FEC Granted New Authority to Impose Higher Automatic Penalties on Nonprofit Organizations, Super PACs, and Political Party Committees

On December 26, 2013, President Barack Obama signed into law a bill (H.R. 3487) that gives the Federal Election Commission (FEC) new authority to impose automatic fines for campaign finance reporting violations on nonprofit organizations, Super PACs, and political party committees. 
 
“The FEC has always expected political party committees and PACs to have their reports filed on time,” said Political Law partner Craig Engle. “This shows a lack of compliance can become expensive.”

The new law – which passed both chambers of Congress with minimal debate – relates to the FEC’s administrative fine program. Under this program, candidates and committees are subject to automatic fines for reporting violations related to their regularly-scheduled FEC disclosure reports. The FEC uses a pre-determined penalty schedule to set the penalty. The schedule is based on factors such as the level of campaign activity the candidate or committee failed to disclose and how close to the election a reporting violation occurs. 
 
The FEC’s authority for the administrative fine program was set to expire at the end of 2013. H.R. 3487 extends the FEC’s authority through 2018. Importantly, it also authorizes the FEC to impose fines under its administrative fine program on additional entities, including organizations that are required to file reports of independent expenditures and “electioneering communications” – television or radio ads that refer to a federal candidate within 60 days prior to the general election or 30 days prior to a primary. Accordingly, all Super PACs and all nonprofit organizations that engage in this type of activity will be subject to automatic fines.  H.R. 3487 also subjects federal, state, and local political party committees to the administrative fine program for the first time. 
 
Additionally, H.R. 3487 expands the FEC’s authority over the types of reports that are subject to automatic fines under the administrative fine program. Previously, the program only applied to candidates’ and committees’ regularly-scheduled disclosure reports (quarterly, semi-annual, and pre- and post-election reports). Now, the FEC can impose automatic fines for violations related to the reports that all entities must file with the FEC within 24 or 48 hours of an election when they make an independent expenditure or electioneering communication.
 
The FEC’s new authority means that newly-covered organizations can face stiff penalties for late FEC filings and other reporting violations, especially if they make large pre-election expenditures.

Arent Fox will continue to monitor developments related to the new penalty program as it is implemented. Please contact Craig Engle with questions.