Democratic Senatorial Campaign Committee v. Federal Election Commission

• Decision Date: 09 October 1980
• Docket Number: No. 80-2074,80-2074
• Citation: 212 U.S.App.D.C. 374,660 F.2d 773
• Parties: DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE, Appellant, v. FEDERAL ELECTION COMMISSION, National Republican Senatorial Committee, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 773

660 F.2d 773

212 U.S.App.D.C. 374

DEMOCRATIC SENATORIAL CAMPAIGN COMMITTEE, Appellant, v. FEDERAL ELECTION COMMISSION National Republican Senatorial Committee, Intervenor.

No. 80-2074.

United States Court of Appeals District of Columbia Circuit.

Argued Sept. 23, 1980.

Decided Oct. 9, 1980.

Appeal from the United States District Court for the District of Columbia (D.C. Civil Action No. 80-01903).

Robert F. Bauer, Washington, D. C., with whom William E. McDaniels, John J. Buckley, and F. Whitten Peters, Washington, D. C., were on the brief, for appellant.

Kathleen Imig Perkins, Asst. Gen. Counsel, Federal Election Commission, Washington, D. C., with whom Charles N. Steele, Gen. Counsel, Federal Election Commission, Washington, D. C., was on the brief, for appellee.

James F. Schoener, Washington, D. C., for intervenor.

Before WRIGHT, Chief Judge, and WILKEY and GINSBURG, Circuit Judges.

Opinion PER CURIAM.

Dissenting opinion filed by Circuit Judge WILKEY.

PER CURIAM:

This case calls for construction of the Federal Election Campaign Act of 1971 (FECA) and its 1974 and 1976 Amendments, 2 U.S.C. § 431 et seq. ¹ Under a provision of the Act that permits the State committees of the political parties to make expenditures on behalf of senatorial candidates, ² a number of Republican State committees have executed agreements by which they purport to designate the National Republican Senatorial Committee (NRSC) as their agent for purposes of making expenditures up to the legal limits. The Democratic Senatorial Campaign Committee (DSCC) has challenged this practice as contrary to the letter and purpose of the applicable statutory provisions. The DSCC first sought relief by filing a complaint with the Federal Election Commission (FEC), which upheld the legality of the "agency" agreements. ³ Assuming that it must sustain Commission decisions not shown to be arbitrary and capricious, the District Court granted the FEC's motion for summary judgment. ⁴ Because we believe that both the FEC and the District Court misconstrued the applicable law, we reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Agency Agreements

The Federal Election Campaign Act, as amended, imposes limitations on campaign contributions and expenditures by individuals and by various kinds of political committees. Section 441a(d)(3), the provision centrally at issue in this case, provides for campaign spending by State and national committees of the political parties:

(3) The national committee of a political party, or a State committee of a political party, including any subordinate committee of a State committee, may not make any expenditure in connection with the general election campaign of a candidate * * * which exceeds

(i) 2 cents multiplied by the voting age population of the State * * *.

Although phrased in restrictive terms, Section 441a(d)(3) is in fact a grant of permission: It permits the national and State committees to make expenditures that would otherwise be prohibited. ⁵

As it has done in each campaign since 1976, the Republican National Committee has designated the NRSC as its agent, authorized to make the expenditures permitted to the national committee by Section 441a(d) in all senatorial elections.

Various State committees of the Republican Party have also designated the NRSC as their agent under Section 441a(d). As in the case of the national committee, their agency agreements purport to transfer to the NRSC spending authority conferred under Section 441a(d)(3). ⁶ In the 1978 senatorial elections, during which the State committees commissioned the NRSC as their agent for the first time, the NRSC spent a total of $2,770,995 under the combined spending authority of the national and State party committees. ⁷ Most of the money went into 12 closely contested races, in which the NRSC spent $2,180,499. Of this sum, $1,106,286.60 was attributable to its expenditures as agent for the national committee, the remaining $1,074,213.40 to expenditures as agent of various State committees.

Agency agreements related to 1980 contests purport to authorize the NRSC to spend even larger sums. There are Senate races in 34 States, whose 34 Republican State committees have a composite spending ceiling of $3,487,020.80 under Section 441a(d)(3). ⁸ A number of these State committees have designated the NRSC as their authorized spending agent. In California alone, the NRSC will be able to spend up to $485,024 as the agent of the State committee, and a total of $970,048 in its capacity as dual agent of the State and national committees. In New York the comparable figures are $379,717.12 and $759,434.24.

B. Proceedings Before the Federal Election Commission

On May 9 of this year the Democratic Senatorial Campaign Committee filed a complaint with the Federal Election Commission in which it challenged the legality of the agency agreements entered by the NRSC and the various Republican State committees. ⁹ In its accompanying memorandum of law, ¹⁰ the DSCC argued that the challenged arrangements violate the plain meaning of Section 441a(d)(3), which provides separate spending limits for State and national party committees and makes no reference to agency. The DSCC claimed that a clear purpose of the statutory scheme was to create an incentive to the development of vigorous State party organizations. The DSCC did not challenge the agency agreement between the NRSC and the Republican National Committee, since the FEC at that time interpreted a Commission regulation, 11 C.F.R. § 110.7, to authorize such agreements. ¹¹ Moreover, the DSCC itself has made an agency agreement with the Democratic National Committee.

The Commission dismissed the complaint. Although it gave no reasoned explanation of its decision, the FEC acted after receipt of a report from its General Counsel. ¹² The "First General Counsel's Report" stated that this was the third time that a complaint of this kind had come before the Commission. Although it recommended the same result that the FEC had reached in the prior cases, ¹³ the report suggested that the General Counsel's emphasis shifted over the course of the various proceedings. ¹⁴ In the first proceeding the General Counsel had attributed importance to the absence of any express statutory prohibition of agency arrangements. In this case, however, the General Counsel placed greater reliance on an inference of congressional intent apparently drawn from a related section of the Federal Election Campaign Act, Section 441a(a)(4). That provision allows for unlimited transfers of money between and among political committees of the same party, as defined by the statute. ¹⁵ Assuming that the NRSC was a committee of the Republican Party within the meaning of Section 441a(a)(4), the General Counsel reasoned that, because the NRSC could lawfully transfer money to the State committees, which the State committees could then spend up to a limit of 2 cents per resident of voting age, the statute must have intended that the NRSC could itself make expenditures up to that limit while acting as the agent of the State committees. ¹⁶ The General Counsel also cited the more general argument that the provision permitting expenditures by the State and national party committees was intended to be "broad" broad enough to permit the pooling of large numbers of small contributions made to the political parties and their various committees. After receiving the General Counsel's report on July 8, the Commission rendered its judgment on July 10. ¹⁷ By a vote of 6-0 it found "no reason to believe" that the NRSC's agency agreements with the State committees violated Section 441a(d)(3). The FEC's summary announcement of the decision did not explicitly adopt the report of the General Counsel. ¹⁸

C. Proceedings Before the District Court

The DSCC sought District Court review of the FEC's action. ¹⁹ Its petition, filed July 30, 1980, requested a declaratory judgment that the FEC's decision was "contrary to law," on the theory that Section 441a(d)(3) precludes the State committees from assigning their spending limits to the NRSC. Ruling on cross-motions for summary judgment, the District Court decided in favor of the FEC on August 28. The court held that the FEC must prevail unless its action was "arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law." ²⁰ Judge June Green found no violation of that standard. The District Court construed the decision of the FEC as resting on the inference, advanced by the General Counsel, that the transfer of funds provision of Section 441a(a)(4), when read in conjunction with Section 441a(d)(3), revealed a congressional willingness to treat the funds and expenditures of various party committees, including the NRSC, as essentially interchangeable. ²¹ The DSCC docketed an appeal in this court on September 4, 1980. The NRSC moved to intervene on September 19, and the court agreed to the intervention.

II. STANDARD OF REVIEW

The District Court regarded the decision of the FEC as entitled to extreme deference. We approach the matter differently.

Although a court should undertake only "a very limited review of the exercise of the FEC's discretionary decisions," In re Carter-Mondale Reelection Committee, Inc., 642 F.2d 538, 545 (D.C.Cir.1980), we deal in this case, not with a discretionary exercise of Commission power, but with an interpretation of a federal statute. The Supreme Court has long recognized that "the courts are the final authorities on issues of statutory construction" and need not "rubber-stamp" administrative decisions that misinterpret a federal statute. SEC v. Sloan, 436 U.S. 103, 118, 98 S.Ct. 1702, 1711, 56 L.Ed.2d 148 (1978) (quoting Volkswagenwerk v. FMC, 390 U.S. 261, 272, 88 S.Ct. 929, 935, 19 L.Ed.2d 1090 (1968), and NLRB v. Brown, 380 U.S. 278, 291, 85 S.Ct. 980, 988, 13 L.Ed.2d 839 (1965)).

We recognize that special deference to an agency's interpretation of its...