[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



 
     HEARING ON FEDERAL ELECTION COMMISSION ENFORCEMENT PROCEDURES

=======================================================================

                                HEARING

                               before the

                   COMMITTEE ON HOUSE ADMINISTRATION
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

            HEARING HELD IN WASHINGTON, DC, OCTOBER 16, 2003

                               __________

      Printed for the use of the Committee on House Administration








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                   COMMITTEE ON HOUSE ADMINISTRATION

                           BOB NEY, Chairman

VERNON J. EHLERS, Michigan           JOHN B. LARSON, Connecticut
JOHN L. MICA, Florida                  Ranking Minority Member
JOHN LINDER, Georgia                 JUANITA MILLENDER-McDONALD, 
JOHN T. DOOLITTLE, California            California
THOMAS M. REYNOLDS, New York         ROBERT A. BRADY, Pennsylvania

                           Professional Staff

                     Paul Vinovich, Staff Director
                George Shevlin, Minority Staff Director



           FEDERAL ELECTION COMMISSION ENFORCEMENT PROCEDURES

                              ----------                              


                       THURSDAY, OCTOBER 16, 2003

                          House of Representatives,
                         Committee on House Administration,
                                                    Washington, DC.
    The committee met, pursuant to call, at 3:00 p.m., in room 
1310, Longworth House Office Building, Hon. Robert W. Ney 
(chairman of the committee) presiding.
    Present: Representatives Ney, Ehlers, Linder, Doolittle, 
Larson, Millender-McDonald, and Brady.
    Staff Present: Paul Vinovich, Staff Director; Matt 
Petersen, Counsel; Jeff Janas, Professional Staff; Jennifer 
Hing, Assistant Clerk; George F. Shevlin, Minority Staff 
Director; Charles Howell, Minority Chief Counsel; Tom Hicks, 
Minority Professional Staff; and Matt Pinkus, Minority 
Professional Staff.
     The Chairman. The committee will come to order. The 
committee is meeting today to discuss the enforcement 
procedures at the Federal Elections Commission. The FEC is 
unique among Federal agencies in that its regulatory activities 
deeply implicate a poor constitutional liberty; namely, 
political speech. Although agencies charged with overseeing 
commodities, financial transactions, or public safety may 
incidentally affect the political process, the actions of the 
FEC have a direct and substantial impact on our Nation's 
political dialogue and electoral system. Our Founding Fathers 
deemed the freedom of speech, especially the ability to speak 
freely on political matters, to be so vital to a healthy 
democratic republic that they enshrined protections for speech 
in the first amendment to the Constitution.
    The founders also included the due process clause in the 
Bill of Rights to ensure that fair procedures govern any 
administrative or legal proceeding conducted by the government.
    Any examination of the FEC's enforcement procedures must 
determine not only whether they efficiently achieve their 
enforcement objectives but also the extent to which they 
respect and fully comply with these two constitutional 
principles. The Federal Election Campaign Act gives to the FEC 
exclusive jurisdiction over civil enforcement of the act.
    Enforcement actions taken by the FEC are conducted 
according to procedures set forth in the act and internal 
Commission directives. In the past, many in the regulated 
community have expressed concerns about the FEC enforcement 
process. These criticisms, from what we have been told, have 
focused on the inability of respondents in enforcement actions 
to appear before the FEC to present an oral argument; the FEC 
practice of naming nearly everyone mentioned in a complaint as 
a respondent, even if they have little or no involvement in the 
alleged violation; the FEC's confidentiality advisement which 
has often impeded the ability of respondents to gather facts, 
even from friendly witnesses; and the limited ability of 
respondents to access all the evidence against them and to 
challenge the recommendations made by the FEC's Office of 
General Counsel.
    In addition to these complaints it has been alleged that 
the burden--and I want to repeat, alleged--that the burden of 
FEC enforcement activity is unevenly borne by grass-roots 
volunteers and small political actors whose lack of experience 
and inability to afford sophisticated legal counsel leave them 
less equipped to navigate the complexities of the act.
    It would indeed be a cruel irony if our Federal campaign 
finance system, whose aim is to reduce cynicism and encourage 
political involvement among our Nation's citizenry, ended up 
stifling grass-roots activism by disproportionately penalizing 
civic-minded individuals with fewer resources and less 
expertise.
    This past summer the FEC held a hearing and sought public 
comment on its enforcement procedures, and we give the FEC 
credit for that. We commend them for taking this proactive step 
of critically examining some procedures to see where it can 
improve its performance by making its procedures more fair and 
more efficient. As a result of that hearing, the FEC recently 
announced certain alterations to its deposition policies. We 
hope this will be the FEC's first step in a continuing process 
of evaluating the effectiveness of its enforcement procedures.
    I also want to commend the FEC for a pretty difficult job 
and a lot of time that the FEC puts into this. And again, it is 
something I know is difficult to balance at times, but I do 
commend you for having the hearing.
    So the purpose of today is, again, to air some of these 
issues and to hear testimony on it. And with that, at this 
point I would like to recognize Mr. Larson, our Ranking Member, 
for any remarks he may have.
    Mr. Larson. Thank you, Mr. Chairman. Obviously, in light of 
the upcoming election cycle relating to the Federal Elections 
Commission, there certainly is a great deal of interest in many 
of our minds. I want to thank you certainly for holding this 
hearing on such a timely matter, and I want to thank our 
esteemed panelists and the witnesses for their participation 
and the insights they will share with us.
    Recently, as you have noted, the FEC responded to requests 
for copies of transcripts of those deposed by the FEC. While 
this policy change is certainly a step in the right direction, 
it is only a small step. I believe a giant leap forward is 
needed to bring some clarity to our election guidelines. At 
issue today is how the FEC responds to enforcement issues. Yet 
it is not only its response that warrants discussion, but also 
the confusing interpretations and the lack of clarity about the 
Federal election guidelines that must be addressed as well. 
These issues are of great concern not only to those who are 
inspired to run for political office, but also those who 
already hold such office.
    As the Chairman points out, we recognize clearly the 
difficulty of the task and the awesome responsibility and job 
that members of the Federal Election Commission have, and 
appreciate your hard work. And I hope you further appreciate 
the need, especially amongst Members who we talk to on a daily 
basis, treasurers of committee, people who--do not possess the 
same legal minds and background, who are anxious and earnest to 
be involved in our political process, yet look at some of the 
laws associated with us and are sometimes intimidated by them.
    So I thank the Chairman again for providing the opportunity 
for us to have the Commission enlighten us and to bring greater 
clarity and more light to these important issues, especially in 
lieu of the landmark legislation that was passed in this body 
just last year, and certainly that has the interest of a number 
of our colleagues. I spoke with Mr. Meehan earlier today, who 
shares a number of concerns as they relate to making sure that 
we go forward with the reforms of the landmark legislation that 
was passed last year.
    And with that, Mr. Chairman, I yield back the balance of my 
time.
    [The statement of Mr. Larson follows:]
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    The Chairman. I want to thank our Ranking Member.
    Just as a footnote, too, this doesn't just provide some 
type of clarity and service to incumbents, I think actually 
what you do is very, very important to the challengers to 
Members of the House. After all, if you are an incumbent and 
you have a campaign account and you are raising money, you can 
have accountants, people that are challenging and may not have 
those economic resources. As I warn them these days, they are 
going to have be very, very careful and that is why clarity is 
going to be important. Otherwise, I tell them, they need to 
hire an accountant, an attorney, and a bail bondsman maybe, in 
order to run for Congress. So the clarity I think is going to 
be very important for the challengers, frankly, probably more 
so even than the incumbents.
    And, Mr. Linder, do you have a statement? Mr. Brady?
    With that, we will go ahead and commence with testimony 
from our witnesses. And we are honored today to have a number 
of distinguished individuals testifying before the committee. 
On our first panel we will hear from Commissioner Ellen 
Weintraub, the current Chair of the FEC, and Commissioner 
Bradley A. Smith, the current Vice Chair of the FEC.

   STATEMENTS OF ELLEN L. WEINTRAUB, CHAIR, FEDERAL ELECTION 
   COMMISSION; AND BRADLEY A. SMITH, VICE CHAIRMAN, FEDERAL 
                      ELECTION COMMISSION

    The Chairman. And Commissioner Weintraub, we will begin 
with you. Thank you.

                STATEMENT OF ELLEN L. WEINTRAUB

    Ms. Weintraub. Good afternoon, Mr. Chairman and members of 
the committee, and thank you for inviting me here today. As a 
former House staffer, it is always a pleasure to be back on the 
Hill and particularly to be here since, when I was on the Hill, 
I worked at the House Ethics Committee and had many, many 
conversations and contacts with the staff of the House 
Administration Committee in my time here.
    I am pleased to appear before you to discuss the Federal 
Election Commission's enforcement procedures. As someone who 
practiced election law before joining the Commission last 
December, I am particularly interested in seeing that the 
Commission enforces the law fairly and efficiently. I had the 
good fortune of having arrived at the Commission at a time when 
there was a great deal of interest on the parts of 
commissioners, agency staff, and those who practice before the 
Commission in improving the enforcement process.
    I was therefore happy to convene an unusual hearing on June 
11 of this year, focusing on the Commission's enforcement 
procedures. We invited the regulated and reform communities in 
to critique our performance and offer suggestions on how we can 
improve. I am not aware of other agencies so frankly inviting 
criticism in this way, and I think it is a tribute to our 
general counsel and his staff that all of the testimony was 
received without defensiveness and with an open mind. This 
reflects our current general counsel's enforcement philosophy 
that the investigative process is not an adversary proceeding 
and that his primary responsibility in that process is to 
provide the Commission with objective recommendations based on 
a fair reading of the record and careful, thorough 
consideration of the issues.
    The Commission received a number of thoughtful, sensible 
suggestions, both in writing and in oral testimony. We may not 
adopt every suggestion that has been made, but all of the 
testimony is being given serious consideration. At the hearing 
we discussed such topics as the timeliness of investigations, 
an area of particular concern to me as a former practitioner--
and any of my enforcement staff can tell you that I am just a 
demon on the subject whenever I feelthere is unnecessary delay 
in the process--whether the Commission should adopt a publicly 
available civil penalty schedule, which I personally favor and I think 
would really enhance the regulated community sense of the fairness of 
the process; the appropriate scope of treasurer liability; the method 
by which respondents are identified; the agency's discovery practices; 
and concerns about the statutory trigger for initiating an 
investigation, which is currently a finding by the Commission that 
there is ``reason to believe'' that the law has been violated.
    Although I do not share all of Vice Chairman Smith's views, 
I join him in urging you to consider amending the language of 
the statute so that the trigger for an investigation would be a 
Commission finding not of reason to believe that the law has 
been violated, but of reason to investigate whether the law has 
been violated, which would more accurately reflect the status 
of our knowledge at that preliminary stage and not create a 
misleading appearance as to what the Commission has actually 
found at that point.
    In response to that hearing, the Commission has already 
made several modifications to its enforcement procedures. 
Witnesses are now given access to their deposition transcripts. 
The Office of General Counsel is currently drafting 
recommendations for changing our practices with respect to 
naming treasurers as respondents. Our staff is developing new 
language for our confidentiality advisement to clarify that 
there are no statutory restrictions on witnesses' cooperation 
with respondents' counsel. We are developing a new policy on 
sua sponte submissions. The Commission is implementing a 
variety of internal management controls to speed the 
disposition of cases, and we are also on track to have the 
public records for closed Matters Under Review, what we call 
MURs, available on the FEC's Web site by the end of the year. 
We won't have all of the MURs for all time up, but we will have 
the current election cycle up and we will continue to work to 
build that database so that anybody, anywhere in the country, 
will have access to these historical precedents that now are 
currently only available if you come into the office. It is my 
personal belief that increased efficiency and increased 
transparency will go a long way towards alleviating any 
remaining concerns of the regulated community about the 
agency's enforcement practices.
    Now is an ideal time for the Commission to make as much 
headway as possible on these issues as we await the Supreme 
Court's opinion on the constitutionality of the bipartisan 
Campaign Reform Act. We appreciate the interest that the House 
Administration Committee has shown in the FEC's enforcement 
procedures, and of course I would be happy to answer any 
questions that you have.
    The Chairman. I want to thank Chairwoman Weintraub for your 
testimony.
    [The statement of Ms. Weintraub follows:]
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    The Chairman. And we will move on now to Commissioner 
Smith.

                 STATEMENT OF BRADLEY A. SMITH

    Mr. Smith. Thank you, Mr. Chairman, Congressman Larson, and 
members of the committee. I will avoid repeating things that 
the Chair has said, but I will note that I am in agreement with 
virtually all and perhaps all of what she said. Perhaps I 
didn't pay quite enough attention to know if it is absolutely 
all.
    I want to start by stressing one point. It is sometimes 
suggested that the Commission need not concern itself with due 
process of respondents because, in fact, if respondents refuse 
to pay a fine assessed by the Commission, the Commission must 
take them to court where the Commission is the plaintiff and 
bears the burden of proof, and there they can get the due 
process to which they are entitled.
    I hope that people would instinctively feel that that seems 
an incorrect way for a government agency to operate, but I 
would further point out that that simply does not reflect the 
reality of the Commission. Twenty years ago the chairman of the 
Section on Administrative Law of the ABA appeared before this 
same committee and noted that the respondents before the 
Commission are denied many basic due process rights. And while 
many of those procedures have changed, some have not. And the 
ABA at that time noted that the Commission has, quote, de facto 
adjudicative phases and functions. And that is the truth. In 
fact, 99 percent of all cases before the FEC and over 96 
percent of those in which we find a violation are adjudicated 
without going to court. So truly the FEC is where cases end, 
not where they begin, and thus process is particularly 
important.
    The Chair has noted that progress is being made, that there 
is a new climate at the FEC which I think is beneficial. I 
would also highlight additionally that we have created 
programs. The administrative fines program created by Congress 
pursuant to an FEC recommendation, the alternative dispute 
resolution program created by the Commission, have helped to 
speed the handling of a large number of matters and I think 
have been very positively received by all segments of the 
public.
    Additionally, I agree that we have an excellent management 
team in place. Our general counsel, Larry Norton, deputy 
general counsel, Jim Kahl, associate general counsel for 
enforcement, Rhonda Vosdingh, have all been in their positions 
only 25 months or less, and they are working to implement a 
number of managerial changes that improve our handling of 
complaints. For example, to lend a few facts to what the Chair 
has already pointed out, since 2000 the number of inactive 
cases sitting at the Commission on a monthly average has 
declined from 98 to 57. The number of cases dismissed as stale, 
in other words simply dismissed because we didn't get to them, 
has dropped by 92 percent. The median time to conclusion of a 
case has dropped by 28 percent. So I think the Commission is 
making progress.
    Chair Weintraub has also mentioned a number of things that 
are being changed: the ability to get your own deposition, and 
hopefully very soon we will see a new confidentiality statement 
that will resolve those concerns; new policy statements on 
treasurer liability and sua sponte submissions. I think there 
are some other areas of process that need to be considered and 
the Chair has mentioned one, changing the RTB terminology. I 
think that could be done without a statutory change, but a 
statutory change would certainly clarify that.
    Additionally, there is no right to a hearing before the 
Commission, as Chairman Ney mentioned. And I think this is 
something that really ought to be considered, and the Congress 
may want to consider whether it should be done by statute. In 
fact, our counsel's people come up to the table and they are 
present at the hearing room to argue the position of the 
counsel, which in this scenario is that the Commission should 
find probable cause. It seems odd, then, that there is no right 
for the opposing counsel to be present to make the argument. 
And while I think people from the counsel's office make an 
honest, fair, professional attempt to present the case and its 
weaknesses, human nature tells us that there are different 
incentives that someone who has recommended that the Commission 
find probable cause may find it very difficult to turn around 
and at the table adequately represent the interest of the 
respondent.
    A second issue that I think is very important is access to 
the documents, depositions and interrogatories, that are 
produced during a hearing. Your lawyers or the lawyers of 
anybody who appears before the Commission have no right to see 
these documents. They do not get to see these investigatory 
documents even at the stage at which we are finding probable 
cause. At that stage, we are clearly in an adjudicatory mode 
and I think it is very important that someone see these. 
Defendants see things differently than our own lawyers. So what 
our own lawyers think is relevant may not be what the 
defendants think is relevant, and I think that is something 
that very definitely needs to be reviewed.
    Additionally, there are areas that Congress might want to 
look at. It would be helpful to have some guidance as to what 
should be made public, and I think you will hear witnesses 
later complain about the Commission's past policies of making 
information public.
    And in my last few seconds I will note as well, I think in 
the end, the most important thing for Congress is to make clear 
that it does view process as important at the Commission. I 
think most of these changes can be made at the Commission 
level, but some expression that that is the desire of Congress 
and that there is this type of oversight I think is very 
beneficial. Thank you.
    [The statement of Mr. Smith follows:]
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    The Chairman. I want to thank you, Commissioner Smith and 
Chair Weintraub, for your testimony. I also, before I ask a 
question, wanted to also make a comment. I think you have--your 
information specialists I think are tremendous. And I 
personally have called on questions that we have, which is the 
way you should do it before you expend funds. Whether you give 
your name or you don't give your name, it is irrelevant on how 
fast the call is answered. I think they have done a good job. 
They get back to you. I know you are probably getting thousands 
of calls, but I just want to tell you I think the information 
specialists have really done a pretty good job.
    Ms. Weintraub. I think so, too.
    The Chairman. Thanks. The question I have is the outlines 
of the FEC enforcement process are set forth in the act. How 
much discretion and authority do you have to modify its current 
enforcement procedures? We can start with either one.
    Ms. Weintraub. I think that we have a great deal of 
flexibility in modifying our enforcement procedures. It is like 
everything else that happens at the Commission, it requires 
four votes.
    I do want to say that I respect everyone's concerns about 
the due process that is afforded to people at the Commission. I 
have a different perspective from the Vice Chairman on that. I 
am very concerned that affording the kind of hearing that he is 
talking about could bog down the process. We are potentially 
talking about an awful lot of hearings which would slow down 
the process considerably. It would force our staff to take 
their time away from processing more cases to preparing for the 
hearings. And I am not sure that we would actually gain that 
much at the end of the process. I know lawyers would feel 
better about having an opportunity to come in, but I think it 
would also exacerbate the difference between the savvy 
Washington insiders and the people who are out in the 
heartlands, who wouldn't know enough to hire some of the fine 
counsel that are sitting behind me today to come in and 
represent them.
    The Chairman. Can I ask you one question? Not to interrupt, 
but from your opinion having stated that, is it a financial 
consideration? In other words, if there were more finances 
available, would it be a good thing to do, or it goes beyond 
that with you?
    Ms. Weintraub. I just don't think that it is--I suppose 
more finances would help. Then we would have more staff. But I 
don't see it primarily as a financial matter. The practices 
that the Commission follows are consistent and, in fact, afford 
more rights to respondents, more opportunities to respond than 
other similar agencies. We have looked at the practices at the 
SEC and the FTC and the CFTC, and none of those agencies offer 
the kind of opportunities that we do. Respondents receive a 
copy of the complaint and they get an opportunity to respond to 
that. Then if the Commission finds reason to believe, we open 
an investigation, the respondents receive a detailed statement 
of the factual and legal basis for the investigation and they 
again have a chance to respond to that. And if the general 
counsel reaches the point where he recommends that the 
Commission find probable cause, respondents again receive a 
brief, setting out all of the arguments and they have a chance 
to respond to that.
    And I think that it is very important to correct the 
impression that the counsel's office functions as a prosecutor. 
There are many, many times when the counsel comes to us and 
says ``don't go forward.'' We do not think there is reason to 
investigate. We do not think there is reason to find probable 
cause here at the end of an investigation. I think that the 
notion that we have a bunch of prosecutors who are out to get 
people fundamentally misapprehends what happens at the agency. 
In terms of the document production, again, it would be a 
cumbersome process. We would have to prepare confidentiality 
logs. We would have arguments over attorney-client privilege. 
We would then have to be litigating over that, which again 
would slow down the process. And I am very concerned about the 
pace at which these cases proceed as it is. Again, I think that 
all of these things would give a big advantage to the savvy 
Washington insiders who would have access and knowledge of who 
to hire to go in there and represent them, whereas the people 
out in the heartlands who perhaps would not have the resources 
or the sophistication to hire those kinds of lawyers or to come 
in and examine the documents would be disadvantaged.
    The Chairman. Do you think that the general counsel should 
have more prosecutorial powers?
    Ms. Weintraub. I don't think it is a prosecutorial role. We 
are an administrative agency. I don't think he is looking to 
prosecute people.
    The Chairman. Mr. Smith.
    Mr. Smith. Mr. Chairman, if I may add a few comments? I 
think this shows why some congressional direction as to how 
important you feel these kinds of due process rights are would 
be helpful. I think that if you--when the comparison is made to 
other agencies, that is made on the basis of generally what 
rights the person has before the case goes before an 
administrative law judge or before the agency otherwise is 
launching an adjudicatory suit; in other words there is not 
such a lengthy investigatory process. And this is the point I 
attempted to emphasize at the beginning, is that the practical 
reality is the Commission is adjudicating cases. We are the 
final stopping point.
    Now, there are reasons, for example, why we might limit 
hearings. For example, people in courts are not entitled to 
hearings on absolutely everything. You can't demand a jury 
trial for your speeding offense generally, and so on. But 
certainly I think that we would have the flexibility, I think 
the Commission has it, but again Congress could direct it or at 
least give us directions to have at least some hearings where, 
for example, the case is knowing and willful and therefore 
potentially could lead to a criminal investigation, or where 
the violation exceeds a particular amount. Criteria can be 
developed.
    Similarly, on the production of documents as it stands now, 
people are not allowed to see even exculpatory information, 
information that we uncover that might tend to show that they 
are not guilty of some type of violation. And I think to most 
lawyers' ears, that instinctively just sends off dozens of red 
flags. Would there be some added difficulty for the Commission? 
Yes. But this is something that prosecutors in various agencies 
in the government live with all the time. In fact, in my mind 
it is an argument for not only giving exculpatory information, 
but for essentially giving all of the information that is 
uncovered in the investigation at the probable cause stage.
    We have--back to the issue of oral hearings, we have oral 
hearingsunder title 26 when we handle repayments for public 
funds in the Presidential elections. I think all of us find those oral 
hearings to be extremely helpful on the Commission, and I have found 
when we have had those hearing the counsel and being able to ask 
questions directly about interpretations of the fact affect things. The 
counsel is not a prosecutor. The counsel is put in a difficult 
position. But it is worth noting that when we had our hearing on June 
11, the agency's prior general counsel of 14 years emphasized that we 
were exactly a prosecutorial body and he was a prosecutor.
    So you see that there are different views here and the 
views that hold sway now may not hold sway in the future, and 
that is why it is worth it to institutionalize some of these 
problems.
    Finally, whether the counsel views himself as a prosecutor 
or not, as I say, it is simply human nature. Yes, the counsel 
also recommends that we not go forward with a case; but when 
the counsel recommends that we do go forward, human nature 
tells us that when we have that meeting and the counsel is 
sitting at the table--and we sit at a table much as you do, and 
the counsel sits at the end of that table with his staff and 
participates in the discussion and the debate--human nature 
tells us that he is not going to represent the interest of the 
defendant the same way the defendant would. No matter how 
competent, no matter how professional the lawyers there are, 
they have made already their finding and recommendation and 
there is going to be a human nature tendency to defend that.
    The Chairman. It raises two more questions. Some of the 
answers. Under the current law, could the FEC alter its 
enforcement procedures to allow for oral arguments? Can it do 
that?
    Ms. Weintraub. Yes, I believe that it can.
    The Chairman. And Commissioner?
    Mr. Smith. I agree.
    The Chairman. Okay. The second--you mentioned exculpatory 
evidence is withheld from respondents. What would be the 
enforcement rationale for this policy to withhold?
    Mr. Smith. If I may, I think there have been three that 
have been offered. First--and I think all of them lack merit, 
and this was discussed even 20 years ago in the ABA report--the 
first is that it is necessary to protect the integrity of the 
investigation, but, of course, at the probable cause stage the 
investigation is concluded, so I am not sure that that holds 
merit.
    Second, that it is necessary under the confidentiality 
clause of the statute which prohibits the fact of 
investigations from being made public. But that turns the 
confidentiality clause on its head. That clause is intended to 
prevent candidates and campaigns and committees who have been 
accused from being unfairly smeared in the press during the 
pendency of the complaint. It is not intended to keep them from 
getting the information they need when they need it.
    Finally, the argument is that certain materials would be 
privileged, but of course one would not suggest that privileged 
materials would be turned over, or memoranda, to the 
Commission. Rather, we are talking about the documents that are 
uncovered through document requests, the interrogatories and 
the deposition transcripts. And so I think that these can be 
required. I think they ought to be required. It would certainly 
be possible to do it with some exception that could be made 
where there is a belief that revealing the information would, 
for example, harm an investigation.
    But I think the general rule when we are dealing with the 
first amendment rights of citizens participating in politics is 
that we should be aiming to give them as much process as we 
possibly can that is consistent with us fulfilling our role 
rather than taking the view it is much easier for us, it is 
much more convenient for us, it is much less work for us if we 
kind of trim that process back.
    The Chairman. Thank you. Chair.
    Ms. Weintraub. I think it is more than a matter of 
administrative convenience. I do think that it would slow down 
the process substantially. We would get bogged down in 
litigation over whether we had produced every document that we 
were supposed to produce. And again I think the current 
situation, and it has been alluded to earlier, where cases 
sometimes get resolved years after the original litigation is 
filed serves no one. It doesn't serve the complainants. It 
doesn't serve the respondent. It doesn't serve the regulated 
community. It doesn't serve the reform community and it 
certainly doesn't make the agency look very good.
    So I am reluctant to engage in extended exercises that I 
think will impair that important goal of getting the cases 
resolved quicker.
    The confidentiality concerns are not always unidimensional 
because frequently we have more than one respondent. So if you 
have more than one respondent and we are gathering information 
from more than one respondent at the same time, each could have 
confidentiality concerns about their own documents that they 
didn't want to share with another respondent in the case.
    And perhaps the strongest argument is that I think it is a 
solution in search of a problem. Before the recent AFL-CIO case 
which limited the documents that we would produce after an 
investigation, the agency routinely produced everything in 
their files at the conclusion of an investigation. I am not 
aware of anybody ever coming forward and saying, ``Aha, I found 
this document that you didn't share with me and this would have 
made a difference in the resolution of my case.'' I don't think 
it has ever happened. It was my experience as a practitioner 
that I always felt that I knew more about the case than the FEC 
lawyers did on the other side. You have the benefit when you 
are representing the respondent that you have a little bit 
franker access to the facts of the case. And I think there is 
really no evidence that this has ever actually posed an 
obstacle to anybody.
    The Chairman. Thank you. Mr. Larson.
    Mr. Larson. Thank you, Mr. Chairman. I want to thank the 
panelists as well, Madam Chairman, Vice Chair.
    I have three questions that I would like to ask. The first, 
cuts right to the chase. Members of the reform community have 
called for the FEC to be abolished. Many have called it the 
Failure-to-Enforce Commission. They view the FEC as too lax in 
its enforcement. What would be your answer to those critics? 
And hasn't the present structure of three Democrats and three 
Republicans, without a tie-breaking entity been problematic, 
and would an odd number of commissioners serve to break that 
deadlock?
    Ms. Weintraub. I think that it is not true that we are the 
failure-to-enforce Commission. In fact, if wewere, I think the 
regulated community wouldn't be nearly so concerned about our 
enforcement procedures. Our penalties have been increasing in amount 
and in frequency over the last few years, and I think that it is really 
a misnomer entirely.
    As to the question of deadlock in the proposal to abolish 
the agency and substitute one with an odd number of 
commissioners, I am very sympathetic to the concerns of the 
reform community when we have a deadlock situation. I know it 
is personally very frustrating to me when this happens, but it 
doesn't happen very often. Our staff did a study and they came 
up with a figure of 3 percent of all the decisions resulted in 
a 3-3 split. So it is not a problem that comes up on a daily 
basis. Usually we work to find common grounds. And usually we 
find it. As I said, it doesn't happen all the time. But when it 
does, it is--you know, it is frustrating, but I think we create 
a larger problem by having an odd number of commissioners. 
Right now there are three Democrats and three Republicans. If 
we had an odd number of commissioners, there would be either 
more Republicans than Democrats or vice versa. And I think that 
that would create a very, very dangerous situation when we are 
talking about people who supervise the political process and 
look at campaigns.
    If it is true, as the proponents of this proposal suggest, 
that we vote on party lines all the time, then creating a 
situation where there are more of one party than the other 
would be extremely dangerous to the party in the minority. I 
think that there are current tendencies to avoid deadlock, we 
wouldn't have the same brakes on because there wouldn't be any 
need to try and work together if you knew that you could just 
roll the other side any time. So I sympathetic to the concerns. 
I understand where they are coming from, and I know they are 
very sincerely held, but I am not in favor of that proposal.
    Mr. Smith. If I can add briefly, and I think one thing to 
note, you see that we exchange our views pretty strongly and we 
are not afraid to do that. But the fact is that shouldn't 
overshadow the fact that on the majority of the things we tend 
to be in agreement that we are talking about today, and this is 
one of those again.
    I would add just a couple of points on the deadlocks. Not 
only as the Chair says is the percentage of deadlock votes, or 
3-3 votes would be a better way to put it, very very small; a 
deadlock is not to say that the Commission did not decide the 
issue. It decides the issue and in the vast majority of cases 
it decides it as clearly as the vote. In other words, if the 
Commission votes 3 to 3 not to pursue a violation, that is as 
final a decision as a vote 5 to 1 not to pursue a violation. So 
I think far too much can be made of that issue. Sometimes I 
have heard it said, well, the Commission deadlocks on important 
votes. But when you actually ask what are important votes, I 
remember some of the ones that I have seen cited. One was the 
Commission split 3 to 3 on whether it should file an amicus 
brief in Federal court on a case involving State law. I don't 
see that as a really important issue. And if that is the best 
that people can come up with, I suggest that this is not really 
as great a problem as is suggested.
    Also, when we talk about even or odd number members of the 
Commission, the one other possibility that the Chair did not 
mention would be to have an independent designated. I just know 
that that does occur in some States and I don't think that it 
really makes any difference. You still have the same problem. 
And of course the fights over who that independent is become 
fierce because, as we know, there are independents who almost 
always vote Republican and there are independents who almost 
always vote Democratic. And it is a little facile to suggest 
that that would solve the problem.
    Mr. Larson. As a follow-up to that question, what is your 
view of the legislation that Shays-Meehan, H.R. 2709, 
introduced calling for a new agency? Their agency would be the 
Federal Election Administration, the FEA, replacing the Federal 
Election Commission, with enhanced authority to enforce Federal 
campaign finances laws. Are you familiar with their proposal?
    Ms. Weintraub. I am. And that is basically what I was 
talking about when I talked about the proposal to avoid the 3-3 
split by having an odd number of commissioners. I think that is 
the heart of the proposal, and I think it is also its greatest 
weakness.
    Mr. Smith. If I may add just a bit. I am not familiar with 
all the details of the proposal, but I have written an article 
which is cited in my testimony, entitled ``The Toothless 
Anaconda'' actually, which discusses--this was written before 
this bill was introduced, but it essentially discusses the same 
type of proposals and I think explains at length why the 
Commission really wouldn't solve such problems that are alleged 
to exist.
    I would also note in terms of lax enforcement, in my 
prepared testimony which I have submitted, I cite a number of 
recent cases. It is worth noting in the last year the 
Commission has assessed in one case a fine of over $800,000. In 
another case we fined a sitting Congressman over $200,000 for 
taking too much money from his parents, not the most nefarious 
violation that one could ever imagine and not something that I 
think speaks of lax enforcement.
    Mr. Larson. Some groups, the Campaign Finance Institute, 
Common Cause, Alliance for Better Campaigns, are endorsing a 
fix to the Presidential public finance system that if left in 
the current state will not survive the 2008 election cycle. 
What is your feeling on that? And should these proposals 
include congressional races? And what is your opinion in 
general on our public financing of campaigns and the extension 
of those to congressional races?
    Ms. Weintraub. I am not fluent in all of the details of the 
proposal that you allude to. I am familiar with this in its 
basic outlines, and I will add that a couple of our colleagues, 
Commissioners Thomas and Toner, put forth another proposal to 
try and fix the Presidential financing system. I think both of 
these proposals go towards the same end of getting more money 
in the system, getting it to candidates earlier, and making it 
a more attractive package so that more people will want to 
participate rather than opt out of the system.
    I am in favor of either of those proposals. Whatever could 
get the votes I would be in favor of it. In terms of extending 
it to congressional races, I have to say, frankly, I just don't 
see any appetite out there for the kind of investment that that 
would require of public dollars. I might in a hypothetical 
world say that would be a good idea, but I just don't see that 
there is much support for it out there, given how vastly 
expensive it would be.
    Mr. Larson. Mr. Smith.
    Mr. Smith. I really have nothing to add. I would tend to 
agree with that. I think if Congress were going toconsider 
reform of the Presidential system, I think that the Toner-Thomas 
proposals probably make sense. My general view is those proposals do 
ask for a considerable added sum to be spent on government campaigns, 
government financed campaigns, and I am just not sure that in a time 
where people keep talking about the need to get the budget under 
control and pay for other things, prescription drug benefits and 
antiterrorism and numerous other things, that that is where the public 
really wants to see its money spent. But that is a political judgment 
that is your area of competence where the public wants its money spent, 
not mine.
    If you were looking for something on the Presidential 
system, I think that would be a good place to start. I do note 
that of the public, only a very small percentage check the box 
on tax forms now, and I will say that having studied elections 
for a long time as an academic, I have not really seen the 
clear, concrete benefits from government financing systems. 
That is, I don't think people look at Arizona and say that 
Arizona with its government financing is inherently governed 
better than New Mexico with its private financing and unlimited 
corporate contributions or that other States, those kind of 
comparisons can be drawn. But I think really that becomes more 
of a political issue for Members of Congress, and you may have 
a very different view as to the possible benefits.
    Mr. Larson. Is it a political issue or a philosophical 
issue?
    Mr. Smith. Well, it is political, philosophical. I assume 
that your politics are driven by your philosophy of government.
    Mr. Larson. Well, I have always noticed that people who 
aren't in elective office refer to them as political issues. We 
think sometimes that heads of commissions should look at this 
philosophically and express their opinion as well, so that we 
are better informed of your views on these issues.
    Mr. Smith. Well, I mean my view would be--and I have 
written again, articles on it which I would be happy to call 
the Commission's attention to--my general sense is that there 
are potential benefits.
    Mr. Larson. I am interested in the toothless Anaconda, you 
know, because that sounds like something that is going to 
squeeze the death out of you but then not eat you.
    Mr. Smith. That is sort of the idea. I would say on the 
government financing system, I think that a system potentially 
could be designed which would have certain benefits. But my 
sense is that that is more of a theoretical design; that in 
practice, government finance campaigns almost immediately tend 
to become outdated. They can't keep up with the changes in 
campaigns, in our system, where we have a robust first 
amendment and people are going to participate on their own. You 
can't really stop outside groups from participating so you 
can't stop the concerns about corruption directly by simply 
having the candidates themselves be government financed. You 
can't address the--all of the concerns about equality because 
there will still be millionaires out there spending money on 
their own, doing things like that. So that is how I tend to 
ultimately to look at the issue. So you asked, and that is sort 
of my view on it.
    Mr. Larson. I am happy to hear it. Thank you.
    Mr. Smith. Thank you.
    The Chairman. Just a question of the Ranking Member. The 
new bill, the FEA, what does that stand for?
    Mr. Larson. It stands for the Federal Elections 
Administration.
    The Chairman. I heard the term Federal Execution 
Administration. That is why I was just kind of curious.
    Mr. Ehlers.
    Mr. Ehlers. Thank you, Mr. Chairman.
    Mr. Larson. Don't tell Mr. Shays I said that.
    The Chairman. I have already informed him.
    Mr. Ehlers. Fortunately we don't have capital punishment in 
Michigan, except by the Federal Government. Your comment about 
Arizona reminded me, I was out there for a hearing on elections 
issues at one point, shortly after that law passed, and the 
advocates there testified very strongly in favor of public 
financing. But it turns out most people don't know that over 50 
percent of the campaign for public financing was financed by 
one wealthy individual and the proposal definitely would not 
have passed without that large contribution. So I thought that 
was an interesting side light.
    I do want to thank the Commission, as the Chairman did, for 
their helpfulness. And particularly my campaign staff. I have 
told them definitely we are never going to do anything wrong, 
and don't ever make me hire an attorney. And so far they have 
succeeded. But they check with you frequently on questions of 
interpretation and always have been given good responses rather 
rapidly, and I appreciate that.
    We even--my first election was a special election. We had 
just a few weeks before the primary, a few weeks between the 
primary and the general. The paperwork was sloppy. The reports 
were inaccurate. I thought I might go to jail before I was 
sworn in. But we just got a CPA and sent him down to your 
headquarters here in Washington and worked through the whole 
thing in 4 hours and got it straightened out, and I was very 
appreciative of your staff's willingness to do that and sit 
down and take that time. So I just want to say the only 
experience I have had with you has been very positive.
    On the proposal for the--for having an odd number 
Commission, it seems to be very strange. You have to recognize 
that in a political partisan situation, there are times you 
simply have to have the same number on both sides. And you are 
well aware of that with your experience on the so-called ethics 
committee, which is Standards of Official Conduct Committee. 
That would never work if we were not an even number on both 
sides. So I think the FEC should remain with the same number on 
both sides.
    In addition to that, we have too many odd organizations in 
Washington already, so clearly we don't want to have--give you 
an odd number.
    I have no specific questions beyond that. I just wanted to 
make those observations. And thank you. Thank both of you for 
your work.
    Mr. Smith. Perhaps, Congressman, I could make a couple of 
observations in response. First, I will just point out it is 
good to hear from you, because I am a native Michiganian 
myself. I remember that long Michigan debate as to whether we 
are Michiganians or Michiganders.
    Mr. Ehlers. We are still Michiganders.
    Mr. Smith. And we were Michiganians at some point. Or maybe 
not. I don't know. I was on the losing side of that one.
    But one thing I would add, you mentioned I think our staff 
can be very helpful, and I think one thing we do is avery good 
public outreach effort to explain things. But I think it is worth it to 
go back a little bit. Congressman Larson mentioned my article, ``A 
Toothless Anaconda.'' that was a bit of play off the critique that the 
Commission is a toothless tiger, that you don't necessarily need teeth 
to kill your victims.
    I think it is worth noting that I have found that while the 
Commission may not be overly frightening to a lot of folks in 
Washington, it can be very confusing and frightening to folks 
at the grass roots. And you talk about your lawyers trying to 
make sure nothing goes wrong. When you decide to run for 
Congress, you get a package. If you ask the Commission what do 
you need to comply with, you will get a package of materials. 
And I just saw it today, and I wish I had thought of it and 
brought it down. It is several pounds. I can't remember the 
exact weight. But somebody had calculated the exact weight. It 
totals, hundreds and hundreds if not over thousands of pages. 
It is very complex.
    And I find when I go to a party convention, people say, 
``well what do you do?'' And I say, ``well, I am a commissioner 
at the Federal Election Commission.'' And they have left the 
punch bowl and are across the room before the words finish 
coming out of my mouth. It can be a very frightening 
organization to these types of groups. And I think that is 
worth keeping in mind.
    Mr. Ehlers. If I may reclaim my time. I would like to 
mention that the weight of that package is probably as much our 
fault as yours. And I sometimes long for the day when we simply 
say, the only thing you have to do is count the money 
accurately and record it all and who it came from, because we 
have imposed so many different regulations on myself. I, in 
fact, recall a businessman who complained to me more years 
about the paperwork that we create for business. Then he ran 
for office as a State legislator, and his next comment to me 
was, ``You treat yourself worse than you treated us.'' we in 
fact have created more paperwork for ourselves than we have for 
a lot of other people. And I really decry that. I think it 
should be simple and straightforward, because we want to 
encourage citizens to run for public office and not discourage 
them, and currently we discourage them.
    Ms. Weintraub. If I might, just a brief comment also. 
Speaking as somebody who used to work for the House Ethics 
Committee, I find that people are extremely friendly to Federal 
election commissioners by comparison. But I want to thank you 
for your kind comments about our staff. I do think that the 
public outreach that we do is one of the best aspects of the 
agency, and the people who work in that division do a terrific 
job, and in fact we routinely go around the country to try to 
reach out to people. We do make it as accessible as possible 
for people who are not Washington insiders.
    The Chairman. Thank you. Gentlelady, Congresswoman 
Millender-McDonald? Gentleman.
    Mr. Brady. Just briefly. I, like my colleague, ran in a 
special election and was completely confused on what I had to 
do. It has been quite some time, and since then I am still 
completely confused to what I have to do, and you probably have 
a staff member directly assigned to me all the time, and I just 
appreciate that and I thank him or her, wherever they may be.
    Mr. Larson. Just a follow-up to that, because you mentioned 
that you do the outreach. I am curious. How many programs do 
you conduct annually for outreach? And are they in every region 
of the country? And do you have the budget to accommodate that?
    Ms. Weintraub. We usually do, I am going to have to give 
you an approximate figure, but I can get back to you with the 
exact number. But I think we probably do about half a dozen 
conferences a year, some of them in Washington and some of them 
around the country. Usually three of them are in other places. 
This year we went to Boston, Chicago, and San Diego. San Diego 
one is the one that is coming up in another couple of weeks. 
And our commissioners go out to those conferences.
    I have been to all of the conferences around the country 
this year to do that kind of outreach and to show people that 
we really do care.
    Mr. Larson. What is the attendance at the conferences?
    Ms. Weintraub. Could be 80 people, could be 100 people. It 
is usually in that range. The first conference that we did this 
year in Washington right after BCRA passed was standing room 
only. There were a lot of people who wanted to come to that. 
And then the staff go around and do separate conferences, just 
sort of 1-day mini-conferences in different parts of the 
country, and they will do maybe three or four.
    Mr. Larson. Like somebody in Idaho was interested or--does 
the staff go out there?
    Ms. Weintraub. We don't necessarily have one in Idaho. But 
we have been to Denver, we have been to Chicago, we are going 
to Tampa, San Diego, Seattle, and San Francisco. We try to 
cover both coasts. And then somewhere in the middle. And 
somewhere in the south maybe, somewhere in the north, we try 
and spread it around. I think it is really a valuable thing 
that the agency does. And the feedback that I get when I go to 
these conferences is that people really do appreciate our 
coming out.
    Mr. Larson. I think they would be extraordinarily valuable, 
and to Mr. Smith's point, especially if you are in the 
hinterlands, so to speak. And you receive, as Mr. Ehlers points 
out, a pound of documents; that has got to be pretty 
intimidating in and of itself.
    The thrust of my question is do you feel that you have 
enough resources? Does the Commission feel it has enough 
resources to carry out its function?
    Ms. Weintraub. I feel pretty comfortable that we are doing 
a good job with the resources that we have. If you want to give 
us more resources we would be happy to have more conferences. I 
will go Idaho if you want me to.
    Mr. Larson. Thank you.
    The Chairman. Gentlelady.
    Ms. Millender-McDonald. Thank you, Mr. Chairman, and it is 
good to be here. It is good to have you here. I am sorry I had 
to step out, but the floor action has us coming and going. More 
going than coming.
    When I left, Mr. Smith was suggesting that a lot of the 
cases you have to throw out because, I guess, the time 
limitations on some of the cases. And is it because of a lack 
of personnel that you are having a backlog of these cases?
    The other thing that I want to ask is the lacks in 
enforcement, and given the structure of three Democrats, three 
Republicans, who breaks the tie if there is a tie to be broken 
or the deadlock or whatever? Is this composition workable?
    Mr. Smith. You referred to my comments as you stepped out. 
I don't recall at what point you stepped out. I had mentioned 
that the Commission had substantially reduced the number of 
cases that are simply not gotten to. In fact in the last fiscal 
year, it was one.
    Like any government agency, like any private business, like 
any household, sure we could use more money. That would be 
nice.
    Ms. Millender-McDonald. I am not advocating on that.
    Mr. Smith. Right. Particularly, I think that it would be--I 
think that due process rights are important and I think that if 
it is true that there is a concern that that would slow the 
process, that it would be valuable to provide the resources to 
provide that due process. I think that generally, though, we 
have been able to cut the backlog. Not only the number of 
dismissals for stale cases cut down to one in the last fiscal 
year, but the time it has taken to process cases we have cut 
considerably. And this week the Counsel's Office provided us 
with ambitious goals on further shortening processing time. We 
have been able to cut this down through good management in the 
Counsel's office and through introduction of programs such as 
admin fines and the alternative dispute resolution program.
    So there are ways to address this beyond simply constantly 
pleading for more money. And I just would say that I think we 
do the best we can with the resources that we have, and we will 
continue to do that. I don't think in my mind that the real 
problem is that we are not getting to cases at all. It is that 
cases could be sped up with our current resources and I think 
we are working on that.
    And then on the deadlock issue we did have a colloquy a bit 
on that. And as the Chair pointed out in response to an earlier 
question, we deadlock about 3 percent of the time or have 3-3 
votes I prefer to say. And as I pointed out, the fact that we 
tie 3-3 does not necessarily mean that the issue is not 
resolved. In fact in the vast majority of cases it clearly 
resolves the issue. In an enforcement matter, a 3-3 vote is 
just as decisive a vote as a 6-0 vote not to go forward. It 
decides the issue.
    Ms. Millender-McDonald. So does it stay in its present form 
when you have the 3-3? You say it is a decision nonetheless. 
Which way does it go if 3 is for and 3 is opposed?
    Mr. Smith. Tie goes to the defendant. The statute requires 
four votes to move forward on any particular matter.
    And I think that system actually has worked very well. I 
find it ironic that many of the people who criticize the 
Commission and criticize that structure and say they deadlock 
all the time 3-3, which first is not true, those same people 
when allegations are made that the Commission has been partisan 
in the past would be the first to point out that well, no, the 
Commission structure requires at least one Democrat to chase 
any Democrat, at least one Republican to vote to chase any 
Republican. They will go right back to that bipartisan 
structure to defend allegations that the Commission has been 
partisan or too aggressive. So I think that bipartisan 
structure serves a real purpose and people who levy the 
complaint know it serves a purpose. They rely on that purpose 
themselves. Frankly, I think that argument is a red herring. It 
is an argument that people instinctively think sounds true, but 
once you know what goes on at the Commission and see the 
figures, it is a red herring argument I think.
    Ms. Weintraub. I do not disagree with anything that the 
Vice Chairman has said on this point. I would add that it is a 
misperception to think that when we walk into the room the 
first thing that happens is three people vote one way and three 
people vote the other way and we start dickering on who is 
going to change their vote. I think that philosophical 
approaches to the law more often governs than partisan 
differences. Sometime we deadlock 3 to 3 and it is not along 
partisan lines. Sometimes people who normally do not agree with 
each other agree with each other. Sometimes I will go over and 
join my Republican colleagues and sometimes I am the sole vote 
and everyone is voting against me. It varies from one case to 
the next.
    But the fact that there are three and three of us forces us 
to work together a lot more than we otherwise would. It forces 
us to seek common ground.
    Ms. Millender-McDonald. That is one way to look at it.
    The Chairman. I know we have a second panel, but I have a 
brief question. The FEC in the past has come under some debate 
for designating additional respondents in a complaint that have 
only the most tenuous connections to the alleged violation. And 
a lot of times the individuals are not made aware of the 
reasons why they have been named as a respondent. Would it 
hinder your enforcement process at all for the respondents that 
they be given a brief explanation as to why they have been 
designated as such?
    Ms. Weintraub. No, I don't think so. Usually people are 
designated as respondents because they are named in the 
complaint, and they may not be formally named but they are 
mentioned in there somewhere and they get a copy of the 
complaint, so they are on notice as to what the general basis 
of it is. Sometimes we have what are called internally 
generated respondents who are not necessarily named in the 
complaint formally and the General Counsel's Office recommends 
that we proceed against them because there is information in 
the complaint that suggests they may have violated the law.
    I think this is another area where the Vice Chairman and I 
agree. We should be providing notice to those individuals at 
some point before we make any decisions with respect to them. 
And I know that the General Counsel's Office is currently 
working on preparing a new policy on naming respondents which I 
expect to have within a matter of weeks.
    It is an area that we are well aware of and that we have 
been working on. It has been a problem in the past, but I think 
we are addressing it.
    Mr. Smith. I would add only that I think it is being 
addressed and I think we are better about not--one of my 
favorite stories was we had a person file a complaint a couple 
of years ago and he had worked for the campaign and had not 
been paid his salary. And he was accusing the campaign of 
various activities, misuse of funds and so on. But he said, ``I 
keep trying to get what I am owed and they will not pay me. In 
effect I was forced to make a $10,000 contribution to the 
campaign.'' So we named him as a respondent for having made an 
excessive contribution to the campaign because he was 
complaining about not getting his salary.
    I think that was an outlier even at that time, butsometimes 
it shows that the process got out of hand. I think that has changed and 
I think there has been a strong effort to be more careful about naming 
respondents. But I think one reason this is a problem or at least 
perceived as such by people who practice before us is that they do not 
know how we do it. And the Commission has--you may hear in the second 
panel, they talk about sort of secret procedures and so on, and there 
are a lot of procedures at the Commission simply have not been 
regularized or made public so the public does not understand what is 
going on. And as you know, when people do not understand what is going 
on, that is when they get suspicious and nervous and feel they are not 
being treated fairly and that is when they feel they can't trust their 
government.
    We need to work on that. I think we are. I don't know 
exactly what to do but I think we need to continue working 
there.
    The Chairman. I want to thank both the Chair and the 
Commissioner. Personal note to Commissioner. I know you were 
born in Michigan. You worked in Columbus, Ohio. I hope you 
remember when the Buckeyes go up to Michigan pretty soon to 
topple Michigan where your loyalties lie.
    Mr. Smith. Are you asking me to state at this time?
    The Chairman. If you would like to, which team you are 
going to root for.
    Mr. Smith. I will confess----
    The Chairman. Thank you very much. I appreciate it. Thank 
you. And we will begin with the second panel.
    I want to welcome panel two. We have James Bopp, Jr., 
partner of Bopp, Coleson & Bostrom, General Counsel, James 
Madison Center for Free Speech; Don McGahn, General Counsel, 
National Republican Committee; Karl Sandstrom, Partner, Perkins 
Coie, Former Commissioner of the FEC; and Marc Elias, Partner, 
Perkins Coie.

    STATEMENTS OF JAMES BOPP, JR., PARTNER, BOPP, COLESON & 
BOSTROM, GENERAL COUNSEL, JAMES MADISON CENTER FOR FREE SPEECH; 
DON McGAHN, GENERAL COUNSEL, NATIONAL REPUBLICAN CONGRESSIONAL 
   COMMITTEE; KARL SANDSTROM, PARTNER, PERKINS COIE, FORMER 
  COMMISSIONER, FEDERAL ELECTION COMMISSION; AND MARC ELIAS, 
                     PARTNER, PERKINS COIE

    The Chairman. We will welcome the panelists and will start 
with Mr. Bopp.

                  STATEMENT OF JAMES BOPP, JR.

    Mr. Bopp. Thank you very much, Mr. Chairman. The topic 
before this committee is really an important one. The 
enforcement procedures of the Federal Election Commission and 
more generally, the matters that come under its jurisdiction go 
to the very heart of the health of our democracy. The FEC, 
unlike any other governmental agency, is charged specifically 
with regulating the four indispensable democratic freedoms that 
are necessary for us to conduct our representative democracy. 
So not only are they charged with regulating such activities in 
those circumstances in which there is a sufficiently compelling 
governmental interest, but also they are active in 
investigating whether or not violations have occurred of the 
act.
    These investigations themselves impinge, infringe, and can 
violate the first amendment rights of our citizens. This is 
most obvious, I think, in the fact that the FEC routinely 
accumulates a lot of documents that go to the political 
strategies and plans, be they legislative, campaign-related or 
whatever, the disclosure of which would seriously jeopardize 
the ability of those groups to conduct their first amendment-
protected activities.
    Thus I view the Federal Election Commission, even though it 
is not an adjudicatory agency--and shouldn't be in my 
judgment--that the Federal constitutional guarantees of due 
process are applicable because the activities, the matters 
which are within the supervision and jurisdiction of the 
Commission, go to first amendment-protected rights and how they 
conduct their activities also can violate those rights. And as 
a result, due process is required in order to ensure that the 
citizens are protected from the government.
    Now, there is another danger with the Federal Election 
Commission. That would be the danger that it could be used for 
partisan advantage. And I think, frankly, every campaign for 
Congress, in their plan, has a chapter on when they are going 
to file an FEC complaint to smear their opponent, to try to 
divert their attention, to waste their resources, et cetera.
    And having the Commission 3 to 3 means that it is very 
difficult to use the Commission for a partisan advantage.
    Secondly, the Commission is a governmental agency and 
powerful governmental officials are apt to use government 
agencies to chill citizens from criticizing them. So that is 
also a danger.
    And finally is the danger that an agency such as this would 
simply become overzealous. This warning was really issued in 
1980 in a second circuit case where Judge Kaufman said, quote: 
This danger, that is infringement of the first amendment rights 
of citizens, is especially acute when an official agency of the 
government has been created to scrutinize the content of 
political expression, for such bureaucracies feed upon speech 
and almost inevitably come to view unrestrained expression as a 
potential evil to be tamed, muzzled, or sterilized.
    I would want to report to you all that in my judgment, the 
Commission has fulfilled some of those fears. That is, that it 
is fair to say that the Commission has engaged in a wide 
variety of overenforcement, particularly against issue advocacy 
speech where the Commission for 25 years, through a series of 
enforcement actions and regulatory efforts, were seeking to 
draw within the jurisdiction of the FEC issue advocacy by 
citizen groups which the U.S. Supreme Court has said repeatedly 
has the highest form of first amendment protection.
    The result has been costly and intrusive investigations, 
often with an eye toward shaping the law rather than pursuing 
somebody who has obviously violated the law. The Christian 
Coalition case which I recount is a tragic example of the 
overenforcement, overinvestigation, and misuse of the agencyin 
my judgment to try to impinge upon--intentionally impinge upon the 
first amendment rights of citizens.
    Well, this could get worse. The Bipartisan Campaign Reform 
Act--I view that anachronism as saying before campaigning, 
retain an attorney--would vastly increase the authority of the 
Federal Election Commission to investigate first amendment-
protected activities.
    So as a result, I would just mention two essential reforms 
in my judgment. One is to separate the conflicting role that 
the general counsel currently has between being an 
investigator, a prosecutor, and a legal advisor to the agency 
and the Commission.
    I think that these create an inherent conflict and that 
historically--I am not talking about the current general 
counsel--but historically, the role that the general counsel 
has assumed is one as a prosecutor, no matter what stage they 
are at. And secondly, I would urge the Congress to incorporate 
into the FECA the decision of the D.C. Circuit in AFL-CIO vs. 
FEC which limited release of documents at case closure. I am 
very concerned that--and I would commend the Commission and 
this committee for their efforts that they have launched in the 
self-examination and trying to, I think, address some of the 
problems that the past has revealed.
    The Chairman. Thank you.
    [The statement of Mr. Bopp follows:]
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    The Chairman. Mr. McGahn.

                    STATEMENT OF DON McGAHN

    Mr. McGahn. Thank you, Mr. Chairman. Mr. Chairman, members 
of the committee, thank you for inviting me to testify here. 
The FEC enforcement process is a mystery to most people. 
Believe it or not, even to some practitioners who specialize in 
this area.
    As has been alluded to in others' comments, I think it was 
Commissioner Smith who mentioned this, there are many mystery 
procedures and sort of insider things that occur. That is the 
first theme I want to hit. The problem with those, even if you 
eventually understand them, is that those who understand them 
the quickest tend to be the ones who are the most sophisticated 
actors; that is to say, incumbents or people who are political 
professionals. Those who are attempting to become involved in 
the political process for the first time, a volunteer 
treasurer, a first-time candidate, a college student 
volunteering for a campaign, are the ones most susceptible to 
these procedures and with the most to lose.
    This is not the sort of message we need to be sending. I 
think the message needs to be more people should be involved in 
politics, not less. There ought to be more people excited about 
being involved in politics, not scared. Based upon my own 
personal experience, I have had several clients who have run 
for Congress, have made mistakes that perhaps if they had 
thought about it ahead of time they maybe would not have made, 
but they were mistakes and they were excellent candidates just 
in the wrong election cycle or the wrong district. And there 
are several that I wish would run again, but they won't because 
they have gone through the FEC gauntlet. And I understand from 
my other colleagues in the Bar that the same happens on the 
other side of the aisle; that there are several very fine 
people who want to run but really get somewhat petrified.
    This week I taught a candidates school for new candidates 
and I can tell you, without revealing any of my insider 
baseball or whether there is something in a notebook about 
filing FEC complaints during the campaign, that these 
candidates are very, very worried about all the things they 
read in the newspaper about criminal penalties and fines and 
all sorts of things.
    And any potential reforms I think flow from that premise. 
Whether it is clarifying whether or not the treasurer is 
liable, and when is the treasurer liable versus when the 
candidate is liable, this is amorphous and I don't think there 
is a clear answer to this day. What does it take to start an 
investigation at the FEC? Is it reason to believe? That is the 
what the law says. What does that mean? It begs the central 
question, is that a reason to investigate or is that a reason 
to believe that there has been a violation of law?
    The notion that I do not actually feel as if you have 
gotten your day in court, so to speak, as Commissioner Smith 
mentioned. Many, many, many, many of the cases do not go to 
litigation. They are resolved by the Commission through 
conciliation, and people pay a fine which is voluntary. But in 
my experience it certainly does not feel voluntary when you 
look at cost of litigating the matter versus the cost of paying 
the fine, which will be much less than litigating.
    I do not advocate oral argument in every matter or somehow 
slowing down the process any more than it can be slowed down. 
But having been someone who has done criminal defense work and 
has worked in a prosecutor's office and done extensive motions 
practice, although it may be a cultural shock to the FEC, it is 
possible to not slow down the process but still give folks a 
hearing when it is warranted. I am not advocating a hearing at 
all times, but it should be in the discretion of the Commission 
to grant an argument at times when the case may warrant it.
    Having spoken to others after certain matters haveclosed, 
it seems it would have been helpful to the commissioners to have heard 
from the lawyers or the respondents personally, because although they 
believe that sometimes the briefing that goes on is thorough, sometimes 
oral argument does bring out things that are not abundantly clear in 
the paper that is presented to the Commission.
    The confidentiality provision is another mystery to many 
people. It is, in many instances, a sword for the Commission 
and not a shield for the respondents. I believe the original 
intent was to protect respondents, not to enable the Commission 
to hide the ball, so to speak. If a party is deposed in a case 
in which you are a respondent, you are not entitled to be there 
to partake in the deposition or at least observe.
    I have had at least one situation where I had a client who 
had a former employee who was being deposed, and attorney-
client privileges were potentially going to arise, and I was 
not allowed in the deposition to object on behalf of my client 
for attorney-client privilege purposes. That is one extreme 
example, but the concept of attorney-client privilege has come 
up in the first panel. One of the first two panelists mentioned 
it.
    These are the fundamental rights protections. Whether or 
not it is an adjudication or not, whether or not it is an 
administrative agency or something that requires due process, 
the effective result is that it is an adjudication for most, 
and that therefore the protections ought to be there, and 
sometimes they are not.
    With that, I conclude, and look forward to answering any 
questions you may have.
    The Chairman. Thank you.
    [The statement of Mr. McGahn follows:]
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    The Chairman. Mr. Sandstrom.

                  STATEMENT OF KARL SANDSTROM

    Mr. Sandstrom. Chairman Ney, Mr. Larson, and members of the 
committee, I want to thank you for the opportunity to appear 
here today. I spent 12 years of my life working as a staff 
member for the Committee on House Administration. The Committee 
on House Administration is the smallest committee on the Hill 
and also the oldest. And the reason it is the oldest committee 
is because the first thing the original Congress had to deal 
with was an election matter, and it is good to see 200 years 
later you are still dealing with election matters.
    And in that regard, I would like to commend the committee, 
because it proved last year that it was ``The Little Engine 
That Could,'' and passed the Help America Vote Act. And all of 
the members of this committee are be commended for the effort 
you put into that. It was a tremendous service to the country.
    The subject of today's hearing, the proper enforcement of 
our campaign finance laws, is of increasing importance in light 
of the Bipartisan Campaign Reform Act. The new law 
fundamentally reshapes the enforcement landscape. Prior law 
focused on regulating financial transactions, primarily the 
reporting and acceptance of contributions. The new law expands 
the scope of regulation to cover political communications 
generally. The old law imposed liability primarily on political 
committees and, to a lesser extent, on unfortunate treasurers. 
The new law imposes personal liability on candidates, their 
agents, and their vendors.
    Under BCRA, political activity that had been the exclusive 
province of State law is now subject to Federal regulation. 
Lastly, BCRA places greater reliance on criminal penalties to 
achieve compliance.
    An unavoidable consequence of these changes is an extension 
of the Federal Election Commission enforcement jurisdiction. 
The demand placed on the Commission to enforce the law over a 
substantial and large swath of political activity and to do so 
in a constitutionally sensitive manner is potentially crushing. 
It will strain the Commission's resources and test its 
judgment. The Commission's task is not made easier by the fact 
that it operates in a politically charged environment. 
Enforcing campaign finance laws is a political act. Complaints 
are filed for political reasons. The resolution of a complaint 
has political consequences. This does not mean that the FEC 
cannot be fair and impartial in enforcing the law, but quite 
the opposite; it means that the FEC must be. Commissioners must 
be willing to take fire from the left and the right, from 
Democrats and Republicans and from reformers and from skeptics.
    Importantly, the process must be fair and heedful of what 
is being regulated. Enforcement insensitive to the political 
arena in which it operates exacts a high price. Political 
participants can be unjustifiably tarred, political activity 
can be chilled, election outcomes can be affected.
    The first obligation of the Commission is to tell the 
public what the law is. Clear rules must precede enforcement. 
Enforcement proceedings should not be the occasion for the 
Commission to articulate how it intends to enforce the law. 
Ambiguity in the law shouldn't be resolved by enforcement. When 
it comes to the regulation of politics, fair notice is 
essential.
    It is far too difficult to get people to participate in 
politics. Uncertainty in the law dampens participation. Vague 
standards are not the only enemy of participation. Strident 
enforcement is also a culprit. Harsh penalties for inadvertent 
violations assure that the uncomprehending violator will 
abandon politics. Drawn-out investigations sideline even the 
wrongly accused. Any regime of campaign finance law that relies 
primarily on the threat of severe penalties ultimately will 
fail. Voluntary compliance and correction must be the goal.
    In recent years, the Commission has made great strides 
inimplementing alternatives to the traditional enforcement process. The 
administrative fine program for late filers has improved the timeliness 
of reports by referring enforcement resources on more important 
matters. The alternative dispute resolution process allows inadvertent, 
unaggravated violations to be resolved with expenditure of no 
investigatory resources.
    The Commission's willingness to dismiss matters because the 
complaint fails to state a violation of law has allowed the 
Commission to timely respond to frivolous, politically inspired 
complaints. All these changes should be applauded and 
expansions of these efforts should be encouraged.
    Because of the enhancement of criminal penalties under 
BCRA, what, other than misdemeanors, are now felonies? The 
Commission will need to revisit its working relationship with 
the Department of Justice. All indications are that the 
Department of Justice is going to be less willing to defer to 
the Commission. The number of concurrent investigations is 
undoubtedly going to increase. This is going to prove to be a 
challenge of civil enforcement.
    Subjects, targets, and even witnesses in a criminal 
investigation will be less likely to cooperate with the 
Commission until the criminal matter is resolved.
    My colleague, Mark Elias, has addressed a number of 
specifics of the enforcement process that could be improved. 
The Commission has been open to change. Listening to the 
concerns of those who practice before it, and generally to the 
public, is not a sign of weakness but of strength. You cannot 
effectively regulate taverns from a monastery. You cannot 
regulate politics without a knowledge of how it is practiced. 
The Commission needs to reach out, and unless it does it will 
be unable to discharge the immense responsibility that the new 
law imposes upon it.
    The Chairman. Thank you.
    [The statement of Mr. Sandstrom follows:]
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    The Chairman. Mr. Elias.

                    STATEMENT OF MARC ELIAS

    Mr. Elias. Thank you, Chairman Ney, Congressman Larson, and 
members of the committee. I want to thank you for the 
opportunity to appear and testify before you today.
    The issue you consider, the Federal Election Commission's 
enforcement procedures, is an important one not only for the 
agency, but for the regulated community as well.
    For the last 10 years as an attorney at Perkins Coie, I 
have represented officeholders, candidates, party committees, 
PACs, and individuals all in matters before the Federal 
Election Commission. My firm, as some of you on the committee 
know, represents both the Democratic Senatorial and Democratic 
Congressional Campaign Committees. I have seen the good and the 
bad in the FEC's process. I have filed complaints against my 
clients' adversaries and defended more than my fair share filed 
against my clients.
    I have conciliated FEC complaints, what I refer to as MURs, 
and have litigated against the agency in Federal court when the 
process failed. On a handful of occasions I have sued the FEC 
when the agency has failed to act on a complaint that my client 
filed. Several months ago I had the opportunity to testify 
before the FEC itself regarding this same topic.
    I think it is important to recognize at the outset the 
commissioners' initiative in seeking comments from the 
regulated community about how the enforcement process works and 
how it could be improved.
    I have been impressed by the Commission's focus on this 
subject and the steps it has taken towards reform so far. In 
particular, the Commission and its general counsel deserve 
credit for reforms and changing the rule on access to 
deposition transcripts. While only one change, it is an 
important step towards a more transparent and open enforcement 
regime.
    During the FEC's review, it sought comments on specific 
topics. I would ask the committee to allow me to submit for the 
record the written comments my firm submitted in connection 
with the FEC's hearing.
    For the sake of brevity I would like to amplify on a few of 
these. Before I do, I would also like to say that my partner, 
Bob Bauer, was out of town today or otherwise would have liked 
to have been here as well. And the comments I offer reflect his 
thoughts on this as well.
    First, I would like to stress how important time is in the 
enforcement process. In nearly every matter, clients are 
acutely aware of how long the FEC takes to review and dispose 
of enforcement matters. Several years ago I litigated a case 
against the FEC over its failure to act in a timely fashion on 
a complaint that had been filed by the Democratic Senatorial 
Campaign Committee. Just by way of background, the complaint 
was filed shortly before the special runoff election. Then-
Senator Wyche Fowler was in a runoff against his challenger 
Paul Coverdell. That complaint was filed prior to the 1992 
cycle.
    In 1997 we were in Federal court with the FEC, arguing over 
why a complaint that the FEC itself ranked in its top tier of 
most important complaints had still not been resolved. The FEC 
at the time acknowledged that it would not resolve the case 
within the 5-year statute of limitations and offered the court 
an estimate of between 3.3 and 4.6 years to resolve a typical 
complaint.
    From the respondent's perspective, the length of the 
typical MUR means that a quick vindication is almost never 
possible. A complaint facing a newly filed MUR is told that it 
will be years before the matter is resolved and indeed it may 
be more than a year before anyone at the agency even reads the 
complaint to see whether it has any merit.
    Things are no better for the party filing the complaint. 
From the perspective of the complaining party, the likely delay 
facing them is simply disheartening. The enforcement process 
offers no real avenues for addressing harms occurringin 
realtime during hotly contested elections. The result is that all too 
often the enforcement process becomes a burden to a defunct campaign 
who has alleged the offending conduct is years in the past.
    More than once I have had to explain to a client that, 
despite the fact that the campaign was years behind them and 
that there was no money left in the campaign or prospect to 
raise any more, they could not terminate their campaign because 
the FEC had not yet acted on a MUR.
    I would also like to highlight the uncertain role that 
campaign treasurers face in the current enforcement process. As 
members of this committee know, every political committee must 
have a treasurer. In fact, he or she is the only statutory 
officer of the committee. While treasurers are often nothing 
more than symbolic figures in a campaign, they learn in an 
enforcement process they, and they alone, will be named as a 
respondent. Even when the conduct at issue has nothing to do 
with reporting or compliance, the treasurer is named in the 
enforcement process and any resulting litigation.
    For a significant number of individuals, this has become 
unacceptable and finding campaign treasurers is increasingly 
difficult. Some campaign treasurers simply refuse to allow 
campaigns to settle matters with the FEC because they will be 
named and are afraid of the stigma that will be associated with 
it. The current practice blurs the distinction between those 
situations where the Commission intends to impose individual 
liability for fines and penalties upon a treasurer and those 
circumstances where the treasurer is simply named in his or her 
official capacity.
    Finally, I just want to say a brief word about how 
respondents are named in enforcement matters. For years the FEC 
has maintained what I describe as a curious process for naming 
respondents, which I noticed when I was a young associate, by 
the fact I would file FEC complaints against adversaries--and, 
I will acknowledge, typically Republicans--and I learn years 
later that a whole group of people who I had never contemplated 
to be respondents had wound up having to respond to the FEC 
complaint. I think Commissioner Smith noted in his written 
testimony that I over time developed a theory that the FEC 
simply scanned all incoming complaints for proper nouns and 
simply all proper nouns became respondents in the FEC 
complaint. I am relieved to hear that that is not as simplistic 
a process as I thought, although I remain puzzled by the 
criteria that are used.
    I would like only to add that the burden and time 
associated with responding to complaints when you are 
representing someone who was not even named by the complaining 
party is worth review and consideration.
    Again I want to thank you for having me here today, and I 
would be happy to answer any questions.
    [The statement of Mr. Elias follows:]
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    The Chairman. I want to thank the panel for your testimony. 
I wanted to ask about what your thoughts were briefly on the 
possibility of being able to withdraw a complaint. And this has 
been raised several times, I know, before different people. 
Somebody files a complaint, it goes on and on. They take a look 
at it and say, I was wrong, I shouldn't have filed it. I guess 
the backup question would be, would they pay some type of 
penalty or legal fees or something of that nature? Do you have 
any thoughts on that? Because you cannot withdraw a complaint 
once it begins, as I understand it. Yes?
    Mr. Sandstrom. It would be a difficult choice to allow 
someone to withdraw a complaint, where the Commission has 
confirmed there has been a violation of law. If the Commission 
has actually begun an investigation, has determined that there 
is likelihood of a violation, the Commission can hardly 
acquiesce in that violation.
    The Chairman. I wonder if the Commission has not determined 
it, it just begins and the person says, I did it, I was wrong.
    Mr. Sandstrom. Certainly I think the Commission could 
entertain that, but you would have to be concerned whether 
somebody had been politically pressured to withdraw a 
legitimate complaint. That complaint, once it is out there, has 
made that person a target and they may have wanted to relieve 
the political pressure that has been brought upon them.
    The Chairman. Anybody else that wants to answer these, just 
feel free.
    Mr. McGahn. The notion of withdrawing a complaint, I agree 
with Mr. Sandstrom in what he said, is difficult once the 
agency makes a finding that there is some violation.
    The Chairman. What about pre-finding?
    Mr. McGahn. That is the point I want to address. First of 
all, the complaints are filed under oath, so the person filing 
the complaint does have to go under oath and have a notary 
print the complaint and file it. And so there is some liability 
to the person filing it if they file a false complaint. 
However, if the person files what he or she thinks is a 
truthful complaint--let's say it is based on information and 
belief, which is an acceptable standard to file a complaint--
but then discovers that they were just wrong, based on new 
information, I am not aware of any formal procedure that would 
allow that person to withdraw the complaint or otherwise 
correct it.
    I have had this situation arise. The advice is, if the 
person filing the complaint could send a letter to the 
commission saying, gee, I think I got the facts wrong--but 
whether or not the Commission entertains that is not mandatory, 
nor is I think there any formal provision.
    The Chairman. Under the law, the Commission can entertain, 
they can look at it, but I don't think that can cause a 
withdrawal.
    The other question I wanted to throw out is probably a 
complete pipedream that would cost the Commission a lot of 
money. And I should have asked the Commission, but I didn't 
think of it. In the State of Ohio we have an Election 
Commission. It is different. Part of it I do not agree with. 
They monitor your free speech. You make a statement in the 
newspaper and say, my opponent is not a good supporter of this 
or that issue, they can actually take you to the Elections 
Commission for what you said in the newspaper, which I think 
someday will be very unconstitutional in the State of Ohio 
because it is monitoring speech.
    But on the other hand, the Ohio Election Commission does do 
something, though, on the filing of these, whether it is on 
speech or violation of the use of funds. And if it is a 
certain--and I wish I could remember what the time frame is, 
but if within a certain time period before that election 
something is filed, the Election Commission does an expedited 
basic emergency hearing so a decision is basically made before 
that election.
    What that does in our process, you have to think twice 
before you file, if you are going to file something frivolous, 
to file 2 weeks before the election this outrageous filing, 
that is going to be decided before the election. And if you 
filed something that is frivolous and it is shown frivolous, 
you will probably lose on a vote, and then it is going to be 
held against the person in the election.
    Do you think there is an ability or enough money that there 
could be an expedited procedure if something is filed within a 
certain time--6 weeks before the election, 2 weeks before the 
election? Would that help? Would that hurt? Or is that probably 
impossible?
    Mr. Sandstrom. I would just note the Commission is 
fallible. And would you want the Commission determining the 
fate of an election based on wrongful findings? If you have a 
rush to judgment; you run a great risk of making a bad 
judgment.
    Mr. Elias. I agree with Karl. I am not sure I would want 
them making a rush to judgment. I do think, however, that a 
process whereby at least a threshold determination is made 
whether or not to find reason to believe, I think you are 
right----
    The Chairman. I apologize. I don't know the exact section 
of law in Ohio. There might be a preliminary decision in Ohio. 
I probably misstated. They do not decide the case but they make 
a preliminary decision in a stated period of time that there is 
probable reason to advance or not. There is something there in 
the law, and I wish I knew it.
    Mr. Elias. I think everyone here on this panel has had a 
client who has had a complaint filed against them that has no 
merit. But since it will take the Commission months or years to 
even look at the complaint, no less dismiss it, that complaint 
looms during the pendency of the election. So even at a 
minimum, if there was some rule that there would be some at 
least screening of those complaints by the Commission so that 
complaints that are clearly not meritorious could be screened 
out prior to elections, that I think would be helpful.
    The Chairman. Which brings me to another question. Would 
there ever be the ability of the FEC to basically try to screen 
actions against--try to prescreen about inexperienced political 
actors, as they may be called, that are making these filings 
and some of them are inexperienced or they are volunteers? 
Would there be an ability to prescreen those, or is that 
probably impossible?
    Mr. Bopp. That would require a considerable refinement of 
the FEC's current procedures, and certainly we know as lawyers 
disciplinary commissions often have a series of filters where 
they filter through complaints and try to quickly dispose of 
those that, on their face, have no merit and try to categorize 
ones depending upon their potential severity and treat them 
differently. That might have some merit.
    The Chairman. I think I confused you, Mr. Sandstrom, on my 
question. But if somebody in good faith brings something to the 
FEC, they are inexperienced and they are volunteer, and I 
wonder if there is a pre-way to say this is very clearly not a 
violation, but if you want to file it you can. And in good 
faith, they do not file it because they are really not an 
experienced person. I guess that was the nature of my question.
    Mr. Sandstrom. I am fully with the Chairman's desire to 
find ways by which matters that shouldn't be before the 
Commission because they are frivolous, they are not 
substantiated, the person was operating on facts they have now 
determined to be false, would have an opportunity to have that 
matter taken out of the political process. So there is 
vindication for the accused. To the extent the Chairman is 
looking for a way to give early vindication, I am fully 
supportive of the Commission exploring it.
    And the Commission has done a much better job. They 
actually now find no reason to believe on occasion. They will 
actually look at a complaint and say this does not rise to a 
level where the facts that have been alleged constitute a 
violation. So you get an opportunity to get those matters 
dismissed at an early stage. I think the Commission should 
improve on this process and try to make those findings even 
earlier.
    The Chairman. I believe we had occasions where somebody 
would write here to House Administration and say, a sitting 
Member of Congress didn't have a right to run because they are 
a sitting Member, and we want an investigation of their 
election process. And we look at that and have to do an 
official dismissal, and we come to a quick conclusion that that 
is something that we shouldn't spend a lot of time on. I was 
comparing it to that.
    My last question: In your opinion, would greater procedural 
fairness--which has been an issue--would that actually result 
in more compliance with the law or would it result in less 
compliance with the law?
    Mr. Sandstrom. Maybe because I am a former commissioner, I 
have some fairly strong views on a number of these issues and 
am more than happy to offer them. I think oral hearings are a 
bad idea. There is a difference between a commissioner and a 
judge. I was in a previous life the chairman of an 
administrative review board which I reviewed along with my 
board members, administrative law judges' decisions. The judges 
are the ones who sat through all the testimony, sat through the 
cross-examination, made credibility judgments with respect to 
witnesses. The Commission is not in a position to do that. No 
lawyer coming before them is offering fact testimony. It is 
onlythen questions of law.
    If the question of law is whether the law is ambiguous, I 
question whether the Commission should be prosecuting that 
matter. So I really do not believe that with respect to having 
an oral hearing, you would do anything positive and you may 
disrupt the process because there is a real danger here. That 
is what I would call ``partisan creep.'' It is difficult for 
three Democrats and three Republicans to judge people of their 
own party. That sympathy would likely come out in a hearing. It 
is just natural. You are more likely to be sympathetic to your 
witness, and therefore hearings would change the dynamics of 
the Commission in a way that I think would not be to anyone's 
benefit.
    Mr. Bopp. Thank you, Mr. Chairman. I really do not know the 
answer to your question. That is, I don't know whether or not 
there would be more willing enforcement or compliance with the 
FECA or not with procedures, because I don't think procedures 
are intended for that purpose. I think the purpose of the 
procedures is to ensure that the FEC, in carrying out its 
activities that inherently impinge on first amendment rights, 
does the minimum amount of damage to our democracy and to the 
exercise of those rights in carrying out their investigatory 
responsibilities.
    So simply the government asking questions of a private 
citizen about their first amendment activities is itself a 
violation of their rights. It chills them, it inhibits them. So 
I think the purpose of heightened procedures is to ensure that 
agreed important work of the Federal Election Commission is 
done with minimal damage to our democracy.
    The Chairman. Thank you. Mr. Larson.
    Mr. Larson. Thank you. And I want to thank the panelists, 
and I have a couple of questions I would like to get to. The 
Chairman has asked a couple of them already.
    My first question has to deal with something you mentioned 
earlier, Marc, and that was with regard to the new law that is 
going into effect. I say this in general terms, because just a 
hunch on my part that most Members of Congress have not 
thoroughly read or understand the ramifications of this law. 
While people may be used to the fact of the treasurer and the 
treasurer's statutory cite and authority, you mentioned 
something about agents, and could you explain or elaborate what 
that means and what the ramification of that is?
    Mr. Elias. Sure. For a number of years before the new law 
predictably--several times a cycle I would get a call from a 
candidate who would say, would you mind talking to so-and-so, I 
want him to be my treasurer. I would say, sure. They would say, 
he is a little nervous; could you tell him this is not that big 
of a deal? I would say, okay, I will do the best I can. And in 
the back of my mind I always knew that the treasurer was, in 
fact, the only person who was going to be on the hook. That no 
matter what went wrong, who was solicited, what was done right 
or wrong, what was reported or wasn't reported, it was only the 
treasurer who could potentially have a problem. The candidate 
would not and, by and large, the people who worked for the 
campaign would not.
    The 2004 cycle has ushered in a new conversation. Now it is 
candidates calling and officeholders calling. I hear now it is 
no longer Joe Smith the treasurer who is liable. They say, now 
it is me. And that is one of the big changes in the Bipartisan 
Campaign Reform Act. The ban, for example, on soliciting soft 
money is not a ban on treasurers. It is not a ban on campaign 
workers. It is a ban on officeholders and candidates, and it is 
a ban on officeholders and candidates and their agents and 
individuals acting on their behalf.
    So if candidate so-and-so goes out now and solicits soft 
money, it is that officeholder or that candidate who has now 
broken the campaign finance laws, not the treasurer. And that 
is also true with respect to individuals who are acting as 
agents on behalf of the candidate.
    Mr. Larson. How would you define an agent?
    Mr. Elias. This was a subject of some discussion among the 
Commission, so I will inevitably get an electroshock from one 
of them if I get this wrong. An agent is someone who acts on 
behalf of a candidate or officeholder, with actual authority to 
act on behalf of the officeholder, and in their capacity to act 
on behalf of the officeholder or candidate. So they need to be 
empowered by the officeholder or candidate to be acting on 
their behalf and they need to be acting in that capacity when 
they do the action.
    Mr. Larson. How many people in a campaign do you think feel 
that they are empowered by the candidate?
    Mr. Elias. An increasing number of people do not want to be 
empowered by the candidate. And all the joking aside, there has 
already been significant discussion and at least one advisory 
opinion, which I submitted on behalf of a relative of an 
officeholder, as to whether or not what is now known as the 
two-hat theory, which is whether it is--you have Jeb Bush in 
Florida or a family member of a Member of Congress--whether 
they can continue to raise money for State candidates as they 
always had, or whether they are somehow wearing a hat acting on 
behalf of their relative. And the Commission I think sensibly 
came to the conclusion that you can raise multiple hats.
    But it now raises this unfortunate question where now 
people call, if I am an agent, how do I know which hat I am 
wearing? And you have to sort of search inside your soul, and 
when you are doing this, are you acting on behalf of the 
Federal officeholder or on someone else's behalf? It is a real 
problem. I think the Commission has taken a sensible and 
practical approach to interpreting it.
    Mr. Larson. Is there a solution, as Mr. Sandstrom alluded 
to before, where we can draw bright lines? Where there can be--
where we can make clear the intent?
    Mr. Elias. Yes. And I think the Commission has done as good 
a job of that, both through their regulations on the agent, and 
also in the advisory opinion that I alluded to.
    Mr. Bopp. And I think in interpreting the BCRA, the 
Commission has made sincere efforts to draw bright lines. You 
should know, however, Congressman, that Mr. Shays and Mr. 
Meehan disagree with the regulation that drew the bright line 
on who is an agent, that is, you have to have express 
authority. They have sued the Commission to overturn that 
regulation, because they want liability cast on all Members of 
Congress by the actions of any person with apparent authority. 
So that even if you have told someone you are not to do this or 
do this for me, if they go out and do it and they have apparent 
authority because of their position with your candidacy, you 
are liable.
    Mr. Larson. Well, I wish Mr. Shays and Mr. Meehan were here 
to respond, but I will follow up with that.
    That leads into my next question and one that I was asking 
the previous panelists. So is there enough money for the FEC to 
broadly reach out and explain to the candidatesand the 
treasurers and the agents in this process to inform them of these new 
rules and regulations inasmuch as this portion of the law takes effect 
November 1st, if I am correct?
    Mr. Bopp. It took effect last November 1st. And my sense of 
it is no, they do not have enough money to do this role, and 
this is a very salutary role for the Commission to undertake.
    Mr. Elias. I will answer by saying I don't know whether 
they have enough money. I will say one thing that I do think is 
important, and that is as the Commission goes forward, 
especially after the McConnell litigation is resolved, that in 
addition to the trainings, the need for them to do whatever new 
implementing regulations quickly and to resolve advisory 
opinion requests quickly is as important, frankly, as the 
trainings that I think go on out in the countryside, which are 
vital.
    And, again, I want to say I think the Commission has done a 
very good job here so far in coming to clear lines in their 
regulatory and advisory opinion process.
    Mr. Larson. Should the Commission do a study of the 
ambiguities in the existing law and correct those or come up 
with suggestions?
    Mr. Sandstrom. The Commission should be always doing a 
continuous study of ambiguities in law. You referred to these 
public information sessions. During those conferences, 
questions come up that the staff can't answer. One of the 
obligations of that staff should be ``if I can't answer it, the 
Commission needs to give me an answer.'' If the Commission 
can't provide an answer, then it does need to do a regulation 
or find some means to publicly answer.
    So this is one avenue, this constant feedback from staff 
should be part of the regular process by which the Commission 
goes about providing clear rules.
    Mr. Larson. Anyone else on the panel wish to respond to 
that?
    Just out of curiosity, I know the Chairman has stepped out, 
but I think it would be interesting on the part of the 
committee to hold a symposium for members so that they can 
fully appreciate, or hopefully understand--we all know how 
enlightened every Member of Congress is on every salient issue 
before them but, nonetheless, I do think that, especially given 
the criminality involved with these issues, that members 
hopefully ought to be more aware of them, or at least more 
informed about the various consequences and some of the 
remedies and procedures and who to go to and how to contact 
them and how to avoid any of the problematic concerns that the 
law anticipates might happen.
    Mr. Doolittle [presiding]. While the Chair is gone and I am 
filling in for him, let me say I agree completely. This change 
in the law was designed, frankly, to take away the bright lines 
and make things more subjecting, more blurred, more questions 
of fact. For potential defendants that is a problem. So I think 
our members ought to realize just the possible jeopardy they 
are now going to be placed in by these changes, and I think one 
of the best things this committee could do would be to try and 
shine a light on that. Knowledge will give us power to act 
effectively.
    Has Mrs.----
    Mr. Larson. She has not.
    Mr. Doolittle. You are recognized.
    Ms. Millender-McDonald. I agree with you, but I am of the 
ilk that everything falls back to me, so I see that as my being 
liable, irrespective of the new law or the old law. But I will 
take you one by one to get you back to some of the things you 
said.
    Mr. Bopp, you mentioned in your testimony, I have read, 
that you are here as a practitioner and not one who is 
representing any client.
    Mr. Bopp. Yes.
    Ms. Millender-McDonald. Given that, you have said that the 
general counsel of the FEC wears many hats; he or she is a 
prosecutor, investigator, regulator, all of the other things 
that you said. And you said that this FEC tends to infringe on 
the first amendment right.
    Given that, then would it be--should we, then, look at--and 
I am not sure you said this, because I wrote side-bar notes, 
the FEC complaints are used for partisan advantage. If you did 
say that, then would it be best that we create a new FEC agency 
that has a nonpartisan person at the helm?
    Mr. Bopp. Well, there are proposals that the agency be 
reformed as either with a single administrator or I think you 
asked earlier having an odd commissioner. Well, if that is the 
way it would be conducted, then I want to be either the odd 
commissioner or the single administrator because I would be the 
most important person in this town. I would have the unilateral 
authority to derail candidacies by launching investigations and 
enforcement actions. I would have the ability unilaterally to 
smear candidates and other groups or citizens that want to 
participate in some way in our democracy. I would have the 
power to stifle speech that I disapproved of and disliked.
    That is why--I mean, I would have more power to affect 
ultimately our government than anyone. And it seems to me that 
we have gone through a period now of 3 years where we have seen 
in Florida the problem of lawyers, courts, you know, trying to 
determine the outcome of elections. We then saw the same sorry 
spectacle in California, efforts to derail democracy--derail 
democracy as I would view it----
    Ms. Millender-McDonald. I am a Californian.
    Mr. Bopp [continuing]. With the lawsuits and judges and the 
court orders to stop or put off the election.
    If we had that kind of system, I think we should just 
cancel elections and just have the lawyers, the courts, and the 
Federal bureaucrats decide who is going to run our country.
    Ms. Millender-McDonald. That is preposterous, yes.
    Mr. McGahn.
    Mr. McGahn. McGahn.
    Ms. Millender-McDonald. You said that people see the FEC as 
a mystery. What type of mystery--I may have not noted some of 
those things that you quoted as a mystery--but what would be 
the mystery that some folks see at the FEC?
    Mr. McGahn. There are several instances of either internal 
procedures or investigatory procedures that are either 
counterintuitive or not publicly disclosed. There is, or so I 
have heard--I have never worked at the Commission so I do not 
have any firsthand knowledge of this--it has been mentioned in 
other hearings that there is a schedule of some sort that 
listed fines for certain offenses, or some table where you have 
a pretty good idea of where you are going to end up in the 
conciliation process. That is not a document that I can get. 
That is not a public document.
    So when clients ask me, once they have done something that 
they think is wrong, what do you think the damage is going to 
be fine-wise, I have to use my best guess just basedon research 
of other MURs and that sort of thing. But yet there is some internal 
schedule. A public agency, one would think, would have to make that 
public, but so far it has not been made public.
    The second area is in the depositions and the like. As I 
mentioned in my opening, if you are a respondent to a matter 
under review, you are not entitled to be in depositions, for 
example, where your case is being discussed. And that is 
irrespective of whether or not there are issues that you really 
ought to be there for or not. On the one hand the Commission 
says that that would somehow compromise the enforcement process 
or somehow impinge upon the confidentiality provisions in the 
statute, but on the other hand it is counterintuitive to people 
that they do not get to be a part of that.
    The third thing is the notion of appearing before the 
Commission in some capacity. Time and time again, people are 
shocked, stunned and amazed, that they are presented with 
preapproved conciliation agreements by a faceless Commission 
that they have never seen, never met, in a building that they 
will never step into. And I have alluded and been misquoted in 
alluding to Kafka's ``The Trial.'' There is a lawyer who is the 
go-between who speaks the dialect of the faceless government 
agency who becomes the shuttle back and forth, and the poor 
respondent did not know what is happening day to day. They know 
they are in trouble but they just do not know quite sure why.
    At the end of the day if you give people hearings, is it 
going to change the cases? Probably not. Lawyers are lawyers 
and the arguments are the arguments. At the end of the day, the 
charm and charisma of a certain attorney is probably not going 
to change the Commission's mind. But the respondents, 
particularly those who they mentioned who are the novice 
political actors, come away feeling they got more of a fair 
shake. The feeling is that there is not a fair shake. There is 
a cloud of secrecy over the Commission, and that is why I think 
the more it can be opened up, it may not change the result of 
cases, nor would I think it would enhance the process, simply 
because people would have more confidence and trust in what is 
going on.
    Ms. Millender-McDonald. Mr. Sandstrom, given that you are a 
former commissioner and the statement was made by Mr. Bopp that 
the general counsel in and of itself wears a lot of hats, how 
do you respond to that? Because it seems as though Mr. Bopp, 
not putting words in your mouth, but has the appearance that 
this general counsel really has too many different areas that 
he or she has to contend with under the cloak of general 
counsel.
    Mr. Sandstrom. First, I would agree with something that Jim 
said, that in fact he would be an odd commissioner. But, I 
think it is very important to know that there is a trade-off 
once you go to hearings, mini-trials. I mean, the costs, 
anybody that is familiar with administrative law proceedings 
before ALJs understand they involve all the expense that a 
regular trial would. They involve witnesses, cross-examining 
them, reviewing documents, so if you actually want the general 
counsel not just to be the attorney to the Commission advising 
the commission on whether to proceed with the matter, based 
upon the general counsel and their staffs' judgment set forth 
in a document about whether this matter merits finding probable 
cause that having been responded to, you would have to look at 
what is the alternative. Is the alternative actually worse than 
the current process? And I would posit that it could well turn 
out to be much worse.
    Don, another good friend said you would like some of the 
mystery taken out. And maybe his clients would like to sit 
through an administrative law judge type trial. I don't think 
so. I don't think that would be healthy for the process. The 
fact that we have so few cases actually going to trial is a 
good thing. If the Commission was actually bringing more cases 
in courts, because more things merited going to court and could 
not be worked out for conciliation, that would be worse for the 
system. So----
    Ms. Millender-McDonald. So a lot of the cases are resolved 
outside of court?
    Mr. Sandstrom. Almost all of the cases. I heard the figure 
like 98 percent. That is healthy, even though I understand that 
the Commission has maybe undue leverage in those cases. 
Because, the respondent's choice is either to give in at the 
conciliation or have to go to court and trial. But if the 
choice is to have the trial earlier, I think you are going to 
lose out there and you are going to turn something into a very 
adversarial proceeding where currently it is not an adversarial 
proceeding even though to many I understand why it appears to 
be.
    Ms. Millender-McDonald. Mr. Elias, given the fact that Mr. 
Sandstrom has said that most of the cases are resolved outside 
of court, and you raise the issue that a screening process 
might be important to have initially as opposed to I guess the 
fact finding that goes on given the cases that come before this 
Commission, would it then be proper to try to have the 
screening before the fact finding mission, or should we have 
the fact finding mission and just ignore screening to try to 
alleviate some of the time element that some of these cases 
imposes?
    Mr. Elias. Let me just start by commenting on the question 
about an independent administrator. If it is going to be an 
Independent rather than a Democrat or Republican, I would 
commend either Senator Jeffords or Congressman Sanders as the 
kind of Independent that I would like to see handling it. In 
terms of your question, I think the question of screening gets 
to whether there are certain kinds of complaints that come in 
for which no facts could be found for which there is going to 
be a violation. A lot of FEC complaints come in that are very, 
very straightforward. They allege that, you know, candidate so 
and so failed to report X poll and the response comes in and 
says we did report it, here it is on our FEC report. And it is 
very, very frustrating to people, frankly, in you all's 
position that you call me and say what do we do. We got this 
complaint and we reported it and I have a copy of the page and 
I say, well, we will put together a response and we will attach 
the page and we will reference it. And then you naturally 
assume that that means it is over. And you say, well, when will 
the FEC tell us that we didn't do anything wrong so that I can 
tell the newspaper that we are right. And I will tell you, 
well, it will likely be several months at a minimum, more 
likely more than a year before the FEC says something.
    I get letters. To be honest with you, one of the problems 
with the FEC is they send the letters and simplytell you what 
MER number it was. I get letters telling me that complaints have been 
dismissed. I can barely figure out who the client was, I mean it was so 
long ago. I mean, 4 years, and I am glad to hear the FEC is speeding up 
their process and I have no doubt that that is the case and I think 
that is great. But we are right now as a law firm dealing with a number 
of complaints that relate to the 1998 cycle.
    Now, why are we dealing with complaints against the 1998 
cycle? Because it is 5 years from the end of the 1998 cycle, so 
the general counsel's office is pushing through all of the MERs 
that are approaching the 5-year statute of limitations. Now 
that is appropriate. They ought to because they ought not to go 
stale. They ought to be resolved in a timely fashion. But my 
idea of screening is that some number of MERs we ought to be 
able to just get knocked out of the box rather than them sit 
for months before some human being looks at them.
    Ms. Millender-McDonald. And that should be done by general 
counsel?
    Mr. Elias. Someone under the general counsel's auspices. I 
don't know who within the organization would do it.
    Ms. Millender-McDonald. So to all of you, should that be a 
restructuring of FEC given the new laws that we have because it 
seems like these laws are absolutely far riskier, I guess you 
might say, or certainly puts us in a different position than 
what the old laws were? Should there be a restructuring of the 
FEC whereby more accountability is brought to bear and this 
screening process is done by someone who has the legitimacy to 
do that and then dispose of it?
    Don't all speak at once.
    Mr. Bopp. I think both those would be, are salutary 
proposals. The additional one that you have referred to is my 
concern that I have expressed in my testimony that the general 
counsel has multiple hats that I think are conflicting and has 
compromised how that office has conducted its respective roles 
because, in my view, in my practitioner's view, the 
prosecutorial role has seemed to historically come to the fore, 
even at the earliest stages of looking at complaints, certainly 
in the cases of investigations that I am familiar with. So you 
know, I think that the prosecutorial role is one. I think that 
the advice that the general counsel is now obligated to give, 
which is intended and should be objective, you know, legal 
advice, you know, is a completely different role. And I think 
the agency would function better and each of these roles would 
be served better by separating those roles.
    The Chairman. Thank you.
    Ms. Millender-McDonald. No other comments on that.
    Mr. Elias. I would just say I think that, to get back to 
the screening role, I think that the agency can't let the 
perfect be the enemy of the good.
    Ms. Millender-McDonald. I am sorry?
    Mr. Elias. The agency can't let the perfect be the enemy of 
the good. And if some numbers of complaints get screened out 
that maybe shouldn't have in an ideal world, great. I mean the 
FEC recently dismissed a complaint involving whether Wal-Mart 
could put out a magazine. I might have seen life--I might have 
seen called balls and strikes slightly different than they did, 
but God bless them. They at least called balls and strikes in a 
fashion that didn't take more than a year or so. And I think if 
cases just moved quicker, whether it was always the result that 
I would like or the result that Don McGahn would like, I think 
we would all be happier.
    The Chairman. Thank you.
    Ms. Millender-McDonald. You know, Mr. Chairman, this has 
been a very informative panel, it has raised a lot of issues, 
and has raised my eyebrows. And as Mr. Elias said, our 
treasurers have been pretty much symbolic, a symbolism, but 
they were really liable for anything that would come to bear in 
terms of infractions. And now the tide has turned. I agree with 
the ranking member. We should look at some type of symposium to 
instruct these Members or to at least inform the Members of the 
new laws and how they are now applied as opposed to the old 
laws that were applied differently.
    The Chairman. Thank you. When I was out of the room and I 
came back in, Mr. Larson had informed me of your statement, and 
you know I think we can do that. Just add a couple of things. 
We have I know with other incumbents stressed to them to call. 
And one of the reasons, as I interpreted or also with some 
legal advice, some Members of Congress may agree to go ahead 
and put their name to something for a local party and to try to 
help out and the next thing you know everybody's going to be 
drug into a real problem. And then obviously there is going to 
be anger within your own party because of what you did to them 
because you know they didn't know it. And I think these are 
general concerns and in discussions that we have I would even 
venture to say that some of the people that were participants 
in writing the law are not able to clearly answer some of the 
questions that are asked of them.
    So we have tried to warn people to call attorneys, pick an 
attorney, would take it one step further, too. We can do this 
for the incumbent and I have no problem in doing it. I would 
also urge both political parties and any other political party 
to do it for challengers. We can't do it for challengers, but I 
think that they should do it for challengers so that if you 
have got John or Susie Smith out there they might spend a grand 
total of $6,000 or 7,000 but that has them making a filing. 
They should also have the availability to know what they are 
into so they don't make some kind of mistake on only spending 
5,000 and also have a legal problem.
    So I think the more we can educate, the better off we would 
be. And I am going to now refer to, if the FEA is created, my 
candidate for life time appointment as head of that 
organization, Mr. Doolittle. He is unbiased.
    Ms. Millender-McDonald. Oh, yeah, right.
    Mr. Doolittle. Mr. Chairman, I can guarantee you I would do 
my part to try and uphold the freedom of speech. It seems to 
have fallen by the board in recent times. I truly apologize for 
missing the first panel. I just had--something came up and this 
was the best I could do. So some of these concerns I can't 
fully address although let me ask if we get to submit questions 
in writing.
    The Chairman. Without objection.
    Mr. Doolittle. And I will want to do that. But I am 
concerned, I understand the Department of Justice's Public 
Integrity Unit has stated they intend to make violations of the 
Federal Election Campaign Act a greater priority and intend to 
ratchet up investigations against candidates. And pursuant to 
that, I understand the Department of Justice has asked the FEC 
to renegotiate at some, I don't know, 20-year-plus old 
memorandum of understanding which sets forth the civil versus 
the criminal responsibilities of each agency. And I guess I 
would like to know, if one of thepeople at this panel can tell 
me, how do cases get referred from the FEC to the Department of 
Justice?
    Mr. Sandstrom. Having referred a couple of matters or voted 
on such matters when I was on the Commission a referral 
requires a majority vote of the Commission. At least four 
commissioners must support the referral. It usually comes at 
the probable cause stage if it involves a FECA violation. 
Referral matters that may involve, for instance, false 
statements may be handled differently. But that is one of the 
things that really needs to be worked out between the 
Department of Justice and the FEC, what is going to be the 
referral policy going forward.
    Mr. Doolittle. Well, does it concern any of you that--I 
don't know. I mean, America is about the freedom of speech. 
That is, I thought that provision of the Constitution was put 
in to preclude exactly what Congress has recently done because 
it seems like we are abridging the freedom of speech in the 
name of some supposedly greater value. I don't know what could 
be greater. So does it concern you that now we are going to be 
sort of threatening people with criminal prosecution for things 
that I thought were sort of in the protected realm?
    Mr. Bopp. Well, if I may, I am one of the counsel 
representing clients in McConnell vs. FEC that has sued many of 
the provisions of the Bi-Partisan Company Reform Act. And the 
fundamental concern there is I think the one that you are 
expressing. The first amendment says quote, Congress shall make 
no law. Well, BCRA was 90 pages. We now have over a thousand 
pages of FEC regulations and explanations of those regulations, 
all of which people are now supposed to try to understand that 
govern a multiple--many different organizations and individuals 
in many different ways. I think we are into a culture of 
regulation of what the founders intended to be a free 
marketplace, which was to be our elections and our speech and 
our association. And we are soon going to reach the point where 
the only people that will participate are the wealthy, the 
corrupt, the reckless and the ignorant. I mean, that is what we 
are getting to. And as we add layer upon layer of regulation, 
what we are talking about here and I think what I have been 
talking about is how can we ameliorate, you know, what the 
essential feature of the regulatory regime that has now been 
imposed upon our democracy.
    Mr. Sandstrom. Mr. Doolittle, I am very sympathetic to your 
question, but I think it may oversimplify. If I am an employer 
and I shake down employees for contributions, that should be 
criminally prosecuted. If I receive foreign money or route it 
through some American citizen, that probably should be 
prosecuted. In the past the Department of Justice has shown 
good judgment, I think, with respect to matters that they have 
prosecuted. The future is open to question. And that is where I 
think your question is most legitimate, is asking how will this 
expanded felony jurisdiction of the Department of Justice be 
employed. And if it is employed in some of the areas that Mr. 
Bopp is most concerned with, the content of communication, 
private political conversations and such, then I think there is 
real danger there. But I think you still need to retain 
criminal enforcement for the truly aggravated violations, for 
instance, foreign national contributions, conduit contributions 
and such.
    Mr. Doolittle. Well, I think if it were confined to that we 
would all have a better comfort level. But I think we are all 
aware of examples where you have some prosecutor some place 
that is out to make a name for himself, and I just worry about 
this. I think this is very much subject to abuse. Yes, sir.
    Mr. Bopp. If I might make one more comment on that. The 
problem here is we are in a downward spiral. The more 
regulation, the more laws you pass, the more incentives there 
are for people who are otherwise corrupt to violate the law. 
The law abiding obey. The one who is prepared to skirt the law 
gains an advantage in an election which occurs at a given point 
in time and we can never go back. So they win the election by 
corrupt practices, and the more restrictions on law abiding 
people, the more opportunity and incentive there is for the 
corrupt to violate laws. Therefore, the reformers, correctly 
understanding that, then say, well, then therefore we need to 
increase penalties.
    Mr. Doolittle. Yeah it is a self-fulfilling prophecy and 
this will only go from bad to worse if we continue down this 
road just as it has gone from bad to worse. It was bad. Now it 
is worse. It will be yet worse than this. Some day we are going 
to have a Congress and a Supreme Court that will give a literal 
reading of the Constitution like has been done in the past but 
not now. I hope we will follow Ms. Millender-McDonald's 
recommendation and really get into this.
    Let me say if you have ever had the misfortune to be on the 
receiving end of one of these investigations, it is very 
troubling. You all of a sudden learn what your real rights are 
and aren't and there are very few real rights that you have as 
a practical matter. You don't even get--you know, under the 
present practices you don't even have to have exculpatory 
information turned over to you by the FEC. They can at their 
discretion withhold that. And I just think there is some real 
unfairness that has been--even, I was looking for this. The 
head of the American Bar Association in 1983 recommended that 
access be given to documents, interrogatories and depositions 
at the probable cause stage and yet as I understand it that 
really has not happened. You know, here we are 20 some years 
later. And unfortunately, by the time you discover what your 
rights really are it is too late. You know, you are then the 
defendant.
    But I think it is our job as the policy makers to try and 
stand up for the rights of the accused. It troubles me. I think 
of my first race for the State Senate and I got a friend to be 
my treasurer. I would never do that to a friend today. I mean, 
there was never even possibility of any--I mean, as long as he 
was trying to be honest he would be okay. But today, you would 
have to go to a professional and you are going to pay. I didn't 
pay my treasurer anything. He volunteered. You would have to 
pay someone to do this today because they incur liabilities. 
And you know this is just one of the things that raises the 
cost of campaigns, and all these big reformers constantly 
complain about the amount of money we are spending on these 
campaigns when they through their onerous regulation have 
caused a lot of it.
    So anyway my time is up, Mr. Chairman. It was a good 
hearing, the part I was here for, and I look forward to the 
next one.
    The Chairman. Thank you. Also wanted to note too, leaving 
ourselves out of it for a second, just to make a warning out 
there to challengers, challengers and their treasurers can get 
themselves in horrific problems, end up having to hire an 
attorney, maybe to have a campaign accountof you know 30,000 
some dollars and they expended it. They hire an attorney. They end up 
with a bill of 50,000 and lose their house or have to mortgage it or 
whatever they have to do because they don't even have the resources we 
do with campaign accounts where we can raise money, hire the attorneys, 
and I just think also, and again, if somebody's committing a wrongful 
act, sure. But I think and what was passed, which I didn't support, but 
what was passed, if not defined very, very clearly and carefully, then 
I believe a lot of challengers, not so much us, where we can put an 
attorney on retainer, you know, call the attorney and they push the 
clock and bill us. But a lot of challengers, I think, are going to not 
have that luxury and the average citizens will start--after a couple of 
people owe 50 or 60,000 and somebody loses their house the average 
citizen might say, wait a minute. So then you are back to where you've 
got to be a State Senator or State Rep or somebody on the inside to run 
for a public office because you know you have been around, you know 
people, you have raised contributions.
    So I just think this should be very chilling, again if it 
is not spelled out exactly what you do and how you do it from a 
very complicated law, which I didn't agree with campaign 
finance reform. But you know it is here and if the Supreme 
Court acts then I think it has got to be spelled out very, very 
carefully and that is just as much a problem for challengers as 
it is for incumbents.
    Ms. Millender-McDonald. Mr. Chairman, I will defer to the 
ranking member.
    Mr. Larson. Thank you. Just a couple of quick points here. 
First, I would hope and I know that we have already chatted 
with the first panel, but it seems, that a symposia or some 
gathering where we can bring Members together would be entirely 
appropriate. But I would also think that the Commission has got 
to have something like the 10 most commonly asked questions by 
campaigns of the Commission so that that would be something 
that could be put out for everybody's perusal. And then also, a 
sense from people who handle these issues on a regular basis, 
the most avoidable offenses, commonly made mistakes by 
campaigns with a fuller, hopefully a better or fuller 
appreciation with the bright lines that need to be drawn, to 
amplify these concerns for both incumbents and challengers 
alike.
    And finally, why I share a number of the concerns that have 
been raised here and we talked earlier about philosophical 
concerns, and I certainly can appreciate those who say, well, 
you know, if there were no regulations at all then you know 
clearly we would operate in the spirit of a free marketplace by 
reporting everything. There is also a whole other philosophy 
that says that if there was public financing of campaigns, and 
we reclaim the air waves that belong to the public, there would 
be free access to disseminate information during an election 
for the public as well. So I just raise that point 
philosophically.
    The Chairman. Gentlelady.
    Ms. Millender-McDonald. I think only, Mr. Chairman, that 
given the information that we have received this committee I 
think would be best to send a letter to our colleagues just 
talking about some of the critical issues that have come before 
this committee today and to tell them that given that, we 
should perhaps convene a symposium to talk about these issues, 
because they are most critical from the treasurer to all other 
aspects of what we have heard today.
    The Chairman. Mr. McGahn, are we allowed to send such a 
letter? I thought I would ask you since you are with the NRCC.
    Mr. McGahn. Yes.
    The Chairman. Thank you. We have it from our expert legal 
counsel. With that, I want to thank all of the witnesses who 
worked hard to prepare for I think two good panels and a good 
hearing. I also want to thank our members for being here today 
and also Mr. Larson's staff as well as the staff of the members 
for preparing and participating in this hearing.
    I ask unanimous consent that members and witnesses have 7 
legislative days to submit material for the record, and those 
statements and materials will be entered in the appropriate 
place in the record without objection. The material will be so 
entered. I also ask unanimous consent that the staff be 
authorized to make technical and conforming changes on all 
matters considered by the committee at today's hearing. Without 
objection, so ordered. And having completed our business, the 
hearing is adjourned.
    Ms. Millender-McDonald. Don't adjourn before I commend you 
and the ranking member on the minority procurement workshop or 
seminar that we had. The ranking member came before the 
Congressional Black Caucus. He took some of their questions and 
their concerns under advisement. He presented it to you. The 
two of you are not minorities by virtue of our looking at you, 
but you were very sensitive to that issue, and with that, let 
me commend you and thank you so much for that. It was 
extraordinarily successful and we look forward to more of 
those, and thank you both so much.
    The Chairman. Well, I thank the gentlelady for her comments 
and we had minority entrepreneurs and business people from 
across the country, as you know. I want to thank Congressman 
Larson and yourself. You were there and the members also, the 
minority leader, Congresswoman Pelosi, and the Speaker of the 
House, Speaker Hastert was very supportive, and appreciate your 
comments.
    With that, the hearing is adjourned.
    [Whereupon, at 5:26 p.m., the committee was adjourned.]

                                
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