Thursday, February 19, 2009, 4:13 PM

Political GPS: ARE ADMINISTRATIVE LAW JUDGES THE ANSWER FOR THE FEDERAL ELECTION COMMISSION?

Seven advocacy groups, including some longtime FEC critics, have renewed their call for Congress to replace the FEC with a new three-member agency that would resolve enforcement matters through administrative law judges, or ALJs. For years, these critics say, FEC enforcement has been a story of too little (low penalties), too late (cases resolved long after elections are over). Concern with FEC functioning has been exacerbated in recent months as case processing has slowed, few civil penalties of note have been announced, and legal principles that seemed settled by earlier enforcement matters have failed to command a majority of the current Commission.

For the sake of discussion, let’s assume that this criticism is well-founded. How would the ALJ proposal help?

One thing ALJs won’t do is speed things up. In contrast to the current system, where the General Counsel investigates complaints and settles most cases pursuant to Commission findings, the new structure would turn all but the most frivolous matters into full-blown adversary proceedings – depositions, motions, and trials. Added to that, if an ALJ imposes a fine, that decision can be appealed to the new three-member agency, and if upheld, that decision can be appealed to a federal judge.

The record at other agencies is hardly encouraging. In late December 2008, The Oregonian described a “national crisis” in processing Social Security disability claims, noting that delay by ALJs has been “dragging out appeals of disability claims as people faced financial ruin, got sicker and even died waiting.” Social Security’s Inspector General recently cited as factors contributing to the backlog a lack of accountability and inadequate staff support.

Understaffing of ALJ offices isn’t limited to the Social Security Administration. It is a chronic problem at other agencies, too, where staffing levels often remain static even as the number of cases are skyrocketing.

Also, it can take years for the Commission (or other agency heads) to resolve appeals of ALJ decisions. A November 2008 letter to the Federal Trade Commission from the U.S. Chamber of Commerce criticized the timeliness of FTC administrative cases, stating that “the failure of the FTC to impose any definitive deadlines or timeframes on its own issuance of a final opinion makes such proclamations [‘justice delayed is justice denied’] ring hollow.” A recent SEC report on its administrative docket indicates that after initial decisions are issued by ALJs, it takes more than a year for the Commission to rule on appeals. And that’s down from 2001, when it took about two years.

If the idea isn’t to improve efficiency, then what could it be? It’s more likely that what supporters of the ALJ proposal want is someone ostensibly less partisan to decide enforcement matters. While ALJs are potentially more insulated from partisan influence, someone has to appoint them, too. It’s also not unheard of for ALJs to have strong ideological perspectives, just as some Commissioners do. And while Commissioners come and go as appointments expire, wayward ALJs are not easily removed or reassigned from one agency to another. Even if ALJs provide a more “neutral” decision-maker, the solution only goes so far. Under the new structure, there will still be political appointees who review all appeals of ALJ decisions.

Finally, supporters of the ALJ proposal suggest that an added benefit of adversary proceedings is that respondents will be entitled to the full panoply of due process rights – opportunity to examine witnesses and other evidence, a hearing, etc. But that benefit can be accomplished within the current system. In fact, FEC Commissioners are actively considering granting respondents more opportunities to challenge evidence and appear before the full Commission. If more procedural rights are appropriate, they can be afforded without adding one more (very long) step until a matter reaches the heads of the agency.

It may be that ALJs would improve functioning at the FEC. The ALJ proposal, however, has been on the table for nearly five years, and there is little indication that its merits have been carefully examined.

EARLY SPRING CLEANING: STATE ETHICS ISSUES ON THE HORIZON

In the wake of recent ethical scandals that have erupted across the country, many states are trying to clean house. These efforts are part of a reform wave that has dramatically altered the campaign finance, lobbying and ethics laws in many states. Here’s just a sampling of some of the changes under consideration.

In Massachusetts, Governor Deval Patrick has proposed legislation that would expand the definition of lobbying to include strategizing and preparing for communications with public officials, and extend waiting periods for former executive officials who wish to lobby after leaving office. The proposal would also require quarterly lobbying reports, bar state agencies from employing outside lobbyists, and increase penalties for violations of the state’s ethics and lobbying laws.

Meanwhile in the aftermath of former Governor Blagojevich’s ouster, Illinois legislators are considering additional campaign finance reforms, tightening restrictions for former legislators who wish to lobby, and strengthening state procurement ethics laws. These proposals come on the heels of Illinois’ adoption of one of the strictest pay-to-play regimes in the country. And in an effort to distance himself from his predecessor, new Governor Quinn has established a Reform Commission to study the problem of corruption in state government and propose additional reforms.

Finally, after pay-to-play concerns derailed New Mexico Governor Bill Richardson’s appointment as Secretary of Commerce, the state legislature is looking at a range of ethics revisions. In the mix are more rigorous disclosure of lobbyists’ expenditures, and a requirement that lobbyists wear prominent badges while working in the Capitol so they are readily recognizable by legislators. Nathaniel Hawthorne might be proud of this new take on the Scarlet Letter, but it would seem that most legislators are already well aware of which lobbyists wield a lot of clout in the chamber.

One thing is certain. All of this signals more compliance concerns for companies and associations that regularly interact with states and municipalities.

FEC BUNDLING RULES PUBLISHED

The FEC published its new rules for reporting contributions bundled by lobbyists in the February 17 Federal Register. Beginning on March 19, 2009, recipient committees must begin tracking these “bundled” contributions for future FEC reports, the first of which is due on May 20. Federal PACs that are “controlled” by lobbyists have until March 29 to file an amended statement of organization (FEC Form 1), which the FEC expects to upload on its website sometime in March.

As a result, the new reporting schedule for recipients of lobbyist bundled contributions is as follows:

  • Monthly filers must file their first report by May 20, 2009, covering bundled contributions received in April.
  • Quarterly filers must file their first report by July 15, 2009, covering bundled contributions received in April, May, and June.
  • All reporting committees must file a semi-annual report on July 31, 2009, covering bundled contributions received from March 19, 2009 through June 30, 2009. Note that this is the first report that will cover bundled contributions received in March.

For more information, see our February 5 edition of Political GPS, which summarized the FEC’s new bundling rules.

If you have any questions, comments or would like to schedule a consultation, please feel free to contact Larry (LNorton@wcsr.com, (202) 857-4429), or
Jim (
JKahl@wcsr.com, (202) 857-4417).

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