Shays v. FEC II

On March 29, 2006, the U.S. District Court for the District of Columbia issued a ruling in Shays and Meehan/Bush–Cheney ’04, Inc. v. FEC (04-1597 and 04-1612) that granted in part and denied in part the plaintiffs’ motion for summary judgment.

Background

On March 11, 2004, the Commission issued a Notice of Proposed Rulemaking asking for comments regarding possible changes to the definition of “political committee” that would require certain groups not currently registered with the FEC to do so. In November 2004, the Commission issued final rules that require organizations to treat more of their receipts as contributions and to use a greater percentage of federal funds for certain allocable expenses. While these rules could trigger registration for some groups, the Commission did not directly modify its definition of “political committee.” Instead the Commission decided that it would continue to construe the definition of “political committee” on a case-by-case basis. See the April 2004 Record, page 1; September 2004 Record, page 1; and November 2004 Record, pages 3 and 4.

The plaintiffs, Christopher Shays, Martin Meehan and Bush-Cheney ’04, Inc., argued that the Commission’s 2004 decision to continue deciding case-by-case whether a group is a “political committee,” as defined in the Federal Election Campaign Act, was arbitrary and capricious. They also argued that the Commission should be compelled to issue a new rule.

Court decision

The district court rejected plaintiffs’ contention that selecting adjudication rather than rulemaking was an abuse of discretion. Nevertheless, the court ruled that the Commission had failed to articulate a reasoned basis for its decision to continue case-by-case determinations of political committee status. Although the Commission had explained that a rulemaking would be complex and potentially over-inclusive, the court noted that the Commission did not explain why case-by-case adjudication would solve these problems. Additionally, the Commission did not address how unregistered groups’ due process or First Amendment rights would be protected without a clear rule to rely upon. Lastly, the Commission did not address how the enforcement process would be timely enough to prove effective.

The court denied the plaintiffs motion to compel the FEC to promulgate a new rule. It remanded the case to the FEC, however, ruling that it must either provide further explanation and justification for its decision to review the political committee status of unregistered organizations on a case-by-case basis or issue a new rule.