This is testiomony to be delivered this morning at the FEC hearing on agency procedures.  It supplements written comments previously filed.

Testimony before the FEC, on Agency Procedures

Robert F. Bauer

January 14, 2008

     The Commission should be applauded for inviting examination of its procedures.  Before you are a number of recommendations, among them several offered by me along with my partners in the Political Law Group.

     I would like to avoid restating those and use my time to answer the question of what you might make of the complaints or suggestions of those who have paraded in here to present them—and of the silence of those who have stayed away, conspicuous by their absence. 

     Defense counsel are here to make suggestions about process.  Reform community representatives, some of whom are dependable voices on the agency’s work, are not much in evidence here.

     This is one possible explanation: much of the reform community has given up on the agency and concluded that it is beyond improvement.  A proposal or two for replacing it has been proposed.  Defense counsel (or organizations skeptical of the campaign finance laws, like the Center for Competitive Politics) come with a very different point of view, also skeptical of the law or its enforcement process but not for the same reason.

     So you might say, most witnesses are here to put in a word for more process—more protections for the regulated and more restraints on the regulator.  And it would be easy to caricature the process as one dominated by the anti-enforcement wing of the regulated community.

     This seems wrong.  So let me step back for a few minutes and say why the choice should not be so starkly, mistakenly mischaracterized as one between enforcing the law and upgrading procedures to conform more to due process concerns.

     Administrative agencies are supposed to "fill in the gaps" in statutes as enacted.  This filling-in is standard agency work, if never free of contention. 

     At the FEC, it is also contentious, in a particular way.  If the Congress never enacts a campaign finance law that is not immediately, predictably challenged on First Amendment or other grounds, then it is also true that the areas left untouched, "unfilled", are just as or more sensitive.  The FEC fills in with every chance that it will be entering into those areas and stirring up major resistance. 

     It is hard enough for activists, parties, candidates and other political actors to accept what Congress manages to produce in the face of partisan and ideological division.  Why would the actions of administrators, filling in the gaps, go down more easily?

     Now the actions by which gaps are filled include enforcement actions and not merely ordinary course rulemakings.  It is a fact that the FEC, in the enforcement or Advisory Opinion process, makes or refashions rules or their functional equivalent, for all practical purposes, never quite admitting it.  And these are the enforcement actions that anyone really cares about.  No one fusses all too often if the agency fines an individual for giving more, and a campaign from accepting more, than the individual contribution limit allows.  But there is a wealth of concern about—among other areas—issue advocacy, fundraising rules, party GOTV activity or individual Internet activity.

     Feelings about the agency’s "filling in" activities are strong—very strong—precisely because they are held by political actors engaged in political activity.  We have seen in recent years that while the noise is loudest in Republican or conservative or libertarian circles, we can hear it virtually everywhere, not always where we would expect it.  One example of this has been the 527 controversies.  It worsens matters considerably that the law has grown in complexity:  this complexity aggravates the natural frustrations—the sense of injury—resulting from fresh constraints on particular political activity.

     This the point at which we hear about "circumvention", "loopholes" and the like—how the agency must stand firm against them.  All these alleged evasions are lumped together—for example, "circumventions" are not to be confused with "loopholes"—but however the points are understood, the common thread is that those raising and spending money for political purposes are working the less clearly marked stretch of the road.  And keep in mind what they are doing:  registering voters, turning them out, raising money, running ads. 

     This is the largest threat to the viability of this campaign finance regime: that filling in of the law by enforcement will wear away credibility of the campaign finance laws.  Administrators can be sure of this, whether the agency is organized like this one or is smaller, with an odd number of Commissioners and a Chair serving for a ten year term. They can be sure that the administrative extension of regulation by Advisory Opinion, or enforcement action will encounter resistance at every turn. 

     For this to work—for political finance regulation to be sustainable—rigorous attention to process is simply indispensable.  It may not end objection; but it will moderate it, and it may also slightly cut down on its frequency.  It is a condition of this filling-in activity that it be carefully conducted with plentiful opportunity for the affected political actors to be heard.  

     The stronger and more comprehensive the procedural protections, the better for the future of political finance regulation.  Deficiencies in process are more than the already vulnerable regulatory process can bear.

     Now there are ambitions to be surrendered if this trade-off of procedural protection for credible enforcement is to succeed.  For example, there is a belief that in campaign finance law, delayed penalties are irreconcilable with vigorous enforcement: that we should want an agency that can strike back quickly, in the middle of an election cycle.  Otherwise, we hear, penalties will be paid as a "cost of doing business" and enforcement will lack deterrent force.

     In campaign finance regulation, this is entirely the wrong goal to set and the wrong view of the consequences of setting it.  The better view is—do it right.  Hear out the respondent; arrive at a considered judgment; and if the judgment is considered and the penalty fits the offense, the regulated community will take notice. 

     Over time, the agency’s enforcement actions will shape compliance practices in the regulated community.  Enforcement actions must be measured by their cumulative impact.  Asking for more immediate satisfaction—for a swift regulatory response that in the particular case deprives the respondent of ill-gotten political gains—is asking too much.  It strains the agency’s capacity for acting fairly and wisely, and these strains will cost more in the long run, in acceptance of its mission, than the agency can gain in the short run in a quest for speedy justice.