspects of campaign

finance. Relevant here, FECA prohibits corporations and

unions from making direct contributions or expenditures in

connection with federal elections, id. § 441b, and it imposes

dollar limits on individuals’ contributions to federal

candidates, id. § 441a(a). FECA defines “contributions” as

“any gift . . . made . . . for the purpose of influencing any

election for Federal office,” id. § 431(8)(A)(i), and it defines

“expenditures” as “any purchase, payment, distribution, . . .

or gift of money or anything of value, made by any person for

the purpose of influencing any election for Federal office,” id.

§ 431(9)(A)(i). Over time, “contributions subject to

[FECA’s] source, amount, and disclosure requirements” came

to be known as “hard money,” Shays II, 414 F.3d at 80, while

“[p]olitical donations made in such a way as to avoid federal

regulations or limits” came to be known as “soft money,” The

American Heritage Dictionary of the English Language 1652

(4th Ed. 2006); see also Shays II, 414 F.3d at 80 (defining

“soft money” as “[f]unds outside FECA’s sphere”).

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In Buckley v. Valeo, 424 U.S. 1 (1976), the Supreme

Court, invoking constitutional avoidance, construed FECA’s

limitation on expenditures to apply only to funding of

communications that “express[ly] . . . advocate the election or

defeat of a clearly identified candidate for federal office,” i.e.,

those that contain phrases such as “‘vote for,’ ‘elect,’

‘support,’ ‘cast your ballot for,’ ‘Smith for Congress,’ ‘vote

against,’ ‘defeat,’ [or] ‘reject.’” Id. at 43-44 & n.52. Thus,

by avoiding these “magic words,” organizations unable to

make “expenditures”—such as corporations and unions—

could fund so-called “issue ads” that were “functionally

identical” to campaign ads and just as effective. McConnell,

540 U.S. at 126; see also FEC v. Mass. Citizens for Life, 479

U.S. 238, 249 (1986) (clarifying that the limited definition of

“expenditures” applied to ads funded by corporations and

unions). “Little difference existed, for example, between an

ad that urged viewers to ‘vote against Jane Doe’ and one that

condemned Jane Doe’s record on a particular issue before

exhorting viewers to ‘call Jane Doe and tell her what you

think.’” McConnell, 540 U.S. at 126-27.

Following Buckley, the Commission repeatedly

interpreted FECA to expand the permissible uses of soft

money. In particular, because FECA only regulated

contributions intended to influence elections “for Federal

office,” 2 U.S.C. § 431(8)(A)(i) (emphasis added), “questions

arose concerning the treatment of contributions intended to

influence both federal and state elections.” McConnell, 540

U.S. at 123. As the Supreme Court explained:

Although a literal reading of FECA’s

definition of “contribution” would have

required such activities to be funded with hard

money, the FEC ruled that political parties

could fund mixed-purpose activities—

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including get-out-the-vote drives and generic

party advertising—in part with soft money. In

1995 the FEC concluded that the parties could

also use soft money to defray the costs of

“legislative advocacy media advertisements,”

even if the ads mentioned the name of a federal

candidate, so long as they did not expressly

advocate the candidate’s election or defeat.

Id. at 123-24 (footnote and citations omitted).

Because soft money could now be spent in so many ways

that benefited federal candidates, and because it could be

raised in massive amounts without any of FECA’s limitations

or reporting requirements, federal candidates would often

solicit such donations directed to their political party. The

party would then spend the money on ads supporting the

candidate—omitting the magic words—or on get-out-the-vote

activity and voter registration activity aimed at helping the

candidate. This “enabled parties and candidates to

circumvent FECA’s limitations on the source and amount of

contributions in connection with federal elections.” Id. at

126. “As the permissible uses of soft money expanded, the

amount of soft money raised and spent by the national

political parties increased exponentially,” from $22 million in

1984 to $498 million in 2000. Id. at 124. Thus, “the ‘soft

money loophole’ had led to a ‘meltdown’ of the campaign

finance system that had been intended ‘to keep corporate,

union and large individual contributions from influencing the

electoral process.’” Id. at 129 (quoting S. REP. NO. 105-167,

vol. 4, at 4611 (1998); id. vol. 5, at 7515).

Recognizing these problems, Congress passed BCRA, the

“central provisions” of which were “designed to address

Congress’ concerns about the increasing use of soft money

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and issue advertising to influence federal elections.” Id. at

132. BCRA made a number of dramatic changes to campaign

finance law to achieve these goals, including barring national

political parties from soliciting soft money. 2 U.S.C.

§441i(a). Relevant here, the Act required the FEC to develop

a new test for determining what advertisements count as

“coordinated communications,” BCRA § 214(c), 116 Stat. at

95 (codified at 2 U.S.C. § 441a note); barred state parties

from spending soft money on “federal election activity,”

including “get-out-the-vote activity” and “voter registration

activity,” 2 U.S.C. § 441i(b)(1); and prohibited federal

candidates from soliciting soft money, id. § 441i(e).

The FEC first issued regulations implementing BCRA in

2003. Believing these regulations far too permissive,

Representative Chris Shays, a prime BCRA sponsor,

challenged nineteen of them in the United States District

Court for the District of Columbia, arguing that they either

violated the Act or were arbitrary and capricious. In Shays v.

FEC, 337 F. Supp. 2d 28 (D.D.C. 2004) (“Shays I”), the

district court largely agreed with Shays, rejecting fifteen of

the nineteen regulations. On appeal, the FEC challenged the

district court’s decision as to five of the regulations, and in

Shays II, 414 F.3d 76, we affirmed the district court.

In response, the Commission modified or more

thoroughly justified its proposed regulations and reissued

them, along with several new ones. Shays now challenges

three of these regulations. The first is the Commission’s

definition of “coordinated communications,” the original

version of which we rejected in Shays II. This regulation

includes three subparts: (1) a “content standard” providing

that only ads containing certain content may be deemed

coordinated, 11 C.F.R. § 109.21(c); (2) a “conduct standard”

governing when campaign employees and vendors who go to

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work for outside organizations may share campaign

information, id. § 109.21(d)(4)-(5); and (3) a “firewall safe

harbor” provision that is also part of the conduct standard and

protects groups hiring former campaign employees and

vendors, id. § 109.21(h). The second challenged regulation

defines “get-out-the-vote activity” and “voter registration

activity,” id. § 100.24(a)(2)-(3), while the third allows federal

candidates to solicit soft money at state party fundraisers, id. §

300.64.

In a thorough opinion, the district court rejected each of

these rules except the last one, finding them either contrary to

BCRA’s purpose or arbitrary and capricious. See Shays v.

FEC, 508 F. Supp. 2d 10 (D.D.C. 2007) (“Shays III”). The

FEC now appeals as to the rules the district court struck

down, and Shays cross appeals as to the rule the district court

upheld. Senator Russell Feingold, another prime BCRA

sponsor, has filed an amicus brief supporting Shays.

We address each rule in turn, employing two familiar

standards of review: Chevron and the Administrative

Procedure Act. As we explained in Shays II:

[B]ecause the regulations at issue interpret

statutes the FEC administers, we review them

under the two-step analysis set forth in

Chevron U.S.A., Inc. v. Natural Resources

Defense Council, Inc., 467 U.S. 837 (1984),

asking first whether Congress has spoken

directly to the precise question at issue, and

second, if it has not, whether the agency’s

interpretation is reasonable. At the same time,

because the regulations reflect final agency

action under the APA, we ask whether they are

“arbitrary, capricious, an abuse of discretion,

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or otherwise not in accordance with law.” 5

U.S.C. § 706(2)(A).

414 F.3d at 96 (citation omitted). In applying Chevron’s

second step and the APA, we “must reject administrative

constructions of [a] statute . . . that frustrate the policy that

Congress sought to implement.” Cont’l Air Lines, Inc. v.

Dep’t of Transp., 843 F.2d 1444, 1453 (D.C. Cir. 1988)

(quoting FEC v. Democratic Senatorial Campaign Comm.,

454 U.S. 27, 32 (1981)). We review the district court’s

Chevron and APA holdings de novo. See Am. Legion v.

Derwinski, 54 F.3d 789, 795 (D.C. Cir. 1995).

II.

The first and most important issue before us is the FEC’s

revised “coordinated communication” standard. Federal

election law “has long restricted coordination of election-

related spending between official campaigns and outside

groups. The reason . . . is obvious. Without a coordination

rule, politicians could evade contribution limits and other

restrictions by having donors finance campaign activity

directly,” e.g., by asking a donor to buy air time for a

campaign-produced advertisement. Shays II, 414 F.3d at 97.

To prevent such evasion, FECA defines “contributions”

to include “expenditures made by any person in cooperation,

consultation, or concert, with, or at the request or suggestion

of, a candidate.” 2 U.S.C. § 441a(a)(7)(B)(i).

Under pre-BCRA regulations, the FEC

determined whether public communications

such as radio and television ads were

“coordinated” based largely on whether the

candidate had engaged in “substantial

discussion or negotiation” with an outsider,

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resulting in “collaboration or agreement.” See

Shays [I], 337 F. Supp. 2d at 55-56 & n.25

(quoting old regulation). Absent that degree of

cooperation, the communication was

considered uncoordinated and thus would not

count as a FECA contribution. BCRA

instructed the Commission to scrap this

approach. “The regulations on coordinated

communications . . . are repealed,” Congress

declared. “The Federal Election Commission

shall promulgate new regulations on

coordinated communications paid for by

persons other than candidates, authorized

committees of candidates, and party

committees. The regulations shall not require

agreement or formal collaboration to establish

coordination.” BCRA § 214(c), 116 Stat. at

95. Apart from this negative command—

“shall not require”—BCRA merely listed

several topics the rules “shall address,”

providing no guidance as to how the FEC

should address them. See id.

Shays II, 414 F.3d at 97-98 (omission in original).

Responding to BCRA, the FEC issued new coordinated

communication regulations. “Under its new test,

communications count as ‘coordinated’ (and thus as

contributions) if: (1) someone other than the candidate, party,

or official campaign pays for them, (2) the communication

itself meets specified ‘content standards,’ and (3) the payer’s

interaction with the candidate/party satisfies specified

‘conduct standards.’” Id. at 98 (quoting 11 C.F.R. § 109.21).

The conduct standard can be satisfied in several ways, e.g., if

“[t]he communication is created, produced, or distributed at

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the request or suggestion of a candidate,” 11 C.F.R.

§ 109.21(d)(1)(i); if “[t]he communication is created,

produced, or distributed after one or more substantial

discussions about the communication between the person

paying for the communication . . . and the candidate who is

clearly identified in the communication,” id. § 109.21(d)(3);

or if the person paying for the communication hires a

candidate’s vendor or former employee “to create, produce, or

distribute” it and in doing so that vendor/employee uses

“material” information about “campaign plans, projects,

activities, or needs” or shares such information with the

payer, id. § 109.21(d)(4)-(5).

Shays challenges the content standard and two features of

the conduct standard. We address each challenge in turn.

The Content Standard

“Under the ‘content’ element” of the original rule,

“communications made within 120 days of a general election

or primary and ‘directed’ at the relevant electorate [could]

qualify as ‘coordinated’ if they refer[red] to a political party

or ‘clearly identified candidate for Federal office.’” Shays II,

414 F.3d at 98 (quoting 11 C.F.R. § 109.21(c)(4) (2003)).

“Before the 120-day mark,” however, “the rule cover[ed] only

communications that either recycle[d] official campaign

materials or ‘expressly advocate[d] the election or defeat of a

clearly identified candidate for federal office.’” Id. (emphasis

added) (quoting 11 C.F.R. § 109.21(c)(2)-(3) (2003)). Thus,

more than 120 days before a federal election, the FEC’s

original rule allowed candidates to coordinate with outside

groups so long as the ads those groups funded did not include

the magic words or recycle campaign materials.

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Challenging the rule, Shays argued that limiting

regulation outside the 120-day window only to advertisements

containing certain types of content violated the Act’s plain

language and purpose, and that the Commission had failed to

provide any good reason for doing so. The district court

rejected Shays’s Chevron step one argument but found that

the regulation failed Chevron step two because “exclud[ing]

certain types of communications” based solely on their

content “regardless of whether or not they are coordinated

would create an immense loophole that would facilitate the

circumvention of the Act’s contribution limits, thereby

creating ‘the potential for gross abuse.’” Shays I, 337 F.

Supp. 2d at 65 (quoting Orloski v. FEC, 795 F.2d 156, 165

(D.C. Cir. 1986)).

In Shays II, we agreed with the district court that the rule

was invalid, but for slightly different reasons. Like the

district court, we “reject[ed] Shays’s . . . argument that FECA

precludes content-based standards under Chevron step one,”

Shays II, 414 F.3d at 99, but we “disagree[d] with the district

court’s suggestion that any standard looking beyond

collaboration to content would necessarily ‘create an immense

loophole,’ thus exceeding the range of permissible readings

under Chevron step two,” id. at 99-100 (emphasis added)

(quoting Shays I, 337 F. Supp. 2d at 65). Rather, we saw no

need to reach the Chevron step two question—whether this

particular content standard violated BCRA—because

“contrary to the APA, the Commission offered no persuasive

justification for the provisions challenged . . . , i.e., the 120-

day time-frame and the weak restraints applying outside of

it.” Id. at 100; see also id. at 97 (“[W]e need not decide

whether [this rule] represent[s an] altogether impermissible

interpretation[] of FECA and BCRA—the Chevron step two

inquiry—because in any event the FEC has given no rational

justification for [it], as required by the APA’s arbitrary and

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capricious standard.” (citation omitted)). Remanding the rule,

we directed the FEC to provide “some cogent explanation”

for it, “not least because” it effectively “allowed a coordinated

communication free-for-all for much of each election cycle.”

Id. at 100. As we explained:

Under the[se] . . . rules, more than 120 days

before an election or primary, a candidate may

sit down with a well-heeled supporter and say,

“Why don’t you run some ads about my record

on tax cuts?” The two may even sign a formal

written agreement providing for such ads. Yet

so long as the supporter neither recycles

campaign materials nor employs the “magic

words” of express advocacy—“vote for,” “vote

against,” “elect,” and so forth—the ads won’t

qualify as contributions subject to FECA.

Id. at 98.

On remand, the Commission published a new notice of

proposed rulemaking, took comments, held hearings, and

analyzed extensive data on television advertising by

candidates for federal office. It then issued a revised

regulation identical to the original regulation except that it

shortened the length of stricter regulation in congressional

races to 90 days. The revised regulation prohibits coordinated

advertisements “refer[ring] to a clearly identified House or

Senate candidate . . . in the clearly identified candidate’s

jurisdiction 90 days or fewer before the clearly identified

candidate’s general, special, or runoff election, or primary or

preference election.” 11 C.F.R. § 109.21(c)(4)(i). It prohibits

coordinated advertisements “refer[ring] to a clearly identified

Presidential or Vice Presidential candidate . . . in a

jurisdiction during the period of time beginning 120 days

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before the clearly identified candidate’s primary or preference

election in that jurisdiction, or nominating convention or

caucus in that jurisdiction, up to and including the day of the

general election.” Id. § 109.21(c)(4)(ii). Outside the 90/120-

day windows, however, the regulation still prohibits only

coordinated advertisements that “disseminate[], distribute[],

or republish[] . . . campaign materials prepared by a

candidate,” or “expressly advocate[] the election or defeat of a

clearly identified candidate.” Id. § 109.21(c)(2)-(3).

Again challenging the rule, Shays argued that the 90/120-

day windows were unsupported by the evidence, violating the

APA, and that the lax standard applying outside the windows

was both unexplained and contrary to BCRA’s purpose,

violating the APA and failing Chevron step two review. The

district court concluded that the FEC had adequately justified

the 90/120-day windows because the record showed that the

“vast majority of candidate advertising occurred within” those

periods. Shays III, 508 F. Supp. 2d at 42; see id. at 40-43. It

also rejected Shays’s claim that the lax pre-window standard

would undermine the Act’s purposes. The district court

nonetheless struck down the revised regulation as arbitrary

and capricious because the FEC “ma[de] no attempt

whatsoever to justify the Commission’s continued reliance on

the express advocacy standard” outside the windows, id. at

47, thus “fail[ing] to meet the APA’s standard of reasoned

decisionmaking,” id. at 48-49.

The FEC appeals this finding, but before we can reach

the merits, we face a jurisdictional question. In Shays II we

held that Shays had standing to challenge the regulations at

issue there because he satisfied standing’s three requirements,

“demonstrat[ing] that he ha[d] suffered ‘injury in fact,’ that

the injury [wa]s ‘fairly traceable’ to the actions of the

defendant, and that the injury w[ould] likely be redressed by a

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favorable decision.” Bennett v. Spear, 520 U.S. 154, 162

(1997) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555,

560-61 (1992)). The “injury in fact” was the FEC’s “illegal

structuring of [the] competitive environment” in which Shays

ran for Congress, Shays II, 414 F.3d at 85, that injury was

traceable to the Commission because it promulgated the

challenged rules, id. at 92-95, and a favorable decision could

redress the injury by striking down the rules, id. at 95.

The FEC suggests that this case is different, saying “[i]t

is unclear whether the Court has jurisdiction to rule on

Shays’[s] challenge to the portion of the regulation governing

the presidential election because he has never been, or stated

any intention to be, a candidate for president.” Appellant’s

Reply Br. 25 n.12. The Commission failed to mention this

argument in its opening brief, first raising it in a footnote in

its reply brief. Moreover, although the Commission assured

us in its brief that it was “not challeng[ing] Shays’[s]

standing,” but rather only highlighting this issue for the court

because we have our “own obligation to determine that [we

have] jurisdiction over each of [Shays’s] claims,” id., the

Commission changed its tone at oral argument, asserting that

Shays lacked standing to challenge the 120-day window

applicable to presidential candidates, Oral Arg. at 47:16-:38.

Normally we would not consider an argument first raised in a

reply brief, Carter v. George Washington Univ., 387 F.3d

872, 883 (D.C. Cir. 2004), much less one raised only in a

footnote, Hutchins v. District of Columbia, 188 F.3d 531,

539-40 n.3 (D.C. Cir. 1999) (en banc). But because this

argument goes to our jurisdiction, we must consider it, see

United States v. Hylton, 294 F.3d 130, 136 (D.C. Cir. 2002),

though we are disappointed in the FEC for raising this issue

so late that Shays had no adequate opportunity to respond.

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That said, Shays plainly has standing under FEC v. Akins,

524 U.S. 11 (1998). Indeed, after some prodding at oral

argument, FEC counsel virtually conceded as much, Oral Arg.

at 47:45-49:15. In Akins, the petitioners—a group of voters

seeking information about the political activities of the

American Israel Public Affairs Committee (AIPAC)—

challenged the FEC’s determination that AIPAC did not

qualify as a “political committee,” a decision that meant

AIPAC had no obligation to report information about its

“members, contributions, and expenditures.” Id. at 16. The

Court held that petitioners had suffered an injury in fact,

namely “their inability to obtain information—lists of AIPAC

donors . . . and campaign-related contributions and

expenditures—that, on [their] view of the law, the statute

require[d] that AIPAC make public,” id. at 21; see also id.

(“[A] plaintiff suffers an ‘injury in fact’ when the plaintiff

fails to obtain information which must be publicly disclosed

pursuant to a statute.” (citing Pub. Citizen v. DOJ, 491 U.S.

440, 449 (1989)).

Here, as in Akins, Shays’s injury in fact is the denial of

information he believes the law entitles him to. Specifically,

under the FEC’s definition of coordinated communications,

presidential candidates need not report as contributions many

expenditures that Shays believes BCRA requires them to

report. Thus, Shays claims the regulation illegally denies him

information about who is funding presidential candidates’

campaigns. We see no difference between this injury and the

injury deemed sufficient to create standing in Akins. Here, as

there, “the information would help [Shays] (and others to

whom [he] would communicate it) to evaluate candidates for

public office . . . , and to evaluate the role that [outside

groups’] financial assistance might play in a specific

election.” Id. And here, as there, Shays’s “injury

consequently seems concrete and particular.” Id. Finally, as

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in Akins, Shays’s injury is fairly traceable to the FEC because

it is caused by the Commission’s rule, and the injury would be

redressed were this court to invalidate the rule. Id. at 25.

Assured of Shays’s standing to challenge this rule in its

entirety, we turn to the merits. Shays claims the rule suffers

from two flaws. First, the FEC failed to justify the length of

the 90/120-day windows, violating the APA. And second, the

lax standard the Commission imposed outside those windows

not only runs counter to BCRA’s purpose, but also was

entirely unjustified, failing both Chevron step two and APA

review. After describing the evidence before the

Commission, we address each argument in turn.

On remand the Commission gathered extensive evidence

about the timing of advertising in federal election campaigns.

Reviewing data from the Campaign Media Analysis Group

regarding television ads run by federal candidates in the 2004

election cycle, the Commission found that “Senate candidates

aired only 0.87 percent and 0.39 percent of their

advertisements more than 90 days before their primary and

general elections, respectively,” while “House candidates

aired only 8.56 percent and 0.28 percent of their

advertisements more than 90 days before their primary and

general elections, respectively.” Coordinated

Communications, 71 Fed. Reg. 33,190, 33,194 (2006). In the

2004 presidential campaign, 8.44 percent of all candidate TV

ads in the primary ran outside the 120-day window, as did 16

percent of all candidate TV ads in Iowa before its crucial

caucus. Shays III, 508 F. Supp. 2d at 45. While these

percentages are small, the total amount spent on pre-window

ads was substantial, totaling into the millions of dollars. See

id.

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In addition to evidence about spending by candidates, the

Commission had before it many examples of expenditures by

outside groups before the 90/120-day windows. For example,

in the 2004 Alaska Senate race, the U.S. Chamber of

Commerce began running TV ads supporting Senator Lisa

Murkowski nine months before the primary election. In the

2004 Florida Senate race, the illuminatingly-named “People

for a Better Florida” began running ads attacking candidate

Mel Martinez over five months before the primary. In the

2006 Pennsylvania Senate race, a group called “Americans

for Job Security” spent $500,000 on TV ads supporting

Senator Rick Santorum starting six months before the

primary. In the 2004 South Dakota Senate race, the Club for

Growth began running ads attacking Senator Tom Daschle

fifteen months before the general election. The group ran

similar ads against Rhode Island Senator Lincoln Chafee

beginning nine months before his 2006 primary. Because

none of these ads contained the “magic words” of express

advocacy, all could have been coordinated with candidates

under the Commission’s rule.

The record also reveals that the vast majority of

campaign ads omit “express advocacy.” “In the 1998 election

cycle, just 4% of candidate advertisements used magic words;

in 2000, that number was a mere 5%.” McConnell, 540 U.S.

at 127 n.18. “Indeed, campaign professionals” told Congress

while it was considering BCRA “that the most effective

campaign ads . . . avoid the use of the magic words.” Id. at

127. Because campaign advertisements rarely use magic

words, the Supreme Court has declared the express advocacy

test “functionally meaningless.” Id. at 193.

In sum, the record demonstrates several key points: (1)

the vast majority of advertising by candidates occurs in the

90/120-day windows the FEC regulates more strictly; (2)

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candidates and outside groups nonetheless run a significant

number of ads before the 90/120-day windows; and (3) very

few ads contain magic words. These facts lead us to two

inexorable conclusions: the FEC’s decision to regulate ads

more strictly within the 90/120-day windows was perfectly

reasonable, but its decision to apply a “functionally

meaningless” standard outside those windows was not. Id. at

193.

Beginning with the windows, we made clear in Shays II

that nothing in BCRA forbids the FEC from “dr[awing]

distinctions based on content, time, and place”; its failure then

was that it provided no evidence in support of the window it

chose. 414 F.3d at 100. But given the record evidence

showing that the vast majority of federal campaign

advertisements run within the more strictly regulated

windows, the FEC now “appears to have drawn the line in a

reasonable place based on the data available to it.” Shays III,

508 F. Supp. 2d at 43.

The next issue is whether the FEC’s decision to regulate

only ads containing express advocacy outside the 90/120-day

windows fails Chevron step two review or violates the APA.

As our cases explain, these inquiries overlap, for “[w]hether a

statute is unreasonably interpreted is close analytically to . . .

whether an agency’s actions under a statute are

unreasonable.” Gen. Instrument Corp. v. FCC, 213 F.3d 724,

732 (D.C. Cir. 2000). At Chevron step two and under the

APA, “[courts] must reject administrative constructions of [a]

statute . . . that frustrate the policy that Congress sought to

implement.” Cont’l Air Lines, 843 F.2d at 1453 (quoting

Democratic Senatorial Campaign Comm., 454 U.S. at 32).

While that policy may sometimes be unclear, here it is not:

“BCRA’s fundamental purpose [is] prohibiting soft money

from being used in connection with federal elections.”

19

McConnell, 540 U.S. at 177 n.69; see also id. at 132

(“BCRA’s central provisions are designed to address

Congress’ concerns about the increasing use of soft money

and issue advertising to influence federal elections.”). Recall

that “soft money” refers to political donations made in such a

way as to avoid FECA’s restrictions. See Shays II, 414 F.3d

at 80.

The question, then, is this: Does the challenged

regulation frustrate Congress’s goal of “prohibiting soft

money from being used in connection with federal elections”?

McConnell, 540 U.S. at 177 n.69. We think it does. Outside

the 90/120-day windows, the regulation allows candidates to

evade—almost completely—BCRA’s restrictions on the use

of soft money. As FEC counsel conceded at oral argument,

Oral Arg. at 0:46-2:00, the regulation still permits exactly

what we worried about in Shays II, i.e., more than 90/120

days before an election, candidates may ask wealthy

supporters to fund ads on their behalf, so long as those ads

contain no magic words. 414 F.3d at 98. Indeed, pressed at

oral argument, counsel admitted that the FEC would do

nothing about such coordination, even if a contract

formalizing the coordination and specifying that it was “for

the purpose of influencing a federal election” appeared on the

front page of the New York Times. Oral Arg. at 7:34-8:03.

Thus, the FEC’s rule not only makes it eminently possible for

soft money to be “used in connection with federal elections,”

McConnell, 540 U.S. at 177 n.69, but it also provides a clear

roadmap for doing so, directly frustrating BCRA’s purpose.

Moreover, by allowing soft money a continuing role in the

form of coordinated expenditures, the FEC’s proposed rule

would lead to the exact perception and possibility of

corruption Congress sought to stamp out in BCRA, for

“expenditures made after a ‘wink or nod’ often will be ‘as

useful to the candidate as cash,’” id. at 221 (quoting FEC v.

20

Colo. Republican Fed. Campaign Comm., 533 U.S. 431, 442,

446 (2001)), and “[i]t is not only plausible, but likely, that

candidates would feel grateful for such donations and that

donors would seek to exploit that gratitude,” id. at 145.

The FEC offers four reasons why we should nonetheless

uphold this lax standard. First, explaining that it chose the

standard to protect the First Amendment rights of outside

groups conducting independent expenditures, it argues that

any standard more vague than “express advocacy” would

unacceptably chill the speech of such groups. We applaud the

Commission’s sensitivity to First Amendment values, but as

we said in Shays II, “regulating nothing at all” would achieve

the same purpose, “and that would hardly comport with the

statute.” 414 F.3d at 101. Thus, “[n]otwithstanding its

obligation to attempt to avoid unnecessarily infringing on

First Amendment interests, the Commission must establish,

consistent with APA standards, that its rule rationally

separates election-related advocacy from other activity falling

outside FECA’s expenditure definition,” id. at 101-02

(citation omitted), which, remember, defines “expenditure” as

“any purchase, payment, . . . or gift of money or anything of

value, made by any person for the purpose of influencing any

election for Federal office.” 2 U.S.C. § 431(9)(A)(i)

(emphasis added). Here the Commission failed to show that

its rule rationally separates election-related advocacy from

other speech, for many of the ads its rule leaves unregulated

are plainly intended to “influenc[e] an[] election for Federal

office.” Id. The FEC claims it has drawn a rational line

because ads omitting magic words run by outside groups in

coordination with candidates before the windows are

generally not intended to influence federal elections. But this

is absurd. Because the magic words test is “functionally

meaningless,” McConnell, 540 U.S. at 193, and “expenditures

made after a ‘wink or nod’ often will be ‘as useful to the

21

candidate as cash,’” id. at 221 (quoting Colo. Republican

Comm., 533 U.S. at 442, 446), there is no question that

coordinated ads omitting magic words are often intended to

influence federal elections. This is true even outside the

90/120-day windows, for as the FEC itself found, “[a]ny time

a candidate uses campaign funds to pay for an advertisement,

it can be presumed that this advertisement is aired for the

purpose of influencing the candidate’s election.” 71 Fed.

Reg. at 33,193 (emphasis added). We have no reason to think

this is any less true of spending that candidates coordinate

with outside groups. In sum, although the FEC, properly

motivated by First Amendment concerns, may choose a

content standard less restrictive than the most restrictive it

could impose, it must demonstrate that the standard it selects

“rationally separates election-related advocacy from other

activity falling outside FECA’s expenditure definition.”

Shays II, 414 F.3d at 102. Because the “express advocacy”

standard fails that test, it runs counter to BCRA’s purpose as

well as the APA.

Second, the FEC points to our decision in Orloski v.

FEC, 795 F.2d 156 (D.C. Cir. 1986), as support for the rule it

chose. Orloski dealt with 2 U.S.C. § 441b(a), which prohibits

corporations from making “contribution[s] or expenditure[s]

in connection with any election to any political office.” The

FEC interpreted this provision to allow corporations to fund

events for federal officeholders so long as those events were

“non-political,” i.e., “(1) there is an absence of any

communication expressly advocating the nomination or

election of the congressman appearing or the defeat of any

other candidate, and (2) there is no solicitation, making, or

acceptance of a campaign contribution for the congressman in

connection with the event.” Orloski, 795 F.2d at 160.

Upholding the regulation under Chevron, we explained that

although it was “at the outer bounds of permissible choice,” it

22

was “still a ‘reasonable choice within a gap left open by

Congress.’” Id. at 167 (quoting Chevron, 467 U.S. at 866).

The FEC urges us to reach the same conclusion here, but

it ignores the crucial differences separating Orloski from this

case. Most important, in Orloski we found that “the FEC’s

interpretation does not create the potential for gross abuse”

because “under the FEC’s interpretation, corporations can

make little more than insignificant, indirect donations to a

candidate’s political warchest, which are unlikely to give the

corporations improper influence over candidates for federal

office or to significantly increase the level of campaign

spending.” Id. at 165-66. Here, by contrast, the coordinated

expenditures the Commission’s rule allows “often will be ‘as

useful to the candidate as cash,’” McConnell, 540 U.S. at 221

(quoting Colo. Republican Comm., 533 U.S. at 446), and “[i]t

is not only plausible, but likely, that candidates would feel

grateful for such donations and that donors would seek to

exploit that gratitude,” id. at 145. This “create[s] the potential

for gross abuse” that was absent in Orloski. Orloski, 795 F.2d

at 165. Moreover, in Orloski we said “[i]f the FEC’s

interpretation unduly compromises the Act’s purposes, it is

not a ‘reasonable accommodation’ under the Act, and it would

therefore not be entitled to deference.” Id. at 164 (quoting

Chevron, 467 U.S. at 845). Here, as we have explained, the

rule “unduly compromises” the Act’s purpose of “prohibiting

soft money from being used in connection with federal

elections.” McConnell, 540 U.S. at 177 n.69.

Third, the FEC disparages the many examples Shays

provides of pre-window expenditures by candidates and

outside groups, calling them mere “anecdotes” and saying

Shays failed to offer any evidence of their relative

significance. See Appellant’s Reply Br. 19-21. But the

FEC’s own study showed that almost 10% of primary election

23

advertisements by House candidates and presidential

candidates in 2004—plainly “aired for the purpose of

influencing the candidate’s election,” 71 Fed. Reg. at

33,193—ran before the windows, and Shays provided

numerous examples of pre-window ads funded by outside

groups that were obviously intended to influence federal

elections. Notably, many of Shays’s examples came from

media markets excluded from the FEC’s study, and they

suggest that the percentage of early advertising may be even

greater than that captured by the FEC’s analysis. Shays’s

evidence, combined with the FEC’s study, proves his point.

Given the rule the FEC chose, which regulates virtually no

coordinated pre-window ads, the Commission could

demonstrate that it met its statutory obligation—“rationally

separat[ing] election-related advocacy from other activity

falling outside FECA’s expenditure definition,” Shays II, 414

F.3d at 102—only by showing that a truly insignificant

number of ads intended to influence federal elections run

before the windows. See Shays II, 414 F.3d at 99 (“[T]he

FEC lacks discretion to exclude [communications intended to

influence federal elections] from its coordinated

communication rule.”). The evidence in the FEC’s own

study, as well as the evidence Shays provided, refutes any

such contention.

Finally, the FEC assures us that we have no reason to

worry about lax regulation outside the 90/120-day windows

because it has received very few complaints alleging that

candidates are currently coordinating expenditures with

outside groups before the windows, and there is no evidence

that candidates will begin coordinating with outside groups if

we uphold the regulation. This argument flies in the face of

common sense. Of course the FEC hasn’t received many

complaints: the challenged rule allows unlimited coordination

so long as the resulting advertisements omit express

24

advocacy. In other words, people have had no reason to

report this type of coordination because it is perfectly legal

under the FEC’s rule. Moreover, the Commission’s

prediction about what will happen in the future disregards

everything Congress, the Supreme Court, and this court have

said about campaign finance regulation. In passing BCRA,

Congress found that ads funded with soft money “were often

actually coordinated with, and controlled by, the campaigns.”

McConnell, 540 U.S. at 131 (citing S. REP. NO. 105-167, vol.

1, at 49 (1998); id. vol. 3, at 3997-4006). In McConnell, the

Supreme Court said, “[m]oney, like water, will always find an

outlet,” id. at 224, and BCRA reflects “the hard lesson of

circumvention” Congress has learned from “the entire history

of campaign finance regulation,” id. at 165. And in Shays II,

we said, “if regulatory safe harbors permit what BCRA bans,

we have no doubt that savvy campaign operators will exploit

them to the hilt, reopening the very soft money floodgates

BCRA aimed to close.” 414 F.3d at 115. Common sense

requires the same conclusion here. Under the present rules,

any lawyer worth her salt, if asked by an organization how to

influence a federal candidate’s election, would undoubtedly

point to the possibility of coordinating pre-window

expenditures. The FEC’s claim that no one will take

advantage of the enormous loophole it has created ignores

both history and human nature.

Conduct Standard: Campaign Vendors and Former

Employees

BCRA directed the FEC, in issuing its revised

coordinated communication rules, to address “payments for

the use of a common vendor” and “payments for

communications directed or made by persons who previously

served as an employee of a candidate or a political party.”

BCRA § 214(c), 116 Stat. at 95 (codified at 2 U.S.C. § 441a

25

note). The FEC’s original post-BCRA regulations

implemented these provisions by specifying that the “conduct

prong” of the coordinated communication test would be

satisfied if a candidate’s vendor or former employee

“create[d], produce[d], or distribute[d]” a communication

using “material” information about “campaign plans, projects,

activities, or needs,” or shared such information with the

person paying for the communication, throughout the “current

election cycle.” 11 C.F.R. § 109.21(d)(4)-(5) (2003).

Shays chose not to challenge these original provisions,

but the FEC nonetheless revisited them after we remanded

other aspects of the coordinated communication rule in Shays

II. Because campaign vendors and employees complained

that the regulation was unnecessarily cumbersome—they

claimed that the information they possess quickly loses

value—the FEC decided to change the rule so that it only

prohibits vendors and former employees from using “material

information” about “campaign plans, projects, activities, or

needs,” or sharing such information with the person funding

the ad, for 120 days, rather than throughout the whole election

cycle. 11 C.F.R. § 109.21(d)(4)-(5).

In the district court, Shays challenged the revised

regulation, arguing that it ran counter to BCRA’s purpose and

violated the APA. Although the district court rejected the

Chevron step two argument, it found the revised regulation

arbitrary and capricious because the FEC had failed to justify

its policy change. Shays III, 508 F. Supp. 2d at 49-52. We

agree.

Explaining the new rule, the FEC reasoned that

“[r]educing the temporal limit to 120 days will not undermine

the effectiveness of the conduct standards and will not lead to

circumvention of the Act” because “material information

26

regarding candidate and political party committee campaigns,

strategy, plans, needs, and activities . . . does not remain

‘material’ for long periods of time during an election cycle.”

71 Fed. Reg. at 33,204. The Commission went on to say that

“a limit of 120 days is more than sufficient to reduce the risk

of circumvention of the Act.” Id. at 33,205. We see two

flaws in this rationale.

First, as the district court pointed out, “the Commission’s

generalization that material information does not remain

material for long overlooks the possibility that some

information—for instance, a detailed state-by-state master

plan prepared by a chief strategist—may very well remain

material for at least the duration of a campaign.” Shays III,

508 F. Supp. 2d at 51. Indeed, the Commission’s own

regulations recognize that some types of information retain

value for longer than 120 days. For example, the Commission

says that polling data—arguably the campaign information

that most quickly becomes obsolete—retains some value for

180 days. See 11 C.F.R. § 106.4(g). Yet the Commission

inexplicably asserts that other types of campaign

information—including some far more durable information

such as donor lists and lists of supportive voters—will have

lost value within 120 days. As Shays points out, under the

FEC’s regulation, a top presidential campaign staffer could

leave a campaign after an early primary, wait 120 days, and

then spend the entire general election working for an outside

group on behalf of his former candidate, using that

candidate’s donor lists, mailing lists, and long-term strategic

plan. The Commission never explains why this type of

coordination should go unregulated.

Second, the FEC has provided no explanation for why it

believes 120 days is a sufficient time period to prevent

circumvention of the Act. Though the Commission certainly

27

has some discretion in choosing exactly where to draw a

bright line such as this one, it must support its decision with

reasoning and evidence, for “a bright line can be drawn in the

wrong place.” Shays II, 414 F.3d at 101.

Conduct Standard: Firewall Safe Harbor

When it revised the conduct standard with regard to

former employees and vendors following Shays II, the FEC

created a new “firewall safe harbor” provision to protect

vendors and organizations in which some employees are

working on a candidate’s campaign and others—separated by

a firewall—are working for outside groups making

independent expenditures. Under the new regulation, “[t]he

conduct standards . . . are not met if the commercial vendor,

former employee, or political committee has established and

implemented a firewall that meets the requirements of

paragraphs (h)(1) and (h)(2) of this section.” 11 C.F.R.

§ 109.21(h). Those requirements are: “(1) The firewall must

be designed and implemented to prohibit the flow of

information between employees or consultants providing

services for the person paying for the communication and

those employees or consultants currently or previously

providing services to the candidate who is clearly identified in

the communication . . . ; and (2) The firewall must be

described in a written policy that is distributed to all relevant

employees, consultants, and clients affected by the policy.”

Id. According to the regulation, “[t]his safe harbor provision

does not apply if specific information indicates that, despite

the firewall, information about the candidate’s or political

party committee’s campaign plans, projects, activities, or

needs that is material to the creation, production, or

distribution of the communication was used or conveyed to

the person paying for the communication.” Id.

28

Shays challenged this regulation, arguing that it was so

vague as to invite near-certain circumvention, undermining

BCRA’s purpose, and that the Commission failed not only to

justify it, but also to explain why it changed its mind after

rejecting a similar provision in 2003, violating the APA. The

district court agreed with both arguments. Shays III, 508 F.

Supp. 2d at 53-56.

Challenging the district court’s ruling and acknowledging

that the regulation provides few details on what constitutes an

acceptable firewall, the FEC argues that “a firewall is more

effective if established and implemented by each organization

in light of its specific organization, clients, and personnel.”

71 Fed. Reg. at 33,206. The Commission emphasizes that

“[a]n organization cannot come within the firewall safe harbor

simply by alleging that it has an internal firewall”; rather,

“[a]n entity seeking to use the firewall safe harbor must be

‘prepared to provide reliable information . . . about [its]

firewall, and how and when the firewall policy was

distributed and implemented.’” Appellant’s Opening Br. 33

(quoting 71 Fed. Reg. at 33,207). Moreover, the FEC insists,

it provided a good reason for implementing the safe harbor: to

make it easier for candidates and independent organizations to

hire consultants, vendors, and former employees—thus

facilitating protected speech—without fear of being falsely

accused of improper coordination. See 71 Fed. Reg. at

33,206. And it claims it did explain why it has now adopted a

firewall safe harbor despite rejecting a similar proposal in

2003, namely in the interim it approved a firewall created by

EMILY’s List and found it sufficient to protect against

coordination. See id.; Coordinated Communications:

Proposed Rules, 70 Fed. Reg. 73,946, 73,955 (2005).

Though we think this a close question, we agree with the

FEC. The district court and Shays are undeniably correct that

29

the regulation is vague as to what constitutes an acceptable

firewall, but “when Congress has not specified the level of

specificity expected of the agency,” as here, “the agency is

entitled to broad deference in picking the suitable level.”

Cement Kiln Recycling Coal. v. EPA, 493 F.3d 207, 217 (D.C.

Cir. 2007) (citation omitted). Moreover, “[t]he APA does not

require that all the specific applications of a rule evolve by

further, more precise rules rather than by adjudication.”

Shalala v. Guernsey Mem’l Hosp., 514 U.S. 87, 96 (1995).

Thus, there is no “basis for suggesting that the agency has a

statutory duty to promulgate regulations that, either by default

rule or by specification, address every conceivable question.”

Id. Instead, the Commission has authority to flesh out its

rules through adjudications and advisory opinions. In

addition, the Commission’s sensible conclusion that firewalls

will be “more effective if established and implemented by

each organization in light of its specific organization, clients,

and personnel,” 71 Fed. Reg. at 33,206, represents just the

kind of agency expert judgment to which we owe deference.

See, e.g., North Carolina v. FERC, 112 F.3d 1175, 1189 (D.C.

Cir. 1997) (“So long as the Commission has examined the

relevant data and provided a reasoned explanation supported

by a stated connection between the facts found and the

choices made, we will defer to the agency’s expertise.”

(citation omitted)). Shays doubts whether the Commission

will enforce the safe harbor provision in a way that actually

requires meaningful firewalls, but as a court reviewing this

facial challenge we must presume that the Commission will

enforce its rule in good faith. See Sullivan v. Everhart, 494

U.S. 83, 94 (1990) (holding that in facial challenges to

regulations courts must presume agencies will implement

them in good faith).

We also believe that the FEC adequately justified the rule

and its departure from past practice. Hardly contrary to

30

BCRA, the regulation makes it easier for candidates and

organizations to engage in protected speech by helping them

hire consultants and employees without fear of false

accusations of coordination. Moreover, the Commission’s

favorable experience with the EMILY’s List firewall

represents a perfectly reasonable basis for its change of heart

since the 2003 rulemaking.

III.

As part of its effort to reduce the influence of soft money,

BCRA requires that all “federal election activity” be paid for

with either hard money or “Levin funds”—limited

contributions to state parties specifically earmarked for

“federal election activity.” See 2 U.S.C. § 441i(b)(2); see also

Shays II, 414 F.3d at 112-13. The statute defines federal

election activity as including “get-out-the-vote activity”

(GOTV activity) and “voter registration activity,” but it leaves

these terms undefined. 2 U.S.C. § 431(20). In 2003 the

Commission issued regulations defining GOTV and voter

registration activity:

(2) Voter registration activity means contacting

individuals by telephone, in person, or by other

individualized means to assist them in

registering to vote. Voter registration activity

includes, but is not limited to, printing and

distributing registration and voting

information, providing individuals with voter

registration forms, and assisting individuals in

the completion and filing of such forms.

(3) Get-out-the-vote activity means contacting

registered voters by telephone, in person, or by

other individualized means, to assist them in

31

engaging in the act of voting. Get-out-the-vote

activity includes, but is not limited to:

(i) Providing to individual voters

information such as the date of the

election, the times when polling places

are open, and the location of particular

polling places; and

(ii) Offering to transport or actually

transporting voters to the polls.

11 C.F.R. § 100.24(a).

In Shays I, the district court invalidated these definitions

on procedural grounds. See 337 F. Supp. 2d at 101-07

(holding that the FEC violated the APA’s notice requirements

in promulgating these definitions because interested parties

could not reasonably have anticipated the final rulemakings

from the notice of proposed rulemaking). “On remand, the

Commission re-promulgated its regulations defining voter

registration activity and GOTV activity (with minimal

alterations to the definition of GOTV activity), and issued an

expanded [explanation and justification].” Shays III, 508 F.

Supp. 2d at 63.

Shays again challenged the regulation, and the district

court found that the definitions survived Chevron step one but

failed Chevron step two because both left unaddressed “vast

gray area[s]” of possible GOTV and voter registration

activity, making it possible for state parties to circumvent the

statute and frustrate BCRA’s purpose. See id. at 63-70.

According to the district court, the definitions also violated

the APA because the Commission gave no good reason for

leaving such large gray areas. See id. at 66, 69-70.

32

Challenging the district court’s ruling, the FEC again

emphasizes the deference to which it is entitled “when

Congress has not specified the level of specificity expected of

the agency.” Cement Kiln, 493 F.3d at 217 (citation omitted).

We agree with the FEC that its decision to promulgate a

somewhat vague regulation, in and of itself, runs afoul of

neither BCRA nor the APA, for there is no “basis for

suggesting that the agency has a statutory duty to promulgate

regulations that, either by default rule or by specification,

address every conceivable question.” Guernsey Mem’l, 514

U.S. at 96. Thus, the Commission has discretion to leave a

large gray area and fill it in later through adjudication and

advisory opinions. That said, we reject the regulation for

other reasons.

As Shays explains, the FEC’s definitions of GOTV

activity and voter registration activity create “two distinct

loopholes.” Appellee’s Opening Br. 41. First, both

definitions require that the party contacting potential voters

actually “assist” them in voting or registering to vote, 11

C.F.R. § 100.24(a)(2)-(3), thus excluding efforts that actively

encourage people to vote or register to vote and dramatically

narrowing which activities are covered. Second, both

definitions require the contact to be “by telephone, in person,

or by other individualized means,” thus entirely excluding

mass communications targeted to many people. Id. (emphasis

added). As Shays points out:

under the Commission’s construction, a state

party within days of a federal election can send

out multiple direct mailings to every potential

voter sympathetic to its cause urging them to

vote, and can blanket the state with automated

telephone calls by celebrities identifying the

date of the election and exhorting recipients to

33

get out to vote, without being deemed to be

engaged in GOTV activity. Likewise, large-

scale efforts encouraging potential supporters

to register to vote and directing them how they

may do so are not “voter registration activities”

under the Commission’s definitions. Indeed,

the more people that a communication is

intended to reach, and the more money the

party spends, the less likely it is that the

communication will be an “individualized

means” of “assistance” subject to BCRA’s

restrictions on [federal election activity].

Appellee’s Opening Br. 43. These examples are not merely

hypothetical. In a recent advisory opinion, the FEC decided

that letters and pre-recorded telephone calls directed to

registered Democrats in Long Beach, California, encouraging

them to vote in an upcoming election, did not count as GOTV

activity because they provided no individualized information

to any particular recipient. See FEC Advisory Op. 2006-19

(June 5, 2006).

The FEC’s restrictive definitions of GOTV activity and

voter registration activity run directly counter to BCRA’s

purpose, and the Commission has provided no persuasive

justification for them. Indeed, though Shays has not argued as

much here, we question whether these definitions could even

survive at Chevron step one, for we doubt whether the

meaning of GOTV activity and voter registration activity can

plausibly be limited to individualized assistance. In any

event, the definitions fail at Chevron step two because they

conflict with BCRA’s purpose of “prohibiting soft money

from being used in connection with federal elections.”

McConnell, 540 U.S. at 177 n.69. The regulation will allow

the use of soft money for many efforts that influence federal

34

elections, for as the Supreme Court observed in McConnell,

“[c]ommon sense dictates” that “any efforts [by state or local

parties] that increase the number of like-minded registered

voters who actually go to the polls” will “directly assist [a]

party’s candidates for federal office.” Id. at 167-68.

Moreover, the only rationales the Commission gave for

adopting its limited constructions of GOTV activity and voter

registration activity were: (1) to ensure that mere exhortations

to get out and vote or register to vote made at the end of a

political event or speech would not count as federal election

activity; and (2) to give clear guidance to state and local party

organizations so they know what activities they can engage in.

Definition of Federal Election Activity, 71 Fed. Reg. 8,926,

8,928-29 (2006). The first rationale is unpersuasive. As

Shays points out, “a definition could surely be crafted that

would exempt such routine or spontaneous speech-ending

exhortations without opening a gaping loophole permitting

state parties to use soft money to saturate voters with

unlimited direct mail and robocalls that unquestionably

benefit federal candidates.” Appellee’s Opening Br. 45. And

the second rationale doesn’t even amount to an argument for a

limited definition of GOTV activity and voter registration

activity; instead, it’s an argument for a clear and detailed

definition. But because any clear definition would satisfy the

FEC’s goal of providing precise guidance—one that forbade

any activity designed to get people to register or vote would

be just as easy to follow as one that allowed unlimited GOTV

and voter registration efforts—the desire for a clear rule, in

and of itself, provides no justification for this limited

definition.

IV.

The single regulation the district court upheld—as to

which Shays cross appeals—deals with soft-money

35

solicitations by federal candidates at state party fundraising

events. BCRA prohibits those seeking or holding federal

office from “solicit[ing] . . . funds in connection with an

election for Federal office, including funds for any Federal

election activity, unless the funds are subject to the

limitations, prohibitions, and reporting requirements of this

Act,” i.e., the funds solicited must not be soft money. 2

U.S.C. § 441i(e)(1)(A). It also prohibits federal candidates

and officeholders from “solicit[ing] . . . funds in connection

with any election other than an election for Federal office or

disburs[ing] funds in connection with such an election unless

the funds” are hard money or Levin funds. Id.

§ 441i(e)(1)(B). The statute specifies, however, that

“[n]otwithstanding” these prohibitions, “a candidate or an

individual holding Federal office may attend, speak, or be a

featured guest at a fundraising event for a State, district, or

local committee of a political party.” Id. § 441i(e)(3).

Asserting that this latter provision made the statute

ambiguous, the FEC issued a regulation allowing federal

candidates and officeholders to solicit soft money at state and

local party fundraisers. See 11 C.F.R. § 300.64 (“Candidates

and individuals holding Federal office may speak at [state and

local party] events without restriction or regulation.”

(emphasis added)).

In Shays I the district court found that although the

regulation survived Chevron review, the FEC had failed to

provide an adequate justification for it, violating the APA.

See Shays I, 337 F. Supp. 2d at 92-93. Choosing not to appeal

this aspect of Shays I, the FEC instead issued a new notice of

proposed rulemaking, took additional comments, and issued

the same regulation with an expanded explanation. This time

the district court found the FEC’s explanation satisfactory.

See Shays III, 508 F. Supp. 2d at 60-61. Shays now appeals,

arguing that the regulation violates BCRA and the APA.

36

In our view, the regulation fails because it allows what

BCRA directly prohibits. As noted above, section

441i(e)(1)(A) expressly prohibits federal candidates and

officeholders from soliciting soft money, yet the

Commission’s rule allows federal candidates and

officeholders to do just that at state and local party

fundraisers. See Chevron, 467 U.S. at 842 (“If the intent of

Congress is clear, that is the end of the matter . . . .”).

Contrary to the Commission’s position, section

441i(e)(3)—“a candidate or an individual holding Federal

office may attend, speak, or be a featured guest at a

fundraising event for a State, district, or local committee of a

political party”—does nothing to make the statute’s

prohibition on soft-money solicitations ambiguous. Rather,

section (e)(3) merely clarifies that despite the statute’s ban on

soliciting soft money, federal candidates may still “attend,

speak, or be a featured guest” at state party events where soft

money is raised, which the statute might otherwise be read as

forbidding. Indeed, several factors demonstrate that section

(e)(3) cannot plausibly be read to allow federal candidates to

solicit soft money at state party events. Most important, when

Congress wanted to create an exception to the ban on federal

candidates soliciting soft money, it did so explicitly. Section

441i(e) contains three express exceptions to section

(e)(1)(A)’s general prohibition on raising soft money. See 2

U.S.C. § 441i(e)(2) (allowing candidates for federal office

who are also candidates for local or state office to solicit soft

money authorized under state law for their state or local

campaign); id. § 441(e)(4)(A) (authorizing federal candidates

to solicit soft money for certain nonprofit groups); id. §

441i(e)(4)(B) (authorizing candidates to solicit up to $20,000

per individual to fund state party GOTV and voter registration

activities). Given these express exceptions, we have no basis

for reading section 441i(e)(3) as creating an implied fourth

37

exception. “Where Congress explicitly enumerates certain

exceptions to a general prohibition, additional exceptions are

not to be implied, in the absence of evidence of a contrary

legislative intent,” none of which is present here. TRW Inc. v.

Andrews, 534 U.S. 19, 28 (2001) (citation omitted).

Moreover, these exceptions expressly allow “solicitation” of

soft money, yet section 441i(e)(3) says only that federal

candidates may “attend, speak, or be a featured guest” at state

party fundraisers. The difference in terminology matters, for

“Congress’ choice of different verbs to characterize the two

situations is a choice which we properly take as evidence of

an intentional differentiation.” Nat’l Insulation Transp.

Comm. v. ICC, 683 F.2d 533, 537 (D.C. Cir. 1982) (citation

omitted). This is especially true because Congress repeatedly

used the term “solicit” and “solicitation” in section 441i—

over a dozen times—yet chose not to do so in section

441i(e)(3). Reading section 441i(e)(3) as allowing

solicitation in light of the clear differences between it and

other sections of the statute that expressly allow solicitation

“inverts the usual canon that when Congress uses different

language in different sections of a statute, it does so

intentionally.” Fla. Pub. Telecomms. Ass’n v. FCC, 54 F.3d

857, 860 (D.C. Cir. 1995).

V.

For the foregoing reasons, we affirm the district court

with respect to the content standard for coordinated

expenditures, the rule for when former employees/vendors

may share material information, and the definitions of GOTV

activity and voter registration activity. With respect to the

firewall safe harbor provision and the rule allowing soft-

money solicitations at state party events, we reverse and

remand for further proceedings consistent with this opinion.

So ordered.