Prior to initiating the Administrative Fine program, the FEC handled reporting violations (late filers, nonfilers and committees that failed to file 48-hour notices) under the same enforcement procedures it employs for other alleged campaign finance violations. Under the administrative fines regulations, if the Commission finds “reason to believe” that a committee violated the law, the Commission will send a letter to the committee containing the factual and legal basis of its finding and the amount of the proposed fine. This letter will be sent to the committee and its treasurer at the address listed on the committee’s most recent FEC Form 1, Statement of Organization.
The committee will have 40 days from the date of the reason-to-believe finding to either pay the fine or submit to the Commission a written challenge, with supporting documentation, explaining the reasons why it believes the Commission’s finding and/or fine is wrong. If the committee submits a challenge, it will be forwarded to an impartial reviewing officer—someone employed by the FEC who was not involved in the original reason-to-believe finding.
If the committee does not submit a challenge within the 40 day period, the Commission will then issue a final determination with the appropriate fine. The committee will then have 30 days to pay the fine or seek judicial review of the Commission’s final determination through a U.S. district court in the area where the committee or treasurer resides or conducts business.
In March 2007, the Commission adopted four changes to the administrative fine regulations which affect the challenge process and are effective April 30, 2007. The changes:
Committees may challenge the reason-to-believe (RTB) finding and proposed fine by submitting a challenge with supporting documentation to the reviewing officer, who will make a recommendation to the Commission as to the final determination. Committees should carefully review the requirements of the three permissible defenses before submitting a challenge because the committee bears the burden of showing that a permissible defense is satisfied. A committee’s challenge must be based on one of the following permissible grounds to be considered by the Commission’s reviewing officer:
The challenge must also explain, in detail, the factual basis for the challenge. The Commission strongly encourages committees to submit their documents in the form of affidavits or declarations because these forms are generally given more weight and credibility.
The rule change for the “factual errors” defense does not create new defenses but simply recognizes the types of errors that the Commission has previously accepted as defenses in the Administrative Fine Program (AFP). The “extraordinary circumstances” defense is replaced by the “best efforts” defense. The revised rule states that the committee used best efforts to file in a timely manner if it:
The Commission included some examples of circumstances that will and will not be considered “reasonbly unforseen” and “beyond the control” of the committee for purposes of this “best efforts defense.” Circumstances that will meet the “best efforts” defense include:
Circumstances that will not meet the best efforts defense include:
You should also review the regulations on the three defenses found at 11 CFR 111.35.
After reviewing the Commission’s reason-to-believe finding and the committee’s written challenge, the reviewing officer will forward a recommendation to the Commission. This recommendation will include the original reason-to-believe finding, the committee’s written challenge and any supporting documentation received from Commission staff or the committee. A copy of the recommendation will also be sent to the committee and treasurer, who will have 10 days to submit a written response to the reviewing officer’s recommendation. The Commission will then make a final determination as to whether the committee violated 2 USC §434(a) and, if so, assess a fine based on the published schedules used to calculate the fines.
You should also review the regulations on the challenge process found at 11 CFR 111.35, 111.36, and 111.37.
Most reports that committees are required to file are covered under the AFP. This includes semi-annual, quarterly, monthly, pre-election, 30-day post-general and special election reports, as well as 48-hour notices that candidate committees are required to file for elections in which the candidate participates.
Four factors are used to calculate fines. They are:
Election Sensitivity
Some reports are considered election sensitive because they are due right before an election. These include the October Quarterly and October Monthly Reports due in even-numbered years and all pre-election reports. Other reports such as the Mid-Year and Year End Reports are considered not-election sensitive. There is a fine schedule for election sensitive reports found at 11 CFR 111.43(b) and another fine schedule for non-election sensitive reports found at 11 CFR 111.43(a).
Late or Not Filed
An election sensitive report is late if it is filed after the due date but more than four days before the election. It is considered not filed if it is not filed more than four days before the election. Here are two examples using Tuesday, May 18, as the date of the primary election. If the pre-election report is filed on Thursday, May 13, the report is considered late. If the pre-election report is filed on Friday, May 14, it is considered not filed.
A non-election sensitive report is late if it is filed after the due date but no later than 30 days after the due date. It is not filed if it is filed more than 30 days after the due date. Here are two examples using the Year End Report’s January 31 due date. If it is filed on February 9, the report is considered late. If it is filed on March 28, it is considered not filed.
Level of Activity
For authorized (or candidate) committees, the level of activity is the total receipts plus total disbursements on the report filed late. For unauthorized committees (for example, PACs or parties), the level of activity is the total receipts plus total disbursements minus allocable activity reported on Lines 18(a) and 21(a)(ii) of Form 3X. If the report is not filed, the level of activity is estimated using prior reports filed by the committee during the current or prior two-year election cycle.
There are two sets of fine schedules. One set of schedules is for reports due before April 16, 2003, and can be found at 11 CFR 111.43(a)(1) and (b)(1). The other set of schedules is for reports due on or after April 17, 2003, and includes 17 level of activity brackets. This schedule can be found at 11 CFR 111.43(a)(2) and (b)(2).
Number of Prior Violations
Prior violations are the number of times that the committee was assessed a fine in the AFP during the current two-year and the prior two-year election cycles. Each prior violation increases the amount of the fine by 25%.
You should also review the regulations for the fine schedules found at 11 CFR 111.43.
Fine Calculation for 48 Hour Notices
As of June 15, 2005, the calculation of fines for committees that fail to file timely 48-hour notices is $110 for each nonfiled notice plus 10% of the dollar amount of the contributions not timely reported. The fine increases by 25% for each time a prior fine was assessed during the previous and current two-year election cycles under the AFP.
You should also review the regulations for 48 Hour Notice fine calculations found at 11 CFR 111.44.
Within 30 days of its receipt of the final determination letter, the committee and its treasurer can file suit in the U.S. District Court in which the committee or treasurer resides or does business. Note that the failure to raise an argument in the administrative (challenge) process in a timely manner is deemed a waiver of the committee’s or treasurer’s right to present that argument to the District Court. Please see 11 CFR 111.38.
When a respondent fails to pay the fine, the Commission may transfer the case to the U.S. Department of the Treasury for collection. Alternatively, the Commission may decide to file suit in the appropriate U.S. district court to collect fines under 2 U.S.C. §437g(a)(6).
If you want additional information on the AFP, please contact the FEC’s Information Division, 202/694-1100 or toll free at 800/424-9530.
A committee files its October Quarterly Report (an election-sensitive report) 10 days late. The level of activity on the report is $105,000, and the committee has two prior violations in the current two-year election cycle.
Applicable formula:
Penalty = [base amount + (set amount x number of days late)] x [1 + (.25 x number of previous violations)]
Penalty = [$900 + ($125 x 10)] x [1 + (.25 x 2)]
Penalty = $3,225
A committee files its July Quarterly Report on August 4. The report contains $100 in receipts and disbursements, and the committee has no prior violations.
Applicable formula:
Penalty = The lesser of: the level of activity in the report; or
[base amount + (set amount x number of days late)]
Penalty = The lesser of: $100 or [$25 + ($5 x 20)]
Penalty = The lesser of: $100 or $125
Penalty = $100
A party committee that allocates federal and nonfederal activities between its federal and nonfederal accounts fails to file its July Quarterly Report within 30 days of its due date. Based on its previous filings, the committee’s estimated level of activity—excluding transfers received from the nonfederal account (reported on line 18a of FEC Form 3X) and disbursements for the nonfederal share of allocable operating expenses (reported on Line 21(a)(ii) of FEC Form 3X)—is $50,000. The committee has one prior violation in the current two-year election cycle.
Applicable formula:
Penalty = base amount x [1+ (.25 x number of previous violations)]
Penalty = $2,700 x [1 + (.25 x 1)]
Penalty = $3,375
A House campaign committee fails to submit a 48-hour notice to disclose its receipt of a last-minute $5,000 PAC contribution. During the current two-year cycle, the campaign has two prior violations under the AFP.
Applicable formula:
Penalty = [$110/per notice + (.10 x amount of contribution(s) not timely reported)] x [1 + (.25 x number of previous violations)]
Penalty = [$110 + (.10 x $5,000)] x [1 + (.25 x 2)]
Penalty = $915
[1] Prior to April 30, 2007, committees could challenge based on the existence of “extraordinary circumstances” that were beyond the respondent’s control and lasted for at least 48 hours. This defense was supplanted by the “best efforts defense” in the Commission’s 2007 revisions.
