[House Report 105-606]
[From the U.S. Government Publishing Office]



105th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     105-606
_______________________________________________________________________


 
                    FEC REAUTHORIZATION ACT OF 1998

_______________________________________________________________________


 June 25, 1998.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Thomas, from the Committee on House Oversight, submitted the 
                               following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 3748]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on House Oversight, to whom was referred the 
bill (H.R. 3748) to amend the Federal Election Campaign Act of 
1971 to authorize appropriations for the Federal Election 
Commission for fiscal year 1999, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``FEC Reauthorization Act of 1998''.

SEC. 2. AUTHORIZATION OF APPROPRIATIONS FOR FEDERAL ELECTION COMMISSION 
                    FOR FISCAL YEAR 1999.

  Section 314 of the Federal Election Campaign Act of 1971 (2 U.S.C. 
439c) is amended--
          (1) by striking ``and $9,400,000'' and inserting 
        ``$9,400,000''; and
          (2) by striking the period at the end and inserting the 
        following: ``, and $33,700,000 for the fiscal year ending 
        September 30, 1999, of which $2,800,000 shall be available only 
        if at least 4 members of the Commission vote not later than 
        September 30, 1998, to adopt a re-prioritization plan for the 
        purpose of improving enforcement procedures and preventing the 
        unnecessary dismissal of appropriate enforcement actions.''.

SEC. 3. APPOINTMENT AND SERVICE OF STAFF DIRECTOR AND GENERAL COUNSEL 
                    OF COMMISSION.

  (a) Appointment; Length of Term of Service.--
          (1) In general.--The first sentence of section 306(f)(1) of 
        the Federal Election Campaign Act of 1971 (2 U.S.C. 437c(f)(1)) 
        is amended by striking ``by the Commission'' and inserting the 
        following: ``by an affirmative vote of not less than 4 members 
        of the Commission and may not serve for a term of more than 4 
        consecutive years without reappointment in accordance with this 
        paragraph''.
          (2) Effective date.--The amendment made by paragraph (1) 
        shall apply with respect to any individual serving as the staff 
        director or general counsel of the Federal Election Commission 
        on or after January 1, 1999, without regard to whether or not 
        the individual served as staff director or general counsel 
        prior to such date.
  (b) Treatment of Individuals Filling Vacancies; Termination of 
Authority Upon Expiration of Term.--Section 306(f)(1) of such Act (2 
U.S.C. 437c(f)(1)) is amended by inserting after the first sentence the 
following new sentences: ``An individual appointed as a staff director 
or general counsel to fill a vacancy occurring other than by the 
expiration of a term of office shall be appointed only for the 
unexpired term of the individual he or she succeeds. An individual 
serving as staff director or general counsel may not serve in any 
capacity on behalf of the Commission after the expiration of the 
individual's term unless reappointed in accordance with this 
paragraph.''.

SEC. 4. ALTERNATIVE PROCEDURES FOR IMPOSITION OF PENALTIES FOR 
                    REPORTING VIOLATIONS.

  (a) In General.--Section 309(a)(4) of the Federal Election Campaign 
Act of 1971 (2 U.S.C. 437g(a)(4)) is amended--
          (1) in subparagraph (A)(i), by striking ``clause (ii)'' and 
        inserting ``clause (ii) and subparagraph (C)''; and
          (2) by adding at the end the following new subparagraph:
  ``(C)(i) Notwithstanding subparagraph (A), in the case of a violation 
of any requirement under this Act relating to the reporting of receipts 
or disbursements, the Commission may--
          ``(I) find that a person committed such a violation on the 
        basis of information obtained pursuant to the procedures 
        described in paragraphs (1) and (2); and
          ``(II) based on such finding, require the person to pay a 
        civil money penalty in an amount determined under a schedule of 
        penalties which is established and published by the Commission 
        and which takes into account the amount of the violation 
        involved, the existence of previous violations by the person, 
        and such other factors as the Commission considers appropriate.
  ``(ii) The Commission may not make any determination adverse to a 
person under clause (i) until the person has been given written notice 
and an opportunity for the determination to be made on the record.
  ``(iii) Any person against whom an adverse determination is made 
under this subparagraph may obtain a review of such determination in 
the district court of the United States for the district in which the 
person is found, resides, or transacts business, by filing in such 
court (prior to the expiration of the 30-day period which begins on the 
date the person receives notification of the determination) a written 
petition requesting that the determination be modified or set aside.''.
  (b) Conforming Amendment.--Section 309(a)(6)(A) of such Act (2 U.S.C. 
437g(a)(6)(A)) is amended by striking ``paragraph (4)(A)'' and 
inserting ``paragraph (4)''.
  (c) Effective Date.--The amendments made by this section shall apply 
with respect to violations occurring on or after January 1, 1999.

SEC. 5. STANDARD FOR INITIATION OF ACTIONS BY FEC.

  (a) In General.--Section 309(a)(2) of the Federal Election Campaign 
Act of 1971 (2 U.S.C. 437g(a)(2)) is amended to read as follows:
  ``(2) Not later than 90 days after the time for responding to a 
complaint under paragraph (1) has elapsed for all respondents, the 
general counsel of the Commission shall provide a recommendation to the 
Commission regarding whether there is sufficient or insufficient reason 
for the Commission to investigate any violation alleged in the 
complaint. If the Commission, upon receiving a complaint under 
paragraph (1) (or on the basis of information ascertained in the normal 
course of carrying out its supervisory responsibilities), determines by 
an affirmative vote of 4 of its members that it has a sufficient reason 
to investigate whether a person has committed (or is about to commit) a 
violation of this Act or of chapter 95 or chapter 96 of the Internal 
Revenue Code of 1986, the Commission (through its chair or vice chair) 
shall notify the person of the alleged violation, and shall set forth 
in such notification the factual and legal basis for such alleged 
violation. The Commission shall make an investigation of such alleged 
violation (which may include a field investigation or audit) in 
accordance with the provisions of this section.''.
  (b) Effective Date.--The amendment made by subsection (a) shall apply 
with respect to complaints filed on or after January 1, 1999.

                           General Discussion

                 PURPOSES AND GOALS OF THE LEGISLATION

Provides funding for FEC

    HR 3748, provides $33.7 million for the Federal Election 
Commission for Fiscal Year 1999. The Commission, which was 
established in 1974, discloses Federal campaign activity, 
promulgates and enforces campaign regulations, audits 
Presidential campaigns and advises campaigns regarding proper 
compliance.
    The budget of the Commission has increased by more than 
100% over the past 10 years and over 20% since the beginning of 
the 104th Congress. This budget keeps pace, not only with 
inflation, but exceeds that of the growth of the Federal 
government. The authorization of the House Oversight Committee 
provides the FEC with a 9% budget increase at the same time 
that the general Federal budget increase is only expected to be 
3.5%. The FEC budget has grown at a rate nearly twice as fast 
as that of the Federal budget over the last 15 years.
    That is more significant within the context of the 
Republican Majority's efforts to control the rate of government 
spending. The Committee, by reporting this measure, grants the 
Commission resources sufficient to enforce the current campaign 
regulations while improving the productivity and processes of 
the agency.
    This authorization does not mandate how the Commission 
ought to spend its budget. The Commission will allocate its own 
financial resources, with Congressional oversight and guidance. 
This bill provides funds for the FEC to increase its staff to 
pursue enforcement if it chooses.
    This authorization provides funds that will keep the 
Commission's modernization efforts on-track. Technology 
enhancements will increase the speed and scope of public 
disclosure. Currently, only 41 of the over 8000 campaign 
committees that exist are using the new FEC sponsored software. 
Therefore, there are great opportunities for the FEC to take 
advantage of enhanced computerization.

Funding increase for Commission conditioned on adoption of 
        reprioritization plan that improves enforcement and prevents 
        needless dismissal of cases

    H.R. 3748 provides $33.7 million for the Commission. Of 
this amount, $2.8 million is conditioned on the adoption, by 
four votes, of a reprioritization plan. A reprioritization plan 
would prevent the needless dismissal of cases by reallocating 
resources from other functions toward. The Commission and some 
of its critics have claimed that its enforcement operations 
lack the necessary funding and staff. The $2.8 million increase 
will not be released until this requirement is met. With the 
overall funding increase and this incentive, the Commission 
should have more than adequate resources to fulfill its 
enforcement responsibilities.

Periodic Commission approval for the FEC's ``statutory staff''

    H.R. 3748 requires periodic review and approval of the 
General Counsel and Staff Director positions by an absolute 
majority of the Commission (4 votes). (Note: Under current FEC 
procedures, an acting General Counsel can be selected to serve 
until a permanent General Counsel is selected.) This provision 
will provide Commissioners with a device that will make the 
institution's staff more responsive and accountable. Increased 
accountability will promote efficiency. This provision was 
included in the 1996 House Republican Leadership campaign 
reform bill.
    Currently, only a majority vote by the Commissioners allows 
the dismissal of statutory staff. Unresponsive or partisan 
staff may continue as long as one party protects them. 
Commission staff should be more accountable to the Commission 
as a whole, and not just the Commissioners from one party. This 
is important given the agency's balance of three Commissioners 
from each party.
    Currently, the Equal Employment Opportunity Commission (42 
U.S.C. 2000e-4(a)), the Federal Labor Relations Authority (5 
U.S.C. 7104) and the National Labor Relations Board (29 U.S.C. 
153) have set terms limited to four or five years for their 
senior staff as well.

Authority for FEC to issue a schedule of fines for reporting violations

    H.R. 3748 grants the Commission the authority to assess 
fines (published in a schedule) for minor violations relating 
to the reporting of receipts and disbursements. Such minor and 
accidental reporting violations would not have to be treated as 
full-blown enforcement matters and the Commission would 
therefore be able to focus on more serious cases. This 
provision will save the time and resources of the Commission by 
streamlining its enforcement procedures. The Commission has 
regularly suggested such a fine schedule in its yearly list of 
legislative recommendations. It appeared in the Commission's 
most recent legislative recommendations that were forwarded to 
Congress in March 1998.

Requiring general counsel's office to recommend reason to investigate 
        or not to investigate within 90 days of receiving responses 
        from respondent

    This provides that the General Counsel's office of the FEC 
would recommend either ``sufficient'' or ``insufficient'' 
``reason to investigate'' within 90 days of receiving a 
response from all respondents. This will reduce Commission-
generated delays in the enforcement process and provide justice 
to respondents in a more timely manner.
    The Commission does not need large funding increases in 
order to reform itself. This proposal does not require the 
Commission to do anything more than it already does. It merely 
requires that some of its enforcement actions be completed 
sooner rather than later. In fact, this requirement may save 
the Commission money.
    The current system allows cases to linger for months, if 
not years. This system is unfair to both the complainants and 
the respondents. Beyond delaying due process, this system is 
wasteful, especially since the FEC eventually dismisses over 
75% of its cases.

House Oversight's FEC accomplishments

    The House Oversight Committee's Republican Majority has a 
significant record of accomplishments on FEC oversight and 
reform in the 104th and 105th Congresses.
    1. In 1995, the House Oversight Committee reported, the 
House passed, and the President signed HR 2527 requiring the 
electronic filing of campaign reports. Now candidate reports 
can be instantly filed over the Internet.
    2. HR 2527 also required House campaigns to file directly 
with the FEC, instead of the Clerk's office. By removing this 
unnecessary step, campaign reports are disclosed to the public 
promptly and efficiently.
    3. In the FY 1998 appropriations bill, the Committee was 
instrumental in promoting the first ever, agency-wide private-
sector audit and management review since its creation over 25 
years ago.
    4. The Committee was also instrumental in placing language 
in the FY 98 Appropriations bill requiring that all filed 
campaign reports be available on the Internet within 24 hours. 
Now, Americans can see the actual filings of candidates without 
leaving their home.
    5. In March, the House passed by an overwhelming margin HR 
3582, the ``Campaign Reporting and Disclosure Act of 1998'' 
which was the most significant bipartisan campaign reform bill 
since 1979. This bill expedites the reporting of campaign 
information within 24 hours 90 days prior to an election and 
promotes more effective disclosure by the FEC.

White House fails to fill Commission vacancies

    President Clinton has so far failed to nominate a full 
slate of individuals to fill the vacant slots on the 
Commission. The current FEC Commissioner nominees have been 
delayed since the resignation of Commissioner Potter in October 
1995. It is troubling that the bi-partisan agency that is 
responsible for enforcing the campaign laws has had a Democrat 
majority for nearly two years. The agency needs to have its 
full compliment of Commissioners.

                     Section by Section Description

Section 1. Short title

Section 2. Authorization of appropriations for Federal Election 
        Commission for fiscal year 1999

    This provision provides $33,700,000 for the FEC for Fiscal 
Year 1999. $2,800,000 of that amount shall be available only if 
a majority of Commissioners (four) vote to adopt a re-
prioritization plan that would improve enforcement procedures 
and prevent the unnecessary dismissal of enforcement actions.

Section 3. Appointment and service of staff director and general 
        counsel of Commission

    This provision provides that the Commission's Staff 
Director and General Counsel may not serve more than 4 
consecutive years without being re-appointed. A majority vote 
by the Commissioners (four) is necessary to fill these 
positions.

Section 4. Alternative procedures for imposition of penalties for 
        reporting violations

    The FEC may choose to fine a person a civil money penalty 
in an amount that is determined by an established schedule of 
penalties, without first attempting to enter into a 
conciliation agreement with the person. A fined individual has 
the right to have the decision reviewed by a US District Court.

Section 5. Standard for initiation of actions by FEC

    The FEC's General counsel has 90 days to recommend to the 
Commission whether there is sufficient or insufficient reason 
for the Commission to investigate any violation alleged in the 
complaint. The Commission then would vote on the 
recommendation.

                            Committee Action

    On April 30, 1998 by roll call vote (4-2), a quorum being 
present, the Committee agreed to a motion to report the bill 
favorably to the House, as amended. Voting Yes: Mr. Ney; Mr. 
Boehner; Mr. Ehlers; and Mr. Mica. Voting No: Mr. Gejdenson, 
Mr. Hoyer.

                            Roll Call Votes

    In compliance with clause 2(l)(2)(B) of Rule XI of the 
Rules of the House of Representatives, with respect to each 
roll call vote on a motion to report the bill and on any 
amendment offered to the bill, the total number of votes cast 
for and against, and the names of those Members voting for and 
against, are as follows:

                            Roll Call No. 1

    Subject: Amendment to H.R. 3478. Offered by: Mr. Gejdenson.

------------------------------------------------------------------------
                                              Aye       No      Present 
------------------------------------------------------------------------
Mr. Thomas...............................  ........  ........  .........
Mr. Ney..................................  ........        X   .........
Mr. Boehner..............................  ........        X   .........
Mr. Ehlers...............................  ........        X   .........
Ms. Granger..............................  ........  ........  .........
Mr. Mica.................................  ........        X   .........
Mr. Gejdenson............................        X   ........  .........
Mr. Hoyer................................        X   ........  .........
Ms. Kilpatrick...........................  ........  ........  .........
      Total..............................        2         4   .........
------------------------------------------------------------------------

                            Roll Call No. 2

    Subject: Amendment in the Nature of a Substitute Offered 
by: Mr. Ehlers

------------------------------------------------------------------------
                                              Aye       No      Present 
------------------------------------------------------------------------
Mr. Thomas...............................  ........  ........  .........
Mr. Ney..................................        X   ........  .........
Mr. Boehner..............................        X   ........  .........
Mr. Ehlers...............................        X   ........  .........
Ms. Granger..............................  ........  ........  .........
Mr. Mica.................................        X   ........  .........
Mr. Gejdenson............................  ........        X   .........
Mr. Hoyer................................  ........        X   .........
Ms. Kilpatrick...........................  ........  ........  .........
      Total..............................        4         2   .........
------------------------------------------------------------------------

                      Committee Oversight Findings

    In compliance with clause 2(l)(3)(A) of rule XI of the 
Rules of the House of Representatives, the Committee states 
that the findings and recommendations of the Committee, based 
on oversight activities under clause 2(b)(l) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

   Oversight Findings of Committee on Government Reform and Oversight

    The Committee states, with respect to clause 2(l)(3)(D) of 
rule XI of the Rules of the House of Representatives, that the 
Committee on Government Reform and Oversight did not submit 
findings or recommendations based on investigations under 
clause 4(c)(2) of Rule X of the Rules of the House of 
Representatives.

                        Constitutional Authority

    Article 1, Section 4, gives Congress the authority to make 
laws governing the time, place and manner of holding Federal 
elections.

                            Federal Mandates

    The Committee states, with respect to section 423 of the 
Congressional Budget Act of 1974, that the bill does not 
include any significant Federal mandate.

            Statement of Bugdet Authority and Related Items

    The bill provides for $33.7 million of budget authority for 
the Federal Election Commission for the Fiscal Year 1999.

               Congressional Budget Office Cost Estimate

    In compliance with clause 2(l)(3)(C) of the rule XI of the 
Rules of the House of Representatives, the Committee sets 
forth, with respect to the bill, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 403 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, May 11, 1998.
Hon. Wiliam M. Thomas,
Chairman, Committee on House Oversight,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3748, the FEC 
Reauthorization Act of 1998.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is John R. 
Righter.
            Sincerely,
                                             James L. Blum,
                                   (For June E. O'Neill, Director).
    Enclosure.

H.R. 3748--FEC Reauthorization Act of 1998

    Summary: H.R. 3748 would authorize an appropriation of 
$33.7 million for the Federal Election Commission (FEC) in 
fiscal year 1999. Of that amount, the bill would make $2.8 
million contingent on the FEC adopting a new plan to prioritize 
enforcement actions by September 30, 1998. The bill also would 
establish four-year terms for the staff director and general 
counsel of the FEC and would require that at least four of the 
six commissioners approve candidates for each position. In 
addition, the bill would allow the FEC to begin imposing 
penalties for violations of reporting requirements that occur 
after January 1, 1999. The FEC would be required to publish a 
schedule of the penalties. Finally, the bill would require the 
general counsel to recommend that the commission either dismiss 
or further investigate complaints filed with the FEC within a 
given period of time.
    Assuming appropriation of the authorized amount, CBO 
estimates that enacting H.R. 3748 would result in additional 
discretionary spending of $33.7 million over fiscal years 1999 
and 2000. We estimate that the bill's other provisions would 
not significantly affect discretionary costs at the FEC. In 
addition, by permitting the FEC to begin imposing penalties for 
certain violations that occur after January 1, 1999, we 
estimate that enacting H.R. 3748 would increase civil monetary 
penalties, which are classified as governmental receipts, by 
less than $500,000 a year. Consequently, pay-as-you-go 
procedures would apply to this bill.
    H.R. 3748 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act of 1995 
(UMRA) and would not affect the budgets of state, local, or 
tribal governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 3748 is shown in the following table. 
For the purposes of this estimate, CBO assumes that the amount 
authorized in H.R. 3748 will be appropriated by the start of 
fiscal year 1999 and that outlays will follow the historical 
spending pattern of the FEC. In addition, we assume that the 
FEC will adopt a new plan for prioritizing enforcement actions 
by September 30, 1998, and thus, will receive the full $33.7 
million. Enacting H.R. 3748 would probably increase receipts 
from civil penalties, but by amounts of less than $500,000 a 
year. We estimate that the bill's other provisions would not 
significantly affect discretionary costs at the FEC. The costs 
of this legislation fall within budget function 800 (general 
government).

                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                              1998     1999     2000     2001     2002     2003 
----------------------------------------------------------------------------------------------------------------
                                        SPENDING SUBJECT TO APPROPRIATION                                       
FEC spending under current law:                                                                                 
    Budget Authority \1\..................................       31        0        0        0        0        0
    Estimated Outlays.....................................       31        3        0        0        0        0
Proposed changes:                                                                                               
    Authorization Level...................................        0       34        0        0        0        0
    Estimated Outlays.....................................        0       31        3        0        0        0
FEC spending under H.R. 3748:                                                                                   
    Authorization Level \1\...............................       31       34        0        0        0        0
    Estimated Outlays.....................................       31       34        3        0        0        0
----------------------------------------------------------------------------------------------------------------
\1\ The 1998 level is the amount appropriated for that year.                                                    

    Pay-as-you-go considerations: The Balanced Budget and 
Emergency Deficit Control Act of 1985 specifies procedures for 
legislation affecting direct spending and receipts. Pay-as-you-
go procedures would apply to H.R. 3748 because it would allow 
the FEC to begin imposing penalties according to a published 
schedule for violations of reporting requirements that occur 
after January 1, 1999. (Civil monetary penalties are classified 
as governmental receipts.) Currently, the FEC has no authority 
to impose penalties, but rather must either negotiate the 
amount of such fines with the violator or pursue a civil action 
in court. Over the last five years, the FEC, on average, has 
negotiated about $1 million a year in civil penalties. Based on 
information provided by the FEC, CBO estimates that H.R. 3748 
would increase the annual amount of civil penalties collected 
by the FEC by less than $500,000 a year.
    Intergovernmental and private-sector impact: H.R. 3748 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Estimate prepared by: John R. Righter.
    Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italic, existing law in which no change is proposed 
is shown in roman):

FEDERAL ELECTION CAMPAIGN ACT OF 1971

           *       *       *       *       *       *       *


TITLE III--DISCLOSURE OF FEDERAL CAMPAIGN FUNDS

           *       *       *       *       *       *       *


                      federal election commission

      Sec. 306. (a) * * *

           *       *       *       *       *       *       *

      (f)(1) The Commission shall have a staff director and a 
general counsel who shall be appointed [by the Commission] by 
an affirmative vote of not less than 4 members of the 
Commission and may not serve for a term of more than 4 
consecutive years without reappointment in accordance with this 
paragraph. An individual appointed as a staff director or 
general counsel to fill a vacancy occurring other than by the 
expiration of a term of office shall be appointed only for the 
unexpired term of the individual he or she succeeds. An 
individual serving as staff director or general counsel may not 
serve in any capacity on behalf of the Commission after the 
expiration of the individual's term unless reappointed in 
accordance with this paragraph. The staff director shall be 
paid at a rate not to exceed the rate of basic pay in effect 
for level IV of the Executive Schedule (5 U.S.C. 5315). The 
general counsel shall be paid at a rate not to exceed the rate 
of basic pay in effect for level V of the Executive Schedule (5 
U.S.C. 5316). With the approval of the Commission, the staff 
director may appoint and fix the pay of such additional 
personnel as he or she considers desirable without regard to 
the provisions of title 5, United States Code, governing 
appointments in the competitive service.

           *       *       *       *       *       *       *


                              enforcement

      Sec. 309. (a)(1) * * *
      [(2) If the Commission, upon receiving a complaint under 
paragraph (1) or on the basis of information ascertained in the 
normal course of carrying out its supervisory responsibilities, 
determines, by an affirmative vote of 4 of its members, that it 
has reason to believe that a person has committed, or is about 
to commit, a violation of this Act of chapter 95 or chapter 96 
of the Internal Revenue Code of 1954, the Commission shall, 
through its chairman or vice chairman, notify the person of the 
alleged violation. Such notification shall set forth the 
factual basis for such alleged violation. TheCommission shall 
make an investigation of such alleged violation, which may include a 
field investigation or audit, in accordance with the provisions of this 
section.]
  (2) Not later than 90 days after the time for responding to a 
complaint under paragraph (1) has elapsed for all respondents, 
the general counsel of the Commission shall provide a 
recommendation to the Commission regarding whether there is 
sufficient or insufficient reason for the Commission to 
investigate any violation alleged in the complaint. If the 
Commission, upon receiving a complaint under paragraph (1) (or 
on the basis of information ascertained in the normal course of 
carrying out its supervisory responsibilities), determines by 
an affirmative vote of 4 of its members that it has a 
sufficient reason to investigate whether a person has committed 
(or is about to commit) a violation of this Act or of chapter 
95 or chapter 96 of the Internal Revenue Code of 1986, the 
Commission (through its chair or vice chair) shall notify the 
person of the alleged violation, and shall set forth in such 
notification the factual and legal basis for such alleged 
violation. The Commission shall make an investigation of such 
alleged violation (which may include a field investigation or 
audit) in accordance with the provisions of this section.

           *       *       *       *       *       *       *

      (4)(A)(i) Except as provided in [clause (ii)] clause (ii) 
and subparagraph (C), if the Commission determines, by an 
affirmative vote of 4 of its members, that there is probable 
cause to believe that any person has committed, or is about to 
commit, a violation of this Act or of chapter 95 or chapter 96 
of the Internal Revenue Code of 1954, the Commission shall 
attempt, for a period of at least 30 days, to correct or 
prevent such violation by informal methods of conference, 
conciliation, and persuasion, and to enter into a conciliation 
agreement with any person involved. Such attempt by the 
Commission to correct or prevent such violation may continue 
for a period of not more than 90 days. The Commission may not 
enter into a conciliation agreement under this clause except 
pursuant to an affirmative vote of 4 of its members. A 
conciliation agreement, unless violated, is a complete bar to 
any further action by the Commission, including the bringing of 
a civil proceeding under paragraph (6)(A).

           *       *       *       *       *       *       *

  (C)(i) Notwithstanding subparagraph (A), in the case of a 
violation of any requirement under this Act relating to the 
reporting of receipts or disbursements, the Commission may--
          (I) find that a person committed such a violation on 
        the basis of information obtained pursuant to the 
        procedures described in paragraphs (1) and (2); and
          (II) based on such finding, require the person to pay 
        a civil money penalty in an amount determined under a 
        schedule of penalties which is established and 
        published by the Commission and which takes into 
        account the amount of the violation involved, the 
        existence of previous violations by the person, and 
        such other factors as the Commission considers 
        appropriate.
  (ii) The Commission may not make any determination adverse to 
a person under clause (i) until the person has been given 
written notice and an opportunity for the determination to be 
made on the record.
  (iii) Any person against whom an adverse determination is 
made under this subparagraph may obtain a review of such 
determination in the district court of the United States for 
the district in which the person is found, resides, or 
transacts business, by filing in such court (prior to the 
expiration of the 30-day period which begins on the date the 
person receives notification of the determination) a written 
petition requesting that the determination be modified or set 
aside.

           *       *       *       *       *       *       *

      (6)(A) If the Commission is unable to correct or prevent 
any violation of this Act or of chapter 95 or chapter 96 of the 
Internal Revenue Code of 1954, by the methods specified in 
[paragraph (4)(A)] paragraph (4), the Commission may, upon an 
affirmative vote of 4 of its members, insitute a civil action 
for relief, including a permanent or temporary injunction, 
restraining order, or any other appropriate order (including an 
order for a civil penalty which does not exceed the greater of 
$5,000 or an amount equal to any contribution or expenditure 
involved in such violation) in the district court of the United 
States for the district in which the person against whom such 
action is brought is found, resides, or transacts business.

           *       *       *       *       *       *       *


                    authorization of appropriations

      Sec. 314. There are authorized to be appropriated to the 
Commission for the purpose of carrying out its functions under 
this Act, and under chapters 95 and 96 of the Internal Revenue 
Code of 1954, not to exceed, $5,000,000 for the fiscal year 
ending June 30, 1975. There are authorized to be appropriated 
to the Commission $6,000,000 for the fiscal year ending June 
30, 1976, $1,500,000 for the period beginning July 1, 1976, and 
ending September 30, 1976, $6,000,000 for fiscal year ending 
September 30, 1977, $7,811,500 for the fiscal year ending 
September 30, 1978, [and] $9,400,000 (of which not more than 
$400,000 are authorized to be appropriated for the national 
clearinghouse function described in section 311(a)(10)) for the 
fiscal year ending September 30, 1981[.], and $33,700,000 for 
the fiscal year ending September 30, 1999, of which $2,800,000 
shall be available only if at least 4 members of the Commission 
vote not later than September 30, 1998, to adopt a re-
prioritization plan for the purpose of improving enforcement 
procedures and preventing the unnecessary dismissal of 
appropriate enforcement actions.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

                    I. H.R. 3748 Should Be Defeated

    Proper funding of the Federal Election Commission (``FEC'' 
or ``Commission'') is itself a reform issue. Consistent with 
their opposition to meaningful reform of any kind, the Majority 
Members of the Committee on House Oversight (``CHO'') refused 
to take the reform-minded stance on the issue of FEC funding 
when they ordered reported H.R. 3748.
    H.R. 3748, reported out of the Committee on House Oversight 
on a straight party line vote, should be defeated because it 
would: (1) grant the FEC insufficient resources to enforce the 
current law; (2) undermine the FEC's statutory independence.

(1) h.r. 3748 would grant the fec insufficient resources to enforce the 
                              current law

    Not only does H.R. 3748 cut 10 percent from the Commission/
OMB budget request of $36.5 million, but it effectively holds 
in escrow $2.8 million of the authorized $33.7 million until 
the Commission adopts new case management procedures, a 
justification for which the Majority failed to offer during the 
markup. In effect, H.R. 3748 guarantees the FEC only $30.9 
million in fiscal year 1999, exactly the same as its current 
budget.
    We find it inconsistent that even as the Republican-
controlled House and Senate have spent in excess of $11 million 
investigating only one segment of the 1996 elections, they are 
unwilling to grant the Commission a budget sufficient to 
enforce the very laws they allege were broken, or at a minimum 
guarantee a spending allowance that keeps pace with the annual 
inflation rate.

     (2) h.r. 3748 would undermine the fec's statutory independence

    H.R. 3748 includes a section specifically designed to 
remove the present general counsel and staff director from 
their positions and deprive the offices in which they serve of 
the independence essential to investigating allegations of 
campaign abuse. With respect to the general counsel, this is 
nothing less than a Republican vendetta precipitated by his 
efforts to carry out the Commission's directed investigation of 
GOPAC and other outrageous Republican violations of the Federal 
Election Campaign Act.
    We believe the new procedures for appointing a staff 
director and general counsel, and new terms of office for them, 
are needless encroachments on the prerogatives of an 
independent agency whose commissioners can decide for 
themselves, in a bipartisan fashion, what best serves the 
agency.

                   II: FEC Tasks for Fiscal Year 1999

    Members have an obligation to take a hard look at the FEC's 
mission in the next fiscal year and ask themselves if the 
agency has enough funds to ensure that campaign laws are 
obeyed. We anticipate that members from both sides of the aisle 
will agree, as we did, that H.R. 3748 will severely restrict 
the FEC's ability to perform its duties:
          (1) FY 1999 coincides with the heaviest filing period 
        of the 1998 congressional election, which occurs in the 
        first quarter of the new fiscal year.
          (2) FY 1999's last three quarters coincide with the 
        ``run-up'' period for the 2000 presidential election.
          (3) FY 1999 occurs in the midst of the busiest and 
        most expensive period of the FEC's six year program of 
        computer system upgrades.
          (4) In FY 1999, the FEC will still be resolving 
        compliance matters pertaining to the 1996 elections.
          (5) In the absence of effective caps on soft money 
        and hard money activities, the FEC in 1998-1999 faces 
        enormous disclosure duties. If present trends continue, 
        1998 will be the most expensive congressional election 
        in history.
    Given this scope of responsibilities, we are convinced the 
Majority is not serious about having the FEC enforce the laws. 
H.R. 3748 signals to candidates that they can skirt federal 
election laws with impunity. If the Majority truly believed its 
oft-repeated line that what American politics needs is not 
comprehensive campaign finance reform but compliance with the 
current law, it would give the Commission the tools it needs to 
perform all of its tasks: disclosing, enforcing, auditing, and 
advising.

                    III. Specific Flaws in H.R. 3748

section 2. authorization of appropriations for fec for fiscal year 1999

    Not only is the $33,700,000 figure authorized by Majority 
$2,804,000 less than the amount the FEC requested, but 
$2,800,000 of that is held in escrow until the Commission 
agrees on revised procedures for managing its caseload. Given 
the major cases the FEC has from the 1996 election cycles, as 
well as its normal workload, this amount is inadequate to fund 
the work pending before the agency. The result is that several 
significant investigations now in progress will have to be 
curtailed, and several additional ones will have to be dropped 
outright.
    If the FEC is authorized at the $33,700,000 level, it will 
have to choose between funding some or all elements of its ADP 
plan and greatly limiting the resources devoted to compliance 
matters resulting from the 1996 elections. This level will 
leave the FEC about $920,000--1/3 what is asked for--to handle 
the compliance component of the budget. The FEC could hire no 
more than 10-15 new people rather than the 37 planned for in 
compliance.
    Section 2's requirement that the Commission adopt a ``re-
prioritization plan for the purpose of improving enforcement 
procedures and preventing unnecessary dismissal of appropriate 
enforcement actions'' is, at best, meaningless, and at worst, 
counter-productive. The present Enforcement Priority System 
(EPS) allows the Commission to make the necessary ``triage 
decisions'' based on objective criteria, and it is regularly 
reviewed and updated by the Commission. The problem is not the 
EPS but the fact that too many cases are dismissed under the 
EPS because the FEC does not have the resources to investigate 
them. Without sufficient resources, altering the EPS will only 
result in different cases being dismissed, not fewer cases. In 
addition, developing an entirely new EPS will take tie up 
resources that would otherwise be devoted to actual case work.

   Section 3. Appointment and Service of Staff Director and General 
                                Counsel

    Under the present law, the appointment and removal of the 
staff director and general counsel are carried out the way all 
decisions at the Commission are carried out. It currently 
requires four of six votes to appoint the staff director and 
general counsel and they serve at the pleasure of the 
Commission. At any time, either or both officers can be removed 
by four votes of the Commission.
    The Majority provision would require the Commission to 
reappoint the staff director and general counsel every four 
years by four affirmative votes of the Commission. This change 
would weaken the bipartisan character of the Commission by, in 
effect, requiring the removal of people in these positions 
based on the vote of three commissioners. This would eliminate 
the independence of the staff director and general counsel; if 
either of them recommended actions unpopular to one or both of 
the major political parties, the commissioners could simply 
vote along party lines to remove the officer.
    Equally troubling is that these provisions create the very 
real prospect that the Commission will not be able to appoint a 
staff director and/or general counsel, after failing to get 
four votes to retain a person in one of these positions. The 
consequent leadership vacuum will limit the ability of these 
offices to consider all the facts surrounding a complaint 
before reporting to the Commission that the complaint has 
merit. For example, pursuant to 2 U.S.C. 437g(a)(3), the 
general counsel must notify a respondent of his or her 
recommendation as to whether there is probable cause to believe 
the law was violated, and provide a brief supporting that 
recommendation. The Commission must consider that brief and the 
respondent's response before it can vote on whether there is 
probable cause to believe the law was violated. If there is a 
vacancy in the position of general counsel, the Commission will 
not be able to proceed to a vote on probable cause.
    Finally, Section 2 does not permit anyone who may have 
served as staff director or general counsel for an unexpired 
term to return to a subordinate position within the FEC once a 
new staff director or general counsel is named or the term 
expires. This may make it impossible to persuade someone from a 
lower tier of management to serve on an interim basis while the 
Commission seeks a permanent replacement.
    We believe that Section 2 is nothing less than an effort by 
the Majority to cripple the FEC's ability to investigate 
allegations of abuse, enforce the law, and deter future 
violations. The effect will be the same as depriving a big-city 
police force of a strong, politically independent police 
commissioner.

          Section 5. Standard for Initiation of Action by FEC

    For each complaint filed with the agency, Section 5 
requires the general counsel to report to the Commission within 
90 days whether there is sufficient reason to investigate the 
complaint. To meet this deadline, the FEC will either require 
an even larger increase in resources than it asked for or 
divert current resources from important investigations.
    Under the present system, cases are rated under the 
Enforcement Priority System. Cases deemed less important 
compared to others are recommended for dismissal based on their 
rating, without a substantive judgment of the merits of the 
allegations. Cases that are rated as deserving of attention are 
place on the Central Enforcement Docket and are assigned as 
staff become available. If a case is not assigned within a 
certain amount of time, the law requires that it be dismissed 
as ``stale.''
    This triage system is based on the idea that a case will be 
assigned when sufficient resources are available to handle the 
case. Under the Majority amendment, every complaint-generated-
case would have to be assigned so that a substantive report to 
the Commission can be made within 90 days regarding whether 
there is reason to investigate.
    We would be inclined to endorse this expedited procedure if 
Congress granted the resources to carry it out. H.R. 3748 does 
not. If enacted, Section 5 will limit staff members from 
conducting actual investigations because they will be busy 
preparing a report on each complaint, regardless of the facial 
merits of the complaint. In addition, without additional 
resources, should the Commission find there are grounds to 
investigate a complaint under this new procedure, the case may 
still have to be held as inactive because of a lack of 
resources, and ultimately may still be dismissed as stale. 
Under the current system, many of those complaints would be 
dismissed by the Commission with a minimal amount of time and 
attention because they simply are not serious enough to warrant 
action. Ironically, this change, without additional resources, 
will result in even less enforcement and fewer investigations.

            IV. Conclusion: The Majority Wants It Both Ways

    Once again the Republican Majority's response to the 
public's support of campaign finance reform is to deprive the 
Federal Election Commission of the funds, discretion, and 
independence it needs to enforce the law and disclose 
information to the public.
    The Majority wants to have it both ways. On the one hand, 
it wants to criticize the Commission for not fulfilling its 
statutorily required duties and, on the other, seeks to limit 
the Commission's budget at every opportunity so that it cannot 
fulfill its duties. If the Commission cannot enforce the law 
with the funds available to satisfy all of us, then 
shortchanging the agency in critical areas certainly will not 
improve enforcement.
    It is our view that if Congress wants the FEC to do its job 
well, whether it be in enforcement, computerization, or 
disclosure, we had better make the funds available for these 
purposes. If H.R. 3748 is adopted, Congress will be culpable 
for thwarting the agency's essential mission.

                                   Sam Gejdenson.
                                   Steny Hoyer.
                                   Carolyn C. Kilpatrick.

                                
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