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REAGAN BUSH COMM. v. FEC

November 17, 1981

REAGAN BUSH COMMITTEE, et al., Plaintiffs,
v.
FEDERAL ELECTION COMMISSION, Defendant



The opinion of the court was delivered by: GREEN

MEMORANDUM OPINION

 A hearing on the preliminary injunction sought by RBC was consolidated with the trial on the merits and held on October 21, 1981. The FEC has moved to dismiss the cause for lack of subject matter jurisdiction and failure to state a claim upon which relief can be granted, or, in the alternative, for summary judgment. RBC has moved for partial summary judgment, asking that the Court enter an order precluding the FEC from rendering and publishing an interim determination on allegations and recommendations pending before the Commission with respect to any violations of federal election laws RBC may be charged with having committed, or any repayments of campaign funds that the FEC may order RBC to make, without first providing RBC the hearing it seeks. Because it is clear that the FEC has not withheld any documents from RBC improperly and that the report the FEC plans to disclose cannot by law contain information concerning violations of election laws and, in any event, is not a final determination of liability (continued input into the process and judicial review still to be available to RBC at subsequent stages of the administrative procedure), dismissal without prejudice as to the FOIA request and summary judgment as to the application for injunctive relief against public disclosure of the audit report will be granted to the FEC and RBC's motion for partial summary judgment will be denied.

 Some discussion of the background of this case is necessary to comprehend what precisely is at stake here. Indeed, defendant suggests that the dispute may in part be attributable to a misunderstanding on the part of RBC as to the relevant audit process and the nature of the report the FEC plans to make public. The two RBC committees are organizations authorized to receive campaign contributions and payments and to make campaign expenditures under the Federal Election Campaign Act (FECA), 2 U.S.C. §§ 431 et seq., and the Presidential Election Campaign Fund Act (PECFA), 26 U.S.C. §§ 9001 et seq. Complaint, PP 2, 3. RBC received $ 29,440,000 from the United States Treasury through the Presidential Election Campaign Fund. Defendant's Statement of Facts Not in Dispute, P 5. RBC was paid this amount upon the conditions that it comply with certain provisions of PECFA and, inter alia, agree "to obtain and furnish to the Commission such evidence as it may request of the qualified campaign expenses of (its) campaign," "to keep and furnish to the Commission such records, books, and other information as it may request," and "to (submit to) an audit and examination by the Commission under Section 9007 and to pay any amounts required to be paid under such section." Letter from the Honorable Ronald Reagan and the Honorable George Bush to the Commission, July 18, 1980 (Exhibit 1 to Defendant's Opposition to Plaintiffs' Motion for a Preliminary Injunction). These conditions are prerequisites to eligibility to receive funds under PECFA. 26 U.S.C. § 9003(a). *fn1"

 The audit report in question is a product of the examining and auditing process under PECFA, rather than of the enforcement procedure under FECA. The audit process begins after each Presidential election, when the Commission is required to conduct an examination and audit of the qualified campaign expenses of the candidates of each political party for President and Vice President. 26 U.S.C. § 9007(a); 11 C.F.R. § 9007.1. The audit serves to determine whether the candidate has been paid from the Campaign Fund more than he was entitled to receive under section 9004 of the Act and should make repayments to the Fund. 26 U.S.C. 9007(b); 11 C.F.R. § 9007.2. An interim audit report, not required by statute or regulation, is presented to each candidate's campaign committee, with an opportunity to respond thereto, under an informal practice established by the FEC. Letter from FEC Chairman McGarry to Counsel for RBC, August 4, 1981 (Exhibit H to Complaint).

 Upon completion of the final audit, which may or may not contain a determination that repayments are appropriate, the Commission is required to notify the candidates whether such repayments will be required. 26 U.S.C. § 9007(b)(2); 11 C.F.R. § 9007.2(a). A candidate found to be owing repayments must make such repayments within 30 days of receiving notice thereof from the Commission, but may request a 90 day extension of the repayment period. 11 C.F.R. § 9007.2(b). Moreover, if a candidate disputes the finding that repayments are due, he is afforded the opportunity to present to the Commission his arguments to the contrary, in writing, within 30 days of the issuance of the Commission's determination, a further 30 day extension of such time available upon request by the candidate and grant by the Commission. 11 C.F.R. § 9007.2(c). The Commission must consider any such submittals by a candidate in making its final determination on the repayment question, which determination must contain a written statement of reasons for the recommendation made. 11 C.F.R. § 9007.2(d), (e). Judicial review of a final determination on this issue is available by appeal to the United States Court of Appeals for the District of Columbia Circuit. 26 U.S.C. § 9011(a).

 If the audit process should uncover information indicating a violation of PECFA (i. e., the knowing and willful incurring of excess expenditures, acceptance of certain contributions to defray expenses, making unauthorized expenditures and contributions, and the like as noted at 26 U.S.C. § 9012) or FECA, such information may be used in the enforcement process under FECA, at 2 U.S.C. § 437g. However, information relating to any notification or investigation under § 437g must remain confidential. 2 U.S.C. § 437g(a)(12) (A).

 In the matter at hand, the FEC is not near its final determination on the question of repayment. The FEC commenced its audit report of RBC pursuant to 26 U.S.C. § 9007 on January 28, 1981. Defendant's Statement of Facts Not in Dispute, P 6. On March 27, 1981, the Audit Division of the FEC held an "exit conference" with officials and attorneys of RBC at which they discussed the Audit Division's preliminary findings. Id. The same findings were expressed in the Audit Division's "interim report," which was delivered to RBC on June 19, 1981. Id.; Complaint, P 15. In the letter accompanying the report, the Assistant Staff Director for the Audit Division informed RBC that it would have 30 days to respond to the findings of the auditors, after which time the audit staff would present a "final audit report" to the Commission for its approval and for subsequent public release. Exhibit A to Complaint; Defendant's Statement of Facts Not in Dispute, P 6. On July 6, 1981, RBC asked for a 30 day extension of its time to respond to the interim report, which was denied by the FEC on July 13, 1981. RBC submitted its response to the report on July 20, 1981, under protest, because it contended that it needed more time to make an adequate response and believed it was entitled to a stay of further Commission action and an administrative hearing on the issues considered in the report. Plaintiffs' Response to Defendant's Statement of Facts, PP 6, 7; Complaint, P 39. On August 4, 1981, the FEC granted RBC an extension of time until August 11, 1981 to supplement its response in writing, but denied its request for a stay of further action and a hearing. Letter from FEC Chairman McGarry to Counsel for RBC (Exhibit H to Complaint). RBC filed its complaint with this Court on August 10, 1981, and shortly thereafter, submitted its supplemental response to the interim audit report.

 With the facts of the events leading up to the instant matter established, an examination of RBC's claims is in order.

 1. RBC's Request for Disclosure of Documents under the Freedom of Information Act

 In the course of the auditing process discussed above, and by the date of its complaint in this action, RBC had made three requests to the FEC for documents and records under the Freedom of Information Act (FOIA), 5 U.S.C. § 552. The first request, dated July 6, 1981, sought records in the FEC's control or possession which were generated or relied upon in the course of its examination and audit of RBC's receipts and expenditures. Complaint, P 18. The second request, made July 17, 1981, sought information as to procedural standards and rules followed by the FEC in the audit process under PECFA. Id., at P 20. The third request, dated July 20, 1981, sought information as to substantive standards and rules followed by the FEC in the PECFA audit process and in enforcing the limitations on contributions and expenditures set forth in FECA at 2 U.S.C. § 441a. Id., at P 22. RBC, in its complaint, alleged that the FEC had not provided it with access to materials responsive to the second and third requests, nor a disclosure determination with respect to the requests, and that, although the FEC provided it with documents represented to be all those responsive to the first request, other responsive documents remained to be disclosed or identified to RBC. Id., at PP 21, 23, 24. As a result, RBC argues, as to the second and third requests, the FEC failed to meet the requirement of timely response to information requests established in FOIA and FEC regulations at 5 U.S.C. § 552(a)(6) and 11 C.F.R. § 4.7.

 The FEC avers that RBC made five requests in all to it under FOIA, including the requests of July 6, 17, and 20 noted above, and two additional ones, on July 29 and 30, 1981. Defendant's Memorandum of Points and Authorities in Opposition to Plaintiffs' Motion for Preliminary Injunction, at 10. The requests of July 29 and 30, according to the FEC, sought, respectively, records concerning the standards and rules followed by the FEC in enforcing the contribution limitations of FECA at 2 U.S.C. § 441a(a)(1)(A) and 11 C.F.R. § 110.1(a)(1), and a report on the FEC's policies and procedures prepared for it by Arthur Andersen & Co. Id., at 11.; Exhibits 5, 6 to Defendant's Opposition.

 It is clear that the FEC has made a good faith, diligent effort to comply with, and has substantially complied with, RBC's five FOIA requests. By letter to RBC of August 27, 1981 the FEC's Freedom of Information Act officer noted that the agency had, on July 30, acknowledged to RBC receipt of its second and third requests (the requests of July 17 and 20) and its July 29 request, advising RBC that the search for records would begin on August 3, 1981. Letter from FOIA Officer Fred Eiland to Counsel for RBC (Exhibit 7 to Defendant's Opposition). In the same letter, the FOIA Officer stated that RBC's requests were "quite broad," but that even despite RBC's refusal to narrow its requests, the FEC would "continue to make, every effort to identify those documents which respond, or potentially respond to those requests." Id. The FEC avers that the July 30 request was answered in full on August 12, 1981, and that RBC was provided with a box of documents sought under the July 17, 20, and 29 requests and indexes to other records potentially responsive to those requests. Defendant's Memorandum in Opposition to Plaintiff's Motion, at 11; Exhibits 8, 9 to Defendant's ...


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