Combat Veterans for Congress v. FEC , 795 F.3d 151 ( 2015 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 5, 2015 Decided July 28, 2015
No. 13-5358
COMBAT VETERANS FOR CONGRESS POLITICAL ACTION
COMMITTEE AND DAVID H. WIGGS, TREASURER,
APPELLANTS
v.
FEDERAL ELECTION COMMISSION,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:11-cv-02168)
Paul D. Kamenar argued the cause for appellants. With
him on the briefs was Dan Backer.
Harry J. Summers, Assistant General Counsel, Federal
Election Commission, argued the cause for appellee. With
him on the brief were Kevin A. Deeley, Acting Associate
General Counsel, and Robert W. Bonham III, Senior Attorney.
Before: HENDERSON, PILLARD and WILKINS, Circuit
Judges.
Opinion for the Court filed by Circuit Judge PILLARD.
2
PILLARD, Circuit Judge: The basic facts are few and not
in dispute. The Federal Election Commission in October of
2011 imposed an $8,690 fine on the Combat Veterans for
Congress Political Action Committee and its treasurer, David
Wiggs, in his official capacity. Combat Veterans incurred the
fine for failing to meet three required reporting deadlines
under the Federal Election Campaign Act. Combat Veterans
sued the Commission, contesting the fine and charging that
the Commission’s procedural errors deprived it of the power
to act.
Only one of Combat Veterans’ claims gives us pause. It
emerged during litigation that the Commission’s voting
procedures may contravene the Campaign Act. The
Commission must secure “an affirmative vote of” four of its
six Commissioners to initiate an enforcement action against a
person who misses a filing deadline under the Act. 52 U.S.C.
§ 30109(a)(2). In polling its Commissioners to learn how
they vote on an enforcement action, the Commission currently
uses a voting procedure that counts as “affirmative votes”
ballots that it distributes to the Commissioners but that
Commissioners do not mark and return. There is a question
whether it is lawful for the Commission to treat unmarked,
unreturned ballots as affirmative votes.
Disposition of this case does not, however, require that
we resolve the precise meaning of “affirmative votes” under
the statute, and, in particular, whether the Commissioners’
silent acquiescence may be treated as such votes. Combat
Veterans has failed to show that the Commission’s use of its
allegedly flawed voting procedure caused it any prejudice.
The challenged votes did not result in an investigation of
Combat Veterans because the filings’ lateness was readily
apparent from information already in the Commission’s
possession. Moreover, the Commission’s ultimate liability
3
determinations on the late filing charges were made by
unanimous tally votes on marked ballots. Because we
conclude that the Commission’s use of its voting procedure
was harmless even if it was in error, we affirm the decision of
the district court.
I.
A.
The Federal Election Commission administers the
Federal Election Campaign Act, the statute that regulates
campaign fundraising and financing for federal elections. See
52 U.S.C. §§ 30101 et seq.1 The Campaign Act requires that
political committees file periodic reports detailing their
receipts and disbursements. Id. § 30104(a)-(b). The Federal
Election Commission is authorized to fine political
committees that fail to meet the Act’s reporting deadlines. Id.
§ 30109(a)(5)(A)-(B).
Deadlines are not all that the Commission superintends,
however. The Commission’s mandate is broad and its
authority considerable. See id. § 30107. Substantively, the
Act charges the Commission to enforce laws governing
required public disclosures of campaign finance information,
as well as limits on contributions to, and public funding of,
federal election campaigns. As a procedural matter, the Act
authorizes the Commission to conduct investigations,
authorize subpoenas, administer oaths, receive evidence, and
initiate civil actions. See id. Such an independent
1
Until recently, the Federal Election Campaign Act was codified
at 2 U.S.C. §§ 431-457. The Act has since been recodified and
renumbered. See 52 U.S.C. §§ 30101-46. In this opinion, we cite
to the current codification.
4
Commission holds potentially enormous power. It must
decide “issues charged with the dynamics of party politics,
often under the pressure of an impending election.” FEC v.
Democratic Senatorial Campaign Comm., 454 U.S. 27, 37
(1981).
Congress sought to limit the Commission’s powers
through two safeguards. First, Congress tempered the
Commission’s powers through structure. See H.R. Rep. No.
94-917, at 3 (1976); see also Scott E. Thomas & Jeffrey H.
Bowman, Obstacles to Effective Enforcement of the Federal
Election Campaign Act, 52 Admin. L. Rev. 575, 590-93
(2000). Congress designed the Commission to ensure that
every important action it takes is bipartisan. See Democratic
Senatorial Campaign Comm., 454 U.S. at 37; Common Cause
v. FEC, 842 F.2d 436, 449 n.32 (D.C. Cir. 1988). The
Commission is comprised of six Commissioners. 52 U.S.C. §
30106(a)(1); see FEC v. NRA Political Victory Fund, 6 F.3d
821, 826-28 (D.C. Cir. 1993) (holding unconstitutional
statutory provision permitting two congressional officers to
serve as ex-officio members). Of the six Commissioners,
“[n]o more than [three] . . . may be affiliated with the same
political party.” 52 U.S.C. § 30106(a)(1) Many Commission
actions require “the affirmative vote of 4 members of the
Commission.” See id. § 30106(c) (cross-citing 52 U.S.C. §§
30107(a)(6), (7), (8), (9)). No Commissioner may “delegate
to any person his or her vote or any decisionmaking authority
or duty.” Id. The Commission cannot sub-delegate its central
powers to committees of its members. See id. The four-
affirmative-vote, non-delegation, and bipartisanship
requirements reduce the risk that the Commission will abuse
its powers. As the Committee Report accompanying the
creation of the four-vote language explains: “[t]he four-vote
requirement serves to assure that enforcement actions, as to
which Congress has no continuing voice, will be the product
5
of a mature and considered judgment.” H.R. Rep. No. 94-
917, at 3 (1976).
Congress further tempered the Commission’s power by
requiring a series of steps before the Commission takes
enforcement action. See 52 U.S.C. § 30109(a); see also 11
C.F.R. § 111.3-111.24 (enforcement process regulations);
Thomas & Bowman, supra at 584-90. Before it may act, the
Commission must find “reason to believe” that a violation of
the Act has occurred. 52 U.S.C. § 30109(a)(2). Following
such a determination, the Commission’s General Counsel may
then conduct an investigation. Id. If the outcome of the
investigation warrants it, the Commission may then proceed
to the next stage of the enforcement process by finding
“probable cause to believe” a violation has occurred. Id. §
30109(a)(1)-(4). Following a finding of probable cause, the
Commission “shall attempt” to resolve a matter by “informal
methods of conference, conciliation, and persuasion, and . . .
enter into a conciliation agreement” with the respondent
involved. Id. § 30109(a)(4)(A)(i). If informal measures are
ineffective, the Commission may vote to file a de novo civil
suit in federal district court to enforce the Campaign Act. Id.
§ 30109(a)(6). Notably, each of those three procedural
stages—(1) a reason to believe determination, (2) a probable
cause determination, and (3) the filing of a civil suit—requires
“an affirmative vote of 4 of [the Commission’s] members”
before the Commission may proceed. Id. §§ 30109(a)(2),
30109(a)(4)(A)(i), 30109(a)(6).
B.
In 1999, Congress amended the Campaign Act to create a
special, streamlined set of procedures for efficiently imposing
fines on covered persons for routine filing and record-keeping
violations, such as the late filings at issue here. See id. §
6
30109(a)(4)(C); 145 Cong. Rec. 16,260 (July 15, 1999)
(statement of Rep. Maloney) (noting that the bill “contains
several provisions that will help the agency operate more
efficiently,” by mandating some electronic filing and creating
“a system of ‘administrative fines’—much like traffic tickets,
which will let the agency deal with minor violations of the
law in an expeditious manner”); 145 Cong. Rec. 21,725 (Sept.
15, 1999) (statement of Rep. Maloney). With those
amendments, Congress sought to make it easier for the
Commission to enforce the Campaign Act’s deadlines. As the
Committee Report accompanying the amendments to the Act
explains, the Administrative Fines Program “create[d] a
simplified procedure for the FEC to administratively handle
reporting violations.” H.R. Rep. No. 106-295, at 11 (1999).
An administrative fines proceeding under the amended
Act thus involves fewer hurdles than other Commission
enforcement proceedings. See 52 U.S.C. § 30109(a)(4)(C).
To impose an administrative fine, the Commission makes a
reason-to-believe determination just as it would in any
potential enforcement proceeding. See id. § 30109(a)(2). The
Commission then furnishes a person with “written notice and
an opportunity to be heard before the Commission.” Id. §
30109(a)(4)(C)(ii). Once that notice and opportunity has been
afforded, however, the streamlined administrative fines
authority permits the Commission to find—without making a
probable cause determination and without filing an action in
district court—that the person violated the Act and require
that she or he “pay a civil money penalty.” Id. §§
30109(a)(4)(C)(i)(I), (II). In administrative fines proceedings,
Congress shifted the burden of seeking judicial review in
federal district court to the party against whom the
Commission makes an adverse determination. Id.
§ 30109(a)(4)(C)(iii).
7
C.
The Commission uses a twenty-four-hour, no-objection
procedure to make reason-to-believe determinations in
administrative fines cases. The no-objection vote is one of
two “circulation vote” procedures that the Commission set
forth in Directive 52, FEC Directive 52 (Sept. 10, 2008),
http://www.fec.gov/directives/directive_52.pdf, pursuant to its
statutory authority to promulgate “rules for the conduct of its
activities,” 52 U.S.C. § 30106(e). The other procedure is a
tally vote. FEC Directive 52, supra at 2. The no-objection
and tally vote procedures enable the Commission to conduct
votes when the six Commissioners are not physically present
together at a meeting.
A twenty-four-hour “no objection” vote refers to the
practice of circulating paper ballots to each Commissioner’s
office, receiving and counting marked ballots, and counting as
“yes” votes any ballots not marked and returned within
twenty-four hours. Id. at 3. A tally vote, by contrast, refers to
the practice of circulating paper ballots, receiving and
counting marked ballots, and deeming ballots not returned by
the deadline (within a week) to be abstentions, i.e., to not
count as “yes” or “affirmative” votes. Id. at 2. In both cases,
the Commission Secretary certifies the results of balloting
promptly after the voting deadline has passed. Any single
Commissioner’s objection to making a particular decision by
no-objection vote, however, has the effect of placing the
matter on the agenda for an in-person vote at a
Commissioners’ meeting. Id. at 3. If, in an administrative
fines proceeding, a respondent challenges a reason-to-believe
determination, the Commission will use a tally vote to make
the final determination as to whether to impose a fine. Id.
8
D.
In late 2010, the Combat Veterans for Congress PAC
missed three deadlines for filing election reports under the
Campaign Act. Over the next four months, pursuant to staff
recommendations, the Commission used its no-objection
procedure to make three separate determinations that there
was “reason to believe” that Combat Veterans had missed a
reporting deadline. In the vote regarding the first late-filed
report, only three Commissioners marked and returned their
ballots; in the second, only two; and in the third, again, only
three Commissioners returned marked ballots. In each
instance, the Commission Secretary certified that the
Commission had “[d]ecided by a vote of 6-0.” J.A. 105, 238,
344. The Secretary further certified that, in each case, all six
Commissioners “voted affirmatively for the decision.” J.A.
105, 238, 344.
Combat Veterans challenged each of the Commission’s
reason-to-believe determinations. It admitted that the reports
were filed late, but disclaimed liability because it believed
that Combat Veterans’ former treasurer, Michael Curry, was
solely responsible for missing the deadlines. In October of
2011, the Commission unanimously found that Combat
Veterans and its current treasurer (in his official capacity)
were liable for $8,690 in civil penalties. The Commission
made that unanimous finding by a tally vote of the
Commissioners, after Combat Veterans and its treasurer had
been provided written notice and had taken advantage of their
opportunity to respond.
Combat Veterans petitioned the Commission for
reconsideration, a hearing, and mitigation of the fine, all of
which the Commission denied. Combat Veterans and its
current treasurer filed a timely petition for review in the
9
district court. Combat Veterans for Cong. Political Action
Comm. v. FEC, 983 F. Supp. 2d 1, 9 (D.D.C. 2013). On
cross-motions for summary judgment, the district court
rejected all of Combat Veterans’ claims and granted judgment
to the Commission. Id. at 5, 11-21. This appeal followed.
II.
A.
The Commission’s twenty-four-hour, no-objection voting
procedure must comport with the statutory requirement that
the Commission, when it takes action to investigate reports of
suspected violations, do so only “by an affirmative vote of 4
of its members.” 52 U.S.C. § 30109(a)(2). That requirement
is a cornerstone of the Commission’s governance structure.
See id. §§ 30106(c), 30109(a)(2), 30109(a)(4)(A)(i),
30109(a)(6). The four-affirmative-vote requirement prevents
partisan misuse of the Commission’s powers and safeguards
individuals from erroneous deprivations of rights.
This matter, which the Commission pursued through its
streamlined Administrative Fines Program, involved a
straightforward determination that Combat Veterans’ filings
were late. The Commission did not exercise here any of the
important powers—including the powers to make “field
investigation[s] or audit[s],” issue interrogatories, conduct
depositions, and issue subpoenas—that it may bring to bear in
more complex cases once it has found a reason to believe a
statutory violation has occurred. See id. §§ 30106(c),
30109(a)(2); see also id. § 30107(a)(1)-(4). The statutory
provision that governs voting in the streamlined
Administrative Fines Program, however, equally applies to
other, more serious and sensitive Commission enforcement
actions. See id. § 30109(a)(2). At least in theory, then, the
Commission’s interpretation of section 30109(a)(2) to permit
10
it to use no-objection voting might equally authorize the
Commission to initiate investigations in complex, sensitive, or
major cases by no-objection voting. In those cases, any
voting inadequacy could have significant effects because the
reason-to-believe determination opens the door to the
Commission’s use of powerful and intrusive investigative
techniques.
Petitioners contend that, even in this simple case, no-
objection voting violates the statutory command that reason-
to-believe determinations be decided by an “affirmative vote”
of four Commissioners. They read the statutory reference to
“affirmative” voting to mean voting by positively taking
action, i.e., doing more than acquiescing by doing nothing.
Yet, they observe, the no-objection voting the Commission
uses in its Administrative Fines Program fails to require that
the Commissioners mark ballots, nor even that
Commissioners’ offices keep any record of Commissioners’
votes on such matters.
Petitioners claim that no-objection voting creates the
unacceptable risks (a) that a Commissioner’s view might be
recorded mistakenly, or (b) that the Commissioner might not
even develop a view before the deadline. A Commissioner
could be on vacation, out of the country, in a hospital bed, or
her email could be malfunctioning, or simply ignored and
unopened. If a Commissioner failed to learn of a ballot, her
silence could inadvertently cast “yes” votes even on issues
she opposes. Petitioners note that Congress’s purpose of
requiring four affirmative votes was to “assure that
enforcement actions, as to which Congress has no continuing
voice, will be the product of a mature and considered
judgment.” H.R. Rep. No. 94-917, at 3 (1976). The no-
objection procedure, however, arguably makes it easier for
Commissioners to give their blanket assent despite Congress’s
11
intention that each matter receive individualized
consideration.
The question whether no-objection voting complies with
the statutory requirement to act by “four affirmative votes”
may be a substantial one but, for the reasons that follow, we
need not decide it in this case.
B.
Even assuming the Commission’s use of its no-objection
procedure was in error, Combat Veterans has failed to show
any likelihood that any material Commission action or
decision would have been different had a tally voting
procedure been used for the reason-to-believe decisions. We
therefore hold that any error was harmless.
“In administrative law, as in federal civil and criminal
litigation, there is a harmless error rule.” Nat’l Ass’n of Home
Builders v. Defenders of Wildlife, 551 U.S. 644, 659-60
(2007) (quoting PDK Labs, Inc. v. DEA, 362 F.3d 786, 799
(D.C. Cir. 2004)). That rule “requires the party asserting
error to demonstrate prejudice from the error.” First Am.
Disc. Corp. v. CFTC, 222 F.3d 1008, 1015 (D.C. Cir. 2000)
(internal quotation marks omitted). The party claiming injury
bears the burden of demonstrating harm; the agency need not
prove its absence. Jicarilla Apache Nation v. U.S. Dep’t of
Interior, 613 F.3d 1112, 1121 (D.C. Cir. 2010); see Shinseki
v. Sanders, 556 U.S. 396, 409-10 (2009). In discussing
harmless error in the context of the Administrative Procedure
Act, the Supreme Court has counseled:
[T]he factors that inform a reviewing court’s
“harmless-error” determination are various,
potentially involving, among other case-specific
factors, an estimation of the likelihood that the result
12
would have been different, an awareness of what
body (jury, lower court, administrative agency) has
the authority to reach that result, a consideration of
the error’s likely effects on the perceived fairness,
integrity, or public reputation of judicial proceedings,
and a hesitancy to generalize too broadly about
particular kinds of errors when the specific factual
circumstances in which the error arises may well
make all the difference.
Shinseki, 556 U.S. at 411-12.
The Commission’s use of its twenty-four-hour, no-
objection voting procedure was harmless for three reasons.
First, even if a reason-to-believe determination had been
erroneously made, Combat Veterans has not explained how it
was prejudiced. A reason-to-believe determination, without
more, is a mere allegation of wrongdoing. All the
Commission did as a result of that step was, in each case, to
notify Combat Veterans of the allegations against it and give
it an opportunity to respond. The Commission did not use
any of its reason-to-believe determinations as grounds to
subpoena, depose, or otherwise investigate Combat Veterans.
Combat Veterans responded to the Commission’s allegations
by admitting that the reports were filed late, advancing
arguments as to why it nonetheless should not be held liable,
and requesting reductions in the proposed fine. Combat
Veterans has failed to carry its burden to show how an
erroneous reason-to-believe determination in this case, if
indeed an error occurred, caused it any prejudice.
Second, there is no hint of any suggestion that the
Commission would have made any different determination
even if it had used a tally voting procedure at the reason-to-
believe stage. The Commission staff recommended that the
13
Commissioners find reason to believe the deadlines had been
missed, and the dates on the reports showed they had in fact
been filed late. No evidence has been introduced to show that
there was any irregularity in the votes undertaken by the
Commission in this case. Combat Veterans’ sole assignment
of error is the Commission’s use of the no-objection
procedure itself.
Third, under our precedent, the Commission’s ratification
of a defect in a reason-to-believe finding by a subsequent,
valid tally vote is sufficient to remedy the earlier error. In
Federal Election Commission v. Legi-Tech, Inc., we
considered a case involving three separate votes—to find
reason to believe, to find probable cause, and to institute an
enforcement action against a party—that the Commission
took while it was unconstitutionally composed. 75 F.3d 704,
705-06 (D.C. Cir. 1996). After the Commission voted but
before the Legi-Tech litigation was over, the decision of
another case in our court held unconstitutional that portion of
the Campaign Act that included on the Commission two ex-
officio congressional officers not appointed by the President,
and accordingly voided enforcement actions the Commission
had initiated while it was unlawfully constituted. See NRA
Political Victory Fund, 6 F.3d at 828.
During the pendency of Legi-Tech, the Commission
responded to NRA Political Victory Fund by voting to
reconstitute itself as a six-member body and exclude the ex-
officio, non-voting members from all proceedings, thus
correcting the constitutional defect in its composition. See
Legi-Tech, Inc., 75 F.3d at 706. The recomposed
Commission then voted, inter alia, to ratify the prior votes
Legi-Tech had challenged. Id. We held that the
Commission’s ratification remedied the constitutional
infirmity in the prior votes—even though we were willing to
14
assume that the Commission’s unconstitutional structure had
prejudiced Legi-Tech. Id. at 708-09.
This case is far easier than Legi-Tech. The purported
infirmity in the Commission’s procedure here was statutory
rather than constitutional. And, as noted above, there was no
prejudice to Combat Veterans. The Commission was
preparing a civil suit for damages against Legi-Tech, whereas
it merely assessed an administrative fine against Combat
Veterans. None of the potentially intrusive investigative
powers that a reason-to-believe determination generally
authorizes were deployed against Combat Veterans, where
prima facie liability for the fines followed from the fact that
the reports were filed later than they were due.
We are confident both that the reason-to-believe
determinations in this case caused Combat Veterans no
prejudice and that the same determinations would have been
made even if the Commission had taken a tally vote. In any
event, any prejudice Combat Veterans might have suffered
was rendered harmless by the Commission’s subsequent
ratification of its reason-to-believe finding with a concededly
valid tally vote. We therefore conclude that the
Commission’s use of its allegedly flawed procedure was
harmless.
C.
Finally, because a dispositive number of the ballots the
individual Commissioners submitted to ratify the
Commission’s ultimate determination to fine Combat
Veterans were signed by a staff member acting on the
Commissioner’s instructions, we must address whether such a
ballot is validly cast. We hold that it is. The practice is
reasonable, not proscribed by statute, and rooted in
longstanding principles of agency. See, e.g., Nisi prius coram
15
Holt, 12 Mod. Rep. 564, 564 (1701) (Holt, C.J.) (“[I]f a Man
has a Bill of Exchange, he may authorize another to indorse
his Name upon it by Parol; and when that is done, it is the
same as if he had done it himself.”); Joseph
Story, Commentaries on the Law of Agency § 50, 56-57 (4th
ed. 1851) (explaining that agents may be verbally authorized
to sign unsealed documents on behalf of principals).2
III.
Combat Veterans’ other challenges to the Commission’s
fines require little discussion. In addition to its voting
procedure claims, Combat Veterans argued to the
Commission, the district court, and this court that its former
treasurer, Michael Curry, made it impossible for Combat
Veterans to file its reports on time. In the days immediately
preceding mandatory deadlines for several filings under the
Campaign Act, Curry suddenly, and for reasons never
clarified, left his post as Combat Veterans’ treasurer. With
Curry went all of the Committee’s institutional knowledge:
passwords, awareness of the contents of its records, bank
deposit slips, bank statements, donor lists, and the expertise to
submit reports to the Commission electronically. Combat
2
Combat Veterans makes additional, technical objections to the
Commission’s voting procedures, including (1) that Directive 52 is
void because, Combat Veterans assert, it was promulgated in secret
in violation of the Sunshine Act, and that many of the
Commissioners’ votes are invalid because (2) the ballots were not
tendered in strict compliance with Directive 52, or (3) were
received after a ballot deadline but counted anyway. The Court’s
resolution of this case on harmless error grounds, coupled with the
fact that—even accepting Combat Veterans’ technical objections—
at least four of the Commission’s ballots in its final tally vote were
valid, means that those claims need not be addressed.
16
Veterans’ view is that Curry’s “reckless and willful
misconduct”—his “malfeasance”—was akin to a natural
disaster, impossible for the organization to have anticipated,
and impossible to rectify in time to meet the relevant statutory
deadlines. Appellant Br. 48-55. Combat Veterans maintains
that both law and reason dictate that the Commission should
have held Curry, and only Curry, liable for the missed
deadlines and, short of that, should have mitigated the fine in
light of Combat Veterans’ alleged use of its best efforts to
overcome Curry’s obstruction.
Denial of Combat Veteran’s claims requires no
explanation beyond what the district court provided. See
Combat Veterans, 983 F. Supp. 2d at 11-18. We affirm for
the reasons given by that court. The district court held, and
we agree, that: (1) the Commission reasonably interpreted the
Campaign Act to permit it to fine both Combat Veterans and
its treasurer in his official capacity for missing filing
deadlines, id., at 11-14; (2) disagreement with a Commission
decision not to take action against someone else is not
grounds for a petition seeking reversal of an administrative
fine against oneself, id. at 14-15; (3) the Commission’s
decision not to mitigate penalties against Combat Veterans
because of Curry’s misconduct was not arbitrary and
capricious, id. at 16-17; and (4) the Commission’s regulation
setting forth the circumstances in which it will mitigate
damages is not arbitrary or capricious or inconsistent with the
Campaign Act, id. at 17-18.
***
For the foregoing reasons, we affirm the decision of the
district court.
So ordered.