Federal Election Commission Approves New Rule to Streamline Enforcement of Disclosure Reporting, Impose Mandatory Fines for Late Filing and Non-Reporting

On May 11, 2000, the Federal Election Commission (FEC or Commission) approved a final rule that establishes a sliding scale of automatic fines for candidates and political committees that fail to file required disclosure reports, or do not file reports on time. The FEC rule will go into effect after a thirty-day Congressional review period and will apply to reports due July 15, 2000.

Last year, Congress gave the Commission authority to develop streamlined enforcement procedures for reporting violations that occur between January 1, 2000, and December 31, 2001. Previously, the Commission lacked the power to assess civil penalties, and could only seek settlements or pursue civil enforcement actions in court. The objective of this streamlined system is to expedite and strengthen enforcement of existing campaign finance reporting requirements.

The rule establishes two schedules of penalties – one for election sensitive reports and one for all other reports. The schedules are tied to the amount of money raised and spent by a committee. The rule also provides for added penalties depending on the number of days a report is late, and includes an additional premium if the respondent has been cited for previously failing to file timely reports.

The rule creates a new office at the Commission headed by a “reviewing officer” and creates a four-step informal adjudication procedure for imposing civil fines. Once the Commission reaches a final determination, the respondent may seek judicial review within thirty days of receipt of the final determination, either in the U.S. District Court where the respondent resides or where the respondent conducts business.

Under the proposed rule, the four steps in the new informal adjudication procedure are:

1. The FEC will notify respondents in writing if it finds “reason to believe” that a violation occurred. That notice will include both the factual and legal basis for the reason to believe finding and the proposed civil money penalty. All candidates and committees have an opportunity to meet the requirements before the FEC commences an enforcement action.

2. The respondent could agree to pay the civil penalty, or file a written challenge to the reason to believe finding and/or the proposed civil money penalty within twenty days.

3. A reviewing officer would then review the FEC’s original notice and the committee’s response. The reviewing officer would then prepare a draft decision and forward the recommendation to the Commission for action.

4. The Commission will review the written record, including the notice, response, and recommended decision, and make a final determination and assess a civil money penalty. Under the proposed rule, the Commission could make a determination that there was no violation, or determine that a violation has occurred but waive the penalty because the respondent demonstrated extraordinary circumstances.