FY 2003 FEC Budget Request

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This document is part of the Congressional Justification Budget Request for FY 2003 presented to the Congress Pursuant to GPRA and OMB A-11 by the Federal Election Commission on February 25, 2002.


APPENDIX G

ALTERNATIVE DISPUTE RESOLUTION (ADR) Program

 

FEBRUARY 25, 2002

Submitted to Congress/OMB

 

The ADR Program was established to expedite the resolution of complaints and referrals of election law violations through both direct negotiations and, when necessary, mediation. The aim of the negotiations is to achieve a mutually agreeable resolution that is both satisfying to the respondent/s, reduces the cost of processing complaints and enhances the overall compliance with the Federal Election Campaign Act.

The FEC enforcement goals, established in the FEC Strategic Plan and the Annual Performance Plans, seek to activate more enforcement cases and to reduce the number of cases dismissed without substantive action. These goals build upon the FY 2000 record when the FEC closed over 70% of the cases processed with some form of substantive action and over 50% of the average monthly caseload was actively being processed. Since 1995, all enforcement cases have been triaged through the Enforcement Priority System (EPS), and cases are held in the Central Enforcement Docket (CED) until activated.

The ADR Program has allowed the Commission to expand the scope and reach of the enforcement process, by expediting the resolution of cases that might not have been activated under the EPS, and might never have reached substantive resolution under the formal enforcement process. Further, the ADR Program helps to ensure that limited enforcement resources are focused on more substantive and significant cases. This is in response to both recommendations from the PricewaterhouseCoopers (PwC) review of the FEC and a desire by the Commission to improve the timeliness of FEC compliance actions.

The ADR Program is designed to promote compliance with the federal election law by encouraging settlements outside the traditional enforcement or litigation processes. The program aims to expedite resolution of enforcement matters and to reduce the cost of processing complaints, and therefore, enhance overall FEC enforcement. The ADR program affords both the FEC and respondent parties the opportunity to resolve cases more rapidly: since the inception of the program in October 2000 through September 30, 2001, 27 matters had been formally settled in the ADR process, requiring an average of 117 days from ADR receipt to process and close.

Through January 31, 2002, the ADR office has received 67 cases, initiated action in 50 cases, started negotiations with respondents in 39 cases, concluded negotiations in 35 cases, and the Commission approved the agreements and formally closed 33 cases. The Commission collected civil penalties totaling approximately $30,000 from the accepted negotiated settlements and approved final agreements. The Commission rejected the settlement in two cases, the respondents rejected four cases for negotiations in ADR, and 17 cases were returned to the Central Enforcement Docket (CED) in OGC. As a result, the ADR office has completed action on 57 cases as of January 31, 2002.

A detailed analysis of the cases closed through the end of FY 2001 (September 30, 2001), the first year of the new program, is provided below.

Sources of Cases

The vast majority of the cases assigned to ADR originated with external complaints filed with the Commission, i.e., Matters Under Review or MURs. Referrals from Audit and the Reports Analysis Division accounted for four cases and four others came either from the respondents themselves as sua spontes or from other federal or state agencies. Multiple respondents were involved in a third of the cases. In two instances, cases were bifurcated as a result of some respondents rejecting the ADR option while others accepted the invitation. In those two instances, the parties rejecting ADR were returned to OGC for appropriate action.

Agreements

Forty-four separate agreements were negotiated from the twenty-seven cases concluded by the ADR office during FY 2001. Each agreement was tailored to address specific issues identified in the complaint or referral. The terms of settlement likewise were tailored to the needs and resources of the respondents and requirements of the Commission.

Issues

The twenty-seven cases negotiated by the ADR Office in FY 2001 involved an array of issues and violations of the FECA. The three most frequently sighted violations, all relating to sections of the statute 2 U.S.C., included:

  1. contributions or expenditures by corporations, banks or labor organizations -- violations of 441b (8 eight cases);
  2. reporting requirements of political committees – violations of 434 (8 cases);
  3. limitations on contributions and expenditures – violations of 441a (6 cases).

The three aforementioned areas accounted for almost two-thirds of the cases resolved by the ADR Office. The remaining cases dealt with: definitional related issues, i.e., 431; contributions in the name of another, i.e., 441f; and an assortment of other topics.

The following chart provides a depiction of the array of issues addressed by the ADR Office. The specific violations of the Act listed on the chart refers to the sections of the FECA that are referenced in the negotiated ADR settlement agreement.

Pie Chart of ADR Issues by Case (Total Settlements: 27)

Processing Time

The twenty-seven cases resolved by the ADR Office in FY 2001 were concluded, on average, in 117 days – counting the period from the time the case was assigned to the ADR office by the Commission until the negotiations were concluded and the agreement was signed by the respondent/s. The ADR office’s goal is to complete its portion of the process, on average, in 90 days.

Pie Chart of ADR Cases Settled During Fiscal Year 2001 (Average Number of Days to Process Case: 385)

Terms of Settlement

During FY 2001 the majority, 52%, of the settlements negotiated by the ADR Office, provided for no monetary civil penalty. Forty percent (40%) of the agreements involved both monetary and non-monetary terms while four percent called only for the payment of a civil penalty. The remaining four percent include the two proposed agreements previously mentioned that were not approved by the Commission.

Approximately, two-thirds of the agreements approved by the Commission contained settlement terms that required some action on the part of the respondent designed to correct their behavior. Those agreements required respondents to attend a FEC seminar, participate in a one-on-one briefing or work with the FEC staff correcting reporting problems.

Twenty-five percent of the approved agreements contained provisions dismissing the complaint after the ADR Office concluded that the alleged violations were unsubstantiated. Another quarter of the agreements contained a requirement that a committee or corporation adopt and distribute to their members or employees guidance noting the prohibition on contributing directly to Federal election campaigns.

Evaluation of the Program by Respondents

Evaluation forms distributed to all respondents, after approval of the negotiated settlement agreements, record considerable satisfaction with the program. Anecdotal comments also reveal favorable response to the program. The low level of rejection of the program – three out of the sixty -one cases assigned to ADR in FY 2001 (13 cases were returned to the CED) – is a strong indication of support for the program. Combining those who rejected ADR with those who failed to respond to the invitation to sign-up indicates that the large majority of those receiving the ADR invitation participated in the program.