On July 28, 2015, the U.S. Court of Appeals for the D.C. Circuit affirmed the district court''s dismissal of administrative fine challenges filed by Combat Veterans for Congress PAC.
In 2010, Combat Veterans for Congress PAC (“CVCP”) submitted three reports after the statutory filing deadlines. As a result, the Commission began administrative enforcement proceedings against CVCP and found reason to believe (RTB) that CVCP and its treasurer, in his official capacity, violated 52 U.S.C. § 30104(a) by failing to file the reports on time.[FN1] The Commission imposed fines totaling $8,690 for the violations. CVCP challenged the Commission’s findings and argued that the actions of its treasurer at the time made it impossible for CVCP to file its reports on time. The Commission confirmed the penalties against CVCP and its successor treasurer in a Final Determination dated October 27, 2011.
CVCP filed a Petition for Review with the district court on December 7, 2011 arguing, among other things, that the Commission’s enforcement action was invalid because it lacked the requisite four affirmative votes for a RTB finding; its former treasurer was solely liable in his personal capacity for failing to file the reports on time; the Commission failed to provide CVCP an in-person hearing; and the Commission’s failure to mitigate the penalties was an abuse of discretion.
District court decision
The district court found no evidence that the Federal Election Campaign Act (the “Act”) imposed liability on treasurers in their personal capacity to the exclusion of committees and treasurers in their official capacity. The court deferred to the FEC’s decision not to prosecute the former treasurer in his personal capacity, citing the Commission’s considerable prosecutorial discretion and no evidence that the Commission abused its discretion. It also referenced requirements in the Act and Commission regulations that political committees and treasurers file periodic reports of receipts and disbursements (see 52 U.S.C. § 30104(a)(1) and (4); 11 CFR 104.5(c)), and noted the Commission’s policy and practice to name as respondents in enforcement matters the political committee and its current treasurer, in his or her official capacity.
The district court also rejected CVCP’s claim that it was unlawful for the Commission to decline to grant an in-person hearing, finding that the phrase “opportunity to be heard” can be interpreted to include not merely oral, but written advocacy, and that a decision regarding the need for an in-person hearing is properly left to the agency. The court also rejected CVCP’s arguments that the FEC failed to mitigate the CVCP fines finding the fines compliant with statutory guidelines, and similarly rejected CVCP’s various claims of Constitutional violations finding them undeveloped and unsupported. The district court declined to consider CVCP’s challenges to the Commission’s voting procedures because they had not first been presented to the agency itself and were based on documents outside the administrative records.
Appeals court decision and analysis
The court of appeals affirmed the district court’s decision. On appeal, CVCP argued that the district court failed to address its challenges to the FEC’s voting procedures and, among other objections, that the Commission’s RTB determinations were void because they lacked affirmative votes from at least four Commissioners.
Under the Act, an enforcement action can only begin after an affirmative vote of four Commissioners that finds RTB that a person has committed a violation of the Act. 52 U.S.C. § 30109(a)(2). Following an investigation, and upon the general counsel’s recommendation, the Commission will determine, again by an affirmative vote of four Commissioners, whether there is probable cause to believe that the person violated the Act. 52 U.S.C. § 30109(a)(2), (4)(A)(i). After a finding of probable cause, the Commission must attempt to resolve the matter by informal methods, but may resort to filing a civil suit after another affirmative vote by four Commissioners. 52 U.S.C. § 30901(a)(4)(A)(i), (6)(A).
Congress authorized the Commission’s Administrative Fines Program to provide a streamlined procedure to handle reporting violations. First, the Commission conducts a 24-hour, no objection vote on a RTB finding, then provides the respondent with notice and an opportunity to be heard. 52 U.S.C. § 30109(4)(C)(i). Pursuant to an agency directive, the no-objection vote requires circulation of ballots to each Commissioner. Any ballots not marked and returned within 24 hours are counted as “yes” votes. FEC Directive 52 (Sept. 10, 2008) [PDF]. At that point, the Commission may find a violation of the Act and issue a civil money penalty without an additional probable cause finding. 52 U.S.C. § 30109(4)(C)(i)-(ii). However, if the respondent challenges the RTB finding, the Commission will consider the respondent’s arguments and will circulate ballots for a “tally vote” on its final determination, whereby votes are marked and counted and any ballots not returned within one week are deemed abstentions.
For each of CVCP’s three late filings, the Commission used the 24-hour, no objection procedure to find RTB. Consistent with agency procedures, the Commission secretary certified that the Commissioners “voted affirmatively” and decided the issue “by votes of 6-0,” though some Commissioners did not return a ballot. The Commission unanimously found CVCP liable for the violations in its final determination by tally vote.
In its court complaint, CVCP argued that the Commission’s RTB procedures did not meet the Act’s requirement for an “affirmative vote” of at least four Commissioners. The appeals court determined that the case did not require the court to decide that issue because even if the Commission’s use of its voting procedure was in error, CVCP failed to show that the voting procedure caused it any prejudice. In addition, the court reasoned that “any prejudice [CVCP] might have suffered was rendered harmless by the Commission’s subsequent ratification of its reason-to-believe finding with a concededly valid tally vote.” With regard to the tally votes, the appeals court referenced the rules of the agency in holding that ballots signed by Commission staff acting on a Commissioner’s instructions were validly cast and that “the practice is reasonable, not proscribed by statute, and rooted in longstanding principles of agency.”
Finally, the appeals court rejected all of CVCP’s other arguments for the reasons given by the district court. CVCP argued that its former treasurer’s negligence made it impossible for it to file its reports on time, that the Commission should have held the former treasurer solely liable, that the Commission should have mitigated the penalties assessed against CVCP and that a related Commission regulation was unlawful. The appeals court dismissed these arguments and affirmed the lower court’s decision.
1 At the time of the enforcement proceedings, Michael Curry was listed as CVCP’s treasurer and custodian of records. By time the enforcement proceedings ended, David Wiggs was named the successor treasurer and, in addition to CVCP, was assessed the administrative fine in his official capacity.