This file contains archived live captions of the open meeting of the Federal Election Commission held on April 14, 2016.  This file is not a transcript of the meeting, and it has not been reviewed for accuracy or approved by the Federal Election Commission.

Good morning. The open meeting for the Federal Election Commission for Thursday, April 14, 2016, is now in order. First item of business is we have some late submitted documents that we need a vote on. Mr. Vice Chairman?
Mr. Chairman I move to suspend the rules in order to consider the following late submitted documents. Agenda 16-16-A. Draft A of advisory opinion 2091601 epic Inc. and Agenda document 14-18-A draft A of advisory opinion 2016-02, Enable Midstream Services, LLC.
Is is there any discussion on the Motion? If none all those in favor indicate by saying aye.
Aye.
Any opposed? Madam Secretary.
Thank you very much and just for clarification the second one is 16-17-A.
That's correct.
Thank you.
So the vote is unanimous and we'll move on to the first Agenda item the correction and approval of minutes for the minutes for the meeting on February 11, the minutes for the meeting on February 25, 2016P Mr. Vice Chairman.
I move approval of the Agenda, 2016-01 epic Inc. Wait a minute.
VICE CHAIRMAN WALTHER: I move approval of Agenda Document Number 16-08-A, and Agenda document 16-09-A.
Is there any discussion on that Motion? If none all those in favor indicate by saying aye.
Aye.
Any opposed? Madam Secretary that Motion passes unanimously. The next item number II which is consideration of draft advisory opinion 2016-01, Ethiq, Inc. which is set forth in Agenda Document Number 16-16-A. We have Joanna Waldstreicher from the Office of General Counsel to give a presentation. We also, I don't know, we have counsel for requester who is here. I don't know if you wish to join us at the table to answer any questions, I don't know if we may have some but if you do so and would like to join us at the witness table, welcome to do so now. Already behave Ms. Waldstreicher give the commission I'd like to recognize Commissioner Ravel for just a moment to say something about this request.
COMMISSIONER RAVEL: Thank you. I want to extend a particularly warm welcome to Nick Sanders who is one of the counsel for the requester hood today. Nick, this is making me feel really old. Nick was my very first law student intern when I arrived at the FEC in 2013 and he's now appearing before us as a lawyer so it's great to see you back here as a lawyer, with a beard. [ Laughter ] So making you seem much more alike I'm sure but anyway it's a momentous occasion.
Thank you, it's great to be back.
Ms. Waldstreicher if you'd like to proceed.
Thank you, Chairman Petersen. Good morning commissioner Agenda document 16-16-A is a drafted response to advisory opinion request submitted by Ethiq Inc. A for profit corporation not owned or controlled by any candidate, political party or political committee plans to distribute political commentary to users of its website. They'll use a proprietary algorithm to tailor the content to each user based on information about his or her presence preferences and opinions. Planned news and distribution will qualify for media exemptions from the definitions of contribution and expenditure. Ethiq's planned activity will call by because it's a press entity and will be acting in its legitimate press function in distributing news and commentary. We did not receive any comments on the request or on the draft and I'm happy to answer any questions.
CHAIRMAN PETERSEN: Are there any questions of Ms. Waldstreicher, questions for counsel of Ethiq or questions about the request? Commissioner Goodman?
COMMISSIONER GOODMAN: Because we often do this, to give the requesters who came long distance, to provide any reactions to the draft before we consider a vote on it.
I think the draft as presented is complete. It's great.
CHAIRMAN PETERSEN: All right.
And I'm Bradley hertz of the Sutton law firm. Thank you for having us here, and this is our client, Darrin Bates, the President and CEO of Ethiq.
And thank you from myself for allowing us to be here today.
CHAIRMAN PETERSEN: We appreciate this request and for appearing before us this morning. Is there any other comment or do we have a Motion? Mr. Vice Chairman?
VICE CHAIRMAN WALTHER: I have a question, on the issue of being available to the general public I'm not sure I fully understand what you'll be seeing every day. Will the general public be seeing the same or having the same equal access to everything every day? Or is it just if you fit into a particular algorithm, you get Issue A and if you fit into another algorithm you get issue B. It wasn't clear to me. When you fill out a questionnaire I assume you end up in one slot for certain things and somebody else may be in slot B and you find yourself out because of three or four questions you're in algorithm 127. What do you get every day?
Generally they receive the same content regardless of how they answer previous questions. In effect because we're covering news and disseminating news on various topics whether it be lets say for example domestic and international politics. If we see a user has a strong interest in international politics, but is not, they're interest is not as piqued when it comes to let's say ethic politics we may tailor content to that user. Much like "The New York Times" for example when it's tracking how you're reading articles it might tailor content that's more specific to what they think you're interested in reading but generally the content that users will receive on Ethiq is standard across the board.
VICE CHAIRMAN WALTHER: So there's a piece of Ethiq's publication or dissemination every day that's exactly the same? And then there's a part that's modified based upon your questionnaire?
That's correct.
VICE CHAIRMAN WALTHER: Is there a chance for somebody who fills out a questionnairend it looks like you have a favoritism towards one particular issue say Issue X but you want to get the information on Issue Y that opposes that position so you want to get both sides of the question, how do you get that done with Ethiq? Do you have to let them know you want to fit into both algorithms? How does that work?
That's a good question. It's very important to me that Ethiq from its inception is a non-part zon, agnostic peculiarity phone. All content will be available to all users at all time. The engine that powers Ethiq might tailor specific content but there will always be an option for users to your point to not only see issue X if that's what they they have a propensity to read and see issue Y as well. We'll never constrain content to users.
VICE CHAIRMAN WALTHER: How does that work though? Say I click on to it and I want to look at some particular issue. There's a lot of issues I could bring up let's talk about Issue A. Then you want to also look at Issue B. Is there a way to click over to it and then get, this is the whole story, this is the rest of the story?
That's correct.
VICE CHAIRMAN WALTHER: That applies to every issue.
That's right. I'm a principled guy and my company has to follow those principles as well. To me it would be unfair to the user if they were only shown issue X and not shown the alternative, Issue Y.
VICE CHAIRMAN WALTHER: Thanks very much. That clears that up.
CHAIRMAN PETERSEN: Any further questions or comments? If not do we have a Motion?I'll choose Commissioner Weintraub to have the privilege of making a Motion.
Can you get it that out?
COMMISSIONER WEINTRAUB: Thank you, Mr. Chairman. I move approval of Agenda Document Number 16-16-A an advisory opinion in response to the request from Ethiq.
CHAIRMAN PETERSEN: We have a Motion on the table. Any discussion on that Motion in if none all those in favor indicate by saying aye.
Aye.
CHAIRMAN PETERSEN: That Motion passes unanimously.
We were fighting over the opportunity to make the Motion. But I won.
CHAIRMAN PETERSEN: Draft advisory opinion 2016-02 Enable Midstream Services LLC. I believe we have counsel for requester here. Meredith K. Lesher. Please join us at the witness table. Madam Secretary do we have someone calling in as well?
Yes, I believe Mr. Alford are you on the line?
I'm here, good morning.
Thank yo.
CHAIRMAN PETERSEN: We'll begin with Tony Buckley from Office of General Counsel. Please proceed.
Good morning Chairman Petersen. Agenda document 16-17A contains a draft as advisory opinion responding to a request asking whether the separate segregated fund it intends to establish be affiliated with separate segregated funds of Senate point, or OGE energy corporation or both. Enable Midstream Services created as a wholly owned Suns dare of enable midstream partners, created from a joint venture. The Commission considers the number of factors in evaluating the overall relationship between entities to determine whether they are properly considered affiliated. The draft notes of all the factors used to determine whether entities are affiliated only one participation in the governance of enable weighs in favor of affiliation of enable and Senate point energy. With a but this factor does not weigh heavily so draft includes enable SFF will not be related. Three factors weigh in favor of affiliation including the fact that enable and OGE energy have 127 common employees, one common Officer. This factor and the other factors weigh heavily, this factor weighs heavily in favor of finding affiliation. It indicates enable is both financed and maintained by OGE energy an an on going basis. The draft concludes that enables SSF will be offensively crated with OGE energies SSF. The Commission received no comments on the request and one comment on the draft. Thank you and I'll be happy to answer any questions you have.
CHAIRMAN PETERSEN: Thank you for that presentation, Mr. Buckley. Any questions of counsel or for counsel for requester, or are there any comments? Commissioner Goodman?
COMMISSIONER GOODMAN: I'll ask the requester to give us your reaction to the draft that you've seen.
We appreciate all the Commission's work on the draft and the Staff's work on the draft. In talking with Enable yesterday and Mr. Alford can elaborate. We feel like we may not have provided significant clarification on the issue of seconded employees and how those employees are truly employees of OGE in name only. If I could refer, if I could bring Brian, Mr. Alford, into the discussion, I think he would like to say a few words about those seconded employees.
CHAIRMAN PETERSEN: Yes, Mr. Alford, if you could shed a little more light. I know that as I was going through the request and I think several of my colleagues felt the same way that that issue of the 175 employees really, that really is the crux of this issue here, and how we treat those I think really, I think the answer that we provide will turn on how we understand their roles to be in terms of the organization. So any information that you can provide would be very helpful.
Well, thank you, Mr. Chairman. I appreciate first the opportunity to speak with you this morning especially by phone, and the depth of clarity that was provided in this draft opinion. We know that we've got a pretty hefty issue and we appreciate the time to work through it. As it is drafted, it wasn't the outcome that we had hoped for. We were actually looking for no affiliation. Our business is quite different from that of our general partners, and our policy and political interests may sometimes be at odds. But with respect to the seconded employee issue as Meredith mentioned, it's we believe these are really OGE employees in name only, just a -- excuse me -- quick definition of the secunded employee. They were part of the OGE organization prior to the year 2000. In early 2000, OGE stopped providing defined benefit and retiree medical plan to employees. Many of the, all of the 175 secunded employees were part of the organization at that time and most were employed by Ineject, the predecessor organization that was contributed by OGE to form Enable. The day-to-day activities are directed by Enable leadership of the secunded employees and that includes establishing their job description, their job assignments, supervisory activity and the other factors that are involved with executing daily operations. And I think more importantly is that no secunded employee has a reporting relationship with OGE and we feel like we're at -- this would create a separation that I think you all would be looking for on this issue. Just a little bit more clarity, Enable does maintain sole discretion as to each secunded employee's continued employment at Enable. Should a secunded employee's services no longer be needed by Enable, OGE would be notified of the status change and then it would be incumbent upon them to determine at that time whether or not the employee is severed from OGE or offered a position within the company.
CHAIRMAN PETERSEN: Just to clarify, this is Chairman Petersen talking. So in essence Enable decides, they aren't required to maintain these employees at the request of OGE, if they decide they don't need them, then it's up to OGE to determine whether or not they want to basically reabsorb them into OGE?
That's correct.
CHAIRMAN PETERSEN: Or whether or not they may no longer need them, as well.
That's correct.
CHAIRMAN PETERSEN: So Enable doesn't -- from your representation doesn't have any ongoing obligation that they can offset unless they get OGE's permission first.
Let me -- ask that again. I want to make sure I give you the correct answer. If you don't mind.
CHAIRMAN PETERSEN: Sure. That's not a problem. Oh, I just wanted to make sure that it's the case that OGE doesn't have any authority to direct Enable to maintain any of these secunded employees and they could be terminated only if they first got approval from OGE.
No, no, OGE does not retain that authority. The employment status of secunded employees is determined by Enable and should that employee, that secunded employee's services no longer be needed, we would notify OGE of that status change and then it could be incumbent upon OGE to determine the ultimate resolution whether they be severed or offered a position back at OGE but they cannot reach across to Enable to determine any --
CHAIRMAN PETERSEN: Is that, just out of has that situation arose in fact? Have there been decisions made by Enable whether they've determined that secunded employees are no longer needed?
Yes, as a matter of fact, of course being in energy, we did have a downsizing arch of 2015. That downsizing did involve several secunded employees. We notified OGE at that time that we would be eliminating positions of several secunded employees, and then OGE then took the responsibility for managing the severance and the related activities to either reabsorbing those affected individuals or providing that severance. I would add that Enable does reimburse or did reimburse OGE for those costs related to that [ Inaudible ].
CHAIRMAN PETERSEN: Is is there any, I interrupted you while you were speaking, were there some further points you wanted to make with regard to kind of the relationship between OGE and the secunded employees?
There was one additional comment related too Executive Officer of OGE serving as a secunded employee of Enable. I don't, again that comes back to I believe Mayor death's comment that we want to ensure we're providing maximum clarity and understanding to you all on this issue. We do not have an executive OGE Officer that is serving in a secunded role. The one role is a secunded employee, but he does not hold or has he ever held an Executive Officer or other Officer position at OGE. That would particular position would fall into the same dispensation if that position was no longer needed, then Enable would notify OGE and then OGE would then be responsible for severance for reabsorbing that individual back into the OGE organization.
CHAIRMAN PETERSEN: You mentioned at the out outset. I'm going to ask if you could explain again. The arrangement by which this the secunded employees that were, that are now part of Enable, how this came about again? Why is it that we have this relationship? Because as I understand it, those employees are paid by OGE and subsequently reimbursed by Enable so it's Enable that ultimately is paying their salary but there's a little bit of a the money changes hands a couple of times. Explain to, I don't know if I'm the only one up here but maybe others have the same question about how this unique situation arose. Explain a little -- [ Simultaneous Speakers ]
The Enable partnership was formed, you had, OGE had had a potential pension liability associated with.
CHAIRMAN PETERSEN: Could you repeat that again? I couldn't quite understand what you said.
Okay, I'm sorry. Trying to give you a brief history without getting more convoluted, but each of the employee groups from OGE and center point were secunded to the partnership until 12/31/14, at which time all but this group of 175 became employees of Enable midstream. This group of 175 has a defined benefit plan, pension plan, with OGE as well as a retiree medical plan with OGE.And the reason for putting them into this particular group was really I believe two-fold, not being terribly close, I'm giving you I think my view is that first, it helped to preserve a benefit for this group of 175. Many of them are approaching retirement age and preserving that benefit for them over the course of several years again, helps protect them for their long term. The other issue is that it helped prevent a significant pension liability on OGE's behalf at 12/31/14. Does that give you an extra degree of clarity? I don't want to con have lute this anymore than I think we already have.
CHAIRMAN PETERSEN: Those are questions I have right at the moment. Are there any other questions from any other commissioners? Commissioner Weintraub?
COMMISSIONER WEINTRAUB: I apologize if we're kind of treading over the same ground. We're all struggling with this aspect of it. Why do these employees continue to have an ongoing relationship with OGE? Why don't they just move over? Why are they still seconded? Why don't they terminate their relationship with OGE and become employees of Enable?
To terminate that relationship would rob them of their pension, and their retiree medical benefit. Once that transition happens, it actually takes that off the table for them, unless they are retirement eligible. If they're retirement eligible, they could conceivably retire from OGE and join Enable in the capacity that you outlined.
COMMISSIONER WEINTRAUB: At the beginning you said once the transition happens, that that issue gets taken off the table. Could you elaborate on that?
I'm not sure the context but let me just back up and restate that. That to make the transition to leave OGE to become an employee of Enable would potentially take a defined benefit, a pension plan benefit and medical retiree benefit off the table the for that individual or group of individuals making that change.
COMMISSIONER WEINTRAUB: So these are not vested benefits?
No, it's a traditional 80-point plan, if employees have not yet achieved that 80-point threshold then they would lose that benefit. There is I believe a time frame at which that seconded period will end, very likely the end of 2017 but that has not been set definitively.
COMMISSIONER WEINTRAUB: Well, it does sound like -- first of all, I applaud the managers who are trying to protect the pension benefits and other benefits for the employees, but it does make it sound like there's still a pretty strong ongoing relationship between OGE and these employees that are dependent on OGE for their benefits.
Well, they are dependent -- keep in mind that Enable does provide the compensation to OGE to preserve that benefit. So ultimately, it's Enable that is continuing to provide those dollars to OGE to preserve the benefit.
CHAIRMAN PETERSEN: Are there some additional questions? I guess one additional question I wanted to ask is that it sounds like these 175 are somewhat uniquely situated. This isn't a situation where OGE continually rotates in employees into Enable so that there's this continuing kind of block of seconded employees within Enable that the reason why they are, they're kind of uniquely situated here is because of the defined benefit plan and retiree medical benefits that they have with OGE, but as time goes on and as they retire, this is going to phase out at some point in the near future. Am I understanding that correctly?
Yes, Mr. Chairman, that is correct, that the -- that population is locked. It will either stay flat or decline. As a matter of fact, I would venture to guess that that number today is less than 175. We'll continue to see it drop through atimes, attrition, et cetera.
CHAIRMAN PETERSEN: I don't know if you'd have this number close at hand or would even have a close estimate. Do you know how many of these 175 would be close to retirement age?
I don't have that specific number. I would venture that the larger percentage of them are at retirement age or nearing retirement age. I'd be happy to provide that to you.
CHAIRMAN PETERSEN: Commissioner Weintraub?
COMMISSIONER WEINTRAUB: Thank you. One other question, and I apologize if it's -- it's probably in the voluminous material you've given us. But how many employees does does Enable have?
Today we have approximately 1800.
COMMISSIONER WEINTRAUB: I'm sorry, 1800?
Yes, ma'am.
CHAIRMAN PETERSEN: So we're looking at roughly 10% of the work force that are seconded, correct?
Yes, Mr. Chairman.
CHAIRMAN PETERSEN: Okay. Any further questions? I'm just looking at the time frame for considering your request, I believe if I can ask Office of General Counsel --
25th is the due date and the Commission has another meeting on the 28th.
CHAIRMAN PETERSEN: So we don't have another meeting between now and when the 60-day deadline for considering your request expires. I know that the information that you've provided both here and in the written materials and if you wanted to provide any information regarding those who are retirement age, I think that's useful, as well. If you would be amenable and would be willing to extend the deadline so that we could hold this over and consider it on our meeting at the 28th, I think that would be helpful for me. These affiliation cases are oftentimes very fact-intensive, involving complex organizational structures, and then applying to that a regulatory test that is multifactor and doesn't easily lend itself to weighting of factors to determine how on balance we're going to make she's decisions so they often are difficult and do turn on very specific understandings of how an organization is structured and in this case, what is the specific relationship that OGE has with these employees that are now at Enable. So if you would be willing to provide --
I'd be happy to provide extra time. [ Simultaneous Speakers ]
CHAIRMAN PETERSEN: Hold this over and in the meantime provide any information to help us clarify kind of the status of these 175. So Mr. Noti?
Mr. Chairman, if the requester is going to be submitting additional information, there was one thing that Mr. Alford mentioned at the very beginning of his presentation that I think would be of interest to us a little bit more about. I believe he said something to the effect of, Enable and OGE have divergent business interests, and there may be circumstances in which their interests would lead to sort of different activities on the part of the SSFSs. We don't remember seeing that, if it's not, if that's something the requester could provide more information about, that could potentially be of interest.
CHAIRMAN PETERSEN: Mr. Vice Chairman?
VICE CHAIRMAN WALTHER: A question on those employees, 175 or less. Do they have any significant management responsibilities?
The responsibilities range from the senior-most seconded employee is a vice president of communications at Enable, and that will work its way down through the organization to [ Inaudible ] workers so there's a variety of responsibilities across that 175.
VICE CHAIRMAN WALTHER: That's one. What about the rest of them?
The rest of?
VICE CHAIRMAN WALTHER: The other 175 less than one person.
They will have a variety of responsibilities. What we will be happy to provide is a breakdown of what those responsibilities are so that you will have greater transparency into their roles into the organization if that would be helpful.
VICE CHAIRMAN WALTHER: I'd be interested in that, yeah, please.
CHAIRMAN PETERSEN: Are there any other comments or if not, what we'll look forward to whatever additional information you may be willing to provide and we'll pick this up again on April 28th and thank you for providing that extension. Thank you, Mr. Alford, and Ms. Lesher, for your appearances here today.
Mr. Alford: Thank you.
CHAIRMAN PETERSEN: We'll turn next to Agenda item IV which is the consideration of Draft Final Rule and explanation and justification for Technical Amendments to 2015 CFR. We have Eugene Lynch from the Office of General Counsel here to give a presentation. And when you're ready, please proceed.
Thank you, Chairman Petersen and good morning, commissioners. Agenda Document Number 16-12-A and 16-12-B contain proposed technical and conforming changes to the code of Federal regulations. If approved the Federal register can introduce the stick nickel changes to the ECFR within days and to the next yearly addition to the printed CFR. The only difference between the two Agenda documents is a proposed technical change which would clarify that the independent expenditure reporting requirements in 11CFR sections 104.4B1 and B2 for political committees making independent expenditures and 109.10C for persons who are not political committees making $10,000 or more in IEs in a calendar year, apply in any calendar year and not just in an election year. This proposed change is found in Agenda Document Number 16-12-A and is omitted from 16-12-B. Otherwise both documents are identical. Thank you and I'd be happy to answer any questions.
CHAIRMAN PETERSEN: Thank you for your presentation. Do we have any questions or comments on the drafts that we're considering? Commissioner Goodman?
COMMISSIONER GOODMAN: Yes, Mr. Chairman, we have draft before us draft A and draft B. The difference between draft A and draft B are subsections C and G of draft A. And that -- the two sections caused me some concern in Draft A because item C involves edits to 11CFR104.4, and item G involves edits to 11CFR109.10. And they implement what was probably a clearer statute than our regulation. 52 USC300104G. And my starting point with these was never a substantive problem with the change. In fact, I think the change is needed and I agree that the change needs to be made to clarify an issue that has caused confusion not only in the regulated community but also within the agency. There has apparently -- there have apparently been some interpretations given out by this agency to people who have called the agency to ask for clarification, based on this word the calendar year, suggesting that it was only in the election year that this report was due. And so I agree that the statute requires the reporting in, as counsel just advised, in every calendar year. I believe you used the word "any" a calendar year, as opposed to "the" calendar year, which is an election year. So I believe we're all in agreement that the change needs to be made. Really, my concern was the integrity of the process we use, and whether we put this into an exception to notice and comment Rulemaking or whether we treat this purely as a Technical Amendment. Now, we know that changing the word "the" to "a" has profound substantive differences in other contexts. For example political committee status, okay? So merely saying, well, this is merely changing an article from "the" to "a" may overstate the technical aspect of changing the words but probably more fundamentally my concern was when I read, when I pulled out the regulation and I read the change from "the" to "a," I wasn't convinced that it fully resolved the question substantively. I thought, well, rather than -- because the problem didn't necessarily arise from the word "the." The problem arose from a combination of "the year" and the language that came later that said, "up to the 20th day before the election." And it was the combination of those two phrases with the word" the "that suggested you only had to report these aggregate IEs in the election year. So say wasn't convinced that changing just the word from" the "to" a "to solved this ambiguity once and for all so for all those reasons I just thought, the better way to do this would be to change the language more substantively, make it crystal clear and the problem is the more language you add to try to really clarify this issue, the more substantive it starts to look. I appreciate the General Counsel's effort to do this surgically and tray to clarify this with sort of like the old song named -- the TV show name that tune, I can name that tune in one note, to try to change this policy with one article from "the" to "a"." So I don't mean to make a mountain out of a mole hill but I just thought this is probably one of those areas that would benefit from greater clarification, more language, to resolve it. Now, mind you, our agency has given substantive advice, and told people already that given the ambiguity, or given the language of the current reg, there is only a reporting requirement in the election year. So this isn't just a substantive concern that people out there have misinterpreted. Inside the building we've had some substantive ambiguity and problem with this. So when I looked at it, I thought that the broader language would really resolve this. So I would go into 104.4B1, for example, and I would explicate that with language like this -- Political committees shall aggregate their independent expenditures made in each calendar year. In other words, I'm changing the article not from "the" to "a" but to "each" and the presentation we got from counsel just used the article "any" to clarify this. So the presentation we just got doesn't even comport with the word "a" which leaves the ambiguity in my mind so I would say political committees shall aggregate their independent extend tours made in each calendar year to determine their reporting obligation. When a committee spends less than $10,000 on an election in any calendar year up to and including the 20th day before the election they must report those independent expenditures on Schedule E, filed at the time of their regular reports in accordance with 11 CFR. My point is: Let's, if we've got the ambiguity and the agency has contributed to misunderstanding out there, let's fix it the right way. And the more we do, the more it looks like it requires notice and comment Rulemaking. That's all. So I intend to vote against Draft A here today. I will be happy to move Draft B, with an addendum here at the table today to direct Office of General Counsel to Draft an NPRM which I intend to support when it comes back consistent with this type of change. And also, I think the public will benefit from notice and comment Rulemaking, not because there may be substantive disagreements with the change, but so that through a notice and comment we can find out if it does resolve the clarity problem or the ambiguity for everybody. And so it really is a matter of process only. It's not a substantive disagreement so that's my position on why I insisted we proceed with Draft B.
CHAIRMAN PETERSEN: Commissioner Weintraub.
COMMISSIONER WEINTRAUB: Thank you, Mr. Chairman. I think this is really -- this really is making a mountain out of a mole hill. If you wanted to change the word from a or to "each," it's the first I've heard of it here at the table today. I think that also could have been a technical correction.
COMMISSIONER GOODMAN: The language I just read is more elaborate than just the word "each." Those were the new sentences that I read that would add crystal clear clarity to the entire reporting regime. By the way, when you read the statute, and then you read --
COMMISSIONER WEINTRAUB: Would you let me finish before you interrupt?
COMMISSIONER GOODMAN: You mischaracterized what I said so I wanted to clarify at that point.
COMMISSIONER WEINTRAUB: As I said, first we're hearing of it today that that's your concern. The notion that something that has absolutely no possibility of a different substantive interpretation under the statute requires notice and public comment I think is debatable, at best. We're trying to do something simple and straightforward here. It was -- I actually thought up until today that you actually did have a substantive problem with this and that you were trying to encourage people not to report in the election year, so as I said, it would have been I think beneficial to all of us if you had conveyed your concern there. To me, this is a completely straightforward technical change. Happy to support Draft A. If Draft A fails, I would support Draft B as-is in order to resolve the other technical corrections. I'm not sure that I'm prepared to support starting a whole Rulemaking over this issue which again I think is completely technical and indisputable under the statute. It's explained clearly in the E&J. You say people have given out different information. That's not what I heard. I heard the Staff was pretty uniform in their interpretation of how this works under the statute so I think we're creating confusion rather than resolving it.
CHAIRMAN PETERSEN: Commissioner Ravel?
COMMISSIONER RAVEL: Thank you, Mr. Chairman. I'm in agreement with Commissioner Weintraub, and I would say that the interpretation that we have here is truly consistent with the Commission's interpretation of these provisions for at least 10 years, and, yes, apparently there was one occasion that there was some different advice given by the FEC, but however, I'm sure if we went through every single Rule, we would find some employee who said something that might not be exactly what is consistent with the Rule. So that is not sufficient to engage in a Rulemaking, and frankly, when -- it's not just the statute. When we promulgated the regulation, they specifically said in the E&J that the reporting requirement applies to IEs made by political committee at any time and any point in the campaign. So the issue about calendar year or whatever has only to do with the aggregation of the costs of the IEs for the purpose of triggering the reporting obligations, not when it, you know, has to -- have the IE reporting provisions altogether. I think this is just a way of providing clarity to the public, which is what we're hear for, and frankly, if we were to do Draft B, myself agree with Commissioner Weintraub. I would not support a Rulemaking. I think it's more confusing to in public than clarity to the public in this instance, and as you know, I am generally all in favor of having the public weigh in on issues, but, look, this is something that is so petty and we want to encourage our Staff to come before us and bring us things that could streamline the work, and in a way that's much more thoughtful, and this is consistent with everything we've always done, so it just -- it does seem that it would be creating more disagreement and more misunderstanding than is necessary.
CHAIRMAN PETERSEN: Commissioner Goodman?
COMMISSIONER GOODMAN: I agree clarity. But it's clarity over a substantive point, that there has been some confusion within the agency as well as outside. So because it goes to the clarity of a substantive ambiguity, and that I think we could fix it better, I just thought we ought to go ahead and fix it better. And when I read the "a" versus "the," it didn't necessarily solve the problem and the E&J still uses the word "the" so now you have a in a reg, with "the" in the E&J so I don't know what the, you know, well, you've explained but I'm not adverse to doing this through the NPRM process to allow people to say: Yep, that clarifies it for me. That clarifies that substantive ambiguity for me.
CHAIRMAN PETERSEN: Mr. Have?
VICE CHAIRMAN WALTHER: I wonder if General Counsel has any comment on what their preference is.
Preference as between Draft A or B?
VICE CHAIRMAN WALTHER: Taking into consideration Mr. Goodman's thoughts on how to approach it, give the clarity once and for all. I'm not uptight about doing it that way, except for the additional time and effort it takes. But I wanted to get your thoughts on that.
So we have provided guidance as to our views on whether notice and comment are required for those changes, and we provided those to commissioners who have requested them. We can provide it to other commissioners, any who are interested. I would say that without -- so without getting into the details of the advice we provided privately, as a general matter, there is nothing that stops the Agency from engaging in notice and comment even if it's not required. So assuming for the sake of argument that notice and comment were not required, the Commission could still go through the notice and comment procedure if it chose to. For those who changes.
CHAIRMAN PETERSEN: Mr. Chairman.
VICE CHAIRMAN WALTHER: I sense a dead lock. Maybe we want to take a break.
CHAIRMAN PETERSEN: Yeah, let's take a brief recess. [ Brief recess ]
CHAIRMAN PETERSEN: Our open meeting is now back in order. Commissioner Goodman.
COMMISSIONER GOODMAN: Yes. I believe Commissioner Hunter has a way forward that may take a little more time but before we conclude the discussion I just wanted to clarify a couple points made here today. The first is that Commissioner Weintraub you said you didn't know my concerns. I refer you to a December 18, 2015, email from make Colombo of my office to all commissioners' offices where I raised the issue, the second concern and I'm reading from the email, is whether the new language sufficiently resolves that ambiguity so I made clear I just wasn't sure that to a resolved the an.
COMMISSIONER WEINTRAUB: I was referring to the language you were proposing here today.
COMMISSIONER GOODMAN: I was working on it and then this was put on the Agenda so this was may time to bring it to the for. I also want to raise the issue of whether there's been a misunderstanding in the agency, internal in the info division they answer a lot of compliance questions to people when they call. Their internal interpretation of this regulation states -- so this is the advice they give to people from this statement, iteration of the regulation -- any person making IEs totaling $10,000 or more with respect to a given election during the calendar year in which the election takes place, must file a report with the FEC within 48 hours. And so my point is, we have probably been systematically giving different substantive advice in this field. Now, I want to fix the substantive problem. The question is: How. And there are two parts to my concern. I will summarize. One is whether this is purely technical or substantive. We may be able to get over that hump. The second is substantively, let's adopt the language that really resolves this once and for all. So Mr. Chairman, thank you.
CHAIRMAN PETERSEN: Thank you. Commissioner Hunter?
COMMISSIONER HUNTER: Thank you, and we may be able to accomplish that goal with some language that's more clarifying and maybe perhaps is still considered a Technical Amendment, and so Lee has graciously offered to provide his language to us in a written form. We can take a look at it. We can ask OGC if they think it is in fact technical and conforming. They said just sort of briefly that just because there's a few extra words doesn't mean that it's not technical and conforming so we'll take a look at it and if we could take this up again at the next meeting, Mr. Chair.
CHAIRMAN PETERSEN: We'll do so, are there any further comments. Let's hope we can wrap that up and get through this as efficiently as possible but appreciate the discussion here and the comments that have been made. Let's turn next to item V on our Agenda which will consider agenda Document Number 16-11-A, which is involves the proposed modifications to the program for requesting consideration of legal questions by the Commission, which is LRA 941. Margaret Forman and Lorenzo Holloway from the Office of General Counsel will give a presentation. Good morning, Ms. Forman and when you're ready proceed.
Good morning. The Office of Compliance and the Office of General Counsel recommend that the Commission approval a policy statement for publication in the Federal register which makes two modifications to the program for requesting consideration of legal questions by the Commission. These modifications arose from our annual review of this program which requires an assessment of whether and to what extent the program has promoted efficiency and fairness in the Commission's report review and audit process. As part of this past year's assessment we first propose that the Commission clarify that a request for legal consideration must be submitted to the Commission's Secretary. This would ensure the requests are timely processed. Second, we propose that the Commission include a brief informal resolution process which in certain cases could promote an efficient and fair resolution without the need for normal resolution. The informal resolution process would last no more than five days and the Commission would be informed about the results of the informal process including whether any legal requests have been resolved, and whether there is a need to proceed to formal resolution. We are happy to answer any questions. Thank you.
CHAIRMAN PETERSEN: I just want to clarify at the outset that the additional 5 business days is isn't automatically tacked on that the way I understand your request is if it becomes clear this can't be resolved through informal means at the outset, then you'll notify the Commission and that the five days, that 5-day informal resolution period won't be utilized.
It's up to 5 days and we recognize that there are some situations that are more prone to informal resolution than others so there could be situations certainly that would not go through that process.
CHAIRMAN PETERSEN: Okay. Are there any further comments or questions? Commissioner Goodman.
COMMISSIONER GOODMAN: I'd just like a clarification: In the memo to the Commission on page 4 of 4, summarizing the changes to the policy there are three bullets on Page 4. I just want some clarification of the last bullet. It says, we would insert at the end of the fourth paragraph in the procedures section, quote, informal resolution of a matter does not prevent the requester from seeking Commission consideration. In an additional or subsequent determination, subject to the requirements of this program. Does that contemplate that even if I resolved the issue with you, I could still nonetheless ask for a formal declaration by the Commission on the same issue? It was a little ambiguous to me. Or am I precluded then, am I cut off from my right to get Commission consideration once I resolve it with you informally? In other words, I might want to resolve it with you informally but I might nonetheless want the Commission to weigh in on the issue. I didn't understand, is that what this is intended to do?
By analogy, Advisory Opinion requests, those are sometimes resolved informally before it becomes a complete request but we always tell the person in that situation, you're free, if this informal resolution for whatever reason ends up not working for you, you're always free to come back and ask for Advisory Opinion, this addition would simply codify for this particular procedure that the fact that you got a resolution from OGC Staff doesn't mean that you can't still go to the Commission.
COMMISSIONER GOODMAN: On the same question at a later date. In other words, I don't preclude myself from going to the Commission.
Short answer. Yes, you could. Yes. You're not waving your right under the policy to get an answer from the Commission by withdrawing the it or agreeing that it's been temporarily informally resolved.
COMMISSIONER GOODMAN: Thank you.
CHAIRMAN PETERSEN: Are there any further comments or questions regarding this regarding this proposal? If none do we have a Motion? Mr. Have?
VICE CHAIRMAN WALTHER: I move approval of Agenda Document 16-11D1 Draft A of proposed modifications to program for requesting consideration of legal questions by the Commission.
CHAIRMAN PETERSEN: Is there any discussion on the Motion? If none all those in favor indicate by saying aye.
Aye.
Aye.
Aye.
CHAIRMAN PETERSEN: Any opposed? Madam Secretary that Motion passes by a vote of 6-0. Thank you, Ms. Forman, Mr. Holloway. The next item on the Agenda will be held over at the request of a Commissioner until the April 28th open meeting, that's the proposed Statement of Policy regarding the public disclosure of closed enforcement files. We'll pick that up in two weeks at the next meeting. And then item VII on our Agenda are Rulemaking proposals, first a Motion to open a Rulemaking 20 assist those accepting corporate contributions or making corporate expenditures in complying with existing Campaign Finance Law which is proposed by Commissioner Weintraub as well as a Motion regarding Foreign National Rulemaking proposed by the Vice Chairman. Any questions or comments? Commissioner Weintraub.
COMMISSIONER WEINTRAUB: Thank you, Mr. Chairman. I've been looking forward to the opportunity to speak about this. I had originally been intended to talk about this at the last meeting and then it got canceled at the last minute so that was a little bit frustrating but as I said, I had been planning on introducing a Motion and I put the document on Blue styled as a Motion largely to give my colleagues a sense of what earns I want to discuss here. I'm not going to make the Motion today. I've been made an offer I can't refuse by the Chairman. I had asked if I could invite a couple of legal scholars to come in today to help inform the Commission's judgment on this issue, and the Chairman made me a counter proposal, a very gracious counter proposal to allow me to convene a Forum on this topic of corporate money and foreign influence. And to really fully flesh out the issue and help inform the Commission, and should we get 4 starts to start a Rulemaking down the road I think that Forum would help inform our Staff and the Office of General Counsel in crafting a well-thought-out Rulemaking proposal. So I'm very excited at the opportunity to convene that Forum. I would like to have there some legal scholars, academics, and based on the academic calendar and people's schedules, we've decided to wait until June to do that, because it will free up more of those people, make them more available to come and advise us. So we are tentatively thinking about doing that on June 23rd. And I am looking forward to it. I think it's going to be very informative. I think this is a really important issue so even though I'm not going to make the Motion I just want to give an overview. I suspect most of the people at the table read my op Ed in "The New York Times." A lot of people in this country are frustrated with citizens united, and I think that, and its aftermath and I think that part of that frustration stems from the shorthand that's been adopted in describing it. When people say corporations are people. You talk to people outside of this building, outside of Washington, and they know full well that corporations aren't people. I know corporations aren't people. You know corporations aren't people. And indeed the Supreme Court knows that corporations aren't people. It's a legal fiction, and it's a -- the court's view of corporate rights actually was explained perhaps best in the Hobby Lobby decision which I think was another decision that caught a lot of people by surprise because it fundamentally suggested that corporations have religious views. If there's anything more counter-intuitive than the notion of a corporation with political views I think it's got go the notion of a corporation with religious views. But the Court explained that the notion of corporations as persons is a legal fiction. They said it explicitly. A corporation is simply a form of organization used by human beings to achieve desired ends. When rights, whether Constitutional or statutory are extended to corporations, the purpose is to protect the rights of these people and that actually makes a lot more sense, whether you agree or disagree with Citizens United or hobby Lobby, the notion that it's to protect people's rights, real human beings' rights, that we talk about the legal fiction of corporate personhood, that actually makes a lot more sense. Then the question is what happens when those real human beings don't actually have the rights that are being protected? Because even though the Court said in Citizens United that one can't discriminate based on a speaker's identity, on a political spender's identity, we learned subsequently in the Blumen case that actually some people don't have those rights, specifically Foreign Nationals don't and this is plain in the statute. This is not something that I'm making up to try and cause trouble for Foreign Nationals. The statute plainly says it shall be unlawful for a Foreign National directly or indirectly to make a contribution or donation of money or other thing of value in connection with a Federal, state or local election. To make a contribution or donation to a committee of a political party or an expenditure independent expenditure or disbursement for an electioneering communication and it is similarly illegal for a person to solicit accept or receive a contribution or donation from a fourth quarter. Now if foreign nationals are not allowed to give individually they don't acquire more rights if they form a corporation. And the answer can't be as simple to say well we're only going to look at where the corporation is incorporated, what it's domicile is. Bays that would open the door to a huge amount of potential foreign intervention in our elections, because it's very easy for anybody anywhere in the world to call up a lawyer in Wilmington and say: Form an LLC for me, form a corporation. And I will transfer funds from my accounts in the Cayman islands or Panama or some other offshore location and it can't be the caste that Foreign Nationals can get around the rules and the statute against foreign donations by the simple expedient of just forming a corporation in the United States. And I would hope that there would be general agreement on that point. And if that is true, then I think we really need to address the circumstances in which it is and is not okay for corporations in this country to be using the resources of Foreign Nationals, because it is the shareholders who own the corporations. Now, some corporations -- this is not going to -- I'm not trying to reinstitute a corporate ban. There are many very politically active corporations, some that get written about in the news all the time, that are closely held corporations that are owned by U.S. shareholders, and this would have absolutely no impact on them. But there are a lot of other corporations that do have resources that are owned by Foreign Nationals. They do have shareholders that are owned by Foreign Nationals. Sometimes they have substantial foreign ownership and I think that we have failed to address this issue so far, since this has been pending out there since Citizens United. We have really not grappled with this issue. We have presented some alternatives in the past. Commissioner Walther has very helpfully pulled back out the proposal that we had put on the table back in 2011, and I'm happy to incorporate those ideas yet again into a proposal for moving forward with a full Rulemaking that would solicit public comment and be both based on and solicit further expert testimony on these issues. The ideas that I put forth in the op Ed are a new way of looking at the spending and the Foreign Nationals but it's not the only way we can look at it and I'm happy to consider other ideas but I think just to ignore this issue and pretend that there is no opportunity for foreign intervention in our elections at a time when more and more corporations are active and many of them are corporations that we know very little about. The Washington post ran an article recently, talked about how 12% of the money that's been contributed to super Pacs so far in this cycle was contributed by corporations and some of them we know nothing about their shareholders. We don't know where that money is coming from. That's a disclosure issue and we should -- also I am speaking today about the potential for Foreign Nationals money coming in through the vehicle of corporations. And I as I said, I'm not going to introduce the Motion today. I have proposed one mechanism for ensuring that foreign money is not coming in through corporate venues. As I said, I'm open to considering other proposals. I consider Commissioner Walther's document to be a very friendly Amendment. Happy to have that on the table as well. Happy to hear from my colleagues as to other proposals they want to make and as I said, I'm particularly happy to accept the Chairman's gracious offer to convene a Forum on this issue and to learn more about it from some real experts. I know some people have reached out to me since I wrote the op ed, talking about their concern about inversions, about corporations that are -- that were organized in the U.S. and are moving offshore. This is an increasing problem, and one that I think we could well benefit from hearing some expert testimony on. I think the Advisory Opinion that we considered today is a good example, how corporations can be very complicated in the way they are formed, and in their interrelationships, and we are perhaps not the best experts on all aspects of corporate jurisprudence so I think it would be good to get some further guidance on this. But I do think it's very important that we consider this issue, and I think the Forum will be a good beginning step forward. It's about time we had some serious conversations at this agency on this topic, and I look forward to cooperating with my colleagues in having those discussions.
CHAIRMAN PETERSEN: Committer Walther, would you like to speak to your Motion as well?
VICE CHAIRMAN WALTHER: I again want to be sure as we go forward, I understand we'll have a Forum and I think that's a great idea. I want it understood that I expect that the consideration will be given also to what did come before us once before on January 20th, 2011, was after a lot of discussion and work this came before us, didn't get passed but at least it would be back again for discussion by a the public, and see if we can make some headway on the issue.
CHAIRMAN PETERSEN: Okay. Commissioner Ravel?
COMMISSIONER RAVEL: This is a really timely and important topic generally to talk about. And the ideas put forth are interesting, but I appreciate hearing that we're going to be open to the Forum, and hearing from experts, and for that, I want to thank you, Mr. Chair, for having come up with that idea as a solution to this. I think it's a really, really good idea for us to have a Forum where experts can come and talk about the issues, and give us an education on some of the issues and complexities that are involved in this, without us, you know, going forward on a Motion without thinking through what all the possible ramifications are. So I'm really pleased that this is the way that we're going to go forward on this, and you are to be commended, really, for having come up with what I think is a really good way to analyze the question. Thank you.
CHAIRMAN PETERSEN: Sure. We'll look forward to that in the coming weeks and months. And as you say, it's an issue of great importance, and very, like you said, can involve some very complex and interesting subject matters that are outside of our areas of expertise and that we can benefit by educating ourselves to a greater degree about some of the particular aspects of how in a [ Inaudible ] world how all this works. So I'll look forward to that, as well. That is the last item on our Agenda. I will turn to Mr. Palmer. Do we have any management or administrative matters that need go discussed.
Mr. Chairman, there are no such matters.
CHAIRMAN PETERSEN: All right. Unless there's anything else that anyone needs to discuss, this meeting is adjourned.