A Fair Hearing for a Fair Hearing

Published on December 6, 2006
by Brad Smith

File Under: Enforcement

At the Federal Election Commission, respondents have no right to see the evidence against them or to cross examine, or even know the identity of, witnesses.  When the Commission makes its final decision and decides on a penalty, the Commission's General Counsel, who makes the recommendation to proceed against the respondent, is present to answer questions for the Commissioners, but respondents are not represented.  These procedures would seem to violate the most fundamental rules of due process, and a committee of the American Bar Association criticized FEC enforcement procedures on those grounds as far back as 1983.

Nevertheless, by June of 2003, twenty years after the ABA report, FEC procedures remained unchanged.  In June of that year the Commission held a public hearing (.pdf) on its enforcement procedures, which resulted in modest changes in Commission procedures (for example, for the first time respondents were allowed to obtain transcripts of their own testimony), but more serious changes remained blocked within the Commission.  Still, the hearings shed added public light on the lack of due process at the Commission, and resuscitated the notion of providing some type of oral hearing.  Then, late last month, FEC Chairman Michael Toner and Commissioner Ellen Weintraub (who had been Chair at the time of the 2003 hearing) introduced a pilot proposal (.pdf) to allow limited oral hearings in Commission enforcement matters.  The Commission voted on November 30 to send the policy out for Public Comment.

"It is a sign of the extremism of the reform camp that is opposes even an experiment to temporarily provide the most basic elements of due process to respondents at the FEC."

The Toner/Weintraub pilot proposal is quite modest.  In addition to being of a limited, eight month duration, the FEC retains sole control over the length of any hearing, or even whether to allow a hearing in any given case.  In other words, the proposal actually creates no "right" to a hearing at all.  All the proposal does is provide that in some cases, when the Commission "concludes that a hearing would help resolve significant or novel legal issues, or significant questions about the application of the law to the facts," and if at least two Commissioners agree, a respondent may appear in person, or through counsel, before the Commission.  This is not a mini-trial--the respondent still has no rights to introduce evidence, or to present or cross-examine witnesses.

This "baby-steps" proposal quickly revealed the extremism that now dominates the modern campaign finance reform movement.  Even before the FEC voted to send the policy out for public comment, Paul Ryan, FEC Program Director and Associate Counsel at the Campaign Legal Center, denounced the proposal as a "bad idea" on the CLC blog.  Ryan's post contains a bit of inadvertent humor (in a post that steadfastly denounces any reform of the campaign finance enforcement system, Ryan's first sentence labels Democratic campaign finance attorney Bob Bauer, who supports the reform, as a "reform opponent"); a bit of typical reform movement hyperbole (the proposal "will dramatically slow the Commission's resolution of enforcement actions, while doing nothing to aid the Commission"); some language inconsistent with the traditional reform description of the FEC General Counsel's function (more on that below); and a remarkable disconnect with the reality of enforcement at the FEC.

While conceding that the proposal "appears on its face to promote fairness," (and providing no argument as to why this facial appearance is not, in fact, true) Mr. Ryan, a First Amendment opponent (we couldn't resist) hinges his legal argument against due process on this:

"[T]he FEC enforcement process is non-adjudicatory--the agency generally can not impose fines.  Instead, the Commission attempts to enter a conciliation agreement (a plea bargain, of sorts) with a person when a majority of Commissioners...finds "probably cause" to believe that person has violated the law.  If such person disagrees with the Commission's findings, the person may simply refuse to enter into a conciliation agreement with the Commission.  If no conciliation agreement is reached, the Commission may then by a majority vote decide to file a civil action in federal court against the alleged violator."

In other words, a violator may simply refuse to pay the penalty assessed by the FEC, thus requiring the FEC to sue as plaintiff in court, where defendant will have the full panoply of due process protections.  But this merely solves the Constitutional problem.  It does not go to whether or not the FEC ought to provide greater due process protection than the minimum required by the Constitution.

The reality is that over 98% of FEC enforcement actions are settled without going to court.  Losing political committees have no resources to go to court.  Even winning committees rarely have the funds to go to court, and cannot afford the bad publicity in the midst of their next campaign.  The cost of a court action far exceeds the annual budget of the vast majority of PACs, union locals, local and county party committees, and even that of a great many state party committees.  And this cost comes on top of the tens or even hundreds of thousands of dollars that go into defending the action at the FEC, before ever going to court.  As William Allen, Chair of the Administrative Law Committee of the ABA at the time of the Committee's 1983 study of the FEC's enforcement practices noted:

"The fact is that the overwhelming majority of election law cases are resolved administratively...The cost of going to court is prohibitive in a lot of cases, and a lot of entities that are subject to regulation are mere temporary enterprises and their useful lives limited to a single election, and litigation is simply not worthwhile in those circumstances."

In my years as an academic researcher, a Commissioner on the FEC, and in private practice, I have never heard a respondent refer to an FEC conciliation agreement as anything other than a "fine" or "penalty."  Most would be stunned to learn that the FEC has no power to fine them--it certainly feels like a fine to most Americans when the Federal Government, after subpoenaing documents and witnesses and conducting a lengthy investigation, determines that there is "probable cause" that the law has been violated, and then assesses a sum of money.  Ryan likens a conciliation to a "plea bargain," seemingly forgetting that plea bargainers pay "fines" and are "sentenced."

Ryan also takes issue with the notion that the FEC's General Counsel is in an adversarial position to respondents before the Commission.  According to Ryan, the General Counsel is not an adversary, with the Commission as an "independent judge."  Rather, the Counsel and the Commission "are a single entity, with the OGC [Office of General Counsel] serving and representing the Commission in its capacity as the civil prosecutor of suspected violations of the law."  As we have already seen, however, in fact the Commission's determination that the law has been broken is, for all intents and purposes, the final stage of the process for the overwhelming majority of respondents.  Ryan's is simply not a realistic description of the Counsel's role.

"The FEC acts, 'as investigator, as prosecutor, and ultimately as judge and jury.'"

As Larry Noble, a former FEC General Counsel and later head of the uber-reform group Center for Responsive Politics, testified at the FEC's 2003 hearing on enforcement procedures, the General Counsel's office "serves as an investigator and prosecutor."  Most assuredly, a prosecutor is usually thought of as adversarial to the respondent or defendant.  Because the dynamics of the process are such that few respondents can challenge the FEC in court, as a practical matter, the Commissioners serve as the court of last resort for respondents.  Their conclusion that the law has been violated means a fine will be assessed.  That is the reality, and fortunately, to the consternation of a reform community that seems to equate justice with guilt, most Commissioners have taken that role seriously.  Or as the ABA's Mr. Allen put it when testifying before Congress at the time the 1983 report was released, the FEC acts, "as investigator, as prosecutor, and ultimately as judge and jury."

Under the FEC's enforcement procedures, the General Counsel ultimately recommends that the Commission find "probable case" that the law has been violated.  When the Commission debates this recommendation, the Counsel is present to answer questions. The Counsel, no matter how fair he tries to be and how professional he is in fact, simply cannot be expected to make the defense that the respondent's own representative would make.  This is an elementary insight of the entire U.S. adversarial system.  If it were really true that the Commission were merely a prosecutor--the Chief Prosecutor, we might say--perhaps the lack of due process would be fair.  But as we have noted, that does not reflect the reality facing either the Commission or respondents appearing before it.

Ryan then goes on to argue what he perceives as the downside to allowing some type of hearing right: It will slow things down.  This is a dubious proposition.  The hearing can be as long or short as desire by the FEC.  It adds no new layer of hearings to the process.  Typically, under the current system, the Commission will spend anywhere from 5 minutes (on an easy case, the type least likely to result in a hearing) to 4 hours evaluating and debating a probably cause recommendation.  Adding a 30 minutes or one hour appearance by the respondent or his counsel, with no witnesses or new evidence, should hardly slow the process.  Moreover, it is not clear that many respondents will seek a hearing.  For one thing, that means the respondent must be prepare to go all the way through the process to "probable cause."  Many will choose not to do this, as the Commission, when it has a strong case, typically offers to settle for less at the "pre-probable cause" stage, thus conserving resources.  And an oral hearing will itself be costly to respondents.  If a small number of respondents chose to avail themselves of a hearing, any delay will be even more minimal--we would guess non-existent.

Mr. Ryan also asks "who is going to do the questioning?" and "will the Commission's General Counsel even be permitted to ask question?"  These are odd questions indeed, since the Toner/Weintraub proposal rather clearly states (p.4), "Respondents will have the opportunity to present their arguments, and Commissioners, the General Counsel, and the Staff Director will have the opportunity to pose questions."  We are used to the fact that pro-regulatory groups such as CLC have a reflexive need to criticize any reform proposal that does not have its origin within the coterie of Pew funded groups that make up the "official" reform community, but CLC may want to take a day or two to actually consider the proposal carefully before leaping to criticize it.

At the same time, Mr. Ryan complains repeatedly that a hearing will "not shed[] any more light on the case."  Of course, that's the type of thing a trial run is supposed to test.  The Commission has, in fact, precedent for oral hearings.  In the Presidential Taxpayer Funded system, candidates who are ordered, as a result of the FEC's audit of a campaign, to repay funds to the Treasury, have a right to a hearing before the FEC.  As a Commissioner, I found these hearings to be remarkably helpful, and my impression was that my colleagues on the Commission did as well.  Once we recognize that the FEC is the de facto judge, not just a prosecutor as Mr. Ryan would have it, it is hard to see how a hearing would not help the FEC resolve facts in many cases.  That is, of course, the entire basis for the U.S. system of justice. 

The FEC must not operate, as the ABA said back in 1983, as a "star chamber."  If hearings do not alter results, it is doubtful that respondents will seek them in large numbers, and any delay that does result will be insignificant.  On the other hand, if many respondents seek a hearing, it will suggest that such hearings are beneficial to the Commission, and therefore, to proper justice.

We conclude by noting that the Toner/Weintraub proposal is not oblivious to the fact that the FEC is a strange duck, indeed--part prosecutor, part judge and jury.  It is true, if very rare, that a well-heeled defendant can ignore the FEC's conciliation proposal, and thereby force the FEC into court, where the full due process protections of the Constitution come into play.  That is why, we presume, the proposal does not go much further, to create a full system of trials in the FEC.

In short, Chairman Toner and Commissioner Weintraub are proposing a moderate course--a very simple compromise--that takes into account the legal and practical realities of FEC investigations and prosecutions.  It is a sign of the extremism of the reform camp that it opposes even a temporary experiment that would provide respondents with one of the most basic elements of due process--the right to appear at a hearing at which one's adversary is appearing.