Alabama Advisory Opinions February 08, 2019: AGO 2019-021 (February 08, 2019)

Advisory Opinion Text

Honorable John H. Merrill

Secretary of State

State Capitol Suite S-105

600 Dexter Avenue

Montgomery, Alabama 36130-4650

Secretary of State - Ethics Commission -Fair Campaign Practices Act - Penalties -Civil Remedies

Discussion of the authority of the Secretary of State and Ethics Commission regarding civil penalties under the Fair Campaign Practices Act.

Dear Mr. Merrill:

This opinion of the Attorney General is issued in response to your request.

QUESTIONS

(1) What are the Secretary of State's obligations under the Fair Campaign Practices Act ("FCPA") in light of Advisory Opinion No. 2018-11 of the Ethics Commission ("Commission")?

(2) Pursuant to section 17-5-19.1 of the Code of Alabama, the Secretary of State is required to inform the Attorney General and district attorney of a political action committee's or candidate committee's violation of the filing requirements of the FCPA four or more times in an election cycle. Where the number of past violations has been reduced by the Commission pursuant to its opinion, does the Secretary of State still have an obligation to notify upon an additional violation?

(3) Under section 17-5-19.1(e) of the Code of Alabama, is the "finality of review" for purposes of the requirement to pay a penalty/institute proceeding to collect the penalty the date the Commission acts on the review or the date its final order is entered?

FACTS AND ANALYSIS

You request guidance on how to perform the Secretary of State's statutory duties under the civil penalties provision of the FCPA in light of recent actions by the Alabama Ethics Commission. Some background is necessary before addressing your specific questions.

Under the FCPA, non-local candidates and committees must file campaign finance reports with the Secretary of State. See Ala. Code § 17-5-9 (Supp. 2018). It is a Class A misdemeanor for a person to intentionally fail to file a required report. Ala. Code § 17-5-19(b) (Supp. 2018). In addition to this criminal penalty, the FCPA provides civil or "administrative penalt[ies] against any person who fails to timely file a report required by [the FCPA] and who does not remedy the filing of the report" under the FCPA's terms. Ala. Code § 17-5-19.1(a) (Supp. 2018). The statute creates a schedule of escalating civil penalties based on the number of violations committed in a single election cycle: a "first offense" is at least $300, a "second offense" is at least $600, and a "third or subsequent offense" is at least $1,200. See ALA. Code § 17-5-19.1(b)(l)-(3) (Supp. 2018). A "fourth failure to timely or accurately file a report in an election cycle shall create a rebuttable presumption of intent to violate the reporting requirements" in a prosecution. Ala. Code § 17-5-19.1(c) (Supp. 2018).

The Secretary of State is charged by statute to "provide uniform guidance for election activities," id., and to "[w]ork cooperatively with the State Ethics Commission to fully implement and enforce all campaign finance laws." Ala. Code § 36-14-18(3) (Supp. 2018). In addition to these general duties, the Secretary of State has four specific duties with respect to the civil penalty provisions of the FCPA. First, the Secretary of State "shall levy an administrative penalty against any person" who fails to timely file a required report with his or her office according to the escalating schedule of penalties. Ala. Code § 17-5-19.1(a) (Supp. 2018). Second, the Secretary of State "shall send the person upon whom the penalty is being imposed proper notification." Ala. Code § 17-5-19.1(d) (Supp. 2018). Third, the Secretary of State "shall notify the Attorney General and the appropriate district attorney of all persons who violate the filing requirements four or more times in an election cycle." Ala. Code § 17-5-19.1(c) (Supp. 2018). Finally, the Secretary of State "may institute proceedings to recover any penalties" that are not paid "within 45 days of the finality of any review." Ala. Code § 17-5-19.1(e) (Supp. 2018).

The Commission, in turn, acts as an appellate body reviewing the Secretary of State's imposition of civil penalties. "Any person upon whom a civil penalty has been imposed . . . may seek a review of such penalty by filing a written notice ... no later than 14 days after the date on which notification of the imposition of the penalty was mailed." Ala. Code § 17-5-19.2(a) (Supp. 2018). Upon notice of appeal, the Commission "may set aside or reduce a civil penalty upon a showing of good cause." Ala. Code § 17-5-19.2(b) (Supp. 2018). See also, Ala. Code § 36-25-4(b)(7) (Supp. 2018) ("[a]ffirm, set aside, or reduce civil penalties as provided in Section 17-5-19.2").

Advisory Opinion No. 2018-11 from the Commission concluded that, on an appeal from the imposition of a civil penalty for a violation of the FCPA, the Commission may reduce or set aside, not merely the amount of the penalty, but also "the number of the offense." Ethics Commission Advisory Opinion No. 2018-11, dated October 3, 2018 at 6. That opinion opined that the Commission had the authority to declare a committee's third failure to file a required report to be only its second offense, first offense, or not an offense at all. The Commission's opinion stated that its actions "shall not impede the independent prosecutorial authority of the District Attorney or the Attorney General." Id. This Office understands that, since adopting this opinion, the Commission has proceeded in individual cases to reduce the "number of the offense" for various political action committees.

As a general matter, it is the opinion of this Office that the Commission lacks the authority to interfere with, or in any way impede, the duties that have been statutorily assigned to the Secretary of State or Attorney General. In response to your specific questions, it is the opinion of this Office that the Secretary of State should ignore the Commission's reduction in the "number of the offense" in performing the Secretary of State's duties under the FCPA. This is so for two reasons.

First, the plain language of the Code of Alabama assigns the responsibility to determine the number of violations to the Secretary of State and, for local committees, to probate judges. The Secretary of State's statutory duties include the duty to "levy and collect penalties for failure to file timely reports" under the FCPA. Ala. Code § 36-14-18(2) (Supp. 2018). The Secretary of State must assess the appropriate civil penalty based on his or her determination of the number of filing offenses during an election cycle and by following the schedule set forth in the FCPA. See Ala. Code § 17-5-19.1(a) & (b) (Supp. 2018).

Although the Commission has authority to reduce or set aside the civil penalty, the Legislature has not empowered the Commission to limit the Secretary of State in the determination of the number of violations of a filing requirement. The relevant statutory power granted to the Commission is set forth in section 17-5-19.2(b) as follows: "The commission may set aside or reduce a civil penalty upon a showing of good cause." Ala. Code § 17-5-19.2(b) (Supp. 2018) (emphasis added). This power is reinforced by section 36-25-4(b)(7) of the Code of Alabama, which grants the Commission the power to "[a]ffirm, set aside, or reduce civil penalties as provided in Section 17-5-19.2." Ala. Code § 36-25-4(b)(7) (Supp. 2018) (emphasis added).

These statutes give the Commission substantial discretion to reduce or eliminate penalties, but they do not give the Commission the power to pardon the underlying offenses or otherwise compel the Secretary of State to treat them as if they never occurred. A "civil penalty" is "[define assessed for a violation of a statute or regulation." Black's Law Dictionary 1313 (10th ed. 2014) (emphasis added). Under the statute, the Commission may reduce the penalty for a fiftieth offense to zero or it may treat a third offense as a first offense for purposes of imposing a civil penalty. But the ability to reduce or eliminate a particular type of punishment—here, a civil penalty—does not set aside the underlying offense itself. An "offense" is "[a] violation of the law." Id. at 1250. Although the Commission has discretion in how much to punish a particular violation, nothing in the statute gives the Commission the power to pardon, nullify, or eliminate the underlying violations themselves as a historical fact. Under the plain text of the statute, the Secretary of State is charged with determining the number of offenses and assessing the initial fine under the schedule in section 17-5-19.1(b).

Second, even if the Secretary of State could theoretically use the Commission's artificial "number of violations" to assess an initial penalty, the Secretary of State must necessarily use the actual, historical number of violations for the reports to the district attorneys and Attorney General. The FCPA requires the Secretary of State to "notify the Attorney General and the appropriate district attorney of all persons who violate the filing requirements four or more times in an election cycle." Ala. Code § 17-5-19.1(c) (Supp. 2018). This notice is not contingent on an appeal of the penalty to the Commission and occurs regardless of the success of any appeal. There is no question that the Commission's decision to reduce or set aside a penalty or "the number of the offense" is irrelevant to the Attorney General's or a district attorney's power to prosecute a criminal violation. The Commission itself has recognized that nothing it does may "impede the independent prosecutorial authority of the District Attorney or the Attorney General." Ethics Commission Advisory Opinion No. 2018-11, dated October 3, 2018 at 6. Instead, the Commission correctly explained that its decisions "do[] not foreclose other investigations in to the same conduct by any law enforcement agency or prosecutorial authority." Id. Because the district attorneys and Attorney General may prosecute intentional violations of the reporting requirements regardless of the Commission's actions, the Secretary of State must necessarily use the actual historical "number of offenses" to determine when to report violations for potential investigation and prosecution.

Finally, a committee that has appealed a civil penalty to the Commission must pay the Secretary of State within 45 days of the Commission's final written order, not within 45 days of the Commission's hearing on the appeal. The FCPA provides that "[c]ivil penalties levied shall be paid to the appropriate filing official within 45 days of the finality of any review." Ala. Code § 17-5-19.1(e) (emphasis added) (Supp. 2018). If a penalty is not paid voluntarily, the Secretary of State may bring legal proceedings to recover the penalty. Id.

It is generally accepted that review is not final until an order is issued in writing. Under the Alabama Administrative Procedures Act, for example, "[t]he final order in a proceeding which affects substantial interests shall be in writing and made a part of the record." Ala. Code § 41-22-16(a) (2013). Likewise, the Alabama Rules of Civil Procedure do "not recognize an oral rendition of a judgment or order or an oral entry of a judgment or order." Ex parte Chamblee, 899 So.2d 244, 248 (Ala. 2004). See also, K.P. v. Madison Cty. Dep't of Human Res., 243 So.3d 835, 837 (Ala.Civ.App. 2017) ("It is clear that an oral pronouncement of a ruling does not constitute a 'rendering' of an order"). Although nothing prohibits the affected committee from paying the penalty prior to the entry of the Commission's final order, it is nonetheless incumbent on the Commission to produce a timely written order when it affirms a penalty on appeal so that the Secretary of State can collect the penalty.

CONCLUSION

The Secretary of State is not bound by the Ethics Commission's reduction in the "number of the offense" in performing the Secretary of State's duties under the civil penalties provision of the Fair Campaign Practices Act.

The Secretary of State should notify the Attorney General and the appropriate district attorney of all persons who violate the filing requirements four or more times in an election cycle based on the actual historical number of violations under section 17-5-19.1 (c) of the Code of Alabama. This duty must be performed regardless of the Commission's action to reduce the number of violations or affirm, set aside, or reduce the penalty associated with a violation.

A committee must pay a penalty within 45 days of the Commission's final written order establishing the amount of the penalty. The Commission must issue its final orders in writing promptly following the hearing at which it considered the appeal.

I hope this opinion answers your questions. If this Office can be of further assistance, please contact me.

Sincerely,

STEVE MARSHALL Attorney General.

G. WARD BEESON, III Chief, Opinions Division.