[Federal Register Volume 65, Number 98 (Friday, May 19, 2000)]
[Rules and Regulations]
[Pages 31787-31798]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-12484]



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Rules and Regulations
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Federal Register / Vol. 65, No. 98 / Friday, May 19, 2000 / Rules and 
Regulations

[[Page 31787]]



FEDERAL ELECTION COMMISSION

11 CFR Parts 104 and 111

[Notice 2000-10]


Administrative Fines

AGENCY: Federal Election Commission.

ACTION: Final Rule; transmittal of regulations to Congress.

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

SUMMARY: The Treasury and General Government Appropriations Act, 2000, 
amended the Federal Election Campaign Act of 1971 (hereinafter ``the 
Act'' or ``FECA'') to permit the Federal Election Commission to impose 
civil money penalties for violations of the reporting requirements of 
the FECA that occur between January 1, 2000, and December 31, 2001. The 
amendments are intended to expedite and streamline the Commission's 
enforcement procedures. The Commission is promulgating amendments to 
its compliance procedure regulations to implement the new program. 
Further information is provided in the supplementary information that 
follows.

EFFECTIVE DATE: July 14, 2000. The Commission transmitted the final 
rules and the Explanation and Justification to Congress pursuant to 2 
U.S.C. 438(d) on May 12, 2000. The Commission anticipates that 30 
legislative days will elapse by the effective date.

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

SUPPLEMENTARY INFORMATION: The Commission is issuing final rules to 
establish the administrative fines program that Congress authorized in 
amendments to section 309(a)(4) of the FECA, 2 U.S.C. 437g(a)(4). These 
amendments were enacted as part of the Treasury and General Government 
Appropriations Act, 2000, Public Law 106-58, 106th Cong., Section 640, 
113 Stat. 430, 476-77 (1999). Under 2 U.S.C. 434, treasurers of 
political committees are required to file reports periodically to the 
Commission by a certain deadline. Prior to enactment of the amendment 
to the FECA, the Commission handled failures to file the reports in a 
timely manner under the enforcement procedures in 11 CFR part 111. The 
purpose of the administrative fines program is to institute streamlined 
procedures, while preserving the respondents' due process rights, to 
process violations of the reporting requirements of 2 U.S.C. 434(a) and 
assess a civil money penalty based on the schedules of penalties for 
such violations. The final rules include new subpart B of 11 CFR part 
111, and technical amendments to 11 CFR 104.5, 111.8, 111.20, and 
111.24 to implement the administrative fines program.
    Section 438(d) of Title 2, United States Code, requires that any 
rule or regulation prescribed by the Commission to carry out the 
provisions of Title 2 of the United States Code be transmitted to the 
Speaker of the House of Representatives and the President of the Senate 
30 legislative days before they are finally promulgated. These 
regulations were transmitted to Congress on May 12, 2000.

Explanation and Justification

    The Commission initiated this rulemaking by issuing a Notice of 
Proposed Rulemaking (NPRM) on March 29, 2000, in which it sought 
comments to the proposed rule. 65 FR 16534 (March 29, 2000). The 
comment period ended on April 28, 2000. The Commission received one 
comment in response to the NPRM from Akin, Gump, Strauss, Hauer & Feld. 
The comment included a request for a public hearing. Because Congress 
intended for this new program to apply to violations that occur in 2000 
and 2001, the final rules need to be issued in a timely manner so that 
the program will be applicable to the reports that are due in 2000. 
Holding a public hearing would postpone publication of the final rules 
and delay the effective date, possibly until February or March, 2001. 
This late effective date would allow the Commission to apply the 
administrative fines procedure to only one major reporting period--the 
2001 Mid-Year Report. This would not give the Commission a sufficient 
basis to determine whether to recommend that Congress make the program 
permanent. Also, the Commission received only one request for a public 
hearing and that requester did submit extensive comments. Therefore, 
the Commission will not hold a public hearing on this final rule.

General Comments

    The commenter's overriding concern was that the proposed procedures 
do not afford adequate procedural due process and therefore, violate 
the Fifth Amendment's Due Process Clause of the U.S. Constitution. The 
commenter argued that the procedures do not meet the balancing test in 
Mathews v. Eldridge, 424 U.S. 319 (1976), by failing to recognize the 
respondents' private interests, by minimizing the potential risk of 
erroneous result, and by placing undue emphasis on administrative 
expediency. The commenter claimed that the potential risk of erroneous 
result is high because the civil money penalty calculation includes 
three factors that could be misapplied and because the advent of 
mandatory electronic filing could flood the Commission's computers and 
lead to a breakdown that would unfairly penalize the respondents.
    The Commission disagrees with this assessment. The Commission does 
recognize that the respondents have a property interest at stake. 
Except for political committees with low levels of financial activity 
during the reporting period, the civil money penalty will not exceed 
fifteen percent of the level of activity in the report for respondents 
who have no previous violations. For committees whose financial 
activity is less than $25,000 and who do not have a previous violation, 
the civil money penalty will not exceed $1000 or the level of activity, 
whichever is less. Thus, the cost of additional procedures such as a 
hearing for the respondent as well as the Commission will exceed the 
benefit of having them. Also, the Mathews balancing test considers 
whether additional procedures will provide greater protection against 
deprivation of a property interest or error. Within the administrative 
fines program, additional procedures in most cases will not afford the 
respondents greater protection against either. As

[[Page 31788]]

stated in the NPRM, the factual and legal issues involved in violations 
of the reporting requirements of 2 U.S.C. 434(a) are relatively 
straightforward. The Commission will carefully review the facts and its 
records before it will even proceed with a reason to believe finding. 
For the most part, the factual disputes surrounding this type of 
violation are whether the respondent filed the report and when the 
report was filed. If the respondent disagrees with the facts in the 
notification of the reason to believe finding, he or she can send proof 
of the filing and the date of the filing. The Commission expects that 
the reviewing officer will be able to resolve these types of factual 
disputes based on the written submissions.
    The Commission also disagrees with the commenter's assertion that 
the procedures set forth in the NPRM pose a large potential risk of 
erroneous result. The civil money penalty calculation is a simple 
arithmetic formula whereby an error can be readily corrected by the 
Commission or the reviewing officer when it is brought to their 
attention. It is premature to predict the impact of mandatory 
electronic filing on administrative fines. It will have no real effect 
on the administrative fines program during the year 2000 because 
mandatory electronic filing is not scheduled to begin until January, 
2001. Given that most committees will file only two reports during 2001 
(2000 Year End and 2001 Mid-Year reports) before the administrative 
fines program sunsets on December 31, 2001, the impact is likely to be 
minimal, if any. The Commission's electronic filing system has been 
designed to accommodate filings by all committees that will be mandated 
to file electronically in 2001. As a result, there is no expectation 
that the system will have an adverse impact on the ability of 
committees to file their reports in a timely manner. In fact, 
committees may find that electronic filing is easier, faster, and more 
convenient than paper filing. Nevertheless, any failure of the 
Commission's system that prevents committees from filing their reports 
when due would be recognized by the Commission as a circumstance beyond 
the control of the filer and would be taken into account when 
considering reason to believe findings or the final determination.
    The Commission recognizes that the need to avoid administrative 
burdens is one of the stated purposes for the amendment to the FECA. 
Congressman William Thomas, Chairman of the Committee of House 
Administration, stated the following on the floor of the House of 
Representatives on September 15, 1999:

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

    The Commission, however, disagrees with the commenter that the 
proposed rule sacrifices the respondents' rights and procedural due 
process in the interest of administrative efficiency. The Commission 
applied the Mathews balancing test in developing the administrative 
fines procedures, taking into consideration the private interests 
involved and the nature of the violation. The Commission believes that 
the procedures in the final rules more than adequately meet the Mathews 
test in providing the respondents with procedural due process.

Section 104.5  Filing Dates

    Paragraph (i) is being added to section 104.5 to encourage 
political committees to keep proof that they filed their reports and 
the dates on which the reports were filed. Retaining this evidence will 
allow a respondent to demonstrate timely filing if the respondent 
disagrees with the Commission on whether the report was filed and if 
so, the date of the filing. No substantive comments were made 
concerning this proposed section.

Section 111.8  Internally Generated Matters; Referrals

    Paragraph (d) is being added to section 111.8 to permit the 
Commission to process complaint-generated matters that allege 
violations of the reporting requirements of 2 U.S.C. 434(a) under the 
administrative fines program. The Commission received no substantive 
comment on this section.

Section 111.20  Public Disclosure of Commission Action

    New paragraph (c) in section 111.20 is being added to provide for 
the public disclosure of the enforcement file once the matter is 
completely resolved. The Commission did not receive any substantive 
comments to this section.

Section 111.24  Civil Penalties

    Revised paragraph (a) of section 111.24 allows for the imposition 
of civil money penalties so as to make section 111.24 consistent with 
11 CFR part 111, subpart B. The Commission did not receive any 
substantive comments on this section.

Section 111.30  When Will Subpart B Apply?

    The amendment to FECA authorizes the administrative fines 
procedures for violations of the reporting requirements of 2 U.S.C. 
434(a) that occur between January 1, 2000 and December 31, 2001. 
Therefore, this section provides that subpart B only applies to 
violations that occur during that time frame and subpart B sunsets as 
of January 1, 2002. The Commission did not receive any substantive 
comments on this section.

Section 111.31  Does This Subpart Replace Subpart A of This Part for 
Violations of the Reporting Requirements of 2 U.S.C. 434(a)?

    Under the amendment to FECA, the Commission has discretion to apply 
either the administrative fines procedures or the current enforcement 
procedures set forth in Secs. 111.9 through 111.19 to violations of the 
reporting requirements of 2 U.S.C. 434(a). The amendment, however, 
still requires the Commission to find reason to believe that a 
violation has occurred prior to making a final determination. Thus, 
Secs. 111.1 through 111.8, which include the Commission's reason to 
believe procedures, will apply to violations processed through the 
administrative fines procedures. Please note that under 2 U.S.C. 
437g(b), the Commission will continue to publish the names of political 
committees that fail to file their reports when due in the calendar 
quarter preceding an election including pre-election reports if the 
committees do not respond within four business days of being notified 
by the Commission of their failure to file. Sections 111.20 through 
111.24, which pertain to public disclosure, confidentiality, ex parte 
communications, representation by counsel, and civil penalties, will 
also apply to violations processed under subpart B. In addition, while 
the Commission anticipates that it will process most of these 
violations under the administrative fines procedures, Sec. 111.31 makes 
clear that the Commission has the discretion to use the enforcement 
procedures in Secs. 111.9 through 111.19 to handle these violations in 
circumstances the Commission deems appropriate.
    Proposed Sec. 111.31(b) is being modified to include complaint-
generated matters that allege violations of the reporting requirements 
of 2 U.S.C. 434(a) along with violations of other provisions of the 
FECA in the administrative fines program. The alleged violations of the 
reporting

[[Page 31789]]

requirements will be processed through subpart B while the other 
alleged violations will be handled through the enforcement process of 
subpart A. The Commission made this modification to maintain 
consistency in its prosecution of alleged violations of the reporting 
requirement of 2 U.S.C. 434(a). The Commission did not receive any 
substantive comments on this section.

Section 111.32  How Will the Commission Notify Respondents of a Reason 
To Believe Finding and a Proposed Civil Money Penalty?

    The Commission will follow its current procedures in finding reason 
to believe and in notifying the respondents of its finding. If the 
Commission, by an affirmative vote of at least four of its members, 
finds reason to believe that a violation has occurred, the Chairman or 
the Vice-Chairman will notify the respondent of the finding. The 
notification will include the legal and factual basis for the finding 
as well as the proposed civil money penalty in accordance with the 
schedules of penalties and an explanation of the respondent's right to 
challenge the finding and/or the proposed civil money penalty.
    As stated in the NPRM, the Commission will also continue to follow 
its current procedure of notifying the political committees of their 
duty to file their reports and the dates on which the reports are due 
prior to the filing deadline. Thus, political committees will continue 
to be on notice of their legal obligation to file their reports in a 
timely manner.
    The commenter urged that the Commission include a regulation 
stating when a report filed electronically is considered ``filed.'' The 
Commission agrees that the regulations should include such a provision 
but has decided that this topic is better addressed in the Commission's 
rulemaking regarding mandatory electronic filing.

Section 111.33  What Are the Respondent's Choices Upon Receiving the 
Reason To Believe Finding and the Proposed Civil Money Penalty?

    Upon receipt of the notification of the reason to believe finding 
and the proposed civil money penalty, the respondents will have two 
options. They may pay the civil money penalties pursuant to 
Sec. 111.34. The Commission will process the payment and then close the 
matter. Respondents may also challenge the reason to believe finding 
and/or the proposed civil money penalty by following the procedures set 
forth in Sec. 111.35. The Commission did not receive any substantive 
comments on this section.

Section 111.34  If the Respondent Decides To Pay the Civil Money 
Penalty and Not To Challenge the Reason To Believe Finding, What Should 
the Respondent Do?

    A respondent who does not wish to challenge the reason to believe 
finding and the proposed civil money penalty must submit a check or 
money order equal to the amount of the proposed civil money penalty to 
the Commission within 40 days of the reason to believe determination. 
Once the Commission receives payment, it will send the respondent a 
final determination that the respondent has violated 2 U.S.C. 434(a) 
and acknowledgment of the respondent's payment of the civil money 
penalty. The matter would then be closed and the file would be placed 
on the public record pursuant to 11 CFR 111.20 and new 11 CFR 111.42. 
The Commission did not receive any substantive comments on this 
section.

Section 111.35  If the Respondent Decides To Challenge the Alleged 
Violation or Proposed Civil Money Penalty, What Should the Respondent 
Do?

    Proposed Sec. 111.35 in the NPRM set forth the requirements that 
respondents must meet to challenge a reason to believe finding and/or 
proposed civil money penalty. The requirements included filing a notice 
of intent to challenge within twenty days of the date of the Commission 
finding reason to believe and filing a written response with supporting 
documentation within forty days of that date. This proposed section 
also provided for circumstances the Commission will consider in 
determining whether to levy a civil money penalty and defenses that the 
Commission will not accept.
    The commenter had several criticisms of this aspect of the 
administrative fines procedures. First, the commenter objected to the 
requirement of the notice of intent to challenge the reason to believe 
finding and/or proposed civil money penalty, stating that the 
requirement is ``contrary to the plain language of the statute, which 
forbids the Commission from making an adverse determination `until the 
person has been given notice and an opportunity to be heard before the 
Commission' '' (citation omitted). While the Commission disagrees with 
the commenter's legal analysis on this issue, the Commission agrees 
that a notice of intent to challenge is not necessary. Consequently, 
that step has been eliminated from the final rules.
    The commenter also objected to the use of the date of the 
Commission's reason to believe determination to trigger the time that 
the respondent has to file a notice of intent and the written response. 
The commenter suggested that the time to file the notice of intent and 
the written response should not begin until receipt of the notification 
of the Commission's reason to believe finding.
    In determining when the time to appeal begins to toll, some federal 
agencies chose the date on which the decision was made, not the date of 
receipt, often providing thirty days from the date of the initial 
decision. See e.g., Coast Guards Regulations on Suspension, Revocation, 
and Appeals, 33 CFR 158.190 (2000); Department of the Interior 
Regulations on Public Lands, 43 CFR 4.356 (2000). The Commission also 
notes that several agencies that begin to toll the time for appeal upon 
service of an initial adverse decision provide thirty days for a party 
to file the appeal. See Federal Retirement Thrift Investment Board 
Privacy Act Regulations, 5 CFR 1630.13 (2000); National Indian Gaming 
Commission Regulations on Appeals, 25 CFR parts 524 and 539 (2000); 
Postal Service Regulations on Suspension and Revocation of Appeal, 39 
CFR 501.12 (2000). Seen in this context, the Commission believes that 
forty days is an ample and fair amount of time for respondents to file 
a written response. The Commission has extended the traditional thirty 
day appeal period an additional ten days to take into account the time 
it takes for Commission staff to prepare the mailing as well as for the 
Postal Service to deliver the notification, with a few additional days 
as a margin for error.
    The commenter strongly disagrees with the list of defenses in 
proposed Sec. 111.35 that the Commission will and will not consider, 
suggesting that the Commission has failed to balance the respondent's 
rights with ``administrative expediency'' for the Commission. The 
commenter recommends that the Commission eliminate proposed 
Sec. 111.35(c)(1)(iii) and (c)(4) because the Commission has no 
rationale for limiting defenses to ``48-hour extraordinary 
circumstance'' and errors on the part of the Commission. In addition, 
the commenter believes that the Commission should allow ``good faith'' 
defenses.
    The Commission has sound policy reasons for limiting the 
respondents' defenses beyond streamlining the administrative process. A 
key cornerstone of campaign finance law is the full and timely 
disclosure of the political committee's financial activity.

[[Page 31790]]

Such disclosure is essential to providing the public with accurate and 
complete information regarding the financing of federal candidates and 
political campaigns. Thus, violations of the reporting requirements of 
2 U.S.C. 434(a) are strict liability offenses. Political committees are 
aware or should be aware of their legal duty to file the required 
reports in a timely manner, and the Commission makes ongoing efforts to 
remind committees of their duty. Committees are given ample time from 
the end of the reporting period to the filing deadline to prepare and 
file their reports. Absent extraordinary circumstances beyond the 
committees' control, the Commission sees no reason why committees 
cannot file their reports by the deadline. The rationale behind the 
``48-hour extraordinary circumstances'' exception is that the 
Commission recognizes there may be instances such as natural disasters 
where a committee's office is located in the disaster area and the 
committee cannot timely file a report because of lack of electricity or 
flooding or destruction of committee records. The Commission, however, 
expects the committee to file its report as soon as it can reasonably 
do so.
    The commenter argues that under proposed Sec. 111.35(c)(4)(iv) 
respondents may be held liable for the failure of the Commission's 
computers. Any failure of the Commission's system that prevents 
committees from filing their reports when due would be recognized as an 
extraordinary circumstance beyond the respondents' control. Therefore, 
Sec. 111.35(c)(4)(iv) has been revised to exclude Commission computer 
failures from the list of circumstances that the Commission will not 
consider as extraordinary circumstances.
    The commenter states that, under the Due Process Clause of the U.S. 
Constitution, the Commission bears the burden of proving the factual 
allegations, not the respondent. In its notification to the respondent 
of its reason to believe finding, the Commission does include the 
factual and legal basis for its finding based on the information 
available to it. Only the respondents can answer the Commission's 
allegations, devise their defenses, and provide the documents that 
would support their defenses. Supporting documentation will permit the 
reviewing officer to evaluate the respondents' factual allegations and 
defenses. Administrative procedures under other federal agencies also 
require respondents to provide the factual and legal basis for seeking 
relief or appealing a decision of the agency. See e.g., 18 CFR 
1312.12(d) (2000) (Tennessee Valley Authority's regulations requiring 
the petition for relief from an assessment of a civil penalty to ``set 
forth in full the legal and factual basis for the requested relief.''); 
25 CFR 577.3 (2000) (The National Indian Gaming Commission's hearing 
regulations state that ``* * * the respondent shall file with the 
Commission a supplemental statement that states with particularity the 
relief desired and the grounds therefor and that includes, when 
available, supporting evidence in the form of affidavits.''). 
Therefore, requiring a respondent to include reasons for challenging 
the reason to believe finding and/or proposed civil money penalty and 
the factual basis for those reasons does not violate a respondent's 
rights under the Due Process Clause.

Section 111.36  Who Will Review the Respondent's Written Response?

    Proposed Sec. 111.36 in the NPRM provided for an impartial 
reviewing officer to review the reason to believe finding, the proposed 
civil money penalty, the Commission's documentation, and the 
respondent's written response and to make a recommendation to the 
Commission. The reviewing officer may request that the respondent and/
or the Commission staff submit supplemental information. Paragraph (b) 
is being revised to clarify the consequence of failure by the 
respondent to file the supplemental information. Such failure will 
entitle the reviewing officer to draw an adverse inference.
    The commenter expressed concern that the procedures described in 
proposed Sec. 111.36 fail to meet the statutory requirements of 
Administrative Procedure Act (APA), 5 U.S.C. 551, et. seq., and the Due 
Process Clause of the U.S. Constitution. The commenter states that the 
proposed rule does not include provisions that incorporate 5 U.S.C. 
555(b) and (c), which entitle a party to appear in person, to be 
represented by counsel, and to have access to documents that are the 
basis of the reviewing officer's recommendation to the Commission. The 
commenter argues that oral hearings will fulfill the requirements of 5 
U.S.C. 555(b) and the Mathews balancing test to determine whether an 
agency's procedures afford respondents adequate procedural due process. 
The commenter contends that oral hearings would give greater meaning to 
the respondents' right to an ``opportunity to be heard''; would settle 
disputes without need for litigation, thereby conserving resources; and 
would develop a full administrative record for the purposes of judicial 
review. The Commission disagrees with some of these contentions and 
believes that these objectives can be achieved in all cases without 
need for an oral hearing.
    With regard to the respondents' right to be represented by counsel, 
new Sec. 111.31 explicitly incorporates Sec. 111.23, which allows for 
respondents to be represented by counsel in any matter before the 
Commission. The commenter cited to 5 U.S.C. 555(c) as the basis for 
requiring the Commission to give respondents access to documents used 
by the reviewing officer in formulating his or her recommendation. The 
Commission disagrees with this reading of this section of the APA. 
Section 555(c) states that a ``person compelled to submit data or 
evidence is entitled to retain or *  * * procure a copy or transcript 
thereof.'' Thus, respondents are entitled to keep a copy of their 
written submissions or ask the Commission to send them a copy of their 
written submissions. It does not grant the respondents the right to 
obtain or review other documents that the reviewing officer relied upon 
to make his or her recommendation. The Commission, however, recognizes 
that a respondent should be given copies of any additional documents 
that the reviewing officer examines after the respondent has filed a 
challenge to the reason to believe finding and/or proposed civil money 
penalty. For example, Commission staff might possibly provide 
additional materials regarding receipt of an electronically filed 
report. Therefore, paragraph (d) is being added to revised Sec. 111.36 
to provide for that procedure. Revised Sec. 111.36 also adds new 
paragraph (f) to require the reviewing officer to send the respondent a 
copy of the recommendation to the Commission and allows the respondent 
to file with the Commission Secretary a written response to the 
recommendation within ten days of the transmittal of the 
recommendation. However, the respondent will not be able to make any 
new arguments, that is, the respondent may not make arguments that the 
respondent did not make in its original written response or that are 
not in direct response to the arguments made by the reviewing officer 
in his or her recommendation to the Commission.
    The commenter interprets the second sentence of 5 U.S.C. 555(b) as 
creating an independent right to appear in person with counsel whenever 
there is an agency proceeding. The Commission disagrees with this 
interpretation. In reading 5 U.S.C. 555(b) as a whole, it is apparent 
that the entitlement described in the second sentence is triggered only

[[Page 31791]]

if the person is compelled to appear in person in an agency proceeding. 
Thus, if a person is compelled to appear in person, the person may 
chose to appear by himself or herself, to appear with counsel, or send 
counsel or a duly qualified representative in his or her stead. The 
right to appear under 5 U.S.C. 555(b) ``is not blindly absolute, 
without regard to the status or nature of the proceedings and concern 
for the orderly conduct of public business.'' DeVyver v. Warden, 388 
F.Supp. 1213, 1222 (M.D. Pa. 1974) (citing Easton Utilities Commission 
v. Atomic Energy Commission, 424 F.2d 847, 852 (D.C. Cir. 1970)).
    Moreover, 5 U.S.C. 555(b) does not afford the respondents a right 
to a hearing. The Supreme Court has held that even where a statute 
requires an ``opportunity for hearing,'' it ``cannot impute to Congress 
the design requiring, nor does due process demand, a hearing when it 
appears conclusively from the applicant's `pleadings' that the 
applicant cannot succeed.'' Weinberger v. Hynson, Westcott & Dunning, 
Inc., 412 U.S. 609, 621 (1973) (involving the Federal Drug 
Administration's procedure for withdrawing approval of a new drug 
application). Similarly, lower courts have held that agencies may make 
a decision solely on the written submission, much like summary 
judgment, where there are no disputed issues of material fact that 
cannot be resolved by the written submissions. State of Pennsylvania v. 
Riley, 84 F.3d 125, 130 (3rd Cir. 1996) (citing Moreau v. F.E.R.C., 982 
F.2d 556, 568 (D.C. Cir.1993); Altenheim German Home v. Turnock, 902 
F.2d 582, 584 (7th Cir. 1990); California v. Bennett, 843 F.2d, 333, 
340 (9th Cir. 1988); Bell Telephone Co. of Pennsylvania v. FCC, 503 
F.2d 1250, 1267-68 (3rd Cir. 1974); Puerto Rico Aqueduct & Sewer Auth. 
v. E.P.A., 35 F.3d 600, 606 (1st Cir. 1994); Louisiana Ass'n of Indep. 
Producers and Royalty Owners v. FERC, 958 F.2d 1101, 1113-15 (D.C. Cir. 
1992); City of St. Louis v. Department of Transp., 936 F.2d 1528, 1534 
n. 1 (8th Cir. 1991)).
    The court in Puerto Rico Aqueduct & Sewer recognized the need for 
administrative summary judgment. It stated that:

    The choice between summary judgment and full adjudication--in 
virtually any context--reflects a balancing of the value of 
efficiency against the values of accuracy and fairness. Seen in that 
light, summary judgment often makes especially good sense in an 
administrative forum, for, given the volume of matters coursing 
through an agency's hallways, efficiency is perhaps more central to 
an agency than to a court. . . . Administrative summary judgment is 
not only widely accepted, but also intrinsically valid. An agency's 
choice of such a procedural device is deserving of deference under 
``the very basic tenet of administrative law that agencies should be 
free to fashion their own rules of procedure.'' Vermont Yankee 
Nuclear Power Corp. v. NRDC, 435 U.S. 519, 544, 98 S.Ct. 1197, 1212, 
55 L.Ed.2d 460 (1978).

35 F. 3d at 606.
    The balancing of accuracy and fairness with the need for efficiency 
in an agency contains two of the three prongs of the Mathews test. 
Unlike other types of violations that may involve complex factual and 
legal issues requiring extensive fact finding and analysis and witness 
testimony, the legal and factual issues pertaining to violations of the 
reporting requirements of 2 U.S.C. 434(a), are elementary and readily 
ascertainable by review of written submissions. Because of this, a 
hearing will not significantly increase accuracy and fairness but will 
drain the Commission's resources and hinder its efficiency. Therefore, 
the Commission does not believe that a hearing is legally required 
especially in light of the additional procedures that are being added 
to the final rules. See supra.
    Paragraph (c) is being added to revised Sec. 111.36 to strongly 
encourage respondents to submit documents to the reviewing officer 
under Secs. 111.35 and 111.36 that are sworn to in the form of 
affidavits or declarations. More weight and credibility are generally 
given to statements and documents that are given under oath or are 
subject to the penalty of perjury.
    The commenter had several additional comments with regard to the 
reviewing officer. First, the commenter stated that the reviewing 
officer could not be viewed as impartial if he or she is within the 
Reports Analysis Division (RAD) or the Office of General Counsel (OGC) 
and suggested an independent position be created to ensure objectivity 
and to shield the reviewing officer from the supervision of the General 
Counsel or the Assistant Staff Director of RAD. The Commission agrees 
that ``[i]mpartiality does not require total independence from the 
government agency or the presence of an administrative law judge * * * 
[but] only decisionmaker independence * * * from the individual action 
to be decided.'' P. Verkuil, A Study of Informal Adjudication, 43 U. 
Chi. L. Rev. 739, 750 n.45 (1976) (citing Goldberg v. Kelly, 397 U.S. 
254, 271 (1970)). The Commission recognizes the need to separate its 
prosecutorial functions from its role as the decider of facts. 
Consequently, at this time, the Commission anticipates that the 
reviewing officer most likely will not be an employee within OGC or 
RAD.
    The commenter also suggested that the civil money penalties in the 
schedules of penalties in Sec. 111.43 should be considered the maximum 
civil money penalty and that the reviewing officer should have the 
authority to reduce the civil money penalty after considering 
mitigating factors and the totality of the circumstances to create 
``more flexibility in applying the new rules.'' The Commission 
disagrees. Allowing the reviewing officer to reduce the civil money 
penalty would vest in the reviewing officer the authority to make final 
decisions, contrary to the FECA and long standing practice. See 2 
U.S.C. 437c(c). Final agency decisions must be made by an affirmative 
vote of four members of the Commission. Also, if the reviewing officer 
is granted the discretion to reduce the civil money penalties, 
different civil money penalty amounts may be levied against political 
committees that commit identical violations, resulting in lack of 
uniformity and certainty and giving rise to the perception of 
unfairness.
    Finally with respect to the reviewing officer, the commenter 
advocated that this person should be subject to the Commission's ethics 
regulation. Further, the person ``should not be a member of the 
enforcement staff who previously served as counsel in a matter where 
the current respondent was either a witness or a respondent'' because 
it will create a conflict of interest and an appearance of impropriety. 
As an employee of the Commission and the federal government, the 
reviewing officer will be subject to the Commission's Standards of 
Conduct set forth at 11 CFR part 7, and the Standards of Ethical 
Conduct for Employees of the Executive Branch. The conflict of interest 
standard in 11 CFR 7.2(c) is designed to address instances where the 
employee's private interests are inconsistent with the efficient and 
impartial conduct of his or her official duties and responsibilities. 
Nothing in the rules bars an employee from serving in different 
capacities at different times such as employees in the Office of 
General Counsel subsequently filling positions in Commissioners' 
offices.
    Section 111.37  What Will the Commission Do Once It Receives the 
Respondent's Written Response and the Reviewing Officer's 
Recommendation?
    The Commission will make a final determination, by an affirmative 
vote of at least four of its members, as to whether the respondent has 
violated the reporting requirements of 2 U.S.C. 434(a) and the amount 
of the civil

[[Page 31792]]

money penalty, if any. The Commission will then authorize the reviewing 
officer to notify the respondent of its decision. The Commission did 
not receive any substantive comments on this section.

Section 111.38  Can the Respondent Appeal the Commission's Final 
Determination?

    This section follows the amendment to the FECA by specifying that 
respondents may appeal a final adverse determination by the Commission 
to a federal district court where the respondents reside or conduct 
business by filing a written petition within thirty days of receipt of 
the Commission's final determination. Respondents, however, may not 
raise any issue that they did not timely raise in the administrative 
proceeding. The Commission received no substantive comments on this 
section.

Section 111.39  When Must the Respondent Transmit Payment of the Civil 
Money Penalty?

    Unless the respondent appeals the Commission's final determination, 
the respondent must send a check or money order to the Commission 
within thirty days of receipt of the final determination. Once there is 
a final determination of the civil money penalty amount, the civil 
money penalty will be a debt owed to the United States. If the 
respondent does not submit full payment, the Commission may forward the 
debt to the U.S. Department of the Treasury for collection under the 
Debt Collection Improvement Act of 1996 within 180 days of the date 
after the final determination. 31 U.S.C. 3711(g); 31 U.S.C. 3716(c)(6). 
In the alternative, the Commission may initiate a civil suit pursuant 
to 2 U.S.C. 437g(a)(6)(A). The Commission did not receive any 
substantive comments on this section.

Section 111.40  What Happens If the Respondent Does Not Pay the Civil 
Money Penalty Pursuant to 11 CFR 111.34 and Does Not Submit a Written 
Response to the Reason To Believe Finding Pursuant to 11 CFR 111.35?

    The Commission will make a final determination and assess a civil 
money penalty, if any. The respondents will be notified by letter of 
the final determination. The respondent must pay any assessed civil 
money penalty within thirty days of receipt of the final determination. 
Unpaid civil money penalties are debts owed to the United States and 
may be transferred to the U.S. Department of the Treasury for 
collection. 31 U.S.C. 3711(g); 31 U.S.C. 3716(c)(6). In the 
alternative, the Commission may initiate a civil suit pursuant to 2 
U.S.C. 437g(a)(6)(A). There were no substantive comments on this 
section.

Section 111.41  To Whom Should the Civil Money Penalty Payment Be Made 
Payable?

    Respondents must pay the civil money penalties by check or money 
order and make the check or money order payable to the Federal Election 
Commission. The Commission did not receive any substantive comments on 
this section.

Section 111.42  Will the Enforcement File Be Made Available to the 
Public?

    Once the enforcement matter is closed, the file will be made 
available to the public subject to the provisions of 11 CFR 4.4(a)(3). 
A matter is considered closed when neither the Commission nor the 
respondent files a civil action in federal court or when there is a 
final disposition of the civil action pursuant to 11 CFR 111.20(c). The 
Commission received no substantive comments on this section.

Section 111.43  What Are the Schedules of Penalties?

    Proposed Sec. 111.43 contained two schedules of penalties--one for 
election sensitive reports and one for all other reports. The 
Commission took into account the level of activity in the report, the 
number of days late, the election sensitivity of the reports, and the 
existence of previous violations in developing the schedules. Two of 
these factors--the level of activity and the existence of previous 
violations--are mandated by the FECA. The Commission included the 
number of days as a factor because fairness demands that a report that 
is only a few days late should not be treated in the same manner as one 
that is many days late or not filed. Similarly, several state agencies 
responsible for overseeing state campaign finance laws levy fines on a 
per day basis for violations of their reporting requirements. See e.g., 
Fla. Stat. Ann. Sec. 106.04(8) (West 2000); Haw. Rev. Stat. Sec. 11-
193(a)(5) (1999); N.M. Stat. Ann. Sec. 1-19-35A (Michie 1999). Because 
of the need to disseminate campaign finance information prior to an 
election for it to have a meaningful impact, the Commission concluded 
that it is especially important for reports due prior to an election to 
be filed in a timely manner and before the election. Thus, the 
Commission developed a different schedule of penalties for election 
sensitive reports that imposes a higher civil money penalty for these 
reports than other types of reports. In addition, the schedule of 
penalties for election sensitive reports uses an earlier cut-off date 
in considering a report not to be filed than the date used for reports 
that are not election sensitive.
    The commenter made several comments and suggestions regarding the 
schedules of penalties. First, the commenter urged the Commission to 
calculate the level of activity based on contributions and expenditures 
less overhead and administrative costs, rather than receipts and 
disbursements, arguing that a calculation based on receipts and 
disbursements does not further the goals of FECA and discriminates 
against political action committees. This argument implicitly assumes 
that disclosure of some types of receipts and disbursements is of 
lesser importance than disclosure of other types. The Commission 
disagrees with this assumption. The amendment to the FECA clearly 
states that the Commission must take into account the ``amount of the 
violation involved,'' which is not limited to contributions and 
expenditures. Under section 434 of the Act, political committees are 
required to disclose all receipts and disbursements in their reports, 
not just contributions and expenditures. Moreover, Congress could have 
drafted the amendment to include just contributions and expenditures, 
as it did for mandatory electronic filing in Section 639 within the 
same amendment, but it did not. This difference in terms used in these 
two sections is strong evidence that Congress intended these two 
provisions to reach different types of financial activity. Thus, the 
Commission concludes that the ``amount of the violation involved'' is 
equal to receipts and disbursements.
    The commenter suggested that the final rules should state that 
committees with no receipts or disbursements will not be subject to the 
administrative fines, and urged the Commission to allow committees to 
send an affidavit attesting to the fact that they did not have any 
receipts or disbursements in lieu of filing a report. The Commission 
cannot do so because it does not have the authority to waive reporting 
requirements in this situation. While the Commission theoretically 
could make a final determination that a committee with no receipts and 
disbursements is in violation of 2 U.S.C. 434(a), the Commission could 
not assess a civil money penalty against the committee because the 
schedules of penalties only provides for civil money penalties if the 
level of activity is $1.00 or more. However, committees with no 
financial activity should file their reports; otherwise, the Commission 
will calculate an estimated level of activity

[[Page 31793]]

based on the average level of activity over the current or previous 
two-year election cycle. Unless the committees file their reports 
disclosing no financial activity, the Commission will assess civil 
money penalties based on these estimated levels of activity or $5500 if 
the Commission cannot calculate the estimated levels of activity.
    The commenter advocates the creation of a ``safe harbor'' for 
committees that do not have any contributions or expenditures in the 
given reporting period because these committees have not engaged in any 
political activity in that period. As discussed above, one of the 
mandated factors in determining the civil money penalty is the amount 
of the violation, which is not limited to just contributions and 
expenditures. Committees are required to file reports even if the 
committees did not have any contributions or expenditures. To create 
such a ``safe harbor'' would be to implicitly allow committees to 
ignore their affirmative and legal duty to file the required reports.
    The commenter characterized the schedules of penalties in the NPRM 
as lacking a rational basis and as discriminating against small 
committees. The commenter suggested that the Commission break down the 
level of activity by $5,000 increments. The basis for the schedules of 
penalties is discussed above. The Commission believes the breakdowns in 
the schedules of penalties using the levels of activity fairly and 
equitably assess civil money penalties that reflect the nature and 
scope of the violation. The Commission notes, however, that the 
commenter was correct in stating that small committees that fall within 
the first range, $1-$24,999.99, could potentially pay a civil money 
penalty that exceeds their total financial activity for a given 
reporting period. Therefore, the two schedules in Sec. 111.43 are being 
amended to include a provision stating that respondents with no 
previous violations will not be assessed a civil money penalty that 
exceeds the levels of activity in the report.
    The preamble to the NPRM included an alternative method for 
calculating the schedule of penalties for the election sensitive 
reports. Instead of a fifty percent increase in the base amounts, the 
NPRM sought comment on adding a flat amount of $1000 to the base 
amounts for all levels of activity. No comments directly addressing 
this issue were received. However, the commenter expressed concern that 
the schedules of penalties discriminated against committees with low 
levels of financial activity. The Commission has determined that a flat 
$1000 addition to the base amounts would impose on committees with low 
levels of financial activity a significantly higher civil money penalty 
relative to their level of activity than committees with higher levels 
of financial activity. Consequently, the Commission has decided to 
adopt a schedule of penalties that increases the base amounts by fifty 
percent for election sensitive reports instead of adding a flat $1000 
to the base amounts.
    The commenter suggested that the civil money penalties in the 
schedules of penalties may be too high in some instances. The 
Commission agrees that the civil money penalties it initially proposed 
for non-filers were too high. Therefore, the civil money penalties for 
non-filers are being reduced in the schedules of penalties in 
Sec. 111.43 (a) and (b). With respect to both election sensitive 
reports and non-election sensitive reports, the resulting civil money 
penalties for non-filers are higher than the civil money penalties for 
reports filed 30 days late, but are not as high as the civil money 
penalties proposed in the NPRM.
    Finally, paragraphs (d) and (e) are being revised to clarify that 
election sensitive reports include reports due before special 
elections.

Examples of Civil Money Penalties

    Example 1:  The respondent files an October quarterly report 20 
days late. The level of activity on the report is $105,000. The 
civil money penalty is calculated as follows. The base amount is 
$900. The per day amount is $125 multiplied by 20 days, which equals 
$2500. The civil money penalty is the sum of these two amounts, 
which is $3400.
    Example 2: The respondent in the above example has one prior 
violation in the current two-year election cycle. The premium for 
the one prior violation is 25% of the civil money penalty calculated 
in example 1, which equals $850. The civil money penalty is the sum 
of this premium and the civil money penalty from example 1, which is 
$4250.
    Example 3: The respondent files a July quarterly report on 
September 1. The report contains $500 in receipts and disbursements. 
The respondent is a non-filer because the report was more than 
thirty days late. The civil money penalty is $500 because it is the 
lesser of the level of activity in the report and $900, which is the 
civil money penalty for a non-filer whose level of activity is less 
than $25,000.
    Example 4: The respondent in the example 3 had one prior 
violation in the current two-year election cycle. Because this is 
not the respondent's first violation, the civil money penalty is not 
capped by the respondent's level of activity. The civil money 
penalty is the $900 assessed against non-filers whose level of 
activity is less than $25,000 plus a 25% premium equaling $225 for 
the one prior violation. Therefore, the civil money penalty for this 
respondent is $1125.

Section 111.44  What Is the Schedule of Penalties for 48-Hour Notices?

    Committees are required to report within 48 hours of receipt of 
those contributions of $1000 or more that are received after the 20th 
day but more than 48 hours before an election. 2 U.S.C. 434(a)(6). The 
Commission developed a different schedule of penalties for failure to 
file these notices on time because of the nature and timing of these 
notices and the need to have them filed on time. The schedule proposed 
in the NPRM did not distinguish between notices that are filed late and 
those that are not filed at all, and would have imposed a civil money 
penalty equal to fifteen percent of the amount of the contribution(s) 
not reported on time plus $100. In the final rules that follow, this 
schedule of penalties is also being reduced because the resulting civil 
money penalties may be too high. The amount in the final schedule of 
penalties is being reduced to 10% of the amount of the contribution(s) 
not timely reported plus $100.

Section 111.45  What Actions Will Be Taken To Collect Unpaid Civil 
Money Penalties?

    The Commission may take any and all appropriate actions authorized 
and required by the Debt Collection Act of 1982, as amended by the Debt 
Collection Improvement Act of 1996 (31 U.S.C. 3701 et. seq.). This 
section adopts the Federal Claims Collection Standards issued jointly 
by the Department of Justice and the General Accounting Office, 4 CFR 
parts 101-105, to provide procedures for the collection of the debt. 
This section also adopts by cross-reference the regulations issued by 
U.S. Department of the Treasury at 31 CFR 285.2, 285.4, and 285.7. 
Changes are being made to this section in the final rules for 
clarification purposes. The Commission did not receive any substantive 
comments on this section.

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

    The attached final rule will not have a significant economic impact 
on a substantial number of small entities. The basis for this 
certification is that the final rule will impose penalties which are 
scaled to take into account the size of the financial activity of the 
political committees. Thus, committees with less financial activity 
will be subject to lower fines than committees with more

[[Page 31794]]

financial activity. Also, the Commission anticipates that there will 
not be a large number of small committees that would be subject to the 
process in the proposed rules. Therefore, the final rules will not have 
a significant economic impact on a substantial number of small 
entities.

List of Subjects

11 CFR Part 104

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

11 CFR Part 111

    Administrative practice and procedures, Elections, Law enforcement.

    For reasons set out in the preamble, subchapter A, Chapter I of 
Title 11 of the Code of Federal Regulations is amended as follows:

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

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

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


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


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

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

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

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

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


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


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

* * * * *
    (d) Notwithstanding Secs. 111.9 through 111.19, for violations of 2 
U.S.C. 434(a), the Commission, when appropriate, may review internally 
generated matters under subpart B of this part.

    5. 11 CFR 111.20 is amended by adding new paragraph (c) to read as 
follows:


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

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

    6. 11 CFR 111.24(a) is revised to read as follows:


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

    (a) Except as provided in 11 CFR part 111, subpart B and in 
paragraph (b) of this section, a civil penalty negotiated by the 
Commission or imposed by a court for a violation of the Act or chapters 
95 or 96 of title 26 (26 U.S.C.) shall not exceed the greater of $5,500 
or an amount equal to any contribution or expenditure involved in the 
violation. In the case of a knowing and willful violation, the civil 
penalty shall not exceed the greater of $11,000 or an amount equal to 
200% of any contribution or expenditure involved in the violation.
* * * * *

    7. Part 111 is amended by designating 11 CFR 111.1 through 111.24 
as subpart A--Enforcement--and by adding new subpart B to read as 
follows:

Subpart B--Administrative Fines

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


Sec. 111.30  When will subpart B apply?

    Subpart B applies to violations of the reporting requirements of 2 
U.S.C. 434(a) committed by political committees and their treasurers on 
or after July 14, 2000, and on or before December 31, 2001.


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

    (a) No; Secs. 111.1 through 111.8 and 111.20 through 111.24 shall 
apply to all compliance matters. This subpart will apply, rather than 
Secs. 111.9 through 111.19, when the Commission, on the basis of 
information ascertained by the Commission in the normal course of 
carrying out its supervisory responsibilities, and when appropriate, 
determines that the compliance matter should be subject to this 
subpart. If the Commission determines that the violation should not be 
subject to this subpart, then the violation will be subject to all 
sections of subpart A of this part.
    (b) Subpart B will apply to compliance matters resulting from a 
complaint filed pursuant to 11 CFR 111.4 through 111.7 if the complaint 
alleges a violation of 2 U.S.C. 434(a). If the complaint alleges 
violations of any other provision of any statute or regulation over 
which the Commission has jurisdiction, subpart A will apply to the 
alleged violations of these other provisions.


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

    If the Commission determines, by an affirmative vote of at least 
four (4) of its members, that it has reason to believe that a 
respondent has violated 2 U.S.C. 434(a), the Chairman or Vice-Chairman 
shall notify such respondent of the Commission's finding. The written 
notification shall set forth the following:
    (a) The alleged factual and legal basis supporting the finding 
including the type of report that was due, the filing deadline, the 
actual date filed (if filed), and the number of days the report was 
late (if filed);
    (b) The applicable schedule of penalties;
    (c) The number of times the respondent has been assessed a civil

[[Page 31795]]

money penalty under this subpart during the current two-year election 
cycle and the prior two-year election cycle;
    (d) The amount of the proposed civil money penalty based on the 
schedules of penalties set forth in 11 CFR 111.43 or 111.44; and
    (e) An explanation of the respondent's right to challenge both the 
reason to believe finding and the proposed civil money penalty.


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

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


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

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


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

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


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

    (a) A reviewing officer shall review the respondent's written 
response. The reviewing officer shall be a person who has not been 
involved in the reason to believe finding.
    (b) The reviewing officer shall review the reason to believe 
finding with supporting documentation and the respondent's written 
response with supporting documentation. The reviewing officer may 
request supplemental information from the respondent and/or the 
Commission staff. The respondent shall submit the supplemental 
information to the reviewing officer within a time specified by the 
reviewing officer. The reviewing officer will be entitled to draw an 
adverse inference from the failure by the respondent to submit the 
supplemental information.
    (c) All documents required to be submitted by the respondents 
pursuant to this section and Sec. 111.35 should be submitted in the 
form of affidavits or declarations.
    (d) If the Commission staff, after the respondent files a written 
response pursuant to Sec. 111.35, forwards any additional documents 
pertaining to the matter to the reviewing officer for his or her 
examination, the reviewing officer shall also furnish a copy of the 
document(s) to the respondents.
    (e) Upon completion of the review, the reviewing officer shall 
forward a written recommendation to the Commission along with all 
documents required under this section and 11 CFR 111.32 and 111.35.
    (f) The reviewing office shall also forward a copy of the 
recommendation to the respondent. The respondent may file with the 
Commission Secretary a written response to the recommendation within 
ten (10) days of transmittal of the recommendation. This response may 
not raise any arguments not raised in the respondent's original written 
response or not directly responsive to the reviewing officer's 
recommendation.


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

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


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

    Yes; within thirty (30) days of receipt of the Commission's final 
determination under 11 CFR 111.37, the respondent may submit a written 
petition to the district court of the United States for the district in 
which the respondent resides, or transacts business, requesting that 
the final determination be modified or set aside. The respondent's 
failure to raise an argument in a timely fashion during the 
administrative process shall be deemed a waiver of the respondent's 
right to present such argument in a petition to the district court 
under 2 U.S.C. 437g.


Sec. 111.39  When must the respondent pay the civil money penalty?

    (a) If the respondent does not submit a written petition to the 
district court of the United States, the respondent must remit payment 
of the civil money penalty within thirty (30) days of receipt

[[Page 31796]]

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


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

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


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

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


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

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


Sec. 111.43  What are the schedules of penalties?

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

------------------------------------------------------------------------
                                                          Or the report
  If the level of activity in     And the report was     was not filed,
        the report was:          filed late, the civil   the civil money
                                   money penalty is:       penalty is:
------------------------------------------------------------------------
$1-24,999.99 \a\..............  [$100 + ($25  x         $900  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$25,000-49,999.99.............  [$200 + ($50  x         $1800  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$50,000-74,999.99.............  [$300 + ($75  x         $2700  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$75,000-99,999.99.............  [$400 + ($100  x        $3500  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$100,000-149,999.99...........  [$600 + ($125  x        $4500  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$150,000-199,999.99...........  [$800 + ($150  x        $5500  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$200,000-249,999.99...........  [$1000 + ($175  x       $6500  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$250,000-349,999.99...........  [$1500 + ($200  x       $8000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$350,000-449,999.99...........  [$2000 + ($200  x       $9000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$450,000-549,999.99...........  [$2500 + ($200  x       $9500  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$550,000-649,999.99...........  [$3000 + ($200  x       $10,000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$650,000-749,999.99...........  [$3500 + ($200  x       $10,500  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$750,000-849,999.99...........  [$4000 + ($200  x       $11,000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------

[[Page 31797]]

 
$850,000-949,999.99...........  [$4500 + ($200  x       $11,500  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$950,000 or over..............  [$5000 + ($200  x       $12,000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
\a\ The civil money penalty for a respondent who does not have any
  previous violations will not exceed the level of activity in the
  report.

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

------------------------------------------------------------------------
                                                          Or the report
  If the level of activity in     And the report was     was not filed,
        the report was:          filed late, the civil   the civil money
                                   money penalty is:       penalty is:
------------------------------------------------------------------------
$1-24,999.99 <SUP>a</SUP>................  [$150 + ($25  x         $1000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$25,000-49,999.99.............  [$300 + ($50  x         $2000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$50,000-74,999.99.............  [$450 + ($75  x         $3000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$75,000-99,999.99.............  [$600 + ($100  x        $4000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$100,000-149,999.99...........  [$900 + ($125  x        $5000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$150,000-199,999.99...........  [$1200 + ($150  x       $6000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$200,000-249,999.99...........  [$1500 + ($175  x       $7500  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$250,000-349,999.99...........  [$2250 + ($200  x       $9000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$350,000-449,999.99...........  [$3000 + ($200  x       $10,000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$450,000-549,999.99...........  [$3750 + ($200  x       $11,000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$550,000-649,999.99...........  [$4500 + ($200  x       $12,000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$650,000-749,999.99...........  [$5250 + ($200  x       $13,000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$750,000-849,999.99...........  [$6000 + ($200  x       $14,000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$850,000-949,999.99...........  [$6750 + ($200  x       $15,000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
$950,000 or over..............  [$7500 + ($200  x       $16,000  x  [1 +
                                 Number of days late)]   (.25  x  Number
                                  x  [1 + (.25  x        of previous
                                 Number of previous      violations)].
                                 violations)].
------------------------------------------------------------------------
<SUP>a</SUP> The civil money penalty for a respondent who does not have any
  previous violations will not exceed the level of activity in the
  report.

    (c) If the respondent fails to file a required report and the 
Commission cannot calculate the level of activity under paragraph (d) 
of this section, then the civil money penalty shall be $5,500.
    (d) Definitions. For this section only, the following definitions 
will apply:
    Election Sensitive Reports means third quarter reports due on 
October 15th before the general election (for all committees required 
to file this report except committees of candidates who do not 
participate in that general election); monthly reports due October 20th 
before the general election (for all committees required to file this 
report except committees of candidates who do not participate in that 
general election); and pre-election reports for primary, general, and 
special elections under 11 CFR 104.5.
    Estimated level of activity means total receipts and disbursements 
reported in the current two-year election cycle divided by the number 
of reports filed to date covering the activity in the current two-year 
election cycle. If the respondent has not filed a report covering 
activity in the current two-year election cycle, estimated level of 
activity means total receipts and disbursements reported in the prior 
two-

[[Page 31798]]

year election cycle divided by the number of reports filed covering the 
activity in the prior two-year election cycle.
    Level of activity means the total amount of receipts and 
disbursements for the period covered by the late report. If the report 
is not filed, the level of activity is the estimated level of activity.
    Number of previous violations mean all prior final civil money 
penalties assessed under this subpart during the current two-year 
election cycle and the prior two-year election cycle.
    (e) For purposes of the schedules of penalties in paragraphs (a) 
and (b) of this section,
    (1) Reports that are not election sensitive reports are considered 
to be filed late if they are filed after their due dates but within 
thirty (30) days of their due dates. These reports are considered to be 
not filed if they are filed after thirty (30) days of their due dates 
or not filed at all.
    (2) Election sensitive reports are considered to be filed late if 
they are filed after their due dates but prior to four (4) days before 
the primary election for pre-primary reports, prior to four (4) days 
before the special election for pre-special election reports, or prior 
to four (4) days before the general election for all other election 
sensitive reports. These reports are considered to be not filed if they 
are not filed prior to four (4) days before the primary election for 
pre-primary reports, prior to four (4) days before the special election 
for pre-special election reports or prior to four (4) days before the 
general election for all other election sensitive reports.


Sec. 111.44  What is the schedule of penalties for 48-hour notices that 
are not filed or are filed late?

    (a) If the respondent fails to file timely a notice regarding 
contribution(s) received after the 20th day but more than 48 hours 
before the election as required under 2 U.S.C. 434(a)(6), the civil 
money penalty will be calculated as follows:
    (1) Civil money penalty = $100 + (.10  x  amount of the 
contribution(s) not timely reported).
    (2) The civil money penalty calculated in paragraph (a)(1) of this 
section shall be increased by twenty-five percent (25%) for each prior 
violation.
    (b) For purposes of this section, prior violation means a civil 
money penalty that has been assessed against the respondent under this 
subpart in the current two-year election cycle or the prior two-year 
election cycle.


Sec. 111.45  What actions will be taken to collect unpaid civil money 
penalties?

    The Commission may take any and all appropriate collection actions 
authorized and required by the Debt Collection Act of 1982, as amended 
by the Debt Collection Improvement Act of 1996 (31 U.S.C. 3701 et. 
seq.). The U.S. Department of the Treasury regulations at 31 CFR 285.2, 
285.4, and 285.7 and the Federal Claims Collection Standards issued 
jointly by the Department of Justice and the Government Accounting 
Office at 4 CFR parts 101 through 105 also apply.

    Dated: May 12, 2000.
Darryl R. Wold,
Chairman, Federal Election Committee.
[FR Doc. 00-12484 Filed 5-18-00; 8:45 am]
BILLING CODE 6715-01-P