Federal Election Com'n v. Ted Haley Congressional Committee

• Decision Date: 22 July 1988
• Docket Number: 87-4248,Nos. 87-3867,s. 87-3867
• Citation: 852 F.2d 1111
• Parties: FEDERAL ELECTION COMMISSION, Plaintiff-Appellant, v. TED HALEY CONGRESSIONAL COMMITTEE; Theodore R. Haley; Joanne Alger; Sallie Baine; Dona Carlson; George W. Edman; Frederick T. Haley; Richard G. Haley, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1111

852 F.2d 1111

57 USLW 2085

FEDERAL ELECTION COMMISSION, Plaintiff-Appellant, v. TED HALEY CONGRESSIONAL COMMITTEE; Theodore R. Haley Joanne Alger; Sallie Baine; Dona Carlson George W. Edman; Frederick T. Haley Richard G. Haley, Defendants-Appellees.

Nos. 87-3867, 87-4248.

United States Court of Appeals Ninth Circuit.

Argued and Submitted June 9, 1988.

Decided July 22, 1988.

Lawrence M. Noble, Richard B. Bader, and Jacqueline Jones-Smith, Washington, D.C., for plaintiff-appellant.

Jonathan I. Feil, Simburg, Ketter, Haley, Sheppard & Purdy, Seattle, Wash., for defendants-appellees.

Appeal from the United States District Court for the Western District of Washington.

Before WRIGHT, BRUNETTI, and TROTT, Circuit Judges.

BRUNETTI, Circuit Judge:

The parties in this appeal are plaintiff/appellant Federal Election Commission (FEC) and defendant/appellee Ted Haley Congressional Committee (committee). There are also various individual defendants/appellees, who made alleged contributions to the committee.

Theodore R. Haley (Haley) ran unsuccessfully in the November 1982 general election for the Sixth District Congressional Seat in the United States House of Representatives. Following the campaign the committee still had outstanding debts to printers, campaign consultants, campaign staff and others. In March 1983 Haley obtained a personal loan for $50,000 from Puget Sound National Bank, and upon receiving the loan proceeds transferred the entire amount to the committee which used the funds to pay the campaign debts.

As a requisite to granting the loan the bank requested security for the loan, and at Haley's request, loan guarantees were provided by the six individual defendants/appellees. Four of the individuals provided guarantees of $10,000 and two provided guarantees of $5,000. All of the defendants/appellees submitted affidavits affirming that prior to the election none of them offered to guarantee loans to the committee after the election and that prior to the election no one connected with the campaign had any discussions with them regarding loan guarantees. These affidavits also stated that none of the appellees was approached regarding a loan guarantee until more than three months after the election was over and none of them expected or intended that their loan guarantees would influence any election for federal office. Haley indicated that he would not be a candidate for public office again. The appellees believed that Haley could and would repay the loan and would do so out of his income as a surgeon. The individual appellees had also made cash dollar contributions to the committee prior to the election.

The loan and the guarantees were reported to the FEC by the committee in its 1983 midyear report. Haley repaid the loan in full from personal funds in four payments between March 31 and December 31, 1983.

On October 30, 1984 the FEC found reason to believe that the appellees violated provisions of the Federal Election Campaign Act of 1971 (FECA) pertaining to the campaign contribution limitation of $1000 per contributor. Appellees were notified of the FEC's actions by letters dated November 7, 1984. The FEC's general counsel notified appellees by letters dated February 14, 1985 that the general counsel was prepared to recommend that the FEC find probable cause to believe that violations of FECA by appellees had occurred. On April 30, 1985 the FEC found that probable cause existed. Appellees were notified of that finding by letters dated May 6, 1985. The FEC was unable through informal methods to secure an acceptable conciliation agreement with appellees. Thus, on July 30, 1985 the FEC authorized the initiation of a civil suit.

On November 7, 1985 the FEC filed this civil suit in the United States District Court for the Western District of Washington. The complaint alleged that the loan guarantees made by the individual appellees constituted contributions under FECA and as such violated FECA's prohibition on contributions in excess of $1,000. The appellees answered on February 24, 1986.

On December 1, 1986 the FEC moved for summary judgment. On December 22 appellees moved for partial summary judgment. Judge Bryan, granting appellees' motion for summary judgment, found that the loan guarantees made by the individual appellees were not contributions under FECA unless made for the purpose of influencing any election for federal office. The district court found that the FEC failed to show that appellees had the intent to influence a federal election, and that even if there were a violation of FECA, it would decline to assess civil penalties because of the "rapid repayment of the loan" and the "clear innocence" of the appellees' motives. FEC v. Ted Haley Congressional Committee, 654 F.Supp. 1120, 1127 (W.D.Wash.1987).

FECA Liability

FECA, as codified at 2 U.S.C. Sec. 431 et seq. is the regulatory scheme providing for limits on campaign contributions. It also provides guidelines on record keeping and reporting requirements. 2 U.S.C. Sec. 441a(a)(1)(A) provides that:

No person shall make contributions to any candidate and his authorized political committees with respect to any election for Federal office which, in the aggregate exceed $1,000.

Title 2 U.S.C. Sec. 441a(f) provides that:

No candidate or political committee shall knowingly accept any contribution or make any expenditure in violation of the provisions of this section. No officer or employee of a political committee shall knowingly accept a contribution made for the benefit or use of a candidate, ... in violation of any limitation imposed on contributions and expenditures under this section.

FECA defines the term contribution to include:

any gift, subscription loan, advance or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office.

2 U.S.C. Sec. 431(8)(A) (emphasis added). A bank loan "shall be considered a loan by each endorser or guarantor ..."

2 U.S.C. Sec. 431(8)(B)(vii)(I).

The Act also provides that:

Any candidate [for Federal office] who receives a contribution or any loan for use in connection with the campaign of such candidate for election ... shall be considered, for purposes of this Act, as having received the contribution or loan ... as an agent of the authorized committee or committees of such candidate.

2 U.S.C. Sec. 432(e)(2).

Regulations promulgated pursuant to FECA provide that "the term 'loan' includes a guarantee, endorsement and any other form of security." 11 C.F.R. Sec. 100.7(a)(1)(i). Those regulations further provide that:

(A) A loan which exceeds the contribution limitations ... shall be unlawful whether or not it is repaid.

(B) A loan is a contribution at the time it is made and is a contribution to the extent that it remains unpaid. The aggregate amount loaned to a candidate or committee by a contributor, when added to other contributions from that individual to that candidate or committee, shall not exceed the contribution limitations [of 2 U.S.C. Sec. 441a(a)(1) ].

Chevron, USA, Inc. v. Natural Resources Defense Council, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), provides our standard of review:

When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, as would be necessary in the absence of an administrative interpretation. Rather if 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.

467 U.S. at 842-43, 104 S.Ct. at 2781-82.

The judiciary is the final authority on issues of statutory construction and we must reject administrative constructions which are contrary to clear congressional intent. Id. at 842-43 n. 9, 104 S.Ct. at 2781 n. 9. See also FEC v. Democratic Senatorial Campaign Comm., 454 U.S. 27, 32, 102 S.Ct. 38, 42, 70 L.Ed.2d 23 (1982).

"The power of an administrative agency to administer a congressionally created ... program necessarily requires the formulation of policy and the making of rules to fill any gap left, implicitly or explicitly, by Congress." Id. at 843, 104 S.Ct. at 2782 (quoting Morton v. Ruiz, 415 U.S. 199, 231, 94 S.Ct. 1055, 1072, 39 L.Ed.2d 270 (1974)).

"[T]he interpretation of statutes and regulations by an agency charged with their administration is entitled to due deference and should be accepted unless demonstrably irrational or clearly contrary to the plain meaning." Nevitt v. United States, 828 F.2d 1405, 1406-7 (9th Cir.1987).

The Supreme Court has held that the FEC is vested by Congress with primary and substantial responsibility for administering and enforcing FECA and that the Commission is provided with extensive rule making and adjudicative powers. FEC v. Democratic Senatorial Campaign Comm., 454 U.S. at 37, 102 S.Ct. at 45 (citations omitted). The Supreme Court also held in that case that the FEC "is precisely the type of agency to which deference should presumptively be afforded." Id.

In our review of FECA we must first isolate the precise question at issue. The individual appellees made various cash dollar contributions to the committee. Each of the six made a loan guarantee to enable Haley to obtain the loan from Puget Sound National Bank, and the loan guarantees are contributions under FECA. 11 C.F.R. Sec. 100.7(a)(1)(i). Those loan guarantees standing alone and taken in the aggregate with the appellees cash dollar contributions...