> FEDERAL ELECTION COMMISSION
>
> PUBLIC HEARING ON ENFORCEMENT PROCEDURES
>
> 10:01 a.m.
>
> Thursday, June 11, 2003
>
> 9th Floor Hearing Room
>
> 999 E Street, N.W.
>
> Washington, D.C. 20463
>
> A T T E N D E E S
>
> Commission Members Present:
>
> Ellen L. Weintraub, Chair

Bradley A. Smith, Vice Chairman

> David M. Mason, Commissioner
>
> Danny Lee McDonald, Commissioner
>
> Scott E. Thomas, Commissioner
>
> Michael E. Toner, Commissioner
>
> General Counsel\'s Office Present:
>
> Lawrence H. Norton, General Counsel
>
> James A. Kahl, Deputy General Counsel
>
> Rhonda J. Vosdingh, Associate General Counsel
>
> Staff Present:
>
> James A. Pehrkon, Staff Director
>
> Roberta J. Costa, Deputy Staff Director
>
> C O N T E N T S
>
> PAGE
>
> Opening Statements
>
> Chair Weintraub 4
>
> Vice Chairman Smith 8
>
> Commissioner Thomas 12
>
> Commissioner Toner 16
>
> Commissioner McDonald 19
>
> Commissioner Mason 21
>
> Cleta Mitchell
>
> Foley & Lardner) 22
>
> Jan Witold Baran 26
>
> Robert F. Bauer and Marc Elias
>
> (Perkins Coie) 29/33
>
> LUNCH
>
> James Bopp, Jr. (James Madison Center for
>
> Free Speech) 113
>
> Donald F. McGahn II 116
>
> Lawrence Noble (Center for Responsive
>
> Politics) 121
>
> BREAK
>
> William J. Olson (Free Speech Coalition
>
> and Conservative Defense and Education
>
> Fund) 196
>
> Charles R. Spies (Republican National
>
> Committee) 201
>
> Joseph Sandler and Neil Reiff (Sandler,
>
> Reiff and Young, PC) 204
>
> [P]{.underline} [R]{.underline} [O]{.underline} [C]{.underline}
> [E]{.underline} [E]{.underline} [D]{.underline} [I]{.underline}
> [N]{.underline} [G]{.underline} [S]{.underline}
>
> CHAIR WEINTRAUB: Good morning. This Special Session of the Federal
> Election Commission for Wednesday, June 11th, 2003, will please come
> to order. I\'d like to welcome everyone to the Commission\'s hearing
> on enforcement procedures. The issues we are discussing today were
> included in a Notice of Public Hearing and Request for Public Comments
> on Enforcement Procedures, published on May 1st, 2003, in the Federal
> Register.
>
> The Commission is currently examining its enforcement practices and
> procedures to determine whether internal directives or practices
> should be adjusted, and we\'re also considering whether a rulemaking
> in this area is advisable. I\'d like to briefly describe the format
> for the testimony today. Each witness will have five minutes to make a
> presentation, and we are going to be using lights. You get a green
> light when you start, a yellow light at four-and-a-half minutes, and
> after five minutes the red light goes on, and the floor opens up
> underneath you, and we do have, well, maybe not, but we do have a long
> day, and we would appreciate everyone\'s cooperation in trying to not
> make it into a long night, as well.
>
> We are going to have questions from all of the Commissioners, and the
> General Counsel and the staff director after the witnesses have an
> opportunity to make their opening statements. Each Commissioner will
> also get five minutes on the same light system, and I have rigged the
> floors underneath their chairs here. No, I haven\'t.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: We are going to see three panels of three to four
> witnesses today. The first panel will begin at 10:15 and run till
> noon. We\'ll take a 1-hour lunch break, have another panel from 1:00
> to 2:45, and the third panel will testify from 3:00 to 4:45. So it is
> going to be a very long day.
>
> We appreciate the willingness of the commenters to assist in this
> effort by giving us their views on these issues, and we want to thank
> particularly the witnesses who have taken the time today to give us
> the benefit of their experience and expertise in this area.
>
> When I came to the Commission six months ago, switching over from
> being one of the regulated to being one of the regulators, I noticed
> that there was an occasional disconnect between the way the agency
> perceived itself and the way the outside world perceived the agency.
>
> Of course, there are disconnects between the way various sectors in
> the outside perceive what the agency is doing and what direction it
> ought to be moving in. One of our commenters has been quoted as
> describing the investigatory process here as akin to having bright
> lights shining on you and being interrogated by the Shining Path
> guerrillas.
>
> Then, there are other commenters who appear to disagree with that
> analysis, but appear also to think that maybe that is what we should
> be doing.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: That was never my experience or my bias that that\'s
> or my bias that that\'s what we should be doing, and I think there was
> some trepidation, internally perhaps, that we were opening ourselves
> up to having people come in here today and throw tomatoes at us all
> day long.
>
> I am pleased to note that I don\'t see a single produce bag anywhere
> in the room, but I have authorized the Staff Director to confiscate
> any that I missed.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: I actually am, on a more serious note, very pleased
> with the tenor of the comments that we\'ve received, which have been
> very constructive and very positive. It was not our intention to open
> this up to allow people to come in and kvetch about their
> least-favorite attorney in the office, and I am gratified that the
> commenters perceived where we were going with this and have given us a
> lot of positive, constructive, process-oriented comments.
>
> We won\'t take all of them. We\'ll listen to them all. We\'ll consider
> them all. We obviously won\'t follow them all. In fact, we couldn\'t
> follow them all because some of them contradict with others.
>
> But I do think that, for the agency, there is nothing but upside in
> our engaging in a dialogue with the regulated community, and the
> reform community, those who have been out there for years following
> very closely what the agency does, I think have a lot to offer us in
> terms of their experience and their perspective on how we could do our
> job better, and that\'s really our goal here is to, as my daughter
> would say, \"Make us the best FEC that we can be.\"
>
> I want to thank, again, all of the participants, all of the
> commenters, all of the people who have submitted written comments and
> all the people who have agreed to come here and testify and subject
> themselves to our questioning today.
>
> I particularly want to thank the General Counsel for his cooperation
> and participation in this agreement to spend this entire day doing
> this, today, on his birthday. I want to thank all of my colleagues for
> their willingness\--
>
> COMMISSIONER McDONALD: He\'ll be more than one year older after this.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: I want to thank all of my colleagues for engaging in
> this introspective exercise, and I particularly want to acknowledge
> the efforts of the Vice Chairman in pushing to get this on the agenda.
> I am very pleased to be able to convene this hearing, and I am looking
> forward to a very interesting day.
>
> I now turn it over to the Vice Chairman, who I know also has an
> opening statement.
>
> VICE CHAIRMAN SMITH: Well, thank you, Madam Chair. Thank you for your
> comments, and I share many of your thoughts, particularly about the
> willingness of the General Counsel and the Counsel\'s Office to engage
> in this type of self-examination and review, which always does carry
> some possibility of the brickbats being thrown in. I think you forgot
> to congratulate the security guards on the no fruit that you were
> commenting about.
>
> \[Laughter.\]
>
> VICE CHAIRMAN SMITH: I do want to note that I think that if the mere
> appearance of corruption can cause citizens to lose confidence in
> government, then surely the appearance of unfairness or unequal
> administration of the law can cause citizens to lose confidence in
> government. And a sense that the process is fair and understandable is
> essential if the public is to have confidence in and support for the
> law.
>
> In 1983, the Chairman of the American Bar Association Section of
> Administrative Law testified before a congressional committee that the
> FEC\'s enforcement process was unduly prolonged and could be
> criticized as \"operating in a \`star chamber\' style,\" going on to
> note that those who are investigated are not clearly apprised of what
> it is that they are alleged to have done, and they are never given the
> opportunity to plead their cases in the way that most of us, as
> lawyers, are accustomed to, by addressing the decisionmakers.
>
> There were several other issues raised, and I think we may hear about
> some this morning. But 20 years later, virtually all of those
> procedures that sparked those criticisms remain in place at the FEC
> and have not been examined in any comprehensive manner that would
> allow for public input. So I think today\'s hearing is an important
> first step in reviewing these enforcement procedures for the first
> time, literally, in decades.
>
> An agency such as ours is always going to be subject to criticism, and
> it\'s to be expected that there will be friction between the
> regulators and the regulated, but this can\'t simply be an excuse to
> avoid any kind of change. Lawyers with whom I speak who do not
> practice before us are regularly shocked by some of the procedures
> that are operative at this agency.
>
> Similarly, I note that a substantial majority of those commenting have
> urged the Commission to substantially strengthen the due process
> protections of those brought before the Commission. Three commenters
> defend the status quo basically on the grounds that the Constitution
> does not require such added protections, but the Constitution sets
> only minimum standards that people have a right to demand from their
> government, and it never sets the most that government can or should
> do.
>
> Just to take two examples, it\'s difficult for me to see how the
> government justifies or gains\--the government being us, the
> Commission\--by denying respondents the rights to copies of their own
> depositions, something routinely granted by other administrative
> agencies. Similarly, once the Counsel\'s Office has filed a probable
> cause brief, it\'s hard to understand why it is fair or what is to be
> gained by denying respondents access to documents potentially relevant
> to their defense, given that we have closed our investigation at that
> point.
>
> Unfair, arcane, or mysterious procedures should not be confused with
> robust enforcement of the law. There is no need for us to fear added,
> unfairness, procedure or process, and when those who are regulated
> feel they are treated unfairly is when they are most likely to be
> least cooperative, more determined to raise every possible legal
> defense and challenge, and least likely to conciliate short of a major
> court battle. As we know, our statute is based on the idea that most
> cases should, in fact, be conciliated rather I think than drawn into
> court.
>
> I often hear it said by those who claim we need tougher enforcement
> that the FEC takes too long to adjudicate cases. But a system that has
> the confidence of the regulated community will cut delays in
> enforcement by encouraging trust and cooperation.
>
> Additionally, there are claims that the Commission favors powerful
> actors and parties, but a system that is open and readily understood
> by all I think, with publicly available procedures and penalty
> guidelines, can help assure that all parties are treated equally, and
> thereby boost the public\'s confidence in the agency\'s impartiality.
>
> The Commission regularly reviews its audit procedures. In the past
> three years, we have inaugurated two innovative programs, the
> Administrative Fines Program for reporting, and the Alternative
> Dispute Resolution Program, and both of these have recently been
> reviewed by the Commission.
>
> As we enter a new statutory and regulatory regime, it is more than
> appropriate that we similarly review the procedures of our core
> enforcement function, which is how we handle what we call matters
> under review.
>
> So, again, I\'m pleased by the support that the Commissioners, the
> Counsel\'s Office and the staff have brought to the process. I think
> that many of the changes can be made without formal rulemaking, but
> getting public input in an organized forum is vital to our efforts.
> Thus, I thank, in advance all of those who will be appearing here
> today and those who submit comments, but are unable to appear.
>
> Thank you.
>
> CHAIR WEINTRAUB: Thank you, Mr. Vice Chairman.
>
> Commissioner Thomas?
>
> COMMISSIONER THOMAS: Thank you, Madam Chair.
>
> Well, I, before we get too far into it, wanted to at least get on the
> record that, from my perspective, having been here over the years, we
> have had a very fruitful self-analysis going on over the years, and we
> have adopted many changes and revisions over the years to streamline
> and improve our enforcement process.
>
> I view it as an ever-ongoing process, but I can remember when I was in
> the Counsel\'s Office, we adopted early on, because we were concerned
> that cases weren\'t getting monitored adequately, we adopted an
> internal tickler system, and a case status report system, and that was
> in the early \'80s.
>
> Over the years, we have attempted three times to adopt a computerized
> MUR tracking system that will enable us to better monitor the
> enforcement process and the status of cases and how much resources are
> going into the various cases for management purposes. And now we do
> have a pretty good system in place, I would say. It has taken a lot of
> hard work and a lot of dedicated staff, but that is now in place.
>
> We developed early on a MUR index system that is computerized that
> helps people to research MURs. That is available in our Public Records
> Office. We have, in 1993, when I was Chairman, we rolled out our
> enforcement priority system, which was a very significant change at
> this agency. It really was a system that objectively analyzed cases to
> figure out which ones should get the use of our limited resources.
>
> It allowed us to focus on what we viewed as the most significant
> cases, it built in a very objective rating system for cases and
> allowed for prompt dismissal of those cases that fell to the bottom
> that were viewed as less significant.
>
> We adopted procedures to remove extra layers of review in the
> Counsel\'s Office, a lot of reports that didn\'t end up having to go
> to the General Counsel\'s Office, and that was a way to speed up some
> of the review, if they were not so significant that they needed to
> bother him.
>
> We started offering pre-probable cause conciliation in most of our
> MURS. That is a way to greatly speed up the resolution of most of our
> compliance cases. We adopted procedures to use informal discovery,
> rather than the formalized subpoena process in many of our compliance
> cases.
>
> We developed an Office of General Counsel Enforcement Procedures
> Manual that enables the staff to be able to know what form letters to
> use and what civil penalty guidelines to work with.
>
> We have sent many of our staff to NITA courses when appropriate and
> when we have funds available to help them learn how to take
> depositions and handle enforcement matters.
>
> We have worked with internal training programs ourselves. We
> periodically find this room very full of OGC staff, learning about
> various provisions of the law. We have modified the law in certain
> cases where appropriate because we have learned that some parts of the
> law basically gum up our enforcement process. For example, we recently
> revised the rules on redesignating and reattributing contributions
> because we were finding that in many excessive contribution cases we
> were handling enforcement matters that really didn\'t warrant that
> kind of severe treatment.
>
> We have, over the years, sought more staff. I have always been a
> proponent for the basic proposition that if you\'ve got a bigger, and
> bigger, and bigger workload, you\'re going to need more and more staff
> to handle it. In one of my Statements of Reasons, in one of my cases a
> couple years go, I wrote a little analysis. I noted that in fiscal
> \'98 we had basically 21 line attorneys available to handle
> enforcement matters, and they were able to resolve 68 cases that
> fiscal year.
>
> In 2001, a few years later, we had moved it up to 29 enforcement line
> attorneys, and they were able to resolve 117 cases. So it seems to me
> that that is a fairly basic proposition that if the workload is
> ever-growing, we need to be honest and ask for the kinds of resources
> necessary to deal with that.
>
> I would, at the outset, note that we are working with some assumptions
> or some assertions that we have to be fairly careful with. Indeed,
> with regard to letting witnesses review depositions, we do let
> witnesses review their deposition transcripts. We have, I guess, a
> policy that some folks are objecting to about letting witnesses
> actually walk away with the transcript thereafter. I guess we can
> happily debate about that. I am happy to look at that as an issue.
>
> We do also let respondents get evidence that we have used in a General
> Counsel\'s brief. We perhaps can work on procedures for better
> identifying what process to use in making that happen, but we have
> been very forthcoming, I think, in terms of trying to make the
> evidence available to help the respondents work on their response
> brief.
>
> But I wanted to get all of that out on the record at the outset
> because I think it\'s important that we keep all of this in some
> perspective. I think those of us that have been here for a long time
> have worked very hard to make the process work well, and we are
> anxious to go through this process here today to see if we can
> continue that goal.
>
> Thank you.
>
> CHAIR WEINTRAUB: Thank you, Commissioner Thomas.
>
> Commissioner Toner?
>
> COMMISSIONER TONER: Thank you, Madam Chair.
>
> I want to thank everyone at the outset for being here today. I know
> how busy all of the lawyers are in town with the constitutional case
> going to the Supreme Court and how difficult it is to make time to
> deal with other matters these days. I really appreciate very much all
> of the comments, everyone being here.
>
> As has been noted previously, the Commission has never systematically
> and publicly examined its enforcement policies, at least in as public
> a setting as we\'re doing today. I welcome this critical
> self-examination and look forward to considering how the Commission
> can provide greater due process rights to respondents without
> undercutting its enforcement function.
>
> In an early case involving the FEC, the Second Circuit Court of
> Appeals observed that the Commission has the weighty, if not
> impossible, obligation to exercise its powers in a manner harmonious
> within a system of free expression. The court\'s comment reflects the
> fact that the FEC, unlike virtually any other federal agency,
> regulates core political speech that is protected by the Bill of
> Rights.
>
> Concerns about the Commission\'s enforcement policies are not new. As
> early as 1982, an American Bar Association Task Force published a
> report that detailed what they perceived to be many procedural
> shortcomings and urged the Commission to make major changes to its
> enforcement procedures.
>
> This ABA Task Force, which was bipartisan and was advised by a former
> Chairman of the FEC, recommended that respondents be given full access
> to all of the information from the agency\'s investigation, including
> any exculpatory information that may exonerate a respondent before the
> Commission decides whether the law has been broken.
>
> The ABA Task Force concluded that such access \"will afford the
> respondent notice of the evidence upon which staff is relying and will
> allow the respondent an opportunity to rebut certain factual
> allegations that are erroneous or incomplete.\"
>
> The task force further concluded that such access would guarantee that
> the Commission has more information available to it at the time it
> makes a decision on whether a person has violated the law.
>
> The 1982 ABA Task Force also recommended that respondents be given
> access to all General Counsel\'s reports that are submitted to the
> Commission and that respondents be given a right to oral argument
> before the Commission, as the General Counsel is allowed to do.
> Interestingly, Common Cause strongly concurred with the latter
> recommendation, concluding that \"The FEC should make greater use of
> oral arguments.\"
>
> Now, 20 years later, many of these enforcement concerns have yet to be
> addressed. I approach our examination of the Commission\'s enforcement
> procedures with two basic premises.
>
> First, I do not believe that providing respondents with due process
> rights in any way compromises the Commission\'s effectiveness in
> enforcing the law. People charged with breaking the federal election
> laws, in my view, should not have to go to federal court to get due
> process, particularly when First Amendment rights of free expression
> are at stake.
>
> I believe the FEC can, and should, do everything in its powers to
> ensure that respondents are given due process and that doing so will
> enhance, not reduce, the Commission\'s enforcement effectiveness.
>
> Secondly, I also strongly believe that the General Counsel\'s Office
> today has a much greater sensitivity and commitment to these issues
> than ever before in treating respondents fairly and providing due
> process. I believe the current Commission shares that view, which has
> made today\'s hearing possible.
>
> I look forward, Madam Chair, to receiving testimony on these issues
> and to continue to work towards making the Commission\'s enforcement
> procedures as fair and as effective as is possible.
>
> Thank you.
>
> CHAIR WEINTRAUB: Thank you, Commissioner Toner.
>
> Commissioner McDonald?
>
> COMMISSIONER McDONALD: Madam Chair, thank you. I am not going to read
> a prepared statement. I will only say to the witnesses I appreciate
> you all coming. I read very carefully your comments, and I am
> interested to get into some of these things that have been raised. I
> have been here since 1982. I must say I do think that the Commission
> has done a number of things, some that were outlined by Commissioner
> Thomas.
>
> I think what we had maybe that helped as much as anything since I\'ve
> been here is the PricewaterhouseCoopers assessment of this Commission
> because it was done independently, not from lawyers who practice
> before us or by the Commissioners, and I thought it was a good test of
> this Commission.
>
> The Commission, prior to that, had been audited a couple of years
> earlier by the Congress. The Commission has been looked at on numerous
> occasions, needless to say. Disinterested third parties that make an
> assessment of a Commission, whether it is this Commission or the one
> that Cleta and I were familiar with in Oklahoma, the Oklahoma
> Corporation Commission, where you would come in and have someone that
> is disinterested make an assessment of the process in relationship not
> only to the agency that is being examined, but in relationship to like
> agencies, I think is very constructive.
>
> We went through a very long process. There are a number of matters
> that I would refer everyone to who has an interest in what was asked
> of the Commission and what the Commission did to follow up on the
> performance audit of the agency. And I thought it was a good marker in
> relationship to what not only the concerns were by a vested interest,
> but also to try to make an independent assessment of where we were.
>
> So I look forward to hearing from the practitioners. We have a very
> distinguished group. I was just looking at that group on the front
> row, if we could, their income alone could cover, hopefully, a number
> of these positions that we need. I look forward to seeing all of them.
> They\'re all friends, and I\'ll be delighted to hear what they have to
> say.
>
> Thank you, Madam Chair.
>
> CHAIR WEINTRAUB: Thank you, Commissioner McDonald.
>
> Commissioner Mason?
>
> COMMISSIONER MASON: Thank you, Madam Chair. As many of my colleagues
> know, when I was Chairman last year, I had attempted to schedule
> roughly this hearing almost exactly one year ago, and then something
> called BCRA happened. As I recall, we spent a number of late evenings,
> and even late nights, in June writing those regulations, and so I
> think it\'s very timely to get to this, and I appreciate the Chair\'s
> scheduling it, and I appreciate the Vice Chairman\'s continuing
> advocacy of doing this.
>
> As most of my colleagues have said, I appreciate the comments, the
> tenor of the comments, and I am eager to hear from the witnesses and
> ask them some questions.
>
> CHAIR WEINTRAUB: Thank you very much, Commissioner Mason.
>
> I would like to invite the first panel of witnesses to come on down
> and take a seat. We have Cleta Mitchell from Foley & Lardner, Jan
> Baran from Wiley, Rein & Fielding, and playing musical chairs now, Bob
> Bauer and Marc Elias from, what\'s the name of that\--Perkins Coie,
> that\'s it.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: I still remember how to pronounce it, though.
>
> Ms. Mitchell, would you like to start us off?
>
> MS. MITCHELL: Thank you, Madam Chair.
>
> I would like to echo my compliments to the Chair and to the Vice
> Chairman for proceeding to hold this hearing and allowing us to make
> comments. I, personally, really appreciate the opportunity to be here.
>
> I want to take a moment of personal privilege on the occasion of Mr.
> Norton\'s birthday to say that I certainly did not\--I meant to say
> this anyway, and now that it\'s your birthday I have to say this, that
> any comments directed to the Office of General Counsel are not
> directed toward you, personally. So happy birthday.
>
> \[Laughter.\]
>
> MR. NORTON: Thank you.
>
> COMMISSIONER McDONALD: I\'d go for cover immediately.
>
> \[Laughter.\]
>
> MS. MITCHELL: As a baseball fan, this process, when I was reading
> through the comments, reminds me of two sets of people who are allowed
> to participate in criticizing the umpires. Ballplayers can\'t argue
> balls and strikes and can be ejected for saying ugly things to the
> umpires, as can managers and even organ players who play \"Three Blind
> Mice\" after a particularly bad call.
>
> However, fans can say whatever ugly things they want to say about the
> umpires, and unless they actually move onto the field or throw
> something that could hurt somebody physically, they\'re allowed to say
> whatever they want.
>
> And in reading the comments, I will tell you that I have a sense that
> there are two sets of commentaries about Commission enforcement
> procedures. Those of us who do represent people before the Commission,
> who have been engaged in the political process in some form or fashion
> and then are accused of having violated some provision of law, and
> I\'ll tell you, I was talking with a new treasurer, a new fundraiser
> for a campaign, yesterday.
>
> She\'s never raised money under the federal law, and when I\'m
> explaining these things to her, she finally said, \"This is so
> complicated? How can I possibly keep from violating the law?\"
>
> And I said, \"Well, we\'ll try to help you with that.\"
>
> \[Laughter.\]
>
> MS. MITCHELL: But it is very overwhelming to people who come into the
> process, and there are differences in perspectives, depending on
> whether you have experienced representing respondents before the
> Commission, as opposed to the criticism that we often hear, which is
> really all we ever read in the paper, which is that the Commission is
> a toothless tiger, and even reading those comments from the reformers
> who would like to abolish the Commission and invest all authority in
> some super speech czar.
>
> I think that it\'s important to give us, those of us who appear before
> the Commission, on behalf of the people, the opportunity to tell you a
> few things, and I appreciate that opportunity.
>
> Four things I want to say quickly, and then be happy to respond to
> questions, and those were really included in my opening comments.
> First, this notion of due process, it was really the most startling
> thing to me, as somebody who used to conduct and teach CLEs on
> Administrative Procedures Act in Oklahoma before the state bar
> association and practice before a lot of different government
> agencies, it was really startling to me to learn some idiosyncrasies,
> shall we say, of the FEC with respect to due process and to actually
> find that there is not a general agreement that due process is the
> primary principle under which the Commission\'s enforcement actions
> and procedures will be carried out.
>
> I thought maybe it was just me until I read the comments submitted by
> the Campaign Legal Center quoting the former General Counsel to the
> Commission. So it is documented that the former General Counsel once
> indicated, during a symposium on the Commission\'s performance in
> enforcing Federal campaign finance law, asking the due process
> question is really just opening the discussion and doesn\'t give you
> any answers. Because in talking about due process, then you have to
> decide, well, what process is due them, and that answer depends very
> much on what is going on.
>
> That principle, if I make no other plea to you, I would urge the
> Commission to set down a marker and adopt the principle that due
> process is the most important principle here in this agency, and that
> everything in the enforcement procedure should be measured by whether
> or not due process is being afforded. I think that that guiding
> principle would be a huge departure, adopting that principle would be
> a huge departure from prior procedures of the Commission.
>
> Secondly, as part of that, make the Enforcement Procedures Manual
> public. There shouldn\'t be\--I was startled to learn, when I was
> practicing law in Norman, Oklahoma, one of our biggest clients was a
> bank. Well, the reason our biggest client was a bank\--oh, I can\'t
> tell you that. I have to stop.
>
> \[Laughter.\]
>
> MS. MITCHELL: But enforcement, make the Enforcement Procedures Manual
> public.
>
> COMMISSIONER McDONALD: I can.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: Thank you, Ms. Mitchell, and thank you for respecting
> our lights, which I think I can reset here.
>
> Mr. Baran?
>
> MR. BARAN: Thank you, Madam Chairman, Commissioners. I appreciate this
> opportunity to testify. I do have some prepared remarks, a copy of
> which I have given to your staff, and I will not read it through it,
> obviously, because I would violate your five-minute rule, but I want
> the Commissioners to be aware that I did try and prepare something in
> writing for today\'s hearing, and I hope it will be introduced into
> the record, if there is no objection.
>
> I know it may be hard to remember for some folks, although I hope
> Commissioner Thomas and Staff Director Jim Pehrkon recalled that I did
> used to work at this agency back in the medieval times of 1977 and
> 1979, and I do have a perspective on what goes on in an executive
> session of this agency, and since 1979, I have the outsider\'s
> perspective, having spent 24 years representing literally hundreds of
> clients before this agency.
>
> I want to hastily note that sometimes the reason I represent such
> larger numbers of clients is because of some of your enforcement
> procedures, such as designating respondents upon receipt of a
> complaint.
>
> I don\'t think that the Commission needs to be defensive about this
> issue. I, for one, do not come here with the intent to criticize you
> for what you do. I\'m here, as I think I was 20 years ago at the House
> Administration Committee with the American Bar Association trying to
> point out a few things that ought to be considered.
>
> And when we testified in Congress, led by then-Chairman Bill Allen, we
> basically said, \"Look, we\'re just here to say that there have to be
> some administrative procedures that promote efficiency and fairness,
> and I think you need to approach this in two ways. One is obviously
> you have to comply with the law. So whatever is legally required, you
> have to incorporate into your procedures, but, secondly, whatever is
> not legally required, you may want to adopt some procedures that
> promote both efficiency, which presumably will save you resources, as
> well as respondents, and a sense of fairness for those who have to
> deal with this agency.
>
> And it is in that spirit that I would briefly comment on some of these
> issues that were in your notice for this hearing.
>
> First, with respect to designating respondents in the complaint, I
> think that the history is that you\'re making too much work for
> everybody, including yourselves. I mean, you ought to do what courts
> do, which is tell the complainant, who\'s the complaint against, and
> then send the notice to that person, as opposed to going through the
> complaint and trying to find every person or individual that might be
> identified and then send them a notice, and then require them to
> respond.
>
> I note that there is this issue of what happens in the course of an
> investigation, where you determined that someone who is not already a
> respondent may have to be a respondent. Well, you could adopt some
> procedures for that contingency.
>
> You might treat it either the way you do now, which is like an
> internally generated matter, where you just find reason to believe and
> send out a notice or it might be useful to adopt a procedure that
> would send out a notice and give the new potential respondent 15 days
> to respond before you make a reason to believe determination.
>
> This is not required by the statute, but there is nothing to prevent
> you from doing that, and it might provide some efficient and orderly
> approach to those types of investigations.
>
> With respect to appearances before the Commission, this is an issue
> that\'s come up, obviously, for decades. Respondents have no sense of
> the decisionmakers. You are as remote as the Wizard of Oz. They think
> that you are insulated and don\'t understand what is going on.
>
> We all know that\'s not true, but people who deal with your agency
> don\'t know that, and there should be, I think, at least an experiment
> with oral hearings of some sort, and I\'m not talking about a trial.
> I\'m not talking about production of evidence and all of that because
> I\'m assuming that all of the facts, and all of the legal arguments
> are stipulated and agreed to between the General Counsel\'s Office and
> the respondents.
>
> I also encourage the Commission to permit motions, and my prepared
> comments will discuss that. In my short time remaining, I want to just
> say that when it comes to depositions and document production at
> probable cause, obviously, I would encourage the agency to formalize
> what Commissioner Thomas, in his opening statement, said you already
> do. And if you do have some sort of a process to provide this type of
> information, then incorporate it into your regulations.
>
> Sorry I can\'t comment on all of your issues, but I\'m prepared to do
> so in the course of questioning, and I very much appreciate the
> opportunity to be here this morning with you.
>
> CHAIR WEINTRAUB: Thank you, Mr. Baran.
>
> Mr. Bauer?
>
> MR. BAUER: Thank you, Madam Chairman, members of the Commission. I\'ll
> be brief because we have submitted written comments.
>
> First of all, I want to distinguish between those issues which I would
> call internal management issues and due process issues. Internal
> management issues that might bear on questions of how quickly the
> Commission turns over cases and so forth are ones that we all have a
> great interest in, but frankly relatively little control over.
>
> We urge you to continue to work on the most expeditious handling of
> the matters before you, but due process is what I\'d like to emphasize
> or procedural issues that really do genuinely affect respondent\'s
> actual or perceived rights are the ones that we have emphasized in our
> testimony.
>
> Second, as to the question, and by the way I should say I don\'t want
> another counsel to trump me here today in wishing the General Counsel
> a happy birthday. This is a tricky business, and Cleta, once again,
> trying to steal the competitive march, delivered a sentimental tribute
> to Mr. Norton, which I now join on a bipartisan basis.
>
> \[Laughter.\]
>
> MR. NORTON: I feel like I need a plea to stop all of this. Thank you.
>
> MR. BAUER: As a matter of fact, my office will be delivering a tactful
> and inexpensive present to you later today.
>
> \[Laughter.\]
>
> MR. BAUER: In any event, moving right along, as far as due process\--
>
> CHAIR WEINTRAUB: The ethics of this place have gone downhill\--
>
> MR. BAUER: It\'s his birthday. We\'re very sentimental at our firm
> about birthdays.
>
> The other thing I want to mention is that on the question of the scope
> of due process, I don\'t think, as we look at some of the issues that
> we\'ve raised here, identifying for respondents the reasons why
> they\'ve been named, providing people with adequate access to their
> deposition transcripts or to the evidence the General Counsel has
> relied upon in a probable cause hearing.
>
> These are not issues that are going to require the Commission to test
> the outer boundaries of constitutional due process jurisprudence. You
> will be not going boldly where no one has ever traveled before. So
> before we show too much anxiety about what you\'re being asked to do,
> I think we ought to put it in the perspective of due process doctrine
> and the least that people expect in practicing before the agency.
>
> Further, I wanted to comment briefly about hearings. We expressed some
> concerns about trial type hearings. I want to make it very clear that
> I don\'t disagree that an appropriate set of rules to provide for oral
> argument in appropriate cases wouldn\'t be welcome.
>
> Our office actually commented adversely on the ex parte rules that
> were adopted many years ago because it was our view that the
> Commissioners were, frankly, receding too far into the background of
> the enforcement process, and there were too many barriers being put
> between those who have matters before the Commission and the
> Commissioners themselves.
>
> There was many years ago an ugly rumor circulating in the regulated
> community, which I\'ll share on the public record because, A, I don\'t
> believe it to be true, and, B, it probably isn\'t true any more that
> many Commissioners relied on bench memos from the General Counsel\'s
> Office rather than actual hard copies of the responses provided by
> respondents in evaluating compliance matters.
>
> And that is probably more an indication of paranoia, I\'m sure, than
> reality, but I think it underscores the concern that Jan expressed
> that you, as Commissioners, might be too far removed from respondents
> and the actual compliance process to give respondents the feeling that
> they are actually being heard on matters that are obviously very
> important to them.
>
> So we would certainly support a carefully tailored process to allow
> for oral argument in certain appropriate instances.
>
> And last, but not least, I do want to say, and I want to echo
> something Vice Chair Smith said about some of the innovative programs
> the Commission has adopted in recent years. We believe that both the
> Administrative Fines Program, and particularly the alternative Dispute
> Resolution Programs represented to the regulated community a genuine
> effort on the part of the Commission to streamline their process and
> also to provide people with the feeling of a ventilated, but
> efficient, procedure for hearing certain types of cases. It was
> extremely well received and, in our experience, it worked rather well.
>
> In conclusion, I would like to point out to Chair Weintraub that the
> light is still green, and I am concluding.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: And I appreciate that because we Commissioners ran on
> a little bit longer in our opening statements, and we have time to
> make up here.
>
> Mr. Elias, do you have an opening statement?
>
> MR. ELIAS: At the risk of not repeating everything else everyone else
> has said, I just wanted to point out two quick things at the outset.
> Whatever processes you adopt, whatever reforms are made or are not
> made, if there is one thing that I hope the Commission leaves with,
> the impression, which is actually an underlying theme I think of most
> of the comments, even some of the comments made by the reform
> community, is the need for greater transparency as to what those rules
> are.
>
> One of the questions that has come up is who gets named as
> respondents. We have submitted comments on that. I share many of the
> concerns that others have expressed on this, but whatever the process
> is, if the process is, as I suspect it is, that someone goes through
> and looks for any proper noun, whatever proper noun is found in the
> complaint gets a letter that they are a respondent, then there ought
> to be published someplace that all proper nouns will be named as
> respondents.
>
> If, in fact, documents are provided at the pre-probable cause stage,
> as they are in some cases in some number, in some amounts, then there
> ought to be some policy that is stated that says these are the
> documents you get, and these are the documents you don\'t get, before
> you submit probable cause briefs.
>
> One of the great problems with this process, the way it has worked,
> note that someone who has represented people before the Commission and
> MURs and, frankly, as someone whose law firm has, on occasion, brought
> lawsuits against the FEC for failure to act on other complaints, is
> that there is just a complete mystery and lack of transparency as to
> why certain decisions are made, procedural decisions, not substantive
> decisions, but just procedural decisions, extensions of time.
>
> Sometimes they are very easy to get. Sometimes they\'re nearly
> impossible to get. Sometimes pre-probable cause, getting copies of
> depositions that would be useful to prepare a probable cause response
> are very easy to get. Other times you can have excerpts of some of
> them.
>
> If nothing else from this process came through, if there was simply a
> set of rules that were set down so that the regulated community knew
> this is what you\'re entitled to at the various stages, I think that
> would be very, very useful.
>
> Also, as long as we\'re here, some of the Commissioners, one of the
> Commissioners mentioned the MUR index, and the MUR index is incredibly
> helpful. A number of you post on your website statements of reasons
> from some MURs.
>
> Having some greater system, of having, again, allowing the regulated
> community to know this is what Commissioners have said on these
> related topics, would again just add to the overall transparency of
> the system, allowing you to know that this is what\'s happened in
> advisory opinions, this is what\'s happened in past MURs, this is
> what\'s happened in cases where there have been statements of reasons.
>
> So my plea is beyond the substance of the comments, which we have
> submitted comments on, and the others have spoken about in their
> opening statements. I just wanted to put in a word for, at the end of
> the day, having some transparent system that allows people to know
> what decisions you all reached as a result of these hearings.
>
> CHAIR WEINTRAUB: Well, thank you very much. Thank you, again. You came
> in under your green light. It didn\'t even go to yellow.
>
> MR. ELIAS: I think mine was actually shorter than Bauer\'s. If someone
> had a stopwatch\--
>
> CHAIR WEINTRAUB: Sorry. We\'re not timing it quite that closely.
> You\'ll have to put your competitive nature a little bit under control
> there.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: And in the interest of fairness, I have to start it
> on myself.
>
> I want to thank you all for your comments and let me just say that I
> agree with many of them. One of the first things I did when I came
> here was starting to ask people about, \"Gee, an Enforcement Manual.
> Could I get a copy of that?\" And then, \"Can we put that on-line?\"
>
> And so I want to assure you, Ms. Mitchell that that is under
> consideration, some either putting the actual thing on-line or looking
> into some summarized version that would provide you with the kind of
> guidance that I know you\'re seeking. Because having sat on your side
> of the table, I know how excited I was to see, wow, you know, there it
> is. There\'s all of that stuff I was always wondering about.
>
> And on the transparency issue, I also am, as a former ethics attorney,
> I\'m very big on transparency, in general, and we are in the process
> of\--I\'m reluctant to say this out loud\--can I say it out loud, Mr.
> Staff Director? We are hoping that by the end of the year we will have
> begun a process of putting all of the MURs on-line, including the
> statements of reasons and all of the public documents.
>
> I hope, now that I have said it publicly, I hope that we are going to
> be able to make that commitment. We are going to have all of them
> on-line by the end of the year, but we are going to start the process
> and fill in over time, and eventually, because I think you\'re right,
> we do need to get that information out there so that not only those of
> you who can, if need be, walk on over here and plow through our
> records in the Public Records Office, but people who are out in the
> hinterlands and don\'t have access to these kinds of attorneys will
> have that available to them.
>
> But I\'m burning up all of my time, and I haven\'t asked a question
> yet. Let me ask you about respondents. Several of you have mentioned
> this issue of how we name respondents, and I think that a lot of
> people have concerns about that.
>
> I guess my question is, and let me direct this first to Mr. Baran, if
> we don\'t name everyone in the complaint who we think could have
> committed some violation at the outset, do you think we are, in a
> sense, violating the due process of those people because we\'re
> actually sort of digging into their activities, and we\'re not putting
> them on notice that we\'re even looking at them at that point, and
> they may, down the road, face an investigation?
>
> MR. BARAN: Well, I don\'t think so, and I think my suggestion sort of
> addresses that concern because what you want to do is you want to
> comply with the statute, which requires you to notify every potential
> respondent in a complaint within the specified time period, and what
> my suggestion is, and it seems to be consistent with your existing
> rules is that it\'s the complainant\'s burden to specify who the
> complaint is against.
>
> Maybe this can be addressed with some formalized rule that says that
> you have to name the respondents in your complaint, if you\'re filing
> a complaint with this agency. That\'s what you have to do when you
> file a complaint with the federal court. You\'ve got to say, \"My
> complaint is against this person or these three people,\" and
> therefore you then send out the notice to the people named
> specifically and unambiguously in the complaint.
>
> That isn\'t really technical notice pleading, because even in federal
> court, you\'ve got to identify who you\'re suing, if you\'re going to
> be suing somebody, and I think that\'s what\'s missing here. You\'re
> sort of putting yourselves in the minds of the complainant and saying,
> well, who is this complaint really against?
>
> And you\'re sort of reading through these letters that may be rambling
> and mention lots of different people and institutions, and then you
> decide, well, we better cover ourselves and send letters to everybody.
> That\'s my sense of what your process is now.
>
> CHAIR WEINTRAUB: I think it\'s probably not quite that way.
>
> Did you want to comment on that, anybody else on the panel, the issue
> of fairness to the respondents?
>
> MR. BAUER: No, the only thing I\'d point out\--it\'s not an objection.
> I agree with you on\--but then of course, if that is indeed the rule,
> it\'s going to encourage complainants to name everybody under the sun
> as respondents.
>
> And so we\'re going to have to suck these poor people into the process
> anyway, which I think puts some pressure on the Commission then, as I
> think its current rules already provide that if there\'s actually no
> basis whatsoever for somebody to be named in the complaint, if the
> person named is not, in fact, implicated in any activity that could be
> said on the facts to violate the statute, then of course an early
> dismissal, a prompt resolution of the matter is in the interests of
> the people who found themselves in that position.
>
> CHAIR WEINTRAUB: I have, well, I have practically no time. Go ahead.
> I\'ll let you\--
>
> MS. MITCHELL: Well, I was just going to say that I think that Jan\'s
> suggestion about a little more guidance to filing a complaint, you
> maybe should, I mean, the regulations on complaint filing basically
> restate the statute, and so it wouldn\'t hurt to come with a little
> more guidance as to the form, as to letting people say here
> who\--define what a respondent is, in layman\'s terms, and maybe allow
> people to list witnesses, possible witnesses who may have information
> so that even at the complainant level, at the very outset of the
> filing of the complaint, a complainant can distinguish between
> witnesses and respondents.
>
> CHAIR WEINTRAUB: I have used up my five minutes, and true to my
> five-minute rule, I pass the baton to the Vice Chairman.
>
> VICE CHAIRMAN SMITH: Thank you, Madam Chair.
>
> I want to just note on a couple of comments that Mr. Bauer you made
> about the perceived insularity of the Commission, and I think it\'s
> worth noting here that, to my knowledge, at least four of the
> Commissioners, and that includes myself, have never represented a
> client before the FEC, and at least three of the Commissioners, not
> including myself, have never represented any client before any
> administrative agency.
>
> I don\'t think that makes them bad Commissioners. It only makes me a
> bad Commissioner on the one criteria. It\'s good that we come from
> different walks of life. It\'s probably good that we\'re not all
> lawyers, for example, but I think it does show the importance of
> getting a formalized procedure like this where we can get some good
> input from those who do represent people in these kinds of hearings.
>
> Not to waste more of my time, pick up a little bit on the Chair\'s
> questioning. I see the issue, Mr. Bauer, that you raised about Mr.
> Baran\'s comment, that then what if respondents name everybody under
> the sun. I suppose we could just delete some of those people on our
> own, but I thought that your written comments were somewhat helpful. I
> wonder if you wanted to perhaps elaborate on them a little bit.
>
> You suggest that the criteria should basically be whether or not the
> facts in the complaint state a complaint against that person; is that
> correct?
>
> MR. BAUER: That\'s correct.
>
> VICE CHAIRMAN SMITH: And so the answer would be we wouldn\'t really
> have a notice problem if we weren\'t naming other people respondents
> because we wouldn\'t, I mean, why would we be looking into their
> background anyway as potential witnesses?
>
> MR. BAUER: That\'s right. In other words, if they just happened to be
> in the vicinity, but taking the facts of the complaint, it\'s true, it
> wouldn\'t make out a violation against them. Their receiving a letter
> from the Federal Election Commission doesn\'t really make any sense.
>
> VICE CHAIRMAN SMITH: Well, I think that might be some way that we can
> work, but I do agree with Mr. Baran that perhaps sometimes demanding
> that folks, if you meant this person to be a respondent, you should
> have named them as a respondent would be helpful as well.
>
> But, Mr. Baran, I want to ask you a very general question because
> we\'re at the beginning of the day, and I do want to raise this
> argument about this sort of due process required, and the arguments
> were, and a couple of you have addressed this a little bit, well, we
> can always do more, but the arguments that have been made as well, the
> Commission, the person can always go through the whole investigation,
> and then spend their money and go to court, and it has to be de novo.
> So then they\'ll get the process if they\'re willing to do all of
> that.
>
> And I\'m directing this to you, Mr. Baran, because that was addressed,
> I don\'t know if your memory works this finely, but it was addressed
> by Mr. Allen in his testimony before Congress, and to some extent in
> the bipartisan report that the ABA prepared some 20 years ago. I just
> wondered if you wanted to address that argument more directly as to
> the importance of the Commission decisions on respondents.
>
> MR. BARAN: Well, I have two comments in that regard.
>
> Number one, as you noted in your opening statement, this agency\'s
> mandate from the statute, and presumably its primary enforcement goal
> is to settle cases, to conciliate and to get people to end the process
> here at the agency.
>
> And as we all know, it\'s much less expensive and time-consuming to do
> that here than it is in court. And to the extent that you can adopt
> procedures that sort of promote that, I think you would be not only
> promoting your statutory mandate, but you\'d probably, in the long
> run, will be saving some resources, and that\'s the spirit in which a
> lot of these recommendations I think are being made. You know, what\'s
> wrong with having a hearing if it may lead to settlement?
>
> None of us can guarantee that because we\'ve never experimented with a
> hearing. We don\'t know how it\'s going to work, but we do know
> that\--I know, from my own personal experience, that I\'ve handled
> cases here that should have been settled, but went to court, and it
> could have been because there were principles that were involved or
> intractable demands for high civil penalties or because the client
> simply just didn\'t feel that they got a fair shake here.
>
> So let\'s go to a judge, and depending on the case, if you have an
> exorbitant civil penalty demand, it\'s usually less expensive to
> litigate. Maybe those concepts will come through in an oral hearing
> and will give not only the respondent a sense that they\'ve gotten a
> fair shake, but it might give you an insight, because of your
> insularity, as to what\'s driving that particular case, and you will
> see an avenue possibly for settlement with that particular respondent.
>
> VICE CHAIRMAN SMITH: Thank you.
>
> CHAIR WEINTRAUB: Time is up. Thank you, Mr. Vice Chairman.
>
> Commissioner Thomas?
>
> COMMISSIONER THOMAS: Thank you, Madam Chair, and thank you all for
> coming. I guess I\'ll start with the "naming of respondents" issue.
> This issue has surfaced here, as some of you may be painfully aware, a
> few times. I think perhaps the most difficult instance, there was an
> enforcement case where Senator McConnell was named as a respondent,
> and he was sent a copy of the complaint early on, and his counsel I
> think was very upset that he had been even named as a respondent and
> sent that complaint.
>
> Some of the Commissioners I think have felt that the Counsel\'s
> Office, in that particular matter, overstepped and that even resulted
> in our then-General Counsel responding to the Statement of Reasons
> that they issued on that issue, but I think it was kind of
> interesting.
>
> This is for you, Ms. Mitchell. Our General Counsel responded, \"At
> this stage, one of our major concerns is to ensure that all relevant
> persons be given their due process notification, as required by
> statute.\"
>
> So, I mean, I hope you appreciate that we\'re sort of caught betwixt
> and between. I can recall a matter where Ben Ginsburg was representing
> a lot of clients, and his major concern was that we had not treated a
> bunch of folks as respondents who should be sent a copy of the
> complaint early on, and he asked that we rescind our internal
> generation Reason to Believe notifications because we hadn\'t properly
> sent the complaint at the outset.
>
> So it\'s not a perfectly easy system. I think the use of proper noun
> system is not the way to go. I think the way that Bob Bauer describes
> it is pretty close to the way that we actually do it. Our mental
> process is we\'re trying, as best as possible, to opine who has been
> alleged by the statements in the complaint to have possibly violated
> the law? We want to give them notification so they will be brought in
> and given a chance to respond all through the process.
>
> Any comments?
>
> MS. MITCHELL: Well, I have one comment, having represented someone who
> was named as a respondent through internally-generated and
> administrative consolidation, and the only information provided was a
> copy of the complaint.
>
> Well, I think the important thing, it comes back to, when we\'re
> talking about due process, notice and hearing. Notice. Not just a
> piece of paper just to be able to say that you sent somebody
> something, but if there are facts on which a person is now to be named
> a respondent, making certain that that person has the facts on which
> the Commission is relying to name the person as a respondent, if the
> person is not named at the outset.
>
> And so I think coming back to that I can just say none of these kinds
> of hurdles are insurmountable, if you operate from a principle of
> providing ample notice of the facts which have swept someone into the
> process, and giving people, and I do think giving complainants the
> opportunity to distinguish between respondents and witnesses, because
> right now that\'s not possible.
>
> So I think that there are certainly some I think relatively simple
> steps that you can follow to try to come to a solution or at least a
> change in the process, but again if you operate from the principle of
> providing notice and making it transparent, I think that some of these
> other things will fall into place. And once you make a change, it
> doesn\'t have to stay that way forever. You can make additional
> changes. It\'s hard for us to make recommendations, and we don\'t even
> know what your process is.
>
> MR. ELIAS: I just wanted to add one thing to that. I thought that the
> standard that the Vice Chairman and Mr. Bauer discussed about actually
> stating a cause of action is very sensible, from everyone\'s
> perspective.
>
> Sitting at this table are not just people who defend FEC MURs, but
> they are people who initiate them. And it is not a secret that if I
> wanted to cause trouble, I could say, you know, and obviously, forgive
> me, Cleta, I could say, you know, \"Cleta Mitchell set up the
> following 527 that\'s raising and spending illegal corporate money.\"
> Now, Cleta, she\'ll be a respondent, the organization will be a
> respondent.
>
> And then if I simply go on to say, \"And this is not unlike other
> organizations that have done this in the past like the XYZ
> organization, the ABC organization, the DFE organization and the HIJ
> organization,\" I promise you ABC, CDE, HIJ will all get named
> respondents as well.
>
> So it\'s not just that the Commission is taking a\--the current
> process takes a value-neutral approach to this. It actually, in some
> respects, encourages the exact concern that one of the Commissioners
> was expressing about how do you, you know, how do you make sure that
> you\'re not sweeping up too much and encouraging people to sweep up
> too much.
>
> The current system actually does incentive sweeping up too much
> because it is so easy to cross the threshold. When you draft a
> complaint, it\'s so easy to cross that threshold to know that you\'re
> going to generate a lot of respondents, for whom you\'re actually,
> when you read the complaint, you\'re not actually saying they did
> anything.
>
> So I think that the standard that the Vice Chairman laid out I think
> is one that most accurately strikes that middle ground.
>
> CHAIR WEINTRAUB: Commissioner Toner?
>
> COMMISSIONER TONER: Thank you, Madam Chair.
>
> I want to start by asking just a couple of issues, practical
> questions. Does everyone on the panel concur that the agency should
> have formalized procedures to provide to the respondents the full
> factual record prior to a probable cause determination? Is there
> consensus on that?
>
> MS. MITCHELL: Well, at the very least, as in a motion for summary
> judgment, the facts on which the Commission is relying or the Office
> of General Counsel is relying to make their probable cause
> recommendation, at the very least, all of those facts, and the
> supporting evidence support for those facts.
>
> COMMISSIONER TONER: And should that be done regardless of whether the
> respondent requests it. It\'s an across-the-board procedure that\'s
> available to everyone?
>
> MS. MITCHELL: I think so.
>
> COMMISSIONER TONER: Do you think that we should also produce to
> respondents any exculpatory information that may exist?
>
> MS. MITCHELL: Yes.
>
> MR. BARAN: Yes.
>
> MR. BAUER: Yes.
>
> MR. ELIAS: Yes.
>
> COMMISSIONER TONER: Is there any good reason not to do that, in your
> mind?
>
> MS. MITCHELL: No.
>
> MR. BAUER: No, but I think that it is only too instructive that it\'s
> a question that has to be asked at this hearing.
>
> COMMISSIONER TONER: The other sort of practical issue that\'s been
> talked about a lot in the comments is access to deposition transcripts
> by witnesses and respondents. Do you believe that we should make the
> judgment that, as in district court or any other legal proceeding,
> witnesses and respondents should be able to retain copies of their
> sworn testimony?
>
> MR. BARAN: Absolutely.
>
> MS. MITCHELL: Absolutely.
>
> MR. BARAN: Well, I would say that providing deposition transcripts at
> the probable cause stage is absolutely necessary, but there are
> investigative justifications for not providing a transcript to a
> witness immediately after the testimony and during the course of the
> investigation.
>
> Of course, the witness will not sign any transcript during that period
> of time because they don\'t have access to it or don\'t have the
> access in a way that is convenient or justified, but once the
> investigation is over, the reason for withholding deposition
> disappears.
>
> I mean, the reason for depositions not being provided is to discourage
> certain consultations and conspiracies, although it\'s not unusual in
> any sort of defense situations to have mutual defense agreements, and
> that\'s perfectly appropriate, but whatever the reason is for not
> providing a deposition transcript immediately after a deposition
> disappears by the time the investigation is over.
>
> And the Commission is now relying on the General Counsel\'s Office for
> a recommendation of probable cause based on the facts, as the General
> Counsel sees them, that have been accumulated during the course of the
> investigation. At that point, all of those facts should be provided to
> the respondent in order to provide a defense.
>
> COMMISSIONER TONER: Well, as has been noted previously, the current
> practice being that respondents and witnesses can come to the
> Commission and look at their sworn testimony, but aren\'t able to take
> it with them. What, if anything, do you think is lacking in that
> process?
>
> MR. BARAN: Well, I think it\'s unnecessarily inconvenient. I mean,
> it\'s as inconvenient to respondents as it would be for all of those
> deposition transcripts to be in my office and require your General
> Counsel to come over and take a look at them in order to prepare his
> probable cause brief. I mean, I don\'t understand the reason for that.
>
> MR. BAUER: I should point out with this, with the regulated community,
> I speak only for myself\--I don\'t think, Marc, you would
> disagree\--we don\'t view it only as an inconvenience, we view it as a
> matter of principle, and in most instances, we tell our clients not to
> come. We just tell them don\'t do it.
>
> I mean, fundamentally, we view that as an offense against their
> rights. It\'s actually fairly demeaning that they have to travel
> across town and allowed only restricted access to their own testimony.
> So, as a matter of principle, we simply advise them not to do it.
>
> MR. ELIAS: Right. And it is particularly the case, just to add, in the
> case of people who are merely witnesses. You know, they receive a
> subpoena that tells them they have to come to Washington, D.C., to
> give a deposition.
>
> Typically, it comes with a cover letter that says, \"You are not a
> respondent. You are only a witness in this investigation,\" and then
> they are being told that if they want a copy of what it is they have
> said under oath, they can\'t have it, but that they are welcome, at
> some point in the next 30 days, they\'ll be contacted, and they can
> fly back to Washington, D.C., to review this deposition transcript.
>
> I think, you know, I am actually surprised, at one point I had a
> dialogue with one of the members of the General Counsel\'s staff, some
> number of years ago, when I first heard about this, I was
> flabbergasted that no one had ever gone to subpoena enforcement, I
> mean\--
>
> COMMISSIONER TONER: On this issue.
>
> MR. ELIAS: I will just speak for myself. If ever you have opportunity
> to subpoena me, personally, to be a witness in something, if I didn\'t
> get\--I would never give a deposition.
>
> COMMISSIONER TONER: You\'ll go to district court.
>
> MR. ELIAS: I\'d go to district court and let you explain it to the
> judge why it is I don\'t get a copy of the deposition that I\'ve just
> given.
>
> COMMISSIONER TONER: Let me ask you, do you think, in your professional
> estimation, that if witnesses and respondents were provided
> across-the-board access to their transcripts that they could take with
> them, that they might be more cooperative, might be more forthcoming
> with relevant information?
>
> MR. ELIAS: Yes.
>
> COMMISSIONER TONER: Does the rest of the panel concur in that
> judgment?
>
> MR. BAUER: Yes. I don\'t disagree, but I would say, even if it\'s true
> that some would not be, it shouldn\'t matter.
>
> MS. MITCHELL: Right.
>
> COMMISSIONER TONER: Thank you.
>
> MR. BAUER: This isn\'t a tactical issue; it\'s a due process issue.
>
> MS. MITCHELL: Right.
>
> CHAIR WEINTRAUB: Thank you, Commissioner Toner.
>
> Commissioner McDonald?
>
> COMMISSIONER McDONALD: Madam Chair, thank you again. I thank all of
> you for coming. The Vice Chairman and I had a discussion just prior to
> the session that one of the frustrating things is there is so little
> time and so many things we\'d like to ask and follow up on, but I\'ll
> try to just ask a few fundamental questions and try not to go over
> necessarily the ground people have already covered.
>
> I think one of the things I\'m really interested in, because it was
> alluded to earlier about the Alternative Dispute Resolution and what a
> wonderful program it\'s been, and we certainly have very capable and
> fine people running the program, but there was a kind of a constant
> theme throughout these comments that the Commission spends its time on
> a lot of cases that really it shouldn\'t be spending its time on, and
> that\'s not a new criticism of us. That\'s been a criticism that has
> gone on for a long time, even longer than I\'ve been here.
>
> AUDIENCE PARTICIPANT: \[Off microphone.\] \[Inaudible.\]
>
> COMMISSIONER McDONALD: I heard that.
>
> \[Laughter.\]
>
> COMMISSIONER McDONALD: I guess what I wanted to ask you all because,
> you know, it\'s a no-fault system, and we understand that, and we
> spend well over a half-a-million dollars on this process, maybe more
> now, maybe more next year.
>
> The very nature of the cases are cases that this Commission has really
> deemed, for all practical purposes, as unimportant. I mean, that\'s
> the issue. That\'s what we are confronted with. And so I guess one of
> the questions I\'d like to ask is\--to any of you who would care to
> answer\--what\'s the downside in taking those cases, and rather than
> putting them in a process and spending that kind of money, maybe, and
> it\'s an internal issue, but it\'s also a legal matter, and turning
> those resources to something else.
>
> And so we, by our own admission, say, \"Look, this just isn\'t
> something we\'re particularly interested in\"?
>
> Would somebody care to comment who thinks positively about it?
>
> MS. MITCHELL: Well, I actually do think that the Commission needs to
> have some criteria, some available criteria, of which we have notice
> of what the criteria is, for distinguishing, and I think that there is
> nothing wrong with that. Because all complaints are not equal, all
> violations are not equal.
>
> Systemic violations that can be addressed expeditiously\--we\'re
> moving into an election cycle. If there are things that are unfolding
> that appear to be systemic violations of law, it seems to me the
> Commission has an obligation to take note of that and attempt to deal
> with that now, sooner, rather than later; you know, rather than four
> years after the election, when the statute is about to run, and the
> witnesses have died, and now you\'re trying to deal with something way
> later, after everybody\'s forgotten.
>
> So I do think that there is a value in that, but again I come back to
> give us notice of what the criteria is that the Commission has adopted
> with regard to Category A, Class A felonies versus Class B
> misdemeanors. I mean, it\'s a common type of practice.
>
> COMMISSIONER McDONALD: Then, like in our MUR dump, Cleta, for example,
> obviously, we determine a lot of cases that we simply either can\'t
> get to or are unimportant vis-a-vis everything else because of the
> priority system we set up.
>
> I guess I am asking that, in your own experience, with your own
> clients, do you think that there\'s just not a diminishing return at
> some point, where, you know, you kind of get a traffic ticket, but\--
>
> MS. MITCHELL: Well, that\'s right. But you can always do what the EEOC
> does, which is give the complainant the letter of Right to Sue. I
> mean, if people feel as though they have not gotten whatever they need
> from you guys or from this Commission, they can take it to court if
> they think they can make their case, but I think that it\'s important
> to try to distinguish and to try to deal with some systemic problems
> early, if you can.
>
> COMMISSIONER McDONALD: Anyone else want to comment on that
> particular\--
>
> MR. BARAN: Well, my sense is that there have been several developments
> since this 1982 ABA report that addresses two things:
>
> One is the undue length of time of investigations and priority of
> resources. Since that report, you have not only the Alternative
> Dispute Resolution, but you\'ve got your Enforcement Priority System,
> and of course Congress passed an Administrative Fine System.
>
> So a lot of the pressures that existed 20 years ago I think have been
> alleviated, plus the Commission has recognized that it, like any
> prosecutorial agency or prosecutor, you can\'t go after everybody, and
> you have to prioritize, and you have to distribute resources.
>
> And when it comes to Alternative Dispute Resolution, which is
> something I have not personally studied in terms of how it has
> developed and what its caseload is over the last couple of years that
> you\'ve had this system, I\'m assuming that that is an efficient use
> of your resources to handle a relatively large number of low-priority
> cases. And if you didn\'t have that, you presumably would be
> substituting two things:
>
> One, perhaps a couple of cases at the margin that would be handled
> through your normal enforcement process, and the rest of them would be
> dismissed through your EPS system.
>
> COMMISSIONER McDONALD: Or maybe just the latter, which is my concern.
>
> MR. BARAN: It could be.
>
> COMMISSIONER McDONALD: Thank you.
>
> CHAIR WEINTRAUB: Commissioner Mason?
>
> COMMISSIONER MASON: Thank you, and thank all of the members of the
> panel.
>
> I wanted to start with Mr. Baran. You raised a concern about I\'ll
> call it the \"reputational impact\" of Commission findings, which I am
> sympathetic to. And I want to ask, recognizing it would take statutory
> change, whether a significant amount of that, to the extent that we
> have to find RTB to open an investigation, and by definition, we
> don\'t know, when we open an investigation, whether somebody broke the
> law or not. That\'s what we\'re trying to find out.
>
> And then we conclude, well, either they didn\'t break the law or we
> probably didn\'t break it or we can\'t find the evidence that they
> broke it, and we end the investigation, and then everything is closed
> out.
>
> To what degree would your concerns be addressed if we simply changed
> that terminology or even almost made the formal motion disappear and
> changed the statute to say that the Commission can\'t open an
> investigation without this vote, and simply leave it at that; so that
> we then wouldn\'t issue a press release that said, not a press
> release, but a statement that said the Commission had found reason to
> believe, but had taken no further action?
>
> MR. BARAN: That would certainly be an alternative to take seriously
> and look at. I\'m trying to think whether that has, in fact, been
> recommended either by this\--
>
> COMMISSIONER MASON: The Commission has recommended it repeatedly. If
> you all agree that it would be a good thing, we might get a hearing on
> Capitol Hill for doing that.
>
> MR. BARAN: Well, as one, I would endorse that type of a recommendation
> and legislative change so that the commencement of a formal
> investigation is not seen as a finding of guilt, even though you
> don\'t intend it to be, for the reasons you just stated.
>
> COMMISSIONER MASON: I want to ask for all of the panel whether that
> concern about the reputational impact and other concerns that I think
> come through mostly in some of the written testimony about the
> Commission\'s conclusions and what it is we\'ve concluded might be
> addressed by a more frequent use of the dismissal motion.
>
> I don\'t know if any of you have noticed, but we have, occasionally,
> in recent times, used a motion to dismiss, which is mentioned in the
> statute. In other words, would it be a more satisfactory outcome to
> you, rather than reason to believe, no further action and close the
> file if the Commission concluded a significant number of its cases
> with a motion to dismiss?
>
> MR. BARAN: Well, if the Commissioner means that the press release and
> the record will then say that the case was dismiss, yes, that would be
> very helpful on this point.
>
> MR. BAUER: I concur.
>
> MS. MITCHELL: I agree.
>
> COMMISSIONER MASON: A couple of people have already commented on the
> respondent notification. Again, I can share those concerns, and I see
> sort of two ranges; a problem, if you will, in simply allowing the
> respondent to bound the case.
>
> If we get a respondent who complains that a corporation has made an
> impermissible contribution to a named political committee, a
> candidate, party committee, I think you would all agree, but let me
> know if you don\'t, that in that circumstance we sort of need to name
> the recipient campaign as a respondent, even if we don\'t have any
> information about whether the campaign knew because they\'re
> necessarily involved, and we need to know. We need to point them on
> notice at that point.
>
> On the other end of the range is Marc\'s example of this campaign did
> something and a whole lot of other people are doing it too.
>
> And I wonder if you might try to be a little more specific between
> those two ranges as to when it is we would name respondents who may
> not be specifically captioned in a complaint, but who are clearly
> involved.
>
> MS. MITCHELL: Well, I think that this goes to one of the points I made
> in my comments, which is a little bit round-about-way of answering
> your question, but I think the Commission, particularly with the new
> enhanced criminal and civil penalties under BCRA, I think the
> Commission needs to define more specifically the potential, not only
> the duties of the treasurer of a political committee, but also the
> potential liability of various people with regard to the political
> committee.
>
> The new statute specifically provides for penalties for the candidate,
> but it\'s hard to tell at what point the candidate really has
> liability or culpability. And so I think if you define some of those
> roles more specifically, it will help determine, help the Commission
> determine who, and when, in a complaint certain parties are named as
> respondents.
>
> CHAIR WEINTRAUB: Thank you, Commissioner Mason.
>
> Mr. General Counsel, your turn.
>
> MR. NORTON: Thank you, Madam Chair.
>
> Thank you, panel, for coming, for your well wishes.
>
> I wanted to raise a couple of concerns or questions that have been
> raised about this idea of having a hearing at the probable cause stage
> and ask if you could react to some of these.
>
> One point that\'s been raised is that, in the last few years, we
> looked at how many cases in conciliation we\'ve settled pre-probable
> cause and post-probable cause. And the figures that I have are 75
> percent have been settled pre-probable cause. So one concern that\'s
> been raised is that providing the opportunity for hearing would
> provide an incentive to go to hearing and a disincentive to resolve
> the case before that opportunity.
>
> A second point or concern that\'s been raised is that providing an
> oral hearing would provide a significant benefit to those respondents
> with D.C. Counsel or the burden perhaps and even a disadvantage to a
> co-respondent who doesn\'t have D.C. counsel.
>
> And the third or a third is kind of what we do in multiple respondent
> cases, where we have confidentiality obligations, and respondents may
> have diverse or even opposing interests, and it seems to me we could
> face the specter of having multiple hearings in order to accommodate
> those interests.
>
> And so I think all of you have suggested a hearing would be a good
> idea. How would you address\--maybe I\'ll start with you, Ms.
> Mitchell\--how would you address some of these concerns about having
> hearings at the probable cause stage?
>
> MS. MITCHELL: Well, I think that the reason that you settle 75 percent
> or conciliate 75 percent at the pre-probable cause stage is because
> people probably thought that there was a reason to do that, it was
> cost-effective, and I don\'t think that will change because it is an
> added expense to go further in the process.
>
> So, it seems to me, that coming back to the guiding principle, as I
> said, at the outset, if the guiding principle is due process, that
> means notice, that means hearing. And either the Office of General
> Counsel should not be allowed to present its arguments to the
> Commission at the probable cause stage or both sides ought to be able
> to present argument to the Commission.
>
> And with that said, if that\'s the principle and that\'s the decision,
> then I think that you just have to figure out a way to deal with all
> of this, and if it takes more time, these details, that due process is
> that pesky little thing that probably is a little more cumbersome. It
> would be a lot easier to just issue an edict, but I don't think that
> any of those concerns are sufficient to warrant not providing the
> opportunity for hearing.
>
> MR. NORTON: Mr. Baran?
>
> MR. BARAN: I would approach the question from a different perspective.
> I wouldn\'t start with an analysis of all of your existing probable
> cause and pre-probable cause conciliation. I would start with all of
> your cases that you filed and work backwards, and look at all of the
> cases that you filed in court and analyze your questions in that
> context.
>
> How many of them would have asked for a hearing? Were there multiple
> parties that would have created confidentiality issues? And would
> there have been a possibility of a settlement as a result of a hearing
> which would have avoided you having to go and file that lawsuit?
>
> I haven\'t done that analysis myself, but obviously one of the
> objectives, other than the due process argument supporting an oral
> hearing is will this save you some time and resources? Will there be
> fewer cases you\'ll have to file if you provide these types of
> additional opportunities in the administrative process?
>
> I don\'t know the answer to that, but I think that\'s the analysis I
> would make.
>
> MR. NORTON: Mr. Bauer?
>
> MR. BAUER: Well, I would like to bring still a different perspective
> to it, which is that I don\'t think the question of whether the
> hearing should be provided should hinge on the overall management
> benefits to the Commission, which is to say, if you add an
> instrumental evaluation to the discussion, and you say, well, if we
> don\'t provide the hearings, then we are going to improve our ability
> to settle cases quickly, in my judgment, you\'ve contaminated the due
> process principle with a series of considerations which I called
> instrumental, but they\'re management related.
>
> And while I don\'t think those are unimportant, I understand you have
> an agency to run, it has a very sort of sour ring to my ears, that my
> due process rights will hinge on the success rate you have in settling
> your cases.
>
> Secondly, I wouldn\'t trouble terribly about providing incentives to
> people to hire D.C. counsel. I think that\'s fine.
>
> \[Laughter.\]
>
> MR. NORTON: Well, I suspected that may have been the case.
>
> MR. BAUER: Thirdly, as far as the way in which the thing could be
> structured, I agree with Cleta that you can find a way, it\'s going to
> take some time. I\'m not certain, however, that you can\'t make some
> rough cuts about the availability of a hearing process, and sort out
> when they\'d be made available on a rational basis and when they
> wouldn\'t:
>
> Those, for example, who have to defend against a knowing and willful
> violation which, by the way, they may be the respondents who are least
> likely to want a hearing, by the way, I should mention, but
> nonetheless you could say knowing and willful cases are ones where
> respondents have a significant incentive to seek the ear of the
> Commissioners;
>
> Level of dollar violation;
>
> Implication of core violations of the statute. I don\'t think somebody
> who has a nonfiling issue before the Commission should presumably need
> a hearing, and I\'m using a bad example, but there are other sort of
> more trivial cases where you could easily see devising criteria that
> would exclude them from the hearing process.
>
> So I think there is a way to do this, and I\'m not suggesting\--we
> haven\'t designed it for you, and in that sense I\'m arguing something
> to you that I probably don\'t have moral authority to argue. We don\'t
> have something in front of you showing you the path to that goal. But
> it\'s hard for me to imagine, at the moment, that it would not be
> feasible.
>
> CHAIR WEINTRAUB: Mr. Staff Director?
>
> MR. PEHRKON: Madam Chair, thank you. And in response to your question
> earlier as to whether or not we would have a system available for the
> textual search of MURs, by the end of the year, the answer is, yes,
> and we will start putting this information up this year, and we will
> continue for the time\--for earlier periods of time. So that is on the
> boards for being accomplished.
>
> So welcome to the panel. Thank you all for being here today. Many of
> my questions have already been answered, but I was intrigued by Ms.
> Mitchell, in one of her comments very early on about the treasurer she
> has been speaking to, and the complexity of the filing and the
> difficulty of following all of these rules.
>
> One of the things that we see from our end is many of the same
> participants are back again, whether it be in the audit process or the
> MUR track process or the complaint process.
>
> So one of the questions I have to you is how do we go about addressing
> these issues, solving them, particularly with the players who are
> ongoing? An area of particular concern\--
>
> MS. MITCHELL: Repeat offenders, you are saying.
>
> MR. PEHRKON: Yes.
>
> MS. MITCHELL: Well, I think it is worth the Commission\'s while to
> devote some time and attention to thinking about the whole range of
> establishing some written guidelines and procedures for
> responsibilities and liabilities of treasurers, candidates, vendors.
>
> And I would see nothing wrong with having some, as part of this effort
> that Commissioner McDonald made reference to, repeat offenders. If you
> are seeing some certain individuals or entities which continually
> violate or flaunt the law and maybe view the fines as a cost of doing
> business, I mean, that\'s not acceptable. And there\'s nothing wrong
> with the Commission including that as part of some guidelines on part
> of the enforcement, as part of the enforcement process. So, at some
> point, a repeat offender, it seems to me, crosses over to knowing and
> willful.
>
> But, again, I want to make some reference that, again, publishing the
> Enforcement Procedures Manual would be very helpful. I mean, maybe you
> have some things contained in that that I don\'t know, and talking
> about D.C. counsel versus outside D.C., there are already, as I
> mentioned in my comments, two classes of respondents: those who have
> seen the \"Holy Grail\" Enforcement Manual and those of us who have
> never worked here and haven\'t seen it. I was shocked to learn that
> there was such a thing.
>
> COMMISSIONER McDONALD: How did you learn that?
>
> \[Laughter.\]
>
> MS. MITCHELL: Someone who used to work here.
>
> COMMISSIONER McDONALD: I was going to ask you did Paul give you a good
> understanding of it?
>
> \[Laughter.\]
>
> MS. MITCHELL: Exactly. But\--
>
> MR. ELIAS: I just wanted to follow up with one quick sentiment, which
> echoes, in part, what Cleta is saying and something that Mr. Bauer
> actually said in his opening statement.
>
> There are two categories of entities that wind up before the
> Commission, and I think it\'s important to treat them separately, and
> this may actually go slightly beyond the mandate of today, and frankly
> into some of the ex parte rule issues.
>
> One of them is the chronic violator. They are a treasurer for a House
> committee in Tulsa, Oklahoma, they violate the law, and then they
> become the treasurer of a PAC in Tulsa, Oklahoma, it\'s someone who is
> a chronic violator.
>
> The other, though, which many of us here have represented, are ongoing
> entities. These are entities, they may be state parties, they may be
> national parties, they may be officeholders or PACs that have ongoing
> existence, and they are chronic in the sense that they\'re repeat, but
> they\'re not chronic in the sense that they are, by volume of their
> activity, oblivious to the law or ignorant to the law or don\'t take
> proper steps to comply.
>
> In fact, they are oftentimes the ones who have the most robust
> compliance operations, but yet because they are so active so often,
> and so visible so often, they more often wind up before you.
>
> And one of the things, which is what I wanted\--
>
> CHAIR WEINTRAUB: You keep defending your clients, though, Mr. Elias.
>
> MR. ELIAS: Well, one of the things I have put in a plug for in the
> past to some of you, I promise none in the ex parte context, is I was
> struck the other night\--I saw Mr. Toner\'s, something Mr. Toner said
> before Mr. Bauer reminded me of this\--I was struck the other night, I
> saw Commissioner Powell on giving a TV interview about the FCC recent
> rulemaking, and one of the things he said struck me.
>
> He said we spend more of our time talking to various interested
> parties who we regulate, that we actually have to cut that back a
> little bit; because we do so much of it that we don\'t have enough
> time to actually sometimes think about the rules we want to
> promulgate.
>
> And I thought, boy, what an idea; the idea that the Commissioners
> actually talk to the people that regulate it.
>
> One of the ways to deal with, at least the institutional interests
> that wind up before the Commission would be for your all staff or OG,
> for your staff, to interact with the regulated, the regulated to
> interact with you, for them to understand what it is you don\'t like
> about what they\'re doing in an informal way, not through the MUR
> process, for them to educate you about why they\'re doing it and why
> they see life in that way, and try, in that way, to actually take out
> of the enforcement process entirely certain categories of things which
> are simply institutional interpretations of the law.
>
> And I think to get back to something Cleta said, you\'re going to see
> more of that now with BCRA. You know, the Democratic National Party
> may interpret it one way, the Republican National Party may interpret
> it a slightly different way, and the General Counsel\'s Office may
> interpret the same provision a slightly different way, and having
> dialogue on some of those things might actually prevent the
> enforcement process from getting bogged down with some of those BCRA
> cases.
>
> MR. BAUER: May I move for an addendum to that comment, since this
> panel has been exceptionally disciplined, and it\'s only 11:30? This
> is a very important point.
>
> I recognize, from your end, and one of your number once explained to
> me this in vivid terms, and we understand perfectly. While we come
> before you right now bristling with outrage about due process
> principles and whatever, and I understand our clients don\'t always
> behave terribly well, and I understand that we don\'t always behave
> terribly well, we\'re defense lawyers, we get frustrated, we don\'t
> like to lose, we ask for something that is denied to us. We find that
> unacceptable, and so we revert to infantile behavior, and we
> apologize, in advance, for all of those episodes of improper behavior.
>
> MS. MITCHELL: Is this confession?
>
> \[Laughter.\]
>
> MR. BARAN: It\'s his life story.
>
> MR. BAUER: I just will not grow up.
>
> CHAIR WEINTRAUB: He knows I\'ve heard all of his tirades anyway.
>
> \[Laughter.\]
>
> MR. BAUER: And so I want to say, and I really mean that, because
> we\'ve reflected on that, and we all understand that sometimes it\'s
> hard for us to see what you have to do and how you approach us.
>
> On the other hand, I do want to say that I do think it is surprising
> the degree to which your side doesn\'t understand an awful lot about
> what our side does for a living; I don\'t mean the lawyers now, I mean
> our clients.
>
> CHAIR WEINTRAUB: Right.
>
> MR. BAUER: We know only too well what we do for a living.
>
> Our clients engage in activities that sometimes, in colloquies with
> the General Counsel\'s Office, in an informal level, comes to them as
> an immense surprise.
>
> We\'ve been asked questions by very capable people who have been open
> to the answers\--this is not a criticism, it\'s an
> observation\--questions about Get Out The Vote activities, and ground
> operations, and why we spend money on television that reflect genuine
> lack of familiarity with the political process and a certain degree,
> if I might say, of media-inspired suspicion.
>
> CHAIR WEINTRAUB: That\'s right.
>
> MR. BAUER: And I don\'t think that having a \"back and forth\" would
> necessarily make them full-throated supporters of the partisan
> political process, but it would reduce the opportunities for the sort
> of misunderstanding at an empirical level that I think does sometimes
> make it difficult for us to appreciate what you do and for you to
> fully understand, as you make your decisions, what it is that we do.
>
> CHAIR WEINTRAUB: And I appreciate that, and I am hopeful that today is
> not a one-time event where, you know, okay, we\'ll invite you all in,
> you can talk to us today, and then we\'re never going to talk to you
> again. I really do think that we need to establish a better dialogue.
>
> COMMISSIONER McDONALD: We\'ve got to talk to them again?
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: Well, maybe not you, Commissioner McDonald.
>
> MR. BARAN: If you adopt our recommendation for a hearing, you will.
>
> \[Laughter.\]
>
> MS. MITCHELL: If I might add just one quick, it\'s in my comments, but
> I would direct the Commission to look at that because I want to echo
> what Bob has just said.
>
> Any of us who have ever been in a campaign know, we know that lots of
> what happens is not intentional violation of the law, it\'s just
> trying to win an election, and it is not\--
>
> CHAIR WEINTRAUB: By whatever means necessary?
>
> MS. MITCHELL: Well, you know, to do my job, and not having any clue
> about that little purple book of regulations somewhere.
>
> And I do think I\'ve had the same experience with, I was thinking of
> this when Commissioner Thomas was speaking about the staff training,
> it wouldn\'t hurt the staff to spend a little time in a campaign to at
> least understand the difference between\--reporters don\'t do it, and
> certainly members of the staff sometimes simply do not have an idea
> about why it is that people wear these funny pins and hats and do this
> stuff just because they really do believe in the process.
>
> And I think that\'s a pretty important type of background and
> training, and I would urge you to dispatch some of the staff to some
> campaigns, with the promise that they can\'t come back and institute
> Commission complaints by things that they\'ve seen.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: We\'re not doing as well on time as you think we are
> because we have another whole round of questions to go through.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: Since I\'m up next, I guess I\'ll follow up on that.
>
> I felt that was a very interesting suggestion when I saw it in your
> written comments. My concern there is how could we possibly eliminate
> the appearance of bias, then, when our own staff are out there working
> on campaigns? I mean\--
>
> MR. BAUER: We will not object. You put as many as you want into
> Cleta\'s campaigns, no problem.
>
> \[Laughter.\]
>
> MR. ELIAS: I think Cleta\'s suggestion is a very good one, but let me
> restate it much more modestly, much, much more modestly. Simply having
> a dialogue, an opportunity for the Office of General Counsel staff for
> Commissioners, for Commissioner staff, to talk to Democratic Party
> staff, have them talk to Democratic campaign staff, Republican Party
> staff, Republican campaign staff.
>
> You all have had, and I know this is not supposed to devolve into
> discussions of particular cases, but you\'ve had MURs that have
> revolved around an understanding of nomenclature. What does it mean
> when the Democratic Party says it has a coordinated campaign?
>
> Well, it\'s not a secret. I mean, I\'m here talking about it in
> public. I\'m sure Jan Baran and Cleta Mitchell know what a Democratic
> coordinated campaign is. And I dare say that there would be a benefit
> to having, even if they didn\'t work on the campaign, at least having
> some kind of dialogue so that, and besides it\'s free information for
> the Commission.
>
> I mean, if the Commission decides, for no other reason, it\'s a free
> look into how the regulated work, but I do think, from the enforcement
> context, it would take some of the mystery out of some of the more
> complicated complaints that come in because a lot of the complicated
> complaints that come in are simply lawyers making very, very routine
> things sound awfully sinister, and if this dialogue went on, you all
> might get through those a lot quicker.
>
> CHAIR WEINTRAUB: Let me switch topics here. Marc and Bob, you had
> talked about or wrote to us about releasing documents or filing suit
> before an election, and obviously this is a concept that I\'m familiar
> with from my years as an ethics person that, you know, the Ethics
> Committees have this blackout period right before the election, but it
> is uniquely true of campaign finance violations that they do tend to
> happen very close to the election.
>
> And if we were to impose some kind of blackout period right before the
> election, in terms of publicizing complaints that are filed, we would,
> in a sense, I think be doing a disservice to the public because if
> somebody is out there rampantly violating the laws right before the
> election, doesn\'t the public have the right to know about it?
>
> It\'s on Page 12 of your comments.
>
> And you also refer to the Commission should not run the risk of
> influencing the outcome of an election by the public release of the
> results of an investigation and talk about it as an unresolved matter.
>
> Once we\'ve concluded the investigation, I\'m not sure in what sense
> it\'s unresolved or why we shouldn\'t make that public. So I want to
> let you, offer you the opportunity to talk about that, and also if you
> wish to comment on the Department of Justice guidelines that you so
> tantalizingly alluded to in your comments.
>
> MR. BAUER: Well, let me just begin by saying I don\'t think you need
> to worry about publicizing a complaint before an election. That will
> be taken care of by the free political market amply without your
> participation.
>
> Our concern here, and, Marc, kindly turn to Page 12 where the comment
> appears, is with the Commission releasing the results of the
> investigations on the eve of elections when a party to the matter that
> is being publicized is also involved in the election.
>
> And I don\'t believe, given the typical set of circumstances that
> dictate the timing, that the Commission is necessarily well advised to
> be in that spot. It is obviously something that respondents who file
> complaints ardently hope for the moment they file them, that the
> results will be timely, if you will, and that they will be timed with
> the political process in a way to have maximum impact.
>
> But we want to put before the Commission that if the concern is with
> the politicization of the Commission\'s work, which, by the way, is
> inevitable, which is why I mentioned the publicizing of the complaint
> in the first instance, there are circumstances, like the ones we
> describe here, where the Commission can limit its apparent active
> involvement in that politicizing process.
>
> On the DOJ guidelines, I want to let Marc, who has taken a keen
> interest in this, also, comment, but it is a significant issue. Now,
> there is enormous confusion at the moment in the regulated community
> about the effect of the enactment of the new law on the standards for
> sorting out what would be civilly treated and what would be criminally
> prosecuted.
>
> MR. ELIAS: Yes. I think what we had in mind was that the Department,
> both through, in some areas in written policy, for example, in the
> case of voter intimidation investigations and the like, where they
> have a written policy about not conducting those kinds of
> investigations during the course of an election, and in other
> instances I think more prudential guidelines, where there is a general
> directive that they are not to do things that would ensnare them into
> partisan political elections.
>
> Other than the case where you were up against a five-year statute of
> limitations, and even then there are ways of doing it through tolling,
> it isn\'t self-evident to me why a case has to get resolved\--because,
> remember, the five years will typically happen in the off-year\--why
> you would have to have, for example, a congressional campaign in a
> situation where it is being sued in late October.
>
> I mean, just as a prudential matter, I think the Department of Justice
> takes some efforts to avoid doing things that look like they were
> timed to benefit one side or the other, and it seems to me a
> relatively minor\--it doesn\'t impose a great burden on the
> Commission. I don\'t see how it sets the Commission\'s enforcement
> back at all, and it keeps them out of the suggestion that what
> they\'re doing is being timed to benefit one candidate or another.
>
> This is particularly sensitive, in some cases, because the Commission
> has this longstanding policy of suing people in their district. So
> tied with the fact that they didn\'t bring a lawsuit in Washington,
> D.C., where they\'d also have jurisdiction, but rather did it back in
> the state shortly before an election, it might not be a bad thing for
> the Commission to look at.
>
> CHAIR WEINTRAUB: Mr. Vice Chairman?
>
> VICE CHAIRMAN SMITH: Thank you.
>
> I just want to take a moment to note that since the Chair and the
> Staff Director have mentioned some revamping of our data availability
> and MUR indexing, that I\'m pleased to hear that we\'re still on
> target for at least the end of the year. That\'s been set back
> recently due to a person being hired to perform that task, among other
> things, who the day before his hire told us, well, he wasn\'t going to
> come after all.
>
> CHAIR WEINTRAUB: I think it was the day after he was hired.
>
> VICE CHAIRMAN SMITH: But, anyway, I\'m pleased that\--
>
> COMMISSIONER McDONALD: Based on money.
>
> VICE CHAIRMAN SMITH: I want to ask about something we haven\'t talked
> about before and, Mr. Bauer and Ms. Mitchell, you both mentioned this
> in your comments, and this relates to the Commission\'s use of the
> confidentiality procedures.
>
> I have heard, on many occasions, that the Commission uses those
> offensively, rather than to protect respondents. In particular, I\'m
> going to go back, this is a MUR that\'s not too old\--it\'s since
> I\'ve been on the Commission. It is before the time of our present
> General Counsel\--in which the respondent notes that he was unable to
> get certain witnesses to speak to him and that they would not do so
> because what they told him was they had been told by the Counsel\'s
> Office that they were not allowed to speak to the respondent.
>
> And he writes, \"The staff\'s admonitions to these material witnesses,
> whether clear or ambiguous intentionally or merely inadvertent, have
> directly and materially hampered our ability to prepare a defense. In
> particular, we were prevented from obtaining copies of key documents
> at a time when the documents were in the possession of vendors and had
> not yet been destroyed or turned over to the Commission in their
> original form.\"
>
> It then goes on, \"We wrote to the General Counsel to report the
> staff\'s apparent effort to dissuade witnesses from speaking with
> us.\"
>
> And then we eventually have a response from the then-General Counsel,
> which after a great deal of verbiage, saying, Well, you know, that\'s
> just how we do things, concludes\--they asked him to specifically tell
> these witnesses that you can talk to this respondent, and he
> concluded, \"I do not believe any further action, in response to your
> allegations, is warranted,\" and the witnesses refused to talk to the
> respondent.
>
> I just wonder if you have had similar problems with this, and I do
> then have a follow-up question as to how this might be handled.
>
> MR. BAUER: We have experienced that, there is no question about it,
> and we have tended to be able, in my recollection, and Marc may recall
> other cases where that has not been the case, but we have been able to
> work through it, typically, but it is absolutely true that comments
> like that made to respondents or to witnesses have often significantly
> affected, adversely affected their willingness to share information
> that would be necessary, we believe, to the representation of our
> client.
>
> So, yes, that\'s one of the reasons we raised it here is because we
> think that\'s unfortunate, and it ought not to happen. That is not
> what the confidentiality provisions of the statute were designed to
> accomplish, nor would anyone have had any thought of drafting a
> provision with that notion in mind, quite frankly, and we don\'t think
> it\'s appropriate or helpful, ultimately, to the quality of advocacy
> before the Commission.
>
> MS. MITCHELL: Well, and just to echo that, the reason I raised that as
> one of the four principal things I hope the Commission will look at is
> taking a different view of the purpose of confidentiality. The
> confidentiality provisions are to protect respondents, not to punish
> them, and to impair their ability to mount a defense to alleged
> violations of law.
>
> And I think, again, specifically under BCRA, when you have these
> increased civil and enhanced criminal penalties, it is absolutely
> imperative that the Commission rethink the use of the confidentiality
> provisions, and to realize and to adopt the view that it is for the
> purpose of protecting respondents, not punishing them, and that has
> been perverted over the years, in my view, by the Commission and the
> OGC, prior to the existing OGC.
>
> VICE CHAIRMAN SMITH: My follow-up question for both of you, though,
> this is a potential problem. Is there a problem if we don\'t provide
> the confidentiality advisement or how we do it, as it would relate to
> multi-respondent cases? In other words, is there a problem of
> Respondent A or a witness telling Respondent A about Respondent B or
> something like that?
>
> You\'re shaking your head, Mr. Elias. Do you want to address that?
>
> MR. ELIAS: I don\'t think so. My assumption is that the
> confidentiality provision should operate akin to Rule 6(e) in criminal
> cases, grand jury secrecy, which is about as strict a confidentiality
> rule as there is in federal law.
>
> And witnesses are routinely told that they need not discuss their
> testimony with anyone. The prosecutor is under an obligation, the
> grand jurors are under an obligation that it will not be disclosed, it
> cannot be leaked, but that the witness can share with whomever they
> wish their own recollection of events.
>
> I mean, if you have someone who is involved in a campaign, and they
> were involved in organizing a use of a corporate airplane, the mere
> fact that they were asked questions by the FEC, during a deposition,
> about the use of a corporate airplane doesn\'t mean that now their
> understanding of what happened, their recollection of what happened
> with the use of the corporate airplane is now somehow barred from
> being discussed with other people, whether they\'re co-respondents or
> not.
>
> VICE CHAIRMAN SMITH: But they would be limited, I presume, under
> 437(g), from noting that they\'d been deposed, for example, by the
> Commission, because that would trigger the notice that there is an
> investigation going on.
>
> MR. ELIAS: I\'m not sure that that\'s what 437(g) is intended to get
> at. I mean, I think 437(g) is meant to shield the, is meant to say
> that the Commission and the Commission staff are not permitted to
> disclose this.
>
> I don\'t think it is intended, it was meant to protect the
> respondents, not as something that inhibits the respondent\'s ability
> to talk to people who were interviewed.
>
> VICE CHAIRMAN SMITH: Thank you. I realized, just as I finished that
> last question, that my red light was on, and I apologize.
>
> CHAIR WEINTRAUB: That\'s okay. I realized too late myself, so I can\'t
> punish you for that.
>
> Commissioner Thomas?
>
> COMMISSIONER THOMAS: Thank you, Madam Chair.
>
> I sort of wanted to deal with two points; one was touched on just
> briefly. The existing relationship between the FEC and the Department
> of Justice, I see in Bob Bauer\'s comment you\'ve got a phrase,
> \"Consequently, the Commission should do whatever it can to assure
> that its role in enforcement is not diminished under BCRA.\" I\'d just
> like to get the sense of the panel about what, if anything, the
> Commission should do, in terms of reworking the existing understanding
> with the Department of Justice, which currently stated leaves them
> only with dealing with substantial knowing and willful violations and,
> in theory, leaves us with the rest.
>
> And then the other point, and I\'ll just get it out here, and you can
> use whatever time you have to deal with that, I had asked that the 3-3
> split issue be included. I don\'t know that it was phrased in a way
> that really gets at the kinds of things I was most interested in. But
> you all have filed complaints, and you may have been the victim of a
> 3-3 split when the complaint failed to go forward.
>
> The Commission has been remarkably successful, in the standing
> doctrine area, at kicking complainants out of court because they
> can\'t follow through with their right to file a suit challenging the
> FEC\'s failure to go forward.
>
> Any ideas you have about whether there\'s anything the Commission can
> do to strengthen the right of complainants who file complaints and who
> meet a 3-3 deadlock situation?
>
> MS. MITCHELL: Well, I do think that it\'s worth pursuing and, if
> necessary, seeking a statutory change. I think that granting, after
> the Commission has either declined to pursue a matter or dismissed a
> matter as not meeting the criteria for investigation, to consider the
> possibility of right to sue, letters of right to sue. The EEOC does
> that.
>
> I do not recommend jury trials, and plaintiff\'s and attorney\'s fees,
> treble damages, but I do think that most of these things will not
> proceed, but I think it is something that ought to be available
> because we\'re talking a lot about respondents. Complainants also have
> rights, and I think it\'s important for the Commission to review what
> the possibilities are in that regard, even if it means seeking a
> statutory change.
>
> MR. BARAN: I guess I have to respectfully disagree. I think
> complainants have great rights, if that\'s an accurate
> characterization. I mean, anyone can file a complaint with this
> agency, and then you have to trigger your administrative process. I
> mean, you don\'t even have a standing issue when it comes to starting
> the complaint process here.
>
> And once there is a Commission deliberation, which may lead, as it
> does infrequently to a 3-3 determination, I mean, there has been a
> review of the merits of that complaint, and no resolution.
>
> I don\'t think that then is a good basis for encouraging people to
> then file subsequent lawsuits in circumstances where they have no
> Article 3 standing in the courts. I mean, there are alternatives. If
> the case is really that serious, the Justice Department can review it,
> and if the issue happens to be a troublesome issue that has led to a
> resolution on the Commission\'s part, you can make recommendations to
> Congress to change the law.
>
> I am not one of those people who thinks that the Commission acts in a
> partisan fashion, and I\'d like to say that you trample on the rights
> of everybody in a very bipartisan fashion.
>
> \[Laughter.\]
>
> MR. BARAN: So, you know, enough is enough, it seems to me. If
> something leads to a 3-3, then that\'s it.
>
> COMMISSIONER THOMAS: Any other thoughts on that point?
>
> MR. BAUER: On the first point, I do believe, and I think we say so,
> that there is likely to be some confusion. There is, indeed, some
> confusion about exactly what BCRA means for the 1975 negotiated MOU on
> the allocation of responsibility between the Agency and the Justice
> Department, and I think that it would be helpful for the Commission,
> at some point, to address the question of what, in fact, for referral
> or other purposes, the change the law means for the continued
> significance of that MOU.
>
> Secondly, I was listening to Jan. He\'s persuasive. I was sort of
> leaning in his direction. But then, at the end of the day, I must say
> that if the Commission ultimately deadlocks and is not able to produce
> a result, I don\'t, quite frankly, think the republic will be shaken
> to its foundations if somebody is entitled to take their complaint to
> a federal district court\--some will, some won\'t.
>
> But at the end of the day, I do believe that some continued right, I
> guess you\'d call it, a statutorily conferred right to pursue the
> complaint in another forum, in a judicial forum, is appropriate.
>
> COMMISSIONER THOMAS: Thank you.
>
> CHAIR WEINTRAUB: Commissioner Toner?
>
> COMMISSIONER TONER: Thank you. Thank you, Madam Chair.
>
> I want to talk briefly about treasurer liability and, Mr. Bauer, Mr.
> Elias, you submitted some comments talking about those issues.
> Actually, on Page 16 of your comments, I thought you actually had a
> very powerful statement, and I\'ll just read it briefly.
>
> Starting on Page 16 you say, \"The Commission should never name a
> current treasurer as respondent in their personal capacity unless the
> treasurer is responsible for the acts that constitute the alleged
> violation.\"
>
> You go on, \"One can hardly overstate how emotionally, and even
> financially, disruptive it can be for an innocent individual to be
> named as a respondent in a matter in which he or she had absolutely no
> involvement.\"
>
> And you go on and you say, \"Imagine the position that such an
> individual is placed when filling out an application to refinance
> their home and are confronted with the question whether they are party
> to any legal proceeding. Do they answer truthfully and risk not
> qualifying for a loan to pay for a child\'s education?\"
>
> And you conclude, \"The Commission\'s answer to this question should
> serve as sufficient justification for the Commission to change its
> policy.\"
>
> If you could just elaborate on your concerns there, and specifically
> do you think that, in terms of how we\'ve handled treasurers in the
> past, we\'ve made some errors in judgment in how we\'ve proceeded?
>
> MR. ELIAS: Let me take a shot at this.
>
> There are two issues that I think come up with treasurer liability or
> naming a treasurer which has caused extreme consternation and concern,
> in my experience in dealing with treasurers.
>
> The first is the idea that they are named. I think probably everyone
> who has sat at this table, and those of you in private practice, have
> at one time or another dealt with whether it\'s the White House
> appointment process, whether it is refinancing a home, they get
> stigmatized.
>
> They get put on this pleading and, in fact, even if there is a
> conciliation agreement, whereby they are not\--the committee they are
> treasurer for is not ultimately found to have violated the law, they
> still remain in the conciliation agreement.
>
> So it will say, you know, there is a conciliation agreement between,
> say, five committees, only one of which is a party to the conciliation
> agreement. The recitation paragraph will still say, \"On XYZ, the
> Commission found reason to believe that blah, blah, blah, and its
> treasurer, So and So, violated the law.\"
>
> Now, the Commission may have then gone on to dismiss that, and this a
> little bit akin to the discussion you were having before about what to
> do when you take no further action, but it is a very traumatizing
> thing that they are named in the\--they are treated by the Commission
> as a respondent, their name is put in every document, and\--
>
> COMMISSIONER TONER: Do you think we should just name the entity?
>
> MR. ELIAS: Yes, unless there is reason to believe that the treasurer,
> themselves, did something wrong, which gets to the second problem,
> which is treasurer liability.
>
> It is very difficult to tell a treasurer, either at the front end of a
> treasurer coming in the door, at the front end of a MUR, or at the
> front end of a lawsuit, whether the treasurer has any personal
> liability for what has happened. You know, are they simply a
> placeholder, like the Secretary of Interior is named as the Secretary,
> not personally, but as the Secretary of Interior? Well, in some
> documents you get from the FEC, it says, you know, \"So and So, as
> treasurer.\"
>
> But it\'s very, very difficult to know that and, frankly, it\'s not
> just disruptive, and disheartening, and difficult for the treasurers
> personally, but it\'s difficult, frankly, as their lawyers, because if
> I represent a campaign, and the treasurer has personal liability, that
> treasurer may need their own lawyer. That treasurer may have, that
> treasurer may not be entitled to the, when we were talking about
> confidentiality, there may be adversity\--
>
> COMMISSIONER TONER: Because of conflict of interest between the
> treasurer and the committee?
>
> MR. ELIAS: Yes. If the treasurer is truly liable in their personal
> capacity, there may be a conflict between that, and the Commission
> doesn\'t spell this out.
>
> COMMISSIONER TONER: Do you think we lose anything, from an enforcement
> perspective, by just naming and focusing on the committee, as opposed
> to the treasurer?
>
> MR. ELIAS: No, I think you gain. I think you actually would settle
> more cases pre-probable cause because I think, taken with the policy
> that the Commission has, in general, of requiring an admission as part
> of the settlement, I think I have seen many times that the obstacle to
> those settlements, in a case where there has to be an admission, is
> that the treasurer, who didn\'t do anything, they may not have even
> been the treasurer at the time that the violation took place. They
> don\'t want their name on a document admitting that the law was
> broken.
>
> So not only don\'t I think you lose anything, I think you\'d actually
> gain.
>
> COMMISSIONER TONER: Do any of the other panelists have thoughts on
> this subject, treasurer liability?
>
> MS. MITCHELL: Well, I\'ve mentioned it twice. I\'ll mention it a third
> time. I think this is very important because I can\'t tell you how
> many times somebody says to me, \"If I\'m the treasurer, what does
> that mean?\" And it\'s impossible to say, with certainty, what that
> means, and I think carving out those specific roles, and
> responsibilities, and liabilities of the candidate, the treasurer and
> the committee itself, I think it\'s vital in these enforcement
> procedures.
>
> COMMISSIONER TONER: I understand it can be difficult to recruit
> treasurers these days.
>
> MS. MITCHELL: Yes.
>
> COMMISSIONER TONER: Maybe this would be a step towards greater
> cooperation within the investigatory process.
>
> Thank you, Madam Chair.
>
> CHAIR WEINTRAUB: Thank you, Commissioner Toner.
>
> Commissioner McDonald?
>
> COMMISSIONER McDONALD: Thank you.
>
> It\'s been very enlightening. I must say I\'ve got so many pages of
> notes.
>
> I\'ll start with the treasurer. Cleta mentioned early on, and I
> couldn\'t help but think, I always say to people, they say, \"Who do
> you think would make a good treasurer?\"
>
> And I always say, \"Somebody that you never want to speak with again
> once they\--\"
>
> \[Laughter.\]
>
> COMMISSIONER McDONALD: And I\'ve given that same advice for
> twenty-some years because I do think it\'s very difficult, under any
> set of circumstances. I mean, I do think it\'s the nature of the
> process, and it\'s been a very vexing problem for us.
>
> There are so many things I\'d like to comment on. I suppose maybe I
> would come at a comment made by the Vice Chairman earlier the other
> way around, which was he suggested, rightfully so, that at least three
> of us may not have appeared before a body like this, and it may well
> be that a number, not all, but a number of our witnesses may not have
> sat where we need to sit either. So I take Marc\'s point that exchange
> of ideas is good.
>
> Bob and I have been in some sessions, and he remembers them because I
> have them all marked down, in which actually there wasn\'t an exchange
> of ideas, as I recall, but nevertheless that\'s some history we can
> get to later.
>
> On the due process side, you know, I think all of us take the point
> very seriously\--I was going to kid Cleta simply because she and I
> have been friends for more years than we can count. When I was reading
> her remarks, I couldn\'t help but remember I hadn\'t seen this
> criticism of due process since she and our friend, Speaker Draper,
> used to pass the appropriations bills without anyone\'s input but
> their own.
>
> That wasn\'t a fair criticism, of course, but I know that people made
> that comment, and not fairly, I have no doubt.
>
> I\'m really interested in this business about the extensions of time
> issue. And, Marc, you kind of touched on the timing of a problem. I
> know Bob remembers a very prominent case we had in relationship to a
> timing issue, taking action against a substantial candidate.
>
> What happens to us sometimes, and I wonder where the cutoff point
> would be, I\'m trying to run a little survey, I\'m trying to get our
> office to put together how many extensions of time have been asked in
> various and sundry cases because I think it might be helpful to have a
> better sense of it.
>
> What do you do in the scenario where maybe you\'re a year out, maybe a
> year-and-a-half out\--we went through this, so it\'s fairly clear\--we
> keep getting a request for an extension of time to delay a particular
> case. Lo and behold, the Commission has to come to grips with the
> system can\'t be gamed so at some point you\'ve got to do something,
> and you get down to an internal mechanism that says we\'ve gone as far
> as we can go. The case, as you pointed out earlier, could come at a
> very vital time in a campaign.
>
> What do we do in a case like that, from your perspective?
>
> MR. ELIAS: I think there are two scenarios in this:
>
> One is where you\'re up against the statute of limitations, and it\'s
> election season, and that\'s I think I said that would be a situation
> where I think you could rightfully ask someone to toll.
>
> As a general matter, if it\'s simply a question of extending time, as
> opposed to dealing with the election, which is immutable, I frankly
> would look at why you are where you are. I mean, in all honesty, if
> there was a complained filed in 1998, in November of 1998, and the
> Commission waited three years to find reason to believe, and then
> another year to get its probable cause brief together, and then you
> get out of the blue, as a lawyer, as a private lawyer, a brief that
> says they\'re now recommending probable cause, and then you go and
> say, \"Okay. Well, now, first, I need to remember what this case is
> about.\"
>
> And then you refresh your recollection of what the case is about, and
> it says, well, you have 15 days to respond. Touching on what we talked
> about earlier, you don\'t have any of the depositions, you don\'t have
> any of the underlying documents. So you make that request.
>
> \"Well, we\'ll check with the General Counsel and we\'ll see what we
> can give you.\"
>
> So now you have 10 days, and you\'ve gotten excerpts of some
> depositions, you\'ve gotten excerpts of some of this, in that case, I
> think an extension of time is appropriate, frankly, irrespective of
> what it means for the statute of limitations.
>
> COMMISSIONER McDONALD: But what if that\'s not the scenario?
>
> MR. ELIAS: If it\'s a scenario where you feel like you\'re being gamed
> by the process, then obviously you should take that into account. But
> one of the ways you can deal with someone gaming the process is by
> providing them, if you provided someone, at the outset, all of the
> information that they could possibly anticipate, all of the deposition
> transcripts, all of the underlying documents, the exculpatory
> documents that we discussed earlier, it\'s going to be a lot harder
> for them to make a compelling case that they actually need the
> extension of time.
>
> The situation we face now is very often that you actually genuinely
> need the extension of time because of these other factors. So I don\'t
> think tolling is the answer, in most cases. I\'m not saying it\'s
> never the answer, but I don\'t think it\'s the answer in most cases.
>
> COMMISSIONER McDONALD: Thank you.
>
> CHAIR WEINTRAUB: Commissioner Mason?
>
> COMMISSIONER MASON: I\'d like to reveal to the members of the panel
> who are not aware of this that in the Enforcement Manual there is a
> series of schedules of standard penalties for different violations of
> the law.
>
> And I would like to ask whether you think it would assist in
> conciliation negotiations for us to publish that schedule, whether it
> would make it easier or more difficult to settle cases, and
> particularly in cases where there\'s more or less a concession, yes, a
> reporting violation occurred or, perhaps, grudging, but acknowledgment
> that if you did take it to court, you\'d probably lose, even though
> you think you might be right, would then having the Commission\'s
> standard penalty schedule assist in conciliation?
>
> MR. BARAN: Well, I think so. I think the combination of knowing what
> the penalty range is and having access to your MUR files to
> corroborate that those penalties have been applied within those ranges
> consistently in other cases is very helpful to a practitioner because
> then we turn around to our client and say, look, you\'re not being
> treated any differently than these other folks, and you\'re within the
> range.
>
> At the current time, if a client gets to that stage, I ask associates
> to go and \"scrummage\" through your files, just find closed cases
> that we might think are comparable. And then the General Counsel\'s
> Office will say to us, \"Well, we\'ve got other cases that we think
> are more comparable than your cases, and we\'re not sure what the
> range is,\" it\'s a much more ad hoc, time-consuming and, for clients,
> expensive proposition and to be able to give them some more definite
> information that\'s easily available.
>
> I think you see that in your Administrative Fines Program. It\'s right
> there in your regulations. So if a client comes to me and says,
> \"Well, you know, I\'ve got this notice of this late filing,\" I point
> him to the regulations. I tell him what their odds are if they wanted
> to appeal.
>
> If they have a good reason, we\'ll discuss the good reason, and then
> they make an economic decision, usually, even if they have a good
> reason; you know, should I pay a \$3,000 late filing or do I want to
> go through the administrative process or even court to vindicate
> myself? There are a few that do that, but most people just pay the
> fine because it\'s appropriate, and it\'s economically justified.
>
> MS. MITCHELL: I agree.
>
> MR. BAUER: I think, consistent with the principle of transparency
> here, which I think really would assist everybody, I think it would
> make the regulated community more comfortable with the Commission\'s
> approach, and I think it would aid some of the practices, some of the
> negotiations in a successful direction.
>
> There is sometimes, to me, an unaccountable fear of what it means to
> provide information to the regulated community. I had a conversation
> some years ago with an employee of this institution in which we
> discussed, and I mention this story not to eat up your time, I hope
> you won\'t hold this against Commissioner Mason, but I think it\'s an
> important point because it reflects on a difference of perspective
> between the Commission and the regulated community.
>
> And the question was, why doesn\'t the Commission tell us what their
> enforcement priorities are?
>
> And the representative of this agency told me, in a very cooperative
> spirit, that if they told the regulated community what their
> enforcement priorities were, members of the regulated community would
> not violate the provisions that the Commission cared about, they would
> simply focus on violating the provisions that the Commission didn\'t
> care about.
>
> That struck me as probably not a bad result, if people violated the
> provisions of law that you didn\'t care about, but it also reflected a
> view of people in the regulated community looking for provisions they
> could violate, that that\'s why they violated the law. They were in
> the business of doing that, and their goal would be to find the ones
> they could violate without being pursued by the Commission.
>
> I thought this was quite remarkable, and I think it just misconstrues
> the way that kind of information would be used in the regulated
> community. I think all to the good, quite frankly, it would be used.
>
> COMMISSIONER MASON: Let me try to get in one more question just to say
> I\'m a little bit disturbed by the suggestion that the treasurer, and
> the candidate, and everybody else involved in the campaign shouldn\'t
> be liable. And I know all of you would agree that there are
> circumstances when the treasurer or the candidate or other particular
> people should be personally liable for violations when they materially
> committed them.
>
> What bothers me, however, about the institutional nonliability is the
> lack of incentive. If you say, \"Well, gee, the treasurer is not
> responsible, and the candidate is not responsible,\" you know, then
> who\'s the cop on the campaign? And some of you have said to me the
> difficulty you have in getting your clients to pay attention, and if
> we give people too much of a free pass aren\'t we kind of not building
> in the right incentive structure to people in the campaign to make
> them want to know about the law and comply with it?
>
> MS. MITCHELL: I don\'t want you to misconstrue my suggestion about
> defining very specifically the liabilities of each player, the roles
> and the responsibilities or the responsibilities and liabilities of
> each role as suggesting that they shouldn\'t be responsible or held to
> some degree of accounting.
>
> What I am saying is tell us what that is. Be specific. And
> particularly in light of BCRA, I think it is incumbent upon the
> Commission to be more specific because BCRA makes specific reference
> to violations by candidates and their agents.
>
> Well, that is nowhere in the regulations, as near as I can find. What
> does that mean? And so carve out, I mean I\'m saying be specific.
>
> MR. ELIAS: Yes, and that\'s exactly I hope what I was understood to
> have said before.
>
> The rationale, in my view, for not naming the treasurer in every case
> is that, then, they think they\'re, in fact, named in no case, and
> that\'s the problem is that by naming them in every MUR, no matter
> whether they were involved or not involved, there can be this false
> sense of security that, in fact, it\'s just a formality.
>
> And maybe it is just a formality. It could be, but if what you want to
> do is make sure there is a cop on the beat, then you would do exactly
> what Cleta said, is you\'d say, \"Okay, treasurer, here are your
> responsibilities. Here\'s what you can be held liable for.\"
>
> And then, in those instances where there is evidence that that
> treasurer did not meet those liabilities, they get named as a
> respondent. But then they know they\'re being named as respondent for
> a reason, and it\'s not just because they happen to fill some
> technical requirement.
>
> CHAIR WEINTRAUB: Just for the record, the red light was on. I didn\'t
> penalize him for your story, Mr. Bauer.
>
> Mr. General Counsel?
>
> MR. NORTON: Thank you, Madam Chair.
>
> Mr. Elias, I hope I can follow up with just one question on this
> treasurer liability because I think the proposal in your written
> comments is more nuanced than you described it in response to
> questions by Commissioner Toner.
>
> What you suggested was that, in the ordinary case, the current
> treasurer would be named in a representational capacity or official
> capacity. We would be clear about that, and I think our reasons for
> doing that are that it\'s clear that the treasurer is in a position to
> bind the committee, and moreover the treasurer is probably authorized
> to follow through on the relief that\'s authorized, including payment
> of the penalty. So that\'s the current treasurer.
>
> And then in other circumstances where the treasurer was personally
> involved in violating the Act, we would be clear in the findings that
> the treasurer was named in a personal capacity. And where that changed
> over the course of the investigation, we would make that clear, too.
>
> Is that still the proposal?
>
> MR. ELIAS: That is the proposal. I was responding to a specific
> question the Commissioner asked. If you want to name the treasurers
> and make it absolutely crystal clear, so that when they go to the home
> mortgage, they can say this was representational only, that\'s fine.
> If you wanted, for administrative purposes, to drop them entirely, I
> think that would be fine, too.
>
> MR. NORTON: Let me ask about something entirely different. The
> proposal was made I think 20 years ago in the ABA study that the
> Commission ought to get legislative authority to allow OGC to follow
> up with respondents for particular information prior to the RTB stage.
>
> And we, I would say not infrequently, have circumstances where there
> is something that is really left ambiguous or unaddressed in the
> response, and we say to ourselves, with additional clarification on
> that point, it may well tip our recommendation towards a finding of no
> reason to believe.
>
> I am not at all certain that the current statute constrains us from
> that follow-up, but I want to ask you, Mr. Baran, do you think
> legislative authority is really required, and as a matter of policy,
> it would be good policy if we did that sort of limited follow-up,
> which of course would be requesting information on a strictly
> voluntary basis as a matter of clarification pre-RTB?
>
> MR. BARAN: Yes. My recollection is that the position of the General
> Counsel at that time was that the statute prohibited you from doing
> that type of contact. We disagreed, but in light of the disagreement,
> we said, well, okay, then ask for legislative authority to do that.
>
> If your position is, and I think it should be, that you\'re not
> constrained to go ahead and do that type of consultation, then you
> don\'t need legislative authority.
>
> I would say that this agency does a variation of that type of
> consultation frequently every day through your Reports Analysis
> Division. You\'re constantly sending letters to committees all over
> the country saying, \"We notice this, we notice that. You know,
> respond in 15 days or you\'ll get another letter like this,\" and so
> on.
>
> I mean, that\'s really the same principle at stake here, and at that
> time, as I said earlier, thing have changed in 20 years, there was a
> position at this agency that that type of informal fact-gathering was
> not possible under the statute.
>
> MR. NORTON: Mr. Bauer, you answered some questions earlier about the
> release of the results of an investigation before an election, where
> the respondent is running for election, but I wouldn\'t say this is a
> common circumstance, but it sometimes comes up where it\'s in the
> interest of that respondent because the Commission, as Judge Kessler
> would put it, exonerated the candidate for election, and it\'s in the
> interest of that respondent for the Commission\'s disposition to get
> on the public record to make that disposition clear.
>
> I think the policy of simply taking things as they come is to get out
> of the business of making a judgment, whether it\'s in the
> respondent\'s interests or not, but rather, when we complete the
> matter, we put it out on the public record.
>
> Does that other circumstance concern you?
>
> MR. BAUER: I think that the Commission shouldn\'t act in any way that
> allows its results to be claimed for good or bad by any party
> involved. Yes, in some cases, you\'re going to have some, no doubt,
> good averted by a policy like the one we propose; that is to say,
> somebody looking for exoneration and ready to claim it will be denied
> it. But I think, on balance, still, the Commission, and Marc discussed
> the Department\'s policy in this matter, simply ought not to put
> itself in a position where its results could be interpreted one way or
> the other.
>
> MR. NORTON: Mr. Bauer, I\'m going to try to use the remaining little
> bit of time I have to ask you to address something that you raised at
> a conference you and I both spoke in some months ago, and that\'s
> about [sua]{.underline} [sponte]{.underline} submissions. And you
> expressed some concern at the time that there not only wasn\'t an
> incentive, but there were perhaps disincentives for parties to come
> forward and make what we call [sua]{.underline} [sponte]{.underline}
> submissions.
>
> And I wonder what you think we ought to do as a matter of policy in
> treating those kinds of submissions, to create an encouragement,
> rather than a discouragement.
>
> MR. BAUER: For years, I think it\'s been fair to say that, in the
> general sense, and I\'m not speaking because it\'s been a while since
> I\'ve discussed it with counsel on my right here, and certainly I\'ve
> discussed it with Marc a number of times, counsel have concluded that
> there isn\'t any palpable advantage.
>
> I\'m not suggesting that they, nonetheless, recommend on it, that, on
> that basis alone, they recommend against it, but there is no palpable
> advantage, because that\'s a question clients naturally ask, for
> clients to come forward with a particular problem.
>
> Again, as I said, they may do it anyway. We may even recommend that
> they do it, but we cannot tell them, if they ask us, that it is going
> to be obvious to them when they compare their circumstances here with
> that of a respondent unwillingly brought in, they will not necessarily
> find that either the outcome or, indeed, even the experience of the
> process will be noticeably or favorably better or different for them.
>
> I don\'t know quite how to address the question. It would be obviously
> nice if the Commission could think through this problem and provide
> some encouragement to the regulated community to believe that making
> it easier on you will provide some better result for them. After all,
> it spares you time, it spares you energy, it spares you resources, and
> presumably, if somebody is prepared to come in and say, yes, I have to
> admit a huge mistake was made, and I\'m prepared to account for it,
> that should count for something.
>
> But right now, I will tell you that in my experience, and if Cleta and
> Jan disagree, I will really be concerned about partisan balance, in my
> experience, our clients do not come away, in those circumstances,
> believing, and we don\'t, from our own empirical review, believe that
> anything fundamentally was different than if the complaint had been
> filed against them.
>
> MR. BARAN: Yes. Even the U.S. Sentencing Commission has downward
> adjustments for cooperation and things of that sort, and now that we
> know that you do have some secret list of ranges of penalties\--
>
> \[Laughter.\]
>
> MR. BARAN: \--you might want to incorporate the [sua]{.underline}
> [sponte]{.underline} nature of a case into your penalty deliberations,
> assuming they are that systematic.
>
> MR. BAUER: That\'s good. And you could, in fact, if somebody comes in
> and tells you there\'s something horrible that they did, and you feel
> it\'s so horrible, in fact, that it needs to be dealt with openly in a
> particularly aggressive way, the discount, if you will, might be
> considerably more modest than in other circumstances. In other words,
> there\'s a way for accounting still for the severity of the violation
> even under a discount program.
>
> CHAIR WEINTRAUB: Thank you.
>
> Mr. Staff Director?
>
> MR. PEHRKON: Madam Chair, thank you.
>
> There\'s been a long discussion today over the issue of transparency
> of process, and I\'d like to follow up on one of the questions raised
> by the General Counsel, which is transparency of the information
> placed on the public record.
>
> And in not what specific documents or what specific information should
> be placed on a public record, but rather what should be the purpose of
> placing the information on the public record and what message should
> we be trying to get out there. Should it be a question, should we be
> trying to explain the case? Should we be more concerned about the
> process? How should we be addressing this? What should we be looking
> at from your perspective, and is there a difference in the type of
> cases that we\'re dealing with?
>
> MR. BARAN: Well, I think you\'re going to be constrained considerably
> by whatever the law is, and of course that\'s under review right now
> in the court of appeals here.
>
> \[Laughter.\]
>
> MR. BARAN: But assuming that you have some flexibility on this issue,
> then you will probably want to revert back to your older procedures of
> providing access either through the public record or under FOIA.
>
> But I suspect that the result is going to be much more limited than
> that, and therefore you\'re going to then have to put on the public
> record, first, what you are permitted to put on the public record. But
> one thing that I would encourage you to consider putting on the public
> record is any final statements by the respondent.
>
> I mean, speaking from personal experience, I know of cases that have
> been through the \"reason to believe\" stage and extensive
> investigation, and then there was a decision by the Commission to take
> no further action. So we never got to probable cause.
>
> But then on the public record pops up a 50-page report from the
> General Counsel\'s Office outlining all of the facts and theories of
> the investigation, which report was never presented to the
> respondents, was not made available to them. It was based on an
> investigation in which they didn\'t have rights of sitting in on
> witness\'s depositions or cross-examination or access to all of the
> documents, and what is a respondent left to do?
>
> Well, other than shriek and complain, they can try and submit
> something for the closed file, which again, in my personal experience,
> I have done, but noticed that those submissions are not included in
> the public file.
>
> \[Laughter.\]
>
> MR. BARAN: So you might want to reexamine that aspect of the public
> file.
>
> MR. PEHRKON: Would anyone else like to sort of add to that?
>
> Mr. Elias, you mentioned transparency of the process earlier.
>
> MR. ELIAS: Yes. I think one of the things that it\'s a little bit
> different approach than the one Jan is taking. Jan is looking at it
> from the perspective of the person whose complaint has just been put
> on the public record.
>
> From someone who tracks what the agency does and helps advise clients
> how not to break the law as interpreted by you all, the more you put
> on the public record that articulate general, as opposed to specific
> statements of law, and now I know you are constrained in terms of the
> advisory committee process and what MURs stand for and the like, it is
> very helpful.
>
> And I mentioned statements of reason. Some of them were helpful
> statements of law or policy or whatever you want to call them that I
> have, over time, that has helped, over time, me shape the advice I
> give to clients has been what the Commissioners have written.
>
> And those kinds of things, to the extent that they are encouraged to
> be shared openly and systematically, as opposed to on an ad hoc basis,
> I think is helpful.
>
> MR. PEHRKON: Thank you.
>
> CHAIR WEINTRAUB: Thank you, Mr. Staff Director.
>
> I know that all of us would be happy to engage you all day long. We
> seldom have such a distinguished and knowledgeable panel in front of
> us, but at this rate, we would never get done.
>
> MR. BARAN: May I ask whether\--
>
> MR. ELIAS: The light is still green. So Jan should get\--
>
> MR. BARAN: I was just going to ask, before concluding\--
>
> CHAIR WEINTRAUB: Yes, but that was the Staff Director\'s\--
>
> MR. BARAN: \--because I sense you are concluding, whether my prepared
> statement will be made a part of this record.
>
> CHAIR WEINTRAUB: Yes, I believe it will.
>
> MR. BARAN: Thank you very much.
>
> CHAIR WEINTRAUB: I want to thank you all again for taking all of the
> time here this morning. I am planning on catching up the time, so
> we\'re going to take a quick lunch and come back at 1 o\'clock, as
> scheduled.
>
> \[Whereupon, at 12:21 p.m., the proceedings were adjourned, to
> reconvene at 1 p.m., later the same day.\]
>
> \- - -
>
> A F T E R N O O N S E S S I O N
>
> 1:04 p.m.
>
> CHAIR WEINTRAUB: We are back in session.
>
> I want to thank the witnesses for agreeing to show up and help us out
> today. For those of you who weren\'t here this morning, we\'re
> operating on a five-minute light system. Each of the witnesses will
> have five minutes to make their opening statements. Then, the
> Commissioners, the General Counsel, and the Staff Director will each
> have five minutes for questions and then another round of five minutes
> of questions. We have, we\'re starting off with James Bopp, Don
> McGahn, and Larry Noble, all well-known practitioners in this area.
>
> Mr. Bopp, why don\'t we start with you?
>
> MR. BOPP: Thank you very much, Madam Chairman and fellow
> Commissioners. I appreciate the opportunity to testify, and I\'m sorry
> that I could not present written testimony, but litigation demands
> really precluded that.
>
> As you all know, I have an election law and FEC practice. And one of
> the cases that I think demonstrates the need for reform by the
> Commission in how they conduct their business is one of those cases,
> and that is the Christian Coalition versus Federal Election
> Commission. That was a case, of course, involving a number of
> allegations, primarily of coordination between the Coalition and
> candidates, resulting in alleged, unlawful corporate contributions to
> their campaigns.
>
> The investigation and subsequent enforcement action went for some
> seven years involving 81 depositions, hundreds of thousands of pages
> of documents produced by numerous witnesses, including the Coalition,
> and then resulted in the Christian Coalition winning nearly every one
> of the claims that were brought against it.
>
> I think this case is an example of problems that the Commission needs
> to address. One is that it involved an enormous expense by the
> Commission of its resources with respect to a case in which the law
> was quite unsettled.
>
> I think, secondly, the General Counsel\'s Office, in my judgment, from
> the get-go, acted as the prosecutor, including during the period of
> time of the investigation, in other words, took a view that a
> violation had occurred, and it was just their job of ferreting it out,
> as opposed to a more impartial examination of the facts and
> circumstances to determine whether or not a violation had occurred.
>
> It also involved enormous expense and damage to the organization, even
> though they ultimately won the case and were vindicated.
>
> And, finally, the investigation involved, and targeted, core First
> Amendment activities of issue advocacy primarily, and the
> investigation was quite intrusive, and, finally\--finally,
> finally\--to really a partisan result because there are quite a few
> organizations that do just this type of activity, did so at the time,
> and of course they were uninvestigated. So one actor, with one point
> of view, was severely adversely affected, even though they ultimately
> won the case, while others, conducting the same kinds of activities,
> you know, got off scot-free, if we could say it in that way.
>
> Now, I agree with the, I understand that this hearing does not involve
> personnel, but I do want to make a statement about your staff. I think
> that they are extremely dedicated and professional, and many of them
> are quite talented, and I think you should be proud of them. I think
> that they do their job in a really fine fashion, and I have
> appreciated my workings with them over the years.
>
> I do think, though, that there\'s a problem here, and when you look at
> the questions that have been or the areas that you are asking for
> statement about, you need to really kind of come back from that, come
> above that, and to a more general view of the agency because each one
> of these or the vast majority of these questions really involved, what
> kind of due process protections should we afford to people that are
> subject to investigations within the agency?
>
> I think that question arises because of the heart of the problem. The
> heart of the problem, in my judgment, is that the General Counsel\'s
> Office, in conducting investigations, acts as prosecutor. In other
> words, they act as if the Federal Election Commission is an
> adjudicatory agency; that is, you ultimately adjudicate campaign
> finance violations.
>
> Now, that is not true. This is not adjudicative agency. It is an
> agency that ultimately acts as a prosecutor, and so, in my judgment,
> the heart of the problem here is that you need, in your investigatory
> process an attitude, a culture, if you will, where the people that
> conduct those investigations do so without any preconceived notions of
> whether or not a violation has occurred or not, but seek to
> objectively evaluate whether or not a violation has occurred, and then
> make that objective recommendation to you, and then you decide whether
> or not you\'re going to act as a prosecutor.
>
> I think, if that were so\--
>
> CHAIR WEINTRAUB: Mr. Bopp, time is up.
>
> MR. BOPP: I am sorry. If that were so\--
>
> CHAIR WEINTRAUB: Your time is up, although I appreciate your
> persistence. I am sure that\'s part of what makes you a good advocate.
>
> Mr. McGahn, over to you.
>
> MR. McGAHN: Thank you. Thank you. Good afternoon. I appreciate the
> opportunity to testify here today. It\'s somewhat of a unique hearing.
> Self-analysis is sometimes difficult, sometimes helpful, and hopefully
> I can be of some assistance here from my perspective, which is one of
> someone who primarily defends folks accused of things, although I have
> filed complaints from time to time, sometimes more often than others.
>
> \[Laughter.\]
>
> MR. McGAHN: So I have seen\--Commissioner, it wasn\'t really that
> funny.
>
> \[Laughter.\]
>
> MR. McGAHN: So I, to a certain extent, have that perspective as well,
> seeing complaints I\'ve filed go through the system, and what comes
> out on the other end, as well as being on the response side, seeing
> the two different perspectives.
>
> To say that the Commission is simply an agency that investigates and
> ultimately, if you want to go to court, you ultimately can, so
> therefore we don\'t really need to concern ourselves with due process,
> and open hearings. And that sort of thing I think oversimplifies the
> modern day concerns, although it is true that the Commission cannot
> enforce the law on its own. It would have to go to court. The process
> here can be quite daunting, and we have all heard many times that the
> process can be, and sometimes is, the penalty.
>
> I heard part of the testimony this morning and there was talk of
> reputational injury and that sort of thing. That is very true. It has
> gotten to the point where people are taking RAD letters and making
> them in the campaign ad, saying this person, you know, the FEC has
> sent a letter saying this appears to be a violation, and they make it
> sound very bad.
>
> Those of us who know what RAD letters are know that if you simply
> respond and amend, they are not really all that big a deal, but they
> can be construed into something that they are not.
>
> So although we can say much of this doesn\'t really have an impact on
> respondents because ultimately they may be cleared, and it was just a
> misunderstanding, the process can be very painful and costly.
>
> To run through some of the issues that others have run through, the
> issue on complaints as to who was a respondent, that is a thorny
> issue. Let\'s not throw out the baby with the bath water. I want to
> say at the threshold here there\'s a lot of good things that the
> Commission does, and there are a lot of procedures that do work, and
> there are, for the most part, things that are predictable and
> notwithstanding folks like me who screech about things routinely,
> there are some good things out there.
>
> However, there are some problems, and there are some consistent themes
> that I think could use some work, and the first is who\'s a respondent
> in a complaint.
>
> There doesn\'t seem to be any clear standard as to who really is a
> respondent. The obvious test would be did the complaint mention the
> person as a respondent, but that doesn\'t necessarily get you to where
> you need to go because the person may not have artfully drafted the
> complaint. There may be an allegation that is screaming out in there
> for investigation. Simply because the person was not named as a
> respondent, that doesn\'t mean the Commission ought to turn a blind
> eye.
>
> On the other hand, there have been cases that have resulted in a
> somewhat bizarre service of complaints. There was a MUR, I recall,
> where someone had accused someone of taking excessive contributions,
> unencumbered by the fact that at the time the limit was \$1,000 per
> election. They had thought it was \$1,000 per cycle, so anyone who
> gave them more than \$1,000 was named as a respondent and got a copy
> of the complaint.
>
> So there were hundreds, in this case, of people who got complaints,
> and donors, and they were less than thrilled to be sent a letter that
> says, \"We have received a complaint that says you may have violated
> federal law.\"
>
> The same is true of a complaint I filed once, where someone had
> executed an affidavit and received a copy of the complaint saying he
> may have violated Federal law. Obviously, he didn\'t. He was the
> factual predicate for the complaint.
>
> I\'ve also heard stories of people who are the complaint filers
> themselves get the complaint back because they had alleged some
> wrongdoing that they witnessed, and now therefore they may have some
> information. So they are both a complainant and a respondent. It\'s
> tough to do, but apparently it has happened.
>
> The discovery process at the Commission is, at times, equally ad hoc.
> The Commission is at a disadvantage because its subpoena power is not
> self-enforcing. You\'d have to go to court to enforce a subpoena. So
> what has really arisen is I think an understanding that we will comply
> with subpoenas, but ultimately you would have to go to court to
> enforce the real tricky stuff.
>
> So there is this sort of what I think is a good system, where it is
> not overly strict, and time limits and the like are not ironclad, as
> they are in federal courts. That\'s one of the positive things I see.
> Because, ultimately, because the subpoena power is not self-enforcing,
> we, the defense bar, could effectively say, We\'re not complying with
> any subpoenas, take us to court, every time and grind the process to a
> halt.
>
> That hasn\'t happened. I\'m not saying it will happen, but if we firm
> up too much in the subpoena power, that could result.
>
> I see I\'m on the yellow light, so I\'m going to breeze through the
> other topics.
>
> Other things in discovery, conduct of depositions and the like, it\'s
> routine to be told that things like the Federal Rules of Civil
> Procedure and Federal Rules of Evidence do not apply, although there
> doesn\'t seem to be much of a justification for it because, again, the
> Commission would have to go to court to bring a case, and those rules
> would apply.
>
> I\'m going to cut off now because the red light is there, and I\'ll
> happily answer questions and try to further assist the Commission.
>
> CHAIR WEINTRAUB: Thank you, Mr. McGahn. I appreciate your cooperation.
> After all, it wouldn\'t be fair to Mr. Bopp if I let you go on into
> the red light, after I made him stop.
>
> Mr. Noble?
>
> MR. NOBLE: Thank you very much, Madam Chairman. I think there is a
> \"sword of Damocles\" in the form of a clock hanging over my head, but
> that\'s fine.
>
> Madam Chair, Mr. Vice Chairman, members of the Commission, General
> Counsel, Staff Director, thank you for the opportunity to testify.
> Today, I\'m testifying on behalf of the Center for Responsive Politics
> and its FEC Watch Program.
>
> Unlike other witnesses here today, I think unlike any other witness
> here today, I bring to the table the view obtained from 23 years of
> trying to enforce the federal election campaign laws, 13 of which, as
> you know, I spent as General Counsel.
>
> And I understand, this morning, your present General Counsel or able
> General Counsel has been assured several times that all of the nasty
> comments being made by the General Counsel were not being actually
> made about him. So I take that as a point of honor, frankly.
>
> \[Laughter.\]
>
> MR. NOBLE: It\'s because of the experience I had, and it\'s because of
> what I\'ve seen since I left the agency that I want to take a few
> moments to make a couple of observations.
>
> We have filed more detailed comments, and I\'m not going to go over
> our detailed comments. I assume I will get questions on it.
>
> First, let me state what should be obvious, but from reading the
> comments of others, may not be obvious. The FEC is a law enforcement
> agency. First and foremost, the FEC is here to enforce a law. It was
> created to civilly enforce the Federal Election Campaign Act. In that
> role, it serves as both an investigator and prosecutor. So does the
> General Counsel\'s Office. It serves as an investigator and
> prosecutor. That is what Congress created.
>
> Its mandate is not to make sure that both political parties have the
> same opportunity to fund-raise; rather, your mandate is to deter
> violations of the law and seek punishment for those who do violate the
> law.
>
> The FEC owes its main duty to the victims of campaign law violations
> which, in some cases, are opposing candidates or opposing political
> parties, but in all cases they are citizens who have the right to
> demand that the laws of the land are enforced fully and fairly.
>
> Let me submit to you that campaign finance law violations are not
> victimless crimes. Citizens who have a right to have their laws
> enforced, who have a right to clean campaigns are the victims of these
> campaign finance violations
>
> This commitment to enforce the law is not lessened because there\'s a
> law dealing with the activities of candidates, officeholders or others
> who control the levers of power in this country. It is also not
> lessened because you may have doubts about the wisdom or the
> constitutionality of the law.
>
> Second, the FEC\'s present procedures comply with the requirements of
> due process. Outside the administrative fines area, and some Title 26
> matters, no matter what procedures the FEC puts into place, no matter
> how many hearings or so-called due process rights it gives
> respondents, the FEC cannot impose a penalty or order anyone to take
> action. It does not sit as a court, a judge or a jury.
>
> The closest analogy I was ever able to come up with when I was here is
> a civil grand jury. It sits as a body that is here to decide whether a
> case should be brought forward, whether a case should be prosecuted in
> court.
>
> At the end of the day, if the FEC cannot settle a matter, it must
> bring an action into the court, where, as we are all painfully aware,
> the burden falls upon the agency, as it should, to prove its case
> [de]{.underline} [novo]{.underline}.
>
> The fact that the FEC is not an adjudicatory agency is central to the
> question of what due process rights are owed respondents. As has been
> said many times by the Supreme Court and lower courts, due process is
> that process which is due, given the circumstances. Not only did
> Congress not provide for trial-type hearings or the right to
> cross-examine witnesses before the agency, nothing in the
> Constitution, nor any statute, requires it.
>
> In fact, Congress already gave respondents far more rights than
> constitutionally required when it created the statutory enforcement
> process, with its numerous steps and cumbersome procedures.
>
> Finally, while the views of those subject to enforcement actions are
> an important element in this review of the enforcement procedures,
> their comfort and satisfaction with the process should not be your
> main focus.
>
> Frankly, I think it is somewhat odd for an enforcement agency to be
> almost solely focused on what those who are subject of the enforcement
> actions think.
>
> The review of the agency\'s enforcement proceedings should focus on
> how to make the process more efficient and more likely to serve the
> goals of law enforcement. What best served the public interest in
> effective law enforcement is the question that should frame this
> inquiry.
>
> Now, I don\'t want to get into\--and I see I\'m, I don\'t have a
> yellow light yet\--I don\'t want to get into a debate with Mr. Bopp at
> this point, but I know feelings run strong about certain cases. I
> would note very quickly that in the Christian Coalition case, the
> district court issued an opinion, which if you look at the ruling in
> the case, it expected to be appealed.
>
> It knew it was writing on a clean slate, and it was coming up with new
> law, and it expected to be appealed. The Commission could not appeal
> the decision. So to decide what was going to happen in that case, you
> can\'t do right now.
>
> The other thing I note, with some reluctance, but since Mr. Bopp has a
> problem with the way the staff of the FEC, under my supervision,
> handled that case, I would note, when we got to court, one party was,
> in fact, sanctioned for discovery abuses, and that was the Christian
> Coalition.
>
> Thank you.
>
> CHAIR WEINTRAUB: Thank you, Mr. Noble.
>
> I just want to clarify that we are not solely focused on making the
> respondents happy. It is just that when we put out the Notice of
> Inquiry, you were the only one on your side of the issue who was
> willing to come in here and testify, and we are very happy to have
> you.
>
> MR. NOBLE: I couldn\'t turn it down.
>
> CHAIR WEINTRAUB: I\'m glad to hear it.
>
> Commissioner Thomas?
>
> COMMISSIONER THOMAS: Thank you, Madam Chairman. Thank you all for
> coming.
>
> I think I\'ll work with Mr. Bopp\'s comments to sort of frame my
> question.
>
> We all have grappled, for years, with this difficult question of where
> do we draw the line in terms of what cases we take off on, what cases
> we want to find reason to believe on and start an investigation.
>
> Maybe I could ask you all to sort of comment on what you think the
> \"reason to believe\" standard is or should be. Some have suggested
> that we would basically work with a standard that, well, if the
> complainant has alleged facts that, if true, would constitute a
> violation, that we better go off on the investigation.
>
> Others have suggested that, well, it\'s more complex, that you need to
> evaluate the credibility of the complainant\'s allegations and factual
> assertions and weigh that against the credibility of the respondent\'s
> response, when they reply to the complaint.
>
> Give me some help here. What do you think? How do you think we should
> work with that standard, given you\'ve got six wild and crazy
> Commissioners who don\'t usually agree on much of anything anyway?
>
> CHAIR WEINTRAUB: Speak for yourself.
>
> \[Laughter.\]
>
> MR. BOPP: I think it\'s a really difficult question, Scott. I really
> do, and I know that it\'s difficult for you all in dealing with it. I
> think there\'s sort of various considerations that I would take into
> account.
>
> I think one is the, well, a couple would be that I think Don is right
> when he talks about the, as the Christian Coalition case is an
> example, that the process can be the punishment.
>
> Secondly, that we are dealing with core First Amendment rights. Even
> with laws that, of course, have been upheld as consistent with the
> Constitution, they have been upheld, in the vast majority of cases,
> even though they impact First Amendment rights, because there are
> compelling interests.
>
> And I think our presumption in a democracy is that the people should
> decide as a result of the election, not the bureaucrats as a result of
> levying fines and investigating the actors.
>
> I think one other factor is that the likelihood that the Commission is
> going to be used for or attempted to be used by people outside of the
> Commission for partisan purposes. If you can entangle your political
> opponent in an investigation, you\'ve accomplished something, all
> right, in terms of their ability to participate in our democratic
> government, if they\'re entangled in an investigation and you\'re not.
>
> Now, I think I would probably use a prima facie case standard. In
> other words, I would take the complaint, and if there is a response, I
> think you have to take the response also, and evaluate whether or not
> there\'s a prima facie case stated, and if there\'s a prima facie
> case, then it\'s worthy of an investigation. And it\'s really up to
> the respondent to come forward and affect that consideration, in terms
> of making a response, as you invite them to do. If they choose not to,
> then all you\'ve got is the complaint.
>
> COMMISSIONER THOMAS: Do we have a response from either of the other
> panelists?
>
> MR. McGAHN: RTB I always see or maybe it ought to be, I don\'t know if
> it actually is, but a three-part analysis:
>
> First is does the complaint state a legal claim? I think part of some
> of the atmospherics around the Christian Coalition MUR, and then a
> couple of other MURs that occurred soon thereafter where the Christian
> Coalition MUR was cited as the legal predicate, was that as a matter
> of law there wasn\'t a violation.
>
> Now, I\'m not going to get into the whole \"issue ad versus express
> advocacy\" debate. We can rehash that forever. But there was, in a
> sense, that is there a predicate legal violation on its face or is
> this something where we\'re going to do a factual inquiry first before
> we see, as opposed to looking at the content of the speech?
>
> The second area would be the facts, and I think there does need to be
> some showing of some credible facts. Now, of course, complaints have
> to be under oath, so you would think that means there are credible
> facts. That being said, newspaper articles from weeklies and cryptic
> references from news sources and things that really are hearsay
> probably ought not support a finding of RTB. Where the bright line is,
> is for the Commission to decide on really case-by-case bases, I think.
>
> But I think you do have to keep in mind that people can say just about
> anything and put it under oath, and still be okay with telling the
> truth because it\'s based on information, and belief, and the like,
> and those sorts of things. I think you have to be careful in moving
> forward on complaints that are based on speculation.
>
> Third, is Commission resources and the like, is it the sort of
> violation that the Commission wants to investigate or is this
> something that may go to ADR sooner or is this something that perhaps
> can be conciliated quickly?
>
> Do we need an RTB finding to move this along. Is this the sort of
> thing that we really want to prioritize or not. I mean, that\'s sort
> of the intangibles that, sitting out here, I\'m not really sure of the
> details of the Commission\'s thinking on those sorts of intangibles,
> but to me that\'s a three-step process, at least how I see it.
>
> CHAIR WEINTRAUB: Well, even though the red light is on, I feel it
> would not be fair not to give you a chance, if you want to make a
> quick response, Mr. Noble.
>
> MR. NOBLE: A quick response. I always view the RTB finding as close to
> a motion to dismiss, which if the allegation stated would be a
> violation of law, there is reason to believe, recognizing that in the
> exercise of prosecutorial discretion, and having gotten a response,
> there may be those cases where the allegations are just so clearly
> wrong from the response as a factual matter that you would not find
> reason to believe. But as a practical matter, I think in most cases,
> the question is does it state a violation of the law.
>
> CHAIR WEINTRAUB: Thank you.
>
> Commissioner Toner?
>
> COMMISSIONER TONER: Thank you, Madam Chair.
>
> I want to thank each of the panelists for being here. Particularly,
> with the extraordinary time pressures that you face with the
> [McConnell v. FEC]{.underline} constitutional challenge, I really
> appreciate you making the time to be here.
>
> Mr. Noble, I would like to begin with you. You indicate at Page 5 of
> your comments that release of relevant depositions and evidence to the
> respondent may have some benefit, I think you say on Page 5, and that
> the FEC should establish a minimum baseline of what will be released
> to respondents.
>
> At the morning panel, I think a consensus emerged that the FEC should
> seriously consider providing across-the-board access to the
> investigatory file that the Commission develops to respondents prior
> to probable cause and that respondents and witnesses should have
> access to their deposition transcripts, as they do when they\'re in
> court.
>
> I\'m wondering what are your thoughts on that? Do you concur in that
> judgment?
>
> MR. NOBLE: No, but I\'m not surprised that there was actually uniform
> thought about that this morning.
>
> No, I think, again, the FEC is an investigatory agency. I think, as
> with all investigatory agencies, you have a right to keep
> investigations or parts of investigations from the respondents so that
> they cannot destroy documents, they cannot modify testimony, they
> cannot coordinate testimony. I know that\'s shocking to think that
> people will do it, but I can tell you, in the 23 years I was here, we
> were aware that people were doing it.
>
> So I think that you have to balance the need for moving the
> investigation along, making sure that you\'re getting what you need
> with what may be fair to the respondents. And what I suggested is, and
> I think this happened while I was here, is that when you reach
> probable cause to believe, it may help the investigation, it may help
> the agency at that point, to release information to the respondent so
> they can reply to it.
>
> However, since it\'s still at the investigatory stage, and still, and
> since the Commission could still send the Office of General Counsel
> back to continue an investigation, I think it would be wrong, as a
> practical matter or as an across-the-board matter to release the
> investigatory file at that time.
>
> When the Commission goes to court, then all of the Federal Rules of
> Civil Procedure will kick in, and they will have access to everything
> they need.
>
> COMMISSIONER TONER: Let me try to get a sense of where you are. Do you
> think it\'s appropriate, prior to probable cause, for the agency to
> release the factual record that it\'s relying upon and making those
> recommendations to the respondent, so they can have that in hand?
>
> MR. NOBLE: I don\'t think there\'s any requirement to release or you
> should release the whole, as a matter of course, the whole factual
> record. I think you can take a look at it and decide what you think
> would be helpful to be released at that point.
>
> For example, I don\'t think it\'s necessary to release information
> about other respondents. I understand why they want to see their own
> deposition, and I think at probable cause to believe that may make
> sense, but going beyond that\--
>
> COMMISSIONER TONER: You think that might make sense?
>
> MR. NOBLE: Yes. I\'m not bothered by that. I can see reasons, in
> specific cases, not to, I should say, also, but the rules deal with
> that.
>
> But I would be opposed to releasing the whole file across-the-board
> unless, unless the Office of General Counsel and the Commission made a
> decision, in a particular case, that they wanted to do it because they
> thought it would promote the resolution of that particular case.
>
> COMMISSIONER TONER: Do you think that the Commission, whether it\'s
> required by the Constitution or not, should provide the respondent,
> prior to probable cause, any exculpatory information it may have in
> hand?
>
> MR. NOBLE: What\'s one person\'s exculpatory information is another
> person\'s incriminating information.
>
> No, I don\'t think there\'s any requirement to do that. Again, I
> think\--
>
> COMMISSIONER TONER: Do you think we should do it, though, as a policy
> matter?
>
> MR. NOBLE: No, I think the Office of General Counsel has a duty to
> bring forward, and we always looked at it at this way, exculpatory
> information to the Commission.
>
> But I will tell you there were years I was there that we thought
> brought forward all exculpatory information, and some Commissioner
> would find something that they thought was exculpatory that we thought
> wasn\'t exculpatory. So you get into those debates.
>
> COMMISSIONER TONER: Would that cut towards providing all of the
> information in the file? You would avoid that type of debate?
>
> MR. NOBLE: Who, the Commissioners?
>
> COMMISSIONER TONER: Right.
>
> MR. NOBLE: No, the Commissioners have to have access to all
> information in the file. All I\'m saying is deciding what should be
> called exculpatory is sometimes not an easy process, but\--
>
> COMMISSIONER TONER: Sure. And what I\'m suggesting is if you provide
> the entire factual record to the respondent, you avoid having to make
> that judgment.
>
> MR. NOBLE: Right, but you also may undermine the investigation.
>
> COMMISSIONER TONER: Do the other two panelists have any reactions to
> these issues?
>
> MR. BOPP: Well, I think that the Commission is ill served by General
> Counsels\' approach to their investigations; that they approach them
> as a prosecutor. Because I think that then deprives the Commission of
> information, arguments, et cetera, that would benefit the Commission
> in deciding whether or not to proceed with a violation.
>
> I think as long as the General Counsel\'s Office acts as a prosecutor
> in the investigatory stage, then you ought to, as a policy matter,
> provide as much due process as you can because it will benefit you\--
>
> COMMISSIONER TONER: Do you think we should provide exculpatory
> information?
>
> MR. BOPP: Yes.
>
> COMMISSIONER TONER: Do you think we should provide the entire factual
> record?
>
> MR. BOPP: Yes. Because\--
>
> COMMISSIONER TONER: Do you think that might aid in settling cases or
> having them be disposed of?
>
> MR. BOPP: It will aid in settling cases, and it\'ll aid the Commission
> in deciding whether or not they should proceed to probable cause. But
> I guess my overall suggestion was, though, that the problem here I
> think is the approach of the General Counsel\'s Office and that flows,
> in part, from the fact that he has too many hats.
>
> In other words, if I were to make a recommendation on how you would
> deal with this, I mean, I would divide the staff; in other words, I
> would have one staff, you know, and maybe have them under the Staff
> Director or someone else.
>
> You know, one staff, you do have one staff, but they all answer to the
> General Counsel. In other words, one staff that is charged with
> investigating which would be to provide you, and we all know this as
> lawyers, you talk to clients, you provide objective legal advice, in
> other words, of what the law is, what the facts are and then the
> client gets to decide.
>
> That is a much different presentation than it is as a prosecutor or as
> an advocate. And my problem that I think has caused problems with the
> Commission and has victimize respondent is that the General Counsel
> acts as a prosecutor when they are talking to you in the context of an
> investigation.
>
> And I think if you would take a look at the General Counsel report in
> the Christian Coalition case, which I think is a classic example of a
> prosecutorial document as a result of an investigation, and if you
> take a look at that and compare it with the General Counsel\'s report
> on the investigation of the AFL-CIO, which I consider to be an
> objective legal advice-type document, you will see the difference.
>
> And I think, unfortunately, too often the Counsel\'s Office is acting
> as the prosecutor.
>
> COMMISSIONER TONER: Thank you.
>
> CHAIR WEINTRAUB: Thank you, Commissioner Toner.
>
> Commissioner McDonald?
>
> COMMISSIONER McDONALD: Thank you, Madam Chair. Thank you, Jim, Don,
> Larry. Good to see you.
>
> I maybe will take the last point first and ask you, Jim, the bottom
> line, I mean, you described something at the outset that I think every
> agency like ours is confronted with. I look at the morning news, and I
> see that a gentleman is going to get seven years for insider trading,
> if he flips somebody, he may get less, I\'m told. The news can\'t say
> that that might\--it seemed a little harsh in relationship to other
> penalties.
>
> When you were discussing the culture, and I\'m speaking from having
> been here and on the inside, it wasn\'t a culture I guess that I saw.
> It was kind of ironic. You drew a kind of a conclusionary comment
> about what the culture was inside. Now, I\'m not debating you saw it
> that way, and don\'t misunderstand, but it wasn\'t a culture I saw,
> and I must say it\'s not that one that we strive to project on either
> side.
>
> But I\'m just wondering how we parcel this out. I mean, we\'re going
> to have cases that we proceed on that four Commissioners think that
> they ought to proceed on. There\'s going to be a lot of people that
> get off. Your point was very well taken. I mean, that\'s just a fact
> of life.
>
> This morning there was a guy pulled off the road on Indian Head
> Highway that was going over at least 55. Since all of us were driving
> about 70, I assume he might have been going 75 or been somewhat
> unlucky, I don\'t know.
>
> It just strikes me that I don\'t know how we combat this. When we go
> up, and we testify before the Congress, if I\'m after a member of
> Congress, I\'m a nitpicking bureaucrat. If I\'m not after their
> opponent, I\'m soft on crime. This is the kind of thing I\'ve seen,
> and it\'s never changed since I\'ve been here.
>
> And I\'m wondering what you think we could do, as a practical matter,
> to get at that. I mean, we\'re always going to have the kind of
> problems, I thin, that you\'ve alluded to with anybody that has a
> client before us; do you not think that\'s true or not? Am I just way
> off-base?
>
> MR. BOPP: Well, I think that lawyers understand the different role. I
> mean, they understand that it\'s one thing to be an advocate for a
> position, and it\'s another thing to give your client objective legal
> advice. I think in too many, in cases that, you know, too many that
> I\'m aware of, I think that the General Counsel is acting as a
> prosecutor within the context of investigations, when I believe he
> should be acting as a lawyer giving objective legal advice to his
> client.
>
> And I agree completely that this is not unique to any particular
> federal agency that\'s in a position like yours. I think it\'s\--and
> that\'s why I talked about it really as a culture; in other words, as
> an understanding of the role that the particular lawyers serve in
> carrying out the responsibilities with the Commission.
>
> And if you all insist, and the supervisors insist, that they act as
> that kind of lawyer, then my concerns about due process, not as
> constitutionally required, but as a policy matter, are lessened. But
> as long as that you have an approach to investigations as a
> prosecutor, then I\'m in favor of as much due process as you could
> swallow because it\'ll serve you better. Because if you\'re not
> getting objective legal advice, then you need the advocacy on both
> sides.
>
> COMMISSIONER McDONALD: Well, I must confess, obviously, if you start
> with that premise that you\'re not getting, that that\'s\--your point
> is well taken. I\'m not so sure I would concur that I didn\'t, at
> least I didn\'t think, and apparently four Commissioners didn\'t think
> they were getting objective legal advice, but maybe that\'s so.
>
> Do these terms ring a bell\--coordination, potential for coordination?
> Did those ring true in that?
>
> MR. BOPP: Oh, yes.
>
> COMMISSIONER McDONALD: And those are out of the AFL-CIO case, by the
> way, the General Counsel\'s report. I just want to be clear that it
> wasn\'t necessarily just in one area, but those were the same kind of
> phrases that were used in the GC report for the AFL-CIO.
>
> MR. BOPP: And I guess my follow-up to that would be, in terms of how
> you conduct your business, I think that you should minimize the times
> in which you use enforcement actions to deal with areas in which the
> law is unclear. I think that is fundamentally unfair to the
> respondents that are the\--you know, they end up on the receiving end,
> when others don\'t who are doing the same thing.
>
> I think it jeopardizes First Amendment values because while you pursue
> one theory, it may be the Constitution requires another one as, of
> course, has occurred in some cases, and that rather than deal\--and I
> think the Christian Coalition case was an example of using an
> enforcement action to try to create or clear up or make certain or
> whatever what was very uncertain law with respect to coordination.
>
> I think you are well advised to use rulemaking for that purpose; in
> other words, come up with a rule. You know, there is an unclear area
> here. Don\'t use an enforcement action, right? Maybe this will be the
> impetus for a rulemaking. Then, you have an established legal standard
> that applies to everyone, and also it\'s subject to review by the
> courts on whether or not you\'ve come up with the right one.
>
> And then it can be enforced, I think, in a way much more consistent
> with all of the values at stake.
>
> COMMISSIONER McDONALD: Thank you. I want to follow up, and I\'ll do it
> next round.
>
> CHAIR WEINTRAUB: Thank you, Commissioner McDonald.
>
> The Vice Chairman?
>
> VICE CHAIRMAN SMITH: Thank you, Madam Chair. I thank all of you for
> coming.
>
> I think in this round of questioning, I\'m going to direct my
> questions I think primarily to Mr. Bopp and Mr. McGahn, and in the
> next round probably to Mr. Noble, but we\'ll see.
>
> I guess, Mr. Bopp, I want to know, first, or I just want your
> thoughts. You mentioned you talked some about the Christian Coalition
> and the extent of the investigation and so on. You talked a little bit
> about First Amendment rights.
>
> Although the organization was ultimately, in your view, largely
> exonerated of the charges, what would you say was the impact of the
> litigation on the organization or other organizations or people and
> their willingness to participate in what were, based on the court
> decision, legal campaign practices? Do you think it had a detrimental
> effect?
>
> MR. BOPP: Very detrimental, certainly to the organization, in terms of
> time, money, reputation, and attention to the activities that they
> were founded to do. It had a severe effect on the organization. It had
> a partisan effect on the system because they were subject to an
> investigation for activities that many other organizations were
> conducting at the very same time and suffered none of those effects of
> the investigation and subsequent suit.
>
> And I think it is chilling, and the irony is, it\'s chilling with
> respect to activities that were, at the end, found to be perfectly
> lawful. But the prospect of being subject to this kind of
> investigation and this kind of cost and reputation damage is chilling,
> and it\'s a terrible result, and surely all would agree it\'s a
> terrible result if that ultimately was unjust, that the organization
> didn\'t commit any legal violations.
>
> I mean, the advantage of rulemaking is that it would provide a
> standard, rather than try to establish a standard in the context of
> litigation, that people can obey prospectively and that would be
> applicable to everyone. So I think that\'s a better route, in many
> cases.
>
> VICE CHAIRMAN SMITH: Do you have any numbers, I don\'t know if you can
> provide them if you do, do you have any sense of the total cost to the
> respondent in that case, to the Christian Coalition, not just legal
> fees, but their total cost of responding to that investigation or
> would you care to put an estimate on it?
>
> MR. BOPP: I don\'t know. No one that I have ever heard of has been
> involved in a case with 81 depositions. I mean, that\'s just
> unbelievable that an organization would have to suffer that size of a
> case.
>
> VICE CHAIRMAN SMITH: Do you find it at all alleviating that if we\'d
> appealed the case, you would have gotten to go further through the
> court system?
>
> MR. BOPP: Well, no.
>
> \[Laughter.\]
>
> VICE CHAIRMAN SMITH: I didn\'t think so. It\'s an interesting debate.
>
> MR. BOPP: And I think the Commission is entitled to look at\--well, I
> think the Commission should respect decisions and that they should, if
> they believe that they are correctly decided, they shouldn\'t force
> respondents to win at all levels.
>
> VICE CHAIRMAN SMITH: Let me ask you and Mr. McGahn both, to close out
> this round. Neither of you submitted extensive written comments in
> advance. Do either of you have proposals you would make that you think
> would be beneficial that would not slow down the process, and indeed
> might even speed up the process? Or do you think that in certain cases
> granting more process might help to speed up actually the enforcement
> process?
>
> MR. McGAHN: I think there\'s many instances where granting more
> process would actually speed the process up, although that may seem
> counter-intuitive to some, in my experience it wouldn\'t necessarily
> be so. There was discussion this morning about oral argument and
> appearing before the Commission and the like. It is amazing how many
> folks come to me with an FEC problem and they want to know what I\'m
> going to argue before the Commission, and I have to explain to them
> that\'s not the way it works. It\'s briefs. General Counsel\'s Office
> presents them to the Commission. And it seems very counter-intuitive
> to people. They sort of picture their champion standing before the
> Commission and making these eloquent points.
>
> I\'m not going to suggest you need oral argument in every case, but
> there may be a system where parties may request oral argument, and
> there may be times where certain Commissioners or more than one
> Commissioner may want oral argument because something simply isn\'t
> clear from the brief.
>
> VICE CHAIRMAN SMITH: Are you suggesting that without some of those
> things, respondents are less cooperative, perhaps or\--
>
> MR. McGAHN: Absolutely. Certainly, the culture feeds into itself,
> where, for example, you\'re in a deposition and your client is being
> asked a series of questions and you know something is coming up, and
> you\'ll ask the counsel, \"Is there a document that you are talking
> about,\" and they will ignore you and they will not answer the
> question. Now, under the Federal Rules of Evidence or the rule in
> Queen Caroline\'s case and common law, there are well-established
> rules, when you ask for documents, they need to make a good faith
> showing to what it is, but there\'s this \"gocha\" mentality, and
> it\'s happened in depositions, and not just happened once. It\'s
> happened time and time again. So then from the deposition process your
> client leaves thinking, \"Gee, these guys aren\'t playing straight.\"
> Then they find out there\'s no oral argument. Then they think, \"Is
> this a rigged system? Why don\'t I get my day to say what\'s on my
> mind?\"
>
> And I\'ll close with the thought that it is amazing how when people
> get to say what\'s on their mind or present their case, how much
> happier they are with the result, even if it\'s the same result. And
> they\'re much quicker to accept the ultimate problem if they feel like
> they\'ve been heard, and simply talking to me and me saying, \"This is
> kind of what\'s going on, and then we submitted this brief,\" there
> isn\'t that sense of closure and that sense that they have been heard.
> Then when the only option is to go to Federal District Court, that\'s
> not really an option for most people, and as we know, very few cases
> really get to court, except for the more larger cases or if somebody
> really wants to prove a point.
>
> So I think opening up the process would actually expedite the process
> in so many ways.
>
> VICE CHAIRMAN SMITH: Thank you.
>
> CHAIR WEINTRAUB: I have some sympathy for you, Mr. McGahn. As you were
> telling that story I had a recollection of a client of mine who
> himself wanted to personally come and make his argument before the
> Commission and was totally convinced that if he could have done that,
> he surely would have swayed them. I\'m not so convinced myself, but in
> any even, we\'ll never know.
>
> And I also have a lot of sympathy for Mr. Bopp. I understand how you
> feel, that the agency, that the agency functions, in your perception,
> with a prosecutorial mindset. I never represented anybody before this
> agency that didn\'t feel that they were being singled out and treated
> unfairly, that other people were getting off easier. I had some who
> were very industrious about finding examples of other people who had
> done equally or in their mind worse things, not just equally bad, and
> you know, got off with lesser penalties. In my experience here, I have
> to say that I think that you are wrong in your assumptions about how
> OGC functions.
>
> In my experience here there have many times when they come to us and
> say, \"We are recommending that you do not find\--that you do not
> proceed against this. We\'ve done an investigation. We don\'t think
> there\'s anything to go on.\" In fact sometimes I find myself
> challenging them, and saying, \"What do you mean we don\'t have reason
> to believe? You know, clearly this guy ought to be investigated.\"
>
> So I know it feels that way when you\'re on the other side, but I
> don\'t think that that\'s actually how it goes on.
>
> But let me turn my attention to Mr. Noble because you are the only
> person representing your perspective that we get to hear from all day
> long.
>
> There are obviously many times when we find ourselves in a position
> where we have to err on one side or the other, either erring on the
> side of providing respondents with more due process rights, which will
> make them feel better about the process, make them feel, and perhaps
> others feel that it is a more fair process, or pursuing our
> investigatory and law enforcement agenda, and you have to make a call
> which side you\'re going to come down on. You seem to come down on a
> different side than everybody else here today.
>
> I\'m going to read to you one of the comments of one of our later
> panelists, or two of them actually. It comes from Mr. Sandler and Mr.
> Reiff. They say, \"If the success of a particular Commission
> investigation depends on keeping the evidence secret from the target
> of the investigation even at the probable cause stage, in violation
> of\"\--what they term\--\"every fundamental principle of due process,
> that should be a pretty good indication that there is something wrong
> with the investigation.\"
>
> And I ask you for a response to that because I have a feeling you
> don\'t agree with them.
>
> MR. NOBLE: No, I don\'t. First of all, and I want to kind of, in a
> sense, back into that to answer the question because there\'s a
> premise there, and it is premising what Mr. Bopp said and what Mr.
> McGahn said, which I don\'t accept, which is the premise is that being
> a prosecutor and being objective are two different things. I don\'t
> believe they are. I think as a prosecutor you have an ethical duty to
> look at the evidence and make a decision as to whether or not you
> think it\'s something that should be prosecuted. And as the Chair
> noted, on why it was here, it was true, that there were times when
> we\'d would come up to the Commission and say, \"We do not think
> there\'s reason to believe,\" or \"We do not think there\'s probable
> cause to believe,\" and we\'d be sent back, and to look again. Or we
> would be chastised by certain Commissioners to how blind we were to
> the evidence there.
>
> I always viewed my role here, and I think the staff when I was here
> viewed their role as being objective as possible, looking at the
> evidence, looking at the law, and making a decision whether there
> should be a recommendation as to a prosecution.
>
> Given that, when you get to the end of the probable cause to believe
> stage, I still approach the whole thing from the perspective that
> we\'re not talking about an adjudication here. Everything everybody is
> talking about is an adjudication. I would pose it a different way. How
> many law enforcement agencies go through a \"reason to believe\",
> \"probable cause to believe\" stage, are required by statute to try to
> settle, must have the General Counsel put forth a brief explaining his
> or her position in the matter before they can decide to prosecute a
> case. There aren\'t many of them. We\'ve looked. There may be a few,
> but there aren\'t many of them.
>
> And in a sense I think what has distorted this process so much is all
> of the, quote, \"rights\" that Congress has already given the
> respondents. What Congress effectively did\--no surprise because
> they\'re subject to these laws\--what Congress effectively did was
> give as close to adjudicatory rights to the respondents as they could,
> without giving the Commission any of the rights that go along with it
> or any of the powers that go along with that.
>
> So my answer on the probable cause to believe is there is no
> obligation. I don\'t think it means anything about what the Commission
> feels or the staff feels about its case, but frankly, if I wasn\'t
> worried about the fact that the Commission may very well send the
> Office of General Counsel back, or that the respondent would later
> come in with more evidence that was constructed after the fact to deal
> with what the Office of General Counsel had in the investigation, I
> wouldn\'t be as concerned about it. But the reality is\--and I know
> the light\'s off\--the reality is we\'d all like to believe that all
> the lawyers out there want to cooperate, and, \"Given another chance,
> I\'m sure I can convince you and if I can\'t I\'ll walk away happy.\"
> I\'ve never seen it happen.
>
> And I will tell you that one of the reasons there are 81 depositions
> in the Christian Coalition case, as the Court noted, was because\--and
> they were sanctioned for this\--they withheld documents. So every time
> more documents would come\--and this was in the litigation\--the
> Office of General Counsel would have to go out and take more
> depositions or redo depositions and\--
>
> CHAIR WEINTRAUB: Well, I don\'t want to relitigate the Christian
> Coalition case here.
>
> MR. NOBLE: I\'m just saying that\--but my point I\'m making here is
> that, yes, it\'s very easy to sit here, and I\'ve never met a lawyer
> who didn\'t come into the investigation and say, \"My client wants to
> fully cooperate, and I\'m sure after you see all of this, you will
> agree my client is innocent,\" and I\'ve never seen a lawyer do
> anything but that.
>
> And it\'s not going to help you to give them more rights. It\'s going
> to slow you down and it\'s going to even make you less effective than
> you are today.
>
> CHAIR WEINTRAUB: I have more questions, but you used up all my time,
> so I will pass it along to the General Counsel\--oh, I\'m
> sorry\--Commissioner Mason. That\'s what I happen when I scramble the
> order. I confuse myself here.
>
> Commissioner Mason. Sorry.
>
> COMMISSIONER MASON: It\'s all right. I kind of want to continue this
> discussion because frankly I agree with you in substantial part on the
> theory that this is a civil law enforcement agency and our obligation
> is to define the law, as Mr. Bopp suggested, through regulation, and
> to enforce it, and so our obligation is to the public. To note what
> the Chair said, that I appreciate you coming and I wish some of the
> other people who more or less agree with you had come.
>
> But what I want to probe is the question about whether what you\'re
> suggesting really works the way you\'re suggesting it does, or whether
> a little more openness might actually promote settlements. And I\'ll
> start with an area where I agree with you, and I\'ve said so, and
> it\'s quoted in something else here, and that is our enforcement
> priority system, where we have Tier 1, serious matters; Tier 2, not so
> serious matters. And the reason we have Tier 2 is so that people who
> commit sort of middling violations of the Act are at some risk of
> having enforcement action. I think that\'s a good idea, that we not be
> bound strictly by that. So that\'s an area where I sort of agree with
> you, that, as it were, hiding that ball a little bit promotes
> enforcement, and if handled right, isn\'t unfair. I mean there is
> going to be an aspect of some things get enforced and others don\'t.
>
> But when we get more or less to the end of the process, the probable
> cause, I sort of question that because of this sense of unfairness on
> the part of respondents, that we have something that we\'re not
> showing them that\'s secret and so on like that. And I really do see
> respondents very often responding the way these other counsel have
> described it. So I wanted to sort of give you an opportunity to think
> about\--you\'ve come some way already in terms of depositions and so
> on\--whether it might not be at least possible that giving some people
> an opportunity to respond at that stage or an opportunity to see a
> fuller recitation of the facts\--though I agree with you there are
> certainly going to be some cases where we don\'t want to give them
> everything\--might not actually promote a settlement by giving them a
> sense of closure and a sense of fairness.
>
> MR. NOBLE: Absolutely. And while I was here I think that was done on a
> case-by-case basis. Yes, there are times you\'re sitting across the
> table from somebody and you\--obviously it\'s going to move things
> along to say, \"Look, let me tell you what we have here. What we have
> is six witnesses who are going to testify they saw him take the
> contribution or testify they were reimbursed for the contribution"
> Sure, in individual cases it may. But all I\'m suggesting is it should
> not be the rule that you have to turn over the whole file, because
> what that leads to is the expectation at that point that, \"Well, the
> next thing we get to do is put on witnesses to counter what you just
> turned over.\" And while that also might in some abstract way aid the
> finding of the ultimate truth if it\'s out there, that\'s not what an
> investigatory agency is about. If you get that\--one of the things
> that I think might come from this, hopefully\--
>
> COMMISSIONER MASON: But why not?
>
> MR. NOBLE: Because in the end that\'s not your job. You can\'t
> adjudicate the truth. You don\'t have the power to do that.
>
> COMMISSIONER MASON: No, but if\--
>
> MR. NOBLE: You have to make a judgment of whether a case should go
> forward.
>
> COMMISSIONER MASON: Yes, I understand, but if providing a respondent
> with some of the evidence against it might provoke them to provide
> responsive materials that would give us a fuller picture, isn\'t that
> a part of our investigative process?
>
> MR. NOBLE: Sure. I think what we\'re leaving out of this is if
> there\'s a probable cause to believe brief, which often lays out most
> of the evidence and provokes responses, and provokes disagreements.
> Again, I mean, that\'s a rather unique situation where a prosecutorial
> agency sends out a brief putting forward its position on the matter,
> and so I don\'t want to paint this as that they are kept in the dark.
> In fact, considering most prosecutorial agencies, respondents are
> given far more information during an investigation than most subjects
> of investigation are given.
>
> But if you get to the case of probable cause to believe, where you
> think it is worth giving out more evidence and it will help the case,
> it will help the enforcement, then, sure, make that decision and give
> it out. But what very quickly happens at this Commission, and maybe
> it\'s changed in the 2-1/2 years I\'ve been gone, is that there\'s a
> one-way ratchet. When you give it out to some people, the next person
> is going to come in and say, \"You gave it out to them. I want it
> now.\" And then it\'s going to become, well, since we\'re giving it
> out to six people, we might as well give it out to everybody. And then
> you\'re stuck in a procedure that\'s going to take you far longer
> because you\'re giving out evidence that they\'re not required to
> have, may not be helpful and it\'s just going to further debate on the
> issues and for that process.
>
> COMMISSIONER MASON: Mr. Noble, my time is about up and I want to let
> other people go on, so I\'ll give you another opportunity if you\'re
> not able to come back to it in response to somebody else\'s question.
> I appreciate your acknowledgement, and I guess I just have to say I\'m
> a little less concerned about the generic sorts of responses then than
> you are, but I appreciate your acknowledgement that at least sometimes
> coming forward with this information could promote settlement, and
> that in essence that\'s what we are about in a lot of the cases.
>
> Thank you, Madam Chair.
>
> CHAIR WEINTRAUB: Thank you, Commissioner Mason, and again I apologize
> for not going to you in your appropriate area there.
>
> Now, Mr. General Counsel.
>
> MR. NORTON: Thank you, Madam Chair, and welcome to the panel.
>
> Mr. Noble, I wanted to get your reaction to a concern that occurs to
> me about a policy of releasing the entire file, and that is the
> privacy interests of third-party witnesses. I don\'t have anyone here
> who is representing those interested today, but as you well know in
> the FOIA context there\'s an exemption when a record was compiled for
> a law enforcement purpose and where the invasion of personal privacy,
> resulting from release, would outweigh the public interest, and courts
> have talked about\--this is grounded in the fact that being identified
> as part of a law enforcement investigation can subject people to
> embarrassment and harassment. There\'s obviously strong public
> interest in encouraging witnesses to participate in future
> investigations.
>
> I was wondering if you think that if we were to have a policy of
> releasing the file, it would be appropriate or indeed we would be
> compelled to make those kinds of evaluations about third-party
> witnesses and how we would respect those rights?
>
> MR. NOBLE: Absolutely. I think you would have to be concerned about
> that. You also get into the unsettled issue of the confidentiality
> provision, where they are multi-respondent cases and you\'re giving
> out information about other respondents, and sometimes in factual
> scenarios in the same case that aren\'t really directly connected to
> the factual scenario in one particular brief. So I think you have to
> deal with all of those issues.
>
> MR. NORTON: You made the point earlier, semi-facetiously, that you
> were one of I think 11 people who are testifying who bring a different
> perspective, and indeed we have 10 or 11 people who have responded to
> our notice of inquiry, who do bring the same or a similar perspective
> and almost the same recommendations.
>
> Someone referred recently to the FCC rule making debate, and part of
> the aftermath of that debate were accusations about who listened to
> whom, and that there were town meetings in fact where the Chairman
> didn\'t attend and perhaps didn\'t get the full picture from
> interested parties. I wonder what you think we could do or should do
> as a way of rounding out the inquiry and informing ourselves. If what
> we are going to do is undertake a reevaluation and changes in
> enforcement procedures, how can we ensure ourselves that we\'re
> looking at things we ought to look at, we\'re talking to the people we
> ought to look at?
>
> MR. NOBLE: Well, one of the things I said in our comments, and I would
> reinforce here, I think it is very important\--you may have already
> done this\--to go to other law enforcement agencies, and not rely on
> what either I or other witnesses tell you other law enforcement
> agencies do.
>
> I found it helpful when I was here to\--either myself or have staff go
> and talk to other agencies, and you come from another agency, and find
> out from them what they do in less, shall we say, less politically
> charged, or some less politically charged atmospheres, and what they
> do when they are trying to enforce the law. And I think that\'s a very
> good starting point. You don\'t have to always reinvent the wheel.
>
> Also I think if you don\'t feel that you\'re getting sufficient input
> from across the board, you may want to open this up again. Even the
> people who\--some of the people who are missing on, if you will, my
> side, are some of the other watchdog groups. But there are other
> people out there. There are candidates who have filed complaints.
> There are people who filed complaints at the agency and feel they
> haven\'t gotten a fair shake. There are people who sat through
> campaigns where they feel that the law was violated by the other side
> and nobody did anything about it. So I think that there\'s a way to
> reach out to those people. I think that\'s important. I mean what we
> have here is what I often refer to as the usual suspects, and I\'ll
> put myself in that group, the same 12 lawyers that basically do this
> stuff, but there are other people out there.
>
> And I have one other point to make on this, is that I was sympathetic,
> and I remain sympathetic to the impact of being investigated, but the
> courts have often said that\'s one of the prices we pay for living in
> a society of laws, is that, yes, people will be investigated, yes,
> they will have to pay for lawyers and such, and that cannot determine
> the whole system. It\'s a fact of life.
>
> But I would urge you to go out and get more information from other
> agencies and also from other people who may not have the resources or
> even know this is going on.
>
> MR. NORTON: You were the one commenter, Mr. Noble, who opposed the
> idea of making our civil penalty formula public or more transparent.
> Could you explain? I think what you said in your comments was, so long
> as we\'re negotiating penalties, it would be counterproductive. I\'m
> just wondering what you meant by that.
>
> MR. NOBLE: Well, I think that it comes in part from some very personal
> experiences here, and I will tread lightly because I still always
> respect my attorney/client privilege obligations here. First of all I
> think the civil penalty is set forth in the statute, the kind of the
> parameter for the civil penalty is set forth in the statute. The FEC
> then has to negotiate the civil penalties.
>
> I know there was\--I think Jan Baran and Bob Bauer years ago put out a
> newsletter where they tried to figure out what the civil penalties
> were in enforcement cases by looking at various cases. My concern
> there is it always comes out as a starting point of negotiation, and
> the Commission is then going to be asked to move down from there. So
> if you say, \"X violation we\'re going to start at \$1,500,\" well,
> you\'re at 750 as a practical matter, unless\--and this is where it
> gets personal\--unless the Commission was to hold the line, which some
> agencies do. I can\'t speak for this Commission because I wasn\'t here
> when some of you were here. But my previous experience was not only
> did the Commission not hold the line, it was notorious on the outside
> for making final offers that it would then come down from, and would
> then negotiate against itself.
>
> So it would make a final offer of let\'s say \$5,000, and when the
> other side said no, it would say, \"Okay, how about 4? How about 3?
> All right, we\'re going to drop the case.\" And there are specific
> instances of that, and as long as you\'re going to do that, I think
> putting out any lowered guideline is just going to exacerbate that
> problem. You\'re just going to keep ratcheting it down, and that\'s
> why I was opposed to it in that case.
>
> MR. NORTON: Thank you, Mr. Noble.
>
> Thank you, Madam Chair.
>
> CHAIR WEINTRAUB: Thank you both.
>
> Mr. Staff Director.
>
> MR. PEHRKON: Thank you, Madam Chair.
>
> Welcome, Mr. Noble, Mr. McGahn, Mr. Bopp. It\'s a pleasure to have you
> here today.
>
> My question is directed toward Mr. McGahn, who earlier you had made a
> comment with respect to the RAD letters that go out, and that they
> give at least some people the impression that the Commission has
> decided that a violation has occurred. Could you elaborate on that for
> me? And what\--is this a problem? And if it is, do you have a
> suggested solution?
>
> MR. McGAHN: I have seen from time to time people go through the RAD
> files, pull RAD letters and try to make them into something that
> they\'re not. I\'m not sure what the solution is to that other than
> people being a little bit more intellectually honest with themselves
> when they try to spin these RAD letters into something they\'re not.
>
> The RAD letters are form letters. There may be a way to rework the
> form letter a little bit\--and they\'re not all form letters; don\'t
> let me assume that they\'re all form letters\--but there are general
> boilerplate that goes out for certain reporting errors or whatnot.
> There may be a way to caveat it to make clear that this is not a
> Federal offense or that sort of thing where somebody can take it and
> do something different.
>
> The same is true with some other form letters, particularly the ones
> that accompany complaints, where it says, \"The Commission has
> received a complaint, indicates you may have violated the Federal
> Election Campaign Act.\" That\'s a sentence that always terrifies
> people, and that sentence can be used down the road to say, \"Well,
> the Commission sent you a letter saying you may have violated federal
> law. Obviously, there must be some basis for this,\" when in fact
> there really isn\'t other than your name is mentioned in a complaint
> somewhere. So perhaps it may be wise to take a look at some of the
> form letters. I\'m not sure particularly with the RAD letters how you
> can inoculate them any more than they already are. I just said it more
> to let you know that it\'s gotten to the point where people are even
> taking RAD letters and trying to make something out of them.
>
> MR. PERHKON: Thank you. I have no further comments.
>
> CHAIR WEINTRAUB: Thank you, Mr. Staff Director.
>
> And back to you, Commissioner Thomas.
>
> COMMISSIONER THOMAS: Thank you, Madam Chair.
>
> Let me go to a topic that at least for me is one of the most important
> that we have to deal with in the enforcement process, and that\'s the
> timeliness, the speed with which we can get cases resolved, and it\'s
> been alluded to with regard to say the Christian Coalition case. I
> haven\'t gone back to sort of parse how much time was devoted to the
> investigation at the administrative level versus how much time was
> taken up with litigation. I think both of them took a pretty long
> stretch of time, to be honest.
>
> And I would note that there are some cases that just by their very
> nature, involve some very complicated fact patterns. I was involved
> years ago as a staff attorney with the AMPAC investigation. It was a
> broad nationwide investigation, and it was a matter of basically
> whether state PAC organizations should be viewed as affiliated with
> AMPAC here in Washington and I guess in Chicago, and very complicated.
> We did lots of depositions all around the country. I was also involved
> in the draft Kennedy Committee case which involved all sorts of
> depositions all around the country because there were draft Kennedy
> Committees set up, and we had to go around and basically try to figure
> out whether they should all be viewed as affiliated with one another,
> very tough factual investigation. You really have to dig from the
> enforcer perspective for the kind of evidence that would prove out
> whether the allegations were true or not.
>
> Just wanted to get the reaction of all of the panel members. At a
> certain level, isn\'t this agency responsible, perhaps above all else,
> for asking for enough staff resources in order to timely investigate
> these matters? Would that perhaps have been a helpful matter in trying
> to more quickly resolve the allegations that were involved in cases
> where you have all had responsibility?
>
> MR. NOBLE: I can go first if you\'d like, because I can tell you
> this\--and I\'ll make this one short\--when we were doing the
> investigation of the \'96 election with both sides, the issue ads, and
> the Department of Justice was doing the same thing. What always
> surprised me was\--and I don\'t remember the exact details. I have
> them somewhere in my files. I had somebody look into it. The
> Department of Justice had over 120 people investigating the \'96
> violations. We had 7. The Office of General Counsel had 120 something
> people to do all nationwide enforcement of law, all audit related
> work, advisory opinions, regulations and all else.
>
> I didn\'t hear anybody complain at the time the Department of Justice
> had too many people, not to mention the fact that a Department of
> Justice investigation in many cases drags on for years. Independent
> counsel of special counsel investigations drag on for years with far
> more people than the Office of General Counsel has.
>
> I\'ve always felt that one of the basic problems in this system is
> that there are not enough resources for serious law enforcement.
>
> MR. BOPP: Well, I think one of the\--again, this is a difficult and
> complicated question you\'re asking, and I think one of the reasons
> the Coalition case took so long, it is true that there were a number
> of allegations regarding different campaigns that certainly were being
> investigated, but one of the factors was that the law was unclear, and
> so the Counsel\'s office I think was kind of in the process of
> formulating a theory of the law, while at the same time\--and then
> seeing whether or not the facts supported the theory. And I think that
> complicated the case and I think it made it longer and more difficult.
>
> And I think, and as I\'ve urged, I would urge you to do rule making as
> opposed to investigations as a mechanism to clarify the law. And I
> also felt that the Coalition\'s case was well staffed from the FEC
> perspective. in other words, my impression of it was there was
> definitely an adequate number of lawyers to conduct the kinds of
> investigations that they were trying to do, but I think those factors,
> the multiple allegations involving multiple campaigns, and the
> unclearness of the law, both made\--came together to make it as long
> and as difficult as it was.
>
> MR. McGAHN: I\'m not so sure it\'s purely a question of resources, and
> I am not entirely familiar with how many lawyers are assigned to
> particular cases, so I can\'t speak to that. But what I can say is
> that in my experience there are times where I feel that things could
> move quicker from the General Counsel\'s Office. It\'s tough for a
> defense lawyer to say this when there\'s a 5-year statute of
> limitations, to say, \"Gee, could you move it along?\" Because you
> could obviously pass the ball around for a while and try to run out
> the clock, but 5 years is a long time, regardless of the complexity of
> the case. And I have had letters that sort of seem to go away for a
> while, and then I get a response, a little bit more time than ought to
> have passed.
>
> Depositions are somewhat unique here in that virtually every
> deposition where I have defended someone, there have been multiple
> lawyers from the Office of General Counsel, sometimes 3, sometimes 4.
> There was one where there was 5. One fellow sort of dozed off at the
> end of the table. When I mentioned it on the record, he went ballistic
> as you can imagine. But that\'s the sort of thing that makes me think
> do we really need more resources or do we need more targeting of the
> resources that exist?
>
> Compare this to the public integrity section, which I don\'t visit
> often but occasionally have to go for someone who\'s not a target, of
> course, merely a witness or the like. There\'s the prosecutor and
> there\'s one FBI agent. And maybe others have had other experiences,
> but in my experience it is a much tighter ship notwithstanding what I
> assume to be accurate numbers proffered by Mr. Noble. Justice is quite
> large and they certainly have ample people to do ample things. But in
> my experience the perception is depositions and meetings, and there
> tends to be a lot of OGC people there that seem to be somewhat
> redundant.
>
> COMMISSIONER THOMAS: If wee could trade stories on sleeping attorneys,
> I think we would see it in every walk of life. A lot of attorneys work
> very long hours and they end up sleepy at the wrong times.
>
> MR. McGAHN: It happens.
>
> CHAIR WEINTRAUB: And I frequently look out when I\'m conducting one of
> these hearings and find people nodding off very often, so it happens
> here too. Although I must say that the fact that we sent 4 or 5
> attorneys to go up against you, Mr. McGahn, is clearly a tribute to
> your fearsome reputation.
>
> MR. McGAHN: I don\'t know if that was it. Just as an aside, the
> fellow\--it wasn\'t just a nap. It was sort of a dramatic\--
>
> \[Laughter.\]
>
> MR. McGAHN: It\'s funny now, but it was quite disturbing to the
> witness who was actually trying to answer questions and thought he was
> in some trouble, and meanwhile this guy is sort of dozing off.
>
> CHAIR WEINTRAUB: I would think the witness would have been comforted
> by that.
>
> It\'s Commissioner Toner's turn.
>
> COMMISSIONER TONER: Thank you, Madam Chair. I am shocked to hear that
> sleeping is occurring at the Federal Election Commission. Got to stamp
> that out immediately.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: We need to provide free coffee around here.
>
> COMMISSIONER TONER: Clearly, and the high-test variety. Forget this
> decaf stuff.
>
> Mr. Noble, in your comments on page 7 you talk about how you recommend
> that the Commission should revisit its memorandum of understanding
> with the Department of Justice, and I was wondering, while you were in
> General Counsel here, what your appraisal was of the MOU with DOJ and
> how it worked vis-à-vis the Commission? And also, do you think BCRA
> introduces any new elements that we ought to look at?
>
> MR. NOBLE: I think since BCRA increases the criminal penalties and
> makes criminal prosecutions maybe just slightly more possible or
> probable, I don\'t think it\'s as bad as other attorneys think it is
> in terms of all the criminal prosecutions that may come from it, but I
> do think you do need to revisit it.
>
> The memorandum of understanding I think is \'77 or \'79.
>
> COMMISSIONER TONER: 1977, that\'s right.
>
> MR. NOBLE: And it served its purpose at that time. It really became
> outdated over time. And what happened was we actually did upon
> occasion approach the Justice Department, but it never really went
> anywhere. And it was a moving target in one sense, because as the
> Department of Justice in the \'90s got more active\--for a long time
> they stayed out of a lot of these cases\--as they got more active, we
> really had to feel our way around with the Department of Justice of
> what\'s the best way to handle criminal and civil investigations at
> the same time, concurrent investigations. So things would come up that
> occasionally require us or make us think that we should go to the
> Department of Justice, but it was always difficult. There are
> obviously different interests involved in it, and so we kind of
> muddled along, and at various times had very good relations with the
> Department of Justice, some cases not such good relations with the
> Department of Justice.
>
> But I would urge the Commission, I think you\'re almost required now
> after BCRA, to go back to them and say, we\'re dealing with a
> 25-year-old memorandum of understanding. We need to look at it again.
>
> COMMISSIONER TONER: Do you recommend, even if we go through that
> process and conclude that the division of labor that\'s set out in
> that 1977 MOU should remain the same and there really aren\'t any
> other major changes that need to be made, would you recommend
> nevertheless that we execute a more contemporary document, you know,
> sometime this century, as opposed to relying on, I think as I
> understand that you\'re saying, is a good document, a good structure,
> but there\'s been some stresses on it over the years?
>
> MR. NOBLE: Yes. And I think any time you look at something that\'s
> 25-years-old and you see the law has been amended in between that time
> and procedures have changed, you wonder how relevant it is. So I
> think, yes, you should\--even if you decide not to make a lot of
> changes in it, you should re-enter into a memorandum of understanding.
>
> COMMISSIONER TONER: Mr. McGahn, I\'m interested on following up on a
> concept that was discussed this morning, and that is downward
> adjustment. As I think was noted, the U.S. Sentencing Commission
> regulations do provide for downward adjustments for defendants that
> volunteer information sua sponte. I was wondering\--and I recognize
> it\'s a perennial issue\--if we were to have downward adjustments here
> to define what is a sua sponte submission, as opposed to somebody who
> comes in 12 hours before the New York Times, is going to run an
> article outlining their problems, and that is an issue. But what I\'m
> really interested in is, do you think if we sought to develop this
> kind of policy here, it would have a practical impact among your
> clients? Would people be willing, more willing to come forward, to
> cooperate fully, provide information, if we had a downward adjustment
> policy?
>
> MR. McGAHN: My instinct is that the answer is yes. If it is in
> someone\'s interest to come forward early, often and come clean, and
> that is seriously going to be considered by the Commission when it
> comes time to conciliate the matter, I think that\'s a very strong
> encouragement. Today I can\'t promise clients that if they come
> forward it\'s going to matter. I think in certain cases it has. In
> other cases it hasn\'t. But to me, I don\'t perceive a consistency,
> but again, all this presupposes what exactly warrants a so-called
> downward adjustment, and now we do know there is something to adjust
> from, at least internally something to adjust from.
>
> It\'s easy to drop a footnote in your response brief that says, you
> know, we are interested in pre-probable cause conciliation. We all do
> that. It\'s another when you actually do have a situation where it was
> an innocent mistake and the client is dying to come in and tell
> somebody they did something wrong. The advice right now is let\'s be
> real careful about doing that, because we\'re not really sure that\'s
> the prudent way to go.
>
> COMMISSIONER TONER: Mr. Bopp, do you have thoughts on this subject,
> downward adjustment something we should look at, or not enough bank
> for the buck?
>
> MR. BOPP: Nothing more than what\'s been said.
>
> COMMISSIONER TONER: Mr. Noble, do you have any thoughts on that?
>
> MR. NOBLE: I don\'t think it\'s a bad idea, and I think it was done
> informally, or more formally, when I was at the Commission. It didn\'t
> always look that way and there are a lot of variables in it, but
> people were given the benefit if they came in, if they were truthful,
> if they cooperated. Sometimes their version of cooperation was not
> necessarily the Commission\'s version of cooperation. But I think that
> should be taken into account. I think it does speed settlements along.
>
> COMMISSIONER TONER: Thank you.
>
> Thank you, Madam Chair.
>
> CHAIR WEINTRAUB: Commissioner McDonald?
>
> COMMISSIONER McDONALD: Is it my turn?
>
> CHAIR WEINTRAUB: It\'s your turn.
>
> COMMISSIONER McDONALD: I was just resting my eyes while\--no, I\'m
> kidding.
>
> I want to go back just a minute. Let me finish up a thought that Larry
> had, and I had conveyed this to Commissioner Toner at the break as
> well, we did have that policy in terms of sua sponte matters, and I
> think the example I gave was my own self. Now, if my wife\'s been
> talking to one of my friends and I inadvertently stayed out a little
> late more than I should have, and she finds out before I am able to
> tell her, sua sponte on my part is really not as compelling as it
> might have been otherwise, I believe is the example I used, and I have
> been in that position. I think last night was the last time I can
> recall.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: Commissioner McDonald, we don\'t want to hear about
> that here.
>
> COMMISSIONER McDONALD: Well, you never know.
>
> I think it is a good point and I think we certainly have tried to do
> that over the years if it genuinely was sua sponte, particularly in a
> case where someone might be taking over a corporate structure, in
> which in routine investigation they found out that in fact somebody
> has done something that was not quite beneficial to their cause.
>
> I want to go back, if I could, Jim, not to ruin your career, but I\'m
> going to have to agree with you. I think you are absolutely right in
> terms of rule making process as opposed to pursuing a matter and
> making law in the context of pursuing a matter.
>
> But one of the things that\'s troubling to me about it is\--not that I
> don\'t agree with you\--but, you know, it reminds me of a lot of
> concurring opinions. We don\'t always derive our decisions based on
> what we all philosophically uniformly agree to or even 4 of us, but
> that we might find a conclusion that is satisfactory. And it goes back
> to the point you made early on about clear, when it is clear. I would
> submit to you that nothing is clear at this agency. I mean you can
> have lawyers that can fight over anything at any time, and they do.
> But I would also submit to you that in the context of not so much\--I
> don\'t much want to rehash a particular case, but in relationship to
> any case where there are four affirmative votes, for whatever reason,
> the commissioners thought there was enough to go forward, I think
> that\'s the only thing that I would pose to you, is that we did think
> it was clear.
>
> Now, we may not have all agreed on every dotting every \"i\" about
> what we wanted to do, and I would rather not focus on the Christian
> Coalition case as opposed to any other case that might come up,
> whether it was the AFL-CIO or anybody else. But you find yourself as a
> Commissioner in a difficult spot. If you say we ought to do it in a
> rule making and the rule making ought to be clear, and we all agree
> what the rule making is, we like to do that, we want to do that. But
> what I found over time is where 4 Commissioners agree on something, as
> diverse a group as this is, they do think it\'s clear, in a manner of
> speaking in terms of the statute to go forward. I just wondered if you
> don\'t think it\'s about the only conclusion, as sitting here I\'m
> talking about, that we can come to, because otherwise we can\'t see to
> function it seems like to me.
>
> MR. BOPP: Well, I think you should just consider this in the balance.
> In other words, that where the law is not clearly established, that
> your preference would be to do rule making as opposed to establishing
> the law that is not clearly established in the context of an
> enforcement action, and I do think it\'s fair to say that the
> Coalition case was a classic example of that. It was the first, you
> know, coordination case that you had. There were no regulations on it.
> You know, there\'s a statute and there\'s accepted views about in-kind
> contributions, which I agree with, but the General Counsel\'s Office
> theory was if you had an opportunity to coordinate, meaning you had a
> discussion with the candidate in question about anything, that was
> coordination. That was their theory.
>
> COMMISSIONER McDONALD: Not quite that way, but that\'s all right
>
> MR. BOPP: And it doesn\'t matter whether or not there was actual
> coordination, doesn\'t matter what was said. I think surely most would
> agree that that law wasn\'t established, was it?
>
> COMMISSIONER McDONALD: Well, you could include a number of laws that
> are established over time.
>
> MR. BOPP: And this is a judgment call.
>
> COMMISSIONER McDONALD: I understand. I\'m just curious.
>
> MR. BOPP: It\'s just something that ought to be in the balance because
> I think when the law is unclear or uncertain, that there\'s a lot of
> unfair results that flow from that, that do have partisan effects, and
> that the agency should endeavor to prevent that from happening.
> That\'s all.
>
> CHAIR WEINTRAUB: Mr. Vice Chairman.
>
> VICE CHAIRMAN SMITH: Thank you, Madam Chair.
>
> Mr. Noble at the start of the day I noted that if people believe that
> the enforcement of the law is unfair or unequal, it can create a loss
> of confidence in government, a loss of confidence and support for the
> law and unwillingness to comply with the law. Would you agree with
> that statement or not?
>
> MR. NOBLE: I agree with it as far as it goes. I would add to it that
> if people feel that the law is not being enforced at all\--
>
> VICE CHAIRMAN SMITH: That would also create it.
>
> MR. NOBLE: Yes.
>
> VICE CHAIRMAN SMITH: But we agree. Now, with that, I note in your
> comments, both here and in your written comments, and the notice is
> very clear that we asked people to comment on any aspect of
> enforcement you want, you do not make a single suggestion for anything
> that could be changed or improved at the Commission, other than that
> there are certain things we should ask Congress for.
>
> Is it your belief, is there nothing you think that the Commission has
> the power to do that would improve our enforcement process?
>
> MR. NOBLE: With all due respect, that\'s not true. I said that you\--
>
> VICE CHAIRMAN SMITH: That was a question, in the statement, and said,
> Is there nothing? So what is there?
>
> MR. NOBLE: In my comments.
>
> VICE CHAIRMAN SMITH: I didn\'t see anything that was different. They
> were kind of just like, well, you can talk to other agencies and see
> what they\--
>
> MR. NOBLE: No. I\'ll give them to you right now. I went beyond that.
> We said that basically you should take extensions of time more
> seriously, not just give out routine extensions of time, and the
> bigger one\--
>
> VICE CHAIRMAN SMITH: So that\'s due process.
>
> MR. NOBLE: I don\'t view it\--I don\'t view that as due process.
>
> VICE CHAIRMAN SMITH: I understand.
>
> MR. NOBLE: The big ticket one for me was ask for more resources.
>
> VICE CHAIRMAN SMITH: That\'s asking someone else, which I said, is
> there nothing we can do with what we have?
>
> MR. NOBLE: Yes. You can ask for more resources, which you don\'t do.
>
> VICE CHAIRMAN SMITH: Okay. We can ask\--yes, we would all like more.
>
> I\'ve got to tell you\--and I\'m going to close I guess with what\'s
> more of a little talk, and then I\'ll give you a chance to respond to
> it.
>
> You made much when you came in of your 23 years experience, and
> that\'s valid. I think it\'s fair to say that even 2-1/2 years after
> you left the agency, you\'re one of the reasons that the agency enjoys
> the reputation it has today.
>
> MR. NOBLE: I don\'t know if that\'s a compliment or not.
>
> VICE CHAIRMAN SMITH: I would say that the people in the ABA section on
> administrative law know a little bit about administrative law as well,
> and I go back\--I disagree. I mean you made a point of saying over and
> over you disagree with almost all the other commenters either here or
> not here, on how you look at it. But the ABA also disagrees with you,
> and I think it\'s worth reading a small part of the comments of
> William Allen, the Chair of the ABA at the time that they examined
> this agency. Admittedly, it\'s 20 years ago, but again, virtually
> nothing has changed in those procedures. And he writes, he says,
> \"There are avenues for going to court ultimately, but the statute
> places a premium on conflict resolution through conciliation. The fact
> is that the overwhelming majority of election law cases are resolved
> administratively for a variety of reasons. The cost of going to court
> is prohibitive in a lot of cases, and a lot of entities that are
> subject to regulation are mere temporary enterprises and their useful
> lives limited to a single election, and litigation is simply not
> worthwhile in those circumstances.\" And I would note it\'s probably
> not worthwhile for the government, nor does it speed the enforcement
> process which is a big concern.
>
> He goes on, he says, \"Accordingly, the procedures of this agency are
> of very great importance, practical importance in the disposition of a
> lot of matters having to do with enforcement of the election laws. In
> the administrative process that the Federal Election Commission
> engages in, it acts as complainant sometimes, internally-generated
> matters and respondents, as investigator, as prosecutor, and in a
> sense ultimately as judge and jury.\"
>
> And I think that more accurately describes what really goes on here. I
> have never, ever heard anybody on the other side say, \"Well, you
> know, we didn\'t mind that the process of the Commission seemed to us
> really unfair, because we always knew we would get our day in court.\"
> I have never heard anybody on the other side express a desire to go to
> court rather than to settle, and I am shocked that\--I mean even for
> example, you can\'t even accept the notion\--You say on the one hand
> the Commission should not make its penalty schedule public, and yet
> because\--and yet you complain that Commissioners deviate from the
> schedule too much. Well, making it public, wouldn\'t that keep people
> from deviating? It\'s not so much that you disagree, it\'s that
> thought never seems to have occurred to you.
>
> And I would conclude by saying I want to congratulate you. Very
> honestly, I have talked over the years with a number of prosecutors,
> commissioners at other agencies, staffers at other agencies, and I
> don\'t think I have ever heard a public official voice such open
> hostility for fairness and ideas of due process for whatever basis,
> and very honestly, I congratulate on that, and it\'s only fair that I
> give you some chance to respond. I hope maybe the Chair will let you
> go over your red light a bit.
>
> \[Laughter.\]
>
> MR. NOBLE: Well, I assume because of fairness and due process rights
> I\'ll be allowed to go over the red light a bit.
>
> CHAIR WEINTRAUB: Yes, within reasons.
>
> MR. NOBLE: Your sarcasm aside, I do put a lot of weight\--
>
> VICE CHAIRMAN SMITH: It is not sarcasm, by the way.
>
> MR. NOBLE: Your congratulations. I do put a lot of weight on fairness
> and due process. I\'m a very big believer in fairness and due process.
> I just don\'t think this agency has in any way, shape or form reached
> that stage where this is a serious debate about whether it\'s an
> aggressive enforcement agency.
>
> What shocks me, with all due respect, is the number of Commissioners
> here, who in other contexts talk about the importance of law
> enforcement. What shocks me, that Congress, that is willing to talk
> about the importance of law enforcement, the importance of making sure
> laws are enforced and crimes rooted out, but when you get to this
> area, it\'s really not that important. I mean, we\'ve got our First
> Amendment rights. I mean we\'re burdened by this.
>
> I think one of the things that I\'m shocked that\'s left out of this
> debate, are all the candidates and political committees who abide by
> the law, who don\'t end up before this agency because in fact they\'re
> not trying to push the envelope, they\'re not trying to see where they
> can get the Commissioners to split 3-3 so they can go ahead and do it.
> They are out there. They are out there in the multitudes and I think
> this Commission does them a disservice when in fact it constantly
> answers to the same 12 people. And I don\'t remember who was on that
> ABA committee, but I suspect some of the same people who testified
> this morning were involved in writing that report. So you\'re going
> back to the same voice over and over again, and you\'re saying,
> \"Well, it's speaking by the thousands.\"
>
> I am concerned about due process but\--and frankly, I would make
> recommendations in the way the agency can be changed to help
> everybody, but again, the reality that I saw in 23 years here, is that
> while there were cases that I thought maybe the agency went too far,
> that I thought people may have been unfairly gone after, the vast
> majority of cases, I thought that not only was the agency bending over
> backwards, that the agency was often taking the position, and the
> Commissioners were taking the position of the respondents, and saw
> themselves in an advocacy position to advocate for the respondents,
> and so given all of that, I just think we\'re very far away from the
> danger zone that you and the other people see here today.
>
> VICE CHAIRMAN SMITH: I think we\'re very far away from having served
> on the same Commission.
>
> CHAIR WEINTRAUB: I said I\'d give him more time. I didn\'t say I\'d
> give you more time.
>
> COMMISSIONER McDONALD: I was starting to say I want some time.
>
> VICE CHAIRMAN SMITH: There are a number of assumptions in there that I
> just find close to bizarre. And I appreciate that once again you
> expressed that hostility toward due process and fairness.
>
> MR. NOBLE: Again, I\'m not hostile to due process. I\'m hostile to
> this, some certain Commissioners\' view of due process.
>
> CHAIR WEINTRAUB: Okay.
>
> MR. NOBLE: Other than that, we agree.
>
> CHAIR WEINTRAUB: Other than that, indeed. I don\'t want to suggest
> that\--everything that the Vice Chairman said, and I certainly don\'t
> want you to feel that you\'re too much under attack here, Mr. Noble,
> but I am a bit concerned that some of what you express is somewhat
> dismissive of some fairly important concerns. I mean just now you were
> saying, oh, well, you know, people say they want law enforcement, but
> then they go complaining that their First Amendment rights are being
> intruded upon as if that is a minor concern. I mean people take their
> First Amendment rights seriously in this country.
>
> Wait, wait, I\'ll give you a chance. Just wait.
>
> And I find it disturbing that you can just blithely dismiss them in
> that fashion. Similarly, in your comments, in your written comments,
> throughout them there is this notion that, hey, we don\'t have to
> worry about due process, there actually isn\'t any process that\'s due
> because\--and I\'ll quote you\--\"The FEC does not have the power or
> authority to declare that anyone has violated the law, impose any
> penalties, or order any remedial action.\"
>
> I mean you make it sound like what we do here is nothing, which, you
> know, sort of makes me wonder why you stayed here for 23 years if you
> felt that way.
>
> MR. NOBLE: I felt this way before.
>
> CHAIR WEINTRAUB: But I think that most respondents before this
> agency\--I mean, certainly there\'s a diversity of viewpoints on this
> panel, if nowhere else today, certainly on this panel, but I think
> that most respondents often do feel badgered by this agency, oppressed
> by this agency, that their First Amendment rights are being
> threatened, and that they\--and that serious penalties are being
> imposed upon them by this agency. Now, it\'s true that it\'s by
> conciliation. You know, otherwise we could go to court over it, but
> people sometimes feel that the costs of going through litigation and
> being embroiled in the court system for another umpty-ump years before
> they resolve this is not worth it to them. They tend to be political
> actors who have political concerns, and they want to get on with their
> political lives.
>
> I want to give you an opportunity to respond, but it does seem to me
> that you diminish the significance of what this agency does and how it
> affects people in exercising their First Amendment rights and in
> participating in the political process.
>
> MR. NOBLE: First, I\'m not at all dismissive of First Amendment
> rights. What I am sometimes dismissive of is how every issue in this
> agency turns into a First Amendment issue, that as the court said in a
> different context, just because somebody comes into a court wearing an
> overcoat doesn\'t mean there\'s a chill. Just because somebody says,
> \"My First Amendment rights are being violated,\" doesn\'t mean their
> First Amendment rights are being violated.
>
> But I do recognize\--
>
> CHAIR WEINTRAUB: Who\'s to decide that?
>
> MR. NOBLE: Sorry?
>
> CHAIR WEINTRAUB: But I mean, you know, are you going to be the person
> who\'s going to decide\--
>
> MR. NOBLE: The courts are ultimately going to decide that, and that\'s
> always the way it\'s been. But, you know, I would note that we always
> took into account First Amendment rights. The statute takes into
> account First Amendment rights, and one of the things we were always
> very quick to say is that the Federal Election Campaign Act implicates
> First Amendment rights. Virtually all of it does. However, Congress
> and the courts and the Supreme Court in a number of cases, has said
> that the interest behind the law is sufficient to justify the burden
> in First Amendment rights. It seems though that certain people on the
> Commission don\'t accept that. They think that the First Amendment
> rights in those cases have to block all attempts at enforcement and\--
>
> CHAIR WEINTRAUB: I can\'t imagine who you\'re talking about.
>
> MR. NOBLE: I\'m not talking about any in particular. And have to be
> controlling in the situation. And maybe one of the reasons I come
> across as adamant about this as I am, is because\--I didn\'t count the
> number of witnesses\--but because all you generally hear about or hear
> from are the people who are complaining about the process being too
> burdensome. In the 23 years I was here I think I can remember one
> letter that the staff got from somebody who was the subject of
> investigation, who said, \"Thank you very much. You did a great job.\"
> In 23 years I think that happened once, maybe more, maybe I wasn\'t
> told about it.
>
> But the reality of it is, when you\'re dealing in law enforcement,
> you\'re not going to be liked by everybody out there. That\'s the
> truth. You know, when I get pulled over by a cop\--not that this has
> ever happened\--for speeding\--
>
> \[Laughter.\]
>
> MR. NOBLE: \--I\'d like to say, \"This is really upsetting to me. This
> is really upsetting to me, and you know, my son is in the car with me
> and this is embarrassing, and now I have to explain to my son why I
> was pulled over for running that stop sign. Don\'t you think you
> should go away?\" That\'s the world we live in. I\'m not dismissive of
> this, and it\'s because I\'m not dismissive of the law and the
> importance of the law that I feel so strongly about this. I think
> that, yes, consider these rules, consider whatever rules you want, but
> keep in mind that ultimately you\'re a law enforcement agency. That\'s
> what I think is missing from the equation, is this belief, this
> culture, that this isn\'t about making things fair between the
> political parties, this isn\'t about making sure that all the
> candidates know absolutely in advance what the law is, because nobody
> in this country knows absolutely in advance how the law is going to be
> applied in a given position.
>
> CHAIR WEINTRAUB: I have to dispute that this agency is solely
> concerned with equalizing things between the political\--
>
> MR. NOBLE: It\'s one of the concerns. It\'s been expressed on the
> record.
>
> CHAIR WEINTRAUB: Well, you know, what may have been expressed in the
> last 23 years on the record in your experience may or may not reflect
> the current concerns of the Commission.
>
> I do think that it is a fair concern for the Commission to be
> concerned with whether people feel that their due process rights are
> being violated and whether they\'re being treated in a different way
> before this agency than they are before other agencies that are out
> there.
>
> But my red light is on, so I am\--who do I go to now? Commissioner
> Mason. Let me get this right this time.
>
> COMMISSIONER MASON: Thank you, Madam Chair.
>
> Mr. Bopp, I was inquiring of Mr. Noble before about the possibility
> that being more forthcoming with the record would promote, tend to
> promote settlements, and I think you wanted to say something about
> that.
>
> And on a related point, you may have addressed in your testimony, and
> Mr. McGahn, feel free to respond as well, I had asked the earlier
> panel if they thought that publishing the recommended fine schedule
> would also promote settlements.
>
> MR. BOPP: I think it would be very helpful to the Commission, and I
> think that it would be a salutary step for the respondents in their
> belief that they\'re being treated fairly if they had access to the
> investigatory information in making their, you know, in filing their
> brief at the probable cause stage with the Commission. It would
> provide an additional opportunity for the evidence that is there to be
> presented to the Commission, so that it would be helpful to you. It
> would have a salutary effect, in my judgment, on the General
> Counsel\'s Office. My view is you should encourage them to give you
> objective legal advice, and to the extent that another person, you
> know, with an interest in this is going to look at the record and
> present exculpatory information will have that effect.
>
> And I don\'t understand, frankly, Larry\'s opposition to this. I mean,
> his position as General Counsel was when the case was dismissed, all
> this goes public. All of it goes public to the world. But at the
> probable cause stage we shouldn\'t give it to the respondent under a
> confidentiality agreement? And secondly, if suit is filed the
> respondent gets it too. You know, we just file a discovery request, we
> get the whole thing.
>
> So it seems to me, you know, the respondent or the world is going to
> get it one way or the other, and why not let the respondent have it at
> a time when it could be helpful to you in your deliberations.
>
> COMMISSIONER MASON: And I assume that you would agree that it probably
> is a little oversimplified to say we should give them a complete file,
> in essence, if there are respondents who might have divergent
> interests or\--for instance, we recently dismissed a case where the
> respondents were the Democratic State Party\'s organization and the
> Leadership Forum which is a Republican affiliated organization. Now,
> we didn\'t do an investigation, but if we had investigated, it\'s very
> clear that there may have been different facts and very different
> interests.
>
> MR. BOPP: Yes, and so I\--
>
> COMMISSIONER MASON: I want to state something I think you assume is
> obvious, but\--
>
> MR. BOPP: Evidence there is pertinent to that respondent.
>
> COMMISSIONER MASON: But that the rules should be to give them more or
> less everything and have reasons for exceptions as opposed to have
> reasons to give them the evidence.
>
> MR. BOPP: And I think it should be under a confidentiality agreement
> because I do agree with the District Court in the AFL-CIO case that
> this, you know, you should not be making willy-nilly this information
> available to the general public when you dismiss, and so I think that
> would be a safeguard that you might consider.
>
> COMMISSIONER MASON: Mr. McGahn?
>
> MR. McGAHN: To the extent I can remember the multiple questions, the
> last question you asked was about the fine, sort of internal fine
> schedule. Although on the one hand I understand the concern that
> that\'s out there, it somehow takes away the mystery and maybe allows
> people to calculate cost of doing business or the like, or there\'s
> other reasons why you may want to keep it secret. The fact of the
> matter is, is if you study the MURs that come out in the
> conciliations, you can sort of, kind of guess where you\'re going to
> be fine wise. So simply releasing this to the public isn\'t
> necessarily going to give away the farm, or it\'s the secret weapon of
> the Commission or somehow cause people to start doing things
> differently than they\'re already going to do. But by keeping it
> secret, it\'s yet another example of the sort of closed door of the
> Commission, yet another thing that the public is unaware of, so I
> would think releasing it would be a benefit to moving matters along,
> making people feel as if they\'re being treated fairly and ultimately
> that will result I think in more enforcement not less, prompter
> enforcement, not slower enforcement.
>
> COMMISSIONER MASON: Thank you.
>
> CHAIR WEINTRAUB: Wow, not even using up your red light. There it is,
> close.
>
> Mr. General Counsel?
>
> MR. NORTON: Thank you, Madam Chair.
>
> I wanted to ask you a question, Mr. Bopp. I don\'t think it\'s really
> a novel proposition that the administrative agencies and regulatory
> agencies seek to develop and clarify the law through the enforcement
> process, and I respect that there can be different views about this
> agency or any other\'s approach to that endeavor and how aggressive in
> trying to develop the law in that manner. But I think one of the
> things you and one of our former Commissioners suggested is that we
> ought to do is tell people what the law is, and that rule making and
> to some extent, an advisory opinion route is the more appropriate
> thing for us to do. And we spent the better part of last year doing
> just that. We\'re about to attempt to resolve fairly significant rule
> making in the Title 26 area. We are talking about any number of other
> possible rulemakings for the balance of the year. And I wonder about
> the balance of that process and whether it could indeed reach the
> point where we are promulgating so many rules and revising so many
> existing rules, that we sow confusion through that process, in fact,
> perhaps in a greater manner than we might by dealing as incrementally
> as we do through the enforcement process.
>
> MR. BOPP: Well, yeah, I agree that that\'s a danger. I mean
> I\--that\'s one of the reasons that I have a strict view of what, you
> know, the amount of law there ought to be that applies to the First
> Amendment. In the face of the First Amendment it says, \"Congress
> shall make no law.\" But I guess what I am saying is that this should
> be something in the balance, a consideration. In other words, as
> you\'re looking at a particular matter, let\'s say you have a pending
> possible enforcement action, and you\'re looking at that. One of the
> considerations I think you should take into account is wouldn\'t it be
> better to handle this in a rulemaking, you know, because of the things
> that I\'ve mentioned. So it\'s just a factor. I mean I\'m not
> advocating a bright line. You should always do this or always do that,
> as a factor.
>
> And I agree that that is a danger as well.
>
> MR. NORTON: I want to respond briefly, I hope, to the point you made
> very early on about the proper function of the office, because I agree
> wholeheartedly. I\'m not sure I could have said it much better. I
> think in our investigative capacity it is our role to develop a full
> record, that we ought to focus on potential violations, that we ought
> not have preconceived ideas, that our role is to objectively evaluate
> evidence. I don\'t think we win in any sense when the Commission finds
> reason to believe or probable cause. I don\'t think it\'s our job to
> sell the Commission. I don\'t agree that it\'s an adversarial process
> at that stage between this office and respondents, and I think that\'s
> part of the circumstances that ought to be taken into account, into
> determining what process is due. I don\'t have any doubt that
> sometimes people are too zealous. I see it. I also have no doubt that
> sometimes people need to be more skeptical. I see that too.
>
> But I wanted to ask you about your observation about the structure of
> the office, and I think the Vice Chairman touched on it a bit in terms
> of the structure of the Commission, that there was this problem of
> dual hats. And as you know, at other regulatory agencies the SEC, the
> FTC, for example, they litigate in federal court, but they also have
> administrative law judges, and they serve as the appeal. They
> adjudicate appeals from the ALJs. So what are they adjudicating?
> They\'re adjudicating matters that they handled in the enforcement
> track previously, and made a recommendation to send it into
> litigation.
>
> My question is, is there something about the structure of this
> Commission, the multiple hats that the Vice Chairman referred to, the
> dual roles of the General Counsel\'s Office that warrants greater
> process than that\--
>
> MR. BOPP: Warrants greater process?
>
> MR. NORTON: Warrants greater process, procedural rights, due process
> rights to respondents, than agencies where you literally have the
> Commission acting in both an adjudicative capacity and in an
> investigative capacity.
>
> MR. BOPP: I\'ve described the problem, and I\'m not talking about it
> being necessarily current or with you or any person\--
>
> MR. NORTON: A number of disclaimers here?
>
> MR. BOPP: As many as I can come up with.
>
> But I\'m just talking about what it is, you know, in 25 years of
> experience in dealing with the agency, and certainly the statement
> that you\'ve made is a wonderful statement about the ideal that I
> would like to see the General Counsel\'s Office conduct themselves,
> and I do know that there are cases when they do do so, even before
> your tenure, as I mentioned.
>
> And I did describe it, I believe, as a cultural problem or a cultural
> phenomena. I don\'t think there\'s any structural magic bullet, you
> know, that you can structure in a certain way and then as a result
> this culture flows, because I do think it\'s attitudinal, you know.
> But I do think the FEC is different. That was your question I think.
>
> The FEC is different than the SEC. It is different than the vast
> majority of government agencies because this one uniquely regulates
> the First Amendment, and the core activities that govern our
> representative democracy. So in that respect I think there needs to be
> more protections, because I see the heavy hand of government as the
> problem in this area, much more than anything else.
>
> And so that to the extent that we can lift the heavy hand of
> government by focusing on doing things where there are clear legal
> violations as opposed to questionable ones, and providing information
> that may not be routinely shared in other agencies, I think that
> promotes that, and that\'s why.
>
> MR. NORTON: Thank you, Mr. Bopp, and thank you, Madam Chair.
>
> CHAIR WEINTRAUB: Thank you, Mr. General Counsel. I just want to point
> out that\--not that I necessarily want to hold up the FCC as a model
> for our conduct these days, but they do regulate speech as in some
> ways does the FTC, the Justice Department and other agencies that I\'m
> probably not thinking of.
>
> Mr. Staff Director.
>
> MR. PEHRKON: Madam Chair, I have no additional questions.
>
> CHAIR WEINTRAUB: Got to love that man.
>
> MR. PEHRKON: I relinquish my time to whoever wants to use it.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: No, no, no. You can\'t give it away because we\'re
> running behind schedule.
>
> I want to thank once again the panel for a most illuminating and frank
> discussion, and we will take a 10-minute break and come back. I guess
> that makes it 3:02 for our next panel.
>
> \[Recess.\]
>
> CHAIR WEINTRAUB: We\'re back in session with our final panel for the
> day. We appreciate your coming here and just in case any of you missed
> the exciting day that we\'ve had before this\--I know Mr. Spies, you
> were out there, but the rest of you have missed a spirited discussion
> so far.
>
> Just so you understand the system we\'re operating under, we\'re using
> the lights on the desk. You get 5 minutes to make your initial
> presentation. The light will go from green to yellow at 4-1/2, and at
> 5 the light will turn red, after which\--after the opening statements,
> we\'ll have an opportunity for each of the Commissioners to question
> for 5 minutes, and then the General Counsel and the Staff Director,
> and then we\'ll do one more found, and then we will be done. And I
> will hold people to their 5-minute limits.
>
> With that, we welcome Mr. Olson, Mr. Spies, Mr. Sandler and Mr. Reiff.
>
> Mr. Olson, why don\'t you start us off?
>
> MR. OLSON: Thank you, Chairman Weintraub. I\'m delighted to be here.
> I\'ve been here a few times before the Commission for similar
> rulemakings and other opportunities to testify, and I think until now,
> nothing I\'ve ever said has been accepted by the Commission. Maybe
> today will be a break in that.
>
> I\'m sure your motivation in having these hearings as we prepare our
> Supreme Court briefs has nothing to do with trying to keep us away
> from getting our work done. But I notice when Jan Baran filed his
> comments, he said, \"I\'m just too busy,\" and I sort of have that
> feeling myself. And not having been here, I don\'t know what good
> jokes have been used, so I\'ll just say that I\'m representing
> Congressman Ron Paul in the BCRA litigation, as you may know. And many
> of us here, and probably at other panels, are involved in that
> litigation. And I can only say that I\'m hoping that today\'s hearing
> is helping you arrange some of the deck chairs on the Titanic. But
> we\'ll have to see what the Supreme Court does.
>
> \[Laughter.\]
>
> MR. OLSON: Thank you, Commissioner McDonald, for your laughter.
>
> I did file a statement. I picked four of the topics that I thought I
> knew something about, after having been around the Commission and
> enforcement actions on and off since 1977, not as a huge part of our
> practice but I have had the opportunity to be down here more than
> once.
>
> I do believe that there are two items that I wanted to give specific
> attention to in our comments that I thought would help. One is on the
> issue of what it takes to file a complaint before the Commission. And
> one of the things that\'s frustrating me is that on occasion I\'ve had
> to defend against complaints which were brought based on nothing more
> than a letter from someone who said, \"I have read an article in a
> newspaper. That article is attached. I believe the facts in that
> article to be true.\" The person having no firsthand information,
> nothing on which they could truly execute an affidavit under penalty
> of perjury, as the statute requires in 437(g).
>
> They have no personal familiarity with the newspaper article except
> for the fact that they operate on the assumption that newspapers
> generally tell the truth. I think if the Commission were to get such a
> complaint, rather than put someone to the burden of having to respond
> to it and open a MUR and go to the expense of it, it would be a good
> practice for this Commission to write to the person filing the
> complaint and saying, \"I\'m sorry, you have filed a complaint,
> although under penalty of perjury, which does not meet the
> requirements of the Act\" and simply return it. I think that would
> save all of us a great deal of time, and I urge that first reform.
>
> Another that I\'ve found terribly frustrating is this entire concept
> of not being allowed to take the deposition of your own client back
> with you after the reporter has recorded it. You know, I\'ve come in
> even with tape recorders and said, \"I\'m going to be taping this,\"
> and they say, \"No, you\'re not.\" And if you fly a client in from
> halfway across the country, what are you going to do at that point?
> You\'re simply not\--you\'re going to back down as against this
> instruction that you cannot tape it, you cannot get a copy of the
> transcript, the Office of General Counsel is in control.
>
> And I\'ve asked on several occasions what the origin of that
> particular rule is, and I\'ve never gotten an adequate answer except
> to say the statute deals with persons who might violate the Act, and
> that privacy is required, and that to protect your own privacy, Mr.
> Respondent, we\'re going to keep you from having a copy of your own
> deposition.
>
> And that\'s the kind of logic, as they say, that would appeal only to
> a lawyer. It\'s a bad reason to have a tactical advantage. And I hope
> that some of these issues\--you know, it\'s funny. In the past, we\'ve
> never had anyone to talk to about this, so this rulemaking is really
> exceptionally exciting, and you couldn\'t have kept me away from this.
> I appreciate your indulgence in allowing me to come down because this
> is the only time we get to talk about these things. And it\'s the only
> time we get to question other than in totally frustrating and futile
> discussions with the Office of General Counsel why things are the way
> they are.
>
> And we were told when we questioned this at not point that, well,
> that\'s a rule that has come down from the General Counsel\'s office.
> I said, well, fine, give it to me in writing. Well, that doesn\'t
> exist in writing. It might exist in some internal procedures which
> you\'re not allowed to have.
>
> Well, has the Commission ever acted on it? No, not that we know. Is it
> in the regs? No. Is it in the statute? No. And at some point you
> realize that you\'re not going to get anywhere, except to yield to the
> superior resources and position of the General Counsel\'s Office. And
> I do think that at some point this gets us to the issue of what the
> General Counsel\'s Office is. Is it a prosecutorial arm of the
> Commission to be an advocate? Or is it designed to be an ombudsman and
> sort of usher the process along? And I think out of this comes a lot
> of other issues, such as do we get to address you in representing our
> clients?
>
> And I want to mention one thing. Did the red button go off? Oh, I\'m
> sorry.
>
> CHAIR WEINTRAUB: I was so interested, I wasn\'t even paying attention,
> but I appreciate your being honest enough to tell me.
>
> MR. OLSON: I\'m sure the rest will come out later.
>
> CHAIR WEINTRAUB: I\'m sure we\'ll have some interesting questions for
> you.
>
> Mr. Spies?
>
> MR. SPIES: Thank you, Madam Chair.
>
> As we note in our comments, I am testifying not necessarily on behalf
> of the Republican National Committee or any particular candidate, but
> I would like to note that official on behalf of the RNC and, I\'m
> going to presume to say, on behalf of Republican candidates
> nationwide, we\'d like to wish Larry a happy birthday.
>
> \[Laughter.\]
>
> MR. NORTON: I was going to ask the Chair to remind you.
>
> MR. SPIES: And you\'ll note the Democrats have not wished him one.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: But they did this morning.
>
> MR. SPIES: I think Jim Bopp got it right when he said that many of the
> problems we\'re hearing about were due to cultural problems at the
> Commission and not\--and that there\'s no magic bullet, no structural
> magic bullet to solve those problems. And I agree with him on that.
>
> But having said that, I think the culture at the Commission is much
> more favorable in terms of respective of due process and in terms of
> allowing a full fact-finding process now than it has been in the past.
> And I think that is due to some structural changes.
>
> For example, I commend the Commission on the administrative fine
> process. That allows me to tell state and local parties, local
> candidates, if you don\'t file your report, you\'re going to get
> fined. It\'s that simple. And it makes things simpler, and I think
> that has worked to deter folks from not filing the reports on time.
>
> I also think the ADR program has worked in terms of being a less
> adversarial process for minor violations of the law or first-time
> violators that takes them out of at least what was previously seen as
> an extremely prosecutorial General Counsel\'s Office into a system
> where they can come to mutual agreement much more quickly.
>
> One problem that still remains that I think everybody and even Mr.
> Noble basically conceded is a problem is the issue of getting copies
> of your own deposition transcripts. This happened with us just about
> six weeks ago, two months ago. We had a witness who had had his
> deposition taken. He was extraordinarily busy. We wanted to get a copy
> of it for him to review at his office or when he was traveling. We
> offered to proffer an affidavit signed by the attorney, an officer of
> the court, subject to rules, you know, rules of the bar, that if we
> falsely signed the affidavit we\'d be in serious trouble with our bar
> membership, et cetera, saying that, you know, we were just going to
> let him look at it and then we\'d return it. And even that was not
> enough. He had to come physically to this building or to the court
> reporter\'s office to review it on the schedule set, at least schedule
> it in terms of having to come here, by the Commission and I have yet
> to hear a reason why that is necessary.
>
> There are lots of other tribunals that cover lots of privacy issues,
> have lots of confidentiality concerns, have lots of money on the line,
> have lots of important issues, and yet they trust officers of the
> court to keep their word. This seems to me to be one of the only
> agencies that does not have that policy.
>
> I\'d also like to note one thing historically, and that is, the
> 1979\--this regards the issue of having a hearing before the
> Commission. When the 1979 amendments were passed, Congress
> specifically considered whether to have a hearing at the probable
> cause phase. And at that time, they decided not to do it based on a
> couple of assumptions.
>
> One assumption was that it would extend the process and be an unfair
> advantage for the D.C. legal base and people based in Washington, D.C.
> That was their first assumption.
>
> The second assumption was that this would be a paper trial process; in
> other words, the General Counsel\'s Office would offer a brief, and
> then the respondent would be able to give a response brief, and
> that\'s it. The Commission would then examine both those briefs.
>
> Both those factual assumptions have changed. In terms of the brief,
> it\'s not a paper trial where you have\--and I realize it\'s not
> really a trial. We could go back to whether it\'s a\--what sort of
> adjudication it is. But in terms of the fact finding the Commission is
> doing, it\'s not done on paper.
>
> The General Counsel\'s Office offers a brief. The respondent gives a
> brief. The General Counsel then provides his spin to the respondent\'s
> brief, and then the General Counsel presents that brief and supposedly
> answers the questions of law and fact that the Commission may have.
> But even with the best intentions, they\'re not going to be providing
> that from the respondent\'s perspective.
>
> If Congress had known that it would not be a paper trial, they have
> done this very differently. I think the situation has changed and we
> need to have hearings.
>
> CHAIR WEINTRAUB: Thank you, Mr. Spies, and thank you for respecting
> the red light.
>
> Mr. Sandler, I think you\'d better start off by wishing the General
> Counsel happy birthday.
>
> \[Laughter.\]
>
> MR. SANDLER: Of course, of course.
>
> COMMISSIONER McDONALD: No coaching the witness.
>
> \[Laughter.\]
>
> MR. REIFF: Should we lead a chorus?
>
> MR. SANDLER: Well, of course we join our Republican colleagues in
> wishing him a happy birthday.
>
> Madam Chair, members of the Commission, as regular\--we\'re appearing
> today on behalf of our law firm, not on behalf of any particular
> client, and as regular practitioners before the Commission, we do
> appreciate the opportunity to address the very important issues raised
> in this notice.
>
> We\'ve reviewed obviously the comments of some of the other groups
> that have been critics of the Commission\'s enforcement process and
> find that we, in effect, really do start with the same premise, which
> is that there really isn\'t any process due to respondents
> because\--as a technical, constitutional, legal matter because of the
> opportunity for trial de novo in court. So the real question is a
> policy one for the Commission, which is: Do you want to have an
> enforcement process in which respondents want to take everything to
> court? And does the General Counsel have the resources, the energy,
> and the willingness to litigate hundreds of civil enforcement cases in
> U.S. district courts across the country? Is that a good way to
> increase the efficiency and expedite the resolution of these cases?
>
> And I think to ask the question is to answer it. As a policy matter,
> not because the Constitution requires it, respondents would be happy
> to tell the Commission, you know, next time there\'s an enforcement
> case, don\'t\--save yourself the postage. We\'ll see you in court.
> That\'s an option the Commission has legally without a doubt. But it
> is not a good policy option, in our view.
>
> The various protections for respondents and due process we believe is
> a way to encourage people to undertake the conciliation process and
> will encourage more resolution of more cases without civil enforcement
> proceedings through litigation.
>
> In terms of the concern about lengthening the process by affording
> these protections, we believe the right way to increase the efficiency
> of the enforcement process and get these cases resolved quickly is not
> to deprive respondents of due process right, but for the Commission to
> avail itself of the very kinds of structural changes that Charlie
> Spies gave some examples of. Another one that will come to my mind
> immediately is mediation. Since the program began, our firm\--and it
> may be a coincidence or whatever\--hasn\'t had a single case referred
> to mediation, despite requests by us in some cases that it be done.
> Not clear why that\'s the case.
>
> We believe that beyond that, prioritization of cases based on\--and we
> have a slightly different approach than some of the other commenters.
> Prioritization of cases based on the sums involved, the importance of
> the issues, not that the Commission shouldn\'t pursue routine
> intentional violations, but they don\'t\--the Office of General
> Counsel does not need to conduct a two-year investigation to resolve
> those cases, which is its practice now. And those kinds of structural
> approaches and a real genuine implementation of an enforcement
> priority system is a better way to expedite the process than to
> deprive respondents of due process, of additional due process
> protections that would\--a deprivation which would only encourage
> greater resort to civil enforcement proceedings in the district
> courts, which is not to anybody\'s advantage.
>
> Thank you very much.
>
> CHAIR WEINTRAUB: Thank you.
>
> Mr. Reiff, do you have an opening statement?
>
> MR. REIFF: Sure, just a couple of brief points to add to Joe\'s
> opening statement. A couple of items that were not address in your
> notice that I just want to point out. Maybe I should characterize
> these more as a couple of personal peeves more than anything else.
>
> But my first point I want to make is about internally generated MURs.
> It seems to me that there\'s a lot less due process involved in these
> kind of cases as opposed to an externally generated outside complaint.
> For example, in most internally generated cases, the respondent will
> not receive the case until it\'s already had a reason-to-believe vote.
> There has probably already been a General Counsel\'s brief prepared
> and the conciliation agreement, a pre-probable cause conciliation
> agreement already presented to the respondent. Obviously, there are
> many fewer bites at the apple for the respondent in this type of case,
> and I would obviously recommend that an additional layer or two of due
> process be afforded to those respondents involved in an internally
> generated matter.
>
> A second pet peeve\--and I\'ll probably get hung by the D.C. Bar,
> Campaign Finance Bar for mentioning this\--is the accessibility to MUR
> documents. The Commission has gone a long way with respect to its
> Internet site in getting advisory opinions available to the general
> public with searches even by word of the opinions. There is no similar
> process for the availability of MUR documents.
>
> CHAIR WEINTRAUB: Ah, but had you been here this morning, you would
> have heard me make a commitment that at the end of the year we\'re
> going to start getting them\--
>
> MR. REIFF: That is great news. Well, on that note, I will end.
>
> \[Laughter.\]
>
> VICE CHAIRMAN SMITH: \"Peeves\" is not usually a word used in our
> hearings.
>
> MR. REIFF: Well, I\'m from Brooklyn.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: You went from peeved to pleased. Good transition.
>
> This time around Commissioner Toner gets to go first.
>
> COMMISSIONER TONER: Thank you, Madam Chair. I wish we could solve all
> issues like we\'ve just solved the first one that Mr. Reiff\--
>
> MR. REIFF: That was outstanding.
>
> COMMISSIONER TONER: Thank you all for being here very much. It\'s been
> a very interesting hearing.
>
> I want to start first with you, Mr. Olson. You mentioned a couple
> things in your opening comments. I just want to explore a couple of
> them. One was the complaint process and this idea of respondents
> relying solely on press clippings without any personal knowledge of
> the allegations they\'re making.
>
> Would you have a hard and fast rule that we shouldn\'t accept any
> complaint where there isn\'t this element of personal knowledge?
>
> MR. OLSON: Yes.
>
> COMMISSIONER TONER: Would you sort of apply that across the board?
>
> MR. OLSON: Oh, yes, I would. As a matter of fact, I believe that is
> what is envisioned in the Act. And I believe\--
>
> COMMISSIONER TONER: Is there a need for sworn testimony and the
> attestation?
>
> MR. OLSON: The precise language is \"may file a complaint with the
> Commission in writing, signed, sworn to by the person filing such
> complaint, and notarized under penalty of perjury.\"
>
> Now, what does it mean to swear to it? If one doesn\'t know the truth
> of the allegations, what does it mean to file it under penalty of
> perjury if you don\'t know the truth of the allegations?
>
> I think that Congress did everything but say that personal knowledge
> is required in those words, but it said it in other words. And yet
> having had cases like that brought against our clients where we\'ve
> gone in initially and said please, we\'d ask the Commission to dismiss
> this in a motion or some other illegitimate procedure that we would
> just create out of thin air, we would always get the response that
> we\'ve made our decision, we\'re beginning the investigation, either
> cooperate or don\'t.
>
> COMMISSIONER TONER: And I think that\'s a very bona fide reading of
> the statute to start with that language. I think it\'s a solid
> reading.
>
> To follow up on that, if we were to take that position across the
> board, it might very well lead to more internally generated MURs on
> the premise that perhaps we don\'t receive a complaint because no one
> has personal knowledge or the people who do have personal knowledge
> are not willing to come forward with a complaint, we would have the
> choice of either not pursuing matters or we would do it internally.
> And Mr. Reiff was indicating he had at least some concerns with
> internally generated MURs in terms of process.
>
> But if we were to adopt your position, would it trouble you at all if,
> in fact, that was the outcome, that we would do more internally
> generated MURs because of that?
>
> MR. OLSON: Well, I look forward to hearing Mr. Reiff\'s follow-up
> because I\'ve always had the same sense, and I\'m not sure that I
> could defend it as well as he could. But it doesn\'t bother me that
> you follow the statute. It will never bother me that you follow the
> statute as long as we get to challenge the statute.
>
> So I would say, yes, you should\--that if there is one reform that
> comes out of this today that I would urge you to take, it would be to
> simply adopt a policy that says we\'re going to require personal
> knowledge.
>
> COMMISSIONER TONER: Even if the practical outcome of that would be
> more internally generated MURs?
>
> MR. OLSON: Follow the statute irrespective of the outcome I would say,
> Commissioner.
>
> COMMISSIONER TONER: Does anyone else on the panel have comments on
> this issue? I think there are some interrelated issues here, but\--
>
> MR. REIFF: I\'ll just make a comment. The context of what I was
> talking about related more to internally generated MURs that probably
> comes from referrals from, say, audits and from reports analysis more
> so than external newspaper articles, for example. So to that extent, I
> really wasn\'t trying to comment and encourage the Commission to go
> out and look at newspaper articles itself internally. It was more in
> the context of things that were the normal day-to-day process of the
> Commission.
>
> COMMISSIONER TONER: Do you think we should have an across-the-board
> policy, as Mr. Olson was outlining, where we wouldn\'t go\--we
> wouldn\'t accept a complaint unless there\'s this element of personal
> knowledge?
>
> MR. SANDLER: It probably wouldn\'t be a bad idea to put\--if somebody
> has allegations, to refer\--you know, that they don\'t have personal
> knowledge of and it\'s a newspaper article, to refer it to the General
> Counsel\'s Office for consideration of whether the facts in the audit,
> if they add up, where they do amount to a violation.
>
> You do run into the problem that Neil mentioned, which is that the
> respondent, potential respondent, has no opportunity to send anything
> to the Commission until they\'ve decided to initiate an investigation.
> Probably the ideal combination would be that the\--you know, there may
> be an increase in internally generated MURs with a more sort of
> intelligent application of the law to the raw information in a
> newspaper article, but that should be accompanied by some opportunity
> to respond to a pre-MUR General Counsel\'s report or something of that
> nature before the RTB finding launches an investigation.
>
> MR. REIFF: Unless I\'m mistaken, the Commission already has an
> internal policy of being able to generate MURs based upon newspaper
> articles, so it\'s not an addition of anything the Commission doesn\'t
> already do.
>
> COMMISSIONER TONER: Mr. Spies, do you have any reaction?
>
> MR. SPIES: I agree with the sentiment of this conversation, but it
> doesn\'t make me feel any better to think that Commission staff is
> going to be scouring newspaper articles looking for violations than
> political opponents or, you know, lobbying groups are going to be
> scouring newspaper articles. It seems to me you can\'t necessarily
> have a hard and fast rule on that.
>
> If it meets the prima facie requirements of a complaint and it alleges
> a violation of the law, I don\'t think you can automatically throw it
> out because it\'s a newspaper article, if it\'s a well-researched
> article that presents evidence of a clear violation.
>
> MR. OLSON: May I clarify what I said, Commissioner? Just very quickly,
> I didn\'t know that your question was suggesting that the Commission
> staff would take the article that had been submitted, they would
> dismiss the complaint, and then proceed based on the\--I would say
> that would be an exercise in futility.
>
> If it comes in, if it\'s an inappropriate complaint, if it fails to
> meet the requirements of the statute as at least I read it\--and maybe
> you do, Commissioner\--then I think you have a duty to dismiss it,
> send it back with an admonition to the person filing the complaint,
> never advise the respondent, trash it. And please don\'t make it a
> part of the public record.
>
> CHAIR WEINTRAUB: If it\'s in the newspaper, I think it\'s too late.
>
> Commissioner McDonald?
>
> COMMISSIONER McDONALD: Madam Chair, thank you. Bill, Charlie, Joe,
> Neil, welcome. Let me be clear about Joe and Neil\'s position first
> vis-à-vis the General Counsel. You want to wish him a very, very happy
> birthday. I couldn\'t hear, so you\'ll get old someday. It\'s hard.
>
> MR. REIFF: For the record, I did offer to lead a chorus.
>
> MR. SPIES: But that\'s personal. It\'s not on behalf of\--
>
> \[Laughter.\]
>
> COMMISSIONER McDONALD: Well, I just don\'t hear as well as I used to.
> I thought that\'s what you said.
>
> Let me, first of all, just in a philosophical vein, Bill, just ask you
> about\--you\'d referenced the Titanic. I feel like I\'ve been on it
> three or four times at a minimum. In terms of the upcoming proceeding,
> just kind of an overall general philosophical question, is it your
> theory that the FECA is basically unconstitutional on its face?
>
> MR. OLSON: Absolutely. You\'ve actually asked that of me before, and I
> think I\'ve had a consistent answer.
>
> COMMISSIONER McDONALD: Well, I like to just check back. I just want to
> be sure. It\'s an evolving process, after all.
>
> MR. OLSON: And now we\'re happy to say that we have an opportunity to
> raise that issue in a coherent way and have a resolution of it,
> because the issue that we brought, as I\'m sure you know,
> Commissioner, is that it violates freedom of the press and press
> principles that deal with prior restraint and other things that don\'t
> ordinarily come out in the speech context. Therefore, there\'s been
> this body of case law that deals with press activities, and for some
> reason, people think campaigns only have speech activities, but we
> make the case that they have very significant press activities as
> well, and that\'s in essence a thumbnail sketch of our case.
>
> But, yes, to the extent that it was appropriate, we brought a
> challenge to FECA provisions which were modified by BCRA, otherwise
> just BCRA.
>
> COMMISSIONER McDONALD: Thank you. Let me ask Charlie, I think maybe
> you have a little bit different slant on it than Joe and Neil have.
> I\'m particularly interested in this alternative dispute resolution
> matter, and Allan doesn\'t take this personal. We\'ve had these
> discussions before.
>
> By the very nature of the kind of disputes that are resolved, the
> Commission basically has taken the posture that they\'re kind of at
> the low end of the totem pole. And I know Charlie knows that from his
> time here.
>
> I guess one of my questions I want to ask\--and no one shares my point
> of view, so don\'t be concerned about it. But it strikes me as
> interesting that we would pursue matters that go into Joe\'s point
> that he had made and Neil had made in their presentation, in their
> paper, about, you know, the Commission can spend too much time on too
> small a matter. And I\'m wondering if we\'re not better served, no
> matter what we do, to divert our resources either to more important
> cases or to current cases and expedite them more quickly by moving
> away from cases that we by our own admission don\'t think rate very
> high on the spectrum.
>
> We have, as I think most of you know, a prioritization system. And
> I\'m wondering if either of you have any thought on that, because I
> was interested in the comments that Joe and Neil had made in their
> presentation in terms of how the Commission ought to spend its time
> and resources, and going back to your observation as well, Charlie.
>
> MR. SPIES: Well, in our comments we noted\--and this may be a slight
> difference from Joe and Neil\--that, at least in my opinion, the
> Commission needs to be focusing on clear areas of the law. There are
> enough areas where everyone can agree it\'s a violation. They\'re the
> most common violations. And the Commission is pretty good at winning
> these cases if they ever have to. And if those can be disposed of, the
> Commission is doing a pretty good job. And ADR has been very good, to
> my knowledge, on that front in terms of taking what everyone can agree
> the law is; and the respondent, by going into ADR, although not
> always, but usually is agreeing that they violated the law, and at
> that point resolving it outside of the adversarial process. And
> if\--you know, I think that even plays into really those that then
> think, you know, if you support the idea of going after sort of larger
> expeditions into grayer areas of the law, then that should free up
> resources to do that. And it could be a win-win.
>
> COMMISSIONER McDONALD: Yes, I don\'t think\--I think my point is that
> we by our own admission say those cases are of very little
> significance to us. So the question gets to be not to go into gray
> areas of the law, and maybe get resources into clearer areas of the
> law where there are bigger stakes to try to resolve the issues, was
> one of my questions.
>
> MR. SANDLER: Well, I think it\'s partly a question not just so much
> clear areas of the law, but the extent to which the facts
> warrant\--well, partly whether the fact\--the extent to which the
> facts warrant enforcement resources and partly the end you\'re trying
> to achieve.
>
> Take the example of somebody, a corporate executive has no\--never
> heard of the Federal Election Campaign Act, makes a contribution, is
> asked to make a contribution of \$2,000, makes the contribution, puts
> in for reimbursement from the corporation. Happens all the time. No
> idea what he was doing.
>
> That situation\--
>
> COMMISSIONER MASON: Did you say it happens all the time?
>
> \[Laughter.\]
>
> COMMISSIONER McDONALD: I started to say, I didn\'t hear that.
>
> MR. SANDLER: Of course, yes, so\--
>
> CHAIR WEINTRAUB: Mr. Norton, are you listening to this?
>
> MR. SANDLER: That situation to me calls for a process in which that
> company would be required to institute a compliance program, to
> educate its employees, to get people aware of that, and an appropriate
> fine. No question about it. A civil penalty.
>
> It doesn\'t take two\--it seems to me the mediation program was
> designed to be able to come up with approaches like that and do it
> efficiently. It doesn\'t take\--in a situation like that, at least our
> experience\--of course, we only do a tiny\--you know, know about a
> tiny fraction of the cases. But in our experience, the approach of the
> General Counsel\'s Office now would be to go and investigate for two
> years and see if that guy did something in the fourth grade that would
> tell them it\'s knowing and willful and he really did know what he was
> doing.
>
> CHAIR WEINTRAUB: Now, that would raise contributions from minors.
>
> MR. SANDLER: So that\'s where I see the mediation, you know,
> alternative dispute resolution coming into play.
>
> COMMISSIONER McDONALD: Well, I think that\'s helpful. I have a whole
> list of them. I don\'t see any cases that reflect what you\'re talking
> about. But I think that\'s helpful. I appreciate it.
>
> CHAIR WEINTRAUB: Commissioner McDonald, thank you.
>
> It\'s Commissioner Mason\'s turn.
>
> COMMISSIONER MASON: Thank you, Madam Chair.
>
> I just want to comment on that last point to begin with, and that is,
> I agree with Commissioner McDonald. I don\'t see a lot of routine
> garden-variety cases that have taken a long time. I do acutely
> remember some fairly small stakes cases that ended up taking a lot of
> time and a lot of our resources because we had very determined
> respondents. Some of Mr. OLSON\'s clients are convinced that the law
> is unconstitutional and they really didn\'t want to cooperate with us,
> and maybe they cooperated a little, and they have a right to take it
> to court. And so we end up in court\--not your clients, actually.
> Maybe. I\'m not thinking of any particular cases.
>
> But we have a case in court right now with tiny little stakes where
> the respondents, you know, are just very determined about their view
> of the law, and we\'ve spent years now in litigation over something
> that is eventually going to settle out for probably less than \$1,000.
> And it was bigger than that when it started. So I think that\'s one
> category.
>
> And on these reimbursements, frankly, we don\'t have a way to
> know\--we\'ve seen some huge corporate reimbursement cases. And so
> when we get a person who says they\'ve done that, we kind of have an
> obligation to ask, well, you know, is there a pattern? And there are
> some things we can look at.
>
> So we\'re not willing to take, you know, an assertion on its face
> that, gee, this only happened once and there was only one person that
> did it, you know. And so sometimes the cases look potentially more
> complicated at the beginning than they end up being, and I think
> that\'s the reason why we would say, hey, an admitted case of a
> corporate reimbursement, you know, how did this get past the corporate
> compliance and so on, may need a more serious look. And, yes, if we
> come through at the end and it\'s one or two cases for a couple
> thousand dollars, sure. But I think sometimes those do legitimately
> require some more investigation.
>
> Mr. OLSON, I think I know what answer I\'m going to get, but I want to
> try anyway, on newspaper articles. We had one complaint based on an
> allegation by an unnamed person that the Chairman of the DNC said
> something in a closed meeting. Now, it wasn\'t\--the reporter wasn\'t
> there. Somebody else was there. It was hearsay. It was hearsay
> reported in the newspaper, and somebody sent that in as the basis of a
> complaint. And I think there\'s a serious question about whether
> that\'s sufficient to open an investigation.
>
> We had another complaint that came in where the Chairman of one of the
> Republican entities said they were \"setting up stuff.\" And that
> quote was then associated with an organization that didn\'t exist at
> the time that he said that, and, you know, the allegation was made,
> well, he obviously meant, you know, this organization and so, you
> know, their affiliate. And I think there\'s a legitimate question
> about whether you ought to proceed.
>
> On the other hand, we had a tiny little case where some poor donor had
> written a check, supposedly from himself and his wife, and some local
> reporter called him up about it, and he says, \"Oh, my wife didn\'t
> know about that.\" Well, you know, he admitted to a violation. It
> wasn\'t a very serious violation, but he admitted to it. And I want to
> know if you would make a distinction between newspaper articles, on
> the one hand, that are blind as to sources, that represent fundamental
> hearsay, and, on the other hand, articles that may be based on
> investigation of the report or direct quotes from known persons,
> which, you know, could be followed up on, as it were, and determined
> through a relatively expeditious investigative process.
>
> MR. OLSON: No, Commissioner Mason, I would not make that distinction.
> I hope that was the right answer you\--
>
> COMMISSIONER MASON: Well, it wasn\'t the right answer. I\'m not
> surprised, but I wanted to probe anyway.
>
> MR. OLSON: No, but, obviously, the reason is if the reporter wanted to
> file the complaint and had personal information from somebody who had
> a bug in the room, let him file the complaint. But you may not act, I
> believe, pursuant to the authority you\'ve been given to consider that
> a bona fide complaint.
>
> Now, I\'m not really speaking to the next issue, which is what can you
> do for internally generated MURs. But it certainly is not a complaint,
> should be dismissed. You should have a clear statement of this, I
> believe, in the rules, in the regulations, and in the campaign guides
> and such. I mean, put this out there, and then you will not have this
> problem.
>
> CHAIR WEINTRAUB: Thank you, Commissioner Mason.
>
> Over to you, Commissioner Thomas.
>
> COMMISSIONER THOMAS: Thank you, Madam Chair.
>
> First, can we get you all to agree with Larry Noble\--
>
> CHAIR WEINTRAUB: Probably not.
>
> COMMISSIONER THOMAS: \--that perhaps the primary function of this
> agency is to enforce against violations of the Federal Election
> Campaign Act?
>
> MR. SPIES: Maybe the statement, but not the attitude that went with
> it.
>
> \[Laughter.\]
>
> COMMISSIONER THOMAS: That\'s a perfect answer. It is. It really is. I
> mean, it\'s an important concept. I hope you all can appreciate that
> Larry\'s perspective coming in was that he was really the only one who
> was coming from the perspective of dealing with it from this side for
> years and dealing with the fact that certainly he\'s been up against a
> lot of very good lawyers, and his staff have over the years. And a lot
> of lawyers have fought really, really hard to basically protect their
> clients. And so he\'s sort of seen, I guess, from his side some
> resistance, if you will, to some of the Commission\'s efforts to try
> to dig up facts, dig up evidence, seen some evidence of lawyers
> representing their clients zealously and not making it easy for the
> Commission staff.
>
> So, I mean, if\--I don\'t mean to defend the way Larry perhaps got as
> emotional as he did about it, but I do think it\'s important that you
> all basically be willing to concede that that is a very important
> function of this agency to actually see if the campaign finance laws,
> in fact, are enforced, and that certainly for serious violations we
> really ought to focus our efforts there.
>
> Is that a fair statement? Do you all agree with that proposition?
>
> MR. SANDLER: I agree with it that it\'s a critical function of the
> agency to enforce the law. I think an equally critical function is the
> disclosure, a disclosure function and everything that happens. It\'s
> the unsung heroes downstairs that, you know, make it available to the
> press and the public that are ultimately the ones that apparently
> ensure that the laws are obeyed. But, yes, it\'s critical\--to
> implement and enforce the Act is obviously the central mission of the
> agency.
>
> MR. SPIES: And I would also note that there was a little bit of this
> beleaguered one out of eleven coming before the Commission, and often
> you see all the practitioners coming to the Commission and you don\'t
> hear from the other side.
>
> There\'s a very well-funded lobby on the other side. There\'s an ACU
> report that said they spent\--they\'ve raised and spent, I think, over
> \$75 million over the last few years trying to convince the public
> that the Commission doesn\'t work and that everyone in the political
> process is trying to get around the laws.
>
> So the other side is heard. It\'s well funded with soft money. It\'s
> out there. It always submits comments here. We all read them. They\'re
> out there.
>
> COMMISSIONER THOMAS: That\'s a very fair point.
>
> Let me focus on the question I raised with one of the earlier panels,
> the aftermath of a three-three split in an enforcement case here. I
> was really interested in exploring with people who have been involved
> filing complaints and had had their complaint meet with that
> unfortunate end.
>
> I had noted that the Commission in their litigation in that area has
> been wildly successful in developing the doctrine of standing such
> that it\'s very difficult for some complainants to work their way
> through the courts in terms of filing an (a)(8) suit challenging the
> Commission\'s failure to go forward.
>
> I\'m just wondering: Do you have any ideas or suggestions that the
> Commission could work with in that area to perhaps strengthen the
> right of complainants? Is there any way, working with the standing
> doctrine such as it is and as developed by the courts, that the
> Commission itself can somehow improve the rights of complainants in
> that context?
>
> MR. SANDLER: At the administrative level, I\'m not sure there is. I
> think that the three-three\--or the requirement of four votes is
> obviously a statutory one. I think it ties directly to the questions
> that were raised about complaints in newspaper articles. In a way, the
> Commission does\--with all respect to Congressman Paul\'s position,
> the Commission does have to entertain complaints based on newspaper
> articles because a lot of times people don\'t have firsthand knowledge
> from the other side.
>
> But at the same time, it\'s the responsibility in a situation like
> that that Commissioner Mason mentioned, where it was hearsay, or the
> reporter, in fact, just outright lied in the article in that
> particular article, that the Commission\--that the General Counsel\'s
> Office should recommend and the Commission should say there is no
> reason to believe, end of story. That\'s where the reason-to-believe
> stage is so critical and the three-three\--or the requirement of four
> votes from Congress at that stage is quite deliberate and intentional.
>
> COMMISSIONER THOMAS: Thank you.
>
> CHAIR WEINTRAUB: Thank you.
>
> And the Vice Chairman?
>
> VICE CHAIRMAN SMITH: Thank you, Madam Chair.
>
> There were some interesting things presented here. Mr. OLSON, you
> mentioned earlier\--you were talking something about the unlimited\--I
> don\'t remember if you used the term \"limited\" or what\--resources
> at the Counsel\'s office. And it strikes me that people are talking
> about the Counsel\'s resources in two ways: one is sort of globally,
> i.e., how many people we have to pursue all cases; but the other
> question is\--but there\'s another thing, which is, from a micro
> level, if you\'re a respondent in a case, generally speaking when you
> represent clients before the Commission, do you feel that the
> government has more resources than you do? Would that be a fair
> statement?
>
> MR. OLSON: Of course.
>
> VICE CHAIRMAN SMITH: I guess you wouldn\'t know how much we spend on
> these things, but I think that\'s worth knowing. I don\'t think
> it\'s\--from the standpoint of someone who\'s being told by their
> government that they\'re under investigation, I don\'t think there\'s
> any question but that the government is bringing more resources to
> bear than are those individuals. And there\'s a question\--it\'s a
> separate question\--as to whether we need more resources to bring more
> people before us and how we handle that.
>
> Another question that I want to ask of Mr. Sandler based on some
> things that have been said today, it\'s been suggested that, in
> fact\--I don\'t know if you\--I don\'t believe you were here when he
> spoke. I don\'t know if you read Mr. Bauer\'s comments this morning
> talking about the standard for naming additional respondents. And he
> suggested that it should be if the complaint, taking the facts as
> true, would lead to that being a violation of the law, it should go
> forward. And it was suggested that that is, in fact, largely the
> standard the Commission uses.
>
> Is that your experience?
>
> MR. SANDLER: No, it\'s not. I agree with Bob Bauer\'s comments in that
> regard, I think, and our comments actually mirrored that, that that is
> the correct standard, but it has not been our experience that that
> applied. And obviously one major case or category of examples involves
> our client, the Democratic National Committee. You know, people come
> in with a newspaper article and say the Democrats have done so-and-so.
> And the Office of General Counsel names the Democratic National
> Committee even though there\'s a thousand, five thousand Democratic
> Committees in America, party committees, state, local, and national
> and so forth.
>
> So that is an issue. I think that the standard is not a difficult one
> to apply. It\'s basically if the facts are taken as true, do they
> state a violation of the act by that particular individual or entity
> who is to be named as a respondent. Are they specific enough? You
> know, just like you would in a court complaint.
>
> VICE CHAIRMAN SMITH: And a question this round for Mr. Olson and Mr.
> Sandler both, if you would respond, because you both mentioned in your
> comments that you think we should make public some of our enforcement
> standards, our directives and guidelines and so on. And I wonder if
> both of you would comment on what benefits you would see coming from
> that. And would you see that improving or hindering the law
> enforcement function of the agency?
>
> Mr. Olson, why don\'t you go first?
>
> MR. OLSON: I think I raised that in the context of depositions. I am
> frustrated by getting into a dispute with the Office of General
> Counsel, having them say that it is because it is our policy, having
> them then not be able to provide to me that policy. I think that has
> an\--it sort of leads to the appearance of arbitrariness and\--not
> impropriety, really. Everything leads to corruption or the appearance
> of corruption, I guess. But, I mean, it just leads to the appearance
> of arbitrariness in that there\'s no written rule and that there\'s no
> action by the Commission.
>
> That\'s why these hearings are so exciting for me as a practitioner
> before you because you\'re going to be forced by the proceedings to
> consider some of these matters that before I don\'t know have\--maybe
> they have. I don\'t think if they\'ve come to the level of the
> Commission because they\'ve been dealt with with the Office of General
> Counsel.
>
> So, yes, I think knowing more in writing as to how the procedure works
> will protect everyone, including the Commission.
>
> VICE CHAIRMAN SMITH: Mr. Sandler, do you want to add anything?
>
> MR. SANDLER: I think as a general matter, if you look at the
> philosophy behind the Sentencing Guidelines, for example, the idea
> that transparency with appropriate discretion and adjustments and so
> forth case by case ensures that like cases are treated alike, which is
> a fundamental standard of appropriate agency action.
>
> On the other hand, I\'m not sufficiently familiar with the practice of
> the Securities and Exchange Commission or the CFTC and these other
> agencies that have similar civil penalty authority and whether there
> is some reason on the other side to keep the policies secret. It seems
> to me that transparency would serve the interests of expediting these
> proceedings.
>
> MR. REIFF: In that regard, it\'s a perfect example if you\'re
> negotiating a conciliation agreement for a particular type of case,
> and you don\'t have any access, especially if you\'re out of\--you
> know, you\'re not a D.C. attorney, you don\'t have access to any MUR
> records to see what is a similarly situated case to know what exactly
> the standards are you\'re basing that negotiation upon. So guidelines
> would be very helpful.
>
> CHAIR WEINTRAUB: They can fix that for you, Mr. Reiff. I told you
> that.
>
> MR. REIFF: I can\'t wait to see it.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: And I know you\'ll remind me if we don\'t make that
> deadline.
>
> MR. REIFF: I\'m sure I will.
>
> CHAIR WEINTRAUB: I want to go back to the issue of newspaper articles
> and whether that gives us sufficient cause to go to RTB if a complaint
> comes in just based on newspaper articles, because I would agree
> that\--and I have commented publicly on this in the past\--I don\'t
> think we ought to be basing legal findings on newspaper articles.
>
> However, the RTB stage, we\'re at a fairly preliminary stage. We\'re
> just saying we have reason to investigate. And I have some experience
> with\--this is not the first time I\'ve dealt with this issue of
> newspaper articles, as Joe knows and some of the rest of you, and
> perhaps some of you don\'t. In a prior lifetime, I was counsel to the
> House Ethics Committee, and we used to confront the same issue all the
> time. Should we start the investigatory process based on newspaper
> articles? Was that fair to the members? And if we didn\'t, even when
> it was written into the rules that newspaper articles shouldn\'t in
> and of themselves be the basis for accepting a complaint, that there
> had to be this personal knowledge, what would inevitably happen is
> exactly what\'s been described here before.
>
> The committee then felt that they were in possession of information. I
> mean, everybody in the world was in possession of this information
> because it had been written about in the newspapers. And for them to
> ignore that and not at least conduct some preliminary investigation as
> to whether there was any wrongdoing would reflect poorly on the
> credibility of the institution, of the committee. And I think we face
> the same problem, that if there are newspaper articles out there that
> everybody in the world is reading that says, you know, some political
> actor is out there blatantly violating the Federal election laws, for
> us not to at least look into that, see whether there is reason to, you
> know, go forward, is really an abdication of our responsibility to
> enforce the law.
>
> And having made my little speech, I feel that I must give you an
> opportunity to respond. It\'s not really a question, but, you know, I
> have a feeling I know what you\'re going to say, Mr. OLSON, but go
> ahead.
>
> MR. OLSON: Well, there\'s just a vast difference between the
> Commission acting pursuant to a complaint which is based on no
> personal information and giving some credibility to what\'s in the
> newspaper article per se versus an internally generated MUR which can
> come from somebody hearing something on a Metro.
>
> An internally generated MUR can begin with, I would say, anything. It
> can begin with the front page of the Wall Street Journal, which is why
> people say keep your clients off the front page of the Wall Street
> Journal, all government agencies read it.
>
> So I have no problem really with trying to hem in the Commission with
> respect to internally generated MURs. I\'m just asking the Commission
> to follow what I believe the law to require for an external complaint.
> The filing of a complaint begins a process which is a costly process
> for our clients. They are put in the position of having to go back and
> reconstruct what happened, to retain counsel, to have counsel prepare
> filings. There is a lot of cost involved in that, pain, anguish, and
> you simply don\'t begin that based on a complaint based on a newspaper
> article. And the statute doesn\'t allow it, in any event.
>
> CHAIR WEINTRAUB: But if we are going to end up in the same place, if
> we\'re are going to end up investigating your client, anyway,
> wouldn\'t you rather know about it?
>
> MR. OLSON: If there is an article in the Washington Times discussing
> some elaborate Republican, Democrat, or third-party scheme to evade
> election laws and you act on it, act on it. But please do not send a
> letter out saying we\'re acting based on a complaint which was
> inappropriately filed.
>
> CHAIR WEINTRAUB: Anybody else want to comment on that?
>
> MR. SPIES: I would look at it somewhat differently. I think
> Commissioner Mason at least took the easy cases in terms of, you know,
> if someone confesses that they did something in the newspaper, I think
> that\'s a pretty clear case, where if someone cares enough to file a
> complaint, it\'s a valid complaint on its face.
>
> Now, whether the Commission wants to spend its resources on that or
> whether you get rid of it quickly in ADR, you know, that\'s a
> different issue. But on its face, that\'s a complaint based on a
> newspaper article. And, again, I would say I would have to
> respectfully disagree in that I don\'t like the idea of the Commission
> generating\--of internally generated MURs. I would rather have
> somebody in the community throw\--you know, that took the time to read
> the article, do a little fact finding, lay it into a complaint, and
> cared enough to do it, than have it internally generated from the
> Commission.
>
> MR. SANDLER: I think that you have to draw a distinction between
> whether a newspaper article is going to be regarded as an adequate
> basis for a complaint and the reason-to-believe finding. For the
> reasons you stated, Madam Chair, I do believe that newspaper articles
> have to be regarded as an adequate basis for a complaint.
>
> Reason to believe is a different story. There I think it\'s incumbent
> you say, well, do we have an obligation to investigate based on that?
> The respondent gets an opportunity to respond prior to RTB, to respond
> to the complaint, and then I think it\'s incumbent then on the Office
> of General Counsel and the Commission to evaluate the credibility of
> the complaint and the response and how it all adds up and to draw the
> very kinds of distinctions, for example, that Commissioner Mason made
> in the examples he used to determine whether, in fact, reason to
> believe should be found. And that should not be\--because it involves
> an investigation, that should not be a low standard.
>
> CHAIR WEINTRAUB: So just a quick yes-no question. So you would not
> agree with Mr. OLSON? You would say that we can at least start looking
> at a complaint based on a newspaper article?
>
> MR. SANDLER: Correct.
>
> CHAIR WEINTRAUB: Okay. And with that, since my time is up, Mr. General
> Counsel.
>
> MR. NORTON: Thank you, Madam Chair.
>
> Mr. Sandler, you in your opening statement, and I think in your
> written comments, said that this is really not a matter of
> constitutional due process, and I think that\'s right. It\'s a matter
> of policy and what\'s appropriate, and I agree with that.
>
> You said that the real question is: Do you want to have a process
> where respondents want to take everything to court? And I must be
> misunderstanding you because that isn\'t my observation of the current
> process. In fact, very few matters go through the enforcement process
> and end up in court. And I was wondering if you could elaborate on
> your argument there.
>
> MR. SANDLER: Right. I think that that situation is going to change
> dramatically because of BCRA. Assuming that some substantial\--for the
> sake of discussion, that some substantial parts of BCRA are ultimately
> upheld, the vast scope of that law and this incredible severity of the
> penalties involved is going to mean that you are going to have an
> inducement for people not to cooperate with Commission investigations,
> not cooperate in the sense of invoking the privileges, witnesses and
> respondents invoking the privilege, the Fifth Amendment, and to force
> things into court where the full panoply of procedural due process is
> there lest they, you know, endanger themselves under the BCRA scheme.
>
> And I think, therefore, it is going to be\--you\'re going to find that
> affording more procedural due process in the administrative process I
> believe will help facilitate resolution of more cases at the
> administrative level rather than through civil enforcement proceedings
> in the courts.
>
> MR. NORTON: Are there other manifestations of the current
> process\--and I guess we\'ll see whether that happens or not. I was
> wondering if there are other manifestations of the current process
> that you think as a matter of policy dictate that we ought to provide
> more procedural rights and more process, such as hearings?
>
> For instance, it occurs to me that if you said that there were lots of
> General Counsel reports, probable cause reports that we previously
> made public before the AFL ruling, and you saw that there were
> representations in those reports that were misleading and that were
> not presented in the brief so that you could respond to them, that
> would be a reason to provide a hearing.
>
> Are there other things besides your concern that BCRA will mean that
> parties are driven into litigation for affording additional procedural
> rights?
>
> MR. SANDLER: Well, I think you just pointed to one, and it was one
> that Charlie Spies had mentioned earlier, that basically\--yes, the
> right to a hearing I think will allow a lot of questions to be
> answered and Commissioners\' concerns and issues to be addressed a lot
> more efficiently than having a respondent write a brief, have that
> filtered through the Office of General Counsel and, you know, the
> Commission isn\'t really able to have any direct interchange with the
> respondent. I think that would\--I agree with that specifically as an
> example to facilitate the resolution of these cases.
>
> MR. NORTON: Mr. Sandler, you and others were here just a few days ago
> testifying that the Commission ought to conclude that Congress didn\'t
> intend to change anything about convention financing because they\'re
> certainly well aware of conventions and that conventions are financed
> and nothing appears in the legislative history to indicate an interest
> in doing that.
>
> Congress is, I assume, at least equally aware that the Commission has
> an enforcement process, and it, in fact, amended 437(g) to increase
> the penalties. But there isn\'t anything I\'ve ever heard is in the
> legislative history and certainly nothing in the statute suggesting
> that the Commission\--there\'s something broken about the process and
> that it ought to afford, for example, hearings at the probable cause
> stage.
>
> Should the Commission infer anything from the fact that Congress
> didn\'t take up this issue and didn\'t deal with the issue in BCRA?
>
> MR. SANDLER: I think it\'s clear that Congress made a deliberate
> decision to defer this whole issue of structuring of the FEC, and the
> sponsors made no bones about the fact that they cared about that issue
> but they were going to put it off for another day. I don\'t think
> there\'s anything in BCRA that requires or mandates or in any way
> indicates that the Commission should revisit its enforcement
> procedures. I think it\'s appropriate for the Commission, again, to do
> so as a matter of policy as it searches for ways to enforce the law
> more efficiently.
>
> MR. NORTON: Mr. Spies?
>
> MR. SPIES: I would just note on that, I think that\'s a little unfair
> in that the Commission, most of its enforcement procedures are secret.
> I mean, we see the results of them, but when Congress\--many Members
> of Congress have never seen the enforcement manual, I assume most of
> them haven\'t. They don\'t know the internal operations. So that to
> then assume that because they haven\'t passed legislation to change
> what they don\'t know about is not necessarily a fair assumption.
>
> MR. NORTON: I didn\'t intend it as a judgment. It was just a question.
>
> Thank you very much, and thank you, Madam Chair.
>
> CHAIR WEINTRAUB: Thank you, Mr. General Counsel.
>
> Mr. Staff Director?
>
> MR. PEHRKON: Thank you, Madam Chair.
>
> Mr. Reiff, Mr. Sandler, Mr. Spies, Mr. OLSON, welcome to the
> Commission.
>
> Mr. Reiff, I\'m going to go back to your pet peeves, or at least one
> of them. You\'ve already gotten an answer of yes, which you haven\'t
> decided to accept yet.
>
> \[Laughter.\]
>
> MR. PEHRKON: But what I want to know, assuming the courts agree with
> you, what would you like to see as far as MUR records available? And
> if you\'re not prepared to answer that now, if you send\--
>
> MR. REIFF: Since Joe was more involved in the AFL case, I\'m going to
> ask him to respond to that.
>
> MR. SANDLER: The General Counsel\'s reports are not at issue in the
> AFL case. Everyone agrees that the basis for the Commission\'s action,
> statements of reasons in the final General Counsel\'s report can be
> made public. So certainly that would be an appropriate\--
>
> MR. REIFF: Conciliation agreements obviously would be helpful. Some
> type of computerized index by citation. Jump in if you have any
> requests.
>
> \[Laughter.\]
>
> MR. REIFF: Obviously, citation cross-referencing would be helpful.
>
> MR. PEHRKON: You would be satisfied with strictly what the court has
> laid out as to the type of documents that should be available.
>
> MR. REIFF: At a minimum, sure. I mean, that would be\--
>
> MR. PEHRKON: What I\'m asking is: If you were to expand it, where
> would you go beyond where the\--
>
> MR. SANDLER: In terms of\--
>
> MR. REIFF: Some of the documents, source documents.
>
> MR. SANDLER: It\'s really not necessary to expand it even if the AFL
> and DNC case didn\'t exist, because we\'re talking about the ability
> to cite things as precedent, to see how the Commission has treated
> like cases. And those materials that have been referred to should be
> sufficient for that purpose, the description of the case and the basis
> for the Commission\'s action. Those are the reported decisions of the
> Commission. We don\'t have, like, the FCC, you know, opinions and so
> forth.
>
> MR. PEHRKON: One of the areas that I\'m sort of curious about is a
> copy of the complaint. Should that be on the record itself?
>
> MR. REIFF: I think that would be helpful to give context to the
> record.
>
> MR. PEHRKON: Because that goes beyond, I believe, the current
> decision.
>
> MR. REIFF: That\'s obviously not covered by the AFL case, and it\'s
> something that the complainant can publicize anyway. Absolutely.
>
> In terms of adding responses by respondents, that might be also
> helpful. I don\'t know if you have any comment within the context of
> the litigation, but if feasible, perhaps, any responses by the
> respondent, if that\'s feasible, that would be helpful as well.
>
> MR. PEHRKON: Thank you.
>
> CHAIR WEINTRAUB: Mr. Reiff, you look like a kid in a candy store.
>
> MR. REIFF: I can\'t wait. Give me a call when it\'s live.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: I\'m going to ask my staff to remind me to do exactly
> that.
>
> We\'re back to you, Commissioner Toner.
>
> COMMISSIONER TONER: Thank you, Madam Chair.
>
> Mr. Reiff, we will send you\--you will be here for the press unveil.
> We\'ll do a virtual tour. We\'ll do the whole deal. We\'ll have you
> here, and we look forward to that.
>
> I want to follow up on a couple of things that were discussed earlier.
> One was Commissioner McDonald made mention of ADR and how under
> current practice it handles primarily lower-tier cases and how that
> plays out in terms of resource allocation within the agency. And the
> question I have is there\'s been some discussion internally about
> whether ADR should be expanded to handle higher-tier cases. And I saw
> in your comments that, in general, you were positive about the ADR
> program, but I was wondering: Would you support from a policy
> perspective ADR being used in higher-tier cases?
>
> MR. SPIES: I think if what makes it a higher-tier case is the nature
> of the actor or the amount in question, then, yes, I think that makes
> a lot of sense to be able to opt into ADR.
>
> If what made it a higher-tier case is a complex legal issue, then\--I
> don\'t think you would make that judgment, anyway, but clearly that\'s
> not the sort of thing that belongs in ADR.
>
> COMMISSIONER TONER: Mr. Sandler, Mr. Reiff, any comments on that?
>
> MR. SANDLER: I basically agree with what Charlie said. I think that if
> the ADR program should be expanded to the range of cases where what
> the Commission should be looking for, apart from, you know,
> retribution or punishment and so forth, is better compliance systems
> within an organization or an entity, and it\'s something that you
> never seem to get to\--a negotiator is never a positive part of the
> discussions in conciliation now, and I guess we had been hopeful that
> the ADR program would bring that kind of approach into play.
>
> COMMISSIONER TONER: Mr. OLSON, any comments on that?
>
> MR. OLSON: Thank you. Yes, just one, which is\--it may sound strange
> at the outset, but I think ADR could be used in a certain class of the
> administrative fine cases. Now, I know that they\'re supposed to be
> cookie-cutter and it\'s supposed to be automatic. But there are some
> instances in which the Commission has found there to be a rationale
> for some mitigation of penalty. And it seems to me that those ought to
> be added to the list, at least in those cases where there is some
> compelling reason for ADR.
>
> And another advantage is that there\'s another rule\--when Mr. Norton
> was asking questions, he didn\'t direct it to me, but what I would
> have said ties into this, which is that I believe the Commission may
> not be applying the new section on administrative fines correctly
> because it does require that parties be given\--that there may be no
> adverse decision until the person has been given written notice and an
> opportunity to be heard before the Commission.
>
> Now, I don\'t know if anyone has discussed this internally because
> I\'m out here, but it does seem to me that that\'s quit different than
> the references to the response in writing to a complaint and the
> response in writing at probable cause. It seems to me that there is
> something other than writing. It just says a hearing. And I don\'t
> know that there is any procedure stated in the regulations now which
> would allow that type of personal counsel appearance on these matters,
> and yet I think the statute requires it.
>
> COMMISSIONER TONER: I\'d be interested in the panel\'s thoughts real
> briefly. In the earlier panel, we talked about downward adjustments
> and the fact that the U.S. Sentencing Commission recognizes downward
> adjustments when defendants come in sua sponte and volunteer
> information of wrongdoing.
>
> From a policy perspective, would you support the agency thinking about
> looking at downward adjustments and recognizing that there is always
> the practical issue of what constitutes a sua sponte submission and
> whether people have met that criteria? But do you think from a policy
> perspective that\'s something we should look at seriously? For anyone
> on the panel who might be interested.
>
> MR. SPIES: I see no downside to valid sua sponte, and\--
>
> COMMISSIONER TONER: Do you think it might encourage people to be more
> forthcoming?
>
> MR. SPIES: If somebody comes to me and says was I allowed to do that,
> and hypothetically the answer was no, you weren\'t allowed to do that,
> and then\--and it\'s something relatively minor, and they say, well,
> what do I do? Obviously the first thing you do is correct it. But then
> the question is: Do you turn yourself into the Commission?
>
> Well, what\'s the advantage to turning yourself into the Commission if
> there\'s not going to be some sort of downward adjustment or reward?
>
> And from the brief time I worked at the Commission, I would say I did
> not necessarily see that there was a\--I felt that there was\--if
> there\'s a sua sponte submission, there was an assumption that they
> had an ulterior motive and there was an assumption that they were
> doing this because they were about to get caught or because it was
> about to be in the newspaper. There was always a suspicion, and that
> has not been my experience from the outside that that\'s necessarily
> valid.
>
> COMMISSIONER TONER: Thank you.
>
> CHAIR WEINTRAUB: Thank you.
>
> Wait a minute. I don\'t want to run your time before I call on you.
> Commissioner McDonald?
>
> COMMISSIONER McDONALD: Madam Chair, thank you.
>
> Well, that\'s an interesting comment, Charlie, but I must say\--I
> think he and I were here at the same time. I don\'t recall it like
> that. I think that the questions that were raised this morning were
> very good ones. It has been my recollection\--and, you know, if he can
> think of something, I wouldn\'t mind if you would drop me a note,
> because I can\'t think of anything under the scenario that he posed.
>
> We had matters that had\--forgive me, Bill, but we had matters that
> were in the press, and people suddenly got religious and decided they
> did want to see us. We had people file complaints, and then people
> kind of announced that they needed to come and see us.
>
> But, be that as it may, it\'s not an issue that I think we\'ve spent a
> great deal of time on. We get them from time to time, and I think the
> point is well taken that certainly if someone wants to come in and
> make their case truly sua sponte, we certainly ought to take that into
> account and have\--what are we calling it?\--a downward\...
>
> COMMISSIONER TONER: Downward adjustment.
>
> COMMISSIONER McDONALD: Downward adjustment, which in the cultural
> environment we\'re now in, we have fairly frequently. So the chances
> are they\'re in pretty good shape.
>
> Let me ask, since nobody has taken very much interest in this, I
> gather all of you have filed complaints. Am I wrong about that? Has
> any of you not filed a complaint with the Commission, or not? Maybe
> I\'m not right about that.
>
> MR. OLSON: I have prepared them for others, if that\'s\--
>
> \[Laughter.\]
>
> MR. OLSON: But I think only once, because\--
>
> COMMISSIONER McDONALD: Wait a minute. Is that complaints in the name
> of another?
>
> I suppose\--you know, I\'m fascinated by the whole proceeding today,
> and I am not unmindful\--I thought Charlie made a very good point on
> the other side, the money that\'s been funded. I\'m anxious to read
> what I\'m sure is a very fair and balanced report, the one he referred
> to. And I want to read it. I really do. It\'s clear that everybody is
> out\--
>
> MR. SPIES: Cleta Mitchell wrote it.
>
> COMMISSIONER McDONALD: Well, that resolves it for me. You\'ll never
> know what I have in mind. Cleta\'s one of my oldest friends in life, I
> must tell you.
>
> But I am kind of interested because we\'re kind of at the end of the
> day and we\'re trying to\--we\'ve gone over, very thoroughly, I think,
> the respondents and all the ills that beset them, and I think I take
> to heart the issues that have been raised.
>
> When you\'ve represented a complainant, I just can\'t help but
> envision\--Cleta said something that caught my attention, which is\--I
> have been in politics a long time. I\'d already lost a race before
> most of you, maybe Dave and I had lost races before most of you were
> in the process. I don\'t know. But we lost early. And I\'ve
> participated in politics for a long period of time. And we lost
> unjustly, I might add. I just want to be very clear. Since we\'re
> talking about fairness today, both of us lost somewhat unjustly.
>
> My question, though, is this: I\'m out there, and I know that
> something is going on. But I\'m not a real insider like everybody that
> has appeared today, whether it be Larry Noble or you all or Bob Bauer
> or whoever. And I\'m not wise to the way of the world in terms of
> making a complaint and knowing exactly who all the players are.
>
> I mean, let\'s just take the corporate structure or the labor
> structure or any other. You know, I\'m not sure how it all works, but
> I can certainly see that something is amiss there.
>
> What do you do for complainants? I mean, there is the other side of
> the law. You know, the law really was created under the theory that,
> as Joe pointed out, and rightfully do, disclosure, number one, but you
> only get disclosure if you have a way to have compliance. If I knew
> the IRS wasn\'t going to audit me, I don\'t think my returns would be
> quite as up to par as I try to make them.
>
> So what do you do in terms\--how do you advise a complainant who comes
> to see you and says, okay, here\'s what you need to do? And is there
> anything that we could be doing for the complainants? Because surely
> you represent some folks who have made complaints against somebody in
> the process.
>
> MR. SPIES: The people that I advise on filing complaints usually have
> very solid, factual bases.
>
> COMMISSIONER McDONALD: Of course.
>
> \[Laughter.\]
>
> MR. SPIES: So it\'s very easy for them to put it together.
>
> COMMISSIONER McDONALD: That\'s very good, by the way.
>
> MR. SANDLER: Well, I realize there\'s\--
>
> COMMISSIONER McDONALD: And encouraging.
>
> MR. SANDLER: \--a tension here, but I think the best thing that can be
> done for complainants and respondents is to resolve the cases more
> quickly. And I realize there is a tension. I thought that Commissioner
> Mason made some excellent points in this regard. But if there\'s a
> factual pattern and it\'s, you know, a normal litigator or fortunately
> just, you know, two depositions and these specific documents, we can
> figure out whether this is true or not and get it resolved in a
> decision before the election, that\'s where I think the public
> interest and the respondents and the complainants are best served.
>
> You know, against that is let\'s see what else we can find. I mean,
> there is that\--maybe there\'s more here. Maybe this is part of the
> pattern. You know, I think you have to weigh that against getting
> these things resolved, and that\'s what complainants are looking for.
> A complainant who has a solid basis, you know, what Charlie was
> talking about\--and, of course, I don\'t think any of his do.
>
> \[Laughter.\]
>
> MR. SPIES: Therein lies the problem.
>
> MR. SANDLER: That\'s right. If a complainant does have a solid basis
> and it\'s filed in April or May or June and if the Commission could
> actually resolve it before the election, if the candidate is truly
> not\--hasn\'t committed a violation, that\'s a just result. If they
> have committed a violation, the complainant\'s happy. They\'ve got
> actually a vindication of their position.
>
> MR. SPIES: And at the risk of sounding simplistic, but to directly
> answer your question, I think the Commission puts out a very good
> brochure on how to file a complaint and\--
>
> COMMISSIONER McDONALD: I\'m just looking at it.
>
> MR. SPIES: And if people\--you know, if it\'s somebody who I think
> probably doesn\'t have a real good basis for a complaint, I\'ll refer
> them to the FEC website or send them the brochure on how to file a
> complaint. And so with that in mind, if you do change the process at
> all, I would update that brochure.
>
> COMMISSIONER McDONALD: It just goes back to the point made earlier
> that someone alluded to\--it may have been Joe, but I may be wrong
> about that. But someone said, well, you know, if they\'ve never heard
> of the Federal Election Commission, and there may be several very
> uninformed people, of course\--
>
> CHAIR WEINTRAUB: I don\'t believe it. I don\'t think it\'s possible.
>
> \[Laughter.\]
>
> CHAIR WEINTRAUB: But I\'m always happy to hear that we\'re doing
> something well, even if it\'s only putting out a brochure.
>
> Commissioner Mason?
>
> COMMISSIONER MASON: First, I want to assure Mr. Olson that we actually
> did fully discuss the issue of opportunity to be heard in the context
> of the administrative fines case and concluded that there\'s actually
> very different language in the APA that\'s intended when a full
> hearing is intended. And that was discussed. It was in the hearings. I
> believe you\'ll even find it in ENJ. And so we explicitly didn\'t
> reach the reading you\'re urging, but we had a pretty good basis in
> the APA and other practices and procedures as to why we didn\'t, and
> we did lay out that basis.
>
> Now, if you want to take it up, but I just wanted to assure that we
> did discuss it. We discussed it in public, and we put out the
> rationale there for people to examine.
>
> MR. OLSON: I\'m sure you always have a good reason for what you do\--
>
> COMMISSIONER MASON: No, I\--well\--
>
> MR. OLSON: But I meant\--you know more about it than I do. But I do
> think that the different language, usually evidence is different
> intent, and so apart from knowing what you know, I have come to my
> conclusion. But I will defer to your greater knowledge at the moment.
>
> COMMISSIONER MASON: Well, no, I think the important point was that we
> did discuss it in public, and I put out the rationale. And so I wanted
> you and anyone else to know that.
>
> Mr. Reiff, I don\'t know if it\'s in your testimony or someone
> else\'s. There was a discussion that, well, for internally generated
> MURs, maybe we ought to send something equivalent to a complaint, and
> I think that\'s not a bad idea. But I don\'t want to leave uncorrected
> the impression that internally generated MURs are virtually ever a
> surprise to the respondent, because the two big categories of
> internally generated MURs are RAD referrals and audit referrals. And
> in an audit, you\'ve had an exit conference where there\'s a serious
> issue. You have a preliminary audit report. And you\'ve had a final
> audit report. So you\'ve had three notices and three opportunities to
> address and deal with the issues that were brought up there.
>
> And so by the time you get an audit referral, it ought not to be a
> surprise. And, similarly\--it\'s not precisely the same process, but
> similarly with RAD referrals, those do not occur without multiple
> opportunities for the reporting entity to address the issue.
>
> I know in the RAD context it sometimes looks like it\'s not always
> perfectly clear to the respondent what RAD, you know, is asking and so
> on. But I just wanted to make it clear that we do have those
> opportunities, and I think it is worth thinking about sort of putting
> one more, you know, to wrap it up as we introduce under the
> enforcement policy. But I didn\'t want to leave the misimpression that
> by and large people should be surprised by these.
>
> MR. REIFF: Well, I guess the important thing here is to just
> distinguish those are not enforcement processes. So when you get it
> into the enforcement process, it\'s pretty far down the line. We\'re
> almost at pre\--we\'re at pre-probable cause at that point. And in
> many cases, the respondent is disputing an item, perhaps, in the audit
> context or in the RAD context, and to have that bite at that apple to
> make their case to the Commission prior to perhaps a reason-to-believe
> finding I think is an important piece of due process in that instance.
>
> COMMISSIONER MASON: I think it\'s reasonable, particularly RAD
> referrals. In audit, you\'ve had the opportunity to make the case in
> the audit referral. But as I said, I think it\'s worth thinking about.
>
> Mr. Sandler, I perceived a little bit of a difference in your urgings
> about how we treated the development of law in enforcement cases from
> particularly Mr. Bauer, I think, and Mr. Bopp, who I think it\'s fair
> to characterize both of them as saying we really shouldn\'t use the
> enforcement process to develop the law when the law is unclear. And as
> I read your statement and heard your testimony, I thought you said,
> well, maybe, you know, that\'s one of the times when, you know, we
> ought to use the enforcement process. The law isn\'t clear. Maybe that
> would be a plus factor for taking a case forward.
>
> I just wanted to give you an opportunity to expand on when and what
> circumstances it may be appropriate to use the enforcement process to
> clarify the law.
>
> MR. SANDLER: Well, I think that any enforcement agency, it\'s
> appropriate to, you know, intelligently pick a test case in which to
> resolve an unclear area of the law, and that\'s a case where,
> particularly if there are complex facts that go into it, or maybe not,
> just in terms of the time that it takes to consider the legal issues,
> where enforcement resources and the time of the Commission is
> justified.
>
> COMMISSIONER MASON: Thank you, Madam Chair.
>
> CHAIR WEINTRAUB: Commissioner Mason, you are a marvel. Haven\'t gone
> into red yet.
>
> Let me see if I know how to reset this thing. Commissioner Thomas?
>
> COMMISSIONER THOMAS: Thank you, Madam Chair.
>
> The question I want to turn to now involves the interplay between the
> Commission\'s enforcement program and the Department of Justice\'s
> enforcement program. I gather as a general proposition you would all
> prefer to be dragged through the FEC enforcement process, however
> unfair, rather than the Department of Justice prosecution procedures.
>
> We are asking for commentary about how the current memorandum of
> understanding defines the relative roles of those two government
> entities. Currently that memorandum of understanding is worded in
> terms of the Department of Justice will focus on matters that involve
> substantial knowing and willful violations. Implicit is that the FEC
> will take everything short of that.
>
> I gather it would be in your interest to help us, if we take a run at
> working that over with the Department of Justice, you would like us to
> take to them a message that indeed they should only handle a
> relatively small area, and we should handle a relatively large area.
>
> What sort of argument\--here\'s your chance. Tell us how you want us
> to go into those negotiations. Do you have any advice about how the
> lines should be drawn any differently? Do you think it\'s a pretty
> good set-up right now that shouldn\'t be changed? Is it about as good
> as you can imagine it being right now? Do you have any recommendations
> for us?
>
> MR. SANDLER: I\'m not sure I can shed much\--or be of much assistance
> on this, Commissioner. It is not my experience or understanding that
> the Department of Justice observes that memorandum of understanding in
> any substantive way right now. It\'s just not clear to me what effect
> it currently has on their decisions as to what cases to bring and how
> to bring them. So I\'m not sure, you know, what can be achieved by
> amending it.
>
> COMMISSIONER THOMAS: You think it\'s a wasted effort? Is that where
> you\'re going? You think that they disregard the memorandum when
> there\'s no\--
>
> MR. SANDLER: That\'s our experience, yes.
>
> COMMISSIONER THOMAS: You think that they\'ve brought charges in
> circumstances that fall short of that standard I referenced?
>
> MR. SANDLER: And have not brought charges in situations that clearly
> do meet the standard.
>
> COMMISSIONER THOMAS: Okay.
>
> MR. SANDLER: Again, they have policies which are, you know, obviously
> highly confidential to which we\'re not privy. And I don\'t know what
> rhyme or reason there may be to it, but it\'s not our impression that
> has anything to do with the memorandum of understanding.
>
> COMMISSIONER THOMAS: Any comment from\--
>
> MR. OLSON: Just the obvious, that if an American citizen runs the risk
> of going to jail for five years for criticizing a Member of Congress
> in a way that the Member of Congress didn\'t want to be criticized,
> we\'d rather not be subject to that penalty and have you have the
> action on it. I suspect that would be a logical view.
>
> COMMISSIONER McDONALD: I knew we were looking better.
>
> \[Laughter.\]
>
> COMMISSIONER THOMAS: We\'re making progress.
>
> MR. SPIES: And on that line, I think I agree with the assumptions on
> which you based your question. And that gets you to under the new
> BCRA, as you rightfully pointed out, with the extreme new penalties,
> and my experience has been that many people at all levels are
> extremely scared of the new penalties, and it\'s chilling political
> activity. Then what can be done to tell people it\'s not necessarily
> going to be the U.S. Attorney, local U.S. Attorney coming to get you
> and drag you through a criminal proceeding? Anything that can be done
> with beefing up the memorandum of understanding or re-ratifying it or
> something along those lines I think probably makes sense. That\'s the
> big-picture answer. Again, I\'ll chat with Tom about specifics and if
> we have ideas get back to you.
>
> COMMISSIONER THOMAS: If we could iron out a new agreement, one thing
> we could probably do better is publicize it. I think that sort of
> would hold the Department of Justice to that kind of a standard.
>
> I have a little time. I want to have a little fun. We\'re sort of
> toying with the idea of maybe putting out press releases when we close
> out cases. Do you have any reaction to having the Federal Election
> Commission develop a press release when it closes out an enforcement
> case to sort of maybe in plain English summarize what was in the case,
> rather than just relying on our current press release generic, rather
> unclear explanation of what went on in the case?
>
> MR. OLSON: Well, I\'ll start with that one. I would hate to see the
> FEC spin be put into a press release on what was resolved. One of the
> things that happens before different administrative agencies is that
> some\--they seem to, in my experience, view differently the
> requirement that you make an admission of guilt. And we\'ve had
> clients who have been absolutely persuaded they did not violate
> something, and to reach a conciliation agreement, they\'ve said, well,
> the Office of General Counsel has said you must make an admission of
> guilt. And in some cases, it\'s afforded settlement and such. And yet
> others have gone ahead and said I guess I can convince myself to say
> it, that I violated it in at least the way they\'re reading it.
>
> And if you put out a press release, I would sure like to have the
> respondents go through it, but that\'s almost an impossible task, too.
>
> So I would say do what you\'re doing.
>
> MR. SPIES: Yes, the devil\'s in the details, but that does\--you are
> inherently a political agency. You regulate the political process. And
> I think it would be very hard to come up with press releases that were
> not exacerbating the political process in terms of I think the actors
> involved have ample reason to publicize whatever results they want.
>
> MR. REIFF: I would just add the Commission is already summarizing some
> selected MURs in their Record, so I guess there is some\--not that
> I\'m encouraging a press release of each case as a press release, but
> there is some effort by the Commission to summarize what I guess they
> believe to be important cases.
>
> I did note, I think in the June issue of the Record, there is new
> language in the conciliation agreements the Commission has added
> recently, I\'ve just noticed, about having cease and desist
> violations. And it seems to be in all of the conciliation agreements,
> even if the violation may have been a one-time transaction that
> happened three or four years ago, which, you know, we can talk about,
> something that I have a problem with generally. But I noticed in the
> Record in the summary of that MUR it also said \"and the respondent
> was ordered to cease and desist violations.\" And I think the
> Commission should obviously, if they do go forward with that, choose
> their words carefully, have a political sensitivity to\--
>
> COMMISSIONER McDONALD: Is that a peeve?
>
> MR. REIFF: Absolutely. My third peeve of the day.
>
> CHAIR WEINTRAUB: Let me assure you that the press release policy under
> discussion involves no spinning, but merely summarizing in plain
> English, for those who have trouble with the legalese.
>
> Mr. Vice Chairman?
>
> VICE CHAIRMAN SMITH: Thank you, Madam Chair.
>
> Mr. Spies, we passed you over last time, so let\'s see if we can
> direct some questions your way. I am interested, too\--I note that you
> and Mr. Josefiak here on the brief have the somewhat unique experience
> of having actually been on both sides of the aisle. You\'ve both
> worked here on the enforcement side. Of course, Mr. Josefiak, former
> Chairman of the Commission, and you\'ve worked on the side
> representing respondents and filing complaints.
>
> I wonder to some extent. I presume that when you left the FEC, like
> other former staffers, you took with you, in your head, at least, some
> knowledge of the enforcement priority system that has been mentioned
> here today that is not known to the public.
>
> MR. SPIES: You can\'t erase that.
>
> VICE CHAIRMAN SMITH: You can\'t erase anything from Spies. I\'ll
> remember that. Okay.
>
> \[Laughter.\]
>
> VICE CHAIRMAN SMITH: And I presume that you probably took away some
> knowledge of the penalty schedule which\--as I think Mr. Baran called
> it, you have a secret penalty schedule. Would it be fair to say that
> that\'s true?
>
> MR. SPIES: Sure.
>
> VICE CHAIRMAN SMITH: Do you think that this gives you an advantage
> over other people who might practice before the Commission who have
> not been made privy to these devices?
>
> MR. SPIES: I think it puts\--does it give an advantage relative to
> practitioners from outside of the Beltway who have never come before
> the Commission? Yes. Does it give an advantage relative to the sort
> of\--the group of 12 that Larry Noble was referring to, the people who
> have been doing this for a long time in D.C.? Probably not. They know
> the cases also.
>
> VICE CHAIRMAN SMITH: But at least over some. Just some quick questions
> here. Given your experience both inside and outside, do you think that
> if we name more respondents rather than less respondents, as suggested
> by Mr. Noble, we should err on the side of\--
>
> CHAIR WEINTRAUB: Fewer respondents? I\'m shocked at you, Mr. Vice
> Chairman.
>
> VICE CHAIRMAN SMITH: Pardon?
>
> CHAIR WEINTRAUB: It\'s not less respondents. It\'s fewer respondents.
>
> VICE CHAIRMAN SMITH: Fewer respondents.
>
> \[Laughter.\]
>
> VICE CHAIRMAN SMITH: I was not an English professor.
>
> If we had fewer rather than more\--
>
> \[Laughter.\]
>
> VICE CHAIRMAN SMITH: Do you find that that speeds up or slows down the
> process of resolving disputes, resolving MURs?
>
> MR. SPIES: I think naming more\--I\'m choosing my words
> carefully\--slows it down, clearly. And I would note on that from\--I
> think the key to naming the correct amount in my opinion is good
> oversight from the Commission and from, you know, the powers that be.
>
> I\'m thinking specifically of an instance in the last couple years
> where I think someone was named just because he was sort of famous and
> they had heard of him. And there was absolutely no allegation against
> him. It caused a lot of turmoil. Eventually, a few\--probably three
> weeks after that happened, the situation was corrected. But there was
> no\--had the Commission or had someone been paying attention in the
> first place, that never should have happened.
>
> VICE CHAIRMAN SMITH: Right, and obviously the goal is not really to
> name more for the sake of naming more, fewer for the sake of naming
> fewer. The goal is to name the right respondents, and I think the kind
> of criteria that Mr. Sandler and Mr. Bauer have talked about today
> make some sense in terms of thinking about internally generated
> respondents.
>
> How about providing documents at the\--just making the record
> available automatically, at least at the probable cause stage? Do you
> think that would speed up the process or slow the process down?
>
> MR. SPIES: I think it speeds it up. You have a lot of times the
> instance where a case is dragged out for years, and then, you know,
> the respondent is given 15 days to prepare a response brief with the
> "sword of Damocles" over them that they have to extend the statute of
> limitations if they want to find an educated response to something
> that took years to prepare. And the sooner you can get documents
> available to respondents and the more you can do leads to better
> crafted responses and moves the process along, ultimately.
>
> VICE CHAIRMAN SMITH: You mentioned earlier that you think there\'s
> been something of a change in culture and that you think that\'s
> important. Do you think that a change in culture that perhaps places
> more concern on the perceptions of the community that it\'s fair or
> beneficial? And, actually, I want to cut you, because I see I\'ve got
> my 30-second light, and I want to make a few comments to close.
>
> What I was getting at, obviously, is that I reject the dichotomy that
> a couple people have suggested that for some reason making sure that
> the process seems fair to those who are caught in the process in some
> way is contrary to enforcement. Sometimes it might create delay, but I
> think many more times it will not create delay, and it may speed
> things up, and it may lead to greater cooperation and earlier or
> easier settlements.
>
> I agree that law enforcement is a key thing of what we\'re doing, but
> it\'s not the only thing. We do disclosure. We do public education.
> And in any cases, it is to be done. It\'s our key function, but it\'s
> a key function with respect for due process. And there may be due
> process minimums required by the Constitution, but those are minimums.
> Those are not the maximum that is required.
>
> In recent months, this Commission, the same Commission that has enough
> concern to call this hearing and listen to this, has done two
> enforcement matters. One was, I think, if memory serves me, our second
> largest conciliation agreement ever with anyone. Another just a few
> weeks ago was, I believe, our large conciliation ever with a sitting
> Member of Congress. And I think those things show that the idea that
> robust enforcement is incompatible with the types of concern over
> fairness and due process is simply a false dichotomy.
>
> I thank you all for coming today. Thank you. Thank you, Madam Chair.
>
> CHAIR WEINTRAUB: Thank you, Mr. Vice Chairman.
>
> Just a couple of questions. I take it that you would all
> agree\--there\'s been a lot of discussion here about whether we should
> make public our enforcement manual or some version, perhaps even in
> summary form, of our enforcement manual setting forth, you know, what
> we look at, you know, the penalties and how we rate different cases in
> terms of their priority for our resources.
>
> I take it you would all agree that that would be something that the
> regulated community would view as a positive step and one that would
> increase the fairness of the process in the minds of the regulated
> community. Any disagreement on that?
>
> MR. SANDLER: No.
>
> CHAIR WEINTRAUB: I want to go to a comment that Mr. Reiff made. This
> is really sort of a new area for this discussion today, but it goes to
> one of my pet peeves. As a former practitioner before this
> agency\--and I think that in fairness to the General Counsel\'s
> Office, I should say that I\'ve seen more flexibility in this regard
> since I\'ve been here than I actually perceived when I was on the
> outside. But when I was negotiating conciliation agreements with OGC,
> I always perceived that OGC was somewhat rigid in the wording, that
> there were boilerplate phrases that had to be included in there in a
> certain way; and that when I said, well, gee, could we change the
> wording in paragraph 3, I was told, well, no, no, no, paragraph 3 has
> to go the way it is. You know, we can negotiate over paragraph 10,
> maybe, but not over paragraph 3 because that\'s our standard
> boilerplate.
>
> Would you all agree with me that if we\--and as I said, I\'ve seen
> more flexibility in this regard since I\'ve been here, and, in fact,
> very recently. But would you agree with me that if we were willing to
> engage a little bit more in the more typical settlement negotiations
> where you argue over the wording, that we might, in fact, increase the
> penalties, that people might be willing to pay more money in return
> for changes in the wording, and that we would probably increase our
> chances of getting to conciliation quicker?
>
> MR. OLSON: Yes.
>
> MR. SANDLER: Yes, I would strongly agree with that. I think that
> particularly\--and there has been, again, some more flexibility, I
> guess, in the recent period, but particularly willingness to reflect
> the position of respondents or even go so far as what other agencies
> do, which is to accept in the appropriate circumstances a conciliation
> in which the respondent neither admits nor denies liability. That\'s
> not appropriate for every case, but, you know, the current policy is
> inflexibly that it can never be accepted in a conciliation agreement.
>
> All those things would greatly increase the willingness of respondents
> to enter conciliation and would expedite the conciliation process.
>
> MR. OLSON: And one of the reasons that\'s always given as to why that
> paragraph 4 cannot be changed is the Commission will simply not accept
> it unless those words are in there. And, of course, that is, in a
> sense, a wonderful bargaining position to be in with a disclosed
> principal who you can\'t touch, can\'t talk to.
>
> CHAIR WEINTRAUB: Well, I have about a minute and a half left, so let
> me throw it open to you. Is there anything that you think that we
> ought to be considering as we look at our enforcement procedures?
>
> MR. REIFF: More peeves?
>
> CHAIR WEINTRAUB: Any more peeves, Neil?
>
> MR. OLSON: I\'ll add one thought, which is that I think there\'s a
> separation of powers issue as to the role\--as to the rights of a
> complainant. I think once a complainant comes to you and puts an issue
> in your lap, how you deal with it is how you deal with it. And I\'ve
> never been very big on private attorneys general. I think the
> executive branch of government ought to decide these issues, and there
> are a thousand considerations as to how they do it and generally ought
> not to be challenged, just as a matter of constitutional law.
>
> MR. REIFF: Just to close, I\'ll just reiterate something in our
> written comments from a recent case and experience we had.
>
> We had a case that took about four years for the Commission to get
> from, I guess, a reason-to-believe finding to the next stage. And it
> was a relatively large case and somewhat complex, and we asked for a
> few more days to respond to, you know, pre-probable cause brief. And
> at every stage at that point we were requested and required for any
> extension of time to allow for the statute of limitations to be
> expanded. In that case, I thought that was patently unfair that we had
> to give up our rights because the Commission took so long, at least at
> that stage of the game, to move the case along.
>
> So I think at that initial stage where the Commission has always as a
> general matter given those types of extensions, it was unfair to take
> into account the amount of time it took the Commission to move the
> case forward.
>
> CHAIR WEINTRAUB: That sentiment has been expressed previously, you may
> not be surprised to hear.
>
> MR. OLSON: Can I also just clarify? Because Mr. Sandler\--
>
> CHAIR WEINTRAUB: Six seconds or less.
>
> MR. OLSON: \--referenced Congressman Paul. I\'m representing him in
> the suit, but not here. I\'m here for the Free Speech Coalition and
> the Conservative Legal Defense and Education Fund.
>
> CHAIR WEINTRAUB: Thank you very much.
>
> Over to you, Mr. General Counsel.
>
> MR. NORTON: Thank you, Madam Chair.
>
> Mr. Spies, you raise concerns with the Commission\'s confidentiality
> advisement, and you make the point that it misleads witnesses into
> thinking that they\'re prohibited from talking to respondents. And
> I\'m sympathetic to that, and I think that we ought to be clearer
> about it and certainly ought to be clear that that\'s not the effect
> of the advisement.
>
> But you then say that the Commission should, if asked, reveal to the
> witness who the respondents to the matter are, and that one strikes me
> as awfully problematic. In other words, we\'re interviewing a
> third-party witness, and the third-party witness says, \"Who are you
> investigating here?\" It doesn\'t seem to me as a cardinal matter of
> law enforcement and, frankly, our confidentiality statute that we
> ought to be disclosing that.
>
> Do you disagree?
>
> MR. SPIES: I fully agree that there\'s competing interests there, and
> I think that\'s a hard question, but I think you may end up getting a
> more accurate statement if they\'re informed of what they\'re
> testifying about.
>
> MR. NORTON: Mr. Sandler?
>
> MR. SANDLER: I think it\'s perfectly appropriate as a matter of law
> enforcement process to advise a witness at that point that they are a
> witness and not a respondent and not to reveal the status of other
> participants.
>
> MR. NORTON: Mr. Spies, in your comments, you address a question
> that\'s come up many times today, and that is who we name as a
> respondent in connection with a complaint. You say we ought to limit
> it to an allegation in the complaint of a violation of the Act by a
> particular respondent. I think, Mr. Sandler, you and Mr. Reiff say we
> shouldn\'t make assumptions.
>
> It seems to me there\'s a competing interest there, too, and that is
> that the statute doesn\'t mandate very rigorous pleading requirements,
> and that many of the complaints we get are by private citizens and are
> necessarily not very articulately drafted, don\'t identify individuals
> as respondents. Should we approach those more liberally in terms of
> inferring from the complaint what they allege has occurred and who
> they allege has violated the Act?
>
> MR. SPIES: It seems to me if they attach evidence that clearly shows a
> violation of the Act, yet the complaint is not sworn out, you know,
> citing the part of the statute or the regs, you don\'t penalize them
> for their lack of familiarity with the statute. But I don\'t\--many of
> the complaints I\--you\'re right that a lot of citizens file
> complaints because things don\'t sound right or because they read in
> the newspaper about something that didn\'t sound fair. And I don\'t
> think the Commission should do their work for them and read into that,
> well, you know, this is what they could have meant.
>
> MR. NORTON: Mr. Sandler\--oh, I\'m sorry.
>
> MR. OLSON: Well, I\'m just saying this has nothing to do whatsoever
> with being unfair to a complainant who doesn\'t know the fine points
> of law. This is jurisdictional. The complaint must meet certain
> attributes, or you have no jurisdiction to begin an investigation
> based on that complaint.
>
> MR. NORTON: Do you want to respond to that, too?
>
> MR. SANDLER: Well, the courts, of course, deal with this situation all
> the time, particularly in the context of pro se complaints. And there
> is an argument to be made for interpreting the legal theories
> liberally. But at some point, somebody has to look at the complaint
> and say\--or the newspaper article attached, and say if what is being
> alleged here, trying to make sense of it, is true, is there a
> violation of the Act or the Commission\'s regulations? And if so, by
> whom? And that should be the starting point.
>
> Of course, as the investigation reveals that other people should be
> respondents, they can be named as respondents.
>
> MR. NORTON: I asked this question of the first panel, and I\'d be
> interested in your reactions. As you know, 437(g) provides that if
> there are four or more votes to find reason to believe, the Commission
> makes an investigation, I think is the language, conducts an
> investigation.
>
> It has occurred to me on occasion that the information we\'ve received
> from the respondents leaves some question unaddressed or perhaps
> ambiguous, and that if we could follow up and clarify with the
> respondent, request additional information on a strictly voluntary
> basis, it would help tip the determination, may well tip the
> determination and the recommendation of the office that there is, in
> fact, no basis for finding reason to believe.
>
> Do you think that the statute prohibits that sort of informal contact
> follow-up with respondents? And if not, do you think it\'s a matter of
> good or bad policy?
>
> MR. SANDLER: I would say the statute absolutely does not prohibit it.
> There\'s nothing that precludes the\--and I think the notice itself
> cites the authority for the proposition that the agency can always
> afford additional process in addition to what the statute provides
> for. And I think it\'s a great idea as a matter of policy and would
> indeed have the beneficial effect that you\'ve suggested.
>
> MR. SPIES: I agree with Joe that clearly the statute doesn\'t prohibit
> it. As a policy matter, the way you laid it out, it sounds\--I think
> it makes a lot of sense. My concern would be if it was part of a
> \"gotcha\" thing where just a little more information could get you to
> RTB, then I would have more concerns about it.
>
> MR. NORTON: Well, thank you very much, and thank you, Madam Chair.
>
> CHAIR WEINTRAUB: Thank you, Mr. General Counsel.
>
> Mr. Staff Director?
>
> MR. PEHRKON: Madam Chair, I have no further questions.
>
> CHAIR WEINTRAUB: Let me just conclude then with a couple of comments.
> I want to, of course, thank all of the witnesses who have been here
> today, this panel and all the previous ones, for all of your time and
> for coming in here. I know you\'re all busy.
>
> I want to give a slight apology to Messrs. Spies, Sandler, and Reiff.
> We always seem to put you on at the end of the day after the press has
> gone home, although I told them that you would be really entertaining
> and informative and they should come and stick around and here what
> you had to say.
>
> All of the panelists today have given us a lot of food for thought,
> and while we cannot promise to accept all of the suggestions that were
> put forth today\--in fact, we couldn\'t do that since some of them
> were contradictory\--we will certainly consider all of them, take them
> very seriously, and I hope this will be the beginning of a dialogue
> and not the endpoint. I think the Commission learns when it sits down
> and talks to people who practice before it and have a lot of
> experience here.
>
> I want to\--I think I was going to say something else in conclusion,
> but I can\'t remember, anymore, because it\'s the end of a long
> day\--oh, I know what else I was going to say. I am not surprised
> that, despite my request and the request from others that we not
> address personalities in the General Counsel\'s Office, that several
> witnesses felt compelled to compliment the staff of the General
> Counsel\'s Office who are, I think without exception, people of
> integrity and great public spiritedness, and I very much appreciate
> their willingness to engage in this process, which had some potential
> for not being the most positive day for them. But I think maybe it
> didn\'t turn out as badly as perhaps we thought it might because,
> really, you guys do a great job, and I think all the witnesses
> acknowledged that.
>
> And, with that, I thank you all, thank all the Commissioners and the
> General Counsel and the Staff Director, and this meeting is adjourned.
>
> \[Whereupon, at 4:48 p.m., the hearing adjourned.\]