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August 3, 1987

COMMON CAUSE, et al., Plaintiffs,

The opinion of the court was delivered by: FLANNERY


 This matter comes before the court on cross motions for summary judgment. In this action, plaintiffs Common Cause and certain named members (hereinafter "Common Cause") challenge a Federal Election Commission ("FEC" or "Commission") decision denying a Petition for Rulemaking that Common Cause filed on November 7, 1984.

 I. Background

 In its Petition, plaintiff Common Cause alleged that there were violations of the Federal Election Campaigns Act ("FECA"), 2 U.S.C. § 431, et seq., associated with the use of "soft money" in connection with federal elections. Rulemaking Record Before the Federal Election Commission ("Record"), Exhibit A, Attachment 1. In its Petition, Common Cause defined "soft money" as:

. . . funds that are raised by Presidential campaigns and national and congressional political party organizations purportedly for use by state and local party organizations in nonfederal elections, from sources who would be barred from making such contributions in connection with a federal election, e.g. from corporations and labor unions and from individuals who have reached their federal contribution limits.

 Id. Common Cause further alleged that this "soft money" was not being raised or spent solely for nonfederal election purposes, but was instead "being channeled to state parties with the clear goal of influencing the outcome of federal elections." Id.

 Upon receipt of Common Cause's petition, the General Counsel of the Commission recommended that a Notice of Availabililty be published in the Federal Register, giving interested parties 30 days in which to comment on the Petition. The General Counsel further recommended that the Petition be sent to the Internal Revenue Service, seeking its comments. Record, Attachment 2. The Commission adopted both recommendations. A Notice of Availability was published, and a copy of the Petition was sent to the IRS, as well as to the Democratic Senatorial Campaign Committee and Democratic Congressional Campaign Committee, the National Republican Senatorial Campaign Committee, the Republican National Committee, the Democratic National Committee, and the National Republican Congressional Campaign Committee. Record, Attachments 9-13. The FEC received five comments. Record, Attachments 15(a)-(e).

 On December 5, 1985, the General Counsel recommended to the Commission that it "seek information and comment on the factual and legal issues raised in the 'soft money' discussion and hold hearings to determine whether problems do in fact exist of the nature alleged by Common Cause." Record, Attachment 18. Based on this recommendation, the Commission scheduled two days of public hearings, and approved a Notice of Inquiry for publication in the Federal Register. The Notice of Inquiry set forth in six pages of detail the allegations of Common Cause. Record, Attachment 21. Further, the Commission sent the Notice of Inquiry to 77 organizations, including state election officials and political party organizations. Record, Attachment 22. The Commission received 15 responses. Record, Attachments 23(a)-(o). The Commission also received testimony from Common Cause, the Center for Responsive Politics, and the Republican National Committee. Record, Attachments 24(b), (c), (f), and 25.

 On April 17, 1986, the Commission acted on plaintiffs' Petition, denying it as to each of 7 proposed revisions, and failing, by a 3-3 vote, to act as to an 8th proposed revision. In the Commission's Notice of Disposition, published in the Federal Register, it stated that:

Common Cause has not presented evidence of instances in which "soft money" has been used to influence federal elections sufficient to justify the stringent rules proposed in its petition. Most of the examples it cites to support its allegations consist of anecdotal and boastful comments of party committee officials and campaign staff that have been quoted in the press. These statements do not constitute concrete evidence demonstrating that the Commission's regulations have been abused so that funds purportedly raised for use in nonfederal elections have in fact been transferred to the state and local level with the intent that they be used to influence federal elections.

 Record, Attachment 30. It is this agency action which plaintiffs challenge in the present action.

 II. Standard of Review

 This action is governed by the Administrative Procedure Act ("APA"), 5 U.S.C. § 706, which provides that agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law" must be set aside by the reviewing court. The United States Court of Appeals for the District of Columbia Circuit has recently held that

Review under the "arbitrary and capricious" tag line, however, encompasses a range of levels of deference to the agency, and [ Heckler v.] Chaney [470 U.S. 821, 84 L. Ed. 2d 714, 105 S. Ct. 1649 (1985)] surely reinforces our frequent statements that an agency's refusal ...

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