McChesney v. Fed. Election Comm'n, 17-1179

• Decision Date: 15 August 2018
• Docket Number: No. 17-1179,17-1179
• Citation: 900 F.3d 578
• Parties: Robert C. MCCHESNEY, in his official capacity as Treasurer of Bart McLeay for U.S. Senate, Inc.; Bart McLeay for U.S. Senate, Inc., Plaintiffs - Appellants, v. FEDERAL ELECTION COMMISSION, Defendant - Appellee, Caroline C. Hunter, in her official capacity as Chair of the Federal Election Commission, Defendant - Appellee, United States of America, Defendant.
• Court: U.S. Court of Appeals — Eighth Circuit

900 F.3d 578

Robert C. MCCHESNEY, in his official capacity as Treasurer of Bart McLeay for U.S. Senate, Inc.; Bart McLeay for U.S. Senate, Inc., Plaintiffs - Appellants,

v. FEDERAL ELECTION COMMISSION, Defendant - Appellee,Caroline C. Hunter, in her official capacity as Chair of the Federal Election Commission,¹ Defendant - Appellee,United States of America, Defendant.

No. 17-1179

United States Court of Appeals, Eighth Circuit.

Submitted: May 15, 2018

Filed: August 15, 2018

Patrick B. Griffin, Bartholomew L. McLeay, The Omaha Building, Omaha, NE, for Plaintiffs - Appellants.

Robert W. Bonham, III, Senior Attorney, Erin R. Chlopak, Assistant General Counsel, Kevin Deeley, Associate General Counsel, FEDERAL ELECTION COMMISSION, Washington, DC, for Federal Election Commission, Caroline C. Hunter.

Robert Homan, Assistant U.S. Attorney, U.S. ATTORNEY'S OFFICE, District of Nebraska, Omaha, NE, for Defendant.

Before SMITH, Chief Judge, BEAM and COLLOTON, Circuit Judges.

BEAM, Circuit Judge, concurs in the result.

COLLOTON, Circuit Judge.

In 2015, the Federal Election Commission imposed a civil penalty of $12,122 on Robert McChesney as treasurer for Bart McLeay’s campaign for United States Senate in Nebraska. The Commission found that McChesney failed to file certain notices of campaign contributions that must be reported within 48 hours. McChesney does not dispute the facts of the filing violation, but he sued on the ground that the Commission lacked authority to impose the penalty. The district court² dismissed the action, and we affirm.

I.

The Federal Election Commission has exclusive jurisdiction over civil enforcement of federal campaign finance laws. 52 U.S.C. § 30106(b)(1). To bring a civil enforcement action, the Commission typically must follow a lengthy multi-step process involving attempts to reach a conciliation agreement with the violating party and culminating in a civil action filed in federal district court. 52 U.S.C. § 30109(a)(1)-(6). But beginning in January 2000, Congress created an expedited process for the Commission to impose administrative fines. Id. § 30109(a)(4)(C). For violations of certain disclosure requirements, the administrative fine scheme allows the Commission to impose directly civil money penalties "under a schedule of penalties which is established and published by the Commission." Id. § 30109(a)(4)(C)(i)(II). The penalty schedule must "take[ ] into account the amount of the violation involved, the existence of previous violations by the person, and such other factors as the Commission considers appropriate." Id. A person fined under the expedited process has a right to be heard before the Commission and to challenge any penalty in a district court. Id. § 30109(a)(4)(C)(ii)-(iii).

The Commission promulgated the penalty schedule and regulations implementing the administrative fine program in May 2000. Administrative Fines , 65 Fed. Reg. 31,787 (May 19, 2000) (codified as amended at 11 C.F.R. §§ 111.30 - 111.46 ). The agency proceeded through notice-and-comment rulemaking under the Administrative Procedure Act, 5 U.S.C. § 553. In keeping with a sunset provision in the authorizing statute, 2 U.S.C. § 437g note (2000) (Effective Date of 1999 Amendment), the Commission set the program to end on December 31, 2001. 11 C.F.R. § 111.30 (2000).

Congress amended the sunset provision several times, including most recently in December 2013. At that time, Congress extended authority for the administrative fine program to include violations through December 31, 2018. Pub. L. 113-72, § 1, 127 Stat. 1210, 1210 (2013). As it did for each previous extension, the Commission updated its regulations to correspond to the new expiration date. Extension of Administrative Fines Program , 79 Fed. Reg. 3302, 3302-03 (Jan. 21, 2014) (codified at 11 C.F.R. § 111.30 ). The Commission adopted the amendment through its notational "tally vote" procedure without holding a public meeting. The Commission then promulgated the amended regulations without notice and comment because it concluded the amendment fell within the "good cause" exception of the APA, 5 U.S.C. § 553(b)(B). 79 Fed. Reg. at 3302.

McChesney served as the treasurer for Bart McLeay’s Senate campaign in Nebraska during the 2014 primary election. Following the primary election, the Commission notified McChesney that it intended to impose a civil monetary penalty under the administrative fine program. The Commission asserted that McChesney had failed to submit certain notices required by 52 U.S.C. § 30104(a)(6)(A). That provision requires a campaign to notify the Commission within 48 hours of contributions of $1,000 or more received after the 20th day but more than 48 hours before the election. See also 11 C.F.R. § 111.44(a). McChesney objected to the penalty, in part on the ground that "it is not based on an authorized schedule of penalties established by the Commission." The Commission ultimately disagreed and imposed a civil penalty of $12,122.

McChesney challenged the penalty in the district court. He argued that the Commission never validly established the 2014 penalty schedule. He complained that the Commission, among other things, adopted the 2014 extension without conducting a new evaluative review of the penalty schedule, holding a public meeting, or complying with its tally vote procedure. In response to the Commission’s motion to dismiss, McChesney objected that the Commission had not yet provided a full administrative record. The district court rejected each of McChesney’s arguments and granted the Commission’s motion to dismiss.

We review a district court’s grant of a motion to dismiss de novo . "To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Section 30109(a)(4)(C) does not specify the grounds for setting aside a civil penalty imposed by the Commission, but we follow the lead of other courts and adopt those listed in the Administrative Procedure Act, 5 U.S.C. § 706. See Combat Veterans for Cong. Political Action Comm. v. FEC , 983 F.Supp.2d 1, 10 (D.D.C. 2013), aff’d , 795 F.3d 151 (D.C. Cir. 2015). Under the APA, a reviewing court will set aside an agency action if the action is "not in accordance with law" or is "in excess of statutory jurisdiction, authority, or limitations," taking due account of the rule of prejudicial error. 5 U.S.C. § 706(2)(A), (C).

II.

As a preliminary matter, McChesney argues that the district court contravened the APA by dismissing his challenge without first requiring the Commission to submit the complete administrative record. The APA, however, is not so exacting; it provides that "the court shall review the whole record or those parts of it cited by a party ." 5 U.S.C. § 706 (emphasis added). The parties dispute whether the Commission has submitted all portions of the administrative record cited in McChesney’s complaint. We need not resolve that dispute, because the district court had sufficient material to resolve the motion, and McChesney was not prejudiced by any shortcoming in the record.

On a motion to dismiss, a court "must primarily consider the allegations in the complaint, although matters of public and administrative record referenced in the complaint may also be taken into account." Deerbrook Pavilion, LLC v. Shalala , 235 F.3d 1100, 1102 (8th Cir. 2000). We accept as true the allegations in McChesney’s complaint and draw all reasonable inferences in his favor. See Petrie ex rel. PPW Royalty Tr. v. Barton , 841 F.3d 746, 753 (8th Cir. 2016). If part of the administrative record is missing, then McChesney receives the benefit of the doubt: his representation about the record is presumed true. It was therefore not reversible error for the district court to rule based on the record that was available to it. See Bar MK Ranches v. Yuetter , 994 F.2d 735, 740 (10th Cir. 1993).

III.

The Commission also presents a preliminary issue. It contends that McChesney did not bring a proper challenge because he did not assert one of the three grounds enumerated in the Commission’s regulation on challenges to a civil penalty, 11 C.F.R. § 111.35. The regulation provides that the respondent’s written response "must assert" at least one of three enumerated grounds: that the Commission relied on factual error, that the Commission improperly calculated the penalty, or that the individual had a justifiable excuse for his failure to comply. Id. § 111.35(b). The regulation on its face, however, applies only to a respondent’s written response to the Commission. The rule does not purport to limit the grounds on which the sanctioned person may challenge the penalty before the district court, and the Commission would be hard pressed to justify such a limitation. The APA permits a court to set aside an agency action if it is not in accordance with law or is beyond the agency’s statutory authority, see 5 U.S.C. § 706(2)(A), (C), and the Commission cannot by regulation eliminate those statutory grounds for relief.

IV.

McChesney’s challenge to the fine turns on statutory language that the Commission may impose a fine "under a schedule of penalties which is established and published by the Commission ." 52 U.S.C. § 30109(a)(4)(C)(i)(II) (emphasis added). He acknowledges that the Commission "published" the 2014 penalty schedule, but advances three reasons why the Commission supposedly never "established" it.

A.

McChesney first contends that the Commission did not establish the 2014 penalty schedule because the Commission did not conduct what he calls a new "evaluative review" before publishing it. He observes that § 30109(a)(4)(C)(i)(II) requires that the Commission’s penalty schedule take into account certain factors, including the amount of the violation...