Federal Election Commission

Also drawing strong support at the Conference was the establishment of a “single point of entry” for the filing of FEC reports and the adoption of electronic filing for the prompt fulfillment of disclosure obligations by reporting entities and individuals. The current requirement for duplicative filings with the Secretary of the senate and Clerk of the House was widely characterized as confusing and unnecessary. “Single entry" filing would serve as an efficient means of putting information promptly before the public.

Electronic filing did raise concerns that the cost of such filing might be problematic for challengers and even burdensome for low-budget candidates and committees. The Committee believes that steps can be taken to assure that burdens or costs be allocated appropriately, and that for low-budget committees and candidates {say, those with total funds of $50,000 or less), the Commission should provide software free or at nominal cost.

Therefore, we recommend that congress authorize the institution of electronic filing procedures to accompany the adoption of a single entry filing system, and direct the Commission to take steps to assure that such filing not become an obstacle to political participation.

Commission Independence

The conference considered various proposals made over the years to strengthen the "Commission’s independence" as an administrative agency. As noted, a number of observers have suggested that the Commission cannot maintain its independence in the face of perceived pressure from Congress whose Members (or at least those seeking re-election) may have a significant stake as candidates in the outcome of Commission action. Congress is seen to have ways to influence Commission action: the power to advise the President on appointments, the power to overrule by amendments and to set Commission budgets, as well as the power to conduct oversight.
 

Proposals for increasing Commission independence have included the following:

• Weakening partisan controls over the appointment process, by providing for a bipartisan blue-ribbon private Commission to advise the President on appointments;
• Providing for a seventh (or fifth) commissioner, whose presence would decrease the likelihood of partisan deadlocks and address public perception of an agency hampered by partisan division; 
• Limiting terms of Commissioners so that no Commissioner seeking reappointment will be dependent upon Congressional or Presidential favor at the same time that he or she is casting votes or exercising influence on regulatory matters; 
• Shifting of annual to biennial authorization and appropriations which reduce the imminence of congressional review and avoid budget review in election years; and 
• Generally authorizing greater delegation of authority from Commission to staff so that whatever partisan influences affect Commission are diluted by more active involvement of professional staff, as well as increasing sheer efficiency.

Of these approaches, the ones which attracted the most attention both at the conference and within the committee were those relating to the number and terms of Commissioners and to the frequency of Congressional budget authorization. As for the proposed blue-ribbon body to advise on nominations, the Committee agrees this might improve both the openness of the nominating process and the quality of nominations. However, while such a process is effective for judicial nominations, the FEC involves at most one or two nominations every year or two, and every nomination has partisan implications, which lead the committee to believe that such a body does not hold enough promise to recommend it.

Should the Six-Member Structure Continue?

The proposal for a statutory amendment to replace the present six-Commissioner structure with seven or five Commissioners drew spirited discussion and a substantial division of opinion. The FEC's structure is literally unique in the Federal Government, and we are convinced that there are good substantive reasons for this agency's having an even number of Commissioners and for requiring a majority vote before action goes forward.

The unique structure was enacted in 1974 not out of Congressional inadvertence or self-serving motives, but because of the FEC's unique role. That role is to assure that official power created to keep the political process open shall never fall -- nor appear to fall -- under partisan control, and shall never interfere with the judgment and actions of the body that is ultimately responsible for the health of our political process: the electorate. However, while some conferees agreed that that is the starting point, not all did. Further, regardless of the starting point, views diverged on how the FEC should be structured now.

One view believes that the FEC should be more "independent" than it is now, or even nonpartisan. Another view is that the FEC's structure unduly protects the two major parties. A third view held that even if it is unrealistic to expect nonpartisanship in such an enterprise. steps are necessary to reduce partisan deadlock and contribute to decisive enforcement. Other observers respond both that reported cases of partisan "deadlock" have been relatively few, but in rebuttal it is argued that the point is not the number of deadlocks but the relative significance of the matters that deadlock and further, that one cannot measure the extent to which action may be avoided, delayed, or recast in efforts to avoid deadlock.

Opponents of those views grant that an odd-numbered FEC might be more decisive, but for that very reason they see too much potential risk of partisan action, or at least of action that may appear so partisan as to undermine the Commission's credibility. Therefore, they believe there is more gained by keeping the even-numbered structure than by risking major change.

Unlike such differences of views, we found consensus on one aspect of current FEC operations -- the involvement of Commissioners in micromanagement -- that is not a necessary consequence of the current six-Commissioner structure. At present, the Commissioners themselves decide on ordinary administration, e.g., hiring down to the GS-14 level. This is inefficient, adds delay and diverts the Commissioners from the policy-making and actions that require their attention.

The Committee concludes that there is a clear route to facilitating Commission decisiveness in administration, without any risk of partisan control. The Committee recommends that Congress amend the statute to provide for a strong Commission chairmanship running for a two-year term, with substantial and specific authority for administration, budget preparation and enforcement priorities. The two-year chairmanship would be rotated among the six Commission members, replacing the present condition that a Commissioner may not serve as Chair more than once during his or her term, with the condition (codifying long-standing practice) that the chairmanship would not be held consecutively by members of the same party. We recognize but do not here resolve other questions of implementing this recommendation, such as whether the chair should be selected by sheer rotation or by election.

The Committee believes that this change offers advantages and meets valuable objectives:

• It would allow for more focused administration of the Agency. obviating the need for all Commissioners to become involved in all administrative decisions. 
• It would encourage meaningful leadership with responsibility on the part of the Chairman to chart a particular direction and see it through over the course of an election cycle.
• Consistent with the biennial authorization process also recommended by the Committee (see below}, it would advance the goal of “independence” in establishing and implementing sensible planning. 
• Twenty years of experience shows the need for more efficient administration. We are confident that whether this recommended step proves to be the most appropriate balance to assure administrative effectiveness without risk of partisan control, or proves to be merely incremental, the current structure is not satisfactory and this step will be a worthwhile improvement.

Concurrent with these recommendations for a more effectively administered Commission, the Committee strongly urges Congress to take a more active role in oversight of the Commission. While independence from the Congress is indispensable to the Commission's mandate to act independently. Congress has an important constitutional responsibility to assure that the statutory mandates are faithfully followed. The concern with Commission "independence" is altogether appropriate but must not be so overstated as to discourage necessary and proper oversight. Congress should not undervalue its responsibility for assuring openness -- formally in appointments and budgeting. informally in review of Commission actions.

Length of Term of Service

The Committee recommends that the statute be amended to provide for a limited term of service of six years for Commissioners. At the Conference, there was substantial sentiment in favor of such a limit to invigorate the Commission with a periodic supply of fresh perspectives and ta1ent. The supporters of such a limit stressed their belief that the FEC's unique responsibility and its history present a unique need for this step to assure continual renewal. Some conferees argued additionally that such a limit would help avoid the appearance of conflicts of interests if reappointments are pending while Commissioners must vote on matters that may affect the interests of those empowered to nominate and confirm.

The Committee concludes that limiting the Commissioners' term of service to six years best balances the needs both to have commissioners develop experience and to continually refresh the agency. Given the obvious advantages to staggered terms of service, the six-year term seems most suitable with six commissioners. However, the Committee believes it would be inappropriate and unfair to apply the new limit to the current Commissioners.

Biennial Authorization

Of all of the options considered in relation to the independence of the FEC, the most widespread agreement was registered in favor of a biennial FEC budget process. Supporters noted that it fulfilled the objectives of many concerned parties: the FEC itself, whose small size makes its planning needs acute, and also interested persons who wish to assure against the appearance that Congress uses budget review to influence the actions of the Commission.

Supporters noted also that Vice President Gore has recommended mu1tip1e-year administrative agency authorizations in the course of his National Performance Review. The FEC would be uniquely benefitted by such treatment.

The Committee concludes that Congress should adopt a two­ year authorization and appropriation schedule for development and approval of the FEC budget.

Enforcement Authority

The Conference discussed at length additional authority for the Commission to perform its responsibilities. In part this is a question of budget: whether the Commission has adequate resources, including the staff it needs, and whether the Commission is making the most productive use of the resources it has.
 

The statute's mandates contribute to the problems, and the statute provides no standards to distinguish the important from the inconsequential. The General Counsel is required to pursue the full-dress enforcement process in seeking the resolution of each and every violation, however different may be their significance to the overall statutory purposes. In every case, the Genera1 Counsel must recommend and the Commission must find "reason to believe"  that a violation has occurred. After  reviewing a respondent's response, the General Counsel and the Commission must generally proceed to a so-called "probable cause" stage, followed by a mandated settlement negotiation period of not less than 30 but not more than 90 days. That these procedures are mandated without regard to the type or significance of violation hampers the Commission's management of its workload.

FECA's cumbersome procedures. according to some observers. have been designed to afford respondents too many "rights" that may be invoked only to delay action. A very different point of view is heard from practitioners before the Commission, who claim that the Commission offers less of a hearing – and except for matters involving a publicly-financed presidential campaign, no oral hearing before the Commissioners – than respondents before other agencies. However, the Commission has no authority to impose civil penalties but must negotiate the sanction and, if unable to secure agreement, petition the courts for judicial enforcement.

The Committee considered various options to improve the Commission's enforcement process and thus promote more efficient use of resources. Among the options drawing the most discussion were:

• Confer authority on the FEC to impose civil penalties for so-called "ticket" violations characterized by the simplicity of the factual issues presented. 
• For the  "ticket" system, design simplified enforcement procedures for action by the staff, but allow the disappointed respondents to appeal to the Commission from the staff and if unsuccessful, from the Commission to the courts. 
• Seek amendment to the statute to identify the key priorities for Commission enforcement with focus on the type of violation and the amount of money involved. 
• Restore the Commission’s random audit authority. 
• Relieve the Commissioners of responsibility for deciding almost all administrative matters, such as hiring below the senior levels. 
• Provide for oral hearing before the Commission in certain types of enforcement proceedings.

“Ticket” system

The Committee recommends the institution of some form of “ticket” system for minor violations drawing clearly limited sanctions. Simplified procedures are particularly well-suited to cases that involve late filing or other routine regulatory matters presenting simple factual issues. The elements of the ticket system might consist of the following:

• Identifying by statute and explicit regulation which violations are appropriate for "ticket" treatment. 
• Conferring on the Commission limited authority to impose civil penalties in accordance with prescribed schedules (by statute or regulation) for violations. 
• Authorizing the staff to provide notice of an apparent vio1ation, accept an initia1 response and then make disposition with a finding of violation and notice of penalty, subject to appeal to the Commission, in the Commission's discretion. 
• Providing for taking appeals on such matters to court under a standard of review affording substantial deference to the Commission's discretion.

The committee is convinced that a ticket system would enable the Commission to focus its limited resources on the most important violations. The ticket system also expedites decision making. Notwithstanding recent Commission efforts, the Commission workloadhas proven overwhelming and delays have become routine, in some measure because the FEC is saddled with an enforcement scheme that fails to distinguish minor violations from others. The Commission has attempted to make adjustments of its own but the necessary change requires statutory amendment, which the Committee urges Congress to enact.

Hearings

The Committee recommends that in cases involving complex factual and/or sensitive legal issues, the Commission should provide to respondents at appropriate stages any written material that the Commission receives from staff and an opportunity to submit written responses to such material. The Committee recommends also that especially in such cases, the Commission should reconsider its sweeping refusal to allow hearings before the commission and should exercise its discretion to grant fairer process.

Fuller opportunity for respondents isparticular1y appropriate for sensitive issues or complex factual determinations, such as cases involving possible “knowing and willful” misconduct. For example, in cases that may depend for resolution on the assessment of witness credibility, only the Office of the General Counsel's assessment of credibility is heard, but fair process considerations strongly favor some access by the respondent to the Commission.

For another example, independent expenditure cases present important questions of fact and law with direct impact on the exercise of constitutional rights recognized by the United States Supreme Court. The Committee has noted only two possible examples; there may be others similarly appropriate for fuller opportunity for respondents.

Adequacy of Audit Program

Many conferees strongly supported restoring the Commission's random audit authority. The 1974 Amendments to the Act granted this authority but its exercise was controversial and it was repealed in 1979. Many conferees believe that the sheer existence of such authority powerfully reinforces compliance with disclosure requirements. Some conferees also argued that the grant of authority could be cabined to avoid any perceived abuses, inequities, and overemphasis of good-faith de minimis errors. For example, the Commission could be directed to audit the same number of challengers and incumbents, though the candidates to be audited in either category would still be selected at random. Similarly, the statute could set a standard of “materiality,” to avoid the danger that audits not become searches for minor matters later published with undue  embarrassment to the candidate. Nonetheless, even if audits are cabined by limiting standards, audits may subject candidates to substantial costs and at worst, to investigations initiated without cause but driven by a determination to prove their own worth.

The conferees who urged restoring random audit authority added the caution that exercise of such authority should not drain resources from higher priorities. The Committee deems this a crucial point.

At present.. the Commission audits only all publicly-funded presidential campaign committees and a small number of audits "for cause." In fact, apart from audits of presidential committees, the number of audits conducted has been strikingly low:

This year "approximately one hundred committees [met] the 'for cause' standard" for audit, but at most only 20 will be audited "because of a lack of audit staff \u2026 Taken in the context of the 8,236 political committees (candidate and non-candidate) which filed over 80,000 reports in the 1992 election cycle to date, this is not an extensive program." The Commission has suffered a 14- year decline in audit staffing. We concur with the testimony of Elizabeth Hedlund at the same hearing: "If Congress wants the FEC to be an effective enforcement agency, it must provide the Commission with the audit staff it needs."
 

There can be no avoiding the conclusion that at stake here is the integrity of the disclosure program which, as we discussed above, we deem the heart of this whole effort. At present, despite the constrained audit effort, all our information and experience convinces us that while inevitably there will be some filings that are careless or worse., reporting committees that are significant in the electoral process are unstinting in their efforts to comply. It must be remembered that all these filings are not only public but monitored by other participants in the electoral process and by the press and public interest groups.

However, as the Commission said this year, "At some point, the risk of detection or prosecution becomes so low that the 'cost of doing business' outside the rules becomes acceptable, the law comes into disrespect, and public confidence in the electoral process is further eroded." We urge Congress to end a leve1 of funding that jeopardizes this entire program. We also urge the Commission to consider adopting a focused or limited scope for some audits of non-presidential committees, to make the most productive use of the resources it has and to increase "the risk of detection" and public confidence in the integrity of disclosure reports.

The Committee notes that the pending bill in the House of Representatives, which includes provision for some public funding of campaigns, also calls upon the Commission to audit about 5% of all such campaigns. The committee stresses that if the commission is assigned additional responsibility for audits, as seems inevitable with public funding, then that responsibility must be accompanied by a commensurate increase in Commission resources.

Funding

The Committee and the conferees devoted much attention to the Federal Election Commission's funding in general. As noted above, one measure widely supported by the conference and recommended by the Committee is to shift to biennial authorization and appropriations. The FEC itself, however, has expressed publicly a concern with the levels of its funding particularly in relation to the complexity of the task it performs.
 

According to the FEC, its resources have been effectively cut in half since its inception, relative to its workload. In 1976, campaign spending reported to and monitored by the FEC was 48 times as large as the Agency's budget, or 48:1. In 1992, that ratio was 95:1. Comparing 1980 with 1992, reported campaign spending rose 171% but the FEC staff rose only from 270 to 276. Of course, there have been productivity improvements in most programs. But as the Commission testified this year, "Productivity increases can provide only so much relief \u2026 [T]he sheer volume of financial activity to be regulated and processed has overwhelmed the staff resources available in many programs ." The Commission added: "[A]bsent \u2026additional staff, many programs which have performed well will see a degradation in quality and timeliness\u2026" 

The Committee notes that there are dissenters on this point also. Some at our Conference and some recently testifying before the Congress have argued that the Commission could do more with less and have pointed to what they perceive to be steadily increased levels of funding for the FEC without commensurably improved performance; and further, that additional funding will encourage an expansion of bureaucracy that may adversely affect the political process.

In June, the House of Representatives, against the recommendation of its standing committee, voted to deny the FEC any increase in its budget for fiscal 1995. ABA policy since 1975 has been, as recommended by this Committee, that the administration of federal election law requires a "single independent agency entrusted with effective enforcement Power and the resources to discharge its responsibilities."

The Committee urges Congress to recognize that the FEC budget has effectively been cut in half since 1976, relative to the rise in campaign spending. We fully recognize the acute overall constraints on federal budgets. We believe that, despite major advances in productivity, the Commission lacks the funding necessary to perform all of its statutory duties. If any additional responsibilities are assigned under new legislation, the need for increased funding is even more imperative.

The Committee urges the Commission to expand on its new effort to set priorities, and to give greater weight in its efforts to such criteria as materiality, to assure that it makes the most productive use of the resources it has.

Conclusion

The Committee has at all times recognized the legitimacy of the strong competing views on the issues addressed in this report. Our approach has been to seek balance between these views and to keep in mind that periodic efforts must be made to review experience with the Act and make appropriate adjustments. The role of the FEC is so central to meeting the challenges raised by the public concern with reform that the Committee strongly urges Congress to give careful attention to the Agency and its requirements for sound performance.

Respectfully submitted,

Steven J. Uhlfelder
Chair, Standing Committee on Election Law
February, 1995