A few notes on FEC enforcement policy, the Supreme Court’s policy preferences, and the FEC’s February 11 hearing on the regulatory response, should there be one, to the Supreme Court’s decision in McCutcheon.

1.  On a policy of no fines for lower-level infractions: Former FEC Chair and Covington and Burling partner Bob Lenhard passed along a helpful comment on a previous posting here that suggested a reformed enforcement model for FEC violations. In that posting, emphasis was placed on the difference between higher and lower level infractions, and it was suggested that those in the latter category be remedied without fines. Lenhard noted the category was defined with reference to “first time offenses”, and he suggests that this is too limiting, He writes:

I would expand this “first time offense” notion to capture multiple little problems. So if Larry Lessig’s PAC later fails to report unpaid legal bills as “debt” and has to amend, he does not have that matter treated as “serious”.

The point is well taken. The issue is really whether a specific problem is serious, not whether it is the first and only time that a minor violation—one that is not “serious”– occurred.

2.  On the Supreme Court as a source of “recommendations” for campaign finance policy: The Campaign Legal Center is following in the path of others in arguing that the Supreme Court in McCutcheon made specific “recommendations” for changes in the FEC rules. This is not correct, but it is amusing to have the Roberts Court depicted as furrowing its collective brow over weaknesses in FEC rules and devising recommendations for a regulatory response. The Court was doing what courts may do when striking down an enactment because it failed the relevant constitutional test: the majority pointed out that if so motivated, Congress in most cases, and the FEC in others, appeared to have available constitutional alternatives in addressing legitimate statutory or regulatory objectives. It is a long way from there to the suggestion that the Court was “recommending” a course action—not usually what the Court is expected to, or should, do. If the CLC would like to have the Justices throw caution to the winds and embark on the business of making regulatory policy, it would not likely relish the recommendations favored by this same majority.

3.   Comments to the FEC on the issues presented in the Advance Notice of Proposed Rulemaking in McCutcheon: I filed these comments yesterday (and joined the comments filed by colleagues in the Perkins Coie Political Law Group):


I am pleased to comment on the Advance Notice of Proposed Rulemaking published by the Commission on October 17, 2014, which is the subject of a hearing on February 11. The following comments are offered in my individual capacity, and I will also be joining my colleagues in the Perkins Political Law Group in another set of comments. As for the ones I am submitting, I would ask that they be considered along with a request to testify on February 11.

In the first place, the Commission is to be commended for putting out these questions through the Advance Notice of Proposed Rulemaking, and for acting as it did last year to address with rulemakings McCutcheon and Citizens United. At a minimum, the ANPRM serves as an opportunity for an important discussion about the implications of the McCutcheon decision. It is to the benefit of all concerned – – the agency, the “regulated community”, and the general public – – to have informed and timely consideration of significant developments in the law.

That having been said:

The Commission should pause before launching actively into rule-making on the specific issues identified in the ANPRM. Certainly any number of these questions are more properly the responsibility of the Congress. The Court in McCutcheon directed certain of its suggestions to Congress, and that is the forum for the thoroughgoing consideration and, eventually, majority support and public acceptance that further regulatory development is best built on.

But even on matters that may be within the sphere of the FEC, there is good reason for the agency to reserve judgment on additional regulations of the kind raised for comment in the ANPRM. Should the rules be expanded in various ways– most of the time made more complex and restrictive–it is important that the Commission proceed only on the best information available about the significance of the problems it is proposing to attack. Observers of the debate over McCutcheon heard much about circumvention strategies assumed to be inevitable if the aggregate limits were stuck down. The concerns were typically expressed in highly speculative terms. It is reasonably concluded from the American experience with campaign finance regulation that, it develops against expectation, confounding even the experts. There are exceptions to that rule – – for example, the rise in third-party or “outside” group spending and the diminishment of the political parties – – but these are truly exceptions.

As a result, there is a risk of poor rulemaking if it is conducted in the absence of a hard data and information about what, in fact, is taking place in political practice. A rule constructed around hypothetical scenarios will all too often lack meaningful practical impact: the remedy proposed may remain as hypothetical as the problem it is supposed to address. Of course, that a rule is ineffective does not mean that it is without cost– cost that can be measured in compliance burdens and expense, opportunity for expanded charges and counter charges, and the inevitable frustration of discovering that the agency has added to the regulatory rule-book without an appreciable gain in enforcement effectiveness or public confidence.

It is not difficult to see how certain of the issues as framed in ANPRM could lead to these problems. In discussing earmarking, for example, the Commission considers whether it should reconstruct the earmarking rules to focus on “implicit” agreements to circumvent the limits. This is a road the Commission has traveled before and it is perilous. Any time this agency regulates on the basis of “implicit” understandings, it is adding to the uncertainty of its regulatory standards and opening wider the invasiveness of its investigative process. How far it might go depends entirely on whether it is solving a real or an assumed problem. Aggressive rulemaking uninformed by actual experience, and in particular in the absence of Congress’ involvement, is a choice that the Commission should make with care, and sparingly, at this stage in the development of the campaign finance laws.

Restraint on the part of the agency is also appropriate in circumstances where the need for further factual development may be more limited, but where the regulatory expansion under consideration calls on the FEC to make judgments beyond its capacity and invites certain litigation. An example in the ANPRM is the suggestion that the rules could be strengthened by limiting the number of candidates a PAC could support or “establishing a maximum percentage of PAC funds that can go to a single candidate.” These are challenging judgments for the government to make: it is neither clear how they could be made or, once made, how they could be made persuasive to the larger community of those affected by them. And there is the question of upholding them in the face of constitutional challenge.

One exception to caution urged in these comments is the question of disclosure, also included in the ANPRM. To the extent that the Commission can modernize disclosure practice, taking into account technological developments, and do so with sensitivity to the concerns about unnecessary invasions of privacy, it certainly should do so.

Overall, however, the Commission should concentrate on the day-to-day business of presenting the law clearly, conforming its rules to legal developments, offering assistance as imaginatively and flexibly as possible to those affected by the law, and adopting high-quality administration as its highest priority. The more complex and abstract questions raised by this ANPRM are best left to the Congress, and the FEC should approach them with care only when a meaningful record of the need for regulatory action and expansion has been established.

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