Simon v. Federal Election Com'n, No. 93-1252

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Writing for the Court: Before SENTELLE, HENDERSON and TATEL; SENTELLE
• Citation: 53 F.3d 356
• Docket Number: No. 93-1252
• Decision Date: 05 May 1995
• Parties: Paul SIMON, et al., Petitioners, v. FEDERAL ELECTION COMMISSION, Respondent.

Page 356

53 F.3d 356 311 U.S.App.D.C. 285 Paul SIMON, et al., Petitioners,
v.
FEDERAL ELECTION COMMISSION, Respondent. No. 93-1252. United States Court of Appeals,
District of Columbia Circuit. Argued March 6, 1995.
Decided May 5, 1995.

Leslie J. Kerman, Washington, DC, argued the cause, for petitioners. With her on the briefs, was Stuart M. Gerson, Washington, DC.

Richard B. Bader, Associate Gen. Counsel, Federal Election Com'n., Washington, DC, argued the cause, for respondent. With him on the brief, were Lawrence P. Noble, Gen. Counsel, and Vivien Clair, Atty., Federal Election Com'n., Washington, DC.

Before SENTELLE, HENDERSON and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge:

This is a petition for review of a Federal Election Commission final repayment determination ordering petitioners Paul Simon and Paul Simon for President, Inc., to repay $412,162.87 in matching funds to the United States Treasury. Petitioners argue, inter alia, that the Commission was time-barred, pursuant to the Presidential Primary Matching Payment Account Act, 26 U.S.C. Sec. 9038 (1988), from imposing this repayment obligation because the Commission did not notify petitioners of their repayment claims within three years as required by the statute. Because we agree that repayment determinations must be issued within the three-year statutory period, we reverse the Commission's ruling.

I. BACKGROUND

The Presidential Primary Matching Payment Account Act ("the Matching Payment Act" or "the Act"), 26 U.S.C. Secs. 9031-9042 (1988), was enacted in 1974 to provide partial federal financing for the campaigns of qualifying presidential primary candidates. Once a candidate's eligibility is established under the Act, he is entitled to receive payments from the Presidential Primary Matching Payment Account to match individual contributions up to $250. 26 U.S.C. Secs. 9034(a) & 9037. Candidates may only use these funds to defray "qualified campaign expenses," defined as expenses incurred in connection with the campaign for the presidential nomination that do not violate federal or state law. 26 U.S.C. Sec. 9032(9); 11 C.F.R. Sec. 9034.4(a) (1995). The Act places limits on each candidate's expenditures. Expenditures in excess of these limits are not "qualified campaign expenses" for which candidates may use their matching funds. 11 C.F.R. Sec. 9038.2(b) (1995).

The Act requires the Federal Election Commission ("the Commission" or "FEC") to conduct a thorough examination and audit of the campaign finances of every publicly funded candidate after the campaign for the nomination ends. 26 U.S.C. Sec. 9038(a); 11 C.F.R. Sec. 9038.1 (1995). If the Commission determines that "any portion of the payments made to a candidate from the matching payment account was in excess of the aggregate amount of payments to which [the] candidate was entitled under section 9034, it shall notify the candidate, and the candidate shall pay to the Secretary an amount equal to the amount of excess payments." 26 U.S.C. Sec. 9038(b)(1). Similarly, if the Commission determines that any portion of the payments was used for a purpose other than to defray qualified campaign expenses, the Commission shall "notify the candidate of the amount so used, and the candidate shall pay to the Secretary an amount equal to such amount." 26 U.S.C. Sec. 9038(b)(2).

In 1987, Senator Paul Simon became a candidate for the Democratic nomination for President of the United States. Pursuant to the Matching Payment Act, Senator Simon

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qualified for and received a total of $3,774,344.77 in federal matching fund payments. These payments were deposited into the account of Paul Simon for President, Inc. ("the Committee"), Senator Simon's principal campaign committee for the 1988 campaign. On April 7, 1988, Simon suspended his candidacy. The Commission subsequently conducted an audit of the Committee's records to determine whether Simon would have to repay any of the matching funds he received, pursuant to Sec. 9038(b). The Commission's Audit Division initiated its investigation on July 25, 1988, and issued an interim audit report to the Committee on July 10, 1990, containing preliminary calculations regarding possible future repayment to the United States Treasury.

Pursuant to the Commission's regulations, 11 C.F.R. Sec. 9038.1(c)(v)(2), the Committee filed its written responses to the preliminary calculations on January 11 and 31, 1991. The Commission had previously granted the Committee several extensions of time to file these responses. In a letter dated January 16, 1991, the Audit Division, however, notified the Committee that the Commission had denied in part the Committee's request for a further extension of time, asserting "the Commission is mindful that the statute of limitations contained in 26 U.S.C. Sec. 9038(c) expires on July 20, 1991."

26 U.S.C. Sec. 9038(c) provides that "[n]o notification shall be made by the Commission under subsection (b) with respect to a matching period more than 3 years after the end of such period." The period ends on the date the national convention of the party whose nomination a candidate seeks nominates its candidate for President. 26 U.S.C. Sec. 9032(6). In this case, the matching payment period ended on July 20, 1988, the date the Democratic National Convention nominated Michael Dukakis for President. Thus, the three-year statutory notification period terminated on July 20, 1991. On July 17, 1991, three days prior to the expiration of the period, the Commission delivered the Committee a letter asserting that the Committee's receipt of the interim audit report one year earlier satisfied the three-year notification period...