Administrative Fines Program Expansion, 62673-62678 [2024-16841]

Agencies

• Federal Election Commission

[Federal Register Volume 89, Number 148 (Thursday, August 1, 2024)]
[Proposed Rules]
[Pages 62673-62678]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16841]


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FEDERAL ELECTION COMMISSION

11 CFR Part 111

[NOTICE 2024--16]


Administrative Fines Program Expansion

AGENCY: Federal Election Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: Since the inception of the Federal Election Commission's 
Administrative Fines Program in 2000, the Commission has been assessing 
civil monetary penalties for certain violations of the reporting 
requirements of the Federal Election Campaign Act of 1971, as amended. 
In 2013, Congress authorized the Commission to expand the 
Administrative Fines Program to include violations for reporting 
requirements not currently covered. Accordingly, the Commission 
proposes to extend its Administrative Fines Program to include 
violations in the timely filing of 24-Hour Reports of Independent 
Expenditures, 48-Hour Reports of Independent Expenditures, and 24-Hour 
Notices of Electioneering Communications. This proposal will allow more 
efficient and predictive adjudication of these filing violations. The 
Commission invites public comment on the proposed regulatory 
amendments.

DATES: Comments must be received on or before September 3, 2024. The 
Commission may hold a public hearing on this rulemaking. Commenters 
wishing to testify at a hearing must so indicate in their comments. If 
a hearing is to be held, the Commission will publish a notification in 
the Federal Register announcing the date and time of the hearing.

ADDRESSES: All comments must be in writing. Commenters are encouraged 
to submit comments electronically via the Commission's website at 
https://sers.fec.gov/fosers, reference REG 2013-06. Alternatively, 
comments may be submitted in paper form addressed to the Federal 
Election Commission, Attn.: Mr. Robert M. Knop, Assistant General 
Counsel for Policy, 1050 First Street NE, Washington, DC 20463 (for 
U.S. Postal Service) or 20002 (for all other delivery services).
    Each commenter must provide, at a minimum, his or her first name, 
last name, city, and state. All properly submitted comments, including 
attachments, will become part of the public record, and the Commission 
will make comments available for public viewing on the Commission's 
website and in the Commission's Public Records Office. Accordingly, 
commenters should not provide in their comments any information that 
they do not wish to make public, such as a home street address, 
personal email address, date of birth, phone number, social security 
number, or driver's license number, or any information that is 
restricted from disclosure, such as trade secrets or commercial or 
financial information that is privileged or confidential.

FOR FURTHER INFORMATION CONTACT: Robert M. Knop, Assistant General 
Counsel for Policy, Cheryl Hemsley, Attorney, or Lindsay Bird, 
Attorney, 1050 First Street NE, Washington, DC 20463 (for U.S. Postal 
Service) or 20002 (for all other delivery services), (202) 694-1650 or 
(800) 424-9530.

SUPPLEMENTARY INFORMATION:

I. Background

    Under the Commission's Administrative Fines Program (``AFP''),\1\ 
the Commission may utilize a streamlined process to assess civil 
monetary penalties for certain violations of the reporting requirements 
of the Federal Election Campaign Act of 1971, as amended (``FECA''). 
Currently, the Commission assesses civil penalties through the AFP when 
a political committee fails to file timely reports as required by 52 
U.S.C. 30104(a) (requiring political committee treasurers to report 
receipts and disbursements within certain time periods).
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    \1\ See 52 U.S.C. 30109(4); 11 CFR part 111, subpart B.
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    In 2013, Congress authorized the Commission to expand the scope of 
the

[[Page 62674]]

AFP to encompass violations for reports filed under 52 U.S.C. 30104(c) 
(certain independent expenditures), 52 U.S.C. 30104(e) (certain Federal 
election activity reports), 52 U.S.C. 30104(f) (notices of 
electioneering communications), 52 U.S.C. 30104(g) (24- and 48-hour 
reports of independent expenditures), 52 U.S.C. 30104(i) (bundled 
contribution reports), and 52 U.S.C. 30105 (certain convention 
reports).\2\
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    \2\ See 52 U.S.C. 30109(4)(C)(iv).
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    On March 30, 2015, the Commission published a Notice of 
Availability seeking public comment on a Petition for Rulemaking (the 
``Petition'') that asked the Commission to expand the scope of the AFP 
to encompass the additional categories of reporting violations included 
in the 2013 statutory expansion.\3\ The Commission received two 
substantive comments. One comment agreed with the Petition that the 
proposed changes ``would advance the goals of statutory compliance, 
enforcement and sound legal administration.'' The other comment asked 
the Commission to be ``lenient on small organizations'' in 
administering the AFP.\4\
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    \3\ Rulemaking Petition Administrative Fines Program and 
Commission Forms, 80 FR 16594 (Mar. 30, 2015).
    \4\ See Comments, Reg 2015-01 Administrative Fines and Forms, 
https://sers.fec.gov/fosers/.
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    After reviewing these comments and engaging in additional 
deliberation, the Commission is now proposing the changes described in 
this document. The Commission seeks comments on these proposals.

II. Background of the Administrative Fines Program and the Scope of 
Proposed Regulations: What reporting violations are covered in the 
proposed expansion?

    Since its implementation, the AFP's streamlined process has aimed 
to efficiently address applicable reporting violations based on a pre-
existing penalty formula, providing transparency to affected persons 
while conserving Commission resources.
    In 2000, the Commission set out the penalty formulas for most 
violations using four factors to calculate fines: (1) the election 
sensitivity of the report, (2) whether the report is considered late or 
not filed, (3) the level of activity (or estimated level of activity) 
on the report, and (4) the committee's number of prior violations. 
These factors are incorporated into penalty tables at 11 CFR 111.43.
    The Commission uses a different formula to calculate civil 
penalties when principal campaign committees fail to timely file 48-
hour notices of contributions. Unlike other regularly scheduled 
reports, these notices are required within 48 hours of the date an 
authorized committee receives a contribution of $1,000 or more received 
after the 20th day, but more than 48 hours before, any election.\5\ The 
Commission explained that ``because of the unique nature and timing of 
[the 48-hour notice] reporting requirement . . . failure to file these 
48-hour notices in a timely manner is tantamount to failing to file 
them at all. Thus, the proposed schedule of penalties [for 48-hour 
notices of contributions] does not make a distinction between late 
filers and non-filers for the violations [of 52 U.S.C. 30104(a)(6)].'' 
\6\
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    \5\ 52 U.S.C. 30104(a)(6); 11 CFR 104.5(f).
    \6\ Administrative Fines, 65 FR 16534, 16537 (Mar. 29, 2000).
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    Accordingly, under 11 CFR 111.44, the calculation of fines for 
committees that fail to file timely 48-hour notices is $178 (base 
amount) \7\ for each untimely notice plus 10% of the amount in 
violation (dollar amount of the contributions not timely reported). The 
fine increases by 25% for each time a prior fine was assessed under the 
AFP during the current and previous two-year election cycles.
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    \7\ As required by the Federal Civil Penalties Inflation 
Adjustment Act of 1990 (codified at 28 U.S.C. 2461), the base amount 
is adjusted annually for inflation.
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    The Commission intends to expand the AFP so that its procedures can 
be extended to additional reporting violations. To maintain the AFP's 
efficiency and further conserve resources, the Commission intends to 
limit the expansion to violations that can be quickly and objectively 
identified and do not involve complex legal issues or factual 
determinations.
    Therefore, the Commission is proposing to expand the AFP to include 
violations resulting from the failure of persons to file, or to timely 
file, three types of filings: (1) 24-hour reports of independent 
expenditures, (2) 48-hour reports of independent expenditures, and (3) 
24-hour notices of electioneering communications.
    24-hour reports of independent expenditures are required when a 
``person'' makes or contracts to make independent expenditures 
aggregating $1,000 or more after the 20th date, but more than 24 hours, 
before the date of an election.\8\
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    \8\ 52 U.S.C. 30104(g)(1); see also 11 CFR 100.16 (defining 
independent expenditure); 11 CFR 104.4 (reporting requirements for 
independent expenditures by political committees); 11 CFR 109.10 
(reporting requirements for independent expenditures by political 
committees and other persons).
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    48-hour reports of independent expenditures are required when a 
``person'' makes or contracts to make independent expenditures 
aggregating $10,000 or more at any time up to and including the 20th 
date before the date of an election.\9\
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    \9\ 52 U.S.C. 30104(g)(2); see also 11 CFR 100.16 (defining 
independent expenditure); 11 CFR 104.4 (Independent expenditures by 
political committees); 11 CFR 109.10 (How do political committees 
and other persons report independent expenditures?).
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    24-hour notices of electioneering communications are required when 
a ``person'' makes a disbursement for the direct costs of producing and 
airing electioneering communications in an aggregate amount in excess 
of $10,000 during any calendar year.\10\
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    \10\ 52 U.S.C. 30104(f); see also 11 CFR 100.29 (defining 
electioneering communication); 11 CFR 104.20 (reporting 
electioneering communications).
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    The AFP currently applies only to violations committed by political 
committees. However, by authorizing the Commission to expand the scope 
of the AFP to cover reports of independent expenditures and notices of 
electioneering communications, Congress granted the Commission the 
authority to cover all ``persons'' required to file such reports and 
notices. The term ``person'' includes an individual, partnership, 
committee, association, corporation, labor organization, and any other 
organization, or group of persons.\11\ Thus, the proposed rules would 
broaden the AFP's scope beyond violations committed by political 
committees.
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    \11\ 52 U.S.C. 30101(11); 11 CFR 100.10.
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    Currently, violations committed by any person resulting from their 
failure to file, or to timely file, reports of independent expenditures 
and notices of electioneering communications are adjudicated through 
the Commission's traditional enforcement process. The proposed rules 
would allow the Commission to shift the adjudication of applicable 
reporting violations from its traditional enforcement process to the 
AFP. This shift would provide filers with a more efficient and 
predictable resolution while allowing the Commission to ensure 
consistent enforcement of similar violations.

III. Proposed Rules

1. Proposed Amendment to 11 CFR 111.35(d)

    Current paragraph (d) of Sec.  111.35 provides a list of 
circumstances that are not considered valid defenses for untimely 
filing because they are not considered reasonably unforeseen and beyond 
the control of the respondent. Paragraph (d)(5) provides that a

[[Page 62675]]

respondent's failure to know the filing dates is not reasonably 
unforeseeable. The Commission proposes to amend paragraph (d)(5) to 
include failure to know ``reporting periods, deadlines, and reporting 
instructions'' as circumstances that would not serve as valid defenses. 
The Commission is proposing this change because such circumstances are 
similarly foreseeable and as within the control of the respondent as 
``filing dates'' in current paragraph (d)(5). The Commission requests 
comments on the proposed change.

2. Proposed Amendment to 11 CFR 111.44

    Currently, Sec.  111.44 applies only to violations of 48-hour 
notices of contributions, which is unclear from the title of this 
section. Because the Commission proposes to expand the AFP to cover 
untimely filed 48-hour independent expenditure reports, the Commission 
proposes to amend the heading to Sec.  111.44 by changing ``notices'' 
to ``notices of contributions.'' This section would continue to apply 
penalties to untimely filed or non-filed notices of contributions, 
while new Sec.  111.45, discussed below, would impose new penalties for 
untimely filed or non-filed 48-hour independent expenditure reports.

3. Proposed new 11 CFR 111.45

    The Commission proposes replacing currently reserved Sec.  111.45 
with new regulations that would implement administrative fines for 
untimely filings of 24- and 48-hour reports of independent expenditures 
and 24-hour notices of electioneering communications.
    Paragraphs (a), (b), and (c) propose formulas for calculating civil 
penalties for violations in timely filing the 24-hour reports of 
independent expenditures, 48-hour reports of independent expenditures, 
and 24-hour notices of electioneering communications, respectively, 
with each paragraph proposing two alternative formulas for calculating 
penalties for that type of violation. The Commission is not limiting 
its consideration of formulas to the two alternatives proposed for each 
of these paragraphs and ultimately may adopt other formulas. Proposed 
paragraph (d) would add 25% to each civil penalty calculated for each 
prior violation, where ``prior violation'' would mean a civil penalty 
assessed against the respondent under the AFP in the current two-year 
election cycle or the previous two-year election cycle. This would 
mirror the provision currently in use for 48-hour notices of 
contributions under Sec.  111.44(a)(2).
    The proposed penalty calculation formulas for violations in timely 
filing reports of independent expenditures and notices of 
electioneering communications are similar to the penalty calculation 
formula for 48-hour notices of contributions violations by principal 
campaign committees under the current AFP. Because the 48-hour notice 
reporting requirement must be met within 48 hours of the predicate 
event (the receipt of a covered contribution), the penalty formulas for 
48-hour notices of contributions under the current AFP do not 
distinguish between late or non-filing or between election-sensitive 
and non-election sensitive reports, unlike formulas for other types of 
reporting violations covered under 11 CFR 111.43. Similarly, because 
24- and 48-hour reports of independent expenditures and 24-hour notices 
of electioneering communications requirements must be met within 24 or 
48 hours of the predicate event (contracting for or making payment for 
a covered independent expenditure or distribution of a covered 
electioneering communication), the proposed penalty formulas for these 
filings also would not distinguish between late or non-filing or 
between election-sensitive and non-election sensitive reports.
    A. Civil Penalty Formulas for violations in timely filing 24- and 
48-hour reports of independent expenditures.
Proposed Civil Penalty Formula A--Aligned With Current 11 CFR 111.44
    As discussed above, the formula for determining civil penalties for 
failing to timely file 48-hour notices of contributions received by 
principal campaign committees is $178 (``base amount'') + (10% x AIV). 
Proposed Alternatives A under paragraphs (a) and (b) would use the same 
formula for failing to timely file 24- and 48-hour reports of 
independent expenditures. Using the same formula that the Commission 
has applied to similar reporting violations for over 20 years would be 
consistent with prior Commission administrative fines practice and 
promote fairness in the application of the law. It would also be easy 
to administer, minimizing the burden on Commission staff. Are there any 
reasons that the Commission should not use this formula to calculate 
civil penalties for violations in timely filing 24- and 48-hour reports 
of independent expenditures? Are the reports included in the proposed 
expansion commensurate in amount and election sensitivity?
Proposed Civil Penalty Formula B--Approximating Recent Violation 
Amounts
    Proposed Alternative B under paragraphs (a) and (b) would use the 
same base amount--$178--but lower multipliers. The formula for 24-hour 
reports of independent expenditures in paragraph (a) would be $178 + 
(7.5% x AIV), and the formula for 48-hour reports of independent 
expenditures in paragraph (b) would be $178 + (5% x AIV).
    Alternative B formulas would result in fines similar to those the 
Commission has approved for these types of violations through its 
traditional enforcement process. Thus, the formulas under Alternative B 
would also be consistent with prior Commission practice and promote 
fairness in the application of the law. Specifically, during the last 
two two-year election cycles, the Commission approved civil penalties 
for untimely filed 24-hour reports of independent expenditures at 
approximately 7.61% of AIV. For 48-hour reports of independent 
expenditures over the same period, the Commission approved penalties at 
approximately 6.31% of AIV. The proposed civil penalties under 
Alternative B would apply this recent historical data as the measure of 
an appropriate penalty amount. Is this percentage approximation 
appropriate or should the Commission consider using different 
percentages as approximation? Should the Commission consider data from 
a longer time period or other additional data in calculating the 
average penalty amounts used to determine an appropriate penalty 
formula?
    The Commission notes that Alternative B would use a higher 
multiplier for untimely filed 24-hour reports of independent 
expenditures than for 48-hour reports of independent expenditures, 
which would result in higher penalties being assessed for 24-hour 
reports than 48-hour reports. In the Commission's view, this would be 
appropriate because 24-hour reports of independent expenditures are due 
closer to the date of the election and therefore failure to timely file 
those reports has a more significant electoral impact. This would be 
consistent with the final civil penalties the Commission has 
historically approved through its enforcement of similar violations. 
Should the Commission instead use the same multiplier for both 24- and 
48-hour reports of independent expenditures and, if so, why?

[[Page 62676]]

    Of the two proposed alternative formulas, which one would be most 
appropriate to determine civil penalties for violations of timely 
filing these reports of independent expenditures, and why? Should the 
Commission consider any other formulas? Does the inherently time-
sensitive nature of independent expenditure reports warrant a higher 
penalty formula than the Commission has historically applied in AFP 
matters?
    B. Civil Penalty Formulas for violations in timely filing 24-hour 
notices of electioneering communications.
    Each alternative in proposed paragraph (c) of Sec.  111.45 would 
provide a formula for calculating civil penalties for violations for 
failure to timely file 24-hour notices of electioneering 
communications. The Commission proposes the same two alternative 
formulas for 24-hour notices of electioneering communications as for 
24-hour reports of independent expenditures.
Civil Penalty Formula Alternative A--Aligned With Current 11 CFR 111.44
    As with both 24- and 48-hour reports of independent expenditures, 
and for the same reasons, the Commission proposes in Alternative A: 
$178 + (10% x AIV) to align with the current formula used in 11 CFR 
111.44.
Civil Penalty Formula Alternative B--Aligned With Proposed Alternative 
B for 24-Hour Reports of Independent Expenditures.
    Proposed Alternative B for 24-hour notices of electioneering 
communications is the same as the proposed Alternative B for 24-hour 
reports of independent expenditures, discussed above: ($178 + (7.5% x 
AIV)).\12\ In the Commission's view, this is appropriate because both 
reports are due within 24-hours of the predicate event and relatively 
close to the election date, which makes them similarly election 
sensitive.
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    \12\ Unlike with 24-hour reports of independent expenditures, 
the Commission does not have a body of data for violations in timely 
filing 24-hour notices of electioneering communications from the 
recent past on which to propose a formula.
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    Should the Commission instead apply a different formula for 24-hour 
notices of electioneering communications than 24-hour reports of 
independent expenditures? For instance, does the fact that 24-hour 
notices of electioneering communications and 24-hour reports of 
independent expenditures have slight differences in time period and 
more significant differences in amount threshold justify applying a 
different penalty formula and, if so, what would the appropriate 
formula be? The Commission notes that the requirement to file 24-hour 
notices of electioneering communications is triggered on the disclosure 
date of an electioneering communication, which, by definition, would 
fall within 30 days of a primary or 60 days of a general election, when 
the person making the electioneering communication has spent or 
contracted to spend more than $10,000 within the calendar year on the 
communication. In contrast, the requirement to file a 24-hour report of 
independent expenditures is triggered when the person making the 
independent expenditure has publicly distributed/disseminated or 
contracted to make an independent expenditure that costs $1,000 or more 
after the 20th day, but more than 24 hours before an election. Are 
these differences sufficient to justify using a different formula and, 
if so, what would be the appropriate formula?
    For proposed formulas under Alternative B in paragraphs (a), (b), 
and (c), the Commission would set the multiplier based on the actual 
civil penalty amounts that the Commission negotiated with respondents 
for violations of timely filing 24- and 48-hour reports of independent 
expenditures via the traditional enforcement from July 1, 2020 through 
December 31, 2023. Would this provide an appropriate base for 
comparison? If not, how many years' data should the Commission use?
    C. Proposed increase in civil penalty for each previous violation.
    Proposed paragraph (d) of Sec.  111.45(d) would apply to penalties 
calculated under paragraphs (a), (b), and (c), and would include a 25% 
increase in civil penalty for each previous violation, in parity with 
current 11 CFR 111.44.
    The penalty formula for untimely 48-hour notices of contributions 
under 11 CFR 111.44 adds 25% to each civil penalty for each prior 
violation. Under Sec.  111.44, ``prior violation'' means ``a final 
civil money penalty that has been assessed against the respondent 
under'' the same section of the rule ``in the current two-year election 
cycle or the prior two-year election cycle.'' \13\ The Commission is 
proposing to include this same requirement in proposed Sec.  111.45(d) 
regarding the civil penalties for violations in timely filing the 
reports covered by this proposed expansion. The Commission seeks 
comments on this proposal.
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    \13\ 11 CFR 111.44(b).
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    D. Calculating civil penalties for each report vs. calculating 
civil penalties for multiple reports as one violation.
    In addition to using formulas to calculate civil penalties for 
violations in proposed 11 CFR 111.45(a), (b), and (c), the Commission 
is considering whether to treat each report the respondent has failed 
to timely file as a separate violation, or whether all reports that the 
respondent has failed to timely file within a certain time period 
should be treated as a single violation.
    For example, under Alternative A (10% multiplier), if Person A 
makes independent expenditures of $1,000 eighteen days before the 
election, and $3,000 fifteen days before the election, triggering the 
24-hour reporting requirement for each independent expenditure but 
filing no reports, should the penalties be calculated for each report 
that was required to be filed: $178 + $178 + (.10 x $4,000) =$756? Or 
should the Commission instead treat this as one violation: $178 + (.10 
x $4,000) = $578?
    Treating multiple reports the respondent has failed to timely file 
as a single violation would be easier to administer, but it may 
unfairly treat such filers the same as those who failed to timely file 
one report. For example, it would treat Filer A, who made two 
independent expenditures in the 18 days before an election, the same as 
Filer B, who made one independent expenditure 12 days before the 
election. If the Commission were to take the single violation approach, 
should it adjust the formula to account for the more significant 
violation of Filer A vis-[agrave]-vis Filer B?
    E. Other considerations
    Finally, should the Commission consider different enhancements or 
reductions in the civil penalty formula? For example, should the 
Commission consider whether the person failing to timely file is a 
political committee, a small organization, or an individual?

III. Proposed Conforming Amendments

A. Adding Statutory Citations of Reports Proposed for the Expanded AFP

    To accommodate the expansion, the Commission is proposing to make a 
technical and conforming amendment in 11 CFR 111.30, 111.31, 111.32, 
111.37, and 111.40 by adding cites to paragraphs (f) and (g) of 52 
U.S.C. 30104, as appropriate, to each instance of the cite covering the 
reports currently included in the Administrative Fines Program.

[[Page 62677]]

B. Conforming Amendments To Clarify That the Proposed Expansion of AFP 
Would Apply Not Only to Political Committees But to Any Person Failing 
To Timely File Reports Subject to the AFP

    Under the proposed expansion of AFP, 24- and 48-hour reports of 
independent expenditures and 24-hour notices of electioneering 
communications must be filed by any ``person'' who meets the filing 
requirements as discussed in section II of this document.
    To accommodate the proposed expansion of the AFP from reporting 
violations committed only by political committees to violations 
committed by persons filing the reports included in the proposed 
expansion, the Commission proposes in 11 CFR 111.30 to replace the 
phrase, ``political committees and their treasurers'' with ``any 
person.'' Additionally, the Commission proposes to replace the word 
``committee'' with ``respondent'' in 11 CFR 111.35(b)(2) and throughout 
paragraph (d) of that section.
    Current Sec.  111.46 requires that if a respondent has not filed a 
designation of counsel, all notifications and other communications to a 
respondent as part of the AFP will be sent to the committee at the 
address on file with the Commission from the committee's most recent 
Statement of Organization, or amendment thereto, filed with the 
Commission in accordance with 11 CFR 102.2.
    The Commission proposes to make conforming edits to the second 
sentence of Sec.  111.46 to state that all notifications and 
communications will be sent the respondent, and if the respondent is a 
political committee, communications will be sent to the political 
committee and its treasurer at the political committee's address as 
listed in the most recent Statement of Organization, or amendment 
thereto, filed with the Commission in accordance with 11 CFR 102.2.

C. Further Conforming Amendments Not Required by the Proposed AFP 
Expansion

    The Commission proposes to make two further conforming amending in 
11 CFR 111.30 and 111.37, addressed above that do not relate to the 
proposed AFP expansion.
    In 11 CFR 111.30, the Commission proposes two changes to update the 
regulation by removing outdated information. First, the Commission 
proposes removing the beginning and statutory end date of the AFP in 
the first sentence. Further, the Commission proposes removing the last 
sentence announcing a gap in the applicability of the AFP for reports 
relating to reporting periods that ended between January 1, and January 
21, 2014.\14\ This information is now outdated, and the statute of 
limitations has expired on any violations for that time period.
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    \14\ See Extension of Administrative Fines Program, Final Rule, 
79 FR 3302 (Jan. 21, 2014).
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    In 11 CFR 111.37(a), the Commission proposes to add ``determines'' 
before ``the amount of the civil money penalty'' to conform the 
language of this provision with the language used in Sec.  111.40(a). 
Each of these sections require a Commission determination as to the 
amount of the civil penalty before further Commission action, albeit 
under differing circumstances.
Certification of No Effect Pursuant to 5 U.S.C. 605(b) (Regulatory 
Flexibility Act)
    The Commission certifies that the attached proposed rules would 
not, if promulgated, have a significant economic impact on a 
substantial number of small entities.
    The proposed rules do not create any new recordkeeping, reporting, 
or financial obligations. Any small entities that would be subject to 
the proposed rules are already liable for civil penalties if they 
violate the applicable reporting requirements. These violations are 
currently adjudicated through the traditional enforcement process. The 
proposed rules will allow the Commission to shift the adjudication of 
applicable reporting violations from its traditional enforcement 
process to the more efficient AFP.
    The proposed rules would result in published penalty schedules for 
the applicable reporting violations, providing clarity and certainty to 
respondents navigating the compliance process. The AFP's streamlined 
process and clear penalty schedules make it less likely that a small 
entity would need to hire additional staff or retain professional 
services to address and remedy reporting violations.
    Moreover, the penalty formulas that the Commission is considering 
will take into account the amount of the disbursements or expenditures 
that were not timely reported. Thus, civil penalties will be scaled so 
that respondents who spend less on disbursements for electioneering 
communications or independent expenditures will be subject to lower 
fines.
    Therefore, the attached proposed rules, if promulgated, will not 
have a significant economic impact on a substantial number of small 
entities.

List of Subjects in 11 CFR Part 111

    Administrative practice and procedures, Elections, Law enforcement, 
Penalties.

    For reasons set out in the preamble, the Federal Election 
Commission proposes to amend 11 CFR part 111 as follows:

PART 111--COMPLIANCE PROCEDURES (2 U.S.C. 30109, 30107(a))

0
1. The authority citation for part 111 is revised to read as follows:

    Authority:  2 U.S.C. 30102(i), 30109, 30107(a), 30111(a)(8); 28 
U.S.C. 2461 note.

0
2. Revise Sec.  111.30 to read as follows:


Sec.  111.30  When will this subpart apply?

    This subpart applies to violations of the reporting requirements of 
52 U.S.C. 30104(a), (f), and (g).
0
3. Amend Sec.  111.31 by revising paragraph (b) to read as follows:


Sec.  111.31  Does this subpart replace subpart A of this part for 
violations of the reporting requirements of 52 U.S.C. 30104(a)?

* * * * *
    (b) This subpart will apply to compliance matters resulting from a 
complaint filed pursuant to Sec. Sec.  111.4 through 111.7 if the 
complaint alleges a violation of 52 U.S.C. 30104(a), (f), or (g). If 
the complaint alleges violations of any other provision of any statute 
or regulation over which the Commission has jurisdiction, subpart A of 
this part will apply to the alleged violations of these other 
provisions.
0
4. Amend Sec.  111.32 by revising the introductory text and paragraph 
(d) to read as follows:


Sec.  111.32  How will the Commission notify respondents of a reason to 
believe finding and a proposed civil money penalty?

    If the Commission determines, by an affirmative vote of at least 
four (4) of its members, that it has reason to believe that a 
respondent has violated 52 U.S.C. 30104(a), (f), or (g), the Chairman 
or Vice-Chairman shall notify such respondent of the Commission's 
finding. The written notification shall set forth the following:
* * * * *
    (d) The amount of the proposed civil money penalty based on the 
schedules of penalties set forth in Sec.  111.43, Sec.  111.44, or 
Sec.  111.45; and
* * * * *
0
5. Amend Sec.  111.35 by revising paragraphs (b)(1) and (d)(2), (3), 
(5), and (6) to read as follows:

[[Page 62678]]

Sec.  111.35  If the respondent decides to challenge the alleged 
violation or proposed civil money penalty, what should the respondent 
do?

* * * * *
    (b) * * *
    (1) The Commission's reason to believe finding is based on a 
factual error including, but not limited to, the respondent was not 
required to file the report, or the respondent timely filed the report 
in accordance with 11 CFR 100.19;
* * * * *
    (d) * * *
    (2) Delays caused by respondent's vendors or contractors;
    (3) Illness, inexperience, or unavailability of the respondent or 
respondent's treasurer or other staff;
* * * * *
    (5) A respondent's failure to know filing requirements, including 
reporting periods, deadlines, and reporting instructions; and
    (6) A respondent's failure to use filing software properly.
* * * * *
0
6. Amend Sec.  111.37 by revising paragraph (a) to read as follows:


Sec.  111.37  What will the Commission do once it receives the 
respondent's written response and the reviewing officer's 
recommendation?

    (a) If the Commission, after having found reason to believe and 
after reviewing the respondent's written response and the reviewing 
officer's recommendation, determines by an affirmative vote of at least 
four (4) of its members, that the respondent has violated 52 U.S.C. 
30104(a), (f), or (g) and determines the amount of the civil money 
penalty, the Commission shall authorize the reviewing officer to notify 
the respondent in writing of its final determination.
* * * * *
0
7. Amend Sec.  111.40 by revising paragraph (a) to read as follows:


Sec.  111.40  What happens if the respondent does not pay the civil 
money penalty pursuant to 11 CFR 111.34 and does not submit a written 
response to the reason to believe finding pursuant to 11 CFR 111.35?

    (a) If the Commission, after the respondent has failed to pay the 
civil money penalty and has failed to submit a written response, 
determines by an affirmative vote of at least four (4) of its members 
that the respondent has violated 52 U.S.C. 30104(a), (f), or (g), and 
determines the amount of the civil money penalty, the respondent shall 
be notified in writing of its final determination.
* * * * *
0
8. Amend Sec.  111.44 by revising the section heading to read as 
follows:


Sec.  111.44  What is the schedule of penalties for the 48-hour notices 
of contributions not filed or are filed late?

* * * * *
0
9. Add Sec.  111.45 to read as follows:


Sec.  111.45  What is the schedule of penalties for 24- and 48-hour 
reports of independent expenditures and for 24-hour notices of 
electioneering communications not filed or filed late?

Alternative A to Paragraph (a)

    (a) 24-hour reports of independent expenditures. If the respondent 
fails to file timely a 24-hour report of independent expenditures as 
required under 52 U.S.C. 30104(g)(1), (3), and (4), the civil money 
penalty will be calculated as follows: Civil money penalty = $178 + 
(.10 x amount of expenditures not timely reported).

Alternative B to Paragraph (a)

    (a) 24-hour reports of independent expenditures. If the respondent 
fails to file timely a 24-hour report of independent expenditures as 
required under 52 U.S.C. 30104(g)(1), (3), and (4), the civil money 
penalty will be calculated as follows: Civil money penalty = $178 + 
(.075 x amount of expenditures not timely reported).

Alternative A to Paragraph (b)

    (b) 48-hour reports of independent expenditures. If the respondent 
fails to file timely a 48-hour report of independent expenditures as 
required under 52 U.S.C. 30104(g)(2), (3), and (4) the civil money 
penalty will be calculated as follows: Civil money penalty = $178 + 
(.10 x amount of expenditures not timely reported).

Alternative B to Paragraph (b)

    (b) 48-hour reports of independent expenditures. If the respondent 
fails to file timely a 48-hour report of independent expenditures as 
required under 52 U.S.C. 30104(g)(2), (3), and (4), the civil money 
penalty will be calculated as follows: Civil money penalty = $178 + 
(.05 x amount of expenditures not timely reported).

Alternative A to Paragraph (c)

    (c) 24-hour notices of electioneering communications. If the 
respondent fails to file timely a 24-hour notice of electioneering 
communications as required under 52 U.S.C. 30104(f), the civil money 
penalty will be calculated as follows: Civil money penalty = $178 + 
(.10 x amount of expenditures not timely reported).

Alternative B to Paragraph (c)

    (c) 24-hour notices of electioneering communications. If the 
respondent fails to file timely a 24-hour notice of electioneering 
communications as required under 52 U.S.C. 30104(f), the civil money 
penalty will be calculated as follows: Civil money penalty = $178 + 
(.075 x amount of expenditures not timely reported).
    (d) Increase in civil money penalties for prior violations. The 
civil money penalties calculated in paragraphs (a), (b), and (c) of 
this section shall be increased by twenty five percent (25%) for each 
prior violation. For purposes of this section, prior violation means a 
final civil money penalty that has been assessed against the respondent 
under this subpart in the current two-year election cycle or the prior 
two-year election cycle.
0
10. Revise Sec.  111.46 to read as follows:


Sec.  111.46  How will the respondent be notified of actions taken by 
the Commission and the reviewing officer?

    If a statement designating counsel has been filed in accordance 
with Sec.  111.23, all notifications and other communications to a 
respondent provided for in this subpart will be sent to designated 
counsel. If a statement designating counsel has not been filed, all 
notifications and other communications to a respondent provided for in 
this subpart will be sent to respondent. If the respondent is a 
political committee, communications will be sent to the political 
committee and its treasurer at the political committee's address as 
listed in the most recent Statement of Organization, or amendment 
thereto, filed with the Commission in accordance with 11 CFR 102.2.

    Dated: July 25, 2024.

    On behalf of the Commission,
Sean J. Cooksey,
Chairman, Federal Election Commission.
[FR Doc. 2024-16841 Filed 7-31-24; 8:45 am]
BILLING CODE 6715-01-P