Legislative Recommendations 2004

1.      Mandatory electronic filing, at a date to be determined by Congress, for all Senate candidates (or those candidates' authorized committees) and for those persons and political committees filing designations, statements, reports or notifications pertaining only to Senate elections if they have, or have reason to expect to have, aggregate contributions or expenditures in excess of $50,000 in a calendar year. 

2.     Electronically filed designations, statements, reports or notifications pertaining only to Senate elections to be forwarded to the Commission within 24 hours of receipt and to be made accessible to the public on the Internet, if Congress does not change the point of entry for filings pertaining only to Senate elections. 

Explanation: Public Law 106-58 required, among other things, that the Commission make electronic filing mandatory for political committees and other persons required to file with the Commission who, in a calendar year, have, or have reason to expect to have, total contributions or total expenditures exceeding a threshold set by the Commission ($50,000).  The Bipartisan Campaign Reform Act of 2002 (Public Law No. 107-155) required the Commission to develop software and software standards that will allow information concerning reportable receipts and disbursements to be "transmitted immediately" and posted on the Commission's web site "immediately upon receipt."  BCRA also expanded the class of persons required to file electronically, mandating that "each candidate for Federal office (or that candidate's authorized committee) shall use software" that meets the new standards once such software is made available to the candidate.  2 U.S.C. 434(a)(12)(C).  The plain language of this statutory revision does not appear to exempt Senate candidates and their authorized committees from the electronic filing requirements, but it does not specify where the electronic reports must be filed.  Thus, a plain reading of these new requirements indicates that all Senate candidates and their authorized committees must use software, presumably to file electronically, with the Senate (or with the FEC).  (The Commission notes that legislation is currently pending (S.1874) in the Senate to mandate electronic filing by Senate campaigns.)

Data from electronically filed reports is received, processed and disseminated more easily and efficiently, resulting in better use of resources.  Reports that are filed electronically are normally available within five minutes and detailed data is available in the Commission's databases within 24 to 48 hours.  In contrast, the time between the receipt of a report filed through the paper filing system and its appearance on the Commission's web site is 48 hours.  It can take as long as 30 days before some detailed data filed on paper is available in the Commission's databases. 

Disclosure delays are likely to severely impede the effective implementation of several requirements of the Act.  For example, the "Millionaire's Amendment" is predicated on the timely availability of disclosure documents.  2 U.S.C. 441a(i)(1)(E) and 441a-1(a)(2)(B).  In other cases, the Act requires the disclosure of specific expenditures within 24 or 48 hours from the time they are made.

Electronic filing (by means other than diskette) is also unaffected by disruptions in the delivery of first class mail, such as those arising from the presence of anthrax powder in the Senate buildings and U.S. Postal Service facilities in 2001 and the more recent discovery of Ricin in mail delivered to the Senate office buildings.  In each case, the disruptions have significantly delayed amendments to Senate campaign reports that were filed via regular mail.  In 2001, reports submitted by regular mail took months to arrive at the Secretary of the Senate (and the FEC), delaying disclosure.  In contrast, amendments electronically filed during the same time periods by other types of filers were received and processed in a timely manner.

Legislative Language:

Section 304(a)(11)(D) of the Federal Election Campaign Act of 1971 (2 U.S.C. 434(a)(11)(D)) is amended to read as follows:  "As used in this paragraph, the terms 'designation,' 'statement,' or 'report' mean a designation, statement or report, respectively, which-- (i) is required by this Act to be filed with the Commission, or (ii) is required under section 302(g) to be filed with the Secretary of the Senate and forwarded by the Secretary to the Commission."

Section 302(g)(2) of the Federal Election Campaign Act of 1971 (2 U.S.C. 432(g)(2)) is amended by inserting "or 1 working day in the case of a designation, statement, or report filed electronically" after "2 working days".

Section 304(a)(11)(B) of the Federal Election Campaign Act of 1971 (2 U.S.C. 434(a)(11)(B)) is amended by inserting ", or filed with the Secretary of the Senate under section 302(g)(1) and forwarded to the Commission," after "Act".

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PART II:  Non-Priority/Substantive or Technical Legislative Recommendations

(Contributions/Expenditures) 
Multicandidate Political Committee Contribution Limitations and Non-multicandidate Political Committee Contribution Limitations (Revised 2004)

Section:  2 U.S.C. 441a(a)(2) and 441a(c)

Recommendation:  The Commission recommends that Congress consider indexing for inflation the contribution limitations applicable to multicandidate political committees and adjusting the amount such committees may contribute to national party committees to harmonize these limits with the limits applicable to non-multicandidate political committees. 

Explanation:  A political committee qualifies for multicandidate status if it has been registered with the Commission for six months or more, has received contributions from more than 50 persons, and has contributed to five or more Federal candidates.  2 U.S.C.441a(a)(4). 

FECA, prior to BCRA, provided a significantly higher limit on contributions to candidates for political committees with multicandidate status than for those without that status ($5,000 per election versus $1,000 per election).  BCRA raised and indexed for inflation the contribution limit on non-multicandidate committees (to $2,000 per election), and such limit eventually will become higher than the limit imposed on multicandidate committees.  It is important to note that a committee cannot opt out of multicandidate status.  Instead, under section 441a(a)(4), a committee automatically triggers multicandidate status once it meets the specific requirements listed above.

In addition, the limit for contributions to national party committees from multicandidate committees is $15,000 per year (as it was prior to BCRA), yet BCRA increased the limit on contributions to the same national party committees from non-multicandidate committees from $20,000 to $25,000 per year.  2 U.S.C. 441a(a)(2)(B), (1)(B).  Moreover, only the contribution limit for non-multicandidate committees is indexed for inflation, which means that over time the current $10,000 difference will only increase.

     Congress should consider revising the statute to give multicandidate committees allowances at least as generous as those given to non-multicandidate committees.

Legislative Language:

Section 315 of the Federal Election Campaign Act of 1971 (2 U.S.C. 441a) is amended

(1)  in subparagraph (a)(2)(B), by striking "$15,000" and inserting in lieu thereof "$25,000";

(2)  in clause (i) of subparagraph (c)(1)(B), by inserting "(a)(2)(A), (a)(2)(B)," after "(a)(1)(B),";

(3)  in subparagraph (c)(1)(C), by inserting "(a)(2)(A), (a)(2)(B)," after "(a)(1)(B),";

(4)  in clause (ii) of subparagraph (c)(2)(B), by inserting "(a)(2)(A), (a)(2)(B)," after "(a)(1)(B),".

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(Compliance)
Fraudulent Misrepresentation of Campaign Authority (NEW)

Section:  2 U.S.C. 441h

Recommendation:  The Commission recommends that Congress revise the prohibitions on fraudulent misrepresentation of campaign authority to encompass all persons purporting to act on behalf of candidates and real or fictitious political committees and political organizations.  In addition, the Commission recommends that Congress remove the requirement that the fraudulent misrepresentation must pertain to a matter that is "damaging" to another candidate or political party.   

Explanation:  2 U.S.C. 441h(a) prohibits a Federal candidate or his or her agent or employee from fraudulent misrepresentation such as speaking, writing, or otherwise acting on behalf of a candidate or political party committee on a "matter which is damaging to such other candidate or political party" or an employee or agent of either.  The Commission recommends that this prohibition be extended to any person who would disrupt a campaign by such unlawful means, rather than being limited to candidates and their agents and employees.  Proving damages as a threshold matter is often difficult and unnecessarily impedes the Commission's ability to pursue persons who employ fraud and deceit to undermine campaigns.  Fraudulent solicitations of funds on behalf of a candidate or political party committee were recently prohibited in BCRA without any required showing of damage to the misrepresented candidate or political party committee.  See 441h(b). 

In addition, while both 441h(a) and (b) directly address fraudulent actions "on behalf of any other candidate or political party," they do not address situations where a person falsely claims to represent another type of political committee or claims to be acting on behalf of a fictitious political organization, rather than an actual political party or a candidate.  For example, the narrow scope of the existing language does not bar fraudulent misrepresentation or solicitation on behalf of a corporate or union separate segregated fund or a non-connected political committee.

Congress should consider revising the statute to strengthen these important prohibitions on fraudulent activity.

Legislative Language:

Section 322 of the Federal Election Campaign Act of 1971 (2 U.S.C. 441h) is amended: 

(1)    in subsection (a), by striking "who is a candidate for Federal office or an employee or agent of such a candidate";

(2)    in paragraph (a)(1), by striking "or political party or employee or agent thereof on a matter which is damaging to such other candidate or political party or employee or agent thereof" and inserting in lieu thereof ", political party, other real or fictitious political committee or organization, or employee or agent of any of the foregoing,";

(3)    in paragraph (b)(1), by striking "or political party" and inserting in lieu thereof ", political party, other real or fictitious political committee or organization, or employee or agent of any of the foregoing,".

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(Public Financing)
Stabilizing the Presidential Public Funding Program (Revised 2004)

Sections: 26 U.S.C. 6096, 9008(a) and 9037(a)

Recommendation:  The Commission strongly recommends that Congress take immediate action to stabilize the Presidential public funding program for upcoming election years.

Explanation:  The Presidential public funding program has experienced shortfalls during each of the last three Presidential elections.  The shortfalls are a result of declining participation in the check-off program and the fact that the checkoff is not indexed to inflation while payouts are indexed.  To date, the shortfalls have principally affected primary candidates, whose funding is given lowest priority under the law.  In February 2004, when the U.S. Treasury made its second payment for the 2004 elections, it was only able to provide approximately 46 percent of the public funds that qualified Presidential candidates were entitled to receive. 

Specifically, only a little over $2.3 million was available for distribution to qualified primary candidates on February 1, 2004, after the Treasury paid the convention grants and set aside the general election grants.[1]  However, the entitlement (i.e., the amount that the qualified candidates were entitled to receive) on that date was $5 million, twice as much as the amount of available public funds.  By February 2004, total payments made to primary candidates exceeded $20.4 million. 

The 2004 shortfall could have been considerably more severe had three major party candidates not opted out of public funding for the primary.  While this left more money for candidates who chose to participate in the program, the candidates who opted out appeared to do so out of a desire to spend beyond the spending limits.  Their ability to operate outside the restrictions of the public funding program may encourage more candidates to opt out in future election years. 

The Commission recommends several specific legislative changes.  First, to alleviate future shortfalls, the statute should be revised so that Treasury will be able to rely on expected proceeds from the voluntary checkoff, rather than relying solely on actual proceeds on hand as of the dates of the matching fund payments.  Since large infusions of voluntary checkoff proceeds predictably occur in the first few months of the election year, including such estimated proceeds in the calculation of funds available for matching fund payouts would virtually eliminate the shortfall in the near future.  Because estimates for expected payouts are an acceptable part of the calculations (e.g., setting aside sufficient funds to cover general election payouts), estimates of the checkoff proceeds could be incorporated, as well.  A very simple change in the wording of 26 U.S.C. 9037 would accomplish this: changing "are available" to "will be available."  Expected payments should be based on sound statistical methods to produce a cautious, conservative estimate of the funds that will be available to cover convention and general election payments.

      A second revision in the statute would further the long-term stability of the presidential public funding program: indexing the voluntary checkoff amount to inflation.  Although the checkoff amount was increased from $1 to $3 beginning with 1993 returns, there was no indexing built in to account for further inflation thereafter.  Although other factors influence the fund's balance, including the number of candidates participating, the number of contributions they can have matched, the taxpayer participation rate and deposits of repayments, an indexing of the checkoff amount for inflation would help guarantee some money coming in to replenish the public funding program.

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(Miscellaneous)
Pay Level for the General Counsel and Creation of Senior Executive Service Positions (NEW)

Sections:  2 U.S.C. 437c(f)(1); 5 U.S.C. 3132(a)(1)

Recommendation:  The Commission recommends that Congress revise section 437c(f)(1) to state that the General Counsel shall be paid at a rate not to exceed the rate of basic pay in effect for level IV of the Executive Schedule (5 U.S.C. 5315), and that Congress amend 5 U.S.C. 3132(a)(1) by deleting subsection (C), which specifically excludes the Federal Election Commission from eligibility for the creation of Senior Executive Service positions.

Explanation:  The Commission believes that two statutory changes are needed to bring the Commission's personnel structure in line with that of other comparable federal agencies.  This would ensure that the Commission is able to compete with other government agencies and the private sector in recruiting and retaining key management personnel, including the General Counsel.  These changes would also enable the Commission, like other agencies, to move to merit-based pay systems for top executives.

First, the FECA creates the statutory office of General Counsel and provides that the compensation of the General Counsel shall not exceed the rate of basic pay in effect for level V of the Executive Schedule (currently $128,200). The Commission believes that this rate of pay is too low in light of the significant responsibilities entrusted to this statutory officer and in comparison to the salary rates of General Counsels of other agencies who have equivalent responsibilities.  The FEC's General Counsel manages and directs a law office of approximately 125 persons.  The General Counsel is also responsible for overseeing the Commission's enforcement program, federal litigation in district and appellate courts, public financing matters, conducting rulemakings, drafting advisory opinions, and providing general guidance on other legal matters.

     Under the present compensation structure, the General Counsel is paid less than the highest paid GS-15 in the Washington, D.C. area, and less than the overwhelming majority of SES employees.  Congress recently restructured the SES compensation system into a performance-based, payband system.  National Defense Authorization Act for Fiscal Year 2004 (Pub. L 108-136, Nov. 24, 2003).  For 2004, individuals serving in SES positions are compensated in a payband between $104,927 and $145,600 (or $158,100 in agencies with a certified SES performance appraisal system).  Increasing the General Counsel's pay will ensure that the Commission can retain highly qualified individuals to serve as General Counsel as well as enable it to remain competitive in the marketplace for federal executives when a vacancy arises. 

      Second, the current pay and benefits structure hinders the Commission's ability to recruit talented executives from other agencies and retain high-performing senior managers, while conversion to SES would enhance this ability.  The Commission is prohibited by law from creating Senior Executive Service positions within the agency.  5 U.S.C. 3132(a)(1)(C). Consequently, unlike other agencies, the Commission's senior managers are employed in Senior Level positions.  These executives, consisting of two Deputy Staff Directors, a Deputy General Counsel, and four Associate General Counsels, oversee major programmatic areas and supervise not only staff, but other managers as well.  However, OPM's Guide to the Senior Executive Service indicates that the Senior Level system is for non-executive positions.  In fact, the OPM Guide provides that supervisory duties should occupy less than 25% of a Senior Level employee's time.  At the Commission, by contrast, supervisory and executive responsibilities occupy 100% of the time of SL employees. 

      In terms of total compensation and benefits, individuals serving in Senior Level positions are under-compensated for the responsibilities and duties required by these positions, and under-compensated when compared to individuals serving in similar capacities at virtually all other Federal agencies.  Conversion to SES would also allow higher pay ranges for these positions and enable the Commission's senior managers to receive performance awards and other benefits not available to Senior Level employees.  Perhaps most significantly, this includes the ability to carry over many more days of annual leave than Senior Level employees.  Given that high-level managers frequently work extended periods in which they cannot use much leave, especially in the aftermath of BCRA, an executive's ability to accumulate and defer leave is not only an important benefit to him or her, but is also a valuable tool for the agency to ensure that executives are available to accomplish agency priorities. 

      Accordingly, the Commission believes that current Senior Level positions within the agency should be converted to SES positions and that any future Senior Level positions be created in the SES. There is a trend toward performance-based pay for executives throughout the government; converting the current Senior Level positions into SES positions would ensure performance-based pay is similarly emphasized for the Commission's senior executive positions.  The Commission is confident that conversion of Senior Level positions to SES positions will assist in retaining highly qualified individuals and will attract superior candidates when vacancies arise, thus permitting the Commission to remain competitive in the marketplace for federal executives.    

Legislative Language:

Section 310(f)(1) of the Federal Election Campaign Act of 1971 (2 U.S.C. 437c(f)(1)) is amended by striking "V" and inserting in lieu thereof "IV". 

Section 3132(a)(1)(C) of Title 5 of the United States Code is amended by striking "Federal Election Commission, or".

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(Contributions/Expenditures)
Modifying the Definition of Federal Election Activity to Simplify Compliance for State, District and Local Party Committees Where Certain Employees Spend More than 25 Percent of Their Time In Connection with a Federal Election (NEW)

Section: 2 U.S.C. 431(20)(A)(iv)

Recommendation:  The Commission recommends that Congress amend 2 U.S.C. 431(20)(A)(iv) to allow State, district and local political party committees to comply with that provision of the Act in biweekly, semimonthly or monthly periods, in conformity with the period of time a party committee selects for payroll purposes.  Currently, section 431(20)(A)(iv) requires compliance in monthly periods.

Explanation:  Under BCRA, "services provided during any month by an employee of a State, district or local committee of a political party who spends more than 25 percent of that individual's compensated time during that month on activities in connection with a Federal election" are Federal election activity.  2 U.S.C. 431(20)(A)(iv).  Several party committees have informed Commission staff that this provision imposes a difficult compliance burden because the committees' payroll periods frequently are different than monthly periods.  The compliance burden for party committees will be lessened if such committees can elect a section 431(20)(A)(iv) compliance period that is the same as the payroll period used by the committees (e.g., biweekly, semimonthly or monthly payroll period). 

For example, a party committee that conducts payroll operations on a biweekly basis can also determine on a biweekly basis whether or not an employee meets the 25 percent test, and thus whether the employee must be compensated from the committee's Federal account.

Legislative Language:

Section 301(20)(A)(iv) of the Federal Election Campaign Act of 1971 (2 U.S.C. 431(20)(A)(iv)) is amended:

(1)  by striking "any month" and inserting in lieu thereof "a payroll period of a State, district or local committee of a political party";

(2)    by striking "a State, district or local committee of a political party"  and inserting in lieu thereof "that party committee";

(3)    by striking "that month" and inserting in lieu thereof "that payroll period";

(4)    by inserting at the end the following: "For purposes of this subparagraph, a payroll period may be a biweekly, semimonthly or monthly period.".

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(Disclosure)
Increasing and Indexing all pre-BCRA Registration and Reporting Thresholds for Inflation (Revised 2004)

Sections: 2 U.S.C. 431 and 434

Recommendation:  The Commission recommends that Congress increase and index for inflation all pre-BCRA registration and reporting thresholds. 

Explanation:  Most of the Act's registration and reporting thresholds were set in 1974 and 1979.  Because over twenty years of inflation had effectively reduced the Act's contribution limits in real dollars, the BCRA increased some contribution limits to partially adjust for inflation, and then indexed those limits: contributions to candidates and national party committees by individuals and non-multicandidate committees, the biennial aggregate contribution limit for individuals and the limit on contributions to Senate candidates by certain national party committees.  The Commission proposes extending this approach to all pre-BCRA registration and reporting thresholds, which have similarly been effectively reduced as a result of inflation.

Increasing and then indexing these thresholds would ease the registration and reporting burdens on smaller political committees who, in some cases, are unaware of the Act's registration and reporting provisions.  Moreover, by increasing and then indexing the thresholds for inflation, Congress would help to ensure that some committees and persons who lack the resources and technical expertise to comply with the Act's registration and reporting requirements would not have to do so.  Finally, because of the effect of inflation, increasing and then indexing the registration and reporting thresholds would continue to capture the significant financial activity envisioned when Congress enacted the FECA.

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(Disclosure)
Making Permanent the Administrative Fine Program for Reporting Violations (Revised 2004)

Section:  2 U.S.C. 437g

Recommendation:  The Commission recommends that Congress make permanent the Commission's authority to assess administrative fines for straightforward violations of the law requiring timely reporting of receipts and disbursements.  The Commission's current Administrative Fine Program only covers violations that relate to reporting periods through December 31, 2005.