Commission holds public hearing on agency practices and procedures

The FEC is charged with administering the Federal Election Campaign Act (the Act) and undertakes a number of efforts to provide disclosure of campaign finance activity, encourage voluntary compliance with the provisions of the Act and conduct civil enforcement activities. In the course of addressing its responsibilities, the Commission periodically reviews its programs. The Commission held a public hearing January 14-15 designed to reexamine the FEC’s practices and procedures, some of which have been in place since the Commission was founded in 1975. The Commission invited the public to offer suggestions to improve the agency’s practices regarding compliance, enforcement, public disclosure, advisory opinions and other matters. The Commission also received written comments from a number of individuals.

Fifteen witnesses testified at the hearing: Jan Witold Baran, Wiley Rein, LLP; Robert F. Bauer, Perkins Coie, LLP; James Bopp, Jr., James Madison Center for Free Speech; Joseph M. Birkenstock, Caplin & Drysdale; David M. Mason, Former FEC Chairman; Scott E. Thomas, Dickstein Shapiro, LLP, Former FEC Chairman; Marc E. Elias, Perkins Coie, LLP; William J. McGinley, Patton Boggs, LLP; Hans A. von Spakovsky, Former FEC Commissioner; Brian G. Svoboda, Perkins Coie, LLP; Laurence E. Gold, Lichtman Trister & Ross, PLLC, AFL-CIO; Robert K. Kelner, Covington & Burling, LLP; Reid Alan Cox, Center for Competitive Politics; Cleta Mitchell, Foley & Lardner, LLP; and Clay Johnson, The Sunlight Foundation.

Witnesses discussed ways to improve aspects of the Commission’s enforcement procedures, such as whether the Commission should make public its internal enforcement procedures and its schedule of penalties and whether respondents in enforcement matters should have the opportunity to address the Commission earlier in the enforcement process. Witnesses also suggested changes to the Commission’s procedures for notifying committees of apparent discrepancies in their reports and for issuing new rules and advisory opinions. In addition, witnesses testified regarding ways to make campaign finance information more accessible to committees and to the general public.

Enforcement procedures

Several witness, including Mr. Baran and Mr. Bopp, believed that the Commission should adopt regulations requiring specific criteria to be included when a person files a complaint in order to reduce frivolous and politically motivated complaints. Mr. Baran testified that requiring complainants to include more specific information would only serve to improve the process. Mr. Cox suggested that the Commission should apply the Act’s confidentiality provision regarding open enforcement matters to complainants, and not merely to the FEC.

Other witnesses discussed ways to streamline the enforcement process. Mr. Elias suggested that the Commission could consider adopting a mechanism for the easier settlement of enforcement cases. Mr. von Spakovsky asserted that the Commission should cease sending “letters of admonishment” to respondents since he believes that the Act is very specific with regard to how a person is penalized should they violate the law. Mr. Gold agreed with several commenters that the Commission should formulate a process for requesting a reconsideration of a “reason to believe” finding. Ms. Mitchell argued that the Commission should provide respondents more time to respond to its findings and that the time allotted should be commensurate with the amount of time the agency spends on the action.

A number of those who testified argued that respondents should have greater access to the Commission throughout the enforcement process, whether through oral hearings or other means. For example, Mr. Svoboda suggested that the Commission should set procedures through which a respondent’s counsel would be able to file briefs directly with the Commissioners at certain stages in the process. Mr. Cox agreed, stressing the importance of allowing respondents in both audit and enforcement matters to interact directly with the Commission.

Witnesses also debated how much transparency there should be in the Commission’s enforcement deliberations. Several witnesses argued that the Commission should make public its internal enforcement procedures and schedule of penalties. Mr. Kelner, for example, suggested that the failure to make the method for calculating penalties public actually lowered the chances that committees will choose to self-disclose violations because they “cannot assess with reasonable confidence the level of fine” that might be assessed. Mr. Thomas, however, argued that the possibility of a large civil penalty acts as a significant deterrent. He suggested that instead of making the actual penalties public, the Commission should instead publish the factors it takes into account when determining a penalty amount. Mr. Birkenstock, in response, suggested to the Commission that its enforcement activities have an “interim rule effect” and that “what we are deterring is political activity.”

Witnesses also focused their attention on the audit process. For example, Mr. McGinley expressed concern that “the audit process is almost becoming the fact-finding process for initiating an enforcement action down the road.” He argued that, as a result, committees undergoing an audit needed better opportunities to respond and the Commission needed to clarify whether it was “receiving” an audit report or “adopting” it. Similarly, Mr. Svoboda, Mr. Kelner and Mr. Gold agreed that greater communication during the audit processes between the Commission and the political committee could be beneficial, especially when the committee has a chance to comment on an Interim Audit Report before the Final Audit Report is issued by the Commission.

Witnesses also offered suggestions for the reports analysis process, specifically with regard to requests for additional information (RFAIs). For example, Mr. Baran identified instances where he believes that the FEC sends out RFAIs that are not based on an apparent reporting discrepancy. Mr. Baran explained that such RFAIs are especially troubling “because the community believes that one basis for an audit is the frequency and the nature of these so-called RFAIs.”

Enforcement determinations and advisory opinions

Mr. Bopp, Mr. Baran and Mr. Bauer argued that the Commission’s enforcement determinations and advisory opinions can have the effect of creating new, de facto regulations. Mr. Bopp argued that the Commission should state clearly that its enforcement decisions do not set precedent. He argued that the regulated community could only rely on two forms of guidance: the statute and regulations, and if their “fact pattern fits a safe harbor that has been adopted through an advisory opinion.” Mr. Bauer, on the other hand, argued that sometimes a pattern of enforcement determinations by the Commission sets “standards of conduct” or a “prohibited zone” for specific activities that does function as a rule, and that committees are correct to interpret the Commission’s enforcement determinations in this way. Mr. Bauer argued that when this begins to happen the Commission should formalize these standards of conduct in a rulemaking.

Some witnesses, such as Mr. Birkenstock, Mr. Elias, Mr. von Spakovsky and Mr. Cox, argued that when advisory opinions are being considered by the Commission, a requestor’s counsel should be allowed to answer Commission inquiries during an open meeting. Mr. Mason, for example, suggested that in some instances hearings could be held before an opinion is issued if Commissioners believe it would be useful, and in other cases when a requestor’s counsel is at an open meeting where an advisory opinion is discussed, the Commission should have “a procedure where a Commissioner can just ask and have them come up and answer a question.” Mr. Thomas indicated that he believed that the Commission could establish a pilot program to implement this proposal, but that the Commission should limit the instances in which a requester could make an oral presentation, which would be subject to Commission approval. Mr. Birkenstock, Mr. Kelner and Mr. Mason all suggested that the Commission should have to consent to such appearances.

Public disclosure

Mr. Johnson of the Sunlight Foundation testified in order to offer suggestions on how to make the Commission’s data and web site more accessible and user-friendly. For example, Mr. Johnson suggested that language on the web site be tailored to speak to citizens who may not be familiar with FEC terms. He stated that since it is the Commission’s mandate to disclose information, the Commission should also examine ways to make the FEC database of campaign finance reports and information accessible to outside organizations (such as search engines) to provide it to their individual readerships. Additional Information A transcript of the hearing is available at https://transition.fec.gov/law/policy/enforcement/2009/01141509hearingtranscript.pdf. Written comments submitted in response to the Commission’s request are available at http://transition.fec.gov/law/policy/enforcement/2009/comments/comments.shtml.