Democracy 21 Endorses New Bill to Replace FEC with Real Enforcement Agency

 

Democracy 21 Press Release, June 26, 2006, www.democracy21.org
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Statement by Democracy 21 President Fred Wertheimer
Endorsing Legislation Introduced by Senators McCain and
Feingold and Representatives Shays and Meehan to Replace
Federal Election Commission with a Real Enforcement Agency

Democracy 21 strongly endorses the legislation introduced in the Senate by Senators John McCain (R-AZ) and Russell Feingold (D-WI) and in the House by Representatives Christopher Shays (R-CT) and Marty Meehan (D-MA) to replace the Federal Election Commission (FEC) with a new agency to enforce the nation's campaign finance laws. The bill was introduced last Thursday.

A summary of the legislation and a summary of the principal differences between the proposed new agency and the FEC are set forth below.

The FEC is a failed agency.

It also is a captive agency.

Washington Post columnist David Broder has described the FEC as an agency ''whose six members are famously responsive to the members of Congress who put them in their jobs.''

The failure of the FEC to do its job is illustrated by the agency's central role in creating the soft money system, which turned into a $500 million national scandal ended by Congress in 2002 when it banned soft money; in issuing flawed regulations that opened new soft money loopholes in the 2002 law banning soft money, which were overturned by the courts; and in allowing 527 groups to become a vehicle for circumventing the soft money ban, an FEC decision which has been challenged by a court decision.

The Supreme Court in upholding the 2002 law banning soft money strongly admonished the FEC for having ''subverted'' and ''invited widespread circumvention'' of the 1974 campaign finance laws by creating the soft money system in the first place.

This did not stop the FEC, however, from repeating history by adopting a number of regulations that opened new soft money loopholes in the 2002 law banning soft money.

As a Washington Post editorial said about the FEC's implementation of the soft money ban:

QUESTION: WHEN is a ban on federal officeholders raising huge soft-money checks not a ban? Answer: When it's enforced by the Federal Election Commission.

It took rulings by a federal district court judge and the D.C. Circuit Court of Appeals to overturn the numerous loophole-opening regulations issued by the FEC to implement the soft money ban.

Federal district court judge Kollar-Kotelly found, for example, in striking fifteen FEC soft money regulations as contrary to law, that one of the FEC regulations ''runs completely afoul'' of basic campaign finance law and ''would create an immense loophole,'' that another ''severely undermines FECA'' and would ''foster corruption,'' that another ''would render the statute largely meaningless'' and that yet another has ''no rational basis.''

Judge Kollar-Kotelly also rebuked the FEC for acting as a ''super-legislature disregarding congressional intent.''

The D.C. Circuit Court found that the Commission's regulations in one area ''fly in the face of [Bipartisan Campaign Reform Act's (BCRA)] purpose because they reopen the very loophole the terms were designed to close,'' and called one of the FEC's regulations an ''absurdity.'' The Circuit Court further stated, ''Whereas BCRA aims to shut down the soft money system, the Commission's rules allow parties and politicians to perpetuate it. . .''

Regarding another FEC regulation, the D.C. Circuit Court found that the FEC rule ''far exceeds any exemption BCRA would permit'' and that ''it runs roughshod over express limitations on the Commission's power....'' Another regulation, according to the Circuit Court, ''appears particularly irrational'' and ''makes no sense.'' With regard to yet another FEC regulation, the Circuit Court said the record presents ''no coherent justification'' for the rule.

The case against the FEC for failing to properly enforce the laws is overwhelming.

The need for a new enforcement body is equally clear.

The legislation introduced last week by Senators McCain and Feingold and by Representatives Shays and Meehan, and previously introduced in the last Congress, would establish a new, effective agency to enforce the nation's campaign finance laws.

The bill would create a new independent agency, the Federal Election Administration (FEA), to replace the FEC. The new enforcement agency would include a Chairman with strong powers and two other members appointed by the President and confirmed by the Senate. The Chairman would serve for 10 years and have broad powers to manage and administer the agency. The other two members would serve for six year terms. No two members of the new FEA could be from the same political party.

The FEC consists of six Commissioners, three from each political party. The position of FEC Chairman rotates on an annual basis among the Commissioners and does not have the authority to manage and administer the agency.

The new agency would use impartial administrative law judges to hear and decide campaign finance enforcement proceedings, an approach currently used by a number of other oversight and enforcement agencies to provide for independent, impartial decisions, but not used by the FEC.

The new agency would have real enforcement powers, including the power to find that violations of law have occurred, to directly impose civil penalties and to issue cease and desist orders. These are enforcement powers available to other federal agencies but not available to the FEC.

On May 15, 2002, Democracy 21 released NO BARK, NO BITE, NO POINT, a comprehensive 142-page report prepared by a blue ribbon task force that detailed the failures of the FEC and made recommendations for the creation of a new agency to enforce the nation's campaign finance laws.

The Democracy 21 task force report found that among the major reasons for the failure of the FEC are the ineffectual structure and cumbersome procedures of the Commission, the politicization of the appointment of commissioners, the lack of effective enforcement powers, the denial of adequate resources and congressional interference with the agency.

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The Federal Election Administration Act of 2006

Structure of the FEA

- The Federal Election Administration Act of 2006 (Act) creates a new independent agency, the Federal Election Administration (FEA), to replace the Federal Election Commission (FEC). The three-member FEA will consist of a chairman and two other members, all of whom are to be appointed by the President, with the advice and consent of the Senate. The Act provides that individuals who are or have been members of the FEC subject to a term limit are not eligible to be appointed to the new agency.

- The FEA chairman will serve a term of ten years and will have broad powers to manage and administer the agency. The two other members will serve staggered six year terms. No two members of the agency can be from the same political party. Members of the FEA are not eligible for reappointment (unless originally appointed to fill a vacancy for less than half of an unexpired term) and may be removed from office by the President only for inefficiency, neglect of duty or malfeasance in office.

Enforcement Functions

- Enforcement actions will be initiated by a majority vote of the three-member FEA, based on either information available to the FEA or on a complaint filed by any person. Prior to initiating an enforcement action, the FEA is required to give any person under investigation notice and the opportunity to make the case that there are no reasonable grounds to believe a violation has occurred or is about to occur.

- Once an enforcement action is initiated by the FEA, the case will be heard by an administrative law judge (ALJ). The FEA general counsel will represent the agency in such a proceeding. The ALJ will have the authority to make findings of fact and reach conclusions of law. The ALJ also will have the authority to find that violations of law have occurred, and to impose civil penalties and issue cease and desist orders, subject to an appeal to the FEA.

- The general counsel and any respondent in an enforcement proceeding will have the right to appeal a decision made by an ALJ to the three-member FEA. The decision of the FEA regarding such an appeal will constitute final agency action and be subject to judicial review. If a decision by an ALJ is not appealed it will constitute final agency action.

- A party aggrieved by a decision of the FEA in an enforcement proceeding will have the right to obtain judicial review in federal court. A complainant may seek judicial review in federal court of the dismissal of a complaint or the failure to act on a complaint by the FEA.

- The FEA will have the authority to apply to a federal district court for a temporary restraining order or preliminary injunction to prevent violations of law that would result in substantial harm to the public interest.

- A majority vote of the three-member FEA will be required for the FEA to initiate enforcement actions before an ALJ, find that campaign finance violations have occurred, impose penalties and sanctions, apply for restraining orders and injunctions, and issue regulations and advisory opinions.

Other Functions

- The FEA will have the responsibilities, previously held by the FEC, to administer the campaign finance disclosure laws and the presidential public financing system, and to issue regulations and advisory opinions. The FEA also will have the authority to conduct a limited number of random audits of campaign committees.

- The budget of the FEA will be established by Congress based on a budget request prepared by the FEA chairman and submitted directly to Congress. The GAO will conduct periodic studies of the funding for FEA and submit recommendations to Congress on the level of funding necessary to provide adequate resources for the FEA to fulfill its statutory responsibilities.

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Principal Differences Between Proposed Federal Election Administration And Current Federal Election Commission

1. Composition of the Agency

Current: The Federal Election Commission (FEC) is composed of six Commissioners, no more than three of whom can come from one political party. This has resulted, as a practical matter, in an FEC composed of three Democrats and three Republicans. The Commissioners are appointed by the President with the advice and consent of the Senate. The position of FEC Chairman rotates on an annual basis among the six Commissioners and does not have the authority to manage the agency.

Proposed: The Federal Election Administration (FEA) will consist of a Chairman and two additional members, all of whom are appointed by the President with the advice and consent of the Senate. The Chairman will serve a term of ten years and will have broad powers to manage and administer the agency. The two other members will each serve staggered six year terms. No two members of the FEA can come from the same political party.

2. Use of Administrative Law Judges

Current: All decisions on enforcement matters are made by a majority vote of the six commissioners. The FEC does not make use of administrative law judges.

Proposed: Enforcement proceedings for violations of campaign finance laws will be conducted before impartial administrative law judges, similar to other agencies (such as the Securities and Exchange Commission, the Environmental Protection Agency and the National Labor Relations Board).

An administrative law judge (ALJ) will conduct an enforcement proceeding after the three-member FEA, by majority vote, makes an initial determination to pursue an enforcement action. The FEA general counsel will represent the FEA in enforcement proceedings. The ALJ will have the authority to make findings of fact and reach conclusions of law. The general counsel and any respondent will have the right to appeal an ALJ decision to the three-member FEA. The decision of the FEA regarding such an appeal will constitute final agency action and be subject to judicial review.

3. Powers

Current: The FEC, unlike a number of other agencies, has no power to find that violations of law have occurred or to impose penalties or other sanctions. After conducting an investigation and reaching a conclusion that ''probable cause'' exists to believe a violation has occurred, the FEC can resolve the matter only by reaching a conciliation agreement with the alleged violator or by bringing a lawsuit to obtain a court decision that a violation has occurred and seek court-imposed civil penalties and sanctions.

Proposed: An ALJ will have the authority to find that violations of law have occurred, and to impose civil penalties and issue cease and desist orders, subject to an appeal to the FEA. The decision by the FEA regarding such an appeal will constitute final agency action and be subject to judicial review. If a decision by an ALJ is not appealed it will constitute final agency action. The FEA will have the authority to apply to a federal district court for a temporary restraining order or preliminary injunction to prevent violations of law that would result in substantial harm to the public interest.

4. Funding

Current: The budget of the FEC is established by Congress based on a budget request submitted by the Office of Management and Budget (OMB). A copy of the budget proposal submitted by the FEC to OMB is authorized to be sent by the FEC to Congress.

Proposed: The budget of the FEA will be established by Congress based on a budget request prepared by the FEA chairman and submitted directly to Congress. The GAO will conduct periodic studies of the funding of FEA and submit recommendations to Congress on the level of funding necessary to provide adequate resources for the FEA to fulfill its statutory responsibilities.

5. Other Responsibilities

Current: The FEC has the responsibilities to administer the campaign finance disclosure laws and the presidential public financing system, and to issue regulations and advisory opinions.

Proposed: The FEA will have the same responsibilities to administer the campaign finance disclosure laws and the presidential public financing system, and to issue regulations and advisory opinions. The FEA also will have the authority to conduct a limited number of random audits of campaign committees.

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Capital Bits and Pieces Vol. VI , No. 63 Released: Monday, June 26, 2006

Contact: Elenia Saloutsi
202-429-2008
esaloutsi@democracy21.org

For the latest reform news and to access previous reports, releases, and analysis from Democracy 21, visit www.democracy21.org.