Opinion
Civil Action No. 01-1747.
February 17, 2005
Larry Klayman, Paul J. Orfanedes, Judicial Watch, Inc., Washington, D.C., Counsel for Plaintiff.
Lawrence H. Norton, Richard B. Bader, Stephen E. Hershkowitz, William S. Shackelford, Federal Election Commission, Washington, DC, Counsel for Defendant.
MEMORANDUM OPINION
Plaintiff Judicial Watch, Inc. complains that the Federal Election Commission ("FEC" or "Commission" or "defendant") violated Federal Election Campaign Act of 1971 ("FECA"), 2 U.S.C. § 434(b), which requires it to obtain from political committees information about their funding sources, including information on refunds, offsets to contributions, and disbursements in excess of $20. This matter is before the court on cross-motions for Summary Judgment pursuant to Fed.R.Civ.P. 56 and L. Cv. R. 7.1(h).
Judicial Watch is a nonprofit watchdog organization that monitors, among other things, perceived political corruption in the Federal Government. On April 10, 2001, plaintiff filed a complaint with the FEC alleging that Representative Tom DeLay and the National Republican Congressional Committee ("NRCC") were selling meetings with top Bush Administration officials in exchange for campaign contributions of up to $500 to the NRCC. Specifically, Judicial Watch alleged that the NRCC paid for prerecorded fund-raising calls featuring the voice of Rep. DeLay saying:
This is Congressman Tom DeLay and I've been asked to contact key business leaders like you! The truth is that the election of President Bush represents an unprecedented opportunity to enact sound economic policies that will benefit you and your business! I'm talking about social security reform and tax reform! We need to pay down the debt — and fix the health care problems in this country! And the fact is, to do this we want people like YOU! . . . People with common business sense . . . People with a good reputation and a record of success! That is why I am asking you to serve as an Honorary Member of our new Business Advisory Council. As an Honorary Member you'll be invited to meetings with top Bush Administration officials, where your opinions on issues like Tax Reform will be heard! You'll also have the opportunity to provide your input to congressional leaders, and receive our distinguished National Leadership Award! To get this country moving in the right direction we need key professionals and business people like you, and I urge you to stay on the line for just a moment so my aide can give you the details on how you can get involved!
C.A.R. Tab 1 at 5 (Administrative Complaint) (emphases in original). Anyone who remained on the line was connected to a telemarketer who requested a one-time contribution of $300 to $500 to the NRCC to support "a media campaign . . . to get some tax relief." C.A.R. Tab 1, at 3.
According to the Act, all political committees must file periodic reports of their receipts and disbursements with the Commission. 2 U.S.C. § 434(a). Each committee must report, among other things, all disbursements including "contribution refunds and other offsets to contributions." 2 U.S.C. § 434(b)(4)(F); 2 U.S.C. § 434(b)(5)(E). In this case, Judicial Watch filed an administrative complaint alleging that the NRCC had violated the reporting requirements of 2 U.S.C. § 434 and the regulations promulgated thereunder, by failing to report the value of meetings with government officials as "offsets to contributions." C.A.R. Tab 1, at 10-16. The FEC found that the financial value of these meetings, if any, is not an "offset" to contributions as that term is used in the statute. Thus, it found that the NRCC was not required to report such meetings as offsets to contributions under 2 U.S.C. 434(b)(4)(f). Plaintiff challenges the determination not to launch an investigation, based on the decision that the meetings did not constitute an offset, as a decision that was arbitrary, capricious and an abuse of discretion. Plaintiff also argues that the FEC failed to inquire whether the conduct at issue constituted other reportable contributions or disbursements, and that the FEC declined to determine whether the NRCC's conduct should be reported to other law enforcement agencies, as is permitted under 2 U.S.C. § 437d(a)(9).
I. Standard of Review
The standard to be applied by this court in reviewing the FEC's decision not to investigate Judicial Watch's administrative complaint is whether the FEC has acted "contrary to law." See 2 U.S.C. § 437g(a)(8)(C). The FEC's decision is "contrary to law" if (1) the FEC dismissed the complaint as a result of an impermissible interpretation of the Act, or (2) if the FEC's dismissal of the complaint, under a permissible interpretation of the statute, was arbitrary or capricious, or an abuse of discretion. See Fed. Election Comm'n v. Democratic Senatorial Campaign Comm., 454 U.S. 27, 31, 37 (1981); In re Carter-Mondale Reelection Committee, 642 F.2d 538, 542 (D.C. Cir. 1980). In reviewing an agency's construction of a statute that it administers, the court must first determine "whether Congress has directly spoken to the precise question at issue." Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842 (1984). If the statute is silent or ambiguous on the precise question at issue, the court "must defer to the agency's interpretation of the statute if it is reasonable and consistent with the statute's purpose." Chemical Mfrs. Ass'n v. U.S.E.P.A., 919 F.2d 158, 162-63 (D.C. Cir. 1990). Thus, the court must defer to the agency's interpretation unless "an alternative reading is compelled by the regulation's plain language or by other indications of the agency's intent at the time of the regulation's promulgation." Trinity Broadcasting of Florida, Inc. v. FCC, 211 F. 3d 618, 625 (D.C. Cir. 2000) (citation omitted).
II. Discussion
A. FEC's Decision Not to Pursue Plaintiff's Administrative Complaint
Plaintiff filed a complaint with the FEC about what it perceived to be an instance of influence peddling by Rep. DeLay and the NRCC. Plaintiff claims that "the FEC has chosen to state — without investigating" that the contributions-for-access scheme complained of is not an "offset," in violation of 2 U.S.C. § 434(b). Defendant responds by explaining that it interprets the term "offset" in its strict accounting sense to apply to the financial refund or return of part or all of a contribution. It did not consider the meetings in question to be such financial refunds or returns and, thus, voted unanimously that there was no "reason to believe" that the NRCC had committed a violation of the Act. Therefore, defendant argues, it was under no obligation to conduct an investigation.
When reviewing FEC's interpretation of the FECA, this Court applies Chevron deference. 467 U.S. 837. Thus, the Court must first determine "whether Congress has directly spoken to the precise question at issue." Id. at 842-43. The Court does so "using traditional tools of statutory construction and legislative history." AFL-CIO v. Federal Election Comm'n, 333 F.3d 168, 172 (D.C. Cir., 2003). If the intent of Congress is clear, both the court and the agency must give effect to the unambiguously expressed intent of Congress. Chevron, 467 U.S. at 843. If, however, "the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute." Id. In Barnhart v. Walton, the Supreme Court summarized the Chevron inquiry by stating that a court must decide "(1) whether the statute unambiguously forbids the Agency's interpretation, and, if not, (2) whether the interpretation, for other reasons, exceeds the bounds of the permissible." 535 U.S. 212, 217-18 (2002) (citing Chevron, 467 U.S. at 843; United States v. Mead Corp., 533 U.S. 218, 227 (2001)). Furthermore, in making such an assessment, "considerable weight should be accorded to an executive department's construction of a statutory scheme it is entrusted to administer," Chevron, 467 U.S. at 844, as courts must "defer to agency interpretations in large part because Congress has chosen to delegate to the agency decisionmaking in the field." Amerada Hess Pipeline Corp. v. FERC, 117 F.3d 596, 601 (D.C. Cir. 1997) (citing Chevron, 467 U.S. at 865-66). The Chevron Court explained that
the principle of deference to administrative interpretations has been consistently followed by this Court whenever a decision as to the meaning or reach of a statute has involved reconciling conflicting policies, and a full understanding of the force of the statutory policy in the given situation has depended upon more than ordinary knowledge respecting the matters subjected to agency regulations.467 U.S. at 844 (internal quotation omitted). Thus, if the agency's "choice represents a reasonable accommodation of conflicting policies that were committed to the agency's care by the statute, [a court] should not disturb it unless it appears from the statute or its legislative history that the accommodation is not one that Congress would have sanctioned." Id. at 845.
A review of the provision in question reveals that Congress has not spoken directly on the question of whether the term "offset," as used in the FECA, includes the contributions-for-access scheme utilized by the NRCC, nor does Judicial Watch argue that it has. Instead, Judicial Watch argues that the NRCC scheme can and should be considered an offset to contributions. The relevant provision states:
(b) Contents of report. Each report under this section shall disclose —
(4) for the reporting period and the calendar year . . . the total amount of all disbursements, and all disbursements in the following categories:
(A) expenditures made to meet candidate or committee operating expenses;
(B) for authorized committees, transfers to other committees authorized by the same candidate;
(C) transfers to affiliated committees and, where the reporting committee is a political party committee, transfers to other political party committees, regardless of whether they are affiliated;
(D) for an authorized committee, repayment of loans made by or guaranteed by the candidate;
(E) repayment of all other loans;
(F) contribution refunds and other offsets to contributions;2 U.S.C. § 434(b)(4). In this instance, as it has before, the FEC has chosen to interpret the provision in a "narrow," "straightforward manner." Def.'s Mot. for Summ. J., at 5. Thus, it interprets section 434(b)(4)(F) according to a "balance sheet approach" to reporting. FEC argues that since its inception in 1975, it has construed the statute's contribution limits as applying to the gross amount of a contribution "regardless of whether the committee offers a valuable inducement to contribute," and has similarly construed the reporting provisions as requiring the gross amount to be listed as a contribution. Id. Defendant points to the structure of the Act and the context in which the term "offsets" appears in support of its argument that the term was intended to refer only to financial transactions. Applying the principle of ejusdem generis, the Commission reasons that because the statute refers to various types of disbursements or payments of money ("disbursements," "expenditures," "transfers," "repayment[s])," the term "offsets" refers strictly to financial refunds. Defendant goes on to give additional rationale for interpreting the term "offset" in a strict accounting sense, including legislative history, consistent agency practice over the past 25 years, and statutory context. A review of the legislative history indicates that the only examples of "offsets" included in the Committee Report are financial items — contribution refunds and dishonored checks. See H.R. Rep. No. 96-422, at 16 (1979). Furthermore, defendant indicates that the FEC has adhered to this construction of the Act since its inception in 1975, citing regulations that require committees to report "itemized offsets to contributions," "unitemized offsets to contributions," and "total offsets to contributions." 11 C.F.R. 104.3(b)(1)(iv)(A) — (C). Finally, defendant explains that within the broader context of the FECA, the general objective of limiting financial contributions would be frustrated if contributors were allowed to offset their contributions by the value accorded to meetings with officials. Defendant essentially argues that under plaintiff's theory a political contributor could contribute the maximum amount allowable and then by "purchasing" a meeting with officials, be able to deduct the purchase amount from the total amount contributed, thereby allowing for total contributions greater than the statutory maximum.
The principle of ejusdem generis indicates that where general words follow specific words in a statutory enumeration, the general words are to be construed to embrace only objects similar in nature to those objects enumerated by the preceding specific words. See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 114-15 (2001).
Plaintiff disagrees with FEC's overall approach, arguing for investigation of the apparent quid pro quo between contributors and "top Bush Administration officials." Judicial Watch goes to great lengths to argue that "meetings with top administration officials also could be an offset." Pl.'s Opp'n to Def.'s Mot. for Summ. J. and Cross Mot. for Summ. J., at 4. Plaintiff argues that a monetary value could be assigned to the meetings in the NRCC scheme, and suggests methods for doing so. Plaintiff also seems to argue that an alternative reading of section 434(b)(4)(F) indicates that the term "offsets" may refer to other items or services of value given in return for campaign contributions. As such, because item (F) already refers to contribution refunds, it would be redundant for Congress to go further and add "and other offsets to contributions." Thus, Judicial Watch argues that it is possible that item (F) indicates that refunds are a type of offset, and "other offsets" refers to other non-monetary offsets to contributions, possibly including meetings with high-level officials. This court is bound, however, to accept any plausible interpretation by the agency, not necessarily the best interpretation. See Trinity Broadcasting of Florida, Inc. v. FCC, 211 F.3d 618, 625 (D.C. Cir. 2000) ("the court is not to decide which among several competing interpretations best serves the regulatory purpose"). Because it was not unreasonable for the FEC to interpret the term "offset" in its strict accounting sense and therefore exclude inducements to contribute from its meaning, it was reasonable for the FEC to determine that the NRCC had not committed a violation of the Act. The FEC's decision not to further investigate Judicial Watch's administrative complaint with regard to section 434(b)(4)(F) was therefore neither contrary to law, arbitrary, capricious, nor an abuse of discretion.
B. FEC's Decision Not to Further Investigate and Refer Judicial Watch's Complaint to Appropriate Law Enforcement Authorities
Plaintiff also argues that it is challenging the FEC's decision not to investigate beyond the scope of the section 434(b)(4)(F) violation alleged in its administrative complaint and report some or all of the complained-of conduct to other law enforcement agencies. Specifically, Judicial Watch argues that it was contrary to law for the FEC to "decline to investigate serious allegations of fund-raising impropriety even if those violations ultimately are not under the jurisdiction of the FEC." Pl.'s Opp'n to Def.'s Mot. for Summ. J. and Cross Mot. for Summ. J. at 8. Defendant responds that absent an allegation of a violation of the Act or 26 U.S.C. 9001 et. seq., there can be no basis for the Commission to begin an investigation. Defendant also argues that while it is authorized to refer possible violations of the laws to appropriate law enforcement authorities, such referrals are entirely discretionary.
Defendant's position is supported by the explicit terms of the FECA, which leaves considerable discretion to the agency. The relevant statutory provision states:
(2) If the Commission, upon receiving a complaint under paragraph (1) or on the basis of information ascertained in the normal course of carrying out its supervisory responsibilities, determines, by an affirmative vote of 4 of its members, that it has reason to believe that a person has committed, or is about to commit, a violation of this Act or chapter 95 or chapter 96 of the Internal Revenue Code of 1954 [ 26 U.S.C. §§ 9001 et seq. or 9031 et seq.], the Commission shall, through its chairman or vice chairman, notify the person of the alleged violation. Such notification shall set forth the factual basis for such alleged violation. The Commission shall make an investigation of such alleged violation, which may include a field investigation or audit, in accordance with the provisions of this section.2 U.S.C. § 437g(a)(2) (emphasis added). Thus, it is well within the discretion of the Commission to determine whether there has been or will be a violation of the FECA or other relevant statutes. Only then is it directed to conduct an investigation. In the case at hand, the Commission has put forth a rational explanation for its preliminary determination that the complained-of activity did not constitute an "offset" under the terms of the Act. Furthermore, pursuant to 2 U.S.C. § 437d(a)(9), the Commission has the "power" to report apparent violations to the appropriate law enforcement authorities. Such action is clearly not mandated by the statute and the failure to report does not constitute an abuse of discretion.
III. Conclusion
Because the Federal Election Commission's interpretation of the FECA was reasonable, its decision to dismiss Judicial Watch's administrative complaint was not contrary to law. Furthermore, the Commission's decision not to refer Judicial Watch's complaint to other law enforcement authorities was not an abuse of discretion. Accordingly, it is hereby
ORDERED that defendant's motion for summary judgment is GRANTED. It is further
ORDERED that plaintiff's cross motion for summary judgment is DENIED. A separate Order accompanies this Memorandum Opinion.