[Federal Register Volume 72, Number 222 (Monday, November 19, 2007)]
[Rules and Regulations]
[Pages 64919-64921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-22524]



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 Rules and Regulations
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  Federal Register / Vol. 72, No. 222 / Monday, November 19, 2007 / 
Rules and Regulations  

[[Page 64919]]



FEDERAL ELECTION COMMISSION

11 CFR Part 111

[Notice 2007-21]


Procedural Rules for Probable Cause Hearings

AGENCY: Federal Election Commission.

ACTION: Rule of Agency Procedure.

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SUMMARY: The Federal Election Commission (``Commission'') is making 
permanent a program that allows respondents in enforcement proceedings 
under the Federal Election Campaign Act, as amended (``FECA''), to have 
a 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 
program is provided in the supplementary information that follows.

DATES: Effective November 19, 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 making 
permanent a program to afford respondents in pending enforcement 
matters the opportunity to participate in hearings (generally through 
counsel) and present oral arguments directly to the Commissioners, 
prior to any Commission determination of whether to find probable cause 
to believe 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 and clarifications. These 
changes and clarifications include 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.''
    On February 8, 2007, the Commission decided by a vote of 6-0 to 
institute the pilot program. The program went into effect on February 
16, 2007. The pilot program was designed to remain in effect for at 
least eight months, after which time a vote would be scheduled on 
whether the program should continue. The Commission finds that the 
pilot program has been successful and hence, is issuing this notice to 
announce that the Commission has determined to make the program 
permanent.

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 for, or waiver of, such a hearing. The respondent must include 
a written request for a hearing as a part of the respondent's filed 
reply brief under 11 CFR 111.16(c). Each 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 
requests are 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.

B. Hearing Procedures

    The purpose of the oral hearing is to provide a respondent an 
opportunity to present the respondent's arguments in person to the 
Commissioners before the Commission makes a determination as to whether 
there is ``probable cause to believe'' that the respondent violated

[[Page 64920]]

the Act or Commission regulations. Consistent with current Commission 
regulations, a respondent may be represented by counsel, at the 
respondent's own expense, or may appear pro se at a 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.
    At the hearing, respondents are expected to raise only issues that 
were identified in the respondent's hearing request. Such issues must 
have been previously presented during the enforcement process, either 
in the response, during the investigation or pre-probable cause 
conciliation, or in the reply brief. Respondents may discuss any issues 
presented in the enforcement matter, including potential liability and 
calculation of a civil penalty, and should be prepared to address 
questions related to the complaint, their initial response, and any 
other material they have submitted to the Commission. The reply brief 
should include specific citations to any authorities (including prior 
Commission actions) on which the respondent is replying or intends to 
cite at the hearing. If respondents discover new information after 
submission of the reply brief, or need to raise new arguments for 
similarly extenuating circumstances, they should notify the Commission 
as soon as possible prior to the hearing. Commissioners may ask 
questions on any matter related to the enforcement proceedings and 
respondents are free to raise new issues germane to any response.
    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 the extent of 
Commission interest. The Commission will determine the amount of time 
allocated for each portion of the hearing, and each time limit 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 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 respondent's 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 be submitted only upon 
Commission request and no more than ten days after such a request from 
the Commission, unless the Commission's request for information 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 
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 of 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 
respondent's 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 hearings 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 the hearing of that respondent, but 
transcripts of other co-respondents' hearings will not be made 
available unless co-respondents specifically provide written consent to 
the Commission granting access to such transcripts.

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. Conclusion

    Probable cause 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 establishes rules of agency practice or procedure. This 
notice 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''). 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: November 5, 2007.
Robert D. Lenhard,
Chairman, Federal Election Commission.

    Note: The following Appendix will not appear in the Code of 
Federal Regulations.


[[Page 64921]]



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 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. E7-22524 Filed 11-16-07; 8:45 am]
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