Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-93-01219/USCOURTS-caDC-93-01219-0/pdf.json

Parties Involved:
Michael S. Dukakis
Petitioner
Dukakis for President Committee, Inc.
Petitioner
Federal Election Commission
Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 6, 1995 Decided May 5, 1995

No. 93-1219

MICHAEL S. DUKAKIS, ET AL.,

PETITIONERS

v.

FEDERAL ELECTION COMMISSION,

RESPONDENT

Petition for Review of an Order of the

Federal Election Commission

Peter E. Ball argued the cause for petitioners. With him on the briefs was Daniel A. Taylor. Dennis

W. Townley entered an appearance for petitioners.

Richard B. Bader, Associate General Counsel, Federal Election Commission, argued the cause for

respondent. With him on the brief were Lawrence M. Noble, General Counsel, and Vivien Clair,

Attorney, Federal Election Commission.

Before SENTELLE, HENDERSON, and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge: This is a petition for review of a Federal Election Commission final

repayment determination, ordering petitioners, Michael Dukakis and the Dukakis for President

Committee, Inc. ("the Committee"), to repay $491,282.31 in matching funds to the United States

Treasury. Petitioners argue the Commission is time-barred from imposing this repayment obligation

on them, pursuant to the Presidential Primary Matching Payment Account Act, 26 U.S.C. § 9031 et

seq. (1988), because the Federal Election Commission ("the Commission") did not issue its final

repayment determination until a year and a half after the statutory notification period expired. On the

basis of our decision in Simon v. Federal Election Commission, No. 93-1252 (D.C. Cir. May 5,

1995), we reverse the Commission's ruling.

I. BACKGROUND

Because both the factual and legal issues presented are nearly identical to those raised and

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discussed in detail in Simon v. Federal Election Commission, No. 93-1252 (D.C. Cir. May 5, 1995),

we will present an abbreviated discussion here. Michael Dukakis was a candidate for the Democratic

Party's nomination for President of the United States in the 1988 election. Before Dukakis received

his party's nomination on July 20, 1988, the Committee received federal matching funds pursuant to

thePresidentialPrimaryMatching Payment Account Act ("the Matching Payment Act," or "theAct"),

26 U.S.C. § 9031 et seq., to help defray campaign costs. The Act requires the Commission to

conduct an audit of the campaign finances of every publicly funded candidate after the party

nomination ends. 26 U.S.C. § 9038(a); 11 C.F.R. § 9038.1(a) (1995). Pursuant to the Act and its

regulations, the Commission approved an interim audit report on the Committee on February 14,

1990. On June 15, 1990, the Committee submitted its response to the audit report. On December

9, 1991, the Commission issued its final audit report, containing an initial repayment determination,

see 11 C.F.R. § 9038.1(d), recommending petitioners repay $492,164.13 to the U.S. Treasury. On

February 25, 1993, the Commission made its final repayment determination, asserting petitioners

owed the Treasury $491,282.31.

Under 26 U.S.C. § 9038(b), theCommission isrequired to notify a candidate if he owesfunds

to the Treasury. Section 9038(c) requires that no notification be sent more than three years from the

end ofthe matching payment period. The period ends on the date the national convention of the party

whose nomination a candidate seeks nominates its candidate for President. 26 U.S.C. § 9032(6).

Here, the matching payment period ended July 20, 1988, the day Dukakis was nominated for

President. Consequently, the three-year statutory notification period terminated July 1991. Thus,

while the Commission issued its interim audit report within the three-year statutory period, the

Commission did not issue either its initial repayment determination or its final repayment

determination until after the period's expiration. See 26 U.S.C. § 9038(c). Petitioners appealed this

order.

II. DISCUSSION

Petitioners maintain the Commission is time-barred, pursuant to 26 U.S.C. § 9038, from

ordering petitioners to repay $491,282.31 to the U.S. Treasury. Specifically, petitioners assert the

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1Regarding surplus funds, § 9038(b)(3) states:

After all obligations have been liquidated, that portion of any unexpended balance

remaining in the candidate's accounts which bears the same ratio to the total

unexpended balance as the total amount received from the matching payment

account bears to the total of all deposits made into the candidate's accounts shall

be promptly repaid to the matching payment account. 

Commission's issuance of an interim audit report within the three-year statutory notification period

did not constitute sufficient notice under the statute. We addressed this exact argument in Simon,

supra, agreeing with petitioners' interpretation of the statute.

Nonetheless, one distinction exists between this case and Simon. In Simon, the Commission

determined the petitioners owed fundsto the U.S. Treasury, pursuant to 26 U.S.C. § 9038(b)(1) and

(2). Language in each of those provisions expressly directs the Commission to notify the candidate

that he owes the government funds, and declares that the candidate must pay to the Secretary an

amount equal to the amount of any excess paymentsreceived, id. at § 9038(b)(1), or an amount equal

to that used for nonqualified campaign expenses, id. at § 9038(b)(2). Unlike the amount owed by

petitioners in Simon, however, a portion of the $491,282.31 which the Dukakis Committee had to

repay to the Treasurywas comprised ofsurplus campaign funds. The Matching Payment Act requires

a candidate with surplus funds, pursuant to § 9038(b)(3), to repay to the Treasury the percentage of

those funds attributable to matching payments.1

Section 9038(b)(3), in contrast to §§ 9038(b)(1) and (2), does not contain an explicit

notification provision. The statutory language imposes the repayment obligation on all candidates

with a surplus, without specifying any threshold Commission action. Accordingly, the Commission

argues the three-year statutory limitation period is inapplicable with regard to the surplus issue.

Consequently, the Commission asserts we must remand this case for a determination of the amount

of additional surplus repayments imposed on petitioners.

We disagree. Section 9038(b)(3), as petitioners point out, is intended to apply only where

a candidate does not dispute his campaign has a surplus, and realizes he must repay a percentage of

these funds. For this reason, the provision is self-executing, requiring no Commission-initiated

conduct. The statute is silent, however, where a candidate disputes whether he has a surplus. During

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the repayment-determination process here, petitioners argued they were in a deficit position. It is

unreasonable to presume Congress mandated the Commission to notify each candidate within three

years ofthe end ofthe matching payment period of all other repayment determinations,see 26 U.S.C.

§ 9038(c), while allowing the Commission to wait literally forever to determine whether a candidate

is in a surplus position, especially so as all repayment obligations are disclosed by the same audit.

Therefore, the statutory design of § 9038 compels us to conclude the three-year limitation

period regarding notification, see 26 U.S.C. § 9038(c), applies with equal force where a candidate

disputes a Commission finding that his campaign isin a surplus position. As a result, no reason exists

to remand this case for further proceedings regarding the surplus issue.

The petition for review is granted, and the decision of the Commission reversed.

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