Herron for Congress v. Federal Election Commission

903 F. Supp. 2d 9, 2012 WL 5451811, 2012 U.S. Dist. LEXIS 160188
CourtDistrict Court, District of Columbia
DecidedNovember 8, 2012
DocketCivil Action No. 2011-1466
StatusPublished
Cited by11 cases

This text of 903 F. Supp. 2d 9 (Herron for Congress v. Federal Election Commission) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Herron for Congress v. Federal Election Commission, 903 F. Supp. 2d 9, 2012 WL 5451811, 2012 U.S. Dist. LEXIS 160188 (D.D.C. 2012).

Opinion

MEMORANDUM OPINION

Denying the Plaintiff’s Motion for Summary Judgment; Granting the Federal Election Commission’s Cross-Motion for Summary Judgment

RUDOLPH CONTRERAS, District Judge.

I. INTRODUCTION

Two years ago, Roy Herron ran an unsuccessful campaign for Congress. Herron now alleges that his opponent violated federal law by failing to make certain disclosures in his filings with the Federal Election Commission (“FEC”). Herron 1 filed an administrative complaint with the FEC, which investigated the matter but decided not to issue any penalties. Herron then filed suit in this court, alleging that the FEC acted arbitrarily, capriciously, and contrary to law. Because the court lacks jurisdiction to hear Herron’s claim, the court will deny Herron’s motion for summary judgment and grant the FEC’s cross-motion for summary judgment.

II. BACKGROUND

A. Legal Framework

1. The Federal Election Campaign Act’s Financial Disclosure Requirements

The Federal Election Campaign Act (“FECA”) requires congressional candidates’ campaign committees to file regular financial disclosure reports in election years. 2 U.S.C. § 434(a)(2). These reports must include the identity of each “person who makes a loan to the reporting committee during the reporting period, together with the identification of any en *12 dorser or guarantor of such loan, and date and amount or value of such loan.” Id. § 434(b)(3)(E), Thus, if a candidate obtains a bank loan in connection with the candidate’s campaign, the candidate’s campaign committee must disclose that fact in its financial disclosure forms. See 11 C.F.R. § 104.3(d)(4). The committee must also report the date, amount, and interest rate of the loan, as well as the types and value of collateral or other sources of repayment used to secure the loan. Id. § 104.3(d)(1).

2. The Federal Election Campaign Act’s Ban on Corporate Contributions

The FECA also prohibits corporations and national banks from making financial contributions in connection with any federal campaign. 2 U.S.C. § 441b(a). However, a political committee can obtain a bank loan without violating this rule, provided that the loan complies with applicable banking laws and that the loan was issued in the regular course of business. 11 C.F.R. § 100.82(a). 2

3. Administrative Complaints and Judicial Review

Any person who believes a violation of the FECA has occurred may file an administrative complaint with the FEC. 2 U.S.C. § 437g(a)(1). After receiving the complaint, the FEC may investigate the matter and determine the appropriate course of action. See generally id. § 437g(a)(2)-(6). If the FEC determines that no violation occurred, it may dismiss the complaint. See id. § 437g(a)(8)(A); Hagelin v. FEC, 411 F.3d 237, 239 (D.C.Cir.2005). A party whose complaint has been dismissed may then file a civil action in this court to challenge the FEC’s decision. 2 U.S.C. § 437g(a)(8)(A). But “[h]aving the right to file an administrative complaint with the FEC does not necessarily give Plaintiffs standing to seek judicial review ... in this Court.” Citizens for Responsibility & Ethics in Washington v. FEC, 799 F.Supp.2d 78, 85 (D.D.C.2011). As a threshold matter, therefore, Herron must establish that this court has jurisdiction to hear his claim. See id.

B. Factual Allegations and Procedural Background

In 2010, Roy Herron was the Democratic Party’s candidate in the race to represent Tennessee’s 8th congressional district in the U.S. House of Representatives. His Republican opponent was Steven Fincher. On July 23, 2010, Fincher’s campaign committee filed a financial disclosure report indicating that it had received $250,000 from Fincher’s personal funds. Pl.’s Mot. at 8.

In September 2010, Herron filed an administrative complaint with the FEC. AR 1-18. The complaint alleged that Finch-er’s campaign misreported the source of the funds. Herron alleged that the funds were actually provided by Gates Bank & Trust Company (“Gates Bank”), a Tennessee bank. Herron also alleged that the Gates Bank loan violated various banking regulations. Herron thus alleged two potential FECA violations: (1) the Fincher campaign’s failure to file accurate financial disclosures, and (2) the Fincher campaign’s receipt of an unlawful corporate contribution (in the form of an irregular bank loan).

On October 6, 2010, the FEC mailed a copy of Herron’s administrative complaint *13 to the Fincher campaign; the Fincher campaign did not file its response until December 2, 2010 — nearly a month after Fincher won the election. AR 58-81. Fincher also filed an amendment to his earlier financial disclosures. AR 83-110. Fincher acknowledged that his campaign committee failed to accurately report the source of the Gates Bank loan. AR 60. Fincher also explained that the Gates Bank loan was “erroneously” and “unintentionally” reported to have a zero percent interest rate, when the loan actually carried a 6.5% interest rate. AR 60. Finch-er’s campaign updated its disclosures and pointed out that the loan had been repaid in full by November 17, 2010. AR 61, 83-110.

After reviewing the parties’ claims and the available evidence, the FEC’s Office of the General Counsel issued a report summarizing its view of the case. See AR 687-712. The report first recommended that the Commission find that Fincher violated the FECA and FEC regulations by misreporting the source of the loan. AR 687-88. However, the report did not find reason to believe that Fincher’s reporting violations were knowing or willful. AR 692. Although it noted that “the public would have been better served by more timely amendments,” the report concluded that there was no evidence to suggest that Fincher’s amended disclosures were intentionally delayed. Id. Finally, the report concluded that the Gates Bank loan was not an illegal corporate contribution because the loan complied with applicable banking laws and regulations. AR 693 (citing 11 C.F.R. § 100.82(a)). The Commissioners then voted to dismiss the complaint. 3

Herron alleges that the FEC’s decision has clouded his political future.

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Bluebook (online)
903 F. Supp. 2d 9, 2012 WL 5451811, 2012 U.S. Dist. LEXIS 160188, Counsel Stack Legal Research, https://law.counselstack.com/opinion/herron-for-congress-v-federal-election-commission-dcd-2012.