FEC v. NRA Political Victory Fund
On December 6, 1994, the Supreme Court ruled that the FEC lacked standing to independently bring a case under Title 2 of the U.S. Code before the Supreme Court. In future cases, the FEC must seek authorization from the U.S. Solicitor General if it wishes to represent itself in Title 2 cases. (Civil Action No. 93-1151.)
This decision brought to an end the FEC's legal efforts to enforce a finding that the NRA contributed corporate monies to its separate segregated fund, the NRA Political Victory Fund. (Corporations are prohibited sources of contributions under 2 U.S.C. §441b(a).) In November 1991, the U.S. District Court for the District of Columbia had ruled in favor of the FEC and had imposed a $40,000 penalty on the defendants. On appeal, the U.S. Court of Appeals for the District of Columbia reversed the district court's ruling on the grounds that the FEC's two nonvoting, ex officio members, the Secretary of the Senate and the Clerk of the House, sat on the Commission in violation of the Constitution's separation of powers.
District court ruling
In a November 15, 1991, order, modified on December 11, the U.S. District Court for the District of Columbia found that a $415,745 payment made by the National Rifle Association's Institute For Legislative Action (ILA) to NRA's separate segregated fund was a corporate contribution in violation of 2 U.S.C. §441b(a). (The ILA is a component of NRA, a nonprofit corporation.) (Civil Action No. 90-3090.) The court ordered defendants ILA, the NRA Political Victory Fund (the separate segregated fund) and the Fund's treasurer to pay a $40,000 civil penalty. The court also ordered defendants to comply with 11 CFR 114.5(b)(3) in future transactions. Under that regulation, a corporation may reimburse its separate segregated fund (SSF) for expenses that the corporation could lawfully have paid as an administrative or solicitation expense, but the reimbursement must be made no later than 30 days after the SSF's payment.
Application of Section 114.5(b)(3)
The payment at issue originated from transactions that took place in March and July 1988, when ILA paid for two solicitation mailings. The Fund reimbursed ILA $415,745, the full cost of the mailings, on August 1. ILA returned that amount to the Fund on October 20th—81 days after the August payment. Because this reimbursement was made after the 30-day period specified in section 114.5(b)(3), the court found that the October 20 payment was not a permissible reimbursement of solicitation expenses, as defendants had argued, but was instead an illegal corporate contribution to the Fund. The court observed that the October 20 payment was not used to pay for the solicitation material purchased in March and July. By defendants' own account, the money was returned to the Fund to bolster its budget for campaign activities related to the 1988 elections.
Application of MCFL
The court also rejected defendants' argument that the October 20 payment was permissible under the Supreme Court's decision in FEC v. Massachusetts Citizens for Life, Inc. (MCFL), 479 U.S. 238 (1986). MCFL permitted a nonprofit corporation to make independent expenditures if, among other conditions, the corporation had a policy of not accepting donations from business corporations and labor unions. The district court found MCFL inapplicable here because the ILA does receive corporate donations.
Constitutional status of FEC
Defendants also argued that the FEC lacked authority to bring suit because the FEC is a constitutionally flawed agency. They first claimed that the appointment of Commission members impermissibly restricts the appointment power granted the President under Article II because, under the Federal Election Campaign Act, the President is prevented from appointing more than three Commissioners from the same political party. Defendants further claimed that, because the President cannot control or remove Commissioners, the execution of the law does not rest with the President, an infringement of the sole executive power vested in the President under Article II. The court, however, ruled that the defendants did not have standing to raise these claims: "[D]efendants have raised an issue that bears on the rights of a third party, namely the President, and not on their own legal interests."
Defendants also argued that the statute's designation of the Clerk of the House and the Secretary of the Senate as nonvoting Commission members violated the separation of powers. Finding no showing that the nonvoting members participated in any decisions involving the present case, the court said that there was "no need to concern itself" with this argument.
FEC requests change in civil penalty
In its original order of November 15, the court had imposed a civil penalty in the amount of the FEC's total costs in investigating and prosecuting the violation, the amount to be calculated by the FEC.
On December 2, the FEC filed a motion asking the court to amend the civil penalty so that it reflected the amount necessary to deter similar violations rather than the costs of the agency's enforcement efforts, which the FEC viewed as unrelated to the violation at issue. The FEC also noted that such a penalty would be time consuming and burdensome to calculate.
In an amended opinion issued on December 10, the court ordered defendants to pay a $40,000 penalty. In imposing that amount, the court considered the defendants' bad faith, the injury to the public, the defendants' ability to pay and the need to vindicate the FEC's authority. The court concluded: "Because of the deliberate nature of defendants' actions, the Court must impose a substantial penalty in order to deter them from repeating this violation." The court added that defendants could have accomplished their objective legitimately if they had used proper fiscal planning.
Appeals court ruling
On October 22, 1994, the U.S. Court of Appeals for the District of Columbia ruled that the composition of the Federal Election Commission "violates the Constitution's separation of powers."
Under the Federal Election Campaign Act (FECA), the President appoints the Commission's six voting members, and Congress designates two non-voting ex officio members. The court found that "Congress exceeded its legislative authority when it placed its agents, the Secretary of the Senate and the Clerk of the House of Representatives, on the independent Commission as non-voting ex officio members."
The court rejected the Commission's contention that the ex officio members play an "informational or advisory role." The court noted that "advice...implies influence, and Congress must limit the exercise of its influence...to its legislative role." The court added that the "mere presence" of the Congressional representatives "has the potential to influence the other Commissioners." Citing legislative history, the court concluded that Congress intended the ex officio members to "serve its interests while serving as commissioners. Ultimately, the court said, "the mere presence of agents of Congress on an entity with executive powers offends the Constitution."
Based on a severability clause in the FECA, the court concluded that "the unconstitutional ex officio membership provision can be severed from the rest of" the statute, permitting a reconstituted Commission to continue to operate. The court added that Congress was not, in this instance, required to amend the statute.
The court rejected two other Constitutional challenges raised in the case; one regarding the Commission's bipartisan composition and the other, its status as an independent agency. The NRA had argued that:
- The "FECA's requirement that '[n]o more than 3 members of the Commission...may be affiliated with the same political party,' 2 U.S.C. §437c(a)(1) (1988), impermissibly limits the President's nomination power under the Appointments clause;" and
- The FEC's independence denies the President "sufficient control over the Commission's civil enforcement authority, a core executive function."
The court found the first of these challenges to be nonjusticiable because it is the Senatorial confirmation process, and not the statute itself, that arguably restrains the President. Indeed, the court noted that "without the statute the President could have appointed exactly the same members" to the Commission.
The court also upheld the FEC's status as an independent agency, citing a number of court cases that specifically sanction such entities.
The appeals court ruling reversed a district court decision that the NRA had violated 2 U.S.C. §441b(a) by contributing corporate funds to its separate segregated fund, the NRA Political Victory Fund. Having ruled on the Constitutional issue, the appeals court did not consider the merits of the case.
Following the appeals court's decision, the Commission took several steps to ensure the uninterrupted enforcement of the federal election law. The agency:
- Reconstituted itself as a six-member body, comprising only those commissioners appointed by the President;
- Ratified, in its reconstituted form, the regulations, forms, advisory opinions, audits, compliance matters and litigation issued and/or initiated by the former Commission; and
- Filed a petition for a writ of certiorari with the Supreme Court.
Supreme Court decision
In December 1994, the Supreme Court ruled that the FEC lacked standing to independently bring Title 2 cases before the Court. As a result of the ruling, the FEC will have to seek authorization from the U.S. Solicitor General if it wishes to represent itself in Title 2 cases.
The FEC's petition to the Supreme Court was filed within the 90-day filing period mandated by law, but it was filed without the authorization of the Solicitor General. The Court contrasted the language at 2 U.S.C. §437d(a)(6) with that of 26 U.S.C. §§9010(d) and 9040(d) to reach the conclusion that the FEC lacked standing to bring this case. The Title 2 statute empowers the FEC "to . . . appeal any civil action . . . to enforce the provisions of the" Federal Election Campaign Act. It fails, however, to explicitly provide the FEC with the authority to file a writ of certiorari or otherwise conduct litigation before the Supreme Court. By contrast, the Court stated, the Title 26 statute does specifically provide the FEC with the authority 'to petition the Supreme Court for certiorari to review" judgments in actions to enforce the Presidential election fund laws. The Court interpreted the discrepancy in the language of these two statutes to indicate congressional intent to restrict the FEC's independent litigating authority at the Supreme Court level to those matters involving the Presidential election laws.
The Court rejected the Commission's argument that, in the past, it had represented itself before the High Court. The Court pointed out that none of those cases had challenged the FEC's standing to petition the Court for a writ of certiorari.
Although the Solicitor General authorized the FEC's petition, this action came months after the 90-day filing period had closed—too late in the day to be effective.
The FEC's petition for a writ of certiorari, therefore, was dismissed for want of jurisdiction. The action left standing the ruling of the court of appeals.
Source: FEC Record — February 1995; December 1993; January 1992. FEC v. NRA Political Victory Fund, 778 F. Supp. 62 (D.D.C. 1991), No. 90-3090 (D.D.C. Dec. 10, 1991), rev'd, 6 F.3d 821 (D.C. Cir. 1993), cert. dismissed for want of jurisdiction, 115 S. Ct. 537 (Dec. 6, 1994).