Common Cause v. FEC (89-0524); FEC v. National Republican Senatorial Committee (90-2055)

On June 12, 1992, the U.S. Court of Appeals for the District of Columbia Circuit reversed the district court's judgment. The district court had ruled that the National Republican Senatorial Committee (NRSC) had exceeded the contribution limits through its exercise of "direction or control" over earmarked contributions. The court of appeals, however, found that the district court had erred in a previous decision. In that case, Common Cause v. FEC, the district court had ordered the FEC to conform to the court's own interpretation of "direction or control."

Background

If a committee, in soliciting earmarked contributions to be passed on to a candidate, exercises "direction or control" over the contributor's choice of the recipient candidate, the contribution counts against both the contributor's limit and the committee's limit. 11 CFR 110.6(d)(2).

In an administrative complaint filed with the Commission (Matter Under Review (MUR) 2282), Common Cause alleged that NRSC had exercised direction or control over the earmarked contributions it had solicited for twelve Senate candidates. As a result, Common Cause claimed, the contributions counted against NRSC's limits for the candidates and caused NRSC to exceed the contribution limits.

NRSC's October 1986 solicitation letter asked readers to support Republican Senate candidates running in four states, without mentioning the names of the candidates. The letter noted that contributions would be divided equally among the four candidates. Various combinations of the four states appeared in different versions of the letter; twelve states were covered in all. Checks were payable to NRSC or an NRSC-controlled fund. The mailing resulted in $2.3 million in contributions. The NRSC deposited the checks in its own accounts, aggregated the contributions to the specified candidates and forwarded the contributions to the candidates in checks drawn on its accounts.

The FEC's General Counsel recommended, inter alia, that the agency find probable cause to believe that NRSC had exceeded the contribution limits by exercising direction or control over the choice of recipient candidates. The Commission, in a 3-3 vote, deadlocked with respect to this allegation and therefore took no action. Commissioner Thomas J. Josefiak (who has since left the Commission), joined by Commissioners Aikens and Elliott, issued a statement of reasons supporting their votes against a probable cause finding.

The Commission did find probable cause to believe that NRSC had committed other violations, and the MUR was resolved through a December 1988 conciliation agreement in which NRSC agreed to pay a $20,000 civil penalty. The MUR was then closed.

Common Cause v. FEC

Common Cause asked the court to compel the FEC to act on the "direction or control" allegation. On January 24, 1990, the district court found that the FEC's dismissal of the allegation was contrary to law. Ruling that NRSC had exercised direction or control, the court ordered the agency to proceed on that basis. In compliance with the order, the Commission reopened MUR 2282 and found probable cause. When it failed to reach a conciliation agreement with NRSC on the matter of direction or control, the agency filed suit.

FEC v. NRSC

The new suit was assigned by lot to the same district judge. On April 9, 1991, the district court granted the FEC's motion for summary judgment, ruling that the NRSC had exceeded the contribution limits by exercising direction or control over earmarked contributions. The court imposed a $24,000 penalty.

Court of appeals ruling

In addressing the central issue-the interpretation of direction or control-the court cited its decision in Democratic Congressional Campaign Committee (DCCC) v. FEC. In that opinion, the court held that, when the FEC dismisses a complaint due to a 3-3 deadlock, the action is subject to judicial review, and the three Commissioners who voted to dismiss must provide a statement of reasons for their vote. The NRSC court noted the purpose of this requirement: "Since those Commissioners constitute a controlling group for purposes of the decision, their rationale necessarily states the agency's reasons for acting as it did." A footnote to the DCCC opinion "strongly suggests that, if the meaning of the statute is not clear, a reviewing court should accord deference to the Commission's rationale."

In the present case, the court pointed out that the three Commissioners who had voted against probable cause in MUR 2282 voted in favor of reopening the enforcement proceedings only because they felt they "were obligated to follow the [district] court's order."[1]

The court of appeals found that Commissioner Josefiak's Statement of Reasons in MUR 2282, joined by two other Commissioners, should have been sustained in Common Cause v. FEC.[2] The court observed that Commissioner Josefiak's statement "identified the two main factors the Commission's General Counsel, and later the district court, invoked to support a finding of direction or control, and pointed out the present inadequacy of each."

The first factor was that NRSC deposited the earmarked contributions in its accounts before forwarding them to the candidates. Noting that FEC regulations permit a conduit committee to deposit earmarked contributions, the court stated: "Nothing has been offered to reveal why engaging in a Commission-approved practice should cause one to run afoul of other Commission rules."

The second factor was that NRSC "controlled" the choice of candidates by selecting the candidates for whom contributions were solicited and by further selecting the four states mentioned in each fundraising letter. The court, however, observed: "Every solicitation 'pre-selects' candidates to some degree. It is fanciful to suppose that national political committees of any party would expend their resources merely to urge individuals to contribute to the candidate of their choice."

To find "direction or control" on the basis of these two factors, the court said, "would throw into doubt whether any solicitation of any earmarked contribution would be exempt from the 'double-counting' requirements of §110.6(d)(2)." However, the court concluded that it was not required to decide if that would be a permissible construction: "It is enough to say that the Commission has not affirmatively adopted such a construction and that it has provided, through the statement of Commissioner Josefiak, joined by two others, a reasoned justification for not doing so." Ruling that "[i]t was an error for the district court to force a different construction upon the Commission," the court reversed the district court judgment.

FOOTNOTES:

[1] Statement of Reasons of Commissioners Aikens, Elliott and Josefiak, MUR 2282, December 10, 1990.

[2] Statement of Reasons of Commissioner Josefiak, MUR 2282, January 30, 1989; Concurrence, February 24, 1989.

Source:   FEC Record — August 1992. Common Cause v. FEC, 729 F. Supp. 148 (D.D.C. 1990). FEC v. National Republican Senatorial Committee, 2 Fed. Elec. Camp. Fin. Guide (CCH) 9302 (D.D.C. 1991), 9316 (D.C. Cir. 1992).