Kennedy for President v. FEC (83-1521)

On May 15, 1984, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion in Kennedy for President Committee v. FEC (Civil Action No. 83-1521), which reversed a repayment determination that the FEC had made with regard to the Kennedy for President Committee. The committee was established by Senator Edward M. Kennedy (D-Mass.) as his principal campaign committee for the 1980 Presidential primaries. On the same day, for reasons set forth in the Kennedy opinion, the court also vacated an FEC repayment determination with regard to the Reagan for President Committee, President Reagan's principal campaign committee for his 1980 Presidential primary campaign. The Reagan campaign had challenged an $87,708 repayment determination made by the FEC in June 1983. (Reagan for President Committee v. FEC; Civil Action No. 83-1666.)[1] The appeals court then remanded both cases to the Commission for further proceedings consistent with its opinion in the Kennedy case.

Background

On April 14, 1983, based on findings of statutorily mandated audits of the Kennedy campaign, the Commission determined that the campaign had exceeded the 1980 state-by-state spending limits for publicly funded candidates by $14,889 in New Hampshire and by $40,611 in Iowa.[2] FEC regulations require publicly funded Presidential primary candidates to repay to the U.S. Treasury nonqualified expenditures that are made with primary matching funds or private contributions.[3] 11 CFR 9038.2(b)(2)(i). Consequently, the Commission determined that the Kennedy campaign had to repay the full amount of nonqualified campaign expenditures incurred by the campaign (i.e., $55,500).

In its December 21, 1983, petition to have the court review the FEC's repayment determination, the Kennedy campaign had not challenged the FEC's determination with regard to the amount of nonqualified expenditures the campaign had incurred. Rather, the Kennedy campaign contended that the repayment formula spelled out in the FEC's regulations exceeded the Commission's statutory authority because it required the repayment of the entire amount of nonqualified expenditures. The Kennedy campaign argued that the election law required publicly funded campaigns to repay only the portion of their nonqualified expenditures made with primary matching funds. As an alternative to the FEC's repayment formula, the Kennedy campaign proposed that its repayment be calculated by "multiplying the total amount of [non]qualified expenditures by the proportion of matching funds to total campaign funds."

Appeals court ruling

The appeals court noted that Section 9038(b)(2) of the Presidential Primary Matching Payment Account Act did not provide a specific formula for determining repayments resulting from nonqualified campaign expenditures. Nevertheless, the court held that "the statute gives rise to a repayment obligation only when the FEC determines that federal matching funds were used for nonqualified purposes." The court reasoned that "if Congress had intended the total amount of every unqualified expenditure to be repaid, the statute would not have expressly limited the repayment obligation to unqualified expenditures paid out of matching fund sources." The court maintained, however, that the FEC should not be bound by the Kennedy campaign's proposed repayment formula but should have discretion "in formulating a proper method for calculating the amount of unqualified campaign expenditures attributable to matching fund sources."

The court noted that, in promulgating the repayment regulation that implements the statutory provision, the FEC had reasoned that "if a candidate spends private campaign contributions...on nonqualified campaign expenditures, those private funds would obviously not be available to defray the candidate's qualified campaign expenditures. The net result would be that the candidate would subsequently require more public funding to meet his or her qualified expenses. In essence, this additional public funding would restore private campaign funds diverted by the candidate to nonqualified campaign purposes." The court maintained, however, that the "Commission's regulation ...indulges the unreasonable presumption that all unqualified expenditures are paid out of federal matching funds." The court concluded that "the true 'net result' of the depletion of the overall campaign fund will be either an increase in the campaign's final deficit or a decrease in the campaign's final surplus. In the case of a deficit, the total federal funds would have been spent regardless of the unqualified expenditures. In the case of a surplus, the government is entitled to recover only its pro rata share of the final campaign surplus."

FOOTNOTES:

[1] Reagan For President Committee v. FEC, 734 F.2d 1569 (D.C. Cir. 1984).

[2] Presidential primary campaigns that receive public funds must agree to limit spending to both a national limit and a separate limit for each state.

[3] Nonqualified campaign expenditures include non campaign-related expenses, certain expenditures made before or after candidacy and expenditures exceeding the limits for publicly funded Presidential primary campaigns.

Source: FEC Record — July 1984. Kennedy For President Committee v. FEC, 734 F.2d 1558 (D.C. Cir. 1984).