[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]





    FEDERAL ELECTION COMMISSION: REVIEWING POLICIES, PROCESSES AND 
                               PROCEDURES

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

                                HEARING

                               before the

                       SUBCOMMITTEE ON ELECTIONS

                                 of the

                           COMMITTEE ON HOUSE
                             ADMINISTRATION
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                Held in Washington, DC, November 3, 2011

                               __________

      Printed for the use of the Committee on House Administration








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                   COMMITTEE ON HOUSE ADMINISTRATION

                DANIEL E. LUNGREN, California, Chairman
GREGG HARPER, Mississippi            ROBERT A. BRADY, Pennsylvania,
PHIL GINGREY, M.D., Georgia            Ranking Minority Member
AARON SCHOCK, Illinois               ZOE LOFGREN, California
TODD ROKITA, Indiana                 CHARLES A. GONZALEZ, Texas
RICHARD B. NUGENT, Florida

                           Professional Staff

             Philip Kiko, Staff Director & General Counsel
                  Jamie Fleet, Minority Staff Director
                                 ------                                

                       Subcommittee on Elections

                  GREGG HARPER, Mississippi, Chairman
AARON SCHOCK, Illinois               CHARLES A. GONZALEZ, Texas
RICHARD B. NUGENT, Florida           ROBERT A. BRADY, Pennsylvania
TODD ROKITA, Indiana

 
    FEDERAL ELECTION COMMISSION: REVIEWING POLICIES, PROCESSES AND 
                               PROCEDURES

                              ----------                              


                       THURSDAY, NOVEMBER 3, 2011

                  House of Representatives,
                         Subcommittee on Elections,
                         Committee on House Administration,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 1310, Longworth House Office Building, Hon. Gregg Harper 
(chairman of the subcommittee) presiding.
    Present: Representatives Harper, Nugent, Schock, Rokita, 
Lungren (ex officio), and Gonzalez.
    Staff Present: Phil Kiko, Staff Director and General 
Counsel; Peter Schalestock, Deputy General Counsel; Kimani 
Little, Parliamentarian; Joe Wallace, Legislative Clerk; Yael 
Barash, Assistant Legislative Clerk; Salley Wood, 
Communications Director; Bob Sensenbrenner, Elections Counsel; 
Karin Moore, Elections Counsel; Jamie Fleet, Minority Staff 
Director; Matt Defreitas, Minority Professional Staff; Khalil 
Abboud, Minority Elections Staff; Thomas Hicks, Minority 
Elections Counsel; and Matt Pinkus, Minority Professional 
Staff.
    Mr. Harper. I will now call to order the Committee on House 
Administration's Subcommittee on Elections for today's 
oversight hearing on reviewing the policies, processes and 
procedures of the Federal Election Commission. The hearing 
record will remain open for 5 legislative days so that members 
may submit any materials that they wish to be included therein. 
A quorum is present, so we may proceed.
    I want to thank everyone for being here today. Certainly we 
are all busy and so, I thank you for taking this time to be 
here. We believe this hearing is long overdue. In fact, the 
last FEC oversight hearing before this Commission was in 2004. 
Seven years is a long time to go without an oversight hearing 
on an agency with such great consequence to political 
discourse. There has been a breakdown in this committee's 
oversight responsibility and it has been a bipartisan one, and 
it is now time for that to change.
    This past summer, the committee presented the FEC with 
questions pertaining to agency operations, regulations and 
litigation. Putting partisan conflicts aside, we want to 
explore the practical functionality of the agency. How it works 
can impact political speech and overall disclosure.
    It was a long list of questions. We had a great deal of 
catching up to do, and I appreciate the FEC's responsiveness to 
our inquiries. There have been some positive accomplishments, 
particularly in providing more due process for those dealing 
with the FEC. However, I found some of the answers to be 
troublesome and others that perhaps just led to more questions.
    For instance, why is the agency continuously pursuing 
litigation based on legal principles that have been rejected in 
case after case? This constant pursuit to litigate losing cases 
again and again I believe is an indefensible waste of 
taxpayers' money.
    Or, why hasn't the Commission updated regulations that are 
unconstitutional after a ruling by the Supreme Court in January 
of 2010?
    Federal general elections are just 12 months away. 
Campaigns and independent groups are in full operation and the 
Commission's regulations are not up to date. How much will 
candidates spend figuring out what rules to follow and what to 
do?
    And finally why, when asked by this committee, did the 
Commission refuse to provide a copy of several enforcement 
documents? Why is the Commission withholding its RAD review and 
referral procedures, its enforcement manual and updates and its 
penalty formulas? From what I understand the enforcement manual 
is similar to, for instance, the SEC's enforcement manual for 
staff investigations, the Department of Labor's manual that 
explains its investigative authority and procedures, the U.S. 
Attorney's manual outlining the Justice Department's 
enforcement policies, the DOJ's Antitrust Division's manual, 
and the U.S. Parole Commission's manual to name a few. And 
there are more. They are similar in that they all provide their 
respective staffs with guidelines and thresholds necessary to 
enforce compliance with Federal laws and regulations.
    But there is one major difference. Theirs are public and 
yours are not. Instead, you deem yours as a sensitive internal 
document and I have to ask how you can justify that. Just this 
past January during the Commission meeting, Commissioner 
Weintraub noted that promoting transparency is essential to the 
Commission's mission. She said, and I quote, we don't believe 
in doing things in secret. And I have to ask what is the 
definition of secret. Unlike the FEC, other agencies rightfully 
make their manuals public to help those trying to comply, 
understand the standards and thresholds that they will be held 
to. Shouldn't everyone subject to your investigation penalties 
have those same rights? Your unwillingness to release these 
documents contradicts and ultimately hinders your agency's core 
mission. And I think it puts us in a situation of are we really 
going to be transparent.
    It is unacceptable and I believe it needs to change, and 
that is why I am going to ask again. This committee is 
requesting that you provide us with your RAD manual, your 
enforcement manual with all updates and your penalty formulas 
for regular and administrative fines proceedings all within 10 
business days. Furthermore, we request that you establish 
agency procedures to make all of them publicly available.
    To be clear, this is the second time that we are asking and 
I believe it is the last time that we will ask. The third 
request will be in the form of a congressional subpoena and we 
know we don't want to go there unless we just have to. But we 
will. I understand that there are policy disputes over some of 
the regulatory progress at the agency. But what we are talking 
about here today are operational failures.
    What disservice is the Commission providing when it doesn't 
even update its regulations to reflect current law? And how can 
we trust an agency to enforce disclosure when it lacks 
disclosure?
    As I mentioned, this agency's actions are of great 
consequence. The laws it enforces are limitations on political 
speech protected by the First Amendment, which is why it is 
imperative that they be enforced in a fair, consistent and 
transparent fashion.
    Again, I do thank you for being here and I look forward to 
discussing these issues. I would like now to recognize my 
colleague, Congressman Gonzalez, for the purpose of providing 
an opening statement. Congressman Gonzalez.
    Mr. Gonzalez. Mr. Chairman, thank you very much. And good 
morning to one and all and welcome. I do have two serious 
concerns on which I hope this hearing will shine some light on. 
The majority's sole recommendation to the so-called 
supercommittee was eliminating the Election Assistance 
Commission and transferring some of its duties to the FEC. I am 
pleased that the minority members under Ranking Member Brady's 
leadership suggested other, more effective suggestions, but I 
also want to know if the FEC can handle the new 
responsibilities as proposed in the legislation.
    The value of EAC to local election officials should by now 
be obvious. One Texas county will save $100,000 per year from a 
single EAC suggestion. I was pleased to see articles from 
former FEC Commissioner von Spakovsky and from Eric Ebersole, 
who the majority called as an expert earlier this year, 
praising the EAC's report on the 2010 elections. It is not 
wholly clear to me whether such reports would have survived 
under H.R. 672 and I am certain that the reports would not have 
received the same priority.
    Regulating campaign finance is FEC's reason for existence 
and requires the Commissioners' full attention. This year has 
seen a host of disturbing reports of financial shenanigans and 
I am eager to hear what the Commission is doing about them.
    Let us turn first to the strange career of W Spann, LLC, 
which was created solely to disguise a $1 million donation to 
the super PAC of former Massachusetts Governor, Mitt Romney. 
That donor was shamed into confessing that there were at least 
two other mystery million dollar donations to Mr. Romney's 
super PAC. Mimi Swartz in the New York Times later quoted, 
quote, one influential Houston Republican said of a recent 
Romney fundraising event, I had someone else pay for me to go 
because I didn't want people to know I was there. I believe 
that paying someone else to donate for you is illegal and with 
this proven disclosure loophole, how do we know that foreign 
nationals haven't illegally contributed too?
    Nor was Mr. Romney alone in this. From Christina Wilkie we 
hear of teenagers maxing out their donations to the campaign of 
my Governor, Rick Perry. Just this week, the Milwaukee Journal 
Sentinel reported that Herman Cain's campaign may have received 
illicit contributions from two Wisconsin corporations created 
solely to funnel money to him. I am not asking the 
Commissioners to comment on any specific allegation, but I want 
to know what steps are being taken to ensure that our laws are 
enforced and any loopholes are indeed closed.
    These disturbing stories make the record setting level of 
obstruction and deadlock votes in the FEC all the more 
troubling. There has been a stunning increase in split deadlock 
votes at the FEC on enforcement votes. It is up more than 1,100 
percent. As former FEC Chairman Trevor Potter said recently of 
the misguided Citizens United decision, quote, the Supreme 
Court upheld the disclosure requirements resoundingly. It is 
inaction in Washington that has given us no disclosure. The FEC 
is now deadlocked 3-3. Congress is deadlocked.
    In the first presidential election since Citizens United 
and SpeechNow, a fully functioning FEC is more important than 
ever, as shown by these chilling words spoken a few words 
again. Quote, groups like ours are potentially very dangerous 
to the political process. We could be a menace, yes. Ten 
independent expenditure groups, for example, could amass this 
great amount of money and defeat the point of accountability in 
politics. We could say whatever we want to say about an 
opponent of a Senator Smith and the Senator wouldn't have to 
say anything. A group like ours could lie through its teeth and 
the candidate it helps will stay clean.
    Those words came from Terry Dolan, National Conservative 
Political Action Committee founder. Commissioners and fellow 
members of this committee, it is up to you and to us to make 
sure that Mr. Dolan's menace is defamed and that proper 
disclosure requirements keep accountability in politics.
    And, Mr. Chairman, at this time, if appropriate, I would 
ask for unanimous consent to enter into the record testimony in 
written form from Common Cause, as well as from Democracy 21.
    Mr. Harper. Without objection.
    [The information follows:]



    
    Mr. Gonzalez. Thank you. And I yield back, sir.
    Mr. Harper. Does any other member wish to be recognized for 
the purpose of making an opening statement? I would now like to 
introduce our witnesses. Commissioner Cynthia Bauerly is 
currently Chair of the Federal Election Commission. Previously 
she served as legislative director for Senator Charles Schumer 
and as counsel on the Senate Judiciary and Rules Committee. And 
we thank you for being here. Commissioner Caroline Hunter is 
the Vice Chair of the FEC. She has been a Commissioner at the 
Election Assistance Commission and has worked in the White 
House, the Department of Homeland Security, and as deputy 
counsel for the Republican National Committee. Welcome.
    Commissioner Donald McGahn previously served as the head of 
a Washington based law practice specializing in election law. 
He was also general counsel to the National Republican 
Congressional Committee in the late 1990s, as well as counsel 
for the Illinois Republican Party.
    Commissioner Matthew Petersen was the Republican chief 
counsel to the Senate Rules and Administration Committee and 
counsel to the Committee on House Administration. I would like 
to welcome Commissioner Petersen back to the committee for his 
first experience on the other side of the witness table at this 
committee.
    Commissioner Steven Walther was Vice Chair of the FEC in 
2008 and the Commission's Chair in 2009. Prior to serving at 
the FEC, Mr. Walther practiced law for 35 years at his Nevada 
law firm.
    Commissioner Ellen Weintraub has been a member of the 
Commission since 2002. She has worked in private practice and 
was counsel to the House Ethics Committee where she was editor 
and chief during the creation of the House Ethics Manual. We 
thank you for a thankless job.
    Chair and Vice Chair, Commissioners, we thank you for all 
of you being here today. The committee has received your 
written testimony. And I will recognize the chair and vice 
chair each for 5 minutes to present a summary of your 
submissions. To help you keep that time, of course you know we 
have a timing device near the witness table. The device will 
emit a green light for 4 minutes and then go to yellow with a 
minute to go. And at red, your time will have been over.
    And we will start with the Commissioner Bauerly. And we 
will start and we welcome you and please proceed.

   STATEMENTS OF THE HON. CYNTHIA L. BAUERLY, CHAIR, FEDERAL 
  ELECTION COMMISSION; AND THE HON. CAROLINE C. HUNTER, VICE 
               CHAIR, FEDERAL ELECTION COMMISSION

            STATEMENT OF THE HON. CYNTHIA L. BAUERLY

    Ms. Bauerly. Thank you. Good morning, Chairman Harper, 
Ranking Member Gonzalez, members of the subcommittee. I am 
pleased to be here on behalf of the Federal Election Commission 
to discuss the Commission's operations and procedures. I 
appreciate the Subcommittee on Elections' invitation to appear 
and the opportunity to present a few moments of opening remarks 
to highlight certain aspects of the Commission's longer written 
submission to you.
    I would like just for a moment, if I might, to introduce 
Mr. Tony Herman, Mr. Alec Palmer, our statutory officers at the 
Commission. Mr. Herman joined us recently and Mr. Palmer was 
recently our permanent Staff Director. I know your staffs have 
met with them and we appreciate your courtesy to them.
    When I was appointed to the FEC in 2008 along with the Vice 
Chair, Commissioners Petersen, Commissioner McGahn and 
Commissioner Walther who as you know had previously served a 
recess appointment, the Commission had lacked a quorum for 
approximately 6 months. When we joined Commissioner Weintraub 
at the Commission in July of 2008, my colleagues and I found 
ourselves with a significant backlog of enforcement audits and 
alternative dispute resolution matters waiting for us. Through 
a lot of hard work by everyone at the agency, particularly in 
the Offices of General Counsel and Compliance, we have returned 
to our appropriate processing times for such matters.
    As you know, a good share of the Federal Election Campaign 
Act is aimed at disclosure of Federal campaign activity. 
Following cases like Citizens United and SpeechNow, many new 
speakers and many recent speakers have become engaged in new 
ways. With this additional activity, the public increasingly 
relies on the disclosure provided by committees through the FEC 
in order to effectively respond to and participate in the 
political debate.
    Accordingly, the Commission strives to make campaign 
finance information readily available and useful to the public. 
Our Website provides disclosure of committee reports and 
independent expenditures and election agency communications in 
nearly real time as we receive that information. We have also 
improved the navigation of our Website to make the information 
easier to find.
    Of course, to be useful, the information needs to be 
accurate as well as timely. Accordingly, the FEC devotes a 
considerable portion of its staff to reviewing all reports. 
This is not a small task. In fiscal year 2011, the FEC reports 
analyst reviewed over 72,000 documents filed by committees. 
These same analysts work very closely with committees to answer 
their questions, assist them with filing before the deadlines 
occur and to resolve problems as they arise. In the last fiscal 
year, they answered 14,000 phone calls from committees to offer 
them assistance. They also work extended hours on filing 
deadlines to make sure they are there when committees need them 
most. The Commission also works hard to provide information and 
training to those who file with the FEC. To better serve 
filers, the Commission is developing a dedicated Web page that 
will answer questions our communications specialists also 
fielded over 11,000 phone calls.
    The FEC also continues to hold regional conferences so we 
may get out and provide education and information to those who 
are complying. I find that participating in these conferences 
is an important way for me to get to know and meet treasurers 
and reporting personnel for committees.
    And the FEC continues to innovate in ways to reach more 
committees and filers with this information. For example, in 
order to provide more cost effective training for grass root 
organizations and candidates, the FEC has instituted a series 
of lower cost 1-day seminars and workshops focused for a 
particular group or a legal issue.
    In addition to disclosure and education, the Commission's 
major responsibilities surround the administration and 
interpretation of the FECA. Public confidence in our elections 
depends not only on transparency but on the assurance of those 
who participate in our Federal election system do so within the 
rules established by Congress. In recent years, the Commission 
has made significant progress in processing enforcement cases 
and audits more timely. For certain reporting violations, the 
FEC's alternative dispute resolution program and its 
administrative fines program has been very effective. And we 
appreciate this committee's work on the administrative fines 
program and hope that the committee will again work to extend 
or make permanent that program in 2013.
    We anticipate a very busy election cycle in 2012 and we are 
prepared for it. The FEC has invested in our infrastructure at 
the Commission to ensure that our servers can handle both the 
volume and the number of reports that we expect in 2012. And of 
course all of this is taking place in a time of quickly 
changing legal landscapes. And where we can, the Commission is 
providing its information as soon as we can without going 
through the full process of a rulemaking.
    Recently, the Commission issued some guidance in response 
to a court settlement in the Carey v. FEC decision. Obviously 
additional rulemakings will be necessary to update forms and 
provide full guidance, but we were able to issue specific 
guidance to committees who want to follow that court decision 
and we did the same thing following the Citizens United in 
2010.
    I see my time has expired. I look forward to answering all 
of your questions, and we stand ready to assist the committee 
in any of its future requests.
    [The statement of Ms. Bauerly follows:]



    
    Mr. Harper. Thank you very much. I will now recognize the 
vice chair, Caroline Hunter, for 5 minutes.

            STATEMENT OF THE HON. CAROLINE C. HUNTER

    Ms. Hunter. Thank you. Chairman Harper, Ranking Member 
Gonzalez, members of the subcommittee, thank you for inviting 
me here today to speak with you about the Federal Election 
Commission.
    Since members of the Commission last appeared before 
Congress several years ago, there have been significant changes 
in campaign finance law. Courts at all levels have stricken 
down laws regulating political speech, most notably in the 
landmark Citizens United decision. I would like to use this 
opportunity to supplement the agency's joint testimony by 
updating the subcommittee on the FEC's efforts to comply with 
these significant rulings. Additionally, I would like to share 
some updates on the new processes and procedures we have 
implemented at the Commission in recent years.
    In Citizens United, as you know, the Supreme Court struck 
down the Federal Election Campaign Act's prohibition on 
corporations making independent expenditures in electioneering 
communications. In response, the FEC released a statement in 
February 2010 confirming it would no longer enforce the 
statutory provision and the agency's regulations prohibiting 
IEs and ECs by corporations and labor organizations. The FEC 
also announced it intended to initiate a rulemaking to address 
various other regulatory provisions implicated by the decision.
    At two FEC open meetings in January and June of this year, 
the Commission considered an alternative draft notice of 
proposed rulemaking. I regret we have yet to remove the 
regulations related to the statutory provisions stricken by the 
Supreme Court; however, I anticipate the Commission may be able 
to initiate a formal rulemaking in the near future.
    Following Citizens United, the D.C. Circuit Court held in 
SpeechNow that FECA's source prohibitions and amount 
limitations on contributions were unconstitutional as to those 
political committees that make only independent expenditures. 
In two advisory opinions, the FEC confirmed it would act in 
accordance with the SpeechNow decision.
    Subsequently, the National Defense PAC asked the FEC for an 
advisory opinion confirming that as a political committee that 
made direct contributions to Federal candidates, it could also 
accept unlimited corporate funds to make independent 
expenditures if it establishes a separate bank account for such 
purposes. After the Commission deadlocked on this issue and the 
PAC sued the agency in Carey v. FEC, the District Court 
recently ruled in NDPAC's favor and the FEC agreed to a 
stipulated judgment and consent order.
    As the Chair mentioned, last month the FEC issued a public 
statement confirming this posture applies to all similarly 
situated political committees. Just as the FEC was created to 
ensure more transparency in the political process, we believe 
it has also been beneficial for the agency to operate with more 
transparency. To that end, the Commission has implemented 
several new reforms over the past 3 years in the enforcement 
and policymaking functions. On the enforcement side, we have 
put in place a procedure for committees that are the subject of 
inquiries from our Reports Analysis Division or audit 
proceedings to raise unsettled legal questions directly with 
the Commissioners. We also passed a directive allowing for RAD 
and the Audit Division to raise those questions on their own to 
the Commission. By having these Commissioners resolve these 
issues on the front end, we believe we can avoid lengthy 
proceedings that are expensive for both the committee and the 
Commission.
    In the audit process we have also implemented hearings for 
committees to present oral arguments and to respond to 
questions from the Commissioners prior to the approval of final 
audit reports. Before the Reports Analysis or Audit Divisions 
refer matters to the office of general counsel for enforcement, 
we have also required the basis of such referrals to be 
provided to respondents and to allow them an opportunity to 
respond. The FECA requires respondents to be notified when a 
complaint from outside the agency is filed and to be given a 
chance to respond. And we thought it was only fair that the 
respondents in internally generated matters also be informed of 
the charges against them. On the policy side, we have also 
implemented a procedure whereby requesters and advisory 
opinions are given the opportunity to appear before the 
Commission to answer our questions about the issues they have 
presented.
    The fairness and efficiency interests running through all 
of these procedural reforms reflect our concern that the 
campaign finance laws and the FEC's processes should not be 
unduly burdensome on those Americans who are engaged in the 
most basic of civic activities.
    I appreciate the Chair's remarks this morning, and while we 
think we have made significant accomplishments in this end in 
response to the hearing that was held here several years ago, 
we do have other things we can do. And we appreciate your 
bringing the spotlight to the enforcement process and look 
forward to talking to you about that and other matters. Thank 
you.
    [The statement of Ms. Hunter follows:]



    Mr. Harper. We now have time for committee members to ask 
questions of the witnesses. Each member is allotted 5 minutes 
to question the witnesses. Obviously we have the timing device 
there to help us keep track of that and we will alternate 
between the majority and the minority. To begin with, I will 
recognize myself for 5 minutes, and I will start with some 
questions dealing with the transparency and the manuals, of 
course, that we are very interested in.
    At a January 20, 2011 Commission meeting, Commissioner 
Weintraub said we don't believe in doing things in secret. Each 
of you please tell me if you think the FEC should release its 
enforcement manuals and penalty guidelines to the public. And 
if not, why not, and we will start with you, Commissioner 
Walther.
    Mr. Walther. Thank you very much. And thank you for having 
us here today. I think this is a very helpful process for all 
of us. And it is overdue. Since I have been on the Commission, 
we have not had an opportunity to have an exchange like this 
and I think it is good for us and it is hopefully helpful. I 
fully support, fully support making public the RAD review 
policy, enforcement policy and a penalty schedule. I am 
completely in favor of that. I think it has been overdue.
    Mr. Harper. Thank you, sir. Commissioner Weintraub.
    Ms. Weintraub. Thank you, Mr. Chairman.
    Mr. Harper. And I hope I pronounced your name at least 
somewhat close.
    Ms. Weintraub. Weintraub. It isn't that hard.
    Mr. Harper. Okay. Good.
    Ms. Weintraub. Thank you, Mr. Chairman. And thank you for 
the shout-out. I appreciate your quoting me on the values of 
transparency. I am a firm believer in them. I actually have 
been advocating for years that we should disclose our penalty 
schedule. I think one complication is that we don't always 
agree on what that penalty schedule should say. We have had 
many debates in executive session when we are trying individual 
cases where Commissioners are not agreed on what the penalty 
levels really ought to be. I have long advocated that we ought 
to have a penalty schedule and that we ought to make it public. 
And then when the Commission departs from it, it ought to have 
to justify those departures in terms of mitigating and 
aggravating factors that would justify that departure.
    I think there may be some confusion about what the 
enforcement manual is. The document that I think of as the 
enforcement manual is a large, cumbersome, rather out of date 
collection of memoranda that are not--a number of them have 
been superseded. I think it might actually be more confusing 
than helpful to disclose that particular document. It is not 
actually in its current form being actively used. It is sort of 
a historical document, but doesn't necessarily reflect what we 
are doing today.
    I think that one effort that Commissioner Walther 
spearheaded, which is far more useful, is that we did create a 
description of our enforcement process and that is posted on 
the Website and it does go into the different stages of the 
process. And I think that actually is much more helpful than to 
put on the public record something that is outdated and not 
really in use.
    Mr. Harper. Thank you, Commissioner. Chair Bauerly.
    Ms. Bauerly. Thank you, Mr. Chairman. Our microphones are 
automatic. So forgive me. I agree with Commissioner Weintraub 
that the effort that we undertook a couple of years ago to put 
onto the Website a comprehensive guide for our enforcement 
process actually reflects the most current documented 
enforcement guide that we do have. We do as I understand have a 
document that hasn't been updated that existed in the 
Enforcement Division prior, certainly prior to my arrival at 
the Commission. But again just a few years ago, we did 
undertake a documentation of our current process so that people 
who are going through could understand all of the different 
nuances.
    I also would support making our penalty guidelines public, 
but I do think that we would need to, again as Commissioner 
Weintraub pointed out, there are some disagreements over what 
that penalty guideline should look like. In addition, of 
course, the Commission is required by the statute to conciliate 
with people who are in the enforcement process. So of course 
the end result in a conciliation agreement may not be 
reflective of the schedule at the outset. So I think that that, 
unlike some other enforcement agencies who do not have the 
requirement to conciliate for civil penalties but could 
actually issue and impose a fine on someone in their process, 
we are differently situated in that way. So I would just want 
to make sure in whatever form we did that we didn't cause 
confusion over different penalties that were resulting in 
conciliation agreements because the Commission is required to 
conciliate under the act.
    Mr. Harper. Thank you. Vice Chair Hunter.
    Ms. Hunter. Thank you. As my colleagues have pointed out, 
there is some disagreement with respect to the amounts in the 
penalty schedule. And I think this would be a good opportunity 
for us to revisit the amount and take an opportunity to 
determine what is the best penalty for whatever violation and 
perhaps we could provide a range to accommodate for the 
conciliation portion that the Chair mentioned. In addition, I 
think it is important that we maintain some discretion to 
depart from the schedule. And I agree with Commissioner 
Weintraub, we should be able to explain when we do that 
departure. But I think we should maintain the ability to do so.
    Mr. Harper. Commissioner McGahn.
    Mr. McGahn. Thank you. To answer your question directly, 
there is no reason why at least parts of the RAD manual could 
be public and at least part of how the penalties are done could 
be more public. And if I could take a minute to elaborate on 
what I mean, because it is a question that raises many, many 
issues and issues I encountered when I was first appointed to 
the Commission. As a practitioner who represented a number of 
politicians, parties, vendors, everyone perhaps members of this 
committee from time to time, when I was appointed to the 
Commission, I really wanted to see these secret books. RAD does 
have a manual. RAD is the Reports Analysis Division. I 
apologize for speaking in Beltway acronym, but I have fallen 
into that habit. And there are parts of it that I think are 
part of the enforcement processes of the Federal Election 
Commission. As part of the enforcement process, I think that is 
something that ought to remain confidential.
    There are parts that may constitute a form of secret law. 
If there is secret law, that ought to be public. Right now the 
current manual I think is a hybrid of the two. So to simply 
turn it over in total I think would cause some issues because I 
think we would be giving away some of the internal deliberative 
process privilege or some of the enforcement triggers.
    The penalty schedule is something I have heard about before 
I was appointed and I wanted to see the penalty schedule and I 
envisioned there was this magic chart on the wall, sort of a 
sentencing guideline. There really isn't. It depends on the 
case. It depends on the history of the issue. And it depends on 
a number of frankly factors as to what penalty applies. The 
Commission has even before I was appointed to the Commission, 
has done quite a bit to make it a little bit more public in 
certain ways. For example, there is a policy for sua sponte 
submissions. If you know you have a problem, you can turn 
yourself in and this policy says you will get a discount on the 
penalty. What the penalty will be, what the starting point is, 
you really don't know, but you can get 50 percent, 75 percent. 
Increased activity. There is a policy on that from 2007, again 
before I was appointed, that talks about what the penalty would 
be and gives a sense of the formula.
    Congress has put in the administrative fines program so you 
know in certain issues what the fine will be. One thing that 
has happened, however, is there have been cases where it just 
doesn't seem fair to impose that penalty on a first-time 
candidate or what not. The Commission through regulation has 
taken the position that they are somewhat handcuffed and they 
don't have a choice in the matter. It would be nice 
legislatively if we were told, yes, we do still have discretion 
in admin fines.
    But there have been things that have made penalties public. 
What I think would help making public is not some magic chart 
because there really isn't a magic chart, but the method used 
to calculate some of these penalties. Is it 10 percent of the 
amount at issue, is it 20 percent, is it 50 percent? The 
counterargument that I have heard, which is somewhat 
persuasive, is people may think that it is a cost of doing 
business; and if they can predict the fine, it may encourage 
them to not comply. I am not sure I buy it because frankly I 
found most people try to comply. Certainly you are going to 
have some bad actors that intentionally try to funnel money to 
campaigns through a back door and what not. But my concern has 
always been the first-time candidate, the unsophisticated 
political player getting caught up in the processes of the FEC 
and they get caught up on this fine calendar chart.
    And my final point with the penalties, and the Vice Chair 
talked about this a little bit, the idea of discretion. There 
are really ways to do penalties. One is on sort of a sentencing 
guideline mentality where everyone gets treated the same once 
you have decided there is a violation. But sometimes the same 
is not really fair. To me I think the Commission needs to 
maintain some discretion in what the penalties are, to look at 
the totality of the circumstances. Is it a first-time 
candidate? Is this someone who is a sophisticated player or not 
a sophisticated player? What is the governmental interest in 
the problem? If it is corporate money to a campaign, every 
court in the land from the supremes on down has said the law is 
at its most urgent application there because it gets at the 
heart of corruption or the appearance thereof. If it is a one-
time report from a political committee that has already 
disclosed the information but forgot some technicality on a 
subsequent report, that really shouldn't be treated the same 
even if it is the same dollar amount.
    So that is my long-winded explanation, is I am sort of in 
favor of in public, but it is not as easy as just handing you a 
book.
    Mr. Harper. And Commissioner Petersen.
    Mr. Petersen. I agree with what most of my colleagues here 
have said. I think that the method by which the Commission 
determines its penalties should be more transparent. And I 
think that this exercise as has been pointed out, there would 
need to be some agreement as to what those methods are. There 
has at times been disagreement amongst us. But whatever we did 
release would have to acknowledge the fact that there does need 
to be flexibility built into the process. And as to the issues 
regarding the enforcement and the RAD manual, I do think that 
more can be disclosed by the Commission with the understanding 
that there are certain parts of the process that are interwoven 
into our enforcement program that under the statute need to 
remain confidential.
    Mr. Harper. I thank you. And now I will yield to the 
ranking member, Mr. Gonzalez, for his questions.
    Mr. Gonzalez. Thank you very much, Mr. Chairman. Excuse me. 
The question will be to the chairwoman, Chair Bauerly. The 
ranking member of this committee wrote to you back on March 
first regarding the proposed bill where you basically assumed 
the responsibilities of the EAC, and you responded--I want to 
make sure--yes, it was signed by you--responded in a letter 
dated March 16th in which you obviously say you have looked at 
the bill, you could assume the additional duties, some of which 
were under your jurisdiction in years previous.
    And you go on to say in your letter that you would 
determine which of the responsibilities could be assigned to 
current or new employees of the FEC and which would be carried 
out under contracts with private entities, outsourcing. Any 
strategy--and I will read from the letter. Any strategy to meet 
these new responsibilities would require additional resources.
    Do you have a specific--at this time, could you tell us 
specifically in the way of expenses, additional expenses that 
would have to be met requiring additional funding for the FEC, 
if, in fact, it took over some of the duties?
    Ms. Bauerly. Thank you, Ranking Member Gonzalez. We have 
not undertaken any comprehensive----
    Mr. Gonzalez. If you could get closer to the microphone. 
Thank you.
    Ms. Bauerly. My apologies again. We have not undertaken a 
comprehensive examination of the EAC's current budget to 
determine what their spending versus what we--but obviously if 
there were--there are significant EAC responsibilities, some of 
which were established in its original legislation, some of 
which have been added over time, including in 2009, important 
obligations under the MOVE Act. So there are certainly 
important programs at the EAC and, as I understand the 
legislation, would continue should the transfer to the FEC 
happen.
    I understand the CBO has prepared an estimate based on 
their review of the current EAC budget. I don't have any basis 
with which to quibble with the CBO's estimate. I do assure the 
committee, were we to be charged with these responsibilities, 
we would of course conduct them in the most cost effective 
manner. But again, there certainly are significant obligations, 
including some contracts that exist at the EAC that I 
understand would need to continue given the programmatic 
requirements, and I believe the CBO has estimated approximately 
20 individuals would be needed to accommodate some of those 
obligations.
    Again, to the extent we could find some space within our 
own current personnel, we would certainly do that. But we would 
certainly not want to shortchange any of those important 
responsibilities that exist currently at the----
    Mr. Gonzalez. But you are not in a position today to say 
with a specific number what it would take for you in the way of 
additional funding so that we can determine if there are really 
any savings which is the objective of us proposing things to 
the supercommittee. I mean, you can't do that today?
    Ms. Bauerly. I cannot.
    Mr. Gonzalez. Thank you. The next question--and it really 
is a yes or no and maybe we can expand on it in a minute. But a 
couple of remarks regarding transparency and the concern this 
committee has on the workings of the FEC. I think it is 
important for the sake of trust just in government and the 
election process and such that what you do to the extent that 
can be public is transparent. But I also believe of equal or 
greater importance is what you are considering.
    Do you have sufficient data, do you have sufficient 
information, are there sufficient disclosure requirements that 
allow you to make measured determinations as far as who is 
spending the money, how they are spending the money, is there a 
violation? I think that Commissioner McGahn said, you know, 
people coming in through the back door. Well, with Citizens 
United and such and the relaxation in my opinion based on 
judicial decree, we don't have to come, a lot of people don't 
have to come through the back door anymore. They just come 
through the front door. The question is can we at least figure 
out and identify who is coming in through the front door.
    In my opinion, you don't have that information presently 
before you and I think it is going to require some sort of 
legislation. The question would be yes or no to the 
individuals, starting with Commissioner Walther, and that is if 
disclosure is important, how is it best effectuated, are 
current disclosure requirements sufficient to carry out the 
FEC's mission?
    Mr. Walther. Thank you. I don't think--I am not too sure 
exactly what you meant by us getting the information. If you 
are suggesting that we collect information to be able to assist 
where the money is coming from, where we see violations, that 
probably would be helpful and that is something that we have 
not really done.
    Secondly, no, the statutory and the regulatory framework 
does not in my opinion begin to provide the kind of 
transparency that we should have in the aftermath of Citizens 
United. The very fact that for all of these decades we have had 
regulation based upon the statute that we have upheld to the 
best of the--I think that should have been upheld to the best 
of our ability--is now gone. There is a huge vacuum there that 
raises questions that we have discussed and that Congress 
obviously has discussed and has been unable to reach agreement 
on.
    But I do think that we have fallen down on what we could 
have done with respect to our regulations. We have had--at 
least prepared--two drafts amongst ourselves on what kind of 
information we thought would be necessary for transparency, for 
corporations that do not have foreign control, and to take a 
look at what we now have to look at to see how we can make sure 
that foreign investment to--in our political system--is 
prohibited. We need to do a lot of that. One draft is much more 
specific than the other, and I think the very least we could 
have done is to make both of those available for public comment 
and we have not been willing to do that yet.
    Mr. Gonzalez. And I am going to ask with the chairman's 
indulgence, I am just going to restrict the question to a yes 
or no and it is going to be whether current disclosure 
requirements are adequate or do we need to improve on those. 
And maybe we will have another go round and you will be able to 
again expand on your remarks. Yes or no, is it sufficient 
presently given Citizens United?
    Ms. Weintraub. No.
    Ms. Bauerly. No, I don't believe so.
    Ms. Hunter. Yes, in order to accomplish--sorry. The laws 
are sufficient in order to follow the mission of the agency as 
it is. Obviously it is at the discretion of Congress to amend 
the laws.
    Mr. McGahn. Yes.
    Mr. Petersen. Yes.
    Mr. Gonzalez. Thank you. I yield back.
    Mr. Harper. Thank you, Mr. Gonzalez. And I ask unanimous 
consent to allow Mr. Lungren, the chairman of the full 
committee, to participate in this subcommittee hearing. Without 
objection, it is so ordered.
    At this time I will recognize the gentleman from Illinois, 
Mr. Schock, for questions.
    Mr. Schock. Thank you, Mr. Chairman. Thank you to the 
Commissioners for being here today. First let me state in 
reaction to the chairman's question and your responses that I 
support the chairman's request for full disclosure of this 
manual and while I can appreciate that each of the 
Commissioners may not want for their deliberations behind their 
decision making to be made public, let me assure you as a 
candidate for office who becomes a victim of your decision or 
at least the recipient of your decision, we want full 
disclosure. And as uncomfortable as that might be for you to 
allow the public and for every candidate for Federal office to 
understand that, I can assure you that our constituents make no 
bones about the fact that they expect us to know the rules and, 
quite frankly, do not understand why if in a case a Member of 
Congress or a candidate for Congress would not be following the 
rules or would receive some kind of statement suggesting 
otherwise.
    Second, I have a whole host of questions. So I hope that we 
will get a couple of rounds if possible. First I would like to 
find out within the FEC who decides which cases the FEC 
litigates.
    Ms. Bauerly. Thank you, Representative Schock. The FEC's 
Litigation Division makes recommendations to the Commission. If 
I might step back for a moment. Much of the litigation comes to 
us. The FEC is often the defendant in lawsuits. In terms of 
initiating lawsuits with respect to perhaps an enforcement 
action, that is the decision of the Commission.
    Mr. Schock. So the Commission actually votes?
    Ms. Bauerly. Yes.
    Mr. Schock. Based on the litigation department's 
recommendation?
    Ms. Bauerly. Yes.
    Mr. Schock. Okay. Back in 1999, the FEC adopted a policy 
that the Commission would enforce section 100.22(b) of its 
regulation in every circuit except the First and Fourth where 
it was found to be unconstitutional. I found that a bit 
puzzling. And my question is simply whether or not there should 
be a difference for the First Amendment rights depending on 
whether you live where the FEC has lost a case and what the 
thinking was behind your judgment on partially enforcing that 
section of your code.
    Ms. Bauerly. Representative Schock, I was not at the 
Commission at that point in time, so I cannot speak to--and 
actually none of us were, so we couldn't speak to the specifics 
of what those--that set of Commissioners were thinking. In 
general, Federal----
    Mr. Schock. Let me ask you. Is that still the Commission's 
position?
    Ms. Bauerly. Post the McConnell decision, that is no longer 
the Commission's view of that, as we indicated in our 
submissions to you.
    Mr. Schock. Okay. You stated that the Commission does not 
believe it is appropriate to request information beyond what is 
required by law. If this is the Commission's policy, I would 
ask why the Reports Analysis Division continues to send out 
requests to candidates asking for information entities are 
under no legal obligation to provide.
    Ms. Bauerly. The Commission seeks further information from 
committees through what is called the request for information, 
an RFAI, when reports analysts on the face of report have 
questions on what might appear on the face of that report in 
terms of a need for additional information or for some 
clarification. So reports are only sent where there is a legal 
basis to do so. And in those letters, the legal basis for 
seeking this information is provided in the letter sent to the 
committees. So we only ask for information that is required. 
And again RFAIs are sent where on the face of the report there 
seems to be some discrepancy, some mathematical error, perhaps 
contributor information is not provided. We ask the committees 
for additional information.
    Mr. Schock. So if you ask for additional information, I 
understand you are asking--I guess the follow-up question to 
that would be what are the due process rates the reporting 
entities have when an RFAI is sent to them.
    Ms. Bauerly. If I might use--make sure I understand your 
question, there wouldn't be I don't think any technical due 
process rights that--because there are no consequences of not 
filing--not responding to the RFAI itself. There may be 
further--there may be--to the extent that if there are problems 
that are not able to be resolved, then perhaps there might be 
some additional process within the agency down the line. But 
the first--the first thing that will happen is the analysts and 
the committee may discuss any issues. If, for example, what is 
missing is contributor information and the committee lets our 
analysts know that they have used their best efforts to collect 
that information from their contributors, contributors simply 
did not want to provide it, then that is all that the 
Commission would require, is the best efforts to collect that 
type of information.
    So many of these issues are resolved very easily in terms 
of just making sure. It may be that something got reported on a 
line that was incorrect. The vast majority of these letters are 
based on discrepancies on the face of the report that are very 
easily either amended or resolved in that way.
    If a committee would like to ask for the Commission to get 
involved in a potential legal question that is raised, the 
Commission fairly recently adopted a procedure where it may do 
so. So if a committee receives a letter and it thinks that it 
does not have an obligation to provide that information, it may 
file a request with the Commission for the Commission's 
determination of that. It may present its arguments to the 
Commission in terms of what it thinks its reporting obligations 
might be. So it does have an opportunity to address those 
issues directly with the Commission.
    Mr. Schock. Okay. Thank you.
    Mr. Harper. I will now recognize the gentleman from 
Indiana, Mr. Rokita, for 5 minutes.
    Mr. Rokita. Thank you, Mr. Chairman. And I want to thank 
everyone for their testimony here today. I want to start off 
with what Commissioner McGahn was talking about where he said 
it was not as simple as handing over a book. I want to make 
sure I understand your testimony the right way. Is that because 
no document exists or is it because, the discretion you and 
Commissioner Hunter and others talked about, you can't just 
hand over a book of these penalties?
    Mr. McGahn. If I could ask you a question.
    Mr. Rokita. No. It is our hearing.
    Mr. McGahn. Which one are you talking about? Are you 
talking about the RAD manual, the enforcement manual or the 
penalties?
    Mr. Rokita. Both. Real quick.
    Mr. McGahn. Okay. There is an enforcement manual. As others 
have said, it is somewhat out of date.
    Mr. Rokita. The penalties----
    Mr. McGahn. Right. And if it was up to me, I would hand it 
to you right now, but I don't have it with me. And it would 
probably take four votes to give you the enforcement manual.
    Mr. Rokita. So you say it is not as simple as handing over?
    Mr. McGahn. The RAD manual is the one that is not as simple 
as handing over because the RAD manual includes essentially--
part of it is directives to the staff, that if there is an 
issue over a certain dollar amount, refer to the Commission, 
the Commission wants to see it. It doesn't mean you have broken 
the law. It just prioritizes what the Commission wants to see 
and when it wants to see it.
    Mr. Rokita. Then why is it so secretive?
    Mr. McGahn. Well, because the dollar amounts at issue--the 
argument that I have heard is that the dollar amounts will let 
people know, well, if your mistake is less than 50 grand or 10 
grand, everyone will have $49,000 mistakes so they won't get 
referred. I don't really buy it. I think at the end of the day 
people have better things to do at their campaign headquarters 
than to reverse engineer their FEC reports to avoid referral.
    Mr. Rokita. I would agree with that.
    Mr. McGahn. But there are other things in the RAD manual 
that I think are part of the enforcement process and you get 
into a situation where there is the confidentiality of a 
specific enforcement matter and there is also the protection 
that the agency has of its enforcement priorities. So right now 
it is all in one book.
    Mr. Rokita. Let me respond to that. I used to run an 
agency, both an election agency and a securities agency. So I 
understand the need to--as others on this panel may want to 
comment on. I understand the need to protect investigative 
material and the public policy behind that. That is different 
than how you intend to enforce something. And it is different 
for this reason. Are we going to be a country of laws or are we 
going to be a country of men? Meaning are we going to be 
consistent? Are the people in this country, including the 
candidates of this country, going to have a fair hearing? 
Discretion or not, or are we going to be a country of men where 
discretion can be used, over used and abused?
    This is especially important when you are talking about a 
bureaucracy that is unelected. It is ultimately important when 
we are talking about the business that each of you and your 
staffs are in, which is protecting a free and fair election. 
And so I think the attitude that I am hearing from this agency 
as a whole, as represented by each of you, and I say this, Mr. 
Gonzalez, in the most bipartisan way possible, none of you are 
that important that you can't disclose what you are doing as a 
public business. And I think we all ought to get over that.
    I will yield back the rest of my time and expect a second 
round.
    Mr. Harper. Thank you.
    Mr. Schock. If the chairman would yield, I just want to 
respond to Mr. Rokita's request for the rest of us to weigh in 
on this.
    Mr. Harper. Certainly.
    Mr. Schock. My only response would be this.
    Many of you were involved with FEC election law in some 
form prior to coming to your Commission spot. Assuming that 
your Commission term expires and you go back into the private 
sector, you may or may not choose to go back into that 
profession. Why should you be privy to information on the 
process in which this Commission has made decisions that your 
peers and competitors in this industry are not privy to?
    Taking us as candidates and officeholders out of this, I 
would suggest that it is only fair that the people who 
represent us and the industries that many of you were involved 
with prior to your Commission service be given the same 
information that many of you will have when your term of 
service is up.
    Mr. Harper. At this time I will recognize the gentleman 
from Florida, Mr. Nugent, for questioning.
    Mr. Nugent. Thank you, Mr. Chairman, and I do appreciate 
the Commission, all of your attendance here today.
    I am a little troubled. My past experience has been in law 
enforcement for 36-plus years, and I understand protecting 
investigative techniques and how you go about investigations. I 
clearly understand that. But what I don't understand is the way 
you are guarding as it relates to enforcement measures or RAD 
or penalties. Because what I keep hearing across the board from 
many of you is that the enforcement manual is out of date. So I 
don't understand how you even operate if your enforcement 
manual is out of date. I don't understand that you don't have 
at least a penalty manual at least describing what the 
penalties are.
    And I certainly do understand discretion, and you need to 
have that, particularly as you related, Mr. McGahn, as it 
relates to a first-time candidate. Somebody who has made a 
simple mistake I don't think rises to the same level. I think 
you need to have discretion.
    So I guess I am troubled by the fact, and so what I want to 
hear--and I will let any member answer this. How do you--what 
is your plan on rectifying the fact that the manual is out of 
date and that there is--doesn't sound like there is a clear 
penalty manual at all?
    Any one of you would--Mr. McGahn.
    Mr. McGahn. I will start, I guess.
    First, I want to make clear I don't want to be portrayed as 
an apologist for hiding documents. On the contrary, I have 
been, I think, one of the prime movers in much of what has been 
made public. I am merely articulating the arguments that I have 
heard in defense.
    It has been the position of the Commission forever and a 
day that these things are secret. Same questions you are 
raising are the same questions I have raised. I am not sure I 
am convinced of the answers I have gotten, either. But as a 
deliberative body of six commissioners where it takes four to 
change what has been a long-standing practice, you know, I am a 
commissioner, so I have to give you the Commission long-term 
view.
    As far as the enforcement manual, Commissioner Walther, it 
has already been talked about his initiative to at least make 
that more public and at least have a summary of how the process 
works I think is a good first step.
    Second, my understanding is our recently hired new general 
counsel is looking into this to at least update it, and then 
from there I would certainly support making something public. 
You know, as the chair rattled off, DOJ, most law enforcement 
have some sort of prosecutor's manual.
    Mr. Nugent. Right.
    Mr. McGahn. And even if there is--the problem ultimately is 
when you keep these things secret. Not only does it give people 
who have worked at the agency an edge, quite frankly, who then 
go off and do other things, but it creates a problem in the 
eyes of the public where you think there is maybe something 
secret. And even if there isn't, you feel like there is some 
hidden process or some hidden rule that you don't see.
    Mr. Nugent. Right.
    Mr. McGahn. There is a lot of legal advice that goes on 
between the general counsel's office and the reports analysis 
division and the audits division when these letters go out. 
That is something that is not particularly public. In fact, 
when I asked for it as a commissioner, I had trouble getting 
it, because it is not the sort of thing that an agency that has 
been around for decades thought to keep in one place.
    So we are making a lot of strides to get it together. It is 
just these sorts of questions hadn't been asked in years. The 
FEC sometimes becomes a little insular and doesn't really think 
about sometimes how the public views what it does. And there is 
a number of commissioners at this table today committed to 
trying to correct that, and we have gone a long way to doing 
that, but there is a lot more work to do.
    So I don't have a good answer as to why this stuff is 
secret. I am just giving you the answers I have been given.
    Mr. Nugent. Okay. The chair, I believe you wanted to----
    Ms. Bauerly. I think that as Commissioner McGahn pointed 
out, this set of Commissioners has changed some of the 
processes and procedures. And, again, the enforcement guide 
that we did put on the Web site was an attempt to start to 
update some of that so that there is something that would be 
more useful to the public, frankly, than handing out documents 
that are outdated.
    With respect to--your other question I think was about 
civil penalties. I think that there is a lot of agreement about 
putting out the formulas that go into it. But, again, as 
Commissioner McGahn pointed out earlier, there are different 
types of violations. Every enforcement matter looks a little 
bit different because there may be three or four violations in 
one matter and there might be one in another. And so if we were 
to take that step, I think we would just want to make sure that 
we are not creating any confusion amongst the public or those 
who are working on committees to ensure, and I think that can 
be accomplished. That would just be the caveat that we would 
need to make sure that we explain that, and everyone 
understands the parameters of what that formula would look like 
and that the Commission does retain the discretion in certain 
instances to make changes from that.
    Mr. Nugent. Thank you.
    I see my time has expired.
    Mr. Harper. And I will now recognize the gentleman from 
California, the chair of the full committee, Mr. Lungren.
    The Chairman. Thank you very much, Mr. Chairman.
    Let me thank you, Mr. Chairman, for having this hearing.
    Maybe one of the reasons we haven't had these issues come 
up as to why you should disclose or not disclose is that we 
haven't had an oversight hearing in this committee since 2003. 
Maybe if these questions had been asked, we might have had some 
decisions, and we might have found out why. So I thank you for 
this.
    I try and look at this from the standpoint of an average 
American who wants to run for office, and the first thing now 
we know is the tremendous hurdles in terms of the cost of 
running for office. And one of the costs is, first of all, you 
have got to hire an accountant; and, secondly, you have got to 
hire an attorney to make sure you don't run afoul of the laws. 
That is a burden we accept as a result of Supreme Court 
decisions on either corruption or the appearance of corruption 
and money. But if done improperly, it chills political speech 
and chills political participation.
    It is daunting for someone who decides they want to run for 
office to all of a sudden say, oh, my Lord, I have to figure 
out what the Federal Government laws are; I have to go find out 
what the FEC stands for. And so I would just say to you, I 
think disclosure ought to be--you ought to resolve doubt in 
favor of disclosure as opposed to nondisclosure.
    And on the idea of a manual that governs your enforcement, 
I do not see how you have a leg to stand on, frankly, for not 
disclosing. In one of the most difficult decisions you have to 
make as a prosecutor on the State level, that is a capital 
punishment case, the guidelines are set up, it is reviewed by 
every DA, and every DA's office in California has a manual as 
to how they do it. It is known to people. Now, the internal 
discussions on a specific case are not, but the manual with 
respect to how you go about making that decision as to whether 
you are going to seek the death penalty or not is known. It is 
known to everybody.
    We allow murderers to know what it is they are facing. 
Shouldn't we allow Members or prospective Members of Congress 
to know what they are facing from an enforcement standpoint? I 
mean, I appreciate what you are saying, but can anyone give me 
a valid argument, not about the internal discussions with 
respect to a specific case but the enforcement manual, that is 
that component of it which is similar to the Justice Department 
and similar to the U.S. Department of Labor as to why you 
should not allow that information out.
    Yes, you say to the public, and I understand that broad 
word, but how about to average members of the public who are 
thinking about the possibility of running for office and 
thinking about what they are going to face and thinking about 
how do I make sure I don't make a mistake. And one of the ways 
I figure that out is I look at their enforcement manual to see 
how they make their decision with respect to enforcement.
    Can any of you help me out as to why that should not be 
made public as soon as possible?
    Madam Chair.
    Ms. Bauerly. Mr. Chairman, if I might, I don't want to 
speak for my colleagues, but I think what you are hearing from 
us is that we agree that this should be--that information about 
our enforcement process should be made public, and we have 
taken the first step in that in putting the enforcement guide 
on the Web site.
    I think what is also important to note is that the 
regulations, the statute that governs what the agency does in 
terms of what candidates or committees need to do in terms of 
their filing, of course, is very public. This one aspect of our 
process has been less public in the past than it is now.
    We, again, as Commissioner McGahn pointed out, we are 
working towards updating all of this so that we can make 
something public. The Commission in terms of we--the 
enforcement manual that I think we refer to in our submission 
to you is not the thing that holds the penalty guideline. The 
calculations for the penalties, that is a separate set of 
documents.
    The Chairman. Well, I would hope----
    Ms. Bauerly. That is something that we----
    The Chairman. Okay. I would hope that the manual that is as 
similar to or comparable to what the Department of Justice has 
and the Department of Labor has, I would hope that you would 
make it as transparent as they do.
    Now, let me ask you about the RFAIs. In terms of the 
Commission, do you make those requests public or are those 
requests made only to the campaign of the candidate?
    Ms. Bauerly. The RFAIs that are sent to committees are also 
put onto the Web site.
    The Chairman. So you see no problem with putting that out 
there and getting that information out, which could potentially 
taint a candidate's reputation, but, at the same time, you have 
difficulty making as transparent the decisionmaking rules that 
you use in terms of enforcement. See, I don't understand that 
connection.
    Look, I have never been mistreated by the FEC. I have no 
bone to pick with you folks. Luckily, I have been able to hire 
good attorneys to keep me ahead of the game and to not have any 
problems.
    But the impact of actions taken by the Commission can be 
very deleterious to the reputation of a candidate and his or 
her committee just by virtue of the fact that you have made a 
request. And I am not telling you don't make requests. I am 
just saying I hope you understand that from the standpoint of a 
candidate who is standing out there and all of a sudden some 
press guy says, hey, I know you have just had this RFAI--they 
don't say that--they just made this request for additional 
information. And you look at it and you say, gee, that is not 
information required by law, and all of a sudden you are 
already digging yourself out of a hole where you may have done 
nothing wrong.
    So all I am saying is I hope you appreciate the tremendous 
impact you have on people who may be doing nothing other than 
trying to express their First Amendment rights in a way that 
allows them to at least run for office as a means of 
articulating their point of view. And I thank you for your work 
because I know you probably don't get a whole lot of people 
patting you on the back for your work. So thank you.
    Mr. Harper. I ask unanimous consent to enter the following 
documents into the record: three letters submitted by lawyers 
who frequently appear before the Commission describing the 
impact of the FEC's failure to disclose materials governing its 
enforcement process, an editorial from the Wall Street Journal 
regarding the FEC, a list of enforcement manuals made available 
to the public by other Federal agencies, the list of questions 
that this committee sent to the FEC and its written responses.
    Are there any objections?
    Without objection, it is so ordered.
    [The information follows:]



    Mr. Harper. I will now recognize myself for some additional 
questions, and this time we will make sure we stay on the 
clock.
    So first thing that I would do is direct a comment back to 
the ranking member's questioning about the EAC and the cost. I 
believe Chair Bauerly mentioned that she did not know some of 
the figures, of what they would be. But just to make the 
commissioners aware, according to the CBO score of the bill, 
the net effect after cost to the FEC would be $33 million less 
spending over 5 years. So those figures are available in the 
CBO report, to let you know.
    And I would like to ask you about, I ask the chair, when 
you were answering questions by Mr. Schock earlier, there was a 
question about the FEC policy that was adopted back in 1999--
obviously, you were not on the Commission at that time--about 
the fact that at that point that there was a different 
enforcement, depending on which Federal Circuit district you 
were in.
    My question would be, is that policy still being used or 
has that--just so that I am clear, is that still the policy, to 
have it different in different districts or is it uniform now, 
according to your enforcement?
    Ms. Bauerly. Thank you, Mr. Chairman.
    To my knowledge, at this point in time the Commission is 
not engaging in what--the legal doctrine of intercircuit 
nonacquiescence, which is a very fancy way of saying what you 
just said, that in different circuits different law might 
govern the Commission's actions. At this point in time, again, 
I don't know of any that we are actively engaging in.
    Mr. Harper. Could you confirm that and let us know?
    Ms. Bauerly. Sure, we would be happy to.
    Mr. Harper. Thank you very much.
    Now, there was some talk that the enforcement manuals were 
outdated, that releasing those would be confusing; and my 
question is, if it is outdated, what is being--we were saying, 
what is the enforcement manual? What is that document when we 
are saying the current enforcement? What is that? Is that 
available?
    Ms. Bauerly. Our enforcement division operates its 
standards with a number of documents that are not housed in one 
thing. The thing that we were talking about, the thing that is 
in a binder that is called the enforcement manual, has not been 
updated on paper simply because that is not how agencies work 
anymore. As we all know, we store things electronically.
    Mr. Harper. May I interrupt just very briefly? Because 
somewhere within your written responses that were submitted I 
believe there was a statement that said the enforcement manual 
was updated via memos and emails. Is that where you are going?
    Ms. Bauerly. Yes, that is--and, again, obviously I don't 
have an office within the enforcement division, so I don't have 
personal access to those. I don't have those sitting on my 
desk, either. But that--again, Commissioner Walther's effort a 
couple of years ago was to try to compile all that information 
in a usable way for people who are engaging in our process.
    Mr. Harper. Okay, and I will ask this question for the 
chair and the vice chair. I believe all have publicly stated 
there is an agreement on a large portion of the needed changes 
to the FEC regulations post-United Citizens--or Citizens 
United, excuse me. Why hasn't the Commission acted on those 
points of agreement and updated its regulations since that 
decision? And then when might we expect that to be updated, 
since that is going back to the decision, I believe, in January 
of 2010?
    Ms. Bauerly. Yes, Mr. Chairman.
    In January of 2010, of course, the Supreme Court struck 
down several provisions of the statute, and we have 
corresponding regulations that were enacted as part of those. 
The Commission has on two occasions put out documents 
suggesting an NPRM, of course, notice of proposed rulemaking, 
the very beginning of our rulemaking process; and, as I think 
Commissioner Walther referenced, we were unable to reach 
agreement on the parameters of that. I think, frankly, there is 
disagreement amongst Commissioners in terms of what issues are 
raised by that case.
    Because the Court decision struck down the statute and not 
our regulations, there is some overlap in our regulations in 
terms of some of those provisions at issue. For example, after 
Wisconsin Right to Life, we provided a regulation regarding how 
to report that activity. The Citizens United decision, of 
course, overtakes Wisconsin Right to Life, so one question that 
some of us would like to ask is whether we should rethink that 
or consider making any changes. So we were unable thus far to 
be able to do that, but, as the vice chair mentioned in her 
opening statement, we do have petitions pending before us with 
respect to some of the provisions at issue in Citizens United, 
and I am hopeful we may be able to take action on that soon.
    Mr. Harper. My time is up. Perhaps one of the others will 
ask you to follow up on that in just a moment.
    Now I will recognize the ranking member, Mr. Gonzalez, for 
a second round of questioning.
    Mr. Gonzalez. Thank you. I am only going to take a couple 
seconds, because the chairman and I could go for days on the 
EAC being subsumed by you.
    But I have just been handed this, and this is a quote from 
the CBO: Enacting H.R. 672 would have no significant effect on 
revenues.
    They are accountants, and I understand that, and they can 
put a pencil to things, but, given your schedule, your duties, 
what it would take to assume those other responsibilities, I 
think today's testimony clearly indicates that you can't put a 
dollar figure on it so that we can make representations to the 
supercommittee that it is going to result in savings.
    I am also a strong proponent of the focus and energy that 
the EAC brings to a specific area of campaign or elections. But 
I am going to ask Vice Chair Hunter and Commissioners McGahn 
and Petersen, because your response to my question about are 
the disclosure laws adequate today in order for you to do your 
job, and each of you said yes. So I would just ask you, beyond 
the obvious, to identify a donor, we establish whether they 
legally can donate or not. Beyond that, what is the value to 
identifying donors to any endeavor, entity that can impact an 
election in this country?
    Ms. Hunter. The value is that the public has the ability to 
know who gave to a candidate's committee or to a political 
committee and to all committees that are required to disclose 
their donors under the law. I believe some of the committees 
you may be referring to are not currently--they are not 
considered political committees; and, therefore, they do not 
have to disclose their political donors.
    Mr. Gonzalez. And do those committees, by the legal nature 
that you just referred to that exempt them or whatever it is, 
do they impact political campaigns in this country today?
    Ms. Hunter. I believe that the Supreme Court has held that 
if they are making independent expenditures that are not 
coordinated with candidates or party committees that it is not 
possible for those independent expenditures to corrupt or to 
have the potential to corrupt those candidates or party 
committees.
    Mr. Gonzalez. Do they influence elections?
    I mean, this is a practical question. We can sit here and 
say what is the Supreme Court going to say. I mean, they have 
already equated a corporation to an individual. We can go from 
there. But I am just asking everyone in this room, my 
colleagues and such, do these entities impact and make a 
difference in elections today in this country?
    Ms. Hunter. Yes, they do. Of course. Just as my neighbor 
does when he is talking to me as I walk down the street. There 
is a multitude of different factors that affect elections.
    Mr. Gonzalez. I think there is a huge difference between 
you talking to a neighbor and the moneys that these groups 
raise and spend to influence elections. I mean, it is obvious 
what is going on, and you may say it is the Supreme Court and 
the legal nature of an entity that exempts them. My point is, 
what is a rose by any other name?
    Mr. McGahn, you answered yes. Mr. Petersen, you answered 
yes. What is the value? I mean, why should we know who is 
contributing to organizations or entities that influence our 
elections?
    Mr. McGahn. Well, for those who give to candidates, I think 
we need to know because of corruption or appearance. I think 
the voters have a right to know who is taking money from whom 
before they vote for the person.
    With respect to noncandidates, I think the argument is that 
the voter can factor in how they view the message based upon 
who is paying for the message. Some say there is value to that. 
Some say that that actually just clouds the message. The 
message ought to stand on its own. You know, there is case law 
in both sides.
    Anonymous speech is still protected in some instances. Some 
instances it is not. There could be harassment against the 
donors and all that. But there is some value. The courts have 
recognized it in some sort of subjective way. Certainly we all 
agree there is some value there. The question is whether it is 
enough of a value to compel people to say who they are when 
they speak. There is arguments on both sides. The Court has 
drawn lines on this.
    Mr. Gonzalez. I only have a couple of seconds. I want to 
give Mr. Petersen a chance.
    Mr. Petersen. I mean, the value of disclosure--just to 
repeat some of what has been said but to add some additional--
when money is given to a candidate--disclosure serves an anti-
corruption purpose.
    When we are in the realm of independent speech, the Supreme 
Court starting in Buckley talked about the value is for the 
public who is receiving the message to be able to take into 
account the person who is funding that message. That is a piece 
of information that they can take into account when evaluating 
the merits or the lack thereof of that particular speech. It is 
a different interest in the independent realm than it is when 
we are talking about disclosure of donors to candidates.
    Mr. Gonzalez. Different interest, same result.
    Mr. Chairman, I know I have run out of time, but I ask 
unanimous consent to tender into the record Mr. Brady's 
statement.
    Mr. Harper. Without objection. Thank you.
    [The statement of Mr. Brady follows:]



    
    Mr. Harper. I now recognize the gentleman from Illinois, 
Mr. Schock, for additional questions.
    Mr. Schock. Thank you, Mr. Chairman. I will run through 
some here.
    Mr. Chairman, you had asked specifically about why there 
hadn't been changes. The commissioners said there will be 
changes. My question is when. Is there a timeline on Citizens 
United?
    Ms. Bauerly. Oh, thank you. I think we weren't sure which 
timeline you were looking for.
    We are in the process of considering when we might schedule 
that. We are hopeful by the end of the year. We are looking at 
each other because, frankly, these processes are complex and we 
want to make sure that we consider all of the options when we 
do put things out for public comment.
    Mr. Schock. Okay. I want to be clear there is consensus 
among you that in addition to the manual you support also 
releasing the fee schedule or the penalty schedule.
    Ms. Bauerly. Representative Schock, if I could make sure I 
understand your question, you are asking whether there is 
consensus among us about releasing our penalty schedule?
    Mr. Schock. Yes.
    Ms. Bauerly. Again, I believe that you heard consensus 
among us that we think that should be public. I think the 
challenge will be making it for some set of documents, some 
pieces of paper that at least four of us can agree on to make 
public. There are some disagreements over what the formula 
should be.
    And, again, we would want to also make sure that any 
documents released do indicate that the Commission has 
discretion to make modifications in either direction and also 
to note that we must conciliate with people and so penalties at 
the end of the day may look different than they do on these 
formulas.
    Mr. Schock. Okay. Well, I just want to state for the 
record, with all due respect to the commissioners, Mr. 
Chairman, I would support your subpoena request so that we are 
sure that we get all the information that we are requesting.
    Finally, I want to follow up on my last question about the 
request for more information. You stated that there is really 
no penalty for people to--for committees that don't respond to 
the request for more information, there is no specific penalty. 
However, I will tell you, as a candidate, when you receive the 
request for additional information, it states specifically on 
that document from the FEC that if a candidate does not respond 
with the information that you are requesting, we will then be 
subject to an audit.
    So I would suggest that, again to Mr. Lungren's point about 
appearances for a candidate who is trying to spend as much time 
getting to know the voters, when we get a document from you 
requesting information that we are not required to produce 
based on law, based on statute, followed by a statement that if 
we don't compel to provide that information we will be subject 
to an audit, I would suggest to you that that is inconsistent. 
It is not helpful. And I would urge the commissioners to review 
that practice, quite frankly.
    Ms. Bauerly. Thank you. If I might, Representative Schock, 
clarify what I said. I didn't mean to suggest--I agree with you 
that an audit certainly would be viewed by some as certainly 
some consequence, perhaps a penalty.
    What I was, I think, responding to was your statement about 
due process; and, as I mentioned, we do have a process by which 
committees may come directly to the Commission to seek further 
guidance on whether they need to respond to that letter. If 
information in a letter can be resolved easily, the public 
record is complete; and there is nothing further taken with 
respect to that request for information.
    If the information remains inadequate, the discrepancies in 
the report are not corrected, for example, if there are 
mathematical errors, cash on hand does not match, for example, 
those things may over the course of time if a committee 
demonstrates an inability to comply with their disclosure 
requirements, then that committee may be referred to a number 
of different processes within the building, including ADR 
enforcement or audit.
    So I apologize if I wasn't clear about the process--the 
full process that is involved with request for information.
    Mr. Schock. But you can understand where we are coming 
from. If you are being requested to provide information that 
you are not required to provide and then also the dangling 
audit is hung above your head, there might as well not be a law 
that says what you can provide. You might as well be able to 
request whatever it is you want so long as you have the audit 
to be able to hang over our heads if and when we don't provide 
the information requested.
    Ms. Bauerly. Representative Schock, we send requests for 
information when there are discrepancies on reports that 
indicate that there may be more information required. All of 
that is based on the existing law and the regulations. There is 
no--not in RFAI----
    Mr. Schock. Let me give you one example where I think there 
is a discrepancy. In June of 2011, the FEC sent a letter to 
Crossroads GPS requiring more information, demanding that they 
disclose their donors. By law, groups are only required to 
disclose this information to the FEC if the contributions are 
earmarked for specific independent expenditures. That is the 
law.
    Crossroads has made it clear publicly throughout the press 
as well as in documents to you that their response to the FEC 
would be that its reports were full and complete and that they 
had no donors to report because no contributions were earmarked 
for a particular election. So it was out there, it is public, 
it has been stated, and yet the FEC sent them a request for 
more information requiring them to submit--to provide their 
donors, and then once again stating if you don't provide the 
information requested, you will be subject to an audit.
    So I would just encourage you that your legal counsel 
should make sure that what you are requesting is, in fact, 
required by law before you compel them because--and not in 
every instance as you are suggesting is it just a clerical 
error or some clarification that needs to be made on a filing 
statement.
    I believe my time has expired. Thank you.
    Mr. Harper. I will now recognize the gentleman from 
Indiana, Mr. Rokita, but I am going to give you an opportunity 
to answer, Madam Chair.
    Ms. Bauerly. Thank you very much, Mr. Chairman.
    I just wanted to make clear to Mr. Schock that requests for 
information are sent based upon the review of the reports. The 
RAD analysts don't go out and look for information about 
committees that they might--whose reports they might be 
reviewing. So I just want to make clear that the report analyst 
is looking at the report being filed by the committee.
    They would not go out and look at other information about 
the committee. In certain instances, you might view that as a 
detriment to the committee. In other instances, committees 
might view that as unfair to them. So what we look at is the 
report that is filed with us. So I just wanted to clarify what 
our process is.
    Thank you, Mr. Chairman.
    Mr. Harper. Thank you.
    I will now recognize Mr. Rokita for questioning.
    Mr. Rokita. Thank you, Mr. Chairman. I appreciate the way 
the discussion is going. I would like to yield 2 minutes to 
Congressman Schock.
    Mr. Schock. Well, Mr. Rokita, thank you for your 
generosity.
    Mr. Rokita. I am new.
    Mr. Schock. Shifting gears here, last year, the Commission 
issued an advisory opinion which gave Google permission to run 
political ads, yet denied Facebook an advisory opinion on 
nearly an identical type of ad. Can you explain why?
    Ms. Bauerly. Congressman Schock, the advisory opinion in 
Google indicated that there were, I believe, four commissioners 
who agreed that the way that the ad was presented on Google 
would comply with the law. My view of that one was that because 
of the way the Google ad was structured that it would be going 
to a landing page where there was a full disclaimer on it. My 
view was that that satisfied our alternative disclaimer 
requirement.
    I won't speak for other commissioners who may have voted in 
favor of that Google opinion. I think there were obviously 
different ways that different commissioners got to that result 
of saying that that was an appropriate course of conduct for 
the Google ads.
    With respect to Facebook, that was a different type of ad. 
Facebook has a different format, and the request indicated that 
they thought they were entitled to an exemption from the 
disclaimer requirements.
    Again, I will speak only from my view. Others may want to 
include theirs. I did not think that it met the existing 
exemptions for a disclaimer requirement.
    Of course, when the Internet rulemaking was conducted a few 
years ago, the one area where the Internet is part of our 
regulations is for ads placed for a fee on another's Web site. 
We have attempted--we understand that technology is changing. 
These are very important innovations for campaigns and 
candidates and voters to use, and we recently put out an 
advance notice of rulemaking to try to gather input on whether 
the Commission should or should not engage in a rulemaking to 
address this issue. We think this is very important.
    The Commission obviously can't adopt a Twitter rule and a 
Facebook rule and a Google rule, but we do want to make sure 
that we are trying to keep up with innovation if we can, and we 
welcome public comment on that notice. It is out for public 
comment right now, and comments are due in the next few weeks. 
So we are looking forward to some guidance not only from users 
of this technology but other providers.
    Mr. Rokita. Reclaiming my time.
    Mr. Schock. Thank you very much, Commissioner.
    Mr. Harper. Reclaiming his time, Mr. Rokita.
    Mr. Rokita. If I knew Congressman Schock was going to ask 
my question, I wouldn't have yielded any time.
    Mr. Schock. I have more.
    Mr. Rokita. With my remaining time, I would like to go to 
the vice chairwoman and see if you want to respond at all to 
any question that Mr. Schock may have asked or Mr. Harper may 
have asked.
    Ms. Hunter. Thank you, Congressman. I would like to follow 
up on the RFAI question.
    While it is true that the letters are sent out pursuant to 
the RAD manual that we have been discussing a lot this morning, 
you have to have four votes to get the RAD manual to be 
approved.
    Several years ago, several of the commissioners brought up 
the exact letter that you are referring to, Congressman, the 
letter that was sent to American Crossroads. But years ago it 
was sent to a different group--and I can't remember what the 
organization was--and we, too, had an issue with the letter 
saying that this is information that the FEC is not entitled to 
ask. And you are right. The letter does end by saying you could 
end up in an enforcement proceeding or an audit proceeding, 
because that is absolutely true.
    But we didn't have a fourth vote to change that letter. So 
we are aware of that issue. It is just there is only so much we 
are able to do.
    And something that came to mind as you were talking, I 
think it would be a helpful improvement to add a sentence to 
the RFAI letter. As the chair notes, we have a new policy now 
that outside groups and the public can ask the Commission to 
weigh in on outstanding legal issues. So I think it would be 
helpful to reference that policy in the RFAI letters so people 
are fully aware that they can contest the premise of those 
letters.
    Thank you.
    The Chairman. Mr. Rokita, would you yield for a second?
    I was just thinking that maybe you can take care of this by 
including RFAI letters in the Anti-Bullying Act that is coming 
through the Congress.
    Mr. Rokita. So noted.
    Mr. Chairman, I yield back.
    Mr. Harper. I will now recognize the gentleman from 
Florida, Mr. Nugent, for additional questions.
    Mr. Nugent. Thank you, Mr. Chairman; and I concur with the 
chairman's idea.
    You know, the comment has been made about, you know, we are 
worried about, particularly as I relate to a candidate, that 
there is a threshold that you don't want them to know about 
because they may violate it up to a threshold. I will tell you 
that I don't know any candidate that wants to get a letter from 
the FEC saying that you are in violation of anything. Because 
that in and of itself, I will tell you, is a sanction that most 
of us as candidates always were concerned about, whether you 
are running in a State but also particularly in a Federal 
election.
    Let me ask, on the RFAIs, do you believe that is part of 
the enforcement action? And each commissioner I would like an 
answer, do you believe that is part of the enforcement action, 
starting with Commissioner Walther.
    Mr. Walther. Well, I think the issue is that it could be 
the beginning of it. I think the RFAIs serve a purpose because 
it offers somebody who has filed--and there is a lot of people 
who file and they don't really understand our reg book very 
well, make mistakes, and it gives us the opportunity to 
communicate informally on ways in which they might be able to 
comply. So there is a benefit to that.
    I think--and I asked the question right now of my 
assistant. I thought we had sent out--when we sent out an 
RFAI--a warning--that they do not have to answer anything. And 
I was just told now that that is only in the case where we 
think that is so, and sometimes they really have to answer the 
question because it is required by law.
    I don't support that. I think we ought to have a warning, 
at least, that you are not obligated to answer anything if you 
don't want to.
    Mr. Nugent. So----
    Mr. Walther. So I am not sure exactly how that----
    Mr. Nugent. Do you believe that is an enforcement action or 
not, the RFAI?
    Mr. Walther. At that particular time, no.
    Mr. Nugent. Okay.
    Commissioner Weintraub.
    Ms. Weintraub. I view the RFAIs primarily as a disclosure 
mechanism to ensure that the reports that are filed contain all 
the information that the law requires.
    Mr. Nugent. Okay.
    Chairman.
    Ms. Bauerly. I agree with Commissioner Weintraub. It is the 
way that we ensure that we are enforcing--that we are complying 
with our duty to ensure that the reports are accurate when they 
are filed.
    As Commissioner Walther noted, at some point, if there are 
enough discrepancies or there are enough problems with someone 
filing, it may later move further down the process. But, again, 
that would have to be a substantial number of problems and 
ongoing problems with reports in order to get there. We have an 
obligation to make sure the public has access to accurate 
information, and when we see problems, that is the step in 
doing so.
    Mr. Nugent. Commissioner Hunter.
    Ms. Hunter. They are absolutely part of the enforcement 
process, as there are consequences; and if one doesn't answer 
them, you know, in total, you can be referred for enforcement--
or for audit.
    Mr. Nugent. Commissioner McGahn.
    Mr. McGahn. I think the FEC has wanted it both ways. On the 
one hand, it is not enforcement when it is convenient; on the 
other hand, it is. It is enforcement when we talk about the 
manual because all of a sudden the manual is secret, but it is 
not enforcement because it is in the public record.
    Personally, I think they are a form of enforcement. I think 
it is a form of branding someone without an opportunity to be 
heard. When they were only available in the public records 
room, okay, they are public. But now they are on the Internet 
and, as you know, they end up in 30-second TV ads and you don't 
really have a meaningful opportunity to respond. It is a very 
real issue, and I think they are a form of enforcement.
    Just if I could take one second, there are examples of 
things the Commission in the past has asked for that they 
don't--that they aren't entitled to ask for. Party committees 
used to get an RFAI all the time when they did a coordinated 
expenditure and an independent expenditure, saying, we see you 
have done both, you know, please explain how you can do both.
    Well, the Supreme Court in Colorado Republican said you 
could do both. It was an old letter that predated Colorado 
Republican that really had never been updated.
    A lot of this has been fixed. There is more work to be 
done, but there are things that are being asked for that still 
are on the cusp beyond the letter to Crossroads. So I just want 
to echo that. But I think the answer is it is part of the 
enforcement process.
    Mr. Nugent. Mr. Petersen.
    Mr. Petersen. I agree, I think it also is part of the 
enforcement process. Even though it may not be part of the 
formal process where a matter under review number is assigned 
to it and so forth, it can definitely lead to that. And I have 
often wondered why we do make those public, and I think as a 
result of them leading to or potentially leading to an 
enforcement matter, I think we should question whether or not 
they should remain public on the Web site.
    Mr. Nugent. And I agree. I think the question was, and you 
may--panel members--some panel members may disagree that it is 
an enforcement action, but if I am held accountable to the 
public in regards to something that you are just--you are 
saying it is just--well, we are just trying to clarify a 
possible mistake in numbers in addition. It could be, you know, 
you had 228 or you had 230 donors. The damage has already been 
done once you release that on your Web site. It then becomes--
that is enforcement, I guess, through omission on your part by 
just releasing it.
    And part of what the chairman had mentioned about the 
bullying aspect of it, particularly for those first-time 
candidates, it can be a crusher to their viability, and so the 
unintended consequence is it is an enforcement. It may not be 
the way you sought, but it is to the candidate.
    I am over time.
    Mr. Harper. The gentleman yields back.
    I now recognize the gentleman from California, chair of the 
full committee, Mr. Lungren, for questions.
    The Chairman. My observation would be if I received a 
letter from a government agency that said if you don't answer 
this, you could be audited, that sounds like a threat. You may 
not see it that way, but I can certainly see a reporter saying 
candidate A received a letter from the FEC threatening an 
audit. Boy, boom, that kind of puts a negative connotation on 
it, I would think. So when you put words like that in there, I 
think you ought to realize what the impact is.
    I was just thinking from Mr. Gonzalez's questions about 
Citizens United and influencing and so forth, does anybody here 
know who financed the original publication of the Federalist 
Papers?
    Mr. McGahn. Publius.
    The Chairman. Did he pay for it?
    Mr. McGahn. It is anonymous.
    The Chairman. Well, I am just saying, should that have been 
disclosed?
    Mr. McGahn. No.
    The Chairman. I think that probably influenced the founding 
of this Republic, if I am not mistaken. And they used other 
names, and they didn't tell anybody where they got their money, 
and it was done to persuade legislatures to adopt the 
Constitution to give us protections under the First Amendment. 
Maybe they didn't understand.
    Let me just ask this question, Madam Chair. Under current 
law, could a candidate designate an individual other than their 
treasurer of their campaign to dispose of campaign assets if 
they were to pass away? Do you have any flexibility in allowing 
a campaign--a candidate to say it is not my treasury. I want--
in the unfortunate situation that I might pass away, somebody 
else might know a better idea of how I would want those 
campaign funds to go to charitable institutions than my 
campaign manager who--I mean my campaign treasurer who I may 
hire because he or she speaks your language and knows how to 
make sure I don't get one of those audit letters.
    Ms. Bauerly. Chairman Lungren, if I understand your 
question, the question is, were a candidate to pass away, could 
a new treasurer be assigned for that committee?
    The Chairman. Yeah, could they designate, in other words, 
one person for purposes of campaign treasury but if in the 
untimely event they passed away someone else to dispose of the 
campaign assets other than the designated treasurer?
    Ms. Bauerly. Of course, a campaign may designate a 
treasurer and an assistant treasurer at any point in time. It 
wouldn't require any other circumstances. So there could always 
be sort of a backup person, and we frankly encourage that 
because that is very useful in case something were to happen to 
the treasurer rather than the candidate.
    At this point in time, I don't believe we have specific 
regulations on that. Were such an unfortunate event to occur, I 
think the Commission would make every effort to work with a 
committee in terms of ensuring that whatever the wishes of the 
candidate were could be carried out.
    The Chairman. Okay. Thank you.
    Mr. Harper. I want to thank everyone, and also we do look 
forward to seeing those manuals and penalty schedules. We think 
that that is an important issue for us today.
    I think it is good that we have had this hearing after many 
years of not having one, and I want to thank each of the 
witnesses for their testimony and the members for their 
participation, and I now adjourn the subcommittee.
    [Whereupon, at 11:39 a.m., the subcommittee was adjourned.]



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