The PDF files on this web site may be viewed or printed using the Adobe® Acrobat® Reader available from Adobe Systems Incorporated.
On June 26, 2008, the Supreme Court ruled that provisions of the Bipartisan Campaign Reform Act (BCRA) known as the Millionaires’ Amendment (2 U.S.C. §319(a) and (b)) unconstitutionally
burden the First Amendment rights of self-financed candidates. The decision overturned an earlier ruling by the U.S. District Court for the District of Columbia that the Millionaires’ Amendment posed no threat to self-financed candidates’ First Amendment or Equal Protection
On March 30, 2006, the plaintiff, Jack Davis, declared his candidacy for the House seat in New York’s 26th District. Mr. Davis intends to spend over $350,000 of his own funds on his campaign, expenditures which will trigger the requirements of the Millionaires’ Amendment, and may result in increased contribution limits for his opponent.
Under the Millionaires’ Amendment, candidates who spend more than certain threshold amounts of their own personal funds on their campaigns might render their opponents eligible to receive contributions from individuals at an increased limit. 2 U.S.C. 441a-1. For House candidates, the threshold amount is $350,000. This level of personal campaign spending could trigger increased limits for the self-financed candidate’s opponent depending upon the opponent’s own campaign expenditures from personal funds and the amount of funds the candidate has raised from other sources. If increased limits are triggered, then the eligible candidate may receive contributions from individuals at three times the usual limit of $2,100 per election (individual limit for 2005-06 cycle) and may benefit from party coordinated expenditures in excess of the usual limit.
Mr. Davis contends that the Millionaires’ Amendment infringes upon his First Amendment right to free speech and his Fifth Amendment right to equal protection. Mr. Davis also alleges that the additional disclosure requirements for self-financed candidates required by the Millionaires’ Amendment impose an unfair burden on his right to speak in support of his own candidacy. He also asserts that the Millionaires’ provisions "dramatically tilt the field" in favor of incumbents by allowing larger contributions and by not adequately factoring in large "war chests" of campaign funds raised in previous elections in determining whether a candidate is eligible to receive contributions at an increased limit.
On June 6, 2006, Davis asked the U.S. District Court for the District of Columbia to declare the Millionaires’ Amendment provisions unconstitutional on their face, and to issue an injunction barring the FEC from enforcing those provisions. Mr. Davis argued that the Millionaires’ Amendment violates the First Amendment by chilling and violates the Equal Protection Clause of the Fifth Amendment by giving a competitive advantage to self-financed candidates’ opponents.
On July 11, 2006, the district
court granted the plaintiff’s
request that the case be heard by
a three-judge panel of the U.S.
Court of Appeals for the District
of Columbia Circuit, as required
by 2 U.S.C. 437h.
The district court held that Mr. Davis’s First Amendment challenge failed at the outset because the Millionaires’ Amendment did not "burden the exercise of political speech."
According to the district court, the Millionaires’ Amendment "places no restrictions on a candidate’s ability to spend unlimited amounts of his personal wealth to communicate his message to voters, nor does it reduce the amount of money he is able to raise from contributors. Rather, the Millionaires’ Amendment accomplishes its sponsors’ aim to preserve core First Amendment values by protecting the candidate’s ability to enhance his participation in the political marketplace." In particular, the court cited the fact that Mr. Davis himself has twice chosen to self-finance his campaign. The court found that Mr. Davis failed to show how his speech had been limited by the benefits his opponents receive under the statute.
Mr. Davis additionally alleged that the disclosure requirements for self-financed candidates under the Millionaires’ Amendment imposed an unfair burden on his right to speak in support of his own candidacy. The district court found that the Millionaires’ Amendment reporting requirements are no more burdensome than other BCRA reporting requirements that the Supreme Court has already upheld.
The court also rejected the second prong of Mr. Davis’s facial challenge, regarding the Equal Protection provision of the Fifth Amendment. In order to argue that a statute violates the Equal Protection Clause of the Fifth Amendment, a plaintiff must show that the statute treats similarly situated entities differently. The district court found that the Millionaires’ Amendment did not violate the Equal Protection Clause of the Fifth Amendment because Mr. Davis could not show that the statute treated similarly situated entities differently. The district court held that self-funded candidates, who can choose to use unlimited amounts of their personal funds for their campaigns, and candidates who raise their funds from limited contributions are not similarly situated. According to the court, "the reasonable premise of the Millionaires’ Amendment is that self-financed candidates are situated differently from those who lack the resources to fund their own campaigns and that this difference creates adverse consequences dangerous to the perception of electoral fairness." Thus, the court found no violation of the Fifth Amendment.
The District court granted the FEC’s request for summary judgment in this case and denied Mr. Davis’s request for summary judgment.
On June 26, 2008, the Supreme Court issued an opinion reversing the district court’s decision. The Court held that the Millionaires’ Amendment unconstitutionally violated self-financed candidates’ First Amendment or Equal Protection rights. The Court also rejected the FEC’s arguments that Davis lacked standing and that the case was moot.
Standing. The FEC argued that Davis lacked standing to challenge the unequal contribution limits of the Millionaires’ Amendment, 2 U.S.C. §319(a), because Davis’ opponent never received contributions at the increased limit and therefore, Davis had suffered no injury. The Court rejected this argument, noting that a party facing prospective injury has standing whenever the threat of injury is real, immediate and direct. The Court further noted that Davis faced such a prospect of injury from increased contribution limits at the time he filed his suit.
Mootness. The FEC also argued that Davis’ argument was moot because
the 2006 election had passed and Davis’ claim would be capable of repetition only if Davis planned to self-finance another election for the U.S. House of Representatives. The FEC also argued that Davis’ claim would not evade review as he could challenge the Amendment in court should the Commission file an enforcement action regarding his failure to file personal expenditure reports. Considering that Davis had subsequently made a public statement expressing his intent to run for a House seat and trigger the Millionaires’ Amendment again, the Court concluded that Davis’ challenge
is not moot.
First Amendment and Equal Protection. In considering Davis’ claim that imposing different fundraising limits on candidates running against one another impermissibly burdens his First Amendment right to free speech, the Court noted that it has never upheld the constitutionality of such a law. The Court referred to Buckley v. Valeo, in which it rejected a cap on a candidate’s expenditure of personal funds for campaign speech and upheld the right of a candidate to "vigorously and tirelessly" advocate his or her own election. While the Millionaires’ Amendment did not impose a spending cap on candidates, it effectively penalized candidates who spent large amounts of their own funds on their campaigns by increasing their opponents’ contribution limits. The Court determined that the burden thus placed on wealthy candidates is not justified by any governmental interest in preventing corruption or the appearance of corruption, and that equalizing electoral opportunities for candidates of different personal wealth was not a permissible Congressional purpose. The Court remanded the matter for action consistent with its decision.
On June 26, 2008, the Commission issued a public statement outlining the general principles the Commission will apply to conform to the Court’s decision.
On November 2, 1984, the U.S. District Court for the District of Columbia issued an order denying plaintiff's motion for a preliminary injunction in Democratic Congressional Campaign Committee v. FEC (Civil Action No. 84-3352).
In its suit, filed on November 2, 1984, the Democratic Congressional Campaign Committee (the Committee) had sought action against the FEC for the agency's failure to expedite action on an administrative complaint the Committee had filed on October 22, 1984. In light of the November 6 general election, the Committee's administrative complaint had asked the FEC to initiate expedited enforcement proceedings against the Republican National Committee and the National Republican Congressional Committee for their alleged violations of the election law. In its civil complaint, the Committee asked the court to enter a permanent injunction directing the Commission to institute expedited enforcement proceedings concerning the violations of the election law alleged in the Committee's complaint. The Committee also asked the court to establish and announce the compliance standards no later than 5:00 p.m. on November 2, 1984.
In addition, the Committee sought a preliminary injunction ordering the Commission to give expedited consideration to the Committee's administrative complaint and to announce its determination on that complaint no later than 5:00 p.m. on November 2, 1984.
On November 2, 1984, the district court denied the Committee's motion for a preliminary injunction. The court concluded that it lacked jurisdiction to require the Commission to make an expedited decision on the Committee's administrative complaint because 120 days had not yet elapsed since the Committee had filed the complaint with the FEC. See 2 U.S.C. §437g(a)(8)(A). In addition, the court stated that it clearly lacked authority to direct the Commission to shorten the time period set forth in the Act's enforcement provisions because Congress had given that authority to the Commission's discretion.
The Committee filed an appeal with the U.S. Court of Appeals for the District of Columbia Circuit but later asked the court to dismiss it. On December 14, 1984, the court granted the Committee's motion and dismissed the appeal.
Source: FEC Record -- December 1984, p. 3; and February 1985, p. 6.
On October 3, 1986, the U.S. District Court for the District of Columbia declared that the FEC's dismissal of an administrative complaint filed with the agency by the Democratic Congressional Campaign Committee was contrary to law. (Democratic Congressional Campaign Committee v. FEC; Civil Action No. 86-2075.) Pursuant to 2 U.S.C. Section 437g(a)(8)(C), the court directed the FEC to conform with its declaration within 30 days.
On October 23, 1987, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion which partially affirmed the district court decision. The appeals court affirmed the ruling that the FEC's dismissal of an administrative complaint resulting from a deadlock vote was subject to judicial review. However, since the appeals court lacked a Commission explanation for the dismissal, it rejected the district court's finding that the dismissal was contrary to law. Instead, the court remanded the suit to the district court with instructions that the district court, in turn, remand the suit to the Commissioners for an explanation of why they voted to dismiss the complaint.
The Democratic Congressional Campaign Committee (DCCC), a national committee of the Democratic Party, filed its administrative complaint with the FEC on December 20, 1985. DCCC alleged that its Republican counterpart, the National Republican Congressional Committee (NRCC), violated the election law by failing to allocate $10,000 to NRCC's coordinated party spending limits for the reelection of Congressman Fernand St Germain in Rhode Island.1 NRCC made the expenditures for mailings during 1985, which allegedly benefited the Republican House candidate in Rhode Island's First Congressional District. (Although the mailings were officially sponsored by the Rhode Island Citizens Group, NRCC did not deny that it had actually prepared and paid for the mailings.)
The mailings encouraged recipients to petition the House Ethics Committee to investigate newspaper charges that "Cong. St Germain had amassed a multimillion dollar personal fortune by using his public position to help wealthy investors." (Congressman St Germain was the Republican candidate's opponent for the Rhode Island House seat.)
The General Counsel recommended the Commission find reason to believe that the NRCC had violated the election law by failing to allocate and report the mailing expenses as coordinated party expenditures. However, on June 5, 1986, a majority of the Commissioners failed to find "reason to believe" the NRCC had violated the election law. Subsequently, by a unanimous vote, the Commissioners closed the file on the complaint.
Initially the court noted that, even though the Commissioners' dismissal of the complaint had resulted from their failure to obtain the votes required to find reason to believe the election law had been violated, the DCCC still had "the right [under the statute] to seek review of an adverse outcome."
On reviewing the DCCC's administrative complaint, the court found that the mailing addressed in FEC Advisory Opinion 1985-14 and those conducted by the NRCC in Rhode Island were similar. They both: "(1) were prepared by a national committee of a political party, (2) identified by name a specific Congressman of the opposing party, (3) criticized the record of the Congressman, and (4) were distributed to the constituents of the Congressman in question."
Furthermore, the court noted that "...[T]he Counsel found that the mailer's statement about ridding the government of corruption 'is a reference to an election in that one way to remove Congressman St Germain would be to vote him out of office.'"
The court therefore concluded that the "NRCC mailer conveys an 'electioneering message' as defined by the FEC's own advisory opinions and as interpreted by its General Counsel. Thus the FEC's dismissal of the plaintiff's complaint was 'contrary to law.'"
On July 16, 1987, the FEC filed an appeal of the district court's decision with the U.S. Court of Appeals for the District of Columbia Circuit (No. 86-5661). The FEC argued that "authoritative legislative history... demonstrate[d] that Section 437g(a)(8) [of the election law] was not intended to authorize judicial review" of the agency's dismissal of an administrative complaint which results from a deadlock vote on the merits of the complaint.2 Moreover, the FEC contended that "...even apart from the controlling legislative history of Section 437g(a)(8), the courts have traditionally found agency deadlocks that do not resolve substantive issues to be inappropriate for judicial review." The FEC further argued that the district court should not have ruled on the merits of DCCC's administrative complaint but should have limited its role to determining whether the FEC's dismissal of the complaint "could be rationally justified." The FEC claimed that "the district court's failure to limit its review to this narrow question [ran] afoul of Congress' expressed intent not to 'work a transfer of prosecutorial discretion from the Commission to the courts...' and was therefore erroneous."
The appeals court concurred with the district court's finding that the FEC's dismissal of the complaint in this case was subject to judicial review, but it rejected the lower court's ruling that the FEC's dismissal of the complaint was contrary to law.
The court found that "because Section 437g(a)(8)(A) provides broadly for court review of an FEC order dismissing a complaint...we resist confining the judicial check to cases in which... the Commission 'act[s] on the merits.'" The court further noted that the explanation of the provision in the legislative history occurred three years after Congress originally enacted the provision. However, the court limited its decision to the narrow circumstances presented in the case, "specifically a general counsel recommendation to pursue the complaint in fidelity to FEC precedent in point."
Furthermore, the appeals court did not agree with the district court's resolution of the merits of DCCC's administrative complaint. "Because we have no explanation why three Commissioners rejected or failed to follow the General Counsel's recommendation, we are unable to say whether reason or caprice determined the dismissal of DCCC's complaint," the court saId. The court therefore held that "the Commission or the individual Commissioners should first be afforded an opportunity to say why DCCC's complaint was dismissed in spite of the FEC's General Counsel's recommendation." The case was remanded to the district court.
1 Coordinated party expenditures are limited expenditures
which may be made by party committees on behalf of federal candidates in general
election campaigns. During 1986, based on the cost of living adjustment, a
national party committee could spend up to $21,810 for each of its House candidates
in Rhode Island. 2 U.S.C. §441a(d).
2 "[I]f the Commission considers a case and is evenly divided as to whether to proceed, that division...is not subject to review anymore than a similar prosecutorial decision by a U.S. attorney." See legislative history of 2 U.S.C. §437g(a)(8)(A) at 125 Cong. Rec. 36,754 (1979) (emphasis added), reprinted in FEC, Legislative History of the FECA Amendments of 1979, at 549.
Source: FEC Record -- July 1985, p. 6; November 1986, p. 4; and December 1987, p. 5.
Democratic Congressional Campaign Committee v. FEC, 645 F. Supp. 169 (D.D.C. 1986), aff'd in part and remanded, 831 F.2d 1131 (D.C. Cir. 1987).
On November 18, 1996, the U.S. District Court for the District of Columbia dismissed this case. The Democratic Congressional Campaign Committee (DCCC) had voluntarily requested such action.
Originally, the DCCC had asked the court to require the FEC to take action on an administrative complaint it filed with the agency on November 4, 1994, alleging violations of the Federal Election Campaign Act (the Act) by Grant Lally, a Congressional candidate from New York.
The Act allows a complainant to file a lawsuit against the FEC if the agency fails to take action on his or her administrative complaint within 120 days after it is filed. 2 U.S.C. §437g(a)(8)(A). The DCCC filed suit on April 23, 1996, after more than 120 days had elapsed.
In its original complaint, the DCCC alleged that Mr. Lally, who was vying to represent the fifth district, received substantial, undisclosed contributions in violation of the limits of the Act. 2 U.S.C. §441a. The DCCC alleged that the money was in excess of $300,000. Mr. Lally said the money was "personal funds" lent to the campaign. The DCCC filed a supplemental complaint in 1995 alleging that Mr. Lally had continued to violate the Act.
Source: FEC Record -- January 1997 [PDF].
On February 20, 1997, with the agreement of both parties, the U.S. District Court for the District of Columbia dismissed this case without prejudice and ordered the FEC to periodically update the Democratic National Committee (DNC) on the status of an administrative complaint it filed against Bob Dole's 1996 presidential campaign.
In June 1996, the DNC filed an administrative complaint with the Commission alleging that Mr. Dole's presidential committee, Dole for President, Inc., disregarded the limit on expenditures during the pre-primary season. The administrative complaint was designated Matter Under Review (MUR) 4382. Under the Presidential Primary Matching Payment Account Act, presidential candidates may receive matching payments for their primary campaigns if they agree to limit their expenditures to a set amount-in this case, a little more than $37 million. 2 U.S.C. §441a(b)(1)(A).
After no apparent action had taken place on the complaint, the DNC, on October 31, 1996, filed suit asking the court to order the FEC to move forward on its allegations against the Dole campaign. The DNC said that in failing to act on its complaint within 120 days after it was filed-the original administrative complaint was filed June 12 and a supplemental complaint was filed on July 22-the FEC was acting contrary to law. 2 U.S.C. §437g(a)(8)(A).
The court said that the FEC should give lawyers for the DNC confidential, updated chronologies on the Commission's actions in MUR 4382. The first was to be delivered at the end of March 1997 with subsequent chronologies presented at 12-month intervals until the matter was resolved or there was further court action.
The contents of the chronologies may not be disclosed to anyone not involved in the administrative complaint. Additionally, DNC counsel may use the information only in preparation for litigation that may result from the MUR. To ensure that there is no unauthorized dissemination of the chronologies, DNC counsel must inform in writing each person who sees the information that it may not be shared with others. The DNC must maintain a list of those people, what information they have seen and a written statement from each person acknowledging that he or she understands the confidentiality provisions that are part of this court action.
Source: FEC Record -- May 1997 [PDF].
On July 2, 1998, at the request of the FEC, and with the consent of the Democratic National Committee (DNC), the U.S. District Court for the District of Columbia dismissed this case without prejudice and remanded the matter back to the FEC to review the impact of the appellate and U.S. Supreme Court decisions in Akins v. FEC on issues presented in this case.
The suit concerned the Commission's dismissal of the DNC complaint alleging that the Christian Coalition is a political committee.
On April 14, 2008, the Democratic National Committee (DNC) and the DNC Services Corporation filed a complaint in the U.S. District Court for the District of Columbia alleging that, since the Commission does not have the four commissioners needed to take certain actions on an administrative complaint filed by the DNC, the court should authorize the plaintiffs to act in the place of the Commission to pursue resolution of the complaint in court.
The court dismissed the complaint on May 14, finding that, under the Federal Election Campaign Act (the Act), a party may only file such a complaint after the expiration of the statutorily mandated 120-day period.
See 2 U.S.C. §437g(a)(8)(A).
According to the court complaint,
the DNC filed an administrative
complaint with the Commission on February 25, 2008, alleging that Senator John mcCain and his Presidential campaign violated the Presidential Primary Matching Payment Account Act (the Matching
Payment Act). The DNC alleged that Senator McCain’s campaign entered into a binding agreement with the Commission for the receipt of primary matching funds. Senator McCain subsequently informed the Commission that he was withdrawing
from the Matching Payment Act Program, but the DNC alleged that his purported withdrawal violated the Matching Payment Act. The DNC alleged that Senator McCain had pledged the matching funds as collateral for a bank loan and thus may not withdraw from the program.
The Act provides that the Commission has 120 days from receipt of an administrative complaint before a complainant can file suit against the Commission alleging a failure to act, and 30 days to comply with any subsequent court declaration that the Commission has unlawfully failed to act. However, because the Commission has only two members at this time and four affirmative votes are required to take certain actions in handling an administrative complaint, the DNC’s lawsuit claimed that the Commission will not be able to act on its complaint in a timely manner, and thus the court should grant the DNC the right to pursue enforcement of the Act in court against Senator McCain and his committee.
The DNC asked the court to:
The Commission filed a statement with the court suggesting that the court had an independent obligation to determine whether the court had jurisdiction over the case.
On May 2, 2008, the District Court issued an Order to Show Cause, directing the DNC to explain why the court should not dismiss the DNC’s complaint for being filed before the 120-day period had expired. In response, the DNC argued that the 120-day rule does not prohibit the filing of a court complaint, but only prohibits the court from acting on a complaint within the first 120 days after an administrative complaint is filed. Additionally, the DNC argued that the 120-day jurisdictional limit should not apply because the Commission lacks a quorum to initiate an investigation.
On May 14, 2008, the District Court dismissed the DNC’s complaint
without prejudice. The court held that it lacked jurisdiction to hear the case because the plain text of the Act allows a party to file a petition with a court only after the expiration of the 120-day period. See 2 U.S.C. §437g(a)(a)(8)(A). The court also observed that the Commission could reach a quorum within the 120-day period.
Source: FEC Record -- June 2008 [PDF].
On June 24, 2008, the Democratic National Committee (DNC) filed a complaint in the U.S. District Court for the District of Columbia alleging
that the Commission failed to act timely upon the DNC’s administrative
complaint filed with the Commission against Senator John McCain’s Presidential campaign.
According to the court complaint, the DNC filed an administrative complaint with the Commission on February 25, 2008, alleging that Senator McCain and his Presidential campaign violated the Presidential Primary Matching Payment Account Act (the Matching Payment Act). The DNC alleged that Senator McCain’s campaign entered into a binding agreement with the Commission for the receipt of primary matching funds. Senator McCain subsequently informed the Commission that he was withdrawing from the Matching Payment Act Program, but the DNC alleged that his purported withdrawal violated the Matching Payment Act. The DNC alleged that Senator McCain had pledged the matching funds as collateral for a bank loan and thus may not withdraw from the program.
The DNC filed a court complaint on April 14, 2008, that is similar to its June 24 complaint. The DNC’s April complaint claimed that the Commission would not be able to act on its administrative complaint in a timely manner and thus the court should grant the DNC the right to pursue enforcement of the Act in court against Senator McCain and his committee. The District Court dismissed the April complaint, stating
that it lacked jurisdiction to hear the case because the Federal Election
Campaign Act (the Act) allows a party to file in court only after 120 days have passed from the filing of an administrative complaint. See 2 U.S.C. §437g(a)(8)(A) and the June 2008 Record [PDF]. The Act requires
the affirmative vote of at least four commissioners to take certain actions on administrative complaints.
Although the Commission currently has six commissioners, when the DNC’s February administrative complaint and April court complaint were filed, the Commission only had two commissioners.
The DNC asks the court to:
Source: FEC Record -- August 2008 [PDF].
In an administrative complaint, filed May 9, 1980, DSCC alleged that NRSC had violated the Act by making special "coordinated" expenditures (2 U.S.C. §441a(d)(3)) as an agent for certain state Republican Party committees. Based on written agreements with the state party committees, the NRSC had made the expenditures to support the general election campaigns of various Senatorial candidates in 1978. NRSC's expenditures were within the limits prescribed by §441a(d)(3) for special party expenditures that a state party committee may make on behalf of its Senate candidate (i.e., $20,000 or 2 cents multiplied by the voting age population of the state). On July 11, 1980, the Commission unanimously determined that there was "no reason to believe" that NRSC had violated the Act. This action was consistent with Commission determinations in prior enforcement actions.
In a petition filed with the U.S. District Court for the District of Columbia on July 30, 1980 (Democratic Senatorial Campaign Committee v. FEC, Civil Action No. 80-1903), DSCC sought a declaration from the court that the FEC's determination was contrary to law and an order directing the Commission to comply with the declaration within 30 days. On August 28, 1980, the district court, ruling on cross-motions for summary judgment, denied the DSCC's petition and affirmed the Commission's determination and interpretation of §441a(d)(3), concluding that the dismissal of DSCC's complaint was not arbitrary, capricious, an abuse of discretion or otherwise contrary to law.
DSCC appealed the district court's order on September 3, 1980 (No. 80-2074). On October 9, 1980, in a per curiam opinion, the appeals court reversed the district court's judgment and declared the Commission's determination contrary to law. Finding that the Commission had presented no reasoned explanation for its determination on the administrative complaint, the court decided the issue de novo. The court determined that neither the language of the statute nor its legislative history could support the Commission's interpretation of §441a(d)(3), i.e., that Congress had not intended to prohibit intraparty agency agreements, such as those used by the Republican Party committees. Accordingly, the appeals court held that, in the absence of an explicit statutory authorization, the agreements between NRSC and the state Republican Party committees violated Section 441a(d)(3). It issued a mandate directing the Commission to conform with its decision.
On October 10, 1980, while the Commission was attempting to comply with the court's decision, intervenor NRSC filed an application to recall the mandate and a petition for an en banc rehearing of the case. The appeals court denied both motions on October 11, 1980. Then, in response to a request from NRSC, the Chief Justice of the Supreme Court issued a stay of the appeals court's judgment, pending the Court's decision on NRSC's petition for a writ of certiorari.
On March 2, 1981, the Supreme Court granted the Commission's petition for a writ of certiorari in FEC v. Democratic Senatorial Campaign Committee (Civil Action No. 80-939). The Court also granted a petition for a writ of certiorari filed by the National Republican Senatorial Committee (National Republican Senatorial Committee v. Democratic Senatorial Campaign Committee, Civil Action No. 80-1129) and consolidated the cases for oral argument.
In a brief filed with the Supreme Court on April 16, 1981, the Commission argued that its decision to dismiss DSCC's administrative complaint was based on a reasonable interpretation of the Act and should be affirmed. The Commission contended that, by substituting its judgment for that of the FEC, the appeals court had interfered with the Commission's exclusive role as the expert body established by Congress to administer, enforce and interpret the Act. Moreover, in reversing the FEC's consistent construction of Section 441a(d)(3), the appeals court had ignored precedent in the District of Columbia circuit, which gave judicial deference to the Commission's interpretations of the Act. The Commission also asserted that the appeals court's decision required it to develop a new rule of law or statutory interpretation in the context of an enforcement proceeding. This requirement was contrary to the statutory mandate that such rules and interpretations be made through advisory opinions and rulemaking.
Furthermore, the Commission argued that its interpretation of 2 U.S.C. §441a(d)(3) was not contrary to law. Rather, the Commission's interpretation was consistent with statutory language, Commission regulations and advisory opinions and legislative history. A contrary interpretation would conflict with the clear Congressional intent to encourage a close working relationship among the various party committees. For example, under the Act, funds may be transferred without limit between political committees of the same party. 2 U.S.C. §441a(a)(4). The Commission asserted that Congress recognized the Act did not prohibit such intraparty arrangements when it rejected an amendment to the Act that would have prohibited NRSC from transferring funds to the state party committees for the purpose of making §441a(d) expenditures. The Commission therefore argued that its interpretation of §441a(d)(3) was entitled to deference by the appeals court.
On November 10, 1981, the Supreme Court issued an opinion reversing the appeals court decision. The Supreme Court's opinion affirmed the Commission's construction of §441a(d)(3) as a "sufficiently reasonable" one. The Court found that the district court had been "correct" in according deference to the Commission's interpretation.1 The Court held that "Section 441a(d)(3) does not expressly or by necessary implication foreclose the use of agency arrangements, such as are at issue here, and the FEC thus acted within the authority invested in it by Congress when it determined to permit such agreements.... While §441a(d)(3) does not authorize the NRSC to make expenditures in its own right, it does not follow that it may not act as agent of a Committee that is expressly authorized to make expenditures." The Court further held that "the FEC's view that the agency agreements were logically consistent with §441a(4)-which authorizes the transfer of funds among national, state, and local committees of the same party-is acceptable."
Source: FEC Record -- August 1981, p. 2; and January 1982, p. 6.
Democratic Senatorial Campaign Committee v. FEC, 660 F.2d 773 (1980 D.C. Cir.), rev'd 454 U.S. 27 (1981), on remand, 673 F.2d 551 (1982).
On August 27, 1990, the U.S. District Court for the District of Columbia granted the FEC's motion for summary judgment, ruling that the agency did not act contrary to law when it dismissed a portion of an administrative complaint filed by the Democratic Senatorial Campaign Committee (DSCC).
In its administrative complaint (Matter Under Review (MUR) 2766), DSCC alleged that $325,000 in media expenditures made by the Auto Dealers and Drivers for Free Trade Political Action Committee (Auto Dealers PAC) in support of 1988 Florida Senate candidate Connie Mack were not independent and thus violated the PAC's $5,000 contribution limit for a candidate under 2 U.S.C. §441a(a)(2)(A). DSCC contended that, because the Auto Dealers PAC and the Mack campaign (Friends of Connie Mack) both used the services of two key campaign consultants, the independence of the PAC's expenditures was compromised, resulting in excessive contributions by the PAC. The consultants, two media firms, provided services to the Mack campaign in Florida and to the Auto Dealers PAC for expenditures in other states.
The PAC denied using either media firm in connection with the Florida Senate race, identifying a third firm as its media consultant for Florida. The PAC's director explained in an affidavit that, when the presidents of the two media firms disclosed that they were retained by the Mack campaign, he told them "not to say anything at all" about the Florida race to anyone associated with the PAC. The PAC submitted affidavits by the two presidents consistent with the PAC director's affidavit. The Mack campaign also denied any consultation or coordination with the PAC and provided supporting affidavits.
The FEC's General Counsel recommended that the Commission authorize an investigation of the matter because of "unanswered questions." However, the Commission, by a vote of 3-2 (and one abstention), failed to find "reason to believe" that a violation had occurred with respect to the independent expenditure portion of the complaint, thereby dismissing that portion.1 (The Commission did find reason to believe that the Mack campaign had failed to comply with the 48-hour notice requirement for last-minute contributions and later entered into a conciliation agreement with the campaign with respect to that violation.)
On June 26, 1990, DSCC filed suit seeking summary judgment that the FEC had acted contrary to law in dismissing DSCC's allegation of coordination between the Auto Dealers PAC and the Mack campaign with respect to the PAC's independent expenditures.
The court found that the Commission's decision to dismiss the independent expenditure allegation was not contrary to law, given the "totality of the circumstances" of the case.
DSCC had argued that the "totality of the circumstances" compelled an investigation to determine whether the PAC's expenditures were independent. These circumstances included: (1) the two common consultants used by the Auto Dealers PAC and the Mack campaign; (2) the General Counsel's recommendation to find "reason to believe" and authorize an investigation; and (3) the affidavits submitted by the PAC and the Mack campaign, which DSCC claimed raised substantial questions. The court, however, was not persuaded by DSCC's arguments.
With respect to the common consultants, the court found that "there was no reason to presume 'coordination' as the consultants were retained by the PAC to work on elections only outside the state of Florida."
The court also found that the Commission's decision not to follow the General Counsel's recommendation was not unreasonable. Citing Commissioner Josefiak's Supporting Memorandum for the Statement of Reasons, the court stated: "In refusing to order an investigation, the Commission applied a minimum evidentiary threshold that required at least 'some legally significant facts' to distinguish the circumstances from every other independent expenditure....[O]therwise every 'independent expenditure' complaint would demand investigation." The court said that "the only record of fact offered in support of DSCC's allegations was the use of 'common consultants.'" In the court's view, however, the affidavits suggested that "the Florida Auto Dealers PAC built a 'Chinese Wall' between itself and the two Mack consultants."
With regard to the affidavits, the court found it "entirely reasonable to read [them] as precluding, rather than raising, an inference of coordination."
Accordingly, the court entered summary judgment in favor of the FEC and against DSCC.
Source: FEC Record -- October 1990, p. 8.
Democratic Senatorial Campaign Committee v. FEC, 745 F. Supp. 742 (D.D.C. 1990).
On November 14, 1994, the U.S. District Court for the District of Columbia ordered the FEC to vacate its dismissal of the Democratic Senatorial Campaign Committee's (DSCC's) complaint against the National Republican Senatorial Committee (NRSC) with respect to excessive contributions made in the 1992 Georgia U.S. Senate race. The court based this judgment on FEC regulations defining general and runoff elections. 11 CFR 100.2(b) and (d).
A general election was held in Georgia on November 3, 1992, in which none of the candidates for U.S. Senate won a majority. Under Georgia law, when an election for U.S. Senator fails to produce a majority winner, a second election must be held between the top two vote getters. Such an election was held on November 24, 1992.
Under the federal election law, the DSCC and the NRSC were each permitted to spend up to $535,608 on behalf of their party nominee in the 1992 Georgia general election for U.S. Senate. 2 U.S.C. §441a(d). The NRSC had exhausted this spending authority by November 3, while the DSCC had not. Subsequently, the NRSC requested an advisory opinion from the FEC as to whether to classify the November 24 election as a second general election or as a runoff. The NRSC would be legally entitled to a new $535,608 spending authority if the election were deemed a general election, but not if it were deemed a runoff election. Since the Commission split 3-31 on how to classify the November 24 election, no advisory opinion was issued. The NRSC then proceeded to spend nearly the full amount permitted for a general election in support of its candidate for the November 24 election. The DSCC, on the other hand, limited its expenditures to the balance which remained from the original §441a(d) allowance.
The DSCC filed a complaint with the FEC on November 19, alleging that the NRSC had violated federal election law by exceeding its §441a(d) spending limit in this race. The Commission split 3-3 on whether or not to initiate an investigation and then dismissed the DSCC's complaint. The DSCC then brought this case before the court.
Based on its interpretation of FEC regulations, the court concluded that the November 24 election was not a general election. It reasoned that the election could not qualify as a general election because it was not held on the Tuesday following the first Monday in November in an even numbered year, nor was it designed to fill a vacancy, thus failing to meet either of the criteria for a general election. 11 CFR 100.2(b).
The court further reasoned that the November 24 election fit the definition of a runoff election because it was held after a general election and it was prescribed by applicable state law as the means for deciding which candidate was the winner. 11 CFR 100.2(d).
The court disagreed with the argument that the November 24 election could be both a general and a runoff election. The court observed that the regulations do not state that a runoff election can also be a general election, whereas, in defining other types of elections, the regulations clearly state where overlap is possible.
The court ordered the FEC to initiate appropriate enforcement proceedings against the NRSC.
Source: FEC Record -- January 1995, p. 10.
Democratic Senatorial Campaign Committee v. FEC, No. 93-1321 (HHG) (D.D.C. Nov. 14, 1994).
On April 17, 1996, the U.S. District Court for the District of Columbia ruled that the FEC acted contrary to law when it allowed nearly 600 days to pass without taking any meaningful action on an administrative complaint filed by the Democratic Senatorial Campaign Committee (DSCC). Under 2 U.S.C. §437g(a)(8)(A), anyone who files a complaint with the FEC may seek court intervention if the FEC fails to complete action on the complaint within 120 days.
The DSCC filed the complaint on May 14, 1993. In the complaint, the DSCC alleged, among other things, that the National Republican Senatorial Committee had violated the law by making illegal "soft money" contributions to influence the 1992 Senate elections-particularly the runoff in Georgia.
On February 22, 1995, the DSCC filed this suit claiming that the FEC's failure to complete action was arbitrary and capricious.
The court reasoned that while FEC decisions concerning whether to conduct an investigation were entitled to judicial deference, the agency's failure to consider a complaint for nearly 600 days was subject to judicial review. The court examined whether the FEC had acted reasonably in allowing nearly 600 days to pass before taking action on the DSCC's complaint.
Based on its analysis of the factors listed above, the court ruled that the FEC's failure to consider the DSCC's complaint for nearly 600 days was contrary to law. The court noted, however, that while this litigation was pending, the FEC had moved forward with respect to the DSCC's complaint. The court warned that should the FEC stall on this matter again, "the need for additional judicial intervention may well be compelling."
Source: FEC Record -- July 1996 [PDF].
On October 9, 1996, the U.S. District Court for the District of Columbia dismissed this case in an expedited decision prompted by the nearness of the November general election. The court said that it could not rule on how party committees may make expenditures that are "independent" because the FEC has not yet addressed the issue in a rulemaking or an advisory opinion.
The Democratic Senatorial Campaign Committee (DSCC) and the Democratic Congressional Campaign Committee (DCCC) wanted the court to rule that their proposed expenditures qualified as "independent expenditures" and therefore were outside any spending limits. But the court said that the FEC "has been granted primary jurisdiction and therefore should be given an adequate opportunity to address the issues raised by Plaintiffs."
In a June 26, 1996, decision, the Supreme Court held that political parties were capable of making "independent expenditures," thus reversing the FEC's long-held presumption that party expenditures on behalf of candidates were "coordinated" with candidates and thus subject to contribution or expenditure limits. Colorado Republican Federal Campaign Committee v. FEC, 116 S. Ct. 2309 (1996).
In July, the DSCC and the DCCC asked the FEC to revise agency regulations in time for the November election to explain how party committees, with their traditionally close contacts with candidates, could make independent expenditures. The Commission agreed to conduct the rulemaking but said it could not revise the rules in time for the 1996 election cycle.
That same month the committees also formally requested an FEC advisory opinion (AOR 1996-30) to answer questions on their proposed independent expenditures, such as whether past contacts between party staff and candidates' campaign staff would compromise the independence of the expenditures, or whether the party committees could erect a "Chinese Wall" to segregate staff chosen to work on independent expenditure campaigns.
An advisory opinion drafted by the FEC's Office of General Counsel and voted on in late August failed to win approval by the required four-vote majority of Commissioners.
In September, the plaintiffs filed suit asking the court to find that their proposed expenditures would qualify as independent expenditures. The committees claimed that they were forced to file suit because the FEC's failure to issue formal guidance would expose them to possible penalties under the Federal Election Campaign Act should they pursue their independent expenditure program.
The court ruled that the plaintiffs had standing to file suit because they suffered injury: "the chilling of First Amendment rights" and "a creditable threat of prosecution."
However, the court said, it was unable to rule on the substance of the case because the FEC had not yet taken any final agency action that could be reviewed by a court. The court said that the plaintiffs "are asking the Court to 'step into the Commission's shoes' and issue the advisory opinion and final rules which it was unable to provide." The court noted that Congress intended the FEC to interpret the statute first, before the courts.
The court therefore granted the FEC's motion to dismiss the case.
The DSCC and DCCC subsequently asked the U.S. Court of Appeals for the District of Columbia to review the lower court's judgment on an expedited basis so the case could be resolved before the election. That court, however, on October 11, 1996, denied the request to expedite the appeal.
Source: FEC Record -- November 1996 [PDF].
On November 25, 1996, the U.S. District Court for the District of Columbia denied a request from the Democratic Senatorial Campaign Committee (DSCC) to find that the FEC violated the Federal Election Campaign Act when it failed to take action on an administrative complaint the DSCC had filed with the Commission.
The DSCC filed the lawsuit against the FEC after the agency had failed to act on its administrative complaint against the National Republican Senatorial Committee (NRSC) within 120 days. 2 U.S.C. §437g(a)(8)(A).
On April 10, 1998, the U.S. Court of Appeals for the District of Columbia Circuit remanded these two cases to the district court after finding that the question of standing had not been resolved.
On October 18, 1999, the U.S. District Court concluded that the DSCC had constitutional standing to litigate these cases.
The DSCC filed its administrative complaint in 1993 and followed it with a supplemental complaint in 1995. The complaints alleged that the NRSC had made at least $187,000 in illegal "soft money" expenditures to influence the Senate election of a Republican candidate in Georgia. The NRSC did this, the DSCC alleged, by funneling the money through four nonprofit organizations that were allegedly closely aligned with the Republican Party.
In April 1996, the DSCC asked the court to order the FEC to act on its administrative complaints. The court found the FEC's delay was contrary to law and told the agency to move forward with the case. It also told the DSCC to file another lawsuit if the FEC did not take action.
The DSCC did just that. In September 1996, it filed suit, asking the court again to order the FEC to complete the consideration of its complaint within 30 days or give the DSCC the authority to file a civil action against the NRSC. In denying the DSCC's request, the court said the FEC's conduct did not yet constitute a failure to act that was contrary to law. Further, the FEC provided the court and the DSCC with a chronology of its actions taken over the past 15 months.
The court also based its ruling, in part, on the FEC's considerable work load, lack of resources and competing priorities. In particular, it noted the U.S. Supreme Court ruling in the Colorado Republican Federal Campaign Committee case, which was handed down in June 1996 and which invalidated part of the FEC's regulation governing expenditures by national and state party committees. That ruling, the court said, added an "additional layer of complexity" to the DSCC's allegations against the NRSC.
The court noted that the statute of limitations period was coming to a close with regard to the DSCC's administrative complaint. Therefore, the court ordered the FEC to file status reports on its progress on the administrative complaint every 30 days (the first report was due December 10, 1996) and scheduled a March 1997 status conference for the FEC and the DSCC in the event that the matter was not resolved by then.
After waiting an additional four months and nearing the five-year statute of limitations for this case, the DSCC filed a motion for summary judgment, citing the FEC's "near glacial pace" in the investigation and arguing again that the agency's actions were contrary to law.
On May 30, 1997, the court granted the DSCC's motion and ordered the FEC to take action, within 30 days, on the committee's administrative complaint. The court also stated that if the FEC failed to take action within 30 days, then the DSCC could initiate its own lawsuit against the NRSC pursuant to 2 U.S.C. §437g(a)(8)(C).
The FEC contended that it was moving forward with the investigation of the DSCC's complaint and that it was "conducting a careful and deliberate investigation of constitutionally sensitive and factually complex issues arising from a national party's payments to independent issue advocacy groups." The FEC also argued that, without sufficient time to conduct a thorough investigation, its five commissioners would not be able to make an informed decision as to whether there was probable cause to believe that a violation of the Act had occurred. The FEC added that certain witnesses were challenging the Commission's discovery requests.
The standard for evaluating administrative delay is whether an agency has acted reasonably and in a manner that is not arbitrary or capricious.1 To measure this, the courts use several criteria described in Rose v. FEC and Telecommunications Research & Action Center v. FCC.
Using those criteria, the court concluded that the FEC's delay-taking more than four years from when the administrative complaint was filed and nearly two years from the Commission's "reason to believe" determination to decide whether there was probable cause to believe a violation of the Act had occurred-was unreasonable.
The court said that the FEC could no longer claim that the Supreme Court's decision in the Colorado case complicated its investigation. The court also cited the impending five-year mark for the case, and said that litigation delays resulting from motions to quash FEC subpoenas were foreseeable and provided no acceptable excuse for the delay.
The court concluded that the FEC's failure to investigate and make a "probable cause" determination in a reasonable time frame was contrary to law under 2 U.S.C. §437g(a)(8)(C). It ordered the Commission to conform its conduct with the court's declaration within 30 days. Subsequently, on June 20, 1997, the Commission appealed this decision to the U.S. Court of Appeals for the District of Columbia Circuit.
The appeals court remanded both cases to the district court to determine whether the DSCC had standing to sue the Commission under §437g(a)(8). In citing the issue of standing, the appeals court acknowledged that the question had come up only on appeal and mainly through an amicus curiae, or friend of the court, brief. The appeals court based its ruling on a 1998 U.S. Supreme Court decision in Steel Co. v. Citizens for a Better Environment, which "seems to hold that before deciding the merits (of a case), federal courts must always decide Article III (of the U.S. Constitution) standing whenever it is in doubt." Because some doubt has now been raised, the appeals court remanded the cases to the district court to address the standing question. The DSCC must present evidence that it satisfied the three-pronged test of standing-injury in fact, causation and redressability. With regard to redressability, the court said that the standing analysis may well have to depend on the Supreme Court's decision in Akins v. FEC.2
On remand, the district court decided that, in the first case, the DSCC did not qualify as a "prevailing party" as defined in the Equal Access to Justice Act, and therefore vacated its earlier decision to award the DSCC attorney's fees. The court did reconfirm its prior order in the second case that found the Commission to have unreasonably delayed taking action on the administrative complaint filed by the DSCC and required the Commission to conclude the matter within 30 days.
Cause v. FEC, 489 F. Supp. 738, 744 (D.D.C. 1980).
2 In the Akins case, several former government officials filed a lawsuit against the FEC after it dismissed an administrative complaint they had filed. Among the issues discussed at the Supreme Court was whether these former officials had standing to initiate this lawsuit.
On August 15, 1997, in response to a court order, the FEC filed an amicus brief about the confidentiality of its documents in the Democratic Senatorial Campaign Committee (DSCC) suit against the National Republican Senatorial Committee (NRSC).
The DSCC's suit was the first contested case in which a private party has sued another private party for violations of the Federal Election Campaign Act (the Act), pursuant to 2 U.S.C. §437g(a)(8)(C). That section of the Act states that if the FEC fails to take action on a complaint within 30 days after it has been ordered to do so by the U.S. District Court for the District of Columbia, then the complainant may file suit in his or her own name against the alleged offender of the Act.
The DSCC had filed two previous lawsuits-in April and November 1996-against the FEC charging that it had failed to take action within 120 days on an administrative complaint filed by the DSCC, alleging that the NRSC had made illegal "soft money" expenditures to influence a Senate election in Georgia. 2 U.S.C. §437g(a)(8)(A). In the resolution of the second delay suit, which occurred on May 30, 1997, the court ordered the FEC to take action on the administrative complaint within 30 days. When that did not happen, the DSCC filed suit on its own against the NRSC.
The Commission's brief was in response to an order from the court seeking the FEC's views on keeping under seal certain documents it filed during proceedings in the two DSCC delay cases and to which the NRSC has requested access. The Commission argued that providing such information to the NRSC would compromise its investigation into the DSCC's original administrative complaint, which continues despite the DSCC's most recent lawsuit against the NRSC. The documents being sought by the NRSC included information about potential witnesses and FEC actions and procedures in the investigation. The FEC contended that the information in the sealed files contained no evidence about the NRSC's alleged violations, and thus would be of little relevance to the NRSC's court battle with the DSCC. And, although the DSCC had seen some of the information under seal, it was barred by the court's protective order from using that information in its own lawsuit against the NRSC.
The Commission also noted the precedent the court would set if it were to allow the NRSC to view the confidential information covered by the protective order, stating that the Commission would have to take such actions into consideration in deciding what information to provide the court in future delay cases.
On August 27, 1997, the court granted a stay requested by the NRSC without deciding whether to maintain the confidentiality of the documents.
Source: FEC Record -- October 1997 [PDF].
By agreement of both parties, the U.S. District Court for the District of Columbia dismissed this case on August 17, 1990. (Civil Action No. 90-0542.) Robert E. Dolan had asked the court to declare that 2 U.S.C. §438(a)(4), referred to as the "sale and use restriction," was unconstitutional as applied to his efforts to solicit individuals identified as contributors in FEC reports.
On July 13, 1990, the Commission had filed suit in the same court, asking the court to declare that Mr. Dolan knowingly and willfully violated the sale and use restriction.
On September 5, 1990, the Commission filed a motion to amend its complaint by requesting a court declaration that the sale and use restriction is constitutional insofar as it curtails the sale or use of contributor data for commercial purposes. The Commission also asked the court to certify the constitutional issue to the U.S. Court of Appeals for the District of Columbia Circuit under 2 U.S.C. §437h.
Source: FEC Record -- October 1990, p. 8.
On March 11, 1982, the U.S. District Court for the Southern District of New York issued a ruling granting a preliminary injunction to the plaintiffs in Dolbeare v. FEC (No. 81 Civ. 4468-CLB).
Plaintiffs' suit challenged pending FEC investigations of various activities with respect to the Citizens for LaRouche Committee (the LaRouche campaign), Lyndon H. LaRouche's principal campaign committee for the 1980 Presidential primaries. The LaRouche campaign claimed that the statutory provision authorizing the investigations (2 U.S.C. §437g(a)(2)) was unconstitutional as applied to the LaRouche campaign because it placed no limits on the time for completing the investigations. Moreover, the LaRouche campaign alleged that the FEC had undertaken the investigations to harass the campaign. Furthermore, the investigations had a chilling effect on the free association rights of the campaign's contributors. The LaRouche campaign also claimed that, in conducting its investigations, the FEC had gone beyond the prescribed scope for FEC investigations.
The FEC sought dismissal of the suit on jurisdictional grounds. Primarily, the FEC claimed that the suit was not justiciable because, under 2 U.S.C. §437g(a), an agency has the discretion to decide whether there is "reason to believe" the Act has been violated and whether an alleged violation should be investigated. The FEC also argued that, pursuant to the Supreme Court's decision in Federal Trade Commission v. Standard Oil of California, such initial agency determinations are not final and thus not ripe for judicial review in a federal court. Moreover, the FEC said that §437h provides jurisdiction only for claims of statutory unconstitutionality, not for claims that a statute is unconstitutional as applied. Furthermore, the FEC argued that the LaRouche campaign's claim that the FEC's investigations would have a long-term chilling effect on their political activities did not meet the test for immediate injunctive relief-evidence of "specific present objective harm or a threat of specific future harm..." (Laird v. Tatum, 408 U.S. 1, 13-14 (1971)). The FEC further argued that the LaRouche campaign had failed to present sufficient evidence to demonstrate a likelihood of succeeding with its case on the merits.
In granting a preliminary injunction, the court found that it did have jurisdiction over the claims raised in the suit and that §437h could be used to challenge the constitutionality of the Act, as applied. The court also held that it did not have to certify the campaign's constitutional questions to the appeals court, pursuant to §437h, but could itself take primary jurisdiction over them. The court reasoned that the campaign would be caused "irreparable harm" as a result of substantial legal fees and the depletion of volunteer staff resources required to defend the campaign against the FEC's ongoing investigations. The court therefore barred the FEC from:
Moreover, the court ordered the FEC to complete its enforcement actions promptly and to treat the LaRouche campaign as a respondent to all pending investigations involving the campaign's 1980 Presidential primary activities. The court also ordered the FEC to furnish copies of depositions taken with regard to any of the pending investigations, if requested by the LaRouche campaign. The court, however, conditioned its enforcement of the injunction on:
Source: FEC Record -- May 1982, p. 6.
Dolbeare v. FEC, No. 81 Civ. 4468-CLB (S.D. N.Y. March 9, 1982) (unpublished opinion).
On February 29, 2001, Robert J. Dole and Dole/Kemp '96, Inc., (Dole/Kemp), Mr. Dole's 1996 presidential campaign committee, filed in the U.S. Court of Appeals for the District of Columbia Circuit a petition for review of the Federal Election Commission's audit of Dole/Kemp. On January 29, 2001, the Commission made a final determination that the petitioners must repay $1,416,903.40 to the U.S. Treasury.
On April 2, 2001, the court granted a joint motion filed by the petitioners and the Commission to hold the case in abeyance through May 23, 2001, to allow the parties an opportunity to engage in settlement discussions that might eliminate the need for further litigation.
Source: FEC Record -- May 2001 [PDF].
On February 14, 1991,1 the U.S. District Court for the District of Arizona granted the FEC's motion for leave to intervene in the case. (Civil Action No. CIV 90-0129 PHX RCB.)
The suit was filed by the Department of Labor and its Secretary, Elizabeth Dole. They alleged that defendants failed to pay overtime wages in violation of the Fair Labor Standards Act. International Association Managers, Inc. (IAM) and two of its officers were named as defendants. Counsel for the defense took depositions from two former IAM employees who defendants believe are involved in the Department of Labor investigation and in an ongoing investigation by the FEC. When questioned about their communications with the two agencies, the employees refused to answer, citing the "government informant's privilege." Defendants then filed a motion to compel the employees to respond to these questions.
In response to the defendants' motion, the FEC filed a motion to intervene in the case or to file an amicus response to defendants' motion to compel. The court granted the motion, stating: "The interest of the FEC in protecting against disclosure of the identity of informants and the nature of informants' communications with the FEC is similar to the interest the Department of Labor seeks to protect....The interest of the two agencies may not be identical, however, and the court can see no reason for requiring the FEC to rely on another agency to protect its interest."
The court also denied defendants' motion to compel the testimony of the two employees. Further, it granted the FEC's motion for a protective order to prohibit defendants from questioning any witness to learn the identity of persons communicating with the FEC and the nature of those communications. The court granted a motion for a similar order requested by the Department of Labor to protect that agency's communications.
Source: FEC Record -- June 1991, p. 9.
On May 5, 1995, the U.S. Court of Appeals for the District of Columbia Circuit ruled that in both these cases the FEC was time barred from imposing repayment obligations on the plaintiffs. Both plaintiffs did not receive an initial repayment determination within the 3-year statute of limitations. 26 U.S.C. §9038(c). The FEC's actions in these matters were therefore reversed.
Both Governor Michael Dukakis and Senator Paul Simon made bids for the 1988 Democratic Presidential nomination. Both of them received public funding for their campaigns. Pursuant to 26 U.S.C. §9038(a), the FEC conducted audits of both campaigns. The 3-year statute of limitations was triggered on July 20, 1988, the day the Democratic National Convention nominated Governor Dukakis for President. Final audit reports containing initial repayment determinations were issued on December 9, 1991, for Dukakis and on October 22, 1991, for Simon. These initial determinations were not finalized until February 25, 1993, for Dukakis and March 4, 1993, for Simon; the Commission determined that the Dukakis and Simon campaigns owed the U.S. Treasury $491,282 and $412,162, respectively.
26 U.S.C. §9038(c) states: "No notification [of repayment] shall be made by the Commission . . . with respect to a matching payment period more than 3 years after the end of such period." The FEC contended that the interim audit report, issued in both cases within 3 years of the date of the nomination, was sufficient notice to obligate plaintiffs to make the repayments. To bolster this argument, the FEC reminded the court that, in accordance with the decision in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., the court must defer to an agency's reasonable interpretation of the statute it administers.
The court concluded that deference was not required in this case because Chevron requires a court to defer to an agency only in cases where the statute at hand is ambiguous on the issue in dispute. The court found no ambiguity in either of these cases: "Subsection §9038(b) requires that the Commission notify the candidate of the amount which he is to pay to the Secretary. The interim audit report does not even purport to notify the candidate of any such amount."
The court cited 11 CFR 9038.2, which states that the inclusion of a preliminary repayment calculation in an interim audit report is optional, as grounds on which to dismiss the notion that the interim report fulfilled the FEC's obligation under the statute of limitations. Further, the court noted that when the Commission issued rules making the interim audit report a mandatory part of the audit process, it included in its Explanation and Justification language stating that: "[Preliminary] calculations will not . . . be considered as the Commission's initial repayment determination . . . ."
The court also dismissed the FEC's reliance on a 1991 amendment to its regulations, 11 CFR 9038.2(a)(2), that explicitly states that the interim audit report constitutes notification for purposes of the 3-year statute of limitations. "[No] such administrative action by the Commission can override the plain mandate of the legislation," said the court.
Additionally, the court held that, although the statute does not explicitly say so, the 3-year notification period implicitly applies to the repayment of surplus campaign funds when the candidate disputes that a surplus exists, as well as to the repayment of nonqualified campaign expenses and excessive payments. 26 U.S.C. §9038(b)(1), (2) and (3). Thus, in the case of Governor Dukakis, who disputed the audit's finding that he had a surplus, the Commission was required to notify him of the amount due within the 3-year period.
Source: FEC Record -- July 1995, p. 9.
Dukakis v. FEC, No. 93-1219 (D.C. Cir. May 5, 1995);
Simon v. FEC, No. 93-1252 (D.C. Cir. May 5, 1995).
Plaintiff initially sought a declaratory judgment from the court that certain individuals associated with a "Defeat Durkin" effort constituted a "political committee" under the Act, which had failed to register and report with the FEC, and that one of the individuals had made excessive contributions to the "Defeat Durkin" effort. Plaintiff also sought a preliminary injunction to enjoin the "Defeat Durkin" effort from: spending any additional funds until it registers with the FEC or spending any funds which consist of contributions in excess of the limits. Finally, plaintiff asked the court to order the FEC to expedite review of a complaint plaintiff had filed three days earlier, on October 24, against the same individuals and the "Defeat Durkin" effort.
On October 31, 1980, the district court denied plaintiff's request for declaratory and injunctive relief and dismissed the suit. The court maintained that it had no jurisdiction over the suit because the Act stipulates the time frame in which the Commission must resolve complaints. The court said, "The FECA explicitly requires...that the party accused of a violation be given 15 days to 'demonstrate, in writing...that no action should be taken against such person on the basis of the complaint.' .... By the terms of the statute, the Commission cannot act until they [the accused parties] have responded or until 15 days have passed."
(U.S. District Court for the District of New Hampshire, Docket No. C80-503D, October 27, 1980)
Source: FEC Record -- December 1980, p. 7.
Durkin for U.S. Senate Committee v. FEC, 2 Fed. Elec. Camp. Fin. Guide (CCH) 9147 (D.N.H. 1980).