Policy Regarding Self-Reporting of Campaign Finance Violations (Sua Sponte Submissions), 16695-16699 [E7-6185]
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16695
Rules and Regulations
Federal Register
Vol. 72, No. 65
Thursday, April 5, 2007
FEDERAL ELECTION COMMISSION
at the time of a misappropriation, and
the post-discovery steps described
below are followed by the committee,
the FEC will not seek a monetary
penalty on the political committee for
filing incorrect reports due to the
misappropriation of committee funds.1
The Commission will also consider the
presence of some, but not all, of these
practices, or of comparable safeguards,
as a mitigating factor in considering any
monetary liability resulting from a
misappropriation.2
11 CFR Part 104
A. Internal Controls
[NOTICE 2007–9]
b All bank accounts are opened in the
name of the committee, never an
individual, using the committee’s
Employer Identification Number,
not an individual’s Social Security
Number.
b Bank statements are reviewed for
unauthorized transactions and
reconciled to the accounting
records each month. Further, bank
records are reconciled to disclosure
reports prior to filing. The
reconciliations are done by
someone other than a check signer
or an individual responsible for
handling the committee’s
accounting.
b Checks in excess of $1000 are
authorized in writing and/or signed
by two individuals. Further, all
wire transfers are authorized in
writing by two individuals. The
individuals who may authorize
disbursements or sign checks
should be identified in writing in
the committee’s internal policies.
b An individual who does not handle
the committee’s accounting or have
banking authority receives
incoming checks and monitors all
other incoming receipts. This
individual makes a list of all
committee receipts and places a
restrictive endorsement, such as:
For Deposit Only to the Account of
the Payee’’ on all checks.
b If the committee has a petty cash
fund, an imprest system 3 is used,
This section of the FEDERAL REGISTER
contains regulatory documents having general
applicability and legal effect, most of which
are keyed to and codified in the Code of
Federal Regulations, which is published under
50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by
the Superintendent of Documents. Prices of
new books are listed in the first FEDERAL
REGISTER issue of each week.
Statement of Policy; Safe Harbor for
Misreporting Due to Embezzlement
Federal Election Commission.
Statement of policy.
AGENCY:
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ACTION:
SUMMARY: The Commission is issuing a
Statement of Policy to announce that it
is creating a safe harbor for the benefit
of political committees that have certain
internal controls in place to prevent
misappropriations and associated
misreporting. Specifically, the
Commission does not intend to seek
civil penalties against a political
committee for filing incorrect reports
due to the misappropriation of
committee funds if the committee has
the specified safeguards in place.
EFFECTIVE DATE: April 5, 2007.
FOR FURTHER INFORMATION CONTACT: Mr.
Joseph Stoltz, Assistant Staff Director,
Audit Division, 999 E Street, NW.,
Washington, DC 20463, (202) 694–1200.
SUPPLEMENTARY INFORMATION: The
Commission has encountered a dramatic
increase in the number of cases where
political committee staff
misappropriates committee funds.
Misappropriations are often
accompanied by the filing of inaccurate
disclosure reports with the FEC, leaving
committees vulnerable to a FEC
enforcement action and potential
liability for those reporting errors. In
response to the rise in this activity, the
Commission has concluded that the
following internal controls are minimal
safeguards a committee should
implement to prevent misappropriations
and associated misreporting.
This policy does not impose new legal
requirements on political committees;
rather it creates a safe harbor. If the
following internal controls are in place
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1 The internal controls set forth here represent the
minimum efforts a committee must take to qualify
for this safe harbor. The FEC provides additional
guidance on internal controls best practices at
https://www.fec.gov/law/policy.shtml#guidance.
2 This policy does not absolve or mitigate FEC
liability for individuals responsible or complicit in
the misappropriations.
3 An imprest fund is one in which the sum of the
disbursements recorded in the petty cash log since
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and the value of the petty cash fund
should be no more than $500.
B. Post-Discovery of Misappropriation
Activity
As soon as a misappropriation is
discovered, the political committee:
b Notifies relevant law enforcement of
the misappropriation.
b Notifies the FEC of the
misappropriation.
b Voluntarily files amended reports to
correct any reporting errors due to
the misappropriation, as required
by the FEC.
This notice represents a general
statement of policy announcing the
general course of action that the
Commission intends to follow. This
policy statement does not constitute an
agency regulation requiring notice of
proposed rulemaking, opportunities for
public participation, prior publication,
and delay in effective date under 5
U.S.C. 553 of the Administrative
Procedures Act (‘‘APA’’). As such, it
does not bind the Commission or any
member of the general public. The
provisions of the Regulatory Flexibility
Act, 5 U.S.C. 605(b), which apply when
notice and comment are required by the
APA or another statute, are not
applicable.
Dated: March 22, 2007.
Robert D. Lenhard,
Chairman, Federal Election Commission.
[FR Doc. E7–6299 Filed 4–4–07; 8:45 am]
BILLING CODE 6715–01–P
FEDERAL ELECTION COMMISSION
11 CFR Part 111
[Notice 2007–8]
Policy Regarding Self-Reporting of
Campaign Finance Violations (Sua
Sponte Submissions)
Federal Election Commission.
Statement of Policy.
AGENCY:
ACTION:
SUMMARY: In order to encourage the selfreporting of violations about which the
Commission would not otherwise have
learned, the Commission will generally
the last replenishment and the remaining cash
always equals the stated amount of the fund. When
the fund is replenished the amount of the
replenishment equals the amounts recorded since
the prior replenishment and should bring the cash
balance back to the stated amount. Only one person
should be in charge of the fund.
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Federal Register / Vol. 72, No. 65 / Thursday, April 5, 2007 / Rules and Regulations
offer penalties between 25% and 75%
lower than the Commission would
otherwise have sought in identical
matters arising by other means. The
Commission will also use a new
expedited procedure through which the
Commission may allow individuals and
organizations that self-report violations
and that make a complete report of their
internal investigation to proceed
directly into conciliation prior to the
Commission determining whether their
conduct may have violated statutes or
regulations within its jurisdiction. This
policy also addresses various issues that
can arise in connection with parallel
criminal, administrative or civil
proceedings.
DATES:
Effective April 5, 2007.
FOR FURTHER INFORMATION CONTACT:
Mark Shonkwiler, Assistant General
Counsel, or April J. Sands, Attorney,
Enforcement Division, Federal Election
Commission, 999 E Street, NW.,
Washington, DC 20463, (202) 694–1650
or (800) 424–9530.
SUPPLEMENTARY INFORMATION:
I. Goals and Scope of the Policy
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The Commission periodically receives
submissions from persons who selfreport statutory or regulatory violations
of which the Commission had no prior
knowledge. The Commission considers
such self-reports (which also are
referred to as sua sponte submissions)
as information ascertained in the normal
course of carrying out its supervisory
responsibilities pursuant to 2 U.S.C.
437g(a)(2), and may investigate if it
determines there is reason to believe a
violation has occurred. The Commission
also investigates complaints reporting
the potentially illegal conduct of
another, submitted pursuant to 2 U.S.C.
437g(a)(1), but which also, by
implication, provide a basis for
investigating the complainant itself.1 As
a general proposition, self-reported
matters, when accompanied by full
cooperation, will be resolved more
quickly and on more favorable terms
than identical matters arising by other
means (e.g., those arising via external
complaints, referrals from other
government agencies, or referrals from
1 If a person who self-reports a violation of the
FECA also makes specific allegations as to other
persons not joining in the submission, and
particularly where the person making the
submission seeks to assign primary responsibility
for the violations to another person (including an
organization’s former officers or employees), the
Commission, acting through its Office of General
Counsel, may advise the self-reporting person that
a portion of the relevant materials should be resubmitted as a complaint to which other persons
would be allowed to respond prior to any findings
by the Commission.
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the Commission’s Audit or Reports
Analysis Divisions).2
The Commission recently has seen an
increase in self-reported violations,
which may be attributable, at least in
part, to greater attention being placed on
compliance programs for areas of
potential organizational liability, and
recognition that addressing a problem
through self-auditing and self-reporting
may help minimize reputational harm.
The increase in the number of selfreported matters has highlighted the
need to increase the transparency of
Commission policies and procedures.
Moreover, the Commission seeks to
provide appropriate incentives for this
demonstration of cooperation and
responsibility.
On December 8, 2006, the
Commission published a proposed
policy statement on self-reporting of
violations. See Proposed Policy
Regarding Self-Reporting of Campaign
Finance Violations (Sua Sponte
Submissions), 71 FR 71090 (December
8, 2006). The comment period ended on
January 29, 2007. Two comments were
received. One of the comments
supported the proposed policy and
suggested some minor revisions. The
other comment opposed the proposed
policy.
This policy provides an overview of
the factors that influence the
Commission’s handling and disposition
of self-reported matters. It should be
noted that while cooperation in general,
and self-reporting in particular, will be
considered by the Commission as
mitigating factors, they do not excuse a
violation of the Act or end the
enforcement process. Also, this policy
does not confer any rights on any person
and does not in any way limit the right
of the Commission to evaluate every
case individually on its own facts and
circumstances.3
II. Self-Reporting of FECA Violations
Self-reporting of violations typically
allows respondents to resolve their civil
liability in a manner which has the
potential to: (1) Reduce the investigative
burden on both the Commission and
themselves; (2) demonstrate their
acceptance of organizational or personal
responsibility and commitment to
internal compliance; and (3) conclude
their involvement in the Commission’s
enforcement process on an expedited
basis. As a result, a person who brings
2 When violations are found, FECA requires the
Commission to attempt to correct or prevent
violations through conciliation agreements before
suit may be filed in federal district court.
3 Some violations, for instance, are subject to a
mandatory minimum penalty prescribed by statute.
See 2 U.S.C. 437g(a)(6)(C).
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to the Commission’s attention violations
of the FECA and Commission
regulations and who cooperates with
any resulting investigation will also
generally receive appropriate
consideration in the terms of an
eventual conciliation agreement. For
example, the Commission may do one
or more of the following:
• Take no action against particular
respondents;
• Offer a significantly lower penalty
than what the Commission otherwise
would have sought in a complaintgenerated matter involving similar
circumstances or, where appropriate, no
civil penalty;
• Offer conciliation before a finding
of probable cause to believe a violation
occurred, and in certain cases proceed
directly to conciliation without the
Commission first finding reason to
believe that a violation occurred;
• Refrain from making a formal
finding that a violation was knowing
and willful, even where the available
information would otherwise support
such a finding;
• Proceed only as to an organization
rather than as to various individual
agents or, where appropriate, proceed
only as to individuals rather than
organizational respondents;
• Include language in the conciliation
agreement that indicates the level of
cooperation provided by respondents
and the remedial action taken.
Additionally, in cases where the
submission includes privileged or
sensitive information, the Commission
may work with the submitter to protect
privileged information from public
disclosure while still allowing the
Commission to verify the sufficiency of
the submission.
III. Factors Considered in Self-Reported
Matters
The Commission may take into
account various factors in considering
how to proceed regarding self-reported
violations. In general, more expedited
processing and a more favorable
outcome will result when the selfreporting party can show that upon
discovery of the potential violations,
there was an immediate end to the
activity giving rise to the violation(s);
the respondent made a timely and
complete disclosure to the Commission
and fully cooperated in the disposition
of the matter; and the respondent
implemented appropriate and timely
corrective measures, including internal
safeguards necessary to prevent any
recurrence. Further detail as to these
factors is supplied below.
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Nature of the Violation
(1) The type of violation: Whether the
violation was knowing and willful, or
resulted from reckless disregard for legal
requirements or deliberate indifference
to indicia of wrongful conduct;
negligent; an inadvertent mistake; or
based on the advice of counsel; 4
(2) The magnitude of the violation:
Whether the violation resulted from a
one-time event or an ongoing pattern of
conduct repeated over an extended
period of time (and whether there was
a history of similar conduct); how many
people were involved in or were aware
of the violation and the relative level of
authority of these people within the
organization; whether individuals were
coerced into participating in the
violation; the amount of money
involved either in terms of absolute
dollar amount or in terms of the
percentage of an entity’s activity; and
the impact the violation may have had
on any federal election;
(3) The origin of the violation:
Whether the conduct was intended to
advance the organization’s interests or
to defraud the organization for the
personal gain of a particular individual;
whether there were compliance
procedures in place to prevent the type
of violation now uncovered and, if so,
why those procedures failed to stop or
deter the wrongful conduct; and
whether the persons with knowledge of
the violation were high-level officials in
the organization.
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Extent of Corrective Action and New
Self-Governance Measures
(4) Investigative and corrective
actions: Whether the violation
immediately ceased upon its discovery;
how long it took after discovery of the
violation to take appropriate corrective
measures, including disciplinary action
against persons responsible for any
misconduct; whether there was a
thorough review of the nature, extent,
origins, and consequences of the
conduct and related behavior; whether
the respondent expeditiously corrected
and clarified the public record by
making appropriate and timely
disclosures as to the source and
recipients of any funds involved in a
violation; whether a federal political
committee promptly made any
necessary refunds of excessive or
prohibited contributions; and whether
an organization or individual
respondent waived its claim to refunds
4 A respondent seeking to defend conduct based
on advice of counsel may not simultaneously
withhold documentary or other evidence
supporting that assertion based on the attorneyclient privilege.
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of excessive or prohibited contributions
and instructed recipients to disgorge
such funds to the U.S. Treasury;
(5) Post-discovery compliance
measures: Whether there are assurances
that the conduct is unlikely to recur;
whether the respondent has adopted
and ensured enforcement of more
effective internal controls and
procedures designed to prevent a
recurrence of the violation; and whether
the respondent provided the
Commission with sufficient information
for it to evaluate the measures taken to
correct the situation and ensure that the
conduct does not recur.
Disclosure and Cooperation
(6) Full disclosure of the violation to
the Commission: Whether steps were
taken upon learning of the violation;
whether the disclosure was voluntary or
made in recognition that the violation
had been or was about to be discovered,
or in recognition that a complaint was
filed, or was about to be filed, by
someone else; and whether a
comprehensive and detailed disclosure
of the results of its internal review was
provided to the Commission in a timely
fashion;
(7) Full cooperation with the
Commission: Whether the respondent
promptly made relevant records and
witnesses available to the Commission,
and made all reasonable efforts to secure
the cooperation of relevant employees,
volunteers, vendors, donors and other
staff without requiring compulsory
process; whether the respondent agreed
to waive or toll the statute of limitations
for activity that previously had been
concealed or not disclosed in a timely
fashion.
The Commission recognizes that all of
the above-listed factors will not be
relevant in every instance of selfreporting of potential FECA violations,
nor is the Commission required to take
all such factors into account. In
addition, these factors should not be
viewed as an exhaustive list.
IV. Reduction in Penalties for SelfReporting Matters
The Commission will generally
reduce opening civil penalty offers by
between 25% and 75% compared with
identical matters arising from a
complaint or by other means. The
amount of the reduction depends on the
facts and circumstances of a particular
case. The Commission will consider the
factors set forth above.
Absent unusual circumstances, the
Commission will grant a civil penalty
reduction of 50% to respondents who
meet the following criteria:
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• Respondents alert the Commission
to potential violations before the
violation had been or was about to be
discovered by any outside party,
including the Commission;
• The violation immediately ceased
and was promptly reported to the
Commission upon discovery;
• Respondents take appropriate and
prompt corrective action(s) (e.g.,
changes to internal procedures to
prevent a recurrence of the violation;
increased training; disciplinary action
where appropriate);
• Respondents amend reports or
disclosures to correct past errors, if
applicable;
• Any appropriate refunds, transfers,
and disgorgements are made and/or
waived; and
• Respondents fully cooperate with
the Commission in ensuring that the sua
sponte submission is complete and
accurate.
In addition, the Commission may
grant a civil penalty reduction of up to
75% to respondents for violations in sua
sponte submissions based on other
factors such as submissions that were
uncovered as a result of independent
experts that were hired by respondents
to conduct a thorough review,
investigation or audit, or an equally
comprehensive internal review,
investigation or audit. In order to
receive this reduction, respondents
must also meet the above criteria for a
50% reduction and provide the
Commission with all documentation of
the experts’ review, investigation, or
audit.5
The required scope of the review,
investigation or audit will depend on
the circumstances. For example, if an
organization discovers that an
employee, stockholder or member may
have reimbursed political contributions
with organization funds, the
Commission would consider a thorough
review to include: Identification of all
political contributions made by the
suspect employee subsequent to and for
at least three years prior to the
suspected reimbursement (and
extending further if additional suspect
contributions are found); a review of
contributions by anyone associated with
the organization (including, but not
limited to, relatives and subordinates)
corresponding in time or recipient to the
suspected reimbursed contributions; a
review of the organization’s
compensation (especially bonus) and
expense reimbursement policies and
5 As discussed above, the Commission will,
where appropriate, work with the submitter to
protect privileged information from public
disclosure.
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practices for the relevant periods to
identify potential contribution
reimbursements. Similarly, if an
organization discovers it has misstated
financial information on its reports, the
Commission would consider a through
review to include: An audit reconciling
bank and internal financial records with
FEC reports for the period in which the
error was discovered, any subsequent
reporting periods, and prior reporting
periods for at least a year prior to the
error (and extending further if
additional errors are found); a review
addressing internal controls and
reporting procedures and identifying
weaknesses contributing to the errors
and remedies for those weaknesses.
The Commission will be the sole
arbiter of whether the facts of each case
warrant a particular reduction in the
penalty. The Commission will generally
not give a respondent the benefit of this
policy if the respondent is the subject of
a criminal or other government
investigation. In considering
appropriate penalties, the Commission
will also consider the presence of
aggravating factors, such as knowing
and willful conduct or involvement by
senior officials of an entity.
V. Fast-Track Resolution
The Commission will generally not
make a reason-to-believe finding or
open a formal investigation for
respondents that self-report violations,
if: (1) All potential respondents in a
matter have joined in a self-reporting
submission that acknowledges their
respective violations of the FECA; (2)
those violations do not appear to be
knowing and willful; (3) the submission
is substantially complete and reasonably
addresses the significant questions or
issues related to the violation; and (4)
the factual and legal issues are
reasonably clear. Accordingly, the
Commission is modifying its current
practice to allow for an expedited FastTrack Resolution (‘‘FTR’’) for a limited
number of matters involving selfreported violations. This procedure is
available at the Commission’s
discretion, but may be requested by
respondents.
Respondents eligible for the FTR
process will meet with the Office of
General Counsel to negotiate a proposed
conciliation agreement before the
Commission makes any formal findings
in the matter. Although the Commission
is always free to reject or seek
modifications to a proposed conciliation
agreement, it is expected that this
process will allow for more expedited
processing of certain types of violations
where factual and legal issues are
reasonably clear. It also will allow
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respondents to resolve certain matters
short of the Commission finding that
there is reason to believe that a violation
has occurred. Examples of matters that
might be eligible for such treatment
include:
• Matters in which an individual
contributor discovers that he or she
inadvertently violated the individual
aggregate election cycle contribution
limit contained in 2 U.S.C. 441a(a)(3);
• Matters in which a political
committee seeks to disclose and correct
relatively straightforward reporting
violations;
• Matters in which a contributor and
a political committee jointly seek to
resolve their liability for a simple and
inadvertent excessive or prohibited
contribution; and
• Matters in which the initial selfreporting submission by the
respondents is sufficiently thorough that
only very limited, if any, follow-up by
the Office of the General Counsel is
necessary to complete the factual
record.
VI. Parallel Proceedings
The Commission recognizes that
persons self-reporting to the
Commission may face special concerns
in connection with parallel criminal
investigations, State administrative
proceedings, and/or civil litigation. The
Commission expects that persons who
self-report to the Commission will
inform the Commission of any existing
parallel proceedings. The Commission
encourages persons who self-report to
the Commission also to self-report
related violations to any law
enforcement agency with jurisdiction
over the activity. This will assist the
Commission, where appropriate and
possible, in working with other federal,
state, and local agencies to facilitate a
global and/or contemporaneous
resolution of related violations by a selfreporting person. The possibility of such
a resolution is enhanced when the selfreporting person expresses a willingness
to engage other government agencies
that may have jurisdiction over the
conduct and to cooperate with joint
discovery and disclosure of facts and
settlement positions with respect to the
different agencies.
In situations where contemporaneous
resolution of parallel matters is not
feasible, the Commission will consider
whether terms contained in a
conciliation agreement with the
Commission may affect potential
liability the same respondent
realistically faces from another agency.
In appropriate cases, where there has
been self-reporting and full cooperation,
the Commission may agree to enter into
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conciliation without requiring
respondents to admit that their conduct
was knowing and willful, even where
there is evidence that may be viewed as
supporting this conclusion. The
Commission has followed this practice
in several self-reported matters where
the organizational respondents
promptly self-reported and took
comprehensive and immediate
corrective action that included the
dismissal of all individual corporate
officers whose actions formed the basis
for the organization’s potential knowing
and willful violation.
The Commission has the statutory
authority to refer knowing and willful
violations of the FECA to the
Department of Justice for potential
criminal prosecution, 2 U.S.C.
437g(a)(5)(C), and to report information
regarding violations of law not within
its jurisdiction to appropriate law
enforcement authorities. 2 U.S.C.
437d(a)(9). The Commission will take
into consideration the fact of selfreporting in deciding whether to refer a
matter. However, the Commission will
not negotiate whether it refers, reports,
or otherwise discusses information with
other law enforcement agencies.
Although the Commission cannot
disclose information regarding an
investigation to the public, it can and
does share information on a confidential
basis with other law enforcement
agencies.
VII. Conclusion
The Commission seeks to encourage
the self-reporting of violations. To that
end, the Commission has adopted this
policy that explains that sua sponte
submissions will, in general, receive
more expedited processing and more
favorable outcomes than identical
matters arising by other means.
This notice represents a general
statement of policy announcing the
general course of action that the
Commission intends to follow. This
policy statement does not constitute an
agency regulation requiring notice of
proposed rulemaking, opportunities for
public participation, prior publication,
and delay in effective date under 5
U.S.C. 553 of the Administrative
Procedures Act (‘‘APA’’). As such, it
does not bind the Commission or any
member of the general public. The
provisions of the Regulatory Flexibility
Act, 5 U.S.C. 605(b), which apply when
notice and comment are required by the
APA or another statute, are not
applicable.
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Dated: March 27, 2007.
Robert D. Lenhard,
Chairman, Federal Election Commission.
[FR Doc. E7–6185 Filed 4–4–07; 8:45 am]
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
BILLING CODE 6715–01–P
[Docket No. FAA–2007–27757; Directorate
Identifier 2007–NM–030–AD; Amendment
39–15014; AD 2007–07–13]
FARM CREDIT ADMINISTRATION
RIN 2120–AA64
12 CFR Parts 611, 612, 614, 615, 618,
619, 620, and 630
Airworthiness Directives; Gulfstream
Aerospace LP Model Galaxy Airplanes
and Model Gulfstream 200 Airplanes
RIN 3052–AC19
AGENCY:
Organization; Standards of Conduct
and Referral of Known or Suspected
Criminal Violations; Loan Policies and
Operations; Funding and Fiscal
Affairs, Loan Policies and Operations,
and Funding Operations; General
Provisions; Definitions; Disclosure to
Shareholders; Disclosure to Investors
in System-Wide and Consolidated
Bank Debt Obligations of the Farm
Credit System; Effective Date
AGENCY:
ACTION:
Farm Credit Administration.
Announcement of effective date.
SUMMARY: The Farm Credit
Administration (FCA) published a final
rule under parts 611, 612, 614, 615, 618,
619, 620, and 630 on February 2, 2006.
This final rule amended our regulations
affecting the governance of the Farm
Credit System and became effective on
April 5, 2006 (71 FR 18168, April 11,
2006), except for the amendments to
§§ 611.210(a)(2), 611.220(a)(2)(i) and
(ii), 611.325, and 620.21(d)(2). This
document announces the effective date
of those delayed portions of the rule.
The effective date for
the amendments to §§ 611.210(a)(2),
611.220(a)(2)(i) and (ii), 611.325, and
620.21(d)(2), published February 2,
2006, at 71 FR 5740, is April 5, 2007.
EFFECTIVE DATE:
Gary
Van Meter, Deputy Director, Office of
Regulatory Policy, Farm Credit
Administration, McLean, VA 22102–
5090, (703) 883–4232, TTY (703) 883–
4434; or Laura D. McFarland, Senior
Attorney, Office of General Counsel,
Farm Credit Administration, McLean,
VA 22102–5090, (703) 883–4020, TTY
(703) 883–4020.
FOR FURTHER INFORMATION CONTACT:
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(12 U.S.C. 2252(a)(9) and (10))
Dated: April 2, 2007.
Roland E. Smith,
Secretary, Farm Credit Administration Board.
[FR Doc. E7–6357 Filed 4–4–07; 8:45 am]
BILLING CODE 6705–01–P
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Jkt 211001
Federal Aviation
Administration (FAA), Department of
Transportation (DOT).
ACTION: Final rule; request for
comments.
SUMMARY: We are adopting a new
airworthiness directive (AD) for the
products listed above. This AD results
from mandatory continuing
airworthiness information (MCAI)
originated by an aviation authority of
another country to identify and correct
an unsafe condition on an aviation
product. The MCAI describes the unsafe
condition as:
Avionics and electrical wire harnesses are
routed behind the Primary Flight Displays
(PFD) tray at the rear of the instrument panel.
In some cases, the wire harness has been
found to be chafing on the PFD tray. That
could result in electrical arcing and shorting
and subsequent loss of systems essential for
safe flight.
This AD requires actions that are
intended to address the unsafe
condition described in the MCAI.
DATES: This AD becomes effective April
20, 2007.
The Director of the Federal Register
approved the incorporation by reference
of a certain publication listed in the AD
as of April 20, 2007.
We must receive comments on this
AD by May 7, 2007.
ADDRESSES: You may send comments by
any of the following methods:
• DOT Docket Web site: Go to
https://dms.dot.gov and follow the
instructions for sending your comments
electronically.
• Fax: (202) 493–2251.
• Mail: Docket Management Facility,
U.S. Department of Transportation, 400
Seventh Street, SW., Nassif Building,
Room PL–401, Washington, DC 20590–
0001.
• Hand Delivery: Room PL–401 on
the plaza level of the Nassif Building,
400 Seventh Street, SW., Washington,
DC, between 9 a.m. and 5 p.m., Monday
through Friday, except Federal holidays.
• Federal eRulemaking Portal: https://
www.regulations.gov. Follow the
instructions for submitting comments.
PO 00000
Frm 00005
Fmt 4700
Sfmt 4700
16699
Examining the AD Docket
You may examine the AD docket on
the Internet at https://dms.dot.gov; or in
person at the Docket Management
Facility between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal
holidays. The AD docket contains this
AD, the regulatory evaluation, any
comments received, and other
information. The street address for the
Docket Office (telephone (800) 647–
5227) is in the ADDRESSES section.
Comments will be available in the AD
docket shortly after receipt.
FOR FURTHER INFORMATION CONTACT:
Mike Borfitz, Aerospace Engineer,
International Branch, ANM–116, FAA,
Transport Airplane Directorate, 1601
Lind Avenue, SW., Renton, Washington
98057–3356; telephone (425) 227–2677;
fax (425) 227–1149.
SUPPLEMENTARY INFORMATION:
Streamlined Issuance of AD
The FAA is implementing a new
process for streamlining the issuance of
ADs related to MCAI. This streamlined
process will allow us to adopt MCAI
safety requirements in a more efficient
manner and will reduce safety risks to
the public. This process continues to
follow all FAA AD issuance processes to
meet legal, economic, Administrative
Procedure Act, and Federal Register
requirements. We also continue to meet
our technical decision-making
responsibilities to identify and correct
unsafe conditions on U.S.-certificated
products.
This AD references the MCAI and
related service information that we
considered in forming the engineering
basis to correct the unsafe condition.
The AD contains text copied from the
MCAI and for this reason might not
follow our plain language principles.
Discussion
The Civil Aviation Authority of Israel
(CAAI), which is the aviation authority
for Israel, has issued Israeli
Airworthiness Directive 31–07–01–12,
dated February 15, 2007 (referred to
after this as ‘‘the MCAI’’), to correct an
unsafe condition for the specified
products. The MCAI states:
Avionics and electrical wire harnesses are
routed behind the Primary Flight Displays
(PFD) tray at the rear of the instrument panel.
In some cases, the wire harness has been
found to be chafing on the PFD tray. That
could result in electrical arcing and shorting
and subsequent loss of systems essential for
safe flight.
The corrective actions include
inspecting the wiring harness for
chafing, performing repairs if required;
and inspecting the wire harnesses for
E:\FR\FM\05APR1.SGM
05APR1
]]>Agencies
[Federal Register Volume 72, Number 65 (Thursday, April 5, 2007)]
[Rules and Regulations]
[Pages 16695-16699]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-6185]
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FEDERAL ELECTION COMMISSION
11 CFR Part 111
[Notice 2007-8]
Policy Regarding Self-Reporting of Campaign Finance Violations
(Sua Sponte Submissions)
AGENCY: Federal Election Commission.
ACTION: Statement of Policy.
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SUMMARY: In order to encourage the self-reporting of violations about
which the Commission would not otherwise have learned, the Commission
will generally
[[Page 16696]]
offer penalties between 25% and 75% lower than the Commission would
otherwise have sought in identical matters arising by other means. The
Commission will also use a new expedited procedure through which the
Commission may allow individuals and organizations that self-report
violations and that make a complete report of their internal
investigation to proceed directly into conciliation prior to the
Commission determining whether their conduct may have violated statutes
or regulations within its jurisdiction. This policy also addresses
various issues that can arise in connection with parallel criminal,
administrative or civil proceedings.
DATES: Effective April 5, 2007.
FOR FURTHER INFORMATION CONTACT: Mark Shonkwiler, Assistant General
Counsel, or April J. Sands, Attorney, Enforcement Division, Federal
Election Commission, 999 E Street, NW., Washington, DC 20463, (202)
694-1650 or (800) 424-9530.
SUPPLEMENTARY INFORMATION:
I. Goals and Scope of the Policy
The Commission periodically receives submissions from persons who
self-report statutory or regulatory violations of which the Commission
had no prior knowledge. The Commission considers such self-reports
(which also are referred to as sua sponte submissions) as information
ascertained in the normal course of carrying out its supervisory
responsibilities pursuant to 2 U.S.C. 437g(a)(2), and may investigate
if it determines there is reason to believe a violation has occurred.
The Commission also investigates complaints reporting the potentially
illegal conduct of another, submitted pursuant to 2 U.S.C. 437g(a)(1),
but which also, by implication, provide a basis for investigating the
complainant itself.\1\ As a general proposition, self-reported matters,
when accompanied by full cooperation, will be resolved more quickly and
on more favorable terms than identical matters arising by other means
(e.g., those arising via external complaints, referrals from other
government agencies, or referrals from the Commission's Audit or
Reports Analysis Divisions).\2\
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\1\ If a person who self-reports a violation of the FECA also
makes specific allegations as to other persons not joining in the
submission, and particularly where the person making the submission
seeks to assign primary responsibility for the violations to another
person (including an organization's former officers or employees),
the Commission, acting through its Office of General Counsel, may
advise the self-reporting person that a portion of the relevant
materials should be re-submitted as a complaint to which other
persons would be allowed to respond prior to any findings by the
Commission.
\2\ When violations are found, FECA requires the Commission to
attempt to correct or prevent violations through conciliation
agreements before suit may be filed in federal district court.
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The Commission recently has seen an increase in self-reported
violations, which may be attributable, at least in part, to greater
attention being placed on compliance programs for areas of potential
organizational liability, and recognition that addressing a problem
through self-auditing and self-reporting may help minimize reputational
harm. The increase in the number of self-reported matters has
highlighted the need to increase the transparency of Commission
policies and procedures. Moreover, the Commission seeks to provide
appropriate incentives for this demonstration of cooperation and
responsibility.
On December 8, 2006, the Commission published a proposed policy
statement on self-reporting of violations. See Proposed Policy
Regarding Self-Reporting of Campaign Finance Violations (Sua Sponte
Submissions), 71 FR 71090 (December 8, 2006). The comment period ended
on January 29, 2007. Two comments were received. One of the comments
supported the proposed policy and suggested some minor revisions. The
other comment opposed the proposed policy.
This policy provides an overview of the factors that influence the
Commission's handling and disposition of self-reported matters. It
should be noted that while cooperation in general, and self-reporting
in particular, will be considered by the Commission as mitigating
factors, they do not excuse a violation of the Act or end the
enforcement process. Also, this policy does not confer any rights on
any person and does not in any way limit the right of the Commission to
evaluate every case individually on its own facts and circumstances.\3\
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\3\ Some violations, for instance, are subject to a mandatory
minimum penalty prescribed by statute. See 2 U.S.C. 437g(a)(6)(C).
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II. Self-Reporting of FECA Violations
Self-reporting of violations typically allows respondents to
resolve their civil liability in a manner which has the potential to:
(1) Reduce the investigative burden on both the Commission and
themselves; (2) demonstrate their acceptance of organizational or
personal responsibility and commitment to internal compliance; and (3)
conclude their involvement in the Commission's enforcement process on
an expedited basis. As a result, a person who brings to the
Commission's attention violations of the FECA and Commission
regulations and who cooperates with any resulting investigation will
also generally receive appropriate consideration in the terms of an
eventual conciliation agreement. For example, the Commission may do one
or more of the following:
Take no action against particular respondents;
Offer a significantly lower penalty than what the
Commission otherwise would have sought in a complaint-generated matter
involving similar circumstances or, where appropriate, no civil
penalty;
Offer conciliation before a finding of probable cause to
believe a violation occurred, and in certain cases proceed directly to
conciliation without the Commission first finding reason to believe
that a violation occurred;
Refrain from making a formal finding that a violation was
knowing and willful, even where the available information would
otherwise support such a finding;
Proceed only as to an organization rather than as to
various individual agents or, where appropriate, proceed only as to
individuals rather than organizational respondents;
Include language in the conciliation agreement that
indicates the level of cooperation provided by respondents and the
remedial action taken.
Additionally, in cases where the submission includes privileged or
sensitive information, the Commission may work with the submitter to
protect privileged information from public disclosure while still
allowing the Commission to verify the sufficiency of the submission.
III. Factors Considered in Self-Reported Matters
The Commission may take into account various factors in considering
how to proceed regarding self-reported violations. In general, more
expedited processing and a more favorable outcome will result when the
self-reporting party can show that upon discovery of the potential
violations, there was an immediate end to the activity giving rise to
the violation(s); the respondent made a timely and complete disclosure
to the Commission and fully cooperated in the disposition of the
matter; and the respondent implemented appropriate and timely
corrective measures, including internal safeguards necessary to prevent
any recurrence. Further detail as to these factors is supplied below.
[[Page 16697]]
Nature of the Violation
(1) The type of violation: Whether the violation was knowing and
willful, or resulted from reckless disregard for legal requirements or
deliberate indifference to indicia of wrongful conduct; negligent; an
inadvertent mistake; or based on the advice of counsel; \4\
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\4\ A respondent seeking to defend conduct based on advice of
counsel may not simultaneously withhold documentary or other
evidence supporting that assertion based on the attorney-client
privilege.
---------------------------------------------------------------------------
(2) The magnitude of the violation: Whether the violation resulted
from a one-time event or an ongoing pattern of conduct repeated over an
extended period of time (and whether there was a history of similar
conduct); how many people were involved in or were aware of the
violation and the relative level of authority of these people within
the organization; whether individuals were coerced into participating
in the violation; the amount of money involved either in terms of
absolute dollar amount or in terms of the percentage of an entity's
activity; and the impact the violation may have had on any federal
election;
(3) The origin of the violation: Whether the conduct was intended
to advance the organization's interests or to defraud the organization
for the personal gain of a particular individual; whether there were
compliance procedures in place to prevent the type of violation now
uncovered and, if so, why those procedures failed to stop or deter the
wrongful conduct; and whether the persons with knowledge of the
violation were high-level officials in the organization.
Extent of Corrective Action and New Self-Governance Measures
(4) Investigative and corrective actions: Whether the violation
immediately ceased upon its discovery; how long it took after discovery
of the violation to take appropriate corrective measures, including
disciplinary action against persons responsible for any misconduct;
whether there was a thorough review of the nature, extent, origins, and
consequences of the conduct and related behavior; whether the
respondent expeditiously corrected and clarified the public record by
making appropriate and timely disclosures as to the source and
recipients of any funds involved in a violation; whether a federal
political committee promptly made any necessary refunds of excessive or
prohibited contributions; and whether an organization or individual
respondent waived its claim to refunds of excessive or prohibited
contributions and instructed recipients to disgorge such funds to the
U.S. Treasury;
(5) Post-discovery compliance measures: Whether there are
assurances that the conduct is unlikely to recur; whether the
respondent has adopted and ensured enforcement of more effective
internal controls and procedures designed to prevent a recurrence of
the violation; and whether the respondent provided the Commission with
sufficient information for it to evaluate the measures taken to correct
the situation and ensure that the conduct does not recur.
Disclosure and Cooperation
(6) Full disclosure of the violation to the Commission: Whether
steps were taken upon learning of the violation; whether the disclosure
was voluntary or made in recognition that the violation had been or was
about to be discovered, or in recognition that a complaint was filed,
or was about to be filed, by someone else; and whether a comprehensive
and detailed disclosure of the results of its internal review was
provided to the Commission in a timely fashion;
(7) Full cooperation with the Commission: Whether the respondent
promptly made relevant records and witnesses available to the
Commission, and made all reasonable efforts to secure the cooperation
of relevant employees, volunteers, vendors, donors and other staff
without requiring compulsory process; whether the respondent agreed to
waive or toll the statute of limitations for activity that previously
had been concealed or not disclosed in a timely fashion.
The Commission recognizes that all of the above-listed factors will
not be relevant in every instance of self-reporting of potential FECA
violations, nor is the Commission required to take all such factors
into account. In addition, these factors should not be viewed as an
exhaustive list.
IV. Reduction in Penalties for Self-Reporting Matters
The Commission will generally reduce opening civil penalty offers
by between 25% and 75% compared with identical matters arising from a
complaint or by other means. The amount of the reduction depends on the
facts and circumstances of a particular case. The Commission will
consider the factors set forth above.
Absent unusual circumstances, the Commission will grant a civil
penalty reduction of 50% to respondents who meet the following
criteria:
Respondents alert the Commission to potential violations
before the violation had been or was about to be discovered by any
outside party, including the Commission;
The violation immediately ceased and was promptly reported
to the Commission upon discovery;
Respondents take appropriate and prompt corrective
action(s) (e.g., changes to internal procedures to prevent a recurrence
of the violation; increased training; disciplinary action where
appropriate);
Respondents amend reports or disclosures to correct past
errors, if applicable;
Any appropriate refunds, transfers, and disgorgements are
made and/or waived; and
Respondents fully cooperate with the Commission in
ensuring that the sua sponte submission is complete and accurate.
In addition, the Commission may grant a civil penalty reduction of
up to 75% to respondents for violations in sua sponte submissions based
on other factors such as submissions that were uncovered as a result of
independent experts that were hired by respondents to conduct a
thorough review, investigation or audit, or an equally comprehensive
internal review, investigation or audit. In order to receive this
reduction, respondents must also meet the above criteria for a 50%
reduction and provide the Commission with all documentation of the
experts' review, investigation, or audit.\5\
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\5\ As discussed above, the Commission will, where appropriate,
work with the submitter to protect privileged information from
public disclosure.
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The required scope of the review, investigation or audit will
depend on the circumstances. For example, if an organization discovers
that an employee, stockholder or member may have reimbursed political
contributions with organization funds, the Commission would consider a
thorough review to include: Identification of all political
contributions made by the suspect employee subsequent to and for at
least three years prior to the suspected reimbursement (and extending
further if additional suspect contributions are found); a review of
contributions by anyone associated with the organization (including,
but not limited to, relatives and subordinates) corresponding in time
or recipient to the suspected reimbursed contributions; a review of the
organization's compensation (especially bonus) and expense
reimbursement policies and
[[Page 16698]]
practices for the relevant periods to identify potential contribution
reimbursements. Similarly, if an organization discovers it has
misstated financial information on its reports, the Commission would
consider a through review to include: An audit reconciling bank and
internal financial records with FEC reports for the period in which the
error was discovered, any subsequent reporting periods, and prior
reporting periods for at least a year prior to the error (and extending
further if additional errors are found); a review addressing internal
controls and reporting procedures and identifying weaknesses
contributing to the errors and remedies for those weaknesses.
The Commission will be the sole arbiter of whether the facts of
each case warrant a particular reduction in the penalty. The Commission
will generally not give a respondent the benefit of this policy if the
respondent is the subject of a criminal or other government
investigation. In considering appropriate penalties, the Commission
will also consider the presence of aggravating factors, such as knowing
and willful conduct or involvement by senior officials of an entity.
V. Fast-Track Resolution
The Commission will generally not make a reason-to-believe finding
or open a formal investigation for respondents that self-report
violations, if: (1) All potential respondents in a matter have joined
in a self-reporting submission that acknowledges their respective
violations of the FECA; (2) those violations do not appear to be
knowing and willful; (3) the submission is substantially complete and
reasonably addresses the significant questions or issues related to the
violation; and (4) the factual and legal issues are reasonably clear.
Accordingly, the Commission is modifying its current practice to allow
for an expedited Fast-Track Resolution (``FTR'') for a limited number
of matters involving self-reported violations. This procedure is
available at the Commission's discretion, but may be requested by
respondents.
Respondents eligible for the FTR process will meet with the Office
of General Counsel to negotiate a proposed conciliation agreement
before the Commission makes any formal findings in the matter. Although
the Commission is always free to reject or seek modifications to a
proposed conciliation agreement, it is expected that this process will
allow for more expedited processing of certain types of violations
where factual and legal issues are reasonably clear. It also will allow
respondents to resolve certain matters short of the Commission finding
that there is reason to believe that a violation has occurred. Examples
of matters that might be eligible for such treatment include:
Matters in which an individual contributor discovers that
he or she inadvertently violated the individual aggregate election
cycle contribution limit contained in 2 U.S.C. 441a(a)(3);
Matters in which a political committee seeks to disclose
and correct relatively straightforward reporting violations;
Matters in which a contributor and a political committee
jointly seek to resolve their liability for a simple and inadvertent
excessive or prohibited contribution; and
Matters in which the initial self-reporting submission by
the respondents is sufficiently thorough that only very limited, if
any, follow-up by the Office of the General Counsel is necessary to
complete the factual record.
VI. Parallel Proceedings
The Commission recognizes that persons self-reporting to the
Commission may face special concerns in connection with parallel
criminal investigations, State administrative proceedings, and/or civil
litigation. The Commission expects that persons who self-report to the
Commission will inform the Commission of any existing parallel
proceedings. The Commission encourages persons who self-report to the
Commission also to self-report related violations to any law
enforcement agency with jurisdiction over the activity. This will
assist the Commission, where appropriate and possible, in working with
other federal, state, and local agencies to facilitate a global and/or
contemporaneous resolution of related violations by a self-reporting
person. The possibility of such a resolution is enhanced when the self-
reporting person expresses a willingness to engage other government
agencies that may have jurisdiction over the conduct and to cooperate
with joint discovery and disclosure of facts and settlement positions
with respect to the different agencies.
In situations where contemporaneous resolution of parallel matters
is not feasible, the Commission will consider whether terms contained
in a conciliation agreement with the Commission may affect potential
liability the same respondent realistically faces from another agency.
In appropriate cases, where there has been self-reporting and full
cooperation, the Commission may agree to enter into conciliation
without requiring respondents to admit that their conduct was knowing
and willful, even where there is evidence that may be viewed as
supporting this conclusion. The Commission has followed this practice
in several self-reported matters where the organizational respondents
promptly self-reported and took comprehensive and immediate corrective
action that included the dismissal of all individual corporate officers
whose actions formed the basis for the organization's potential knowing
and willful violation.
The Commission has the statutory authority to refer knowing and
willful violations of the FECA to the Department of Justice for
potential criminal prosecution, 2 U.S.C. 437g(a)(5)(C), and to report
information regarding violations of law not within its jurisdiction to
appropriate law enforcement authorities. 2 U.S.C. 437d(a)(9). The
Commission will take into consideration the fact of self-reporting in
deciding whether to refer a matter. However, the Commission will not
negotiate whether it refers, reports, or otherwise discusses
information with other law enforcement agencies. Although the
Commission cannot disclose information regarding an investigation to
the public, it can and does share information on a confidential basis
with other law enforcement agencies.
VII. Conclusion
The Commission seeks to encourage the self-reporting of violations.
To that end, the Commission has adopted this policy that explains that
sua sponte submissions will, in general, receive more expedited
processing and more favorable outcomes than identical matters arising
by other means.
This notice represents a general statement of policy announcing the
general course of action that the Commission intends to follow. This
policy statement does not constitute an agency regulation requiring
notice of proposed rulemaking, opportunities for public participation,
prior publication, and delay in effective date under 5 U.S.C. 553 of
the Administrative Procedures Act (``APA''). As such, it does not bind
the Commission or any member of the general public. The provisions of
the Regulatory Flexibility Act, 5 U.S.C. 605(b), which apply when
notice and comment are required by the APA or another statute, are not
applicable.
[[Page 16699]]
Dated: March 27, 2007.
Robert D. Lenhard,
Chairman, Federal Election Commission.
[FR Doc. E7-6185 Filed 4-4-07; 8:45 am]
BILLING CODE 6715-01-P
