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COMMON CAUSE v. FEC

June 25, 1986

Common Cause, Plaintiff,
v.
Federal Election Commission, Defendants



The opinion of the court was delivered by: PRATT

 John H. Pratt, United States District Judge.

 Plaintiff Common Cause brings this action for judicial review of an order by the Federal Election Commission (the Commission) dismissing plaintiff's administrative complaint. Common Cause alleges that President Reagan's 1984 Presidential campaign committee violated the federal election laws by failing to pay for and report the expenses of a trip to Illinois, where the President addressed a convention of the Veterans of Foreign Wars. Common Cause brought these allegations before the Commission in an administrative complaint, which the Commission dismissed. Pursuant to 2 U.S.C. § 437g(a) (8), Common Cause now seeks a declaration that the Commission's action was "contrary to law." Before the court are the parties' cross-motions for summary judgment.

 BACKGROUND

 On August 22, 1984, Ronald Reagan received the Republican Party's nomination for President. From the Party's convention in Dallas, Texas, Mr. Reagan flew directly to Chicago, Illinois. There, on August 24, 1984, he addressed a convention of the Veterans of Foreign Wars (VFW). Mr. Reagan did not expressly mention his candidacy during this speech. Nor did he solicit from the audience contributions to his campaign. The President did echo, however, his campaign theme -- emphasized in his acceptance speech the day before -- of a "springtime of hope" for America. See Ex. C to Def. Ex. 1, at 8; Pl. Ex. B at 1173, 1174. He also credited the previous four years of his administration with military strength and economic recovery and, without mentioning Walter Mondale, attacked the positions of his Democratic opponent.

 Both Mr. Reagan's audience and the press reacted as if the remarks were a campaign speech. The audience chanted "Four more years, four more years!" Pl. Statement of Mat. Facts Not in Dispute para. 7. The NBC Nightly News reported, "The president flew on to Illinois, which the Reagan camp regards as a key battleground . . . . He attacked Mondale as soft on defense . . . ." Ex. A to Complaint, at 2. Newspaper accounts of the speech further emphasized this campaign theme with headlines such as "BATTLE FOR ILLINOIS," Chicago Sun-Times ; "Bringing the Fight to Illinois," Chicago Tribune ; "Democrat is Linked to 'Failed Policies'" and "President Criticizes Mondale for Stance on Security Issues," Washington Post ; and "CAMPAIGN SALVOS" and "President raps rival for stand on defense," Boston Globe. Pl. Statement of Mat. Facts, para. 8.

 The federal election laws required periodic reports of expenditures by Mr. Reagan's authorized campaign committee. The Presidential Election Campaign Fund Act, 26 U.S.C. § 9001, et seq., provides for public financing of Presidential election campaigns. In order to be eligible for public funding, a candidate must agree, inter alia, to furnish to the Commission full reports of all "qualified campaign expenses." 26 U.S.C. § 9003(a)(1); 11 C.F.R. § 9006.1(a) (1986). Since Mr. Reagan had accepted public financing, the expenses of the Chicago trip should have been reported if they met the definition of "qualified campaign expenses." In addition, under Commission regulations, if the trip was "campaign-related" and had involved government conveyance, the President was required to reimburse the Government for the costs of the trip. 11 C.F.R. § 9004.7(b) (5) (1986).

 The statute defines a "qualified campaign expense" as an expense within the prescribed "expenditure report period" that is incurred by a Presidential candidate "to further his election," with the exception of expenses whose incurring or payment violates any federal or applicable state law. 26 U.S.C. § 9002(11). Commission regulations further define "qualified campaign expenses" to include candidate's "campaign-related" travel expenses. 11 C.F.R. § 9004.7 (1986). The Chicago trip occurred within the "expenditure report period" since Mr. Reagan had already been nominated. See 26 U.S.C. § 9002(12) (A); 11 C.F.R. § 9002.12(a). The White House, however, viewed the trip as official business. The government therefore paid for the trip and the expenses were not reported to the Commission.

 On September 20, 1984, Common Cause filed with the Commission a complaint against Reagan-Bush '84, Mr. Reagan's principal authorized campaign committee. The complaint alleged that the expenses incurred in connection with the Chicago trip were "qualified campaign expenses," which Reagan-Bush '84 must pay for and report. Although notified of the complaint, Reagan-Bush '84 failed to report the trip's expenses. Instead, it filed a memorandum of law on October 29, 1984, in opposition to plaintiff's administrative complaint. On December 24, 1984, the Commission's Office of General Counsel, despite defendant's response, recommended that the Commission find "reason to believe" that Reagan-Bush '84 and its treasurer violated 2 U.S.C. § 434(b) (4) and 11 C.F.R. § 9003.1 and § 9004.7 in failing to report the trip's expenses.

 The Commission chose not to follow the General Counsel's recommendation. On January 15, 1985 it voted four to two to find no reason to believe a violation had occurred, and it dismissed the complaint. The Commission did not issue a statement of reasons to accompany this order.

 Common Cause then brought suit in this court on March 22, 1985. Plaintiff alleged that the Commission acted "contrary to law" when it dismissed Common Cause's administrative complaint. On October 23, 1985, we denied the Commission's motion to dismiss for lack of subject matter jurisdiction. *fn1" In its present motion for summary judgment, Common Cause seeks both a declaration that the Commission acted arbitrarily, capriciously and contrary to law and an order mandating the Commission to act on the allegations in the complaint.

 Discussion

 It is appropriate at the outset to establish the framework for our consideration of the issues presented. First, plaintiff's petition allows only limited review by this court. Under 2 U.S.C. § 437g(a) (8), any aggrieved party may judicially challenge an order of the Federal Election Commission dismissing that party's administrative complaint. The court may declare that the Commission's dismissal is "contrary to law" and direct the Commission to conform with that declaration. § 437g (a) (8) (C). As both parties agree, the standard of review under this provision parallels that under the Administrative Procedure Act, 5 U.S.C. § 706(2) (A). In other words, our task is limited to determining whether the Commission's action was arbitrary, capricious, an abuse of discretion or otherwise contrary to law. Def. Memo. in Oppos. to Pl. Mot. and in Support of Def. Mot. (Def. Memo.) at 8-9; Pl. Oppos. at 2.


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