[Federal Register Volume 72, Number 32 (Friday, February 16, 2007)]
[Rules and Regulations]
[Pages 7551-7554]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-2723]


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FEDERAL ELECTION COMMISSION

11 CFR Part 111

[Notice 2007-04]


Policy Statement Establishing a Pilot Program for Probable Cause 
Hearings

AGENCY: Federal Election Commission.

ACTION: Statement of policy.

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SUMMARY: The Federal Election Commission (``Commission'') is 
establishing a pilot program that will allow respondents in enforcement 
proceedings under the Federal Election Campaign Act, as amended 
(``FECA''), to have an oral hearing before the Commission. Hearings 
will take place prior to the Commission's consideration of the General 
Counsel's recommendation on whether to find probable cause to believe 
that a violation has occurred. The Commission will grant a request for 
a probable cause hearing if any two commissioners agree to hold a 
hearing. The program will provide respondents with the opportunity to 
present arguments to the Commission directly and give the Commission an 
opportunity to ask relevant questions. Further information about the 
procedures for the pilot program is provided in the supplementary 
information that follows.

DATES: Effective Date: February 16, 2007.

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 
(generally through counsel) and present oral arguments directly to

[[Page 7552]]

the Commissioners, prior to any Commission determination of whether to 
find probable cause to believe that respondents violated FECA.\1\
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    \1\ 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. See 2 U.S.C. 437g; 11 CFR part 111.
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I. Background

    On June 11, 2003, the Commission held a hearing concerning 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.\2\ In response to issues raised at the hearing, the 
Commission has made a number of changes, such as allowing Respondents 
to have access to their deposition transcripts, See Statement of Policy 
Regarding Deposition Transcripts in Nonpublic Investigations, 68 FR 
50688 (August 22, 2003), and clarifying questions concerning treasurer 
liability for violations of the FECA, See Statement of Policy Regarding 
Treasurers Subject to Enforcement Proceedings, 70 FR 3 (January 3, 
2005).
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    \2\ The comments from these 2003 proceedings are available 
online at http://www.fec.gov/agenda/agendas2003/notice2003-09/comments.shtml.
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    On December 8, 2006, the Commission published a proposal for a 
pilot program for probable cause hearings, and sought comments from the 
regulated community. See Proposed Policy Statement Establishing Pilot 
Program for Probable Cause Hearings, 71 FR 71088 (Dec. 8, 2006). The 
comment period on the proposed policy statement closed on January 5, 
2007. The Commission received four comments, all of which endorsed the 
proposed pilot program for probable cause hearings. These comments are 
available at http://www.fec.gov/law/policy.shtml#proposed under the 
heading ``Pilot Program for Probable Cause Hearings.''

II. Procedures for Probable Cause Hearings

A. Opportunity To Request a Hearing

    A respondent may request a probable cause hearing when the 
enforcement process reaches the probable cause determination stage (see 
11 CFR 111.16--111.17) and the respondent submits a probable cause 
response brief to the Office of General Counsel. The General Counsel 
will attach a cover letter to its probable cause brief to inform the 
respondent of the opportunity to request an oral hearing before the 
Commission. See 11 CFR 111.16(b). Hearings are voluntary and no adverse 
inference will be drawn by the Commission based on a respondent's 
request or waiver of such a hearing. The respondent must include a 
written request for a hearing as a part of its properly and timely 
filed reply brief under 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 are responsible for ensuring that their 
request is timely received. All requests for hearings, scheduling and 
format inquiries, document submissions, and any other inquiries related 
to the probable cause hearings should be directed to the Office of 
General Counsel.
    The Commission will grant a request for an oral hearing if any two 
Commissioners agree that a hearing would help resolve significant or 
novel legal issues, or significant questions about the application of 
the law to the facts. The Commission will inform the respondent whether 
the Commission is granting the respondent's request within 30 days of 
receiving the respondent's brief. Respondents who submitted their 
probable cause briefs prior to the effective date of this policy 
statement may request in writing a probable cause hearing if the 
Commission has not made its probable cause determination.
    Two commenters suggested that the Commission offer oral hearings at 
other stages of the enforcement process, including prior to a 
Commission decision to enter into pre-probable cause conciliation. The 
commenters provided no specific suggestion as to how such hearings at 
other stages of the enforcement process would benefit the decision-
making process. The Commission declines to adopt such an expansion of 
the pilot program at this time.

B. 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 (or their counsel) will have the opportunity to 
present their arguments, and Commissioners, the General Counsel, and 
the Staff Director will have the opportunity to pose questions to the 
respondent, or respondent's counsel, if represented. One commenter 
suggested that the proposed probable cause hearing procedure be revised 
to exclude any questioning of respondents or respondents' counsel by 
the Commission's General Counsel or Staff Director, as this would be a 
continuation of the completed investigation and would offer little 
value to the Commission. The Commission rejects this suggestion. The 
Commission believes that the participation of the General Counsel and 
Staff Director in the hearings is appropriate and may often prove 
helpful to the Commission.
    Respondents may discuss any issues presented in the enforcement 
matter, including potential liability and calculation of a civil 
penalty. Hearings are confidential and not open to the public; 
generally only respondents and their counsel may attend. Attendance by 
any other parties must be approved by the Commission in advance.
    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 respondents' counsel, 
followed by questioning from the Commissioners, General Counsel, and 
Staff Director. Hearings will normally conclude with the respondent or 
respondent's counsel's closing remarks.
    Third party witnesses or other co-respondents may not be called to 
testify at a respondent's oral hearing, nor may a respondents' counsel 
call the respondent to testify. However, the Commission may request 
that the respondent submit supplementary information or briefing 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 the Commission's request for 
information imposes a different, Commission-approved deadline. 
Materials requested by the Commission, and materials considered by the

[[Page 7553]]

Commission in making its ``probable cause to believe'' determination, 
may be made part of the public record pursuant to the Commission's 
Statement of Policy Regarding Disclosure of Closed Enforcement and 
Related Files, 68 FR 70426 (Dec. 18, 2003).
    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 Commission. 
Respondent may be bound by any representations made by respondent or 
respondents' counsel at a hearing. The Commission will make the 
transcripts available to the respondent as soon as practicable after 
the hearing, and the respondent may purchase copies of the transcript. 
Transcripts will be made public after the matter is closed in 
accordance with Commission policies on disclosure.\3\
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    \3\ The Commission's 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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C. Cases Involving Multiple Respondents

    In cases involving multiple respondents, the Commission will decide 
on a case-by-case basis whether to structure any hearing(s) separately 
or as joint hearings for all respondents. Respondents are encouraged to 
advise the Commission of their preferences. Co-respondents may request 
joint hearings if each participating co-respondent provides an 
unconditional waiver of confidentiality with respect to other 
participating co-respondents and their counsel and a nondisclosure 
agreement. If separate hearings are held, each respondent will have 
access to the transcripts from his/her/its own hearing, but not 
transcripts of other co-respondents' hearings, unless co-respondents 
specifically provide written consent to the Commission granting access 
to such transcript(s).

D. 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 at 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.

E. 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 affirmative 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 terminate or modify this pilot program through additional policy 
statements prior to the eighth month of the pilot program by an 
affirmative vote of four of its members. If the pilot program is 
terminated, previously requested hearings may still be held.

F. 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. Currently, the majority of the 
Commission'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 
encourages pre-probable cause conciliation. The Commission has a 
practice in many cases of reducing the civil penalty it seeks through 
its opening settlement offer in pre-probable cause conciliation. 
However, once pre-probable cause conciliation has been terminated, this 
reduction (normally 25%) is no longer available and the civil penalty 
will generally increase.
    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 in effective date 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: February 12, 2007.
Robert D. Lenhard,
Chairman, Federal Election Commission.

Appendix

Basic Commission Enforcement Procedure

    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.
    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).\4\ 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 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).\5\ 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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    \4\ 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).
    \5\ 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

[[Page 7554]]

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 submit a motion to 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. E7-2723 Filed 2-15-07; 8:45 am]
BILLING CODE 6715-01-P