[Federal Register Volume 65, Number 61 (Wednesday, March 29, 2000)]
[Proposed Rules]
[Pages 16534-16541]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-7618]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 65, No. 61 / Wednesday, March 29, 2000 / 
Proposed Rules  

[[Page 16534]]



FEDERAL ELECTION COMMISSION

11 CFR Parts 104 and 111

[Notice 2000-6]


Administrative Fines

AGENCY: Federal Election Commission.

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Treasury and General Government Appropriations Act, 2000, 
amended the Federal Election Campaign Act of 1971 (hereinafter ``the 
Act'' or ``FECA'') to permit the Federal Election Commission to impose 
civil money penalties for violations of the reporting requirements of 
the FECA that occur between January 1, 2000, and December 31, 2001. The 
amendments are intended to expedite and streamline the Commission's 
enforcement procedures. The Commission is proposing amendments to its 
compliance procedure regulations to implement the new program. Please 
note that the proposed rules that follow do not represent a final 
decision by the Commission on the issues presented by this rulemaking. 
Further information is provided in the supplementary information that 
follows.

DATES: Comments must be received on or before April 28, 2000.

ADDRESSES: All comments should be addressed to Rosemary C. Smith, 
Assistant General Counsel, and must be submitted in either written or 
electronic form. Written comments should be sent to the Federal 
Election Commission, 999 E Street, N.W., Washington, DC 20463. Faxed 
comments should be sent to (202) 219-3923, with printed copy follow-up. 
Electronic mail comments should be sent to [email protected]. 
Commenters sending comments by electronic mail must include their full 
name, electronic mail address and postal service address within the 
text of their comments. Comments that do not contain the full name, 
electronic mail address and postal service address of the commenter 
will not be considered. The Commission will make every effort to have 
public comments posted on its website within ten (10) business days of 
the close of the comment period.

FOR FURTHER INFORMATION CONTACT: Ms. Rosemary C. Smith, Assistant 
General Counsel, or Ms. Mai T. Dinh, Attorney, 999 E Street, N.W., 
Washington, D.C. 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: The Treasury and General Government 
Appropriations Act, 2000, Public Law No. 106-58, 106th Cong., Sec. 640, 
113 Stat. 430, 476-77 (1999), amended section 309(a)(4) of the FECA, 2 
U.S.C. 437g(a)(4) to provide for a modified enforcement process for 
violations of reporting requirements. The amended procedure provides 
that if the Commission finds a violation of 2 U.S.C. 434(a) it may:
    (i) 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 to be heard before the Commission.
    (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 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 set aside.
    The Commission is seeking public comments on the proposed rules at 
11 CFR part 111, subpart B, that would implement this amendment to the 
Act and would establish a new streamlined procedure for only those 
enforcement matters that involve alleged violations of the reporting 
requirements of 2 U.S.C. 434(a). The new rules would also impose civil 
money penalties in accordance with the schedules of penalties. The 
current enforcement procedures in 11 CFR 111.1 through 111.24 would be 
designated as 11 CFR part 111, subpart A--Enforcement, and would 
continue to apply to other types of alleged violations of the FECA.

Applicability

    The amendment to the Act applies only to violations that occur 
between January 1, 2000 and December 31, 2001. The Commission would 
have discretion to apply these new procedures to reporting violations 
of 2 U.S.C. 434(a). These reporting violations include failure to file 
or timely file monthly, quarterly, pre-election, post-general election, 
mid-year and year-end reports, and 48 hour notices regarding 
contributions after the 20th day but more than 48 hours before the 
election. While the Commission anticipates that it would use these new 
procedures to handle most of its non-filer and late filer enforcement 
matters, the Commission may decide not to apply the new procedures to 
certain violations because of unusual circumstances. The Commission 
also contemplates that complaint generated matters that deal only with 
alleged 2 U.S.C. 434(a) violations would be processed under the new 
procedures. Complaints that contain allegations of 2 U.S.C. 434(a) 
violation(s) as well as violation(s) of other provisions of the FECA 
would be processed under the current enforcement procedures.

Enforcement Procedures

1. Due Process Considerations

    In developing the procedures to implement this amendment to the 
FECA, the Commission is taking into consideration the requirements of 
the Administrative Procedure Act (hereinafter ``APA''), 5 U.S.C 551 et 
seq., and the Due Process Clause of the U.S. Constitution, U.S. Const. 
amend. XIV, Sec. 1, and the intent of Congress in enacting this 
amendment.
    Because the only procedures specified in the amendment to section 
434(a) of the FECA are ``written notice and an opportunity to be heard 
by the Commission,'' it is quite clear that the statute on its face 
does not trigger the formal adjudication provisions of the APA. Section 
554(a) of the APA states that the relevant program statute must require 
an opportunity for a hearing ``on the record,'' before the APA's formal 
adjudication procedures are triggered.

[[Page 16535]]

Although the Supreme Court has never interpreted this language in 
section 554(a), it has so interpreted the almost identical language 
pertaining to formal rulemaking in section 553(c) of the APA in United 
States v. Florida East Coast Railway Co., 410 U.S. 224 (1973). 
Furthermore, the leading court of appeals decisions, City of West 
Chicago v. NRC, 701 F.2d 632 (7th Cir. 1983), and Chemical Waste 
Management, Inc. v. EPA, 873 F.2d 1477 (D.C. Cir. 1989), have required 
the presence of the phrase ``on the record'' unless there is some 
extraordinary indication of congressional intent that formal APA 
procedures should apply. Nothing extraordinary in the amendment or the 
legislative history indicates that Congress intended to require the 
Commission to follow the formal APA adjudication procedures.
    Although the FECA does not require a formal APA procedure, the U.S. 
Constitution requires the Commission to afford respondents adequate due 
process prior to assessment of a civil money penalty. Because the APA 
is silent on what type of procedure agencies must follow in informal 
adjudication, the Commission must look to case law to determine what 
procedure will satisfy the due process requirements. Under Mathews v. 
Eldridge, 424 U.S. 319, 334-335 (1976), the Supreme Court stated that 
courts must employ a balancing test to determine the adequacy of an 
agency's procedures, once a protected property or liberty interest has 
been shown to be affected. The balance involves the following three 
factors: (1) The private interest affected by the official action, (2) 
the risk of an erroneous result and the probable value of additional 
procedural safeguards, and (3) the government's interest in avoiding 
administrative burdens. Because the APA does not prescribe procedures 
for informal adjudications, the Commission is left with devising a 
procedure that meets the Mathews balancing test.
    Another consideration is congressional intent. The legislative 
history suggests that a purpose for the amendment is to streamline the 
process for reporting violations in order to redirect more resources to 
more complex violations. Congressman William Thomas, Chairman of the 
Committee of House Administration, stated the following on the floor of 
the House of Representatives on September 15, 1999:

Allowing the FEC to impose administrative fines for reporting 
violations without the lengthy procedural steps required in a normal 
enforcement case will free critical FEC resources for more important 
disclosure and enforcement efforts. The rights of those under these 
regulations are protected by preserving the option of appeal to a 
U.S. District Court for those who believe the FEC erred.

    The Commission believes it has developed procedures in this 
proposed rule that address these considerations. The private interests 
involved in this rulemaking are protected. The risk of erroneous 
results is relatively low in most cases given that reporting violations 
are relatively straightforward. Absent extraordinary circumstances, 
there are basically only three issues--whether the respondent was 
required to submit a report, whether the report was timely filed, and 
whether the civil money penalty was calculated correctly. The 
opportunity for the respondent to submit a written response and to have 
the enforcement matter reviewed by an independent reviewing officer 
will protect the respondent from an erroneous result as will the 
opportunity for the respondents to appeal to federal district court. 
This streamlined process will ensure that the Commission does not 
devote too many resources to these relatively minor, straightforward 
violations. The streamlined process will also meet the requirements of 
the amendment. The Commission seeks comments on the adequacy of the 
procedures proposed to protect respondents' due process rights.

2. Notification to Respondents of Reason To Believe Finding

    The amendment to the FECA did not change the 2 U.S.C. 437g(a)(2) 
requirements pertaining to reason to believe findings and notifying 
respondents of the reason to believe findings. Thus, under the proposed 
11 CFR 111.32, the Commission would continue to authorize the Chairman 
or Vice-Chairman to notify the respondents in writing if it finds 
reason to believe that a violation has occurred. The notification would 
contain the factual and legal basis for the reason to believe finding 
and the proposed civil money penalty in accordance with the applicable 
schedule of penalties. Before the reports are due, the Commission 
intends to follow its current procedures of informing all committees of 
their duty to submit the reports and the filing deadlines. Thus, all 
committees will have prior notification of the requirements and an 
adequate opportunity to meet the requirements before the Commission 
finds reason to believe and commences an enforcement action.
    Under the proposed 11 CFR 111.34, if the respondent does not wish 
to challenge the reason to believe finding, the respondent may pay the 
proposed civil money penalty within forty days of the Commission's 
reason to believe finding. The Commission would then send the 
respondent an acknowledgment of the payment and its final 
determination. The matter would then be closed and the information 
placed on the public record.

3. Respondent's Written Response

    If, however, the respondent wants to challenge the reason to 
believe finding and/or the proposed civil money penalty, the respondent 
under the proposed 11 CFR 111.35 would be required to submit a written 
notice of intent to challenge the reason to believe finding and/or the 
proposed civil money penalty to the Commission within twenty days of 
the Commission's reason to believe finding. The respondent would also 
be required to submit a written response to the Commission within forty 
days of the Commission's reason to believe finding. The written 
response must set forth one or more of the following arguments: alleged 
factual and/or legal errors in the reason to believe finding; and/or 
reasons why the proposed civil money penalty was improperly calculated; 
and/or extraordinary circumstances that were out of the control of the 
respondent and that were for a duration of at least 48 hours and that 
prevented the respondent from filing the report in a timely manner. 
Extraordinary circumstances would not include negligence, illness of 
staff, computer failures, problems with contractors and vendors, and 
other similar occurrences. Respondents would be required to include all 
supporting documentation with their written response.

4. Reviewing Officer

    The respondent's written response would be forwarded to a reviewing 
officer under proposed 11 CFR 111.36. To ensure impartiality, the 
reviewing officer would not be someone who was involved in developing 
the reason to believe finding. The reviewing officer would review the 
reason to believe finding with supporting documentation and the 
respondent's written response with supporting documentation. The 
reviewing officer would also be allowed to request that other 
Commission staff and the respondent submit supplemental information. 
The reviewing officer would draft a written recommended decision and 
forward it to the Commission along with the reason to believe finding 
with supporting documentation, the respondent's written response with 
the supporting documentation, and

[[Page 16536]]

supplemental information, if any. These materials along with the 
Commission's final determination and any statement(s) of reasons, 
subject to any claims of privilege, would constitute the entire 
administrative record.
    The amendment to the FECA requires that a respondent have ``an 
opportunity to be heard'' before the Commission makes a final adverse 
determination. The Commission believes that this requirement would be 
satisfied by the respondent's opportunity to submit a written response 
to the reason to believe finding with a review by an impartial 
reviewing officer. The Commission recognizes, however, the possibility 
that respondents may want the opportunity for an oral hearing before 
the reviewing officer in those infrequent situations where there may be 
a disputed issue of material fact. The Commission seeks comments on 
whether oral hearings should be incorporated into the new procedural 
rules. If so, under what circumstances should an oral hearing be held? 
Who should preside over an oral hearing? What procedures should be 
followed? What topics should be addressed in an oral hearing?
    A broader concern is that oral hearings would necessitate 
increasing the resources the Commission devotes to these 
straightforward reporting violations, thereby defeating the 
congressional intent to streamline the process. Hearings may also 
increase the respondent's expenses and unduly prolong the enforcement 
process. Comments are requested on ways to reduce the amount of 
resources needed if the process includes an opportunity for an oral 
hearing, and ways to avoid procedural delays.

5. Final Determination by the Commission

    Proposed 11 CFR 111.37 contemplates that once the Commission 
receives the respondent's written response, if any, to the reason to 
believe finding, the reviewing officer's written recommendation, and 
all supporting and supplemental documents and information, the 
Commission would then make a final determination, by a vote of at least 
four of its members, as to whether a violation of 2 U.S.C. 434(a) has 
occurred. If the Commission determines that a violation has occurred, 
then it would assess a civil money penalty in accordance with the 
schedules of penalties in proposed 11 CFR 111.43. For purposes of 
judicial review, the final determination would be the final agency 
action.
    The Commission would modify the proposed civil money penalty if the 
respondent can demonstrate that the proposed civil money penalty was 
incorrectly calculated. An example of an incorrectly calculated civil 
money penalty is when the respondent can convincingly demonstrate that 
it filed the required report earlier than the filing date alleged in 
the reason to believe finding, though the report is still filed late. 
Then the Commission would reduce the fine to the appropriate amount 
based on a recalculation of the number of days late.
    The Commission may also determine that there was no violation. 
Finally, the Commission may determine, by a vote of at least four of 
its members, that a violation of 2 U.S.C. 434(a) has occurred but waive 
the civil money penalty because the respondent has convincingly 
demonstrated the existence of extraordinary circumstances that were 
beyond the respondent's control and that were for a duration of at 
least 48 hours.
    The proposed rules do not include provisions for mitigating factors 
that may reduce the civil money penalty. The Commission believes that 
this is the simplest, most straightforward way to effectuate statutory 
intent, particularly since the new administrative fine program is 
limited to a two-year period. The Commission is also concerned that the 
inclusion of mitigating factors would result in a lack of uniformity 
and certainty in the imposition of civil money penalties. Nevertheless, 
comments are sought as to whether the Commission should include 
mitigating factors, what those factors should be and how the factors 
should be applied.

6. Failure To Submit Payment or Written Response

    If the respondent fails to pay the proposed civil money penalty 
within forty days of the Commission's reason to believe finding or to 
submit a notice of intent to challenge the reason to believe finding or 
to submit the written response within the time stated in proposed 11 
CFR 111.35, the Commission would, under proposed 11 CFR 111.40, issue a 
final determination with a civil money penalty consistent with the 
appropriate schedule of penalties. The respondent would then have 
thirty days from receipt of the final determination either to submit 
payment of the civil money penalty or to seek judicial review.

Judicial Review

    As provided in the statutory amendments to the FECA and section 
111.38 of the Commission's proposed regulations, the respondent may 
seek judicial review of the Commission's final determination within 
thirty (30) days of receipt of the final determination. The respondent 
may seek judicial review in a U.S. district court where the respondent 
resides or conducts business. The review would be limited to issues and 
facts raised during the enforcement process. This is consistent with 
the Commission's procedures for presidential repayment determinations 
at 11 CFR 9007.5(b) and 9038.5(b) where the failure to timely raise 
issues constitutes a waiver of the right to raise the issues in future 
proceedings.

Schedules of Penalties for Reports Other Than 48-Hour Notices

    The amendment to the Act requires the Commission to take into 
account the amount of the violation and the existence of previous 
violations by the respondent in developing the schedules of penalties. 
In establishing the proposed schedules of penalties set forth in 11 CFR 
111.43, the Commission considered its past enforcement of 2 U.S.C. 
434(a) violations and the civil penalties involved in those enforcement 
cases and the fine schedules of state agencies for similar reporting 
violations. In addition, the Commission believes that it is vital that 
civil money penalties not be set at a level so low that they will be 
treated as merely ``the cost of doing business.'' Conversely, the 
penalties must not be so high that they become unduly burdensome.
    The Commission also considered the election sensitivity of a 
report. While it is important that all reports should be filed in a 
timely manner, it is especially important that reports due just before 
an election, i.e., pre-primary, pre-general, October quarterly, and 
October monthly, be filed in a timely manner to maintain the integrity 
of the campaign finance system. Therefore, the Commission proposes to 
subject these election sensitive reports, which are defined in proposed 
11 CFR 111.43(e) as the October quarterly and October monthly, and the 
pre-election reports under 11 CFR 104.5 to a higher civil money 
penalty. Election sensitive reports and the pre-election reports under 
the schedules of penalties in proposed 11 CFR 111. 43 would be assessed 
an additional 50% of the base amounts. An alternative method of 
handling election sensitive reports would be to add a flat $1000 to the 
base amounts. The Commission seeks comments on which alternative the 
Commission should adopt.
    The schedules of penalties in proposed 11 CFR 111.43 for late 
filers and non-filers would have four components. The first is a base 
amount depending on the level of activity on the

[[Page 16537]]

report. The level of activity is the amount of receipts plus the amount 
of disbursements in the report. The base amounts would range from $100 
to $5000 for all reports except for election sensitive reports and from 
$150 to $7500 for election sensitive reports. This component would 
satisfy the statutory requirement that the schedules of penalties take 
into account the amount of the violation.
    The second component is a set amount depending on the level of 
activity on the report multiplied by the number of days the report is 
filed late up to thirty days. This set amount ranges from $25 per day 
to $200 per day for all reports. This component would also satisfy the 
statutory requirement that the schedules of penalties take into account 
the amount of the violation.
    The third component is a set amount for respondents who are non-
filers. The Commission considers respondents to be non-filers if they 
do not file their election sensitive reports prior to four (4) days 
before the election or if they do not file any other report within 
thirty days of its due date. This set amount ranges from $1,600 to 
$17,000 for all reports except election sensitive reports and from 
$1,650 to $19,500 for election sensitive reports. These amounts were 
achieved by doubling the per day penalty and multiplying this penalty 
by thirty days and then adding the base amount of the first component.
    The fourth component is an additional premium for each prior civil 
money penalty that was assessed against the respondent for failure to 
file timely reports. This component would satisfy the requirement that 
the schedules of penalties take into account the existence of previous 
violations. This premium would be an additional 25% of the civil money 
penalty for each prior civil money penalty that had been assessed under 
this subpart during the current two-year election cycle and prior two-
year election cycle.
    For non-filers, the Commission would estimate their level of 
activity by adding the total receipts and total disbursements reported 
in the current election cycle and then dividing by the number of 
reports received in the current election cycle. If the respondents have 
not filed any reports in the current election cycle, then the 
Commission would estimate the level of activity by adding the total 
receipts and total disbursement reported in the most recent election 
cycle and then dividing by the number of reports received in the most 
recent election cycle.

Examples of Civil Money Penalties

    Example 1: The respondent files an October quarterly report 20 
days late. The level of activity on the report is $105,000. The 
civil money penalty would be calculated as follows. The base amount 
would be $900. The per day amount would be $125 multiplied by 20 
days, which equals $2500. The civil money penalty would be the sum 
of these two amounts, which would be $3400.
    Example 2: The respondent in the above example has one prior 
violation in the current two-year election cycle. The premium for 
the one prior violation would be 25% of the civil money penalty 
calculated in example 1, which would equal $850. The civil money 
penalty would be the sum of this premium and the civil money penalty 
from example 1, which would be $4250.
    Example 3: Instead of being subject to the proposed schedule of 
penalties that adds 50% of the base to the civil money penalty, the 
respondent in example 1 would be subject to a schedule of penalties 
that adds $1000 to the base amounts for election sensitive reports. 
The civil money penalty would be calculated as follows. The base 
amount would be $1600. The per day amount would be $125 multiplied 
by 20 days, which equals $2500. The civil money penalty would be the 
sum of these two amounts, which would be $4100. Example 4: The 
respondent in the example 3 had one prior violation in the current 
two-year election cycle. The premium for the one prior violation 
would be 25% of the civil money penalty calculated in example 3, 
which would equal $1025. The civil money penalty would be the sum of 
this premium and the civil money penalty from example 3, which would 
be $5125.

    The Commission believes that these proposed schedules of penalties 
reflect a reasonable approach. The additional premium that is added for 
those respondents who have had previous civil money penalty assessments 
is intended to ensure that the schedules of penalties would not be 
viewed as ``the cost of doing business.'' The Commission seeks comments 
on the reasonableness of the schedules of penalties in the proposed 
rule; the comprehensiveness of the schedules of penalties; additional 
factors that the Commission should consider; and alternative means to 
develop the schedules of penalties.

Schedule of Penalties for 48-Hour Notices

    Under 2 U.S.C. 434(a)(6), principal campaign committees are 
required to report within 48 hours contributions of $1000 or more that 
are received after the 20th day but more than 48 hours before an 
election. It has been the Commission's experience that in the cases 
regarding alleged violations of the 48-hour notice requirement, the 
respondents generally fail to file these notices rather than file them 
late. Also, because of the unique nature and timing of this reporting 
requirement, the Commission believes that failure to file these 48-hour 
notices in a timely manner is tantamount to failing to file them at 
all. Thus, the proposed schedule of penalties does not make a 
distinction between late filers and non-filers for violations of 2 
U.S.C. 434(a)(6). The schedule of penalties set forth in proposed 11 
CFR 111.44 would be calculated based on the number of previous civil 
money penalties assessed against the respondent in the current two-year 
election cycle and the prior two-year election cycle, as well as a 
percentage of contribution(s) not timely reported. The Commission seeks 
comments on this approach to handling the failure to file timely the 48 
hour notices.

Debt Collection Improvement Act

    The Debt Collection Improvement Act of 1996 (hereinafter ``DCIA''), 
Pub. L. 104-134, 110 Stat. 1321-358 (1996), codified at 31 U.S.C. 
3711(g), requires Federal agencies to transfer to the Department of the 
Treasury for debt collection action any non-tax debt that is over 180 
days delinquent, subject to certain exemptions. The DCIA also permits 
the voluntary transfer of debts less than 180 days delinquent to the 
Department of the Treasury or, with the consent of the Department of 
the Treasury, to a Treasury-designated debt collection center for debt 
collection services. Section 111.44 of the proposed rules would 
incorporate, by reference, the Department of Treasury's debt collection 
regulations and the Federal Claims Collection Standards.
    After a final determination as to the amount of the civil money 
penalty, the Commission intends to utilize the DCIA to collect civil 
money penalties from respondents who fail to pay within a reasonable 
time. This debt collection procedure, however, would not preclude the 
Commission from filing suit under 2 U.S.C. 437g(a)(6) in the 
appropriate United States district court to collect the civil money 
penalty where it determines that this is preferable to transferring the 
debt to the Department of Treasury for collection under the DCIA.

Conforming Amendments

    The proposed rules contain conforming amendments to the existing 
regulations. The current sections of part 111 would be designated as 
``subpart A--Enforcement.'' Paragraph (d) would be added to 11 CFR 
111.8 to allow the Commission to apply proposed subpart B of part 111 
to internally generated matters relating to violations of 2 U.S.C.

[[Page 16538]]

434(a). Paragraph (c) would be added to 11 CFR 111.20 to provide for 
public disclosure of non-exempt 2 U.S.C. 437g investigatory materials 
within thirty (30) days after the final disposition of a civil action. 
This paragraph, if promulgated, would not be limited to civil actions 
arising from enforcement actions undertaken under subpart B of part 111 
but would be applied to all civil actions.
    The Commission welcomes comments on these and any other issues 
raised by the new statutory provisions on administrative fines for 
reporting violations.

Certification of No Effect Pursuant to 5 U.S.C. 605(b) (Regulatory 
Flexibility Act)

    The attached proposed rules would not, if promulgated, have a 
significant economic impact on a substantial number of small entities. 
The basis for this certification is that the attached proposed rules, 
if promulgated, would impose penalties which are scaled to take into 
account the size of the political committees. Thus, committees with 
less financial activity would be subject to lower fines than committees 
with more financial activity. Also, the Commission anticipates that 
there will not be a large number of small committees that would be 
subject to the process in the proposed rules. Therefore, the attached 
proposed rules, if promulgated, will not have a significant economic 
impact on a substantial number of small entities.

List of Subjects

11 CFR Part 104

    Campaign funds, Political committees and parties, Reporting and 
recordkeeping requirements.

11 CFR Part 111

    Administrative practice and procedures, Elections, Law enforcement.
    For reasons set out in the preamble, it is proposed to amend 
subchapter A, Chapter I of Title 11 of the Code of Federal Regulations 
as follows:

PART 104--REPORTS BY POLITICAL COMMITTEES (2 U.S.C. 434)

    1. The authority for part 104 continues to read as follows:

    Authority: 2 U.S.C. 431(1), 431(8), 431(9), 432(i), 434, 
438(a)(8), 438(b), 439a.

    2. 11 CFR 104.5 would be amended by adding new paragraph (i) to 
read as follows:


Sec. 104.5  Filing dates (2 U.S.C. 434(a)(2)).

* * * * *
    (i) Committees should retain proof of mailing or other means of 
transmittal of the reports to the Commission.

PART 111--COMPLIANCE PROCEDURES (2 U.S.C. 437g, 437d(a))

    3. The authority for part 111 continues to read as follows:

    Authority: 2 U.S.C. 437g, 437d(a), 438(a)(8).

    4. 11 CFR 111.8 would be amended by adding new paragraph (d) to 
read as follows:


Sec. 111.8  Internally generated matters; referrals (2 U.S.C. 
437g(a)(2)).

* * * * *
    (d) Notwithstanding Secs. 111.9 through 111.19, for violations of 2 
U.S.C. 434(a), the Commission, when appropriate, may review internally 
generated matters under subpart B of this part.
    5. 11 CFR 111.20 would be amended by adding new paragraph (c) to 
read as follows:


Sec. 111.20  Public disclosure of Commission action (2 U.S.C. 
437g(a)(4)).

* * * * *
    (c) For any compliance matter in which a civil action is commenced, 
the Commission will make public the non-exempt 2 U.S.C. 437g 
investigatory materials in the enforcement and litigation files no 
later than thirty (30) days from the date on which the Commission sends 
the complainant and the respondent(s) the required notification of the 
final disposition of the civil action. The final disposition may 
consist of a judicial decision which is not reviewed by a higher court.
    6. 11 CFR 111.24(a) would be revised to read as follows:


Sec. 111.24  Civil Penalties (2 U.S.C. 437g(a) (5), (6), (12), 28 
U.S.C. 2461 nt.).

    (a) Except as provided in 11 CFR 111.44 and in paragraph (b) of 
this section, a civil penalty negotiated by the Commission or imposed 
by a court for a violation of the Act or chapters 95 or 96 of title 26 
(26 U.S.C.) shall not exceed the greater of $5,500 or an amount equal 
to any contribution or expenditure involved in the violation. In the 
case of a knowing and willful violation, the civil penalty shall not 
exceed the greater of $11,000 or an amount equal to 200% of any 
contribution or expenditure involved in the violation.
* * * * *
    7. 11 CFR 111.25 through 111.29 would be added and reserved.
    8. Part 111 would be amended by designating 11 CFR 111.1 through 
111.24 as subpart A--Enforcement--and by adding new subpart B to read 
as follows:

Subpart B--Administrative Fines

Sec.
111.30   When will subpart B apply?
111.31   Does this subpart replace subpart A of this part for 
violations of the reporting requirements of 2 U.S.C. 434(a)?
111.32   How will the Commission notify respondents of a reason to 
believe finding and a proposed civil money penalty?
111.33   What are the respondent's choices upon receiving the reason 
to believe finding and the proposed civil money penalty?
111.34   If the respondent decides to pay the civil money penalty 
and not to challenge the reason to believe finding, what should the 
respondent do?
111.35   If the respondent decides to challenge the alleged 
violation or proposed civil money penalty, what should the 
respondent do?
111.36   Who will review the respondent's written response?
111.37   What will the Commission do once it receives the 
respondent's written response and the reviewing officer's 
recommendation?
111.38   Can the respondent appeal the Commission's final 
determination?
111.39   When must the respondent transmit payment of the civil 
money penalty?
111.40   What happens if the respondent does not pay the civil money 
penalty pursuant to 11 CFR 111.34 and does not submit a written 
response to the reason to believe finding pursuant to 11 CFR 111.35?
111.41   To whom should the civil money penalty payment be made 
payable?
111.42   Will the enforcement file be made available to the public?
111.43   What are the schedules of penalties?
111.44   What is the schedule of penalties for 48-hour notices?
111.45   Will the Debt Collection Improvement Act of 1996 be used to 
collect unpaid civil money penalties?


Sec. 111.30  When will subpart B apply?

    Subpart B applies to violations of the reporting requirements of 2 
U.S.C. 434(a) committed by political committees and their treasurers on 
or after [the effective date of the final rule], and on or before 
December 31, 2001.


Sec. 111.31  Does this subpart replace subpart A of this part for 
violations of the reporting requirements of 2 U.S.C. 434(a)?

    (a) No; Secs. 111.1 through 111.8 and 111.20 through 111.24 shall 
apply to all compliance matters. This subpart will apply, rather than 
Secs. 111.9 through 111.19, when the Commission, on the basis of 
information ascertained by the Commission in the normal course of 
carrying out its supervisory responsibilities, and when appropriate, 
determines that the compliance matter should be subject to this 
subpart. If the Commission determines that the violation should not be 
subject to this

[[Page 16539]]

subpart, then the violation will be subject to all sections of subpart 
A of this part.
    (b) Subpart B will apply to compliance matters resulting from a 
complaint filed pursuant to 11 CFR 111.4 through 111.7 if the complaint 
alleges a violation of 2 U.S.C. 434(a) and does not allege violations 
of any other provision of any statute or regulation over which the 
Commission has jurisdiction.


Sec. 111.32  How will the Commission notify respondents of a reason to 
believe finding and a proposed civil money penalty?

    If the Commission determines, by an affirmative vote of at least 
four (4) of its members, that it has reason to believe that a 
respondent has violated 2 U.S.C. 434(a), it shall authorize the 
Chairman or Vice-Chairman to notify such respondent of the Commission's 
finding. The written notification shall set forth the following:
    (a) The alleged factual and legal basis supporting the finding 
including the type of report that was due, the filing deadline, the 
actual date filed (if filed), and the number of days the report was 
late (if filed);
    (b) The applicable schedule of penalties;
    (c) The number of times the respondent has been assessed a civil 
money penalty under this subpart during the current two-year election 
cycle and the prior two-year election cycle;
    (d) The amount of the proposed civil money penalty based on the 
schedules of penalties set forth in 11 CFR 111.43; and
    (e) An explanation of the respondent's right to challenge both the 
reason to believe finding and the proposed civil money penalty.


Sec. 111.33  What are the respondent's choices upon receiving the 
reason to believe finding and the proposed civil money penalty?

    The respondent must either send payment in the amount of the 
proposed civil money penalty pursuant to 11 CFR 111.34 or submit a 
written response pursuant to 11 CFR 111.35.


Sec. 111.34  If the respondent decides to pay the civil money penalty 
and not to challenge the reason to believe finding, what should the 
respondent do?

    (a) The respondent shall transmit payment in the amount of the 
civil money penalty to the Commission within forty (40) days of the 
Commission's reason to believe finding.
    (b) Upon receipt of the respondent's payment, the Commission shall 
send the respondent a final determination that the respondent has 
violated the statute or regulations and the amount of the civil money 
penalty and an acknowledgment of the respondent's payment.


Sec. 111.35.  If the respondent decides to challenge the alleged 
violation or proposed civil money penalty, what should the respondent 
do?

    (a) Within twenty (20) days of the Commission's reason to believe 
finding, the respondent shall submit to the Commission a written notice 
of intent to challenge the reason to believe finding and/or the 
proposed civil money penalty.
    (b) Within forty (40) days of the Commission's reason to believe 
finding, the respondent shall submit to the Commission a written 
response.
    (c) The written response shall contain the following:
    (1) Reason(s) why the respondent is challenging the reason to 
believe finding and/or civil money penalty which may consist of:
    (i) The existence of factual errors; and/or
    (ii) The improper calculation of the civil money penalty; and/or
    (iii) The existence of extraordinary circumstances that were beyond 
the control of the respondent and that were for a duration of at least 
48 hours and that prevented the respondent from filing the report in a 
timely manner;
    (2) The factual basis supporting the reason(s); and
    (3) Supporting documentation.
    (4) Examples of circumstances that will not be considered 
extraordinary include, but are not limited to, the following:
    (i) Negligence;
    (ii) Problems with vendors or contractors;
    (iii) Illness of staff;
    (iv) Computer failures; and
    (v) Other similar circumstances.


Sec. 111.36  Who will review the respondent's written response?

    (a) The reviewing officer shall review the respondent's written 
response. The reviewing officer shall be a person who has not been 
involved in the reason to believe finding.
    (b) The reviewing officer shall review the reason to believe 
finding with supporting documentation and the respondent's written 
response with supporting documentation. The reviewing officer may 
request supplemental information from the respondent and/or the 
Commission staff. The respondent shall submit the supplemental 
information to the reviewing officer within a time specified by the 
reviewing officer.
    (c) Upon completion of the review, the reviewing officer shall 
forward a written recommendation to the Commission along with all 
documents required under this section and 11 CFR 111.32 and 111.35.


Sec. 111.37  What will the Commission do once it receives the 
respondent's written response and the reviewing officer's 
recommendation?

    (a) If the Commission, after having found reason to believe and 
after reviewing the respondent's written response and the reviewing 
officer's recommendation, determines by an affirmative vote of at least 
four (4) of its members, that the respondent has violated 2 U.S.C. 
434(a) and the amount of the civil money penalty, the Commission shall 
authorize the reviewing officer to notify the respondent by letter of 
its final determination.
    (b) If the Commission, after reviewing the reason to believe 
finding, the respondent's written response, and the reviewing officer's 
written recommendation, determines by an affirmative vote of at least 
four (4) of its members, that no violation has occurred, or otherwise 
terminates its proceedings, the Commission shall authorize the 
reviewing officer to notify the respondent by letter of its final 
determination.
    (c) The Commission will modify the proposed civil money penalty 
only if the respondent is able to demonstrate that the amount of the 
proposed civil money penalty was calculated on an incorrect basis.
    (d) The Commission may determine, by an affirmative vote of at 
least four of its members, that a violation of 2 U.S.C. 434(a) has 
occurred but waive the penalty because the respondent has convincingly 
demonstrated the existence of extraordinary circumstances that were 
beyond the respondent's control and that were for a duration of at 
least 48 hours. The Commission shall authorize the reviewing officer to 
notify the respondent by letter of its final determination.


Sec. 111.38.  Can the respondent appeal the Commission's final 
determination?

    Yes; within thirty (30) days of receipt of the Commission's final 
determination under 11 CFR 111.37, the respondent may submit a written 
petition to the district court of the United States for the district in 
which the respondent resides, or transacts business, requesting that 
the final determination be modified or set aside. The respondent's 
failure to raise an argument in a timely fashion during

[[Page 16540]]

the administrative process shall be deemed a waiver of the respondent's 
right to present such argument in a petition to the district court 
under 2 U.S.C. 437g.


Sec. 111.39.  When must the respondent transmit payment of the civil 
money penalty?

    (a) If the respondent does not submit a written petition to the 
district court of the United States, the respondent must remit payment 
of the civil money penalty within thirty (30) days of receipt of the 
Commission's final determination under 11 CFR 111.37.
    (b) If the respondent submits a written petition to the district 
court of the United States and, upon the final disposition of the civil 
action, is required to pay a civil money penalty, the respondent shall 
remit payment of the civil money penalty to the Commission within 
thirty (30) days of the final disposition of the civil action. The 
final disposition may consist of a judicial decision which is not 
reviewed by a higher court.
    (c) Failure to pay the civil money penalty may result in the 
commencement of a collection action under 31 U.S.C. 3701 et seq. 
(1996), or a civil suit pursuant to 2 U.S.C. 437g(6)(A), or any other 
legal action deemed necessary by the Commission.


Sec. 111.40.  What happens if the respondent does not pay civil money 
penalty pursuant to 11 CFR 111.34 and does not submit a written 
response to the reason to believe finding pursuant to 11 CFR 111.35?

    (a) If the Commission, after the respondent has failed to pay the 
civil money penalty and has failed to submit a written response, 
determines by an affirmative vote of at least four (4) of its members 
that the respondent has violated 2 U.S.C. 434(a) and determines the 
amount of the civil money penalty, the Commission shall authorize the 
reviewing officer to notify the respondent by letter of its final 
determination.
    (b) The respondent shall transmit payment of the civil money 
penalty to the Commission within thirty (30) days of receipt of the 
Commission's final determination.
    (c) Failure to pay the civil money penalty may result in the 
commencement of a collection action under 31 U.S.C. 3701 et seq. 
(1996), or a civil suit pursuant to 2 U.S.C. 437g(6)(A), or any other 
legal action deemed necessary by the Commission.


Sec. 111.41.  To whom should the civil money penalty payment be made 
payable?

    Payment of civil money penalties shall be made in the form of a 
check or money order made payable to the Federal Election Commission.


Sec. 111.42.  Will the enforcement file be made available to the 
public?

    (a) Yes; the Commission shall make the enforcement file available 
to the public.
    (b) If neither the Commission nor the respondent commences a civil 
action, the Commission shall make the enforcement file available to the 
public pursuant to 11 CFR 4.4(a)(3).
    (c) If a civil action is commenced, the Commission shall make the 
enforcement file available pursuant to 11 CFR 111.20(c).


Sec. 111.43.  What are the schedules of penalties?

    (a) The civil money penalty for all reports that are filed late or 
not filed, except election sensitive reports and pre-election reports 
under 11 CFR 104.5, shall be calculated in accordance with the 
following schedule of penalties:

------------------------------------------------------------------------
                                       And the report     Or the report
  If the level of activity in the     was filed late,    was not filed,
             report was                 the fine is        the fine is
------------------------------------------------------------------------
$1-24,999.99.......................  [$100+($25 x Numb  $1600 x [1+(.25
                                      er of days         xNumber of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$25,000-49,999.99..................  [$200+($50 x Numb  $3200 x [1+(.25
                                      er of days         xNumber of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$50,000-74,999.99..................  [$300+($75 x Numb  $4800 x [1+(.25
                                      er of days         xNumber of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$75,000-99,999.99..................  [$400+($100 x Num  $6400 x [1+(.25
                                      ber of days        xNumber of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$100,000-149,999.99................  [$600+($125 x Num  $8100 x [1+(.25
                                      ber of days        xNumber of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$150,000-199,999.99................  [$800+($150 x Num  $9800 x [1+(.25
                                      ber of days        xNumber of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$200,000-249,999.99................  [$1,000+($175 x N  $11,500 x [1+(.2
                                      umber of days      5 x Number of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$250,000-349,999.99................  [$1500+($200 x Nu  $13,500 x [1+(.2
                                      mber of days       5 x Number of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$350,000-449,999.99................  [$2000+($200 x Nu  $14,000 x [1+(.2
                                      mber of days       5 x Number of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$450,000-549,999.99................  [$2500+($200 x Nu  $14,500 x [1+(.2
                                      mber of days       5 x Number of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$550,000-649,999.99................  [$3000+($200 x Nu  $15,000 x [1+(.2
                                      mber of days       5 x Number of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$650,000-749,999.99................  [$3500+($200 x Nu  $15,500 x [1+(.2
                                      mber of days       5 x Number of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$750,000-849,999.99................  [$4000+($200 x Nu  $16,000 x [1+(.2
                                      mber of days       5 x Number of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$850,000-949,999.99................  [$4500+($200 x Nu  $16,500 x [1+(.2
                                      mber of days       5 x Number of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
$950,000 or over...................  [$5000+($200 x Nu  $17,000 x [1+(.2
                                      mber of days       5 x Number of
                                      late)] x [1+(.25   previous
                                       Number of         violations)]
                                      previous
                                      violations)].
------------------------------------------------------------------------

    (b) The civil money penalty for election sensitive reports that are 
filed late or not filed shall be calculated in accordance with the 
following schedule of penalties:

[[Page 16541]]



------------------------------------------------------------------------
                                       And the report     Or the report
  If the level of activity in the     was filed late,    was not filed,
             report was                 the fine is        the fine is
------------------------------------------------------------------------
$1-24,999.99.......................  [$150 + ($25  x    $1,650  x  [1 +
                                      Number of days     (.25  x  Number
                                      late)]  x  [1 +    of previous
                                      (.25  x  Number    violations)]
                                      of previous
                                      violations)].
$25,000-49,999.99..................  [$300 + ($50  x    $3,300  x  [1 +
                                      Number of days     (.25  x  Number
                                      late)]  x  [1 +    of previous
                                      (.25  x  Number    violations)]
                                      of previous
                                      violations)].
$50,000-74,999.99..................  [$450 + ($75  x    $4,950  x  [1 +
                                      Number of days     (.25  x  Number
                                      late)]  x  [1 +    of previous
                                      (.25  x  Number    violations)]
                                      of previous
                                      violations)].
$75,000-99,999.99..................  [$600 + ($100  x   $6,600  x  [1 +
                                      Number of days     (.25  x  Number
                                      late)]  x  [1 +    of previous
                                      (.25  x  Number    violations)]
                                      of previous
                                      violations)].
$100,000-149,999.99................  [$900 + ($125  x   $8,400  x  [1 +
                                      Number of days     (.25  x  Number
                                      late)]  x  [1 +    of previous
                                      (.25  x  Number    violations)]
                                      of previous
                                      violations)].
$150,000-199,999.99................  [$1,200 + ($150    $10,200  x  [1 +
                                      x  Number of       (.25  x  Number
                                      days late)]  x     of previous
                                      [1 + (.25  x       violations)]
                                      Number of
                                      previous
                                      violations)].
$200,000-249,999.99................  [$1,500 + ($175    $12,000  x  [1 +
                                      x  Number of       (.25  x  Number
                                      days late)]  x     of previous
                                      [1 + (.25  x       violations)]
                                      Number of
                                      previous
                                      violations)].
$250,000-349,999.99................  [$2,250 + ($200    $14,250  x  [1 +
                                      x  Number of       (.25  x  Number
                                      days late)]  x     of previous
                                      [1 + (.25  x       violations)]
                                      Number of
                                      previous
                                      violations)].
$350,000-449,999.99................  [$3,000 + ($200    $15,000  x  [1 +
                                      x  Number of       (.25  x  Number
                                      days late)]  x     of previous
                                      [1 + (.25  x       violations)]
                                      Number of
                                      previous
                                      violations)].
$450,000-549,999.99................  [$3,750 + ($200    $15,750  x  [1 +
                                      x  Number of       (.25  x  Number
                                      days late)]  x     of previous
                                      [1 + (.25  x       violations)]
                                      Number of
                                      previous
                                      violations)].
$550,000-649,999.99................  [$4,500 + ($200    $16,500  x  [1 +
                                      x  Number of       (.25  x  Number
                                      days late)]  x     of previous
                                      [1 + (.25  x       violations)]
                                      Number of
                                      previous
                                      violations)].
$650,000-749,999.99................  [$5,250 + ($200    $17,250  x  [1 +
                                      x  Number of       (.25  x  Number
                                      days late)]  x     of previous
                                      [1 + (.25  x       violations)]
                                      Number of
                                      previous
                                      violations)].
$750,000-849,999.99................  [$6,000 + ($200    $18,000  x  [1 +
                                      x  Number of       (.25  x  Number
                                      days late)]  x     of previous
                                      [1 + (.25  x       violations)]
                                      Number of
                                      previous
                                      violations)].
$850,000-949,999.99................  [$6,250 + ($200    $18,750  x  [1 +
                                      x  Number of       (.25  x  Number
                                      days late)]  x     of previous
                                      [1 + (.25  x       violations)]
                                      Number of
                                      previous
                                      violations)].
$950,000 or over...................  [$7,500 + ($200    $19,500  x  [1 +
                                      x  Number of       (.25  x  Number
                                      days late)]  x     of previous
                                      [1 + (.25  x       violations)]
                                      Number of
                                      previous
                                      violations)].
------------------------------------------------------------------------

    (c) If the respondent fails to file a required report and the 
Commission cannot calculate the level of activity under paragraph (e) 
of this section, then the civil money penalty shall be $5,500.
    (d) Definitions. For this section only, the following definitions 
will apply:
    Election Sensitive Reports means third quarter reports due on 
October 15th before the general election (unless the candidate does not 
participate in that general election), monthly reports due October 20th 
before the general election (unless the candidate does not participate 
in that general election), and pre-election reports under 11 CFR 104.5.
    Estimated level of activity means total receipts and disbursements 
reported in the current election cycle divided by the number of reports 
filed to date covering the activity in the current two-year election 
cycle. If the respondent has not filed a report covering activity in 
the current two-year election cycle, estimated level of activity means 
total receipts and disbursements reported in the prior two-year 
election cycle divided by the number of reports filed covering the 
activity in the prior two-year election cycle.
    Level of activity means the total amount of receipts and 
disbursements for the period covered by the late report. If the report 
is not filed, the level of activity is the estimated level of activity.
    Number of previous violations mean all prior final civil money 
penalties assessed under this subpart during the current two-year 
election cycle and the prior two-year election cycle.
    (e) For purposes of the schedules of penalties in paragraphs (a) 
and (b) of this section,
    (1) Reports that are not election sensitive reports are considered 
to be filed late if they are filed after their due dates but within 
thirty (30) days of their due dates. These reports are considered to be 
not filed if they are filed after thirty (30) days of their due dates 
or not filed at all.
    (2) Election sensitive reports are considered to be filed late if 
they are filed after their due dates but prior to four (4) days before 
the primary election for pre-primary reports, or prior to four (4) days 
before the general election for all other election sensitive reports. 
These reports are considered to be not filed if they are not filed 
prior to four (4) days before the primary election for pre-primary 
reports, or prior to four (4) days before the general election for all 
other election sensitive reports.


Sec. 111.44.  What is the schedule of penalties for 48-hour notice?

    (a) If the respondent fails to file timely a notice regarding 
contribution(s) received after the 20th day but more than 48 hour hours 
before the election as required under 2 U.S.C. 434(a)(6), the civil 
money penalty will be calculated as follows:
    (1) Civil money penalty = $100 + (.15  x  amount of the 
contribution(s) not timely reported)
    (2) The civil money penalty calculated in paragraph (a)(1) of this 
section shall be increased by twenty-five percent 25%) for each prior 
violation.
    (b) For purposes of this section, prior violation means a civil 
money penalty that has been assessed against the respondent under this 
subpart in the current two-year election cycle or the prior two-year 
election cycle.


Sec. 111.45.  Will the Debt Collection Improvement Act of 1996 be used 
to collect unpaid civil money penalties?

    Yes; The debt collection regulations issued by the Department of 
Treasury at 31 CFR part 285 and the Federal Claims Collection Standards 
issued jointly by the Department of Justice and the Government 
Accounting Office at 4 CFR parts 101 through 104 also apply.

    Dated: March 23, 2000.
Darryl R. Wold,
Chairman, Federal Election Committee.
[FR Doc. 00-7618 Filed 3-28-00; 8:45 am]
BILLING CODE 6715-01-P