The Federal Election Commission: Enforcement Process and Selected Issues for Congress
Released: 2015-12-22T00:00:00

Introduction

Even as Congress finalized legislation creating the FEC in 1974, some Members of the House and Senate disagreed over how the agency should be constituted, what powers it should have, and how broad its enforcement authority should be. Perhaps unsurprisingly, almost immediately, the FEC's enforcement activities generated controversy. Fo r some, they were too vigorous; for others, too lax. Partially due to enforcement controversies, Congress has occasionally considered restructuring the agency. In the 114 th Congress, H.R. 2931 would replace the current six-member body with a five-member commission, including a chairperson with enhanced enforcement powers. Recent Congresses have also engaged in oversight concerning the FEC's enforcement practices and transparency.

The controversy surrounding the FEC's enforcement of campaign finance law and regulation continues. During 2015, as the FEC marked its 40 th anniversary, prominent media accounts and opinion pieces chronicled tense relations among commissioners and stalemates over new regulations and enforcement. In recent years, commissioners have sparred at open meetings and in the media about whether the agency's enforcement activities are inadequate or overzealous. The debate over enforcement is not merely about internal agency disagreements. Rather, it represents broader controversies about what the FEC does and what it should do, and what federal campaign finance policy is and should be. Some also contend that enforcement establishes the boundaries of permissible campaign behavior. This report is not about the FEC's individual enforcement controversies, but, rather, about why controversies surrounding the enforcement process might matter to Congress as it provides the agency with overall direction and shapes campaign finance policy generally.

Scope of the Report

This report highlights examples of FEC or congressional attention to enforcement topics, but it is not intended to provide comprehensive discussion of particular enforcement matters. Rather, it discusses selected major issues that appear to be most consequential for Congress. Other topics might be relevant for practitioners or agency officials but are generally not addressed here. Unless otherwise noted, the report does not address criminal enforcement handled by the Justice Department or activities regulated by agencies such as the Internal Revenue Service (IRS). The report is not a legal analysis of commission activity. Other CRS products cited throughout this report provide additional information about related topics. In particular, another CRS product provides an overview of the FEC. Finally, the report does not provide compliance guidance to those regulated by FECA or FEC rules.

A Note on Terminology

This report uses the terms "FEC," "commission," and "agency" interchangeably. Some discussions of the FEC's authority, which are generally beyond the scope of this report, use the term "commission" to denote members of the FEC as opposed to agency staff. This distinction is not central to this report but is relevant for some material in the " Transparency and the Enforcement Process " section.

Why Campaign Finance Enforcement Might Matter to Congress

Members of Congress have a dual stake in campaign finance policy: as regulators and as the regulated. By enacting legislation, appropriating funds, and conducting oversight, Congress establishes the rules that campaigns—including their own—must follow and provides resources for ensuring compliance. More generally, enforcement is one of the most prominent topics in federal campaign finance policy. Policy debates often characterize enforcement as an indicator of other issues, such as the health of the FEC or the extent of government regulation of political speech. Enforcement can also indicate to what extent emerging campaign practices will be permitted, as the FEC considers how existing law and regulation might apply to new circumstances. Proposals to restructure the FEC typically have enforcement implications. For all these reasons, even a basic understanding of enforcement can enhance familiarity with campaign finance policy overall. As noted elsewhere in this report, Congress has regularly considered legislation and held hearings that could affect the FEC's enforcement duties.

Latest Congressional Activity

Congress has considered various campaign finance legislation, and conducted FEC oversight, for decades. Much of that activity has addressed campaign finance policy generally rather than FEC enforcement specifically. The same is true of more current legislation and hearings. Recent developments particularly relevant for enforcement include the following.

In the 114 th Congress, H.R. 2931 would replace the current six-member FEC with a five-member commission, including a chairperson with enhanced enforcement powers. The 113 th Congress extended until 2018 operating authority for the FEC's Administrative Fine Program (AFP). The legislation also expanded the program to cover late reports filed by non-candidate committees and for independent expenditures. During the 113 th Congress, a Senate Judiciary Committee subcommittee held a hearing on criminal enforcement of campaign finance law. The hearing included witnesses from the Department of Justice, Internal Revenue Service, and interest groups, but did not focus on the FEC. During the 112 th Congress, the Committee on House Administration, Subcommittee on Elections, examined FEC enforcement through an oversight hearing. Subsequently, the FEC released additional information about its enforcement activities.

The FEC: A Brief Overview

The FEC is a six-member independent regulatory agency. Commissioners are appointed by the President and subject to Senate confirmation. The Senate most recently confirmed commissioners in 2013 (the 113 th Congress), as shown in Table 1 . Another CRS report provides additional detail about the commission.

The Enforcement Process in Brief

Three major enforcement options are at the commission's disposal: (1) what the agency has termed the "general enforcement process" established in FECA; (2) the Alternative Dispute Resolution (ADR) Program; and (3) the Administrative Fine Program (AFP). The first category includes the most complex and sometimes controversial matters that the commission might handle, designated as "Matters Under Review" (MURs). They may entail lengthy investigations or audits, protracted negotiations between the commission and H.R. 3487 respondents, substantial civil penalties, or litigation—although the pace can vary depending on individual circumstances. By contrast, matters handled under the AFP and ADR programs typically are simpler and less controversial. ADR cases can involve various issues; the program is designed to facilitate negotiation that leads to relatively speedy resolution of fairly simple matters. AFP cases are limited to straightforward matters involving late filings. A five-year statute of limitations applies to campaign finance enforcement matters.

Overview and Initial Steps

The enforcement process typically begins when one of four entities files a complaint or makes an internal referral to the FEC. These include the following:

a complaint from an individual or other group (e.g., an opposing campaign); a referral from another government agency (e.g., Department of Justice); a referral from the FEC Audit Division or Reports Analysis Division (RAD); or a violation that is self-reported by a political committee or other regulated entity (a sua sponte submission).

Timing and Votes

The details of processing and resolving complaints vary based on whether the matter is handled through the MUR, ADR, or AFP methods. In general, once complaints or referrals are complete,

the commission notifies the respondent (the subject of the complaint or referral) of the receipt or referral; the respondent has an opportunity to reply to the complaint and may choose to be represented by an attorney; and the commission determines which enforcement method, if any, to pursue: the MUR, ADR, or AFP processes.

Regardless of the enforcement mechanism, FECA dictates much of how the process must unfold and how long it takes. In particular, FECA specifies how complaints must be filed and, except for AFP cases, that the commission must seek voluntary compliance before imposing a penalty. FECA also requires commissioners to vote on key enforcement decisions throughout the process. In particular, affirmative votes from at least four commissioners are required to

find "reason to believe" (RTB) that a violation has occurred or is about to occur, which commences additional action (e.g., an investigation); find probable cause that a violation has occurred or is about to occur; resolve a matter (e.g., through a conciliation agreement, penalties, etc.); and authorize filing a lawsuit if a matter cannot otherwise be resolved.

Without an affirmative vote from at least four commissioners in each of these instances, substantive action stops. The " Deadlocked Votes " section contains additional detail.

Table 2 below lists the major steps and potential timelines required for cases routed through the MUR process, typically the most complex and consequential enforcement cases. The table excludes optional steps, such as hearings or presentation of legal questions to the commission, which require additional time.

Selected Major Topics of Debate in Enforcement

Transparency and the Enforcement Process

At least two transparency issues are central to the enforcement process. First, FECA bars the FEC or its personnel from releasing any information about individual enforcement matters until after cases are closed. This confidentiality requirement was designed to prevent competing campaigns from using complaints as political weapons. Nonetheless, campaigns and other political actors routinely publicize complaints they have filed, even if the commission cannot comment. Second, Congress has dedicated some recent oversight activities to agency transparency concerning enforcement. Apparently both on its own initiative and in response to congressional interest, in recent years, the FEC has reexamined how it provides enforcement information to the public or those regulated by campaign finance law and commission rules. Highlights appear below.

Recent Congressional Oversight and FEC Enforcement Processes

As noted previously, in November 2011, during the 112 th Congress, the Committee on House Administration, Subcommittee on Elections, held an FEC oversight hearing. Much of that hearing emphasized transparency surrounding the FEC's enforcement process. After the November 2011 hearing, negotiations between the committee and commission appear to have resulted in the ongoing effort to approve and publicly release a new FEC enforcement manual. In May 2012, the FEC released on its website more than 1,200 pages of documents concerning its enforcement and audit procedures. During the summer of 2013, controversy developed concerning an Office of General Counsel (OGC) draft of the enforcement manual and proposed revisions to that draft from some commissioners. A major source of controversy appeared to be the extent to which OGC staff should be restricted from sharing information with other agencies (particularly the Justice Department), or from conducting research that might constitute an "investigation" as contemplated in FECA, without specific commission authorization. Although the manual was scheduled for consideration at FEC open meetings at least as early as June 2013, it was held over due to disagreements among commissioners about whether a vote should occur, and if so, when. Debate over the matter continued at the FEC, sometimes including acrimonious public meetings among commissioners. In a June 17, 2013, memorandum to the commission, then-FEC General Counsel Anthony Herman called aspects of a proposal to restrict staff interactions with other agencies without commissioners' approval "troubling" and "unprecedented." He suggested that proposed additional requirements for subpoenas or commissioner approval for information-sharing could "increase administrative burden and legal risk for the Commission" and "would expose the Commission to allegations that politics and partisanship motivate its case-by-case decisions." Then-Vice Chairman Donald McGahn disputed Herman's characterization and contended that FECA vested relevant decisionmaking authority only in the commissioners and that, in some cases, "staff viewed the Commission as an obstacle to be overcome, and not the deliberative body vested with decision-making authority that [FECA] contemplates." Amid apparent stalemate among commissioners, Herman resigned as general counsel effective July 5, 2013. Proposed changes to information-sharing policies reportedly remain under consideration. The general counsel position remained vacant for more than two years. As noted elsewhere in this report, in August 2015 the FEC appointed an acting general counsel.

Relationships with Other Agencies

The FEC's relationships with other federal agencies that might share enforcement interests appear to have varied over time. The current state of those relationships does not appear to be a major component of the public record. In July 2011, the FEC submitted written responses to questions from the Committee on House Administration, Subcommittee on Elections, explaining that the agency's memorandum of understanding (MOU) with the Justice Department became "somewhat outdated" after Congress enacted the 2002 Bipartisan Campaign Reform Act (BCRA). The commission noted that "[a]lthough several draft proposals were exchanged" between the FEC and DOJ, "those negotiations did not ultimately lead to a revised MOU, and those discussions have not yet been revived." One 2015 media account reported that the MOU had not been updated and that commission referrals to DOJ for alleged "knowing and willful" FECA violations were rare.

Enforcement Outreach and FEC Processes

The FEC appears to have interpreted its confidentiality obligations differently over time. In brief, areas of debate have concerned which documents the commission releases and, in particular, whether documents that informed the commission's consideration but were not final (such as interim OGC reports) should be released. Litigation, which is beyond the scope of this report, has shaped some of the agency's disclosure policies. As of this writing, activity at recent FEC open meetings suggests that commissioners are attempting to negotiate mutually agreeable revisions to Directive 68, the agency's internal policy regarding how and when respondents and the commission receive status reports on pending cases. In 2007, the FEC established probable cause hearings permitting respondents to address findings in certain OGC briefs. The FEC established a pilot program for conducting audit hearings in 2009. The FEC held hearings on its enforcement procedures in 2003 and 2009. The agency also solicited public comments in 2013. The FEC has substantially revised its website in recent years to include a variety of additional information about the agency's processes and campaign finance data, including some enforcement information. Since 2013, the FEC has permitted those with "a material dispute on a question of law" arising during Audit Division and Reports Analysis Division referrals to ask the commission to consider the disputed legal question before proceeding with an enforcement matter.

Deadlocked Votes

Throughout its history, the commission has been criticized for failing to reach consensus on some key policy and enforcement issues, resulting in what are commonly termed "deadlocked" votes. Affirmative votes from at least four commissioners are required to authorize most consequential agency activity, including making, amending, or repealing rules; issuing advisory opinions (AOs); and approving enforcement actions and audits. Unlike matters that a majority of the commission has definitively approved or rejected, actions without at least four votes for or against can have the effect of leaving questions of law, regulation, or enforcement unresolved. In these cases, deadlocked votes essentially halt substantive commission action on the matters in question.

The FEC does not regularly compile and release summary deadlocks data. Most recently, the commission appears not to have produced an official, publicly available statistical summary since 2009. Using those data, CRS found that in 2008-2009, the FEC deadlocked on approximately 13% of closed MURs. A CRS analysis of more recent FEC vote tallies found that in calendar year 2014, commissioners deadlocked on 24.4% of closed MURs. Results from other analyses vary based on methodology, time period, and the types of votes studied.

Deadlocks in some recent matters have fostered debate about what split votes suggest about agency enforcement. For some, deadlocks represent a failure to enforce campaign finance law. For others, they signal that the commission is carefully considering what the law permits and prohibits.

Overall, deadlocked votes might or might not reflect the overall functioning of the enforcement process. In particular, even MURs without deadlocks can be controversial, while those with deadlocks can include agreement on some questions. In one 2014 example, MUR 6660, the commission avoided deadlock, but commissioners released competing statements explaining the implications of their votes. Similarly, in two other MURs closed in 2014 (6722 and 6723), the commission considered allegations of impermissible coordination between political committees. On February 25, 2014, the commission voted unanimously that there was "no reason to believe" that impermissible coordination had occurred. In explaining their votes, however, three commissioners stated that "[S]ome activity that is plainly 'coordination' under the statute is not squarely covered by the Commission's coordination communications regulation," suggesting that substantive differences remained despite the agreeing votes. Finally, particularly when votes occur on multiple motions affecting a MUR, substantive decisions can occur on some issues even when deadlocks preclude decisions on others.

Congress appears to have anticipated that the commission might be unable to reach consensus in some controversial cases, and perhaps intended for deadlocks to occur. According to one analysis, "In order to ensure that the Commission would not become a vehicle for partisan purposes, the Congress created an unusual conflict within the FEC" through the six-member structure. Commenting on the four-vote requirement, former Commissioner Scott E. Thomas and his executive assistant, Jeffrey H. Bowman, continued, "These provisions were specifically designed to ensure that formal action on a matter before the commission could go forward only on the affirmative vote of a mixed majority of Commission members." In addition, deadlocks might be viewed positively if enforcement actions being considered are perceived as unwarranted or excessive. Nonetheless, deadlocks mean that the commission has been unable to reach consensus about some element of law or regulation. As a result, at least in specific circumstances, deadlocks prevent campaign finance law from being enforced or preclude those seeking guidance from clearly knowing whether their planned activities will run afoul of the law. Another CRS report contains additional analysis of deadlocks generally.

Timing and Penalties

As Table 2 above shows, at minimum, resolving a MUR enforcement case could take months. In practice, resolution often takes longer. In some cases, the commission may be unable to resolve an enforcement action before the five-year statute of limitation expires.

In March 2015, citing FEC data, one account reported that the FEC had "a backlog of 191 serious enforcement cases, with more than a quarter of these still unresolved more than two years after allegations of campaign finance violations were first filed." Some protracted enforcement cases appear to be the result of disagreement among commissioners—including on whether pending enforcement matters constitute a "backlog" or necessary deliberation. In other instances, factors such as the complexity of the issues in question, the need for comprehensive audits, replies from and negotiations with respondents, and other factors explain timing. Recently, some commissioners have proposed that the FEC revise its policies concerning how quickly cases are handled and when the commission or the public is informed about enforcement progress. Some commissioners have also proposed meeting more frequently to address enforcement matters.

The FEC has noted that, except for AFP matters, the agency "does not impose fines," but instead "seeks the payment of civil penalties through voluntary settlements (called 'conciliation agreements') with respondents." Those amounts are typically modest, as shown in Figure 1 below. In 2014, for example, the commission assessed less than $600,000 in penalties in all closed enforcement cases—the smallest amount since before FY2000. Financial penalties peaked in the mid-2000s, likely the result of large assessments on some organizations that operated under Section 527 of the Internal Revenue Code (IRC) in the early 2000s while taking the position that they were not political committees subject to FECA. The decline in penalties since that time has generated controversy, with some advocates claiming that lower amounts reflect lax enforcement, a scenario that is possible. It is also possible that decreased penalty amounts reflect better compliance. Particularly amid recent debate about whether the commission should publicize a penalty schedule, commissioners have debated whether existing penalties are sufficient and whether providing more information about how penalties are calculated would essentially publicize a "cost of doing business" for violating law or regulation. In addition, although monetary penalties are the most prominent component of FEC enforcement tools, the commission also could assess other forms of corrective action, such as requiring violators to attend training seminars.

Vacancies Among Senior Enforcement Staff

As noted in Figure 2 below, high-profile vacancies have occurred in some FEC senior staff positions. As of this writing, these include vacancies or acting appointments in the general counsel position, as well as the associate general counsel for enforcement. Amid a reported stalemate over how to fill the position, and reportedly reflecting other commissioners' divisions over enforcement, the general counsel position was vacant for more than two years between July 2013 and August 2015. The commission appointed FEC attorney Daniel Petalas acting general counsel in August 2015.

Potential Considerations for Congress and Concluding Comments

Enforcement is important not only for encouraging compliance with law and regulation or correcting non-compliance, but also for what it represents about the state of campaign finance policy overall. For some, the FEC's enforcement process is unnecessarily complex and insufficiently transparent. For others, it is too lax to be effective. Whether observers prefer more vigorous, more limited, or unchanged campaign finance enforcement, there is general consensus that a clear, consistent enforcement process matters. Without transparent and consistent enforcement, political actors lack guidance about what they can and cannot do, when, and how.

If Congress wants to provide more direction surrounding enforcement, it could pursue legislation to clarify those issues on which policy stalemates have occurred. Nonetheless, pursuing legislative clarity on controversial issues might not be practically attainable in all circumstances. In addition, legislating individual policy issues would not necessarily address the fact that the commission routinely deadlocks on a variety of issues, which suggests that structural reform could be a more expedient route to curtailing split votes.

As such, some contend that more vigorous enforcement of campaign finance law requires restructuring the FEC. Most prominently, critiques typically propose eliminating the even-number commissioner structure to make deadlocks less likely. For some, in choosing the current bipartisan structure, Congress intentionally made the FEC "weak" with the agency being "designed to promote deadlock along party lines on issues that really mattered." Other observers warn that an odd number of commissioners could invite politicized enforcement. As one analysis explains, "The FEC's bipartisan design ... allows its regulations to carry weight. If not for this bipartisan design, every FEC action would be tinged with politics and viewed by some as illegitimate."

Several questions could be relevant as the House and Senate examine how they want the FEC to enforce campaign finance law and regulation—if they choose to make any change at all. Potential questions include the following:

How does Congress want the FEC to prioritize enforcement compared with other duties, such as disclosure? What relationships does Congress want the FEC to have with other enforcement agencies, and for which areas of law and regulation should the FEC be responsible? Does the commission have a unified understanding of what the agency's enforcement priorities are and should be? Does Congress want to clarify its expectations in these areas through oversight, legislation, or both? Does the commission have adequate appropriations to carry out enforcement duties? Does the commission have adequate personnel to carry out enforcement duties? Does the commission have adequate statutory authority to carry out enforcement duties? To what extent should the commission wait for relevant pending litigation to resolve before reaching a determination in enforcement cases? Does Congress want to leave that determination to the commission or to specify a standard? If so, what? Do FECA's civil-enforcement requirements sufficiently reflect current needs? For example: Do prohibitions on sharing information about open enforcement matters limit the potential for filing frivolous complaints for publicity; do they limit the commission from informing the public about its enforcement activities; or neither or both? Do the required time frames (e.g., as shown in Table 2 ) allow for sufficient consideration by the commission and are they reasonable for respondents? Do those time frames, commission practices, or both or neither affect what is sometimes regarded as long delay in pending enforcement matters? Does the requirement that the commission attempt to negotiate compliance undermine enforcement? Does Congress want to clarify which investigation and enforcement activities FEC staff can initiate versus those that require commissioner actions? Specifically, does Congress want to revisit the authorities of the commission versus those of the OGC or other enforcement staff? Does Congress want to reestablish the FEC's authority to conduct random audits? Does Congress want to amend FECA (or enact another statute) to provide either greater flexibility or limitations in the enforcement process?

The FEC can determine how to prioritize enforcement activities, fill relevant staff vacancies, and whether or not commissioners can agree on enforcement actions. Much of the enforcement process, however, is set in statute and therefore beyond the agency's control. As long as campaign finance policy remains controversial, history suggests that so, too, will be enforcement.