[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
Available on the Internet:
http://www.gpoaccess.gov/congress/house/administration/index.html
_____
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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
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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.]