Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-93-01698/USCOURTS-caDC-93-01698-0/pdf.json

Parties Involved:
Americans for Robertson, Inc.
Petitioner
Federal Election Commission
Respondent
Marion G. Robertson
Petitioner

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 6, 1994 Decided February 3, 1995

No. 93-1698

MARION G. ROBERTSON AND

AMERICANS FOR ROBERTSON, INC.,

PETITIONERS

v.

FEDERAL ELECTION COMMISSION,

RESPONDENT

On Petition for Review from the

Federal Election Commission

Carol A. Laham argued the cause for petitioners. With her on the briefs were Jan Witold Baran and

Thomas W. Kirby.

Richard B. Bader, Associate General Counsel, argued the cause for respondent. With him on the

brief were Lawrence M. Noble, General Counsel, and Vivien Clair, Attorney, Federal Election

Commission.

Before: SILBERMAN, BUCKLEY, and SENTELLE, Circuit Judges.

Opinion for the Court filed by Circuit Judge SILBERMAN.

SILBERMAN, Circuit Judge: Marion G. (Pat) Robertson and Americans for Robertson, Inc.

(collectively referred to as "petitioner"), seek review of a determination of the Federal Election

Commission that petitioner must repay certain campaign matching funds. We reject petitioner's

constitutional and statutory challenges, but grant the petition with respect to one of four disputed

expense items.

I.

Petitioner made an unsuccessful bid for the Republican Party's nomination for election as

President in 1988. During the course of the primary campaign, Robertson was eligible for and

received campaign matching funds under the Presidential Primary Matching Payment Account Act,

26 U.S.C. §§ 9031-9042 (1988). Robertson remained eligible to receive such funds from the

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1The Commission determined that petitioner's final date of eligibility for receipt of public funds

was April 28, 1988, based upon petitioner's successive poor showings in primary races, see 26

U.S.C. § 9033(c)(1)(B). 

2

2 U.S.C. § 441a(b)(1)(A) establishes per state and overall expenditure limitations for

presidential primary candidates who receive public campaign funds. Expenses are allocable

generally to the state where "... incurred ... for the purpose of influencing the nomination with

respect to that particular state," as determined by the Commission's regulations. 11 C.F.R. §

106.2. See generally id. Pt. 106. 

3The GOP nominated George Bush on August 18, 1988, triggering the three-year period

prescribed by statute for the Commission to complete its "final determination." 26 U.S.C. §

9038(b), (c) (1988). 

beginning of the primary season until April 28, 1988.1 He received funds thereafter only in

conjunctionwith "winding down" expenses "associated with the termination of political activity" (e.g.,

administrative costs, expenses in fundraising to assist in retiring campaign debt). 11 C.F.R. §

9034.4(a)(3)(i) (1994). He was given a total of $10,410,984.83 in public funds. A candidate who

receives matching funds under the statute is obliged to maintain and provide documentation to the

Commission verifying that all expenses are "qualified" campaign expenditures and that those

expenditures fall within Commission limits. Any expenditure in excess of the individual state or

overalllimits or not properly documented is deemed a "nonqualified" campaign expense, and the FEC

may seek a pro rata repayment (determined by a multiplier) of the share of public funds attributable

to such nonqualified expenditures. Id. §§ 9035.1, 9038.2.2

Following petitioner's campaign, the Commission audited petitioner's campaign expenditures

and his receipt and use of public funds.326 U.S.C. § 9038(a); 11 C.F.R. § 9038.1(a)(1).

Discovering irregularities in recordkeeping, disbursements, and expenditure levels, the Commission

on December 19, 1989 issued an "Interim (preliminary) Audit Report" and "preliminary calculation"

whereby petitioner wasthought to be obliged to repay $290,772.60. Petitioner subsequently sought

to convince the FEC as to the propriety of its expenditures, but on March 26, 1992, the Commission

issued a "Final Audit Report" and "initialrepayment determination" of $388,543.78; in addition, the

FEC asserted that petitioner should refund $105,634.56 to certain press organizations that had

allegedly overpaid for the cost of air travel with petitioner's entourage. Petitioner again responded

in writing, on June 25, 1992, and also requested an oral presentation before the Commission. He

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4The Commission's determination also "ordered" petitioner to refund the $105,634.56 sum

attributable to press overpayments. Petitioner has argued that the Commission does not have

authority to order such a refund, and the Commission has conceded that any challenge would

have to frame petitioner's press charges as impermissible corporate campaign contributions under

2 U.S.C. § 441b (1988), enforceable through the procedures set forth in 2 U.S.C. § 437g (1988). 

So the issue is not before us. 

made the presentation on December 2, 1992, and submitted supplemental documents on December

9, 1992.

The Commission thereafter (in September 1993) released its "final determination"

accompanied by a "Statement of Reasons" concluding that petitioner was obliged to repay

$290,793.66 to the United States Treasury.

4 The repayment figure reflected disallowances for, inter

alia, the four insufficiently documented, excessive or otherwise not "qualified" campaign expenses

which are the subject of this appeal. These four disputed repayment items include amounts that

petitioner claims the Commission had either improperly allocated to or wrongly judged to have

exceeded the Iowa and New Hampshire state expenditure limits; funds that had been transferred

between petitioner's national and state campaign accounts; and monies that had been spent attending

the 1988 Republican National Convention.

In addition to disputing these assessments, petitioner, at the oral hearing, also challenged the

Commission's authority to issue any repayment determination. Petitioner contended that the

Commission had failed to meet the statutory three-year period for "notification" of repayment

determinations, see 26 U.S.C. § 9038(c), a period which ran from August 18, 1988 (the date of the

GOP nomination of George Bush) to August 18, 1991. The FEC (Commissioner Elliott dissenting)

rejected this argument as not properly presented to the Commission since it had only first been made

at the oral hearing. Pursuant to FEC regulations, oral presentations to the Commission may only deal

with mattersraised in prior written submissions, 11 C.F.R. § 9038.2(c)(3), which are themselves due

within 30 days of the issuance of the Final Audit Report (although an extension to 45 days was

granted here). See 11 C.F.R. § 9038.2(c)(2). Petitioner did not raise the issue of the three-year limit

on "notification" of repayment determinations in compliance with the Commission's internal

procedures for challenging agency action.

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5Although it initially granted certiorari, the Supreme Court dismissed the FEC's petition on the

grounds that since the Commission does not have independent litigating authority to file petitions

for certiorari before the Court under 2 U.S.C. § 437d(a)(6), the Court lacked jurisdiction to hear

the case. 

II.

Petitioner, before us, presents an array of objectionsto the Commission's order ofrepayment,

ranging from a challenge to the constitutionality of the FEC's composition to a claim that the

Commission's actions exceeded its statutory authority to a dispute as to the merits of four separate

expense items. The constitutional challenge is based on the presence of two congressionally

appointed, non-voting ex officio members on the Commission throughout the proceedings in this

case. We have recently held that the Commission so composed is unconstitutional. See Federal

Election Comm'n v. NRA Political Victory Fund, 6 F.3d 821, 826-27 (D.C. Cir. 1993), cert. granted,

114 S. Ct. 2703 (1994), cert. dismissed, 115 S. Ct. 537 (1995).5 The Commission, however, in an

effort to avoid the effect of our opinion, voted on December 1, 1993, to ratify its past "actions in

audits of publiclyfunded presidential campaigns," including this case, without the presence ofthe two

ex officio members. Petitioner disputes the Commission's claim that this action undoes any taint of

unconstitutionality.

The Commission'sresponse is that petitioner's constitutional challenge is not properly raised

because it was not brought before the Commission. The latter point need not detain us. It was hardly

open to the Commission, an administrative agency, to entertain a claimthat the statute which created

it was in some respect unconstitutional. See Mitchell v. Christopher, 996 F.2d 375, 378-79 (D.C.

Cir. 1993). Still, we do not need to decide whether the FEC's subsequent ratification vote obliterated

the unconstitutional taint because petitioner is estopped from challenging the Commission's

constitutionality. See Fahey v. Mallonee, 332 U.S. 245, 255 (1947) (where a party has enjoyed

benefits from agency under a statutory scheme, courts will not entertain challenges to agency's

existence); Brockert v. Skornicka, 711 F.2d 1376, 1380 (7th Cir. 1983) (constitutional estoppel

"most appropriate when a party seeks to retain the benefits of a governmental act while attempting

to invalidate its burdens").

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6The statute does provide for criminal penalties for unlawfully misspent funds, granting the

Attorney General authority to pursue such wrongdoers and setting penalties. See 26 U.S.C. §

9042(b). 

Petitioner, after all, voluntarily accepted over $10 million in public funds disbursed at the

Commission's direction. It is hardly open to it now, after having taken the money, to claim that the

very statutory instrumentality by which the funds are dispensed may not seek reimbursement because

its composition is unconstitutional. Under the statute only the Commission may seek reimbursement

(not, for example, the Justice or Treasury Departments), so under petitioner's logic, if it had taken

the funds and spent them in a gambling casino, the taxpayers would have no recourseat least as to

compelling repayment.6

The doctrine of constitutional estoppel, as petitioner points out, has its limits. The

government may not interpose the doctrine as a defense if a party wishes to challenge an

unconstitutional condition which is imposed on the receipt of federal funds. See Kadrmas v.

Dickinson Pub. Schools, 487 U.S. 450, 456-57 (1988). But that limitation is not applicable here;

rather, petitioner has mounted a categorical, structural challenge unrelated to the funds he has

received and now attemptsto avoid repaying. Petitioner is claiming, in effect, that the entire process

by which it received fundsnot the criteria for eligibility, disbursement, or repaymentis

unconstitutional. It would seem that a party wishing to make such a challenge must do so before it

accepts and spends federal fundsnot after, as a ploy to avoid its part of a bargain.

Petitioner'ssecond, statutory argument is more troublesome, however. It is claimed that the

Commission's "final determination" came down after the three-year period during which the statute

permitsthe Commission to "notif[y]" the candidate of a repayment "determin[ation]." See 26 U.S.C.

§ 9038(b), (c). The Commission, in accordance with its regulation (adopted before both the end of

the three-year period and theCommission'sfinaldetermination in this case and ostensiblyrepresenting

a "clarification" of prevailing Commission practice), contends that the statute requires only that the

Commission issue its "interim audit report" (preliminary calculation) prior to the expiration of the

three-year period; it is not even obliged to issue its initial determination before that point. At oral

argument, counsel for the Commission conceded, however, that the Commission would not be

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7

In petitioner's case, the amount ostensibly owed increased after the preliminary calculation,

ultimately declining in the final determination, though still slightly above the preliminary

calculation. The second, higher amount was arrived at after the three-year period for agency

notification had run. 

entitled to make a "determination" in excess of the amount stated in a preliminary calculation if that

higher determination was made after the three-year period expiredwhich is what happened in this

case.7It may well be that the Commission's elastic interpretation (whether in its regulations, if

deemed "procedural" and therefore not impermissibly retroactive, see Landgraf v. USI Film Prods.,

114 S. Ct. 1483, 1502 (1994), or in its general practice of interpreting the statute) of the words

"notify," "determines," and "determination" stretches Chevron deference beyond its reach. See

Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984). We

conclude, however, that we should not decide this question, either, because the Commission was

within its rights in refusing to consider petitioner's statutory argument.

An agency is entitled to prescribe its own procedures, including requirementsthat parties give

timely notice asto the nature of any challengesto agency authority, at least asregards actions already

taken. See USAir, Inc. v. Department of Transportation, 969 F.d 1256, 1260 (D.C. Cir. 1992).

Petitioner waited until the oral hearing to indicate its view that the FEC's authority to issue a

determination had expired. But the Commission's regulations provide that the oral hearings are

confined to matters raised in a timely written submission (filed within 30 days of the final

determination), 11 C.F.R. § 9038.2(c)(2), (3) (1994), and petitioner's written submission simply did

not make this argument even though it was filed on June 25, 1992, long after the August 18, 1991,

date that petitioner claims marked the end of the Commission's authority to issue a final

determination. Petitioner points out that Commissioners can and did ask a broad range of questions

at the oral hearing and that the FEC allows supporting documents to be submitted up to five days

after the oral hearing. These practices, petitioner argues, suggest that the content of the original

written response is not dispositive or controlling in agency proceedings and that the scope of the

Commission's inquiry has in this case been de facto expanded (as petitioner's "Supplemental

Response" filed in support of its oral presentation thoroughly addressed the statutory issue). That

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proposition does not logically follow, however; soliciting or accepting additional material during or

after the oral hearing does not necessarily expand the subject matter scope of the original written

submissions or implicitly relax the agency's procedural requirement for challenges to agency decisions.

The regulation thus can be interpreted to limit additional material to the previously raised

subjectswhich is exactly how the Commission does interpret it.

The Commission's application ofitsregulation is certainly technical and stricttoo technical

and strict for the dissenting Commissioner who thought an oral hearing unnecessary under the

Commission'sreadingbut we cannot conclude that the regulation or the Commission's interpretation

is unreasonable. We ourselves, after all, will not permit a party to take a position at oral argument

not supported by its principal brief.

III.

That brings us to the specific expenditures disallowed. It should be noted that under the

statute and the FEC's regulations a recipient of campaign funds assumes the burden of documenting

expenses attributed to state and national expenditure limits, and of producing those documents at the

Commission's request and to the Commission's satisfaction. 11 C.F.R. § 106.2(d). But, of course,

the Commission's determination asto what documentation is adequate must pass the Administrative

Procedure Act reasonableness test.

The FEC had claimed in its initial repayment determination that petitioner had significantly

exceeded boththe Iowa andNewHampshire state expenditure limits, therebyincurring corresponding

obligations to repay public matching funds. Petitioner was able to reduce a portion of the claimed

excess by producing additional documentation which resulted in cancellation of some expenditures

and the reallocation of others to alternative state, regional, or national campaign expense categories.

TheCommission'sfinaldetermination, however,rejected petitioner's effort to accountfor $14,665.50

spent over the Iowa state limit. Petitioner claimed that that amount was never actually expended,

because it had been deposited with a telephone company for telephone service in Iowa but was

subsequentlyrefunded. The Commission determined that petitioner had inadequately established that

the refunded amount was of a deposit that was specifically directed to telephone service allocable to

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the Iowa state limit, so petitioner was not entitled to that specific credit. (Petitioner had pointed to

a handwritten note on the refund check that stated only that the refund was related to phone service

originating within an Iowa area code.)

The Commission reasonably concluded that the telephone company refund checkmade out

by the Omaha, Nebraska office of Northwestern Bell and payable to petitioner's office in Bismarck,

North Dakotawith only the written notation that it was a refund related to telephone service

somehow connected to an Iowa area code was insufficient evidence that the check offset specific

Iowa expenditures. The notion of state expenditure limits incorporates specific time frames and

accounting methodsfor attribution of expensesto a given state primary effort. Petitioner's proffered

documentation does not meet the FEC's requirements sufficiently to offset Iowa primary

expenditures.

Petitioner was also accused of insufficiently documenting the ultimate deposit or disbursal of

funds on the state level transferred from petitioner's national account to a state campaign account.

The transferred funds, in the amount of $17,008.00, were thus not shown to have been spent on

qualified campaign expenses. Petitioner's pro rata repayment obligation of public funds out of this

amount was calculated at $5,189.86. Petitioner argued that the funds had been merely transferred,

not expended. The Commission found, however, that petitioner had no supporting documentation

for that proposition. We do not think the Commission was arbitrary in insisting on documentation

establishing that funds transferred from petitioner's national accounts were actually received and

deposited in state accounts and not otherwise expended. The Commission's regulations clearly

require that such disbursements be accounted for, including proof of transfers and deposits. 11

C.F.R. § 9033.11(c).

TheCommission also concluded that petitioner had impermissibly utilized matching fundsfor

expendituresnot connected with "winding down" costsmade after petitioner's

statutorily-determined viability as a primary candidate had expired. The Commission defines the

statutory term "winding down" as "associated with the termination of political activity." Id. §

9034.4(a)(3)(i). Petitioner spent $74,482.01of which the Commission has now ordered a

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repayment to the Treasury of $22,727.59in order to attend and portray his attendance at the 1988

RepublicanNationalConvention, which occurred well after petitioner's eligibilityfor receipt of public

funds had ended. Petitioner claimed that the video and audio record of Robertson's attendance at the

convention was utilized as part of a mass mailing to raise funds to retire campaign debts, which

should be thought a paradigmatic "winding down" expense.

The Commission had previously reasonably rejected the notion that attendance of a party's

convention was a legitimate winding down expense, see Repayments by Publicly Fiananced

Presidential Candidates, 50 Fed. Reg. 9,422-23 (March 8, 1985); the making of a video of that

event for fundraising purposes understandably did not alter the Commission's conclusion. Under

petitioner'stheory, a candidate'strip to Hawaiiwould be a legitimate winding down expense if videos

from the trip were used at fundraising gatherings.

We do not think, however, that the Commission's rejection of petitioner's claim concerning

certainNew Hampshire expenditures wasreasonable. Petitioner sought to convince the Commission

that it had not exceeded the New Hampshire state expenditure limit by showing that the $120,352.47

cost of a fundraising mailing had been incorrectly allocated to that state's limit. The Commission's

regulations provide that fundraising expenses are not presumptively deemed allocable to a state

expenditure limitation unless incurred within 28 days of a particular state's primary election. 11

C.F.R. §§ 100.8(b)(21), 110.8(c)(ii).

Petitioner, in order to avoid the attribution of the costs of the mailing to the New Hampshire

state limit, proved that the postage for the mailing had been purchased by January 15, 1988, at least

four days prior to the start ofthe 28-day period (the primary occurred on February 16), and produced

corroborating dated copies of check request forms and an affidavit of a campaign worker verifying

that the mailing had actually preceded the period. The Commission rejected this showing in the

Statement ofReasons without elaboration. The Commission only acknowledged that it had originally

double counted the mailing expense; it did not mention the allocation of the cost to the New

Hampshire primary effort. The agency gave no indication of what more it wanted as proof. The

FEC's terse explanation did not meet the standard of reasoned agency decisionmaking, see SEC v.

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Chenery Corp., 318 U.S. 80, 89-90, 95 (1943), nor do the more elaborate makeweight explanations

(e.g., disputing whether a receipt for postage is equivalent to a mailing date) belatedly presented

before us alter our conclusion. While recipients of matching funds bear the burden of accounting for,

allocation and documentation of campaign expenses, the agency cannot reject uncontroverted

documentation relevant to state expenditure limits.

* * *

Accordingly, we deny the petition except as it relates to the New Hampshire expenditures.

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