Van Hollen v. Federal Election Commission

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 20, 2015 Decided January 21, 2016

No. 15-5016

CHRISTOPHER VAN HOLLEN, JR.,

APPELLEE

v.

FEDERAL ELECTION COMMISSION,

APPELLEES

CENTER FOR INDIVIDUAL FREEDOM AND HISPANIC

LEADERSHIP FUND,

INTERVENOR-APPELLANTS

Consolidated with 15-5017

Appeals from the United States District Court

for the District of Columbia

(No. 1:11-cv-00766)

Thomas W. Kirby argued the cause for appellant Center

for Individual Freedom. With him on the briefs were Jan

Witold Baran, Caleb P. Burns, and Samuel B. Gedge.

Jason Torchinsky was on the brief for appellant Hispanic

Leadership Fund.

2

Daniel Z. Epstein and Joshua N. Schopf were on the brief

for amicus curiae Cause of Action in support of appellants.

Catherine M.A. Carroll argued the cause for appellee

Christopher Van Hollen Jr. With her on the brief were Roger

M. Witten, Donald J. Simon, Trevor Potter, J. Gerald Hebert,

Fred Wertheimer, and Scott L. Nelson.

Kevin A. Deeley, Acting Associate General Counsel,

Harry J. Summers, Assistant General Counsel, Holly J. Baker

and Seth E. Nesin, Attorneys, Federal Election Commission,

were on the brief for appellee Federal Election Commission.

Before: BROWN, Circuit Judge, SENTELLE and

RANDOLPH, Senior Circuit Judges.

Opinion for the Court filed by Circuit Judge BROWN.

BROWN, Circuit Judge: The arc of campaign finance law

has been ambivalent, bending toward speech and disclosure.

Indeed what has made this area of election law so challenging

is that these two values exist in unmistakable tension.

Disclosure chills speech. Speech without disclosure risks

corruption. And the Supreme Court’s track record of

expanding who may speak while simultaneously blessing

robust disclosure rules has set these two values on an

ineluctable collision course.

That tension is on full display in this appeal. At issue is

whether to uphold the FEC’s rule requiring corporations and

labor organizations to disclose only those donations “made for

the purpose of furthering electioneering communications” or

whether the Bipartisan Campaign Reform Act requires

disclosure of all donations irrespective of donative purpose.

3

Christopher Van Hollen, Jr.—a member of the United States

House of Representatives—challenged this rule under the

familiar Chevron and State Farm frameworks. In a previous

judgment, we reversed the district court and held the rule

survived Chevron Step One. We now consider whether the

rule survives Step Two and State Farm’s “arbitrary and

capricious” test. We hold that it does.

I

Congressman Van Hollen’s challenge to the FEC’s

disclosure rules is best understood in its broader context, the

century-long conflict over campaign finance reform. That

context is a protean cascade of perspectives, supplied by each

branch of government, on how best to safeguard democracy

without unnecessarily sacrificing liberty.

Throughout the twentieth and early twenty-first centuries,

campaign finance reform efforts endeavored both to ban

corporate contributions and to expand disclosure

requirements. These efforts date as far back as President

Theodore Roosevelt’s State of the Union address in 1905.

Nine years earlier, William McKinley defeated populist

William Jennings Bryan with a war chest of $16 million,

dwarfing Bryan’s paltry $600,000. Public opinion steadily

galvanized in favor of campaign finance reform, prompting

Roosevelt to champion the cause. Roosevelt urged Congress

to forbid “[a]ll contributions by corporations . . . for any

political purpose” and to “secure by law the full and verified

publication in detail of all [political contributions].” President

Theodore Roosevelt, State of the Union Address (Dec. 5,

1905), available at http://www.presidency.ucsb.edu/ws/index.

php?pid=29546. Two years later, Congress heeded his call

with the Tillman Act of 1907. See Ch. 420, 34 Stat. 864.

4

The Tillman Act was just the beginning. Over the

ensuing decades, Congress passed, in piecemeal fashion,

several reform measures. The Federal Corrupt Practices Act,

the Hatch Act, the Smith-Connolly Act of 1943, and the Taft-

Hartley Act of 1947 each contained provisions aimed at

tackling political corruption in campaign finance, either

through restricting speech or requiring disclosure. And in

1974, Congress completed a massive campaign finance

overhaul with passage of the Federal Election Campaign Act

(FECA).

FECA confronted headlong the “who” and “how much”

of campaign contributions. The Act established caps on

contributions and expenditures, restricted corporations and

unions from making independent expenditures, and required

that the identities of any individuals making a contribution or

expenditure be disclosed to the newly created Federal

Elections Commission. The Supreme Court blessed most of

FECA’s reforms in Buckley v. Valeo, 424 U.S. 1 (1976),

striking only the caps on individual, candidate, and campaign

expenditures. But critically, while upholding FECA’s

disclosure requirements, the Court construed them narrowly

to reach only “contributions earmarked for political purposes”

and “expenditures for communications that expressly

advocate the election or defeat of a clearly identified

candidate.” Id. at 80.

The Court’s gloss on FECA’s disclosure requirements

turned out to be a pyrrhic victory for campaign finance

reformers. The “express advocacy” carve-out opened a

gaping new loophole: advertising expenditures that eschewed

magic words like “elect Mary Smith” or “defeat John Brown”

could now go undisclosed. Corporations, unions, and political

parties took full advantage by sponsoring “issue ads,” which

5

were functionally equivalent to express advocacy but

comfortably skirted FECA’s disclosure requirements.

Determined to close this loop, Congress passed the

Bipartisan Campaign Reform Act (BCRA) in 2002. BCRA

recognized and regulated a new category of political

advertising called “electioneering communications,” defined

as communications that “refer[] to a clearly identified

candidate” “made within” sixty days of a general election or

thirty days of a primary election. 2 U.S.C. § 434(f)(3)(A)(i)

(2002). These communications were precisely the sort left

unregulated by Buckley’s construction of FECA, and BCRA

now subjected them to robust disclosure requirements. It

required any person making an expenditure (referred to as a

“disbursement”) totaling more than $10,000 to disclose “all

persons sharing the costs of the disbursement.” Id. §§

434(f)(2)(A), (B), and (D). BCRA also went one step further:

it altogether banned corporations and unions from using their

general treasuries to fund electioneering communications. Id.

§ 441b(b)(2). These provisions were upheld by a sharply

divided Court in McConnell v. FEC, 540 U.S. 93 (2003).

In BCRA’s wake, the FEC promulgated several rules

to enforce the various reforms, two of which are relevant

to today’s appeal. First, the FEC promulgated a rule enforcing

BCRA’s ban on corporate and union expenditures

for electioneering communications. Electioneering

Communications, 67 Fed. Reg. 65190, 65190 (Oct. 23, 2002).

Second, the FEC promulgated a rule to enforce BCRA’s

requirement for disclosure of “the names and addresses of all

contributors who contributed an aggregate amount of $1,000

or more to the person making the disbursement.” 52 U.S.C.

434(f)(2)(E)–(F). The FEC’s rule mirrored this language

almost identically but replaced the words “contributor” and

“contributed” with “donor” and “donated.” Bipartisan

6

Campaign Reform Act of 2002 Reporting, 68 Fed. Reg. 404,

420 (Jan. 3, 2003). Whatever the import of that choice, it is

clear that as of 2003, (1) corporations and unions could not

fund electioneering communications out of their general

treasuries, and (2) with certain exceptions not relevant to this

opinion, persons making disbursements for electioneering

communications had to disclose the names of anyone who

donated $1,000 or more to them.

But the Supreme Court would soon deliver a heavy

blow to BCRA’s attempt to regulate electioneering

communications. With its ruling in FEC v. Wisconsin Right to

Life, Inc., 551 U.S. 449 (2007), another sharply divided

decision, and this time without even a majority opinion, the

Court held corporations and unions could not be barred from

electioneering communications unless they are “the functional

equivalent of express advocacy.” Id. at 465. And an ad is only

the functional equivalent of express advocacy, the Court said,

when it “is susceptible of no reasonable interpretation other

than as an appeal to vote for or against a specific candidate.”

Id. at 469–70. The three ads before the Court in Wisconsin

Right to Life couldn’t satisfy this exacting test, and neither, it

seems, could the vast majority of issue ads funded through

independent expenditures. See Id. at 476. For restrictions on

core political speech, the Court announced it would “give the

benefit of the doubt to speech, not censorship.” Id. at 482.

BCRA’s prohibition on corporate- and union-funded

electioneering communications, beaten and tattered by

Wisconsin Right to Life, was left on life support. 1

1

The Court’s subsequent decision in Citizens United v. FEC pulled

the plug on this ban once and for all, ruling unconstitutional the

prohibition on corporate- and union-funded “express advocacy.”

558 U.S. 310, 365 (2010).

7

The FEC was now left to decide how BCRA’s disclosure

requirements should apply to a class of speakers Congress

never expected would have anything to disclose. The FEC

published a Notice of Proposed Rulemaking (NPRM) and

requested comments on proposed rules that “would

implement the Supreme Court’s decision in Wisconsin Right

to Life.” 72 Fed. Reg. 50261, 50262 (Aug. 31, 2007). That

NPRM advanced two proposals for applying BCRA’s

disclosure provisions to corporations and unions. Under the

first, the FEC would simply apply the existing disclosure

requirements for individuals and qualified nonprofit

corporations (QNCs) to corporations and unions, which would

require disclosure of all $1,000 contributors. Id. Under the

second, the FEC proposed to exempt corporations and unions

from the disclosure requirements altogether. Id.

The FEC received twenty-seven comments and held a

two-day hearing. Rather than embracing either of the

NPRM’s proposals, it adopted a middle path. See

Electioneering Communications, 72 Fed. Reg. 72899, 72900

(Dec. 26, 2007). Corporations and unions would not be

altogether exempted, but neither would they be required to

disclose every donation totaling $1,000 or more. Id. Rather,

corporations and unions would be required to disclose all

donations totaling $1,000 or more that were “made for the

purpose of furthering electioneering communications.” Id. at

72911. This new “purpose requirement” set corporate and

union electioneering communications apart from

communications funded by other persons, who were still

required to disclose all donations regardless of purpose.

Representative Christopher Van Hollen challenged the

FEC’s new purpose requirement and persuaded the district

court that it violated BCRA’s text. Van Hollen v. FEC, 851

F.Supp.2d 69 (D.D.C. 2012); see Chevron, USA, Inc. v. Nat.

8

Res. Def. Council, Inc., 467 U.S. 837 (1984). That decision

was appealed to and reversed by a panel of this court, which

concluded BCRA’s disclosure provisions were ambiguous,

and the FEC’s rule cleared Chevron Step One. Ctr. for

Individual Freedom v. Van Hollen, 694 F.3d 108, 111 (D.C.

Cir. 2012). Congress’s use of the terms “contributors” and

“contributed,” the panel said, is “anything but clear.” Id. The

panel did “not agree with the District Court that the[se] words

. . . cannot be construed to include a ‘purpose’ requirement.”

Id. However, it concluded that it was “in no position to assess

the parties’ arguments on whether § 104.20(c)(9) is

reasonable, and thus entitled to deference under Chevron Step

Two, or whether the regulation survives arbitrary and

capricious review.” Id. at 112. The panel sent the case back to

the district court to sort these questions out. 2

On remand, the district court concluded that the FEC’s

rule failed at both the Chevron Step Two and arbitrary and

capricious stages. The Center for Individual Freedom filed its

notice of appeal shortly thereafter. 3 We review the FEC’s

action de novo, according no particular deference to the

2

Technically, the panel instructed that the matter be referred back

to the FEC in order to give it a chance to revisit and clarify its rule.

Ctr. for Individual Freedom, 694 F.3d at 112. But when the FEC

declined to comment further, Van Hollen’s challenge in district

court resumed.

3

Our previous ruling affirmed the Center for Individual Freedom’s

and the Hispanic Leadership Fund’s standing to appeal the district

court’s judgment. Ctr. for Individual Freedom, 694 F.3d at 110

(“We are satisfied that the Intervenors have standing to pursue this

appeal, for they have convincingly demonstrated that the District

Court's decision . . . has caused them injury that will be redressed

by a favorable decision from this court.”). As the posture of this

appeal is identical to the previous, we have neither the occasion nor

inclination to reconsider our prior determination.

9

district court’s judgment. Fox v. Clinton, 684 F.3d 67, 74

(D.C. Cir. 2012).

II

Our analysis of Van Hollen’s challenge picks up where

our prior judgment left off. Van Hollen argues the FEC’s

disclosure rule is both an impermissible construction of

BCRA and an arbitrary and capricious use of the FEC’s

regulatory authority, and the district court agreed on both

scores. For the reasons outlined below, we do not.

A

We are first asked to decide whether the FEC’s purpose

requirement is “based on a permissible construction of

[BCRA] in light of its language, structure, and purpose.” Nat’l

Treasury Emp. Union v. FLRA, 754 F.3d 1031, 1042 (D.C.

Cir. 2014). This inquiry, often called Chevron Step Two,

“does not require the best interpretation, only a reasonable

one.” Am. Forest and Paper Ass’n v. FERC, 550 F.3d 1179,

1183 (D.C. Cir. 2008). “We are bound to uphold agency

interpretations . . . regardless whether there may be other

reasonable, or even more reasonable, views.” Gentiva

Healthcare Corp. v. Sebelius, 723 F.3d 292, 296 (D.C. Cir.

2013). In this case, BCRA is ambiguous, and the FEC’s

construction of it is reasonable. We defer accordingly.

The starting place for any Chevron Step Two inquiry is

the text of the statute. BCRA states, in relevant part:

“Every person who makes a disbursement for

the direct costs of producing and airing

electioneering communications in an aggregate

amount in excess of $10,000 during any

10

calendar year shall . . . file with the Commission

a statement containing . . . the names and

addresses of all contributors who contributed an

aggregate amount of $1,000 or more to the

person making the disbursement.”

52 U.S.C. § 30104(f) (emphasis added). This provision directs

the disclosure of “all contributors” and omits any explicit

mention of a purpose requirement. By contrast, the

neighboring section governing express advocacy directs

disclosure of “each person who made a contribution . . . for

the purpose of furthering an independent expenditure.” Id. §

30104(c)(2)(C). The nonparallel nature of these two related

provisions, Van Hollen contends, renders impermissible the

FEC’s purpose requirement. At the same time, FECA

elsewhere defines “contribution,” a term derived from the

same root as the words in the challenged section, as a

donation “by any person for the purpose of influencing any

election for Federal office.” 52 U.S.C. § 30101(8)(A)(i)

(emphasis added). And the FEC intentionally drew upon the

express advocacy purpose requirement as precedent for

resolving the ambiguity in the electioneering communications

provision. See 72 Fed. Reg. at 72911 n.22. Our question, then,

is this: Does BCRA’s text permit the FEC’s purpose

requirement?

To answer this, we must first remember what we’ve

already settled. In our previous ruling, we concluded

Congress did not have “an intention on the precise question”

whether a purpose requirement is permissible as “it is

doubtful that . . . Congress even anticipated the circumstances

that the FEC faced when it promulgated [this regulation].”

Ctr. for Individual Freedom, 694 F.3d at 111. We noted “it

was due to the complicated situation that confronted the

agency in 2007 and the absence of plain meaning in the

11

statute that the FEC acted . . . to fill ‘a gap’ in the statute.” Id.

But while we might have stopped there, our analysis went

beyond merely highlighting BCRA’s ambiguity. We also

weighed in on the precise interpretive question relevant to

Step Two. We disagreed with the district court “that the

words ‘contributors’ and ‘contributed’ . . . cannot be

construed to include a ‘purpose’ requirement” and cited

multiple dictionaries that “define ‘contribute’ in a way that is

consistent with the regulation.” Id. at 110–11. In other words,

we held that whether corporations and unions should be

required to disclose every person who gave $1,000 or more or

only those who gave for the purpose of influencing

electioneering communications was an open policy question,

one Congress left for the FEC to decide.

That decision largely foreordains our Chevron Step Two

answer. In deciding the Step One question, we did not limit

our analysis to whether BCRA is ambiguous; we specifically

concluded the FEC’s interpretation of “contributors” was

within the range of linguistically permissible constructions.

Having thus already concluded section 30104(f) could be

construed to include a purpose requirement, it would be odd

for us to reverse course now and declare it could not.

But even setting aside that we all but answered the Step

Two question last time around, the FEC’s purpose

requirement is more than just a permissible construction of

BCRA; it’s a persuasive one. For one, as suggested above, the

FEC’s purpose requirement is consistent with the purpose-

laden definition of “contribution” set forth in FECA’s very

own definitional section. See 52 U.S.C. § 30101(8)(A)(i)

(defining “contribution” as “anything of value made . . . for

the purpose of influencing [a federal] election”). ”

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Moreover, the FEC’s purpose requirement regulates

electioneering communication disclosures in precisely the

same way BCRA itself regulates express advocacy

disclosures. In a neighboring provision, BCRA requires a

person making an express advocacy expenditure to disclose

only those “person[s] who made a contribution . . . for the

purpose of furthering an independent expenditure.” Id. §

30104(c)(2)(C). Thus, to resolve the ambiguity it faced in

Wisconsin Right to Life’s wake, the FEC simply opted for an

approach already endorsed by Congress in a related context.

That “Congress codified the very approach” the FEC now

adopts in a similar context is “highly persuasive in

demonstrating” the FEC’s construction of BCRA “does not

reflect an unreasonable interpretation of the statute.” Public

Citizen v. Carlin, 184 F.3d 900, 906 (D.C. Cir. 1999).

Van Hollen counters this point, arguing Congress’s

failure to include a purpose requirement in the electioneering

communication context—which it included for express

advocacy— textually precludes the FEC from later doing so.

This is a classic invocation of the expressio unius canon of

construction, and if we were interpreting this statute directly

rather than filtered through an agency’s construction, Van

Hollen’s argument would have serious bite. However, as is

usually the case, the procedural posture matters. The

expressio unius canon operates differently in our review of

agency action than it does when we are directly interpreting a

statute. See Tex. Rural Legal Aid, Inc. v. Legal Servs. Corp.,

940 F.2d 685, 694 (D.C. Cir. 1991) (“[T]his canon has little

force in the administrative setting.”); Cheney R.R. Co. v. ICC,

902 F.2d 66, 69 (D.C. Cir. 1990) (“Whatever [expressio

unius’s] general force, we think it an especially feeble helper

in an administrative setting, where Congress is presumed to

have left to reasonable agency discretion questions that it has

not directly resolved.”). In scenarios of precisely this ilk, “we

13

have consistently recognized that a congressional mandate in

one section and silence in another often suggests not a

prohibition but simply a decision not to mandate any solution

in the second context, i.e., to leave the question to agency

discretion.” Catawba Cnty., N.C. v. EPA, 571 F.3d 20, 36

(D.C. Cir. 2009). This approach dovetails appropriately with

the wide latitude we afford agencies when interpreting

statutes: we do not demand the best interpretation, only a

reasonable one.

Nor do Van Hollen’s other arguments persuade us that

the FEC’s purpose requirement was an impermissible

construction of BCRA. Van Hollen contends the requirement

“frustrate[s] the policy that Congress sought to implement”

and therefore must be rejected. See Shays v. FEC, 528 F.3d

914, 919 (D.C. Cir. 2008). Specifically, he asserts the FEC’s

rule violates BCRA’s primary purpose of “improv[ing]

disclosure” and “curtail[ing] circumvention of campaign

finance rules,” allowing contributors to “avoid reporting

altogether” by simply “transmitting funds but remaining silent

about their intended use.” Van Hollen Br. at 27–28. And here,

his invocation of our Shays decision does lend a measure of

credibility. A panel of this court invalidated a regulation

allowing “candidates to evade—almost completely—BCRA’s

restrictions on the use of soft money” because it “frustrate[d]

Congress’s goal of prohibiting soft money” in federal

elections. 528 F.3d at 925. According to Van Hollen (and the

district court), since “the legislative history of the BCRA

makes it clear that the purpose behind the disclosure

requirements was to enable voters to be informed about who

was trying to influence their decisions,” the purpose

requirement’s “limiting language” similarly frustrates BCRA.

Van Hollen, 74 F.Supp.3d at 433–34.

But the art of statutory construction has moved beyond

14

this particularly results-oriented brand of purposivism. Just

because one of BCRA’s purposes (even chief purposes) was

broader disclosure does not mean that anything less than

maximal disclosure is subversive. 4 Statutes are hardly, if ever,

singular in purpose. Rather, most laws seek to achieve a

variety of ends in a way that reflects the give-and-take of the

legislative process. See Patel v. USCIS, 732 F.3d 633, 636

(6th Cir. 2013) (“[I]t is folly to talk about ‘the purpose’ of the

statute when the statute reflects a compromise between

multiple purposes.”). That BCRA seeks more robust

disclosure does not mean Congress wasn’t also concerned

with, say, the conflicting privacy interests that hang in the

balance. In fact, Congress “took great care in crafting . . .

language to avoid violating the important p[]rinciples in the

First Amendment.” 147 CONG. REC. S3033 (daily ed. Mar. 28,

2001) (statement of Sen. Jeffords). Chevron demands our

deference when an agency’s interpretation is “a reasonable

accommodation of conflicting policies that were committed to

the agency’s care by the statute.” 467 U.S. at 845.

Moreover, the district court’s invocation of such a

sweeping disclosure purpose contradicts the very statute

whose purposes it purports to protect. BCRA does not require

disclosure at all costs; it limits disclosure in a number of

4

At oral argument, Van Hollen’s counsel conceded that BCRA did

not call for unbounded disclosure. The district court, however, was

less sanguine, suggesting unbounded disclosure was BCRA’s aim:

[I]t was contrary to the policy goal that Congress intended

to implement for the Commission to add limiting language

to its regulations when the aim of that language was—as the

FEC put it—‘to ensure that disclosure of the newly-

permitted electioneering communications would be

narrowly tailored.’ Congress did not call for narrow

tailoring; it called for just the opposite.

Van Hollen, 74 F.Supp.3d at 434.

15

ways. For example, for electioneering communications under

$10,000, no disclosures are necessary, see 52 U.S.C. §

30104(f)(1), and for those over $10,000, BCRA does not

require disclosure of those who contribute $999 or less, see id.

§ 30104(f)(2)(E). These disclosure limitations suggest

Congress’s purposes were far more nuanced than the district

court’s characterization concedes.

To be sure, a statute’s purpose is relevant to Chevron’s

Step Two inquiry. See UC Health v. NLRB, 803 F.3d 669,

675 (D.C. Cir. 2015) (requiring deference so long as an

agency construction is “reasonable and consistent with the

statute’s purpose”). But we are judges, not legislators, and it

behooves us to maintain a healthy sense of modesty regarding

our ability to discern the scope and priority of purposes the

BCRA Congress pursued. “What judges believe Congress

‘meant’ (apart from the text) has a disturbing but entirely

unsurprising tendency to be whatever judges think Congress

must have meant, i.e., should have meant.” Zuni Pub. Sch.

Dist. No. 89 v. Dep’t of Educ., 550 U.S. 81, 117 (2007)

(Scalia, J., dissenting). What matters here is that Congress left

the meaning of “contributor” ambiguous. Congressional

silence of this sort is, in Chevron terms, “an implicit

delegation from Congress to the agency to fill in the statutory

gaps.” FDA v. Brown & Williamson Tobacco Corp., 529 U.S.

120, 159 (2000) (emphasis added). 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.” Michigan v. EPA, 135 S. Ct. 2699,

2713 (2015) (Thomas, J., concurring) (emphasis added). The

FEC did precisely that, deciding to fill the gap left in BCRA

with the same purpose-requirement Congress adopted in

related contexts. We are loathe to upset such a policy

16

judgment based on nothing more than highly generalized

overtures to BCRA’s “primary purpose.”

Because the FEC’s purpose requirement is consistent

with BCRA’s text, history, and purposes, it easily clears the

Chevron Step Two hurdle.

B

We are next asked to decide whether the FEC’s purpose

requirement is “arbitrary and capricious.” The Administrative

Procedure Act deems unlawful any agency action found to be

“arbitrary, capricious, an abuse of discretion, or otherwise not

in accordance with law,” 5 U.S.C. § 706(2), but to invalidate a

regulation under State Farm review, see Motor Vehicle Mfrs.

Ass’n, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29

(1983), a challenger must show the agency action is not a

product of reasoned decisionmaking, see Fox, 684 F.3d at 74–

75. This is “a heavy burden,” since State Farm entails a “very

deferential scope of review” that forbids a court from

“substitut[ing] its judgment for that of the agency.”

Transmission Access Policy Study Grp. v. FERC, 225 F.3d

667, 714 (D.C. Cir. 2000). The APA’s arbitrary and

capricious standard requires, inter alia, that an agency

adequately explain its action so that a reviewing court can

“evaluate the agency’s rationale at the time of decision.”

Pension Benefit Guar. Corp. v. LTV Corp., 496 U.S. 633, 654

(1990).

This appeal presents two State Farm challenges. First, the

district court held the FEC acted unreasonably in revisiting its

original 2003 rule, concluding the FEC’s subsequent action

was unnecessary because the Supreme Court’s Wisconsin

Right to Life decision left existing disclosure provisions

“untouched.” Van Hollen, 74 F.Supp.3d at 419. Second, Van

17

Hollen contends the FEC failed to adequately explain its

decision to adopt the purpose requirement.

1

The district court held “it was unreasonable for the FEC

to alter the statutory reporting requirements on the stated

grounds that it was implementing the Supreme Court’s

decision in [Wisconsin Right to Life]” as “nothing” in that

decision “required narrowing the disclosure requirements.”

Van Hollen, 74 F. Supp. 3d at 419. 5

But in focusing on the opinion’s silence regarding

disclosure, id. at 418–19, the district court downplays

Wisconsin Right to Life’s disruptive import. Before 2007, the

modus operandi of campaign finance law had always been

that Congress could restrict corporate and union speech in the

interest of deterring “corruption” or “the appearance of

corruption.” See Buckley, 424 U.S. at 26. But Wisconsin Right

to Life marked the first chink in that conventional wisdom’s

armor, an onslaught that would ultimately culminate in the

most expansive, speech-protective campaign finance decision

in American history, Citizens United. After Wisconsin Right

to Life, corporations and unions suddenly could expend

general treasury funds for issue ads, a result Congress had

explicitly prohibited under BCRA. An entirely new class of

5

The court apparently proceeds under Chevron Step Two, but

curiously concludes “[t]he starting point of the second step of the

Chevron analysis must be the stated reason behind the regulation,”

and attempts to assess the adequacy of that explanation. See Van

Hollen, 74 F. Supp. 3d at 415. This seems more like State Farm

than Chevron. So, while the district court speaks of the FEC’s

“unreasonable” action, we think it more appropriate to consider

whether its decision to revisit its previous regulation was

“arbitrary.”

18

previously silenced speakers was now subject to BCRA’s

disclosure requirements. And just as the FEC was authorized

to decide how to implement BCRA’s disclosure provisions for

qualified speakers in 2003, it was authorized to decide how to

implement BCRA’s disclosure provisions for these newly

qualified speakers in 2007, too.

It is true Wisconsin Right to Life “said absolutely

nothing” about the challenged disclosure provisions, but that

does not mean the FEC was barred from promulgating a new

regulation. An agency “must consider varying interpretations

and the wisdom of its policy on a continuing basis . . . in

response to changed factual circumstances.” See Nat’l Cable

& Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967,

981 (2005). The Supreme Court’s decision brought an entirely

new class of speakers within reach of BCRA’s disclosure

requirements, a class altogether different from those already

subjected to them. Constitutional decisions of this magnitude

unquestionably justify an agency in updating its existing

regulations to appropriately compensate for changed

circumstances.

2

Van Hollen also argues, and the district court agreed, that

the FEC failed to adequately explain its decision to adopt the

purpose requirement. While an agency is required to

adequately explain its decision, this does not mean that its

explanation “must be a model of analytical precision.”

Dickson v. Sec. of Defense, 68 F.3d 1396, 1404 (D.C. Cir.

1995). It is enough that a reviewing court can reasonably

discern the agency’s analytical path. Bowman Transp. Inc. v.

Ark.-Best Freight Sys. Inc., 419 U.S. 281, 286 (1974). That

low hurdle is cleared where the agency “examine[d] the

relevant data and articulate[d] a satisfactory explanation for

19

its action including a rational connection between the facts

found and the choice made.” State Farm, 463 U.S. at 43.

Here, we acknowledge the FEC’s explanation was not

one of “ideal clarity,” but, again, ideal clarity is not the

standard. The FEC advanced three explanations for its

purpose requirement, which we refer to as the “support,”

“burden,” and “privacy” rationales. 72 Fed. Reg. at 72901,

72911. Because we can reasonably discern the FEC’s

analytical path from these three rationales, we uphold its

purpose requirement against Van Hollen’s challenge.

1. The Support Rationale

The FEC was concerned that some individuals who

contribute to a union or corporation’s general treasury may

not support that entity’s electioneering communications, and a

robust disclosure rule would thus mislead voters as to who

really supports the communications. The agency explained,

A corporation’s general treasury funds are often

largely comprised of funds received from

investors such as shareholders who have

acquired stock in the corporation and customers

who have purchased the corporation’s products

or services, or in the case of a non-profit

corporation, donations from persons who

support the corporation’s mission. These

investors, customers, and donors do not

necessarily support the corporation’s

electioneering communications. Likewise, the

general treasury funds of labor organizations and

incorporated membership organizations are

composed of member dues obtained from

individuals and other members who may not

20

necessarily support the organization's

electioneering communications.

72 Fed. Reg. at 72911 (emphases added). It’s hard to escape

the intuitive logic behind this rationale. Imagine the following

not unlikely scenario. A Republican donates $5,000 to the

American Cancer Society (ACS), eager to fund the ongoing

search for a cure. Meanwhile, Republicans in Congress, aware

of a growth in private donations to ACS, push for fewer

federal grants to scientists studying cancer in order to reduce

the deficit. In response to their push, the ACS runs targeted

advertisements against those Republicans, leading to the

defeat of several candidates in the upcoming election.

Wouldn’t a rule requiring disclosure of ACS’s Republican

donor, who did not support issue ads against her own party,

convey some misinformation to the public about who

supported the advertisements?

Granted, as Van Hollen is quick to point out, the FEC’s

assertions here were not corroborated with any hard evidence

showing contributors who disagree with their chosen

corporation’s electioneering communications. But these

assertions “are, at the very least, speculation based firmly in

common sense and economic reality.” Verizon v. FCC., 740

F.3d 623, 646 (D.C. Cir. 2014); see also San Luis Obispo

Mothers for Peace v. NRC, 789 F.2d 26, 44 (D.C. Cir. 1986)

(“[T]he Commission is not required to hold a hearing to prove

what common sense shows.”). Here, the FEC’s assertion that

some number of a corporation’s investors, a nonprofit’s

donors, or a union’s members may generally support the

entity but not its electioneering communications seems fairly

intuitive, at least enough to pass State Farm’s “very

deferential scope of review.” Transmission Access, 225 F.3d

at 714.

21

2. The Burden Rationale

This second rationale displayed the FEC’s concern not

for the interests of contributors or the public, but with the

onus placed on the disclosing entity to curate an exhaustive

list of every individual who provided more than $1,000. The

FEC explained,

Furthermore, witnesses at the Commission’s

hearing testified that the effort necessary to

identify those persons who provided funds

totaling $1,000 or more to a corporation or labor

organization would be very costly and require an

inordinate amount of effort. Indeed, one witness

noted that labor organizations would have to

disclose more persons to the Commission under

the ECs rules than they would disclose to the

Department of Labor under the Labor

Management Report and Disclosure Act.

72 Fed. Reg. at 72911. As further support for its explanation,

the FEC noted that “all commenters who addressed disclosure

of electioneering communications stated that corporations and

labor organizations should not be required to report the

sources of funds that made up their general treasury funds.”

Id. And one commenter urged an exemption for nonprofits,

stating that “nonprofit corporations have a wide variety of

sources of income, and unlimited disclosure would create a

heavy burden for them.” Id.

Van Hollen suggests this explanation is inadequate for a

couple of reasons. First, he argues the FEC did not support its

assertion that identifying contributors would be “very costly

and require an inordinate amount of effort” with anything

more than “conclusory assertions.” Van Hollen Br. at 39. But

22

this isn’t entirely accurate. The Commission cited to one

commenter who testified “that labor organizations would have

to disclose more persons to the Commission under the

[electioneering communications] rules than they would

disclose to the Department of Labor,” and another commenter

who testified that the “reporting requirements would far

exceed all other reporting requirements that currently apply to

nonprofit organizations, such as reporting to the Internal

Revenue Service.” 72 Fed. Reg. at 72911. These assertions,

relied upon by the FEC, are uncontradicted in the record, and

“[w]ithout any contrary evidence to disprove these findings,”

Van Hollen has “not shown any arbitrary and capricious

action.” Agape Church v. FCC, 738 F.3d 397, 410 (D.C. Cir.

2013).

Second, Van Hollen suggests the FEC could have

mitigated the cost of compliance by clarifying that business

income (such as from customers or shareholders) and union

dues do not entail “truly donative acts” and are therefore

exempt from disclosure. Van Hollen Br. at 43. He points out

that the FEC took a similar approach in promulgating the

2003 version of the disclosure rules, clarifying that

“individuals are required to disclose donations received,

which does not include salary, wages, or other compensation

for employment.” 68 Fed. Reg. at 414. By exempting these

sources of revenue, which are less relevant to voters anyway,

the overall compliance costs of the regulation would drop.

But this alternative would only reduce the disclosure burdens

borne by for-profit corporations and unions. Nonprofit

corporations, which, as we’ve already noted, faced reporting

requirements that “would far exceed all other reporting

requirements that currently apply to nonprofit[s],” obtain no

benefit from this alternative, and the FEC was justifiably

concerned about their compliance costs, too. Accordingly, this

was not a viable alternative. Since agencies are only required

23

to consider “significant and viable” alternatives, Nat’l

Shooting Sports Found., Inc. v. Jones, 716 F.3d 200, 215

(D.C. Cir. 2013) (emphasis added), we find no error in the

FEC’s decision not to adopt this only partially mitigating

alternative.

To be sure, the FEC’s explanation was far from ideal, and

it is more difficult to discern its analytical path on this point.

For instance, what are the Department of Labor’s disclosure

requirements, and how much more burdensome was the

existing rule? The IRS’s? Would different rules for nonprofits

solve most concerns? What is actually more burdensome

about disclosing all donations as opposed to only a subset of

donations? And does that justify a change in policy that will

have a markedly decreased effect on the amount of

disclosures? The answers to these questions may exist and

may likely support the rule, but the FEC’s explanation did not

provide them. Ultimately, however, State Farm’s standard is

“[n]ot particularly demanding,” and the FEC’s burden

rationale leaves just enough detail for us to see “what major

issues of policy were ventilated and why the agency reacted to

them as it did.” Republican Nat’l Cmte v. FEC, 76 F.3d 400,

407 (D.C. Cir. 1996).

3. The Privacy Rationale

The FEC’s final explanation centered on its effort to

tailor the regulations such that they both effectuate BCRA’s

purpose in disclosure while also minding carefully the

constitutional interests in privacy also at stake. The FEC

reasoned that the revised purpose requirement is “narrowly

tailored to address many of the commenters’ concerns

regarding individual donor privacy.” 72 Fed. Reg. at 72901.

24

This explanation is significant. The FEC is “[u]nique

among federal administrative agencies,” having “as its sole

purpose the regulation of core constitutionally protected

activity—the behavior of individuals and groups only insofar

as they act, speak and associate for political purposes.” AFL-

CIO v. FEC, 333 F.3d 168, 170 (D.C. Cir. 2003). Thus, more

than other agencies whose primary task may be limited to

administering a particular statute, every action the FEC takes

implicates fundamental rights. By tailoring the disclosure

requirements to satisfy constitutional interests in privacy, the

FEC fulfilled its unique mandate.

And the FEC’s concerns about the competing interests in

privacy and disclosure were legitimate. We began this opinion

by acknowledging the unmistakable tension that exists in

campaign finance law between speech rights and disclosure

rules. The Supreme Court has vigorously protected the

public’s right to speak anonymously, even recognizing that

anonymous speech has “played an important role in the

progress of mankind.” Talley v. California, 362 U.S. 60, 64

(1960). “Anonymity,” the Court elsewhere observed, “is a

shield from the tyranny of the majority” and “exemplifies the

purpose behind the Bill of Rights and of the First Amendment

in particular: to protect unpopular individuals from

retaliation—and their ideas from suppression—at the hand of

an intolerant society.” McIntyre v. Ohio Elections Comm’n,

514 U.S. 334, 357 (1995). This is not to say the Court is naïve

to the potential downsides that may accompany this right to

anonymity. Much to the contrary, the McIntyre Court

acknowledged “political speech by its nature will sometimes

have unpalatable consequences,” but, vindicating the right to

speak anonymously, declared “our society accords greater

weight to the value of free speech than to the dangers of its

misuse.” Id.

25

And yet, the Court has sanctioned startling intrusions on

this right to anonymity by upholding mandatory disclosure

requirements. The Court held in Buckley that such

requirements “appear to be the least restrictive means of

curbing the evils of campaign ignorance and corruption that

Congress found to exist,” all the while recognizing “public

disclosure of contributions to candidates and political parties

will deter some individuals who otherwise might contribute”

and “expose contributors to harassment or retaliation.” 424

U.S. at 68. Ironically, these two values the Buckley Court

acknowledged would be harmed by the disclosure

requirements were the very same values the McIntyre Court

later believed “exemplifie[d] the purpose behind the Bill of

Rights and of the First Amendment in particular”—namely,

“protect[ing] unpopular . . . ideas from suppression” and

“individuals from retaliation.” McIntyre, 514 U.S. at 357. But

even after McIntyre, the Court upheld the disclosure

requirements in McConnell, and again in Citizens United,

without much more than a passing citation to McIntyre or any

of the Court’s other precedents establishing the right to speak

anonymously. 6 As one dissenting justice observed in

McConnell, “The Court now backs away from [McIntyre],

allowing the established right to anonymous speech to be

stripped away based on the flimsiest of justifications.” 540

U.S. at 276 (Thomas, J. dissenting).

Both an individual’s right to speak anonymously and the

public’s interest in contribution disclosures are now firmly

entrenched in the Supreme Court’s First Amendment

jurisprudence. And yet they are also fiercely antagonistic. The

6

Judge Easterbrook, dubitante in Majors v. Abell, 361 F.3d 349,

356 (7th Cir. 2004), also noted “the Justices’ failure to discuss

McIntyre” and concluded it was therefore “impossible for courts at

our level to make an informed decision—for the Supreme Court has

not told us what principle to apply.”

26

deleterious effects of disclosure on speech have been ably

catalogued. “Disclaimer and disclosure requirements enable

private citizens and elected officials to implement political

strategies specifically calculated to curtail campaign-related

activity and prevent the lawful, peaceful exercise of First

Amendment rights.” Citizens United, 558 U.S. at 483

(Thomas, J., dissenting) (highlighting how mandatory

disclosure of contributors to California’s controversial “Yes

on Proposition 8” campaign led to their being singled out for

ruthless retaliation and intimidation). “[T]he advent of the

Internet enables prompt disclosure of expenditures, which

provides political opponents with the information needed to

intimidate and retaliate against their foes.” Id. at 484 (internal

quotation marks omitted). “Disclosure also makes it easier to

see who has not done his bit for the incumbents, so that arms

may be twisted and pockets tapped.” Majors v. Abell, 361

F.3d 349, 356 (7th Cir. 2004) (Easterbrook, J., dubitante).

In addition to these general burdens, the specific

disclosure requirement Van Hollen advocates here would

present its own unique harms. For instance, an American

Cancer Society donor who supports cancer research but not

ACS’s political communications must decide whether a

cancer cure or her associational rights are more important to

her. This is categorically distinct from deciding whether a

political issue, such as tax reform, is as important as one’s

associational right. Cancer research isn’t a political issue, but

disclosure rules of this sort would undeniably transform it into

one. These disclosure rules also burden privacy rights in

another crucial way: modest individuals who’d prefer the

amount of their charitable donations remain private lose that

privilege the minute their nonprofit of choice decides to run

an issue ad. The Supreme Court routinely invalidates laws

that chill speech far less than a disclosure rule that might

scare away charitable donors. See Watchtower Bible and

27

Tract Soc’y of New York, Inc. v. Stratton, 536 U.S. 150 (2002)

(striking a law requiring religious canvassers to obtain a

permit before advocating door-to-door on private property).

The ones who would truly bear the burden of Van

Hollen’s preferred rule would not be the wealthy corporations

or the extraordinarily rich private donors that likely motivated

Congress to compel disclosure in the first place. Such

individuals would have “little difficulty complying” with

these laws, as they can readily hire “legal counsel who

specialize in election matters,” who “not only will assure

compliance but also will exploit the inevitable loopholes.”

Majors, 361 F.3d at 357–58 (Easterbrook, J., dubitante).

Instead, such requirements “have their real bite when flushing

small groups, political clubs, or solitary speakers into the

limelight, or reducing them to silence.” Id. at 358.

By affixing a purpose requirement to BCRA’s disclosure

provision, the FEC exercised its unique prerogative to

safeguard the First Amendment when implementing its

congressional directives. See AFL-CIO, 333 F.3d at 170. Its

tailoring was an able attempt to balance the competing values

that lie at the heart of campaign finance law. We therefore do

not find this rationale inadequate.

***

At the close of its explanation, the FEC succinctly

defended its decision to adopt a purpose requirement for

corporate and union electioneering communications:

In the Commission’s judgment, requiring

disclosure of funds received only from those

persons who donated specifically for the purpose

28

of furthering [electioneering communications]

appropriately provides the public with

information about those persons who actually

support the message conveyed by the

[electioneering communications] without

imposing on corporations and labor organizations

the significant burden of disclosing the identities

of the vast numbers of customers, investors, or

members, who have provided funds for purposes

entirely unrelated to the making of

[electioneering communications].

72 Fed. Reg. at 72911. In light of its three rationales—the

support, burden, and privacy rationales—we conclude the

FEC’s purpose requirement is neither arbitrary nor capricious.

III

Holding, as we do here, that the FEC’s purpose

requirement satisfies both Chevron Step Two and State Farm

review has the benefit both of being a correct application of

black letter administrative law and of forestalling to some

other time an answer to the important constitutional questions

bubbling beneath the surface of this case. As our discussion of

the FEC’s rule has shown, the Supreme Court's campaign

finance jurisprudence subsists, for now, on a fragile

arrangement that treats speech, a constitutional right, and

transparency, an extra-constitutional value, as equivalents.

But “the centre cannot hold.” William Butler Yeats, The

Second Coming (1919). Until then, however, the FEC’s

purpose requirement survives, and the judgment of the district

court is therefore

Reversed.