Proposed rules and policy statement on best efforts

The Commission requests public comments on both a proposed policy statement and a notice of proposed rulemaking (NPRM) regarding the so-called “best efforts” defense. Under section 432(i) of the Federal Election Campaign Act (the Act), if a committee treasurer demonstrates that best efforts were made to obtain, maintain and submit the required information, the committee’s report or records will be considered in compliance.

Background

Historically, the Commission has interpreted the best efforts defense to apply only to treasurers’ efforts to obtain, maintain and submit the required name, address, occupation and employer information for individual donors who contribute more than $200 in a calendar year. The proposed policy and companion rulemaking would expand application of this defense to include other reporting and recordkeeping requirements.

The proposals respond to the U.S. District Court for the District of Massachusetts’ decision in Lovely v. FEC. (See the May 2004 Record, page 4.) That case involved a political committee’s challenge to an administrative fine the Commission assessed for late filing. The committee argued that it had made best efforts to file the report on time and that this constituted a valid and complete defense against the fine. The court concluded that the statutory language at 432(i) requires the Commission to entertain a best efforts defense in the administrative fines context, and that it was unclear from the record in the case whether the Commission had considered the committee’s best efforts defense. The court remanded the case to the Commission for further proceedings.¹ On remand, the Commission determined that the committee had failed to show best efforts and left the administrative fine in place.

The Commission has determined that, despite the limited breadth of the Lovely decision, implementing the court’s interpretation of best efforts more accurately reflects the language of the Act and the intent of Congress.

Proposed policy and NPRM

The Commission’s proposed policy statement would apply the best efforts defense to obtaining, maintaining and submitting all required information, not just contributor identification. The policy covers respondents in FEC Matters Under Review (MURs) and Alternative Dispute Resolution cases. The proposed policy includes a list of possible reasons for a committee’s failure to obtain, maintain or submit information or reports that the Commission may consider as indicating that the best efforts defense is met.

The NPRM proposes adding a best efforts defense for Administrative Fine cases that result from a committee’s failure to file disclosure reports in a timely manner.

Currently, Commission regulations set forth three permissible grounds upon which to challenge a reason to believe (RTB) finding in an Administrative Fine case. Respondents are permitted to challenge administrative fines on the basis of “factual errors,” improper calculation of a penalty or “extraordinary circumstances” beyond the respondent’s control that lasted at least 48 hours and prevented the respondent from filing the report on time. See 11 CFR 111.35(b)(1).

The proposed rules would clarify that the “factual errors” defense applies only if the Commission relied upon those erroneous facts in its RTB finding. The rules would also replace the “extraordinary circumstances” defense with the best efforts defense. To show that it made best efforts to file in a timely manner, a respondent would need to demonstrate that (i) unforeseen circumstances beyond the respondent’s control caused the tardiness, and (ii) the respondent filed the report within 24 hours after those circumstances were resolved. The proposed regulations list examples of circumstances that will be considered “unforeseen” and beyond the control of the respondent, including a failure of Commission computers, Commission-provided software or the internet and severe weather or other disaster-related incidents. The proposed regulations also list examples of circumstances that will not be considered as qualifying for the best efforts defense.

The Commission requests comments on these and other proposed changes by January 8, 2007.

Comments

Both the proposed policy and the NPRM were published in the Federal Register (See 71 FR 71084 and 71 FR 71093, respectively) and are available on the FEC website at http://transition.fec.gov/law/policy.shtml and http://transition.fec.gov/law/law_rulemakings.shtml and from the FEC faxline, 202/501-3413. All comments should be addressed to Mr. J. Duane Pugh Jr., Acting Assistant General Counsel, and must be submitted in either written or electronic form by January 8, 2007.

The Commission recommends that comments be submitted via e-mail to bepolicy@fec.gov or afbestefforts@fec.gov or through the Federal eRegulations Portal at www. regulations.gov. Comments must include the full name and postal address of the commenter or they will not be considered. Faxed comments must be sent to 202/219-3923, with a printed copy follow-up to ensure legibility. Mailed comments should be sent to the Federal Election Commission, 999 E Street, NW, Washington, DC 20463. No oral comments can be accepted.

¹ The Lovely case did not involve a challenge to the validity of the administrative fines program rules, and those rules have continued in full force and effect since the district court order. However, the court stated that the Commission could “refine by regulation what best efforts means in the context of submitting a report.” Lovely, 307 F. Supp. 2d at 300.