[Federal Register Volume 71, Number 236 (Friday, December 8, 2006)]
[Proposed Rules]
[Pages 71088-71090]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-20844]



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FEDERAL ELECTION COMMISSION

11 CFR Part 111

[Notice 2006-19]


Proposed Policy Statement Establishing a Pilot Program for 
Probable Cause Hearings

AGENCY: Federal Election Commission.

ACTION: Draft Statement of Policy with Request for Comments.

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SUMMARY: The Commission is issuing a proposed policy statement to 
establish a pilot program offering probable cause hearings to 
respondents in enforcement actions pending before the Commission. The 
pilot program would allow respondents to request a hearing directly 
before the Commission prior to the Commission's consideration of the 
General Counsel's probable cause recommendation. The program would 
provide respondents with the opportunity to present directly arguments 
to the Commission and give the Commission an opportunity to ask 
relevant questions. The Commission requests comments on this proposed 
pilot program.

DATES: Comments must be submitted on or before January 5, 2007.

ADDRESSES: All comments should be addressed to Mark D. Shonkwiler, 
Assistant General Counsel, Enforcement Division, and must be submitted 
in either electronic or written form. Electronic mail comments should 
be sent to [email protected] and must include the full 
name, electronic mail address and postal service address of the 
commenter. Electronic mail comments that do not contain the full name, 
electronic mail address and postal service address of the commenter 
will not be considered. If the electronic mail comments include an 
attachment, the attachment must be in the Adobe Acrobat (.pdf) or 
Microsoft Word (.doc) format. Faxed comments should be sent to (202) 
219-3923, with printed copy follow-up to ensure legibility. Written 
comments and printed copies of faxed comments should be sent to the 
Federal Election Commission, 999 E Street, NW., Washington, DC 20463. 
Commenters are strongly encouraged to submit comments electronically to 
ensure timely receipt and consideration. The Commission will make every 
effort to post public comments on its Web site within ten business days 
of the close of the comment period.

FOR FURTHER INFORMATION CONTACT: Mark D. Shonkwiler, Assistant General 
Counsel, 999 E Street, NW., Washington, DC 20463, (202) 694-1650 or 
(800) 424-9530.

SUPPLEMENTARY INFORMATION: The Federal Election Commission is 
establishing a pilot program to afford respondents in pending 
enforcement matters the opportunity to participate in hearings before 
the Commission. During such a hearing, a respondent (generally through 
counsel) may present oral arguments directly to the Commissioners, 
prior to any Commission determination of whether to find probable cause 
to believe that respondents violated the Federal Election Campaign Act.
    On June 11, 2003, the Commission held a hearing concerning 
potential changes to its enforcement procedures. The Commission 
received comments from those in the regulated community, many of whom 
argued for increased transparency in Commission procedures and expanded 
opportunities to contest allegations.\1\ The Commission designed this 
pilot program with those concerns in mind. Proposed procedures for 
probable cause hearings are outlined below. The Commission seeks 
comment on all aspects of this proposal.
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    \1\ These comments are available at http://www.fec.gov/agenda/agendas2003/notice2003-09/comments.shtml.
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Opportunity To Request a Hearing

    A hearing may take place before the Commission considers whether or 
not to make a finding of ``probable cause to believe'' that a 
respondent has violated the Act or Commission regulations.\2\ A 
probable cause hearing may be requested by any respondent who reaches 
the probable cause determination stage (see 11 CFR 111.16-111.17) and 
submits a probable cause response brief to the Office of General 
Counsel. A cover letter attached to the probable cause brief will 
inform the respondent of the opportunity to request an oral hearing 
before the Commission. Hearings are voluntary and no adverse inference 
will be drawn by the Commission with respect to the request or waiver 
of such a hearing.
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    \2\ The Commission is appending to this statement a general 
description of its enforcement procedures (``Basic Commission 
Enforcement Procedure''). These procedures are prescribed by statute 
and regulation, and the Commission is not requesting comment on them 
at this time.
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    The General Counsel must receive the written request for a hearing 
at the same time that a respondent submits his or her timely response 
brief. 11 CFR 111.16(c). Any request for a hearing must state with 
specificity why the hearing is being requested and what issues the 
respondent expects to address. Absent good cause, to be determined at 
the sole discretion of the Commission, late requests will not be 
accepted. Respondents may make their request for a hearing by mail 
(including private delivery services), hand delivery, facsimile or 
email. Respondents are responsible for ensuring that their request is 
timely received.
    The Commission will grant a request for an oral hearing when it 
concludes that a hearing would help resolve significant or novel legal 
issues, or significant questions about the application of the law to 
the facts. Within 30 days of receiving a request for a hearing, the 
Commission will grant a request for a probable cause hearing if any two 
commissioners agree to hold a hearing.

Hearing Procedures

    The purpose of the oral hearing is to provide a respondent an 
opportunity to present his or her arguments in person to the 
Commissioners before the Commission makes a determination that there is 
``probable cause to believe'' that the respondent violated the Act or 
Commission regulations. Consistent with current Commission regulations, 
any respondent may be represented by counsel, at the respondent's own 
expense, or may appear pro se at any probable cause hearing. See 11 CFR 
111.23. Respondents will have the opportunity to present their 
arguments, and Commissioners, the General Counsel, and the Staff 
Director will have the opportunity to pose questions. Respondents may 
discuss any issues presented in the enforcement matter, including 
potential liability and calculation of a civil penalty.
    The Commission will determine the format and time allotted for each 
hearing at its discretion. Among the factors that the Commission may 
consider are agency time constraints, the complexity of the issues 
raised, the number of respondents involved, and Commission interest. 
The Commission will determine the amount of time allocated for each 
portion of the hearing, and these time limits may vary from hearing to 
hearing. The Commission anticipates that most hearings will begin with 
a brief opening statement by Respondent or Respondent's counsel, 
followed by questioning from the Commissioners, General Counsel, and 
Staff Director. Hearings will normally conclude with the respondent's 
closing remarks.
    The Commission will have transcripts made of the hearings. The 
transcripts will become a part of the record for the enforcement matter 
and may be relied upon for determinations made by the

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Commission. Respondent may be bound by any representations made by 
Respondent or Respondent's counsel at a hearing. The Commission will 
make the transcripts available to the respondent, who may, at his or 
her own expense, purchase copies of the transcript. Respondents will 
have access to the transcripts from their own hearing, but not 
transcripts of other co-respondents' separate hearings, unless co-
respondents in the same matter specifically provide written consent to 
the Commission granting access to such transcript(s). Transcripts will 
be made public after the matter is closed in accordance with Commission 
policies on disclosure.\3\
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    \3\ Statement of Policy Regarding Disclosure of Closed 
Enforcement and Related Files, 68 FR 70426 (Dec. 18, 2003) is hereby 
amended to include disclosure of transcripts from probable cause 
hearings.
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    Third party witnesses or other co-respondents may not be called to 
testify at a respondent's oral hearing. However, the Commission may 
request that supplementary information be submitted after the probable 
cause hearing. The Commission discourages voluminous submissions. 
Supplementary information may not be submitted more than ten days after 
the oral hearing, unless submitted in response to a Commission request 
that imposes a different, Commission-approved deadline. Materials 
requested by the Commission, and materials considered by the Commission 
in making its ``probable cause to believe'' determination, may be made 
part of the record pursuant to the Commission's Statement of Policy 
Regarding Disclosure of Closed Enforcement and Related Files, 68 FR 
70426 (Dec. 18, 2003). Hearings are confidential and not open to the 
public; only Respondents and their counsel may attend. Attendance by 
any other parties must be approved by the Commission in advance.

Cases Involving Multiple Respondents

    In cases involving multiple respondents, the Commission will decide 
on a case-by-case basis how to structure any hearing(s). Respondents 
are encouraged to advise the Commission of their preferences. Such 
respondents may request joint hearings if each participating respondent 
provides an unconditional waiver of confidentiality with respect to 
other participating co-respondents and their counsel and a 
nondisclosure agreement.

Scheduling of Hearings

    The Commission will seek to hold the hearing in a timely manner 
after receiving Respondents' request for a hearing. The Commission will 
attempt to schedule the hearings on a mutually acceptable date and 
time. However, if a respondent is unable to accommodate the 
Commission's schedule, the Commission may decline to hold a hearing. 
The Commission reserves the right to reschedule any hearing. Where 
necessary, the Commission reserves the right to request from a 
respondent an agreement tolling any upcoming deadline, including any 
statutory deadline or other deadline found in 11 CFR part 111.

Pilot Program

    The pilot program will last eight months from the time that this 
policy is approved. After eight months, a vote will be scheduled on 
whether the program should continue. The program will remain in effect 
until that vote is taken. Four votes will be required to extend or make 
permanent the program. The program will be terminated after that vote 
if there are not four affirmative votes to make the program permanent 
or to extend it for some time period. The Commission may modify or 
terminate this pilot program prior to the eighth month of the program 
if there are four affirmative votes for modification or early 
termination. If the pilot program is terminated, any previously 
requested hearings will still be held.

Conclusion

    The Commission urges Respondents to consider carefully the costs 
and benefits of proceeding to probable cause briefings and/or hearings. 
The hearings are optional and no negative inference will be drawn if 
Respondents do not request a hearing. The majority of the agency's 
cases are settled through pre-probable cause conciliation. Proceeding 
to probable cause briefing requires a substantial investment of the 
Commission's limited resources. Consistent with the goal of expeditious 
resolution of enforcement matters, the Commission seeks to promote pre-
probable cause conciliation. To encourage this, the Commission has a 
practice in many cases of reducing the civil penalty it seeks through 
its opening settlement offer. However, once the Office of General 
Counsel has terminated pre-probable cause conciliation negotiations, 
this reduction (normally 25%) is no longer available and the civil 
penalty will generally increase.
    All requests for hearings, scheduling and format inquiries, 
document submissions, and anything else related to the probable cause 
hearings should be directed to the Office of General Counsel.
    This notice represents a general statement of policy announcing the 
general course of action that the Commission intends to follow. This 
policy statement does not constitute an agency regulation requiring 
notice of proposed rulemaking, opportunities for public participation, 
prior publication, and delay effective under 5 U.S.C. 553 of the 
Administrative Procedures Act (``APA''). As such, it does not bind the 
Commission or any member of the general public. The provisions of the 
Regulatory Flexibility Act, 5 U.S.C. 605(b), which apply when notice 
and comment are required by the APA or another statute, are not 
applicable.

    Dated: December 1, 2006.
Michael E. Toner,
Chairman, Federal Election Commission.

Appendix

Basic Commission Enforcement Procedure \4\

    The Commission's enforcement procedures are set forth at 11 CFR 
part 111. An enforcement matter may be initiated by a complaint or 
on the basis of information ascertained by the Commission in the 
normal course of carrying out its supervisory responsibilities. 11 
CFR 111.3. If a complaint substantially complies with certain 
requirements set forth in 11 CFR 111.4, within five days of receipt 
the Office of General Counsel notifies each party determined to be a 
respondent that a complaint has been filed, provides a copy of the 
complaint, and advises each respondent of Commission compliance 
procedures. 11 CFR 111.5. A respondent then has 15 days from receipt 
of the notification from the Office of General Counsel to submit a 
letter or memorandum to the Commission setting forth reasons why the 
Commission should take no action on the basis of the complaint. 11 
CFR 111.6.
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    \4\ The Commission provides this overview of enforcement 
procedures for informational purposes only. The Commission is not 
seeking comment on this section.
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    Following receipt of such letter or memorandum, or expiration of 
the 15-day period, the Office of General Counsel may recommend to 
the Commission whether or not it should find ``reason to believe'' 
that a respondent has committed or is about to commit a violation of 
the Act or Commission regulations. 11 CFR 111.7(a).\5\ With respect 
to internally-generated matters (e.g., referrals from the 
Commission's Audit or Reports Analysis Divisions), the Office of 
General Counsel may recommend that the Commission find ``reason to 
believe'' that a respondent has committed or is about to commit a 
violation of the Act or Commission

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regulations on the basis of information ascertained by the 
Commission in the normal course of carrying out its supervisory 
responsibilities, or on the basis of a referral from an agency of 
the United States or any State. If the Commission determines by an 
affirmative vote of four members that it has ``reason to believe'' 
that a respondent violated the Act or Commission regulations, the 
respondent must be notified by letter of the Commission's 
finding(s). 11 CFR 111.9(a).\6\ The Office of General Counsel will 
also provide the respondent with a Factual and Legal Analysis, which 
will set forth the bases for the Commission's finding of reason to 
believe.
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    \5\ The Office of General Counsel may also recommend that the 
Commission find no ``reason to believe'' that a violation has been 
committed to is about to be committed, or that the Commission 
otherwise dismiss a complaint without regard to the provisions of 11 
CFR 111.6(a). 11 CFR 111.7(b).
    \6\ If the Commission finds no ``reason to believe,'' or 
otherwise terminates its proceedings, the Office of General Counsel 
shall advise the complainant and respondent(s) by letter. 11 CFR 
111.9(b).
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    After the Commission makes a ``reason to believe'' finding, an 
investigation is conducted by the Office of General Counsel., in 
which the Commission may undertake field investigations, audits, and 
other methods of information-gathering. 11 CFR 111.10. Additionally, 
the Commission may issue subpoenas to order any person to submit 
sworn written answers to written questions, to provide documents, or 
to appear for a deposition. 11 CFR 111.11-111.12. Any person who is 
subpoenaed may motion the Commission for it to be quashed or 
modified. 11 CFR 111.15.
    Following a ``reason to believe'' finding, the Commission may 
attempt to reach a conciliation agreement with the respondent(s) 
prior to reaching the ``probable cause'' stage of enforcement (i.e., 
a pre-probable cause conciliation agreement). See 11 CFR 111.18(d). 
If the Commission is unable to reach a pre-probable cause 
conciliation agreement with the respondent, or determines that such 
a conciliation agreement would not be appropriate, upon completion 
of the investigation referenced in the preceding paragraph, the 
Office of General Counsel prepares a brief setting forth its 
position on the factual and legal issues of the matter and 
containing a recommendation on whether or not the Commission should 
find ``probable cause to believe'' that a violation has occurred or 
is about to occur. 11 CFR 111.16(a).
    The Office of General Counsel notifies the respondent(s) of this 
recommendation and provides a copy of the probable cause brief. 11 
CFR 111.16(b). The respondent(s) may file a written response to the 
probable cause brief within fifteen days of receiving said brief. 11 
CFR 111.16(c). After reviewing this response, the Office of General 
Counsel shall advise the Commission in writing whether it intends to 
proceed with the recommendation or to withdraw the recommendation 
from Commission consideration. 11 CFR 111.16(d).
    If the Commission determines by an affirmative vote of four 
members that there is ``probable cause to believe'' that a 
respondent has violated the Act or Commission regulations, the 
Commission authorizes the Office of General Counsel to notify the 
respondent by letter of this determination. 11 CFR 111.17(a). Upon a 
Commission finding of ``probable cause to believe,'' the Commission 
must attempt to reach a conciliation agreement with the respondent. 
11 CFR 111.18(a). If no conciliation agreement is finalized within 
the time period specified in 11 CFR 111.18(c), the Office of General 
Counsel may recommend to the Commission that it authorize a civil 
action for relief in the appropriate court. 11 CFR 111.19(a). 
Commencement of such civil action requires an affirmative vote of 
four members of the Commission. 11 CFR 111.19(b). The Commission may 
enter into a conciliation agreement with respondent after 
authorizing a civil action. 11 CFR 111.19(c).

 [FR Doc. E6-20844 Filed 12-7-06; 8:45 am]
BILLING CODE 6715-01-P