FEDERAL ELECTION COMMISSION NEWS CONFERENCE

SCOTT THOMAS, FEDERAL ELECTION COMMISSIONER

NATIONAL PRESS CLUB WASHINGTON, DC

MONDAY, DECEMBER 13, 1993

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Well, let's get started. We're running just a little bit behind. I'm Fred Elland, press officer of the Commission. We're glad to see you here this morning. The Commission feels that the business at hand is important enough to get as many reporters and media together as possible to explain what the Commission is about to tell you....

The chairman and vice chairman have come down from a workshop the Commission is conducting at the Washington Hilton. I say this because about 11:00 or so, we're going to have to turn them loose so they can go back to the workshop. In the meantime, however, the procedure will be the chairman will make a statement, after which he will be available for questions. Vice Chairman Trevor Potter, who is also chair of the Commission's Finance Committee, and general counsel Larry Noble will also be available to respond to questions that you might have....

After this session is over, if any of you have questions remaining, the press office staff will be here, other members of the senior staff of the Commission will be available to try to respond to whatever questions remain....

At this point, Chairman Scott Thomas will make his presentation.

Thank you, Fred.

Good morning, everybody.

I want to just make sure that everybody understands this is Vice Chairman Potter and this is Larry Noble, our general counsel. They are going to assist me when we get to the question-and-answer session....

Clean, open, and fair elections are central to our representative form of democracy. The public confidence that our political leaders are selected without hidden or improper influence is essential. The president, the Congress, and the American people all agree on this....

The Federal Elections Commission is charged with the serious responsibility of enforcing the federal laws that govern the financing of campaigns for the presidency and the Congress. These laws require that campaigns and committees disclose the sources of their funding and that contributions to campaigns and committees are subject to (minimums ?). The FEC is firmly committed to meeting its important task, and that is why we are here today....

We are announcing that the FEC has unanimously adopted significant improvements to its enforcement program. We are going to focus our limited resources on what matters most, and we are going to speed up the resolutions of our cases, but before I describe the specific changes, it is important for you to understand the background that led the Commission to initiate these reforms....

In recent years, the enforcement workload of the Commission has been much greater than many assume. In the past four election cycles, we have faced 1,997 enforcement cases involving several thousand respondents. Even more significant is the dramatic rise in workload in the last two election cycles. Since the end of Fiscal Year 1988, the number of respondents has more than tripled. As of December 1, 1993, there were over 2,300 respondents involved in 446 pending cases....

In addition, more and more of the cases we must deal with involve complex financial transactions, such as schemes to launder contributions and hide the true identity of donors. These cases take far greater resources to resolve....

The explosion in enforcement work is caused in large part by the huge increase in campaign finance activity in recent years. In the last election cycle alone, the FEC regulated the activities of more than 9,000 political committees that spent the staggering sum of $2.1...

billion. That spending is about half a billion dollars more than the previous presidential cycle.

For a relatively small agency located in Washington, DC, and operating on a limited budget in an era of fiscal restraint, the enforcement workload is simply overwhelming. With only 276 employees on board, most of whom attend to disclosure, audit, informational, or other support functions, only 19 front-line attorneys can be assigned to enforcement duties full time....

We have attempted over the last several years to address the growing workload. We have adopted internal guidelines for when staff reports are due, cut back on extensions of time granted to respondent counsel, added additional enforcement teams, computerized operations, and streamlined many procedures, but these measures have not been able to fully stem the impact of the most recent workload increases. The unfortunate result has been lengthy delays in resolving too many of our cases, and this has become simply unacceptable to the Commission and staff. Real changes had to be made....

And that brings us to today. While the new enforcement measures I'm announcing today include several procedural or administrative changes, the foremost difference and the most important for the regulated community and public to understand is that the Commission has adopted a sweeping new approach to enforcing the law....

In the past, the FEC attempted to handle virtually each and every enforcement case all the way through to a conciliation agreement or litigation. However, in trying to do a thorough job in all cases, we eventually ended up doing a slow job in all cases, and we found ourselves pursuing more and more matters that simply weren't worth anyone's time....

So a task force was formed to develop a better way to focus our limited resources. A lot of thinking, discussion, and hard work by a lot of dedicated FEC people ensued. As a result, I can announce today that we have adopted a comprehensive system for prioritizing our cases and resolving targeted cases faster....

Specific elements of our new priority system include: First, creating an objective method for ranking cases that will allow us to identify those which best warrant the use of our limited resources. Second, determining, based on resources, the total number of cases the enforcement staff can actively and efficiently pursue at any one time. Third, establishing realistic time goals for resolving targeted cases -- in specific, trying to resolve cases within an election cycle or less. Fourth, managing and tracking cases through periodic priority...

evaluations so that staff assignments can be adjusted as needed and cases that warrant no further Commission resources can be identified for closing. Fifth and last, creating a central enforcement docket system to process incoming cases and assign them as staff become available....

Under the old system, all incoming cases were immediately assigned, even though each attorney already had a full caseload. Piling additional cases on staff simply meant that all cases suffered. Under our new system, matters will not be assigned until attorneys can actively and efficiently pursue them. Those that are assigned will be from a prioritized list....

Although not exhaustive, the factors we will use in prioritizing cases include whether there was knowing and willful intent to violate the law, the apparent impact of alleged violations on the election process, the amount of money involved, the age and timing of the violation, and whether a particular area of the law that needs attention is involved....

Of course, for effective enforcement, specific aspects of the priority elements and methodology must remain confidential.

At the heart of this new system is the principle that we are going to operate more efficiently by pursuing the most significant cases. We cannot and should not attempt to fully investigate and resolve each and every one of the hundreds of cases that come before us. As you know, law enforcement agencies at every level of government often use their prosecutorial discretion in selecting the cases they can pursue. An agency like the FEC, with an ever-growing workload and no control over how many external complaints are filed, is truly compelled to do this....

Recognizing that the caseload far exceeded our resources, the Commission recently decided to exercise its prosecutorial discretion and take no further action in 137 cases that had been pending. Based on objective guidelines and in comparison with all other pending cases, these 137 matters did not warrant the use of more taxpayer dollars....

The cases closed fell into two broad categories: First, those that were relatively insignificant compared to other pending cases and, second, those that were stale, meaning the activity in question occurred prior to the 1990 election cycle. Because of other overriding priority factors, a few cases that involve allegations pre- dating the 1990 election cycle do remain ongoing, but most pre-1990 cycle cases now have been closed. Some, you should note, deal with matters already effectively prosecuted under criminal statutes....

The cases identified as relatively insignificant compared to the rest of our caseload either involved little money, had little impact on the election process, or had little remaining enforcement value. A number of these cases involved committees or individuals who had...

little campaign finance experience, and I hasten to add that even after the closing of 137 cases, more than 300 cases with 1,234 respondents remain on our docket, but with a more manageable caseload, we will be able to put more effort into cases targeted for one reason or another, handle them faster than in the past, make our point, and then move on to other cases that need attention. As appropriate, we will be able to focus on certain types of cases that need special emphasis....

Our new approach will better enable the FEC to work on a wide range of cases at all times. No one should assume that any particular type of violation will be overlooked. If anything, the opposite will occur. We will effectively pursue more types of violations to achieve voluntary compliance at all levels....

Now, another point must be mentioned. The Commission also is moving towards higher civil penalties when serious violations are found. This process is still evolving, but by focusing on more significant cases and seeking tougher sanctions, the Commission is determined to put teeth in its enforcement program....

The early effect of our new approach is shown by several fairly large civil penalties paid this year, including one case that totaled more than $122,000 and others totaling $64,000, $57,000, $45,000, and $40,000. If paying civil penalties was considered simply the cost of doing business in the past, that will change....

We believe the results will be even more impressive in the coming months once the Commission has had more time to work under the new priority system. We hope the public and regulated community will fairly evaluate the program over time....

Now, our staff has prepared a list of the closed cases, and copies are available in your press packets. You can review the actual case files in the FEC's public records office....

Our press office, as Fred indicated, will be available throughout the day and thereafter to answer your questions.

Now, at this point I'll be happy to answer your questions as best I can about our enforcement reforms.

If you will, would you please identify yourself as you ask your question?

(Off mike.) How would you judge -- (inaudible)?

The system that we have adopted under our prioritization program depends on several objective factors or criteria. All of our cases are reviewed under the same set of factors and criteria and are ranked. The system we have in place, therefore, is designed to make sure that it is truly objective and even-handed and that the same kind of factors will be applied in each case. That's basically the approach we adopted because we wanted to make sure that everyone who deals with the commission could feel confident that the system we've come up with is designed to treat people fairly and to enable the commission to truly focus its limited resources on those cases we find most significant....

(Inaudible) -- the complaint never had any merit; they dropped it. Is that what you're saying with these cases, or is it just that we're so overworked we can't get to these cases?...

Well, as I mentioned, some of the cases that we have dropped fall into a category that we identify as cases that are less significant than other cases we still have pending by comparison. And so part of the analysis is, amongst the commissioners and amongst the staff that developed these standards, is that we want to have a system that does identify cases that perhaps don't have as much merit as others and that don't need to be pursued as far as others....

One element of this program I would note is that in terms of some of the cases as to which no further action will be taken, we are moving toward a system whereby in some cases where we think it's appropriate, we will send an admonishment letter after having perhaps found reason to believe, and the admonishment letter will simply inform the respondent that "We have found what appears to be a possible violation, but based on all of the factors and circumstances, the commission is taking no further action. However, you are specifically admonished not to repeat that violation, because that would be significant in the future."...

Herb Kaplow, ABC. How are you going to determine which cases to take and which not? Does the commission vote on that?

And it's three Republicans and three Democrats.

The commission right now is divided evenly with three Republicans and three Democrats.

And what happens if it's a tie?

Well, as with any action before our agency, you need four affirmative votes in order to take action. So you would need the four votes in order to take the action to close a particular case. I would note that the number of occasions where the commission divides along partisan lines on a 3-3 split are relatively rare. And I think I noted at the outset that this program we are announcing today, in fact, was adopted unanimously and all of the cases that we approved for closing were approved unanimously for closing....

Will you have -- (inaudible)? You said to close a case requires four votes. Does it require four votes to assign a case to attorneys to pass your screening?...

Actually, we have delegated to staff in the office of general counsel the responsibility for making the initial rating of cases and the initial assignment of cases. That is to be handled at the staff level; again, according to these very objective criteria, the factors that the commission has approved....

What is the relation, if any, to the NRA -- (inaudible)?

This action we're taking and announcing today is not related at all to the NRA decision. For those of you who may not know, the NRA decision refers to a court case that recently held certain actions taken by the FEC against a certain respondent, the National Rifle Association, as impermissible because of the composition of the commission, the presence of two representatives of the Congress who sit as non-voting members on the commission....

We separately have made a significant effort to try to deal with that case. We have voted to appeal that case and it's our expectation that we will win on appeal. And in the meantime, this program we're announcing today is an effort to identify cases as a general matter across the board on our docket that warrant closing and to from this point on be able to handle the cases that we do think are worth pursuing much more quickly and be able to provide everyone in the process, respondents and complainants, a fairer resolution of those cases....

Dave Hess, Knight-Ridder. (Inaudible) -- some campaigns consider cutting corners, this being how far they can -- (inaudible)?

We actually hope that it has just the opposite effect. We are, as I mentioned, making our civil penalties significantly higher, and we expect that to have some deterrent...

impact. Moreover, the prioritization program, as we have developed it, is designed to always have a very broad mix of cases so that no one type of case and no one size of violation will totally escape our process. And the idea is that we will be able to move from one type of case to another or from one side of violation to another internally and target that kind of a case for prosecution in order that no one will feel comfortable that any particular case can escape scrutiny....

Peter Hardin, Richmond Times-Dispatch. What is the oldest case here today as far as a date? How far back does it go?

We have one case we're closing out that the case was opened in fiscal 1986, which would go back a ways.

All right, then, regarding the case involving Senator Robb of Virginia, was that closed because it was stale from '88 or because it was not a priority?

That case in particular was closed because it involved pre-1990 election activity. So it was -- the number one reason it was closed is because it fell into that category of being stale, yes....

Do you have any way of knowing about how many big cases involving presidential elections where the finding came after the election?

Well, as a practical matter, most of the findings that the commission makes end up coming after the election in question. And that is because most people file complaints just before the election in order to get maximum publicity. And under the procedural protections afforded under our statute, it takes time to allow for the resolution of that case. And so as a practical matter, even complaint-generated matters are resolved after the election....

Internally-generated cases that come through our reports analysis division or our audit division also, as a matter of routine, generally come after the elections in question because they depend on reviewing the reports that occurred during the election. But on occasion we are able to act quickly and deal with something in the process phase before a campaign gets to the general election. And that is really one of the things we're moving toward, as I mentioned. We're hoping that in more cases we will be able to resolve cases quickly enough so that they have more relevance to the process....

(?): Let's go around this side toward the back.

Yeah, Jim Frye (ph) -- (inaudible). What effect does this case have on any complaints involving Texas Senator Kay Bailey Hutchison? And have you all made any determination yet on whether you would consider what's happened in her campaign -- (inaudible)?...

We, of course, cannot comment about any pending enforcement case. There's a confidentiality requirement in the statute. I can say, when you go through your press packet, you won't find any reference to that campaign or those allegations. And beyond that, I can't make any comments....

Can you -- just as a follow-up, how do you determine whether something is, in your opinion, willful before you actually have concluded your investigation and come to your findings?...

Well, as a general rule, it's difficult to determine if something is a knowing and willful violation before you've been able to gather the kind of evidence that is relevant to that. And for the most part, we will base some sort of determination on whether there's knowing and willful intent on whatever information we get in the complaint at the time it's filed and whatever information we get from the responses to the complaints that are filed....

(?): Tom?

These minor matters, where you find a reason to believe -- (inaudible) -- go no further, the letters of admonishment, will you make them public? (Inaudible.)

Yes, we will make those letters of admonishment public. And that is indeed one of the aspects of the program that we want you to be aware of. Part of the enforcement program at any level of government is to inform people about what kinds of violations have been found and what sort of action the agency has taken, if any. Publicity has its own deterrent value, even if the agency doesn't pursue a case all the way through to a civil penalty or litigation. Publicity has a very significant impact on the process....

A lot of the cases that you will see on the list of cases closed are cases where we did conduct a thorough investigation; there are extensive responses to complaints or to reason-to-believe findings on the record. And as members of the press and public, you will be able to go through those and see an awful lot of information on what happens. And that kind of information, if publicized, will have the deterrent effect that we are after in most cases....

You said that you are going to stiffer penalties as a deterrent. Are there any statutory limits on the amount you can fine a campaign?

Actually, there are statutory limits. For a non- knowing and willful violation, the maximum penalty allowed by law is $5,000 or the amount of the violation in question, whichever is larger....

Are you going to ask Congress to increase those?

Thus far we have not asked Congress to increase those limits. The statutory provisions would allow for calculation of some very significant penalties, and those provisions actually would allow for larger penalties than the commission historically has assessed in many cases. So we feel that we have a fair amount of leeway yet to go in order to get to that point. Now, I would also want you to be aware, for knowing and willful violations, the amount of the penalty can be $10,000 per violation or twice the amount of the violation in question. So those amounts can start to be very high when you are working in the knowing and willful area....

Are those high enough, in your estimation?

Well, I think that in my own personal estimation, yes, those are high enough. Those would serve as an adequate sanction. Keep in mind that when we resolve a serious case, as a general matter we also require that the respondent admit that they violated the law in the conciliation agreement. And we require that any illegal money that was contributed be returned to the contributors or disgorged in payment to the U.S. Treasury. And that's all done apart from the civil penalty. So you can be very thorough and severe in terms of assessing penalties....

Bob Jackson, Los Angeles Times. In discussing civil penalties, you mentioned there was one case involving a $122,000 penalty. Is that an example of a willful violation -- (inaudible)?...

That particular case referred to the compliance case that came out of the audit of the Dole For President Committee. The Dole For President Committee itself was assessed a civil penalty of $100,000 and other people involved in that case were also assigned penalties. But in terms of knowing and willful findings, that case did not involve any knowing and willful findings....

Elizabeth Arnold (sp), National Public Radio. So what exactly do you mean by "We are moving towards higher civil penalties"? What does that mean?

The Commission as a body has developed a consensus for increasing civil penalties as a general matter where we find serious violations. We are trying again to focus our enforcement strength on those cases that really warrant the most serious penalties. So over the last year or two we have started trying to identify cases that really warrant the most significant penalties where we can achieve the best deterrent value. But it is, as I said, an ongoing, evolving process. And although we have internal guidelines for how we will assess penalties, what we are moving toward is more of focusing on high civil penalties on those cases that really warrant the most significant penalties....

You're not bumping up against statutory (limits ?), are you? You're talking about within existing --

Of course, within existing statutory authority -- is what we are working with.

(Inaudible) -- case you just closed?

With regard to any specific case, I would prefer not to make a comment. There are several reasons. First of all, we have prepared files that we want you to read, because in those files we have identified the specific factors as to why we closed the specific cases. I'd like you to work with that first. Beyond that, I am but one of six people, and I wouldn't want to necessarily speak for my colleagues. But for the most part I identified the two classes of cases where we're working with -- those that are relatively insignificant or those that are (stale ?)....

In the very back.

(Inaudible) -- Dallas Morning News. Is it your feeling that the FEC complaint process is used as a campaign tactic -- (inaudible) -- about that?

Well, I think there's little doubt that many people file complaints, particularly just before the election, in order to gain the publicity attended to that kind of a finding of complaint. And some of those turn out to be relatively insignificant or unfounded...

allegations. I think everyone would concede that that is part of the process. Yes, the new enforcement priority system is designed to take that into consideration. And for those cases that appear not to raise significant issues or that don't raise any apparent knowing or willful intent, or cases that don't meet any of the other factors I identified in my opening remarks -- if they fall below a certain threshold, we probably would end up treating those as less significant and maybe taking no further action....

Does your prioritization program allow you to speed up your audits from the -- (inaudible) -- presidential cycle and -- (inaudible) -- presidential audit?...

We have made several serious improvements in the audit program, and it is our expectation that we will be able to much better process the audits coming out of the 1992 campaign cycle than we did for 1988. We have done several things. We have gotten more resources for the audit division. We have greatly streamlined the audit process. We have changed the regulations that were confusing and causing committees to trip over rules that were really not necessary. And we think that all that kind of streamlining is going to make a dramatic difference. I can't give you a specific date on when we will have our first audit finally released, but I can assure you that we are on our schedule. We have every intention of having these out and available much before the next election....

I'm Josh -- (inaudible) -- Washington Times. Mr. Chairman, you indicated in your statement that by moving to this system you said that you'd be able to focus on certain kinds of cases that need special -- (inaudible). What types of cases are those?...

Well, we will be able to choose virtually any area of the law that we think perhaps need special emphasis. For example, we have recently asked Congress to give us some more resources to address those violations of the $25,000 annual limit that are brought to our attention. Historically the Commission has had a great deal of difficulty on its own initiative coming up with cases that it should pursue under that $25,000 annual limit. What we are asking Congress to do is enable us to have some resources where we can use our database and our Reports Analysis Division and Office of General Counsel to try to identify some of those kinds of cases and pursue them much more vigorously than we have in the past. That's an example of a kind of case that we might want to target. And this kind of concept can be applied to virtually every kind of case that could come to the Commission's attention....

Are there -- (inaudible) -- any other areas that you can identify right now as cases that might come before you of a general nature that you may not be inclined to dismiss -- I mean that are more important than others?...

Well, I'll give you a past example. In years past the same concept would apply in the area of late and non-filers. The

Commission several years ago made a conscious decision that it was going to focus more on late and non-filers, because we felt that we needed to build some deterrent in there. And we have done that. And that would be another example of a type of case that this prioritization program could identify....

I'm -- (inaudible) -- Jackson (sp), CNN. You haven't mentioned increasing -- (inaudible) -- corporation contributions, use of business money and all of that good stuff -- (inaudible) -- consider the worst of violations. (Off mike)? Are you going to give increased attention to corporate contribution cases or less?...

I think that it is our expectation that those cases which evidence the most obvious intent to circumvent the law will be our higher priority. Again, without making specific comment on some of the cases we closed, I can again emphasize that some cases -- and I think the ones you mention -- clearly involve activity that predates the 1990 election cycle....

I would also emphasize something I said. Some cases, and again I think the cases you mentioned are examples, involve parallel criminal proceeding where the Justice Department criminally prosecuted these people under available criminal statutes for much the same type of activity. And so one factor obviously in our being able to start not putting resources into cases that would be unnecessary, is a case where the Department of Justice, on its own or pursuant to assistance given by the FEC, has pursued someone criminally, and the effect of prosecution has achieved that....

One follow-up, if I could. In the past your relied namely on lawyers taking statements from deposition proceedings. You haven't had investigators, analogous to FBI investigators, go out and develop leads and interview people in a more formal way. Do you have any investigators on your staff?...

We are, as we speak, in the process of adding investigators to our staff. A few years ago we started down this path. We developed in 1990 a task force to identify all sorts of ideas that would improve the enforcement program, and moving toward the hiring of investigators was one of those concepts. And we have asked Congress expressly for funding to in part hire some investigators to help us do our investigations....

Can you say how many and what sort of qualifications you're looking for?

Well, the budget process is somewhat iffy, and we're not sure exactly how much money we'll be able to actually spend on investigators as distinguished from other additional staff. But if you check with us as the budget year progresses you'll be able to get a specific number....

Let's go back over here.

A follow-up to an earlier issue, and that is criminal cases. How is your decision-making on whether to continue with a case or whether to go faster or slower affected by current criminal charges -- whether they be state or Department of Justice?...

The presence of pending parallel criminal proceedings is a complicating factor for us, quite frankly. Often you find that persons involved in a parallel criminal proceeding will assert the Fifth Amendment, and it's very difficult to get testimony at the Federal Election Commission when these people are worried about testifying in connection with a criminal action. So in many of our cases that involve that situation we have had to work with the Justice Department as best as possible, and in some cases hold up part of our investigation pending the Justice Department resolution....

What about state charges?

Same issue there. If someone is under possible criminal indictment, the same sort of Fifth Amendment concerns develop there. So that can be a problem in those kinds of situation....

Chairman Thomas, do you have any inkling of what the reaction will be to this on Capitol Hill from the oversight committees, the -- (inaudible) -- oversight committees? And, also, what impact do you think this might have, or should it have, on the agency's 1995 budget request?...

Well, I will let the vice chairman, who is the chairman of our finance committee address the latter question. As for your general first question, it is our expectation that the members of our oversight committees will be very receptive to this idea, because, first of all, we have been informing them that we have been moving towards management reforms in the Office of General Counsel and our enforcement program, and they have enthusiastically supported our ability to improve enforcement by giving us more resources in our current fiscal budget and so on. So I am optimistic that it will be well received....

In terms of your question about the budget, the Federal Election Commission has been underfunded for years. The Office of Management and Budget did not approve or support a single initial Commission budget request from 1977 through 1983 -- 1993. For 1994, the current fiscal year, the Commission has received its full budget request. We will still be short enforcement staff though, because we have to fund a government-wide salary increase, and we haven't received any additional funds to do that. As a result, we anticipate only being able to hire half the additional enforcement staff that we had initially hoped to fund through our '94 budget....

As for 1995, we have asked Congress and the Office of Management and Budget for a significant budget increase. Part of it is to provide electronic filing capacity to candidates and political committees, and to make it easier for the press to look directly into our computers and see what campaign activity has been reported. But another section of that budget request goes to additional enforcement resources. We are hopeful that even in this budget environment Congress and the administration will be supportive. We have heard initial support from members of our committees on the Hill. However, that money, if we receive those resources in 1995, is too late to deal with the problem we have been addressing this morning, which is more cases than we have staff resources....

(Inaudible) -- respond to the general criticism that the FEC is a toothless tiger, is ineffective? And how -- (inaudible) -- working out today address that --...

Well, that's why we are here, and that's why we did what we did. This is an effort to actually not just change the reality but change the perception that the agency is ineffective. I think that there has been a serious effort made by this agency over the years to enforce the law. Certainly compared to the ability of the government to enforce the election laws prior to the Commission's creation, this agency has made a dramatic difference. And I have great faith that for the most part campaigns and committees make a serious effort to comply with the law and do comply with the law....

By the same token, we have heard in the press a lot the perception that the Commission is in fact toothless, and that can have its own corrosive effect on the process. And if people get that idea there is perhaps the possibility that they will feel like getting away with violations is going to be the matter of some course....

So one thing we are attempting to do here today is to announce we are going to put teeth in the enforcement of the law. We are going to manage our caseload better. We're going to resolve cases more quickly. And the enforcement program, as a general matter, will not be subject to that kind of criticism in the future....

(Off mike) -- question in the back.

(Inaudible.) How many people do you think you'll need to hire on your enforcement staff -- (off mike) -- and how many do you think you will in fact hire?...

Well, the -- we are asking in the current fiscal year -- we have been given funding in the current fiscal year for several more positions in the Office of General Counsel....

It's difficult until all of the numbers and estimates on the pay raise that the vice chairman referred to are worked out to give you a specific number. It is my expectation that we will be able to add at least an additional enforcement team, which generally involves about five or six more enforcement attorneys, plus supervisory and support staff, and that will certainly assist us....

Part of what we are dealing with is the fact that this priority program will identify cases that, as a matter of common sense, simply aren't worth dragging all the way through the enforcement process, so part of what we're announcing today is the effort to identify those kinds of cases, and they don't need additional staff assistance....

And it's our expectation that combining the increased number of staff in the counsel's office with this ability to target the most significant cases, that we will be able to handle, from this point forward, the cases that we could be handling....

(Could you tell us ?) how many -- (I don't know what the term was, whether ?) it was investigators or attorneys or whatever -- how many will you have to investigate how many cases?...

Well, I mentioned the number 19. We have right now only 19 front-line staff attorneys assigned to enforcement full time. Now, there are additional attorneys in the Office of General Counsel. We, in fact, have about 48 attorneys overall in the Office of General Counsel right now, but those folks have to perform many functions. We have all of the policy work associated with advising people on the audits that are pending, advisory opinions have to be issued, regulations have to be issued to clarify the law....

Certainly the largest component of our Office of General Counsel staff is dedicated to enforcement, and what we are hoping is that we will be able to add more to that and, through the prioritization program, handle the cases that need to be handled effectively....

Back in the back of the room.

-- (inaudible) -- one of the things you're dropping (are things that are ?) either stale or insignificant -- (inaudible) -- Senator Durenberger, can you explain why that one -- (inaudible) --...

Well, again, let me ask, if you would, to check the underlying enforcement file. We have in those files made an effort in

writing to explain the specific reasons, and those are reasons that six commissioners could agree on. If you asked me, you might get a different answer, say, than someone else, and I would ask that you take a first crack at the underlying file and that would be the way to go at it....

-- (inaudible) -- you seem to be saying here that some of these cases were dropped for essentially for political reasons, that you simply could not get a majority of the Commission to pursue them....

No, I don't think I said that. I hope I didn't -- I hope I didn't imply it, either. The cases that we have voted to drop are cases where we had six votes to drop, and the Commission was therefore unanimous....

And I think for the most part the Commission is unanimous on its enforcement decisions. Most cases it either is a violation or it is not. It's fairly clear, and so we don't split all that often, and that is certainly the case here. The cases we've identified for closing we unanimously agreed --...

-- (inaudible) -- each case, these 137 cases were dropped because you couldn't get any -- (inaudible) --

Definitely that is the case, yes.

Could I follow up on that? When you say you voted unanimously to drop them -- (inaudible) -- how many of these cases have you earlier had only three votes to proceed?...

I'm not sure I have that information now. If you want to follow up, we can certainly try to get that information.

There were some, though?

I'm not --

-- (inaudible) --

-- I wouldn't be surprised if maybe there were some, but off the top of my head, I'm not sure exactly which ones I would identify.

There were certain cases where you deadlocked and then the commissioners decided to drop them simply because -- (inaudible) -- authority to proceed.

Larry Noble, our general counsel, might have some more specific information on that.

One or two more questions, and then we're going to have to adjourn.

Mr. Chairman, why is it only now that the agency has publicly acknowledged a statement that was clearly made six months to a year ago to increase the amount of civil penalties -- (inaudible) --...

Well, part of the philosophy of how you enforce the law is that you don't want to let people in the process know exactly what you're going to do in advance, and we historically have taken the approach that if we were to fully divulge how we calculate our civil penalties, it makes it easier for people in the process to build that in as a cost of doing business....

Now, there are some countervailing considerations. We have talked seriously amongst ourselves about the possibility in some areas of moving more toward a standard civil penalty for certain kinds of violations, but I think I said the process is evolving, and it really is. We are right now in the middle of trying to identify how we should assess civil penalties and to fit in with the overall goal of improving the enforcement program....

Vice Chairman Potter -- (inaudible) --

I just wanted to go back to that earlier question about whether any of these cases were being dropped for political reasons and to be clear on what you've been told here this morning. These were cases that were recommended to the Commission by the staff of the Office of General Counsel for closing. They were recommended based on the criteria and new views in the new enforcement priority system. They were either below the cutoff date in terms of timing -- they were too old -- or, based on the objective rating done by the staff, they were not as important as other cases we have....

The Commission took those recommendations and agreed to them by a 6-0 vote. In no case was there a dispute about whether or not something should be closed for any type of political consideration. This was done on an objective basis by the staff and the Commission then approved those recommendations as, essentially, a group based on the system we now have in place....

I'm sorry, we're going to have to cut it off. The chairman and vice chairman have to get back up. As I said, the press office staff will remain and some senior staff will be here, too, to respond to any questions you may have....

Other than that, you'll find a complete file on each of these cases you have before you in the Commission's public records office.

Thank you very much for coming.