Dukakis v. FEC; Simon v. FEC
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.
The 3-year statute of limitations
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. Dukakis v. FEC, No. 93-1219 (D.C. Cir. May 5, 1995); Simon v. FEC, No. 93-1252 (D.C. Cir. May 5, 1995).