[Federal Register: December 1, 2003 (Volume 68, Number 230)]
[Rules and Regulations]
[Page 67013-67018]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr01de03-1]
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Rules and Regulations
Federal Register
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[[Page 67013]]
FEDERAL ELECTION COMMISSION
11 CFR Parts 100 and 102
[Notice 2003-22]
Leadership PACs
AGENCY: Federal Election Commission.
ACTION: Final rules and transmittal of regulations to Congress.
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SUMMARY: The Federal Election Commission is revising portions of its
regulations to address the relationship between the authorized
committee of a Federal candidate or officeholder and entities that are
not authorized committees but are associated with the Federal candidate
or officeholder. The final rules state that authorized committees and
entities that are not authorized committees shall not be deemed to be
affiliated. Thus, certain disbursements by those unaffiliated entities
will be treated as in-kind contributions to the candidates. Further
information is contained in the Supplementary Information that follows.
EFFECTIVE DATE: December 31, 2003.
FOR FURTHER INFORMATION CONTACT: Ms. Mai T. Dinh, Acting Assistant
General Counsel, Mr. J. Duane Pugh Jr., Senior Attorney, or Mr. Anthony
T. Buckley, Attorney, 999 E Street, NW., Washington, DC 20463, (202)
694-1650 or (800) 424-9530.
SUPPLEMENTARY INFORMATION: The Commission is adopting final rules at 11
CFR 100.5(g)(5) to address the relationship between authorized
committees and unauthorized committees that are associated with a
Federal candidate or officeholder, more commonly known as ``leadership
PACs,'' as well as other entities that are not Federal political
committees, but are established, financed, maintained, or controlled
by, or acting on behalf of, a Federal candidate or officeholder
(collectively ``leadership PACs''). Previously, the Commission has
examined this relationship on a case-by-case basis to determine whether
transactions between an authorized committee and a leadership PAC
constituted in-kind contributions or resulted in affiliation under 11
CFR 100.5(g). In promulgating rules of general applicability, the
Commission is changing its case-by-case approach and is deciding to
analyze these transactions as in-kind contributions exclusively and not
to engage in an affiliation analysis in examining the relationship
between an authorized committee and a leadership PAC. As such, under
the new rules, an authorized committee and a leadership PAC will not be
deemed to be affiliated. Additionally, the adoption of these rules
requires a change in the Commission's regulations at 11 CFR
102.2(b)(1)(i), which, in part, governs the disclosure of the names of
all unauthorized committees affiliated with an authorized committee.
The Commission published a Notice of Proposed Rulemaking on
December 26, 2002, 67 FR 78753 (``NPRM''). Written comments were due by
January 31, 2003. Comments were received from: the Campaign and Media
Legal Center; the Center for Responsive Politics and Common Cause and
Democracy 21 (joint comment); Cleta Mitchell, Esq.; Paul E. Sullivan,
Esq.; Republicans Members of the U.S. House of Representatives Tom
DeLay, Roy Blunt, Deborah Pryce, David Dreier, John Doolittle, Jack
Kingston, Tom Reynolds, Bob Ney, Tom Davis, Phil English, Greg Walden,
Buck McKeon, Hal Rogers, and Pete Sessions, and the American Liberty
PAC, American Success PAC, Federal Victory Fund, Help America's Leaders
PAC, Pacific Northwest Leadership Fund, People for Enterprise, Trade,
and Economic Growth, Together for Our Majority PAC, and the 21st
Century Fund (joint comment); the Rely on Your Beliefs Fund; and Lyn
Utrecht, Esq., Eric Kleinfeld, Esq., Jim Lamb, Esq., and Pat Fiori,
Esq. (joint comment). The comments are available at http://www.fec.gov/register.htm
under ``Leadership PACs.'' The Commission held a public
hearing on February 26, 2003, at which it heard testimony from seven
witnesses: Donald McGahn, Esq.; Cleta Mitchell, Esq.; Paul E. Sullivan,
Esq.; Lawrence M. Noble, Esq.; Paul Sanford, Esq.; Glen Shor, Esq.; and
Donald Simon, Esq. Transcripts of the hearing are available at the
website identified above. Please note that, for purposes of this
document, ``comment'' and ``commenter'' apply to both written comments
and oral testimony at the public hearing.
Under the Administrative Procedures Act, 5 U.S.C. 553(d), and the
Congressional Review of Agency Rulemaking Act, 5 U.S.C. 801(a)(1),
agencies must submit final rules to the Speaker of the House of
Representatives and the President of the Senate, and publish them in
the Federal Register at least 30 calendar days before they take effect.
The final rules that follow were transmitted to Congress on November
24, 2003.
Explanation and Justification
11 CFR 100.5 Political Committee
I. Background
The Federal Election Campaign Act of 1971, as amended (``FECA''), 2
U.S.C. 431 et seq., defines ``authorized committee'' as ``the principal
campaign committee or any other political committee authorized by a
candidate under section 432(e)(1) of this title to receive
contributions or make expenditures on behalf of such candidate.'' 2
U.S.C. Sec. 431(6); see also 11 CFR 100.5(f)(1). ``Unauthorized
committee'' is defined in the Commission's regulations as ``a political
committee which has not been authorized in writing by a candidate to
solicit or receive contributions or make expenditures on behalf of such
candidate, or which has been disavowed pursuant to 11 CFR
100.3(a)(3).'' 11 CFR 100.5(f)(2) (emphasis added). An unauthorized
committee may accept contributions in greater amounts than those
allowed to be accepted by an authorized committee, compare 2 U.S.C.
441a(a)(1)(C) with 2 U.S.C. 441a(a)(1)(A), and, if it attains
multicandidate committee status,\1\ may contribute greater amounts to
Federal candidates than those allowed to be contributed by an
authorized
[[Page 67014]]
committee. Compare 2 U.S.C. 441a(a)(2)(A) with 2 U.S.C. 441a(a)(1)(A).
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\1\ A committee achieves multicandidate status when it has been
registered under 2 U.S.C. 433 for not less than six months, has
received contributions from more than 50 persons, and except for a
State political party organization, has made contributions to five
or more candidates for Federal office. 2 U.S.C. 441a(a)(4); 11 CFR
100.5(c)(3).
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The term ``leadership PAC'' lacks a formal definition. Generally,
such PACs ``are formed by individuals who are Federal officeholders
and/or Federal candidates. The monies these committees receive are
given to other Federal candidates to gain support when the officeholder
seeks a leadership position in Congress, or are used to subsidize the
officeholder's travel when campaigning for other Federal candidates.
The monies may also be used to make contributions to party committees,
including State party committees in key states, or donated to
candidates for State and local office.'' Notice of Proposed Rulemaking
on Leadership PACs, 67 FR 78753, 78754 (Dec. 26, 2002) (citations
omitted).
Pursuant to 2 U.S.C. 441a(a)(5), ``all contributions made by
political committees established or financed or maintained or
controlled by any corporation, labor organization, or any other person,
including any parent, subsidiary, branch, division, department, or
local unit of such corporation, labor organization, or any other
person, or by any group of such persons, shall be considered to have
been made by a single political committee.''
Under the Commission's regulations, committees that are affiliated,
that is, committees that are established, financed, maintained, or
controlled by the same corporation, labor organization, person or group
of persons, et al., share a single limitation on the amount they can
accept from any one contributor. 11 CFR 100.5(g), 110.3(a)(1),
110.3(a)(3)(ii). Typically, under FECA and the Commission's
regulations, the Commission has treated ``leadership PACs'' as
unauthorized political committees, and usually has not found them to be
affiliated with authorized committees sharing contribution limits of
affiliated committees.
In 1986 the Commission began a rulemaking to address affiliation in
general, including leadership PACs. The Commission determined in 1989,
however, to maintain its existing approach, noting that ``the
Commission has concluded that this complex area is better addressed on
a case-by-case basis.'' Affiliated Committees, Transfers, Prohibited
Contributions, Annual Contribution Limitations and Earmarked
Contributions; Final Rule, 54 FR 34098, 34101 (Aug. 17, 1989). The
Commission embarked on this rulemaking in 2002, in part, to clarify its
historic approach in examining the relationship and transactions
between a candidate's authorized committee and a leadership PAC
associated with that candidate. NPRM at 78755.
II. Alternatives in the NPRM
The NPRM set forth three different ways of addressing the question
of affiliation between an authorized committee and a leadership PAC.
The first two proposals (Alternatives A and B) would have established
factors for finding affiliation, with all of the consequences of
affiliation applying as a result. The third proposal (Alternative C)
sought to codify the Commission's existing practice.
Alternative A set out individual factors in proposed section
100.5(g)(5)(i), the presence of any one of which would result in
affiliation. The factors were: (1) The candidate or officeholder, or
their agent has signature authority on the unauthorized committee's
checks; (2) funds contributed or disbursed by the unauthorized
committee are authorized or approved by the candidate or officeholder
or their agent; (3) the candidate or officeholder is clearly identified
as described in 11 CFR 100.17 on either the stationery or letterhead of
the unauthorized committee; (4) the candidate, officeholder or his
campaign staff, office staff, or immediate family members, or any other
agent, has the authority to approve, alter or veto the unauthorized
committee's solicitations, contributions, donations, disbursements or
contracts to make disbursements; and (5) the unauthorized committee
pays for travel by the candidate, his campaign staff or office staff in
excess of $10,000 per calendar year. The second factor would have been
satisfied even if the officeholder or candidate or agent authorized or
approved only some and not all of the disbursements.
Alternative B described two separate tests under which affiliation
would have been found. Under proposed section 100.5(g)(5)(i)(A),
affiliation would have existed if any one of the following factors were
present: (1) The candidate or officeholder has signature authority on
the entity's checks; (2) the candidate or officeholder must authorize
or approve disbursements over a certain minimum amount; (3) the
candidate or officeholder signs solicitation letters and other
correspondence on behalf of the entity; (4) the candidate or
officeholder has the authority to approve, alter or veto the entity's
solicitations; (5) the candidate or officeholder has the authority to
approve, alter, or veto the entity's contributions, donations, or
disbursements; or (6) the candidate or officeholder has the authority
to approve the entity's contracts. Under this alternative, the
authorized committee and the leadership PAC would have been considered
affiliated because the candidate or officeholder exercised sufficient
influence to conclude that the candidate or officeholder established,
financed, maintained, or controlled the leadership PAC.
If none of the above factors were present, affiliation could still
be found under Alternative B of proposed section 100.5(g)(5)(i)(B) if
any three of the following factors were present: (1) The campaign staff
or immediate family members of the candidate or officeholder have the
authority to approve, alter or veto the entity's solicitations; (2) the
campaign staff or immediate family members of the candidate or
officeholder have the authority to approve, alter, or veto the entity's
contributions, donations, or disbursements; (3) the campaign staff or
immediate family members of the candidate or officeholder have the
authority to approve the entity's contracts; (4) the entity and the
candidate or officeholder's authorized committees share, exchange, or
sell contributor lists, voter lists, or other mailing lists directly to
one another, or indirectly through the candidate or officeholder to one
another; (5) the entity pays for the candidate or officeholder's travel
anywhere except to or from the candidate or officeholder's home State
or district; (6) the entity and the candidate or officeholder's
authorized committees share office space, staff, a post office box, or
equipment; (7) the candidate or officeholder's authorized committee(s)
and the entity share common vendors; and (8) the name or nickname of
the candidate or the officeholder, or other unambiguous reference to
the candidate or officeholder appears on either the entity's stationery
or letterhead.
Alternative C would have largely continued the Commission's current
treatment of leadership PACs by treating a leadership PAC as affiliated
with a candidate or officeholder's authorized committees unless the
leadership PAC undertook activities that would indicate its primary
purpose is not to influence the nomination or election of the candidate
or officeholder involved. These activities are: (1) Only making
disbursements to raise funds for party committees or to influence the
nomination or election of persons other than the candidate or
officeholder involved; (2) avoiding references to the candidacy or
potential candidacy of the sponsoring candidate or officeholder in
[[Page 67015]]
any solicitations, communications or other materials of the
unauthorized committee; (3) requiring that the candidate or
officeholder make no reference to his or her candidacy or potential
candidacy during his or her speeches or appearances on behalf of the
leadership PAC; and (4) requiring that specified expenses would have to
be reimbursed by a presidential campaign committee if the candidate or
officeholder becomes a presidential candidate. If the leadership PAC
did not conform its activities to these limitations, under Alternative
C, it would be deemed to be an authorized committee.
III. Comments
1. Question of Affiliation
One commenter thought that Alternative A was contrary to FECA and
not mandated by the Bipartisan Campaign Reform Act of 2002, Pub. L.
107-155, 116 Stat. 81(2002) (``BCRA''). Another commenter believed that
this alternative would defeat the purpose of leadership PACs, and that
it was sufficiently onerous that Federal officeholders could not and
would not establish them. A third commenter agreed with this latter
point, arguing that its terms went beyond what the authors of BCRA
envisioned. One commenter disagreed with Alternative A's general
structure, arguing that no one single factor is sufficient to prove
affiliation absent express authorization by the candidate.
Other commenters disapproved of Alternative A because it did not
allow for sufficient opportunities to find affiliation. One commenter
stated that the alternative contained only a per se list and thus
ignored numerous factors that indicated a relationship existed between
two committees. Another commenter argued that Alternative A was
insufficiently comprehensive to encompass all relationships covered by
the statutory term ``established, financed, maintained, or
controlled.'' Similarly, one commenter supported many of the factors of
Alternative A, but believed it did not include enough factors and was
not sufficiently flexible.
With respect to Alternative B, one commenter argued that it also
was contrary to FECA and not mandated by BCRA. Another commenter felt
that it essentially defeated the purpose of leadership PACs and was
sufficiently onerous that the only conclusion to be drawn is that
Federal officeholders could not and would not establish them. A third
commenter agreed with this latter point, stating that Alternative B was
a more burdensome version of Alternative A.
The commenter who disagreed with the general structure of
Alternative A concurred that most of the eight factors listed should be
considered in determining affiliation, but thought setting a specific
number to be met could present problems. Of the three commenters who
thought Alternative A was not sufficiently comprehensive, all three
supported the structure of Alternative B, but did not feel it included
enough factors. Each of these commenters proposed variations on
Alternative B that included additional factors. Two of these commenters
added a third option for finding affiliation, based on a ``totality of
the circumstances.'' The commenter who did not include such an option
argued that the rule should only apply to political committees under
FECA and political organizations organized under 26 U.S.C. 527.
One commenter stated that Alternative C was a useful starting point
for addressing the issue of the status of leadership PACs in the
related candidate's own election. Another commenter thought that
Alternative C provided a basis for a reasonable set of criteria
defining and governing leadership PACs. This commenter suggested that
certain amendments to Alternative C would be appropriate: (1)
Specifically authorizing leadership PACs to contribute to State and
local candidates and political parties within the limits and pursuant
to State laws; (2) eliminating provisions that prohibit references to
the related Federal candidate in solicitations or public appearances;
and (3) requiring candidates and officeholders who become candidates
for President and qualify for primary or general election financing to
repay to the presidential campaign committee any expenses paid by the
leadership PAC for travel, polling, staff, or other expenses made on
behalf of the presidential campaign effort. Another commenter stated
that Alternative C's proposed conditions are cumbersome and do not
significantly improve the Commission's regulatory framework. This
commenter suggested that the Commission should presume a leadership PAC
is unaffiliated unless its activities are for the purpose of
influencing the election of the connected Federal candidate.
Another commenter argued that Alternative C continues a current
system that fails to properly consider affiliation, and that the mere
absence of a leadership PAC attempt to influence the specific
officeholder's election should not be conclusive evidence that the
committees are not affiliated. This commenter argued that such a
standard ignores the ``established, financed, maintained, or controlled
by'' test in FECA. Two other commenters disapproved of Alternative C
because it maintains the status quo.
2. Impact of BCRA
The Commission also sought comment as to how BCRA impacted a
potential rule governing leadership PACs. Five commenters took issue
with a suggestion in the NPRM that BCRA might require a finding of
affiliation between an authorized committee and a leadership PAC. One
commenter noted that one of BCRA's sponsors, Senator John McCain, had
stated that, under BCRA's terms, ``[a] Federal officeholder or
candidate is prohibited from soliciting contributions for a Leadership
PAC that do not comply with Federal hard money source and amount
limitations. Thus, the Federal officeholder or candidate could solicit
up to $5,000 per year from an individual or PAC for the Federal account
of the Leadership PAC and an additional $5,000 from an individual or
PAC for the non-Federal account of the Leadership PAC.'' 148 Cong. Rec.
S2140 (Mar. 20, 2002). Thus, this commenter argued that BCRA does not
contemplate the automatic affiliation of leadership PACs with
authorized committees.
This same commenter noted that a number of leaders of the House of
Representatives, all of whom voted in favor of BCRA, have leadership
PACs. One commenter argued that BCRA does not require or even suggest
that the Commission change its approach with respect to leadership PACs
and the proper focus is on whether the activities at issue are ``for
the purpose of influencing the election of the individual who is
connected with the PAC.'' In contrast, other commenters argued for an
interpretation that BCRA prohibits Federal candidates and officeholders
from maintaining soft money leadership PACs.
The Commission determined in the Soft Money rulemaking that BCRA
does not allow a Federal candidate or officeholder to raise up to
$5,000 separately for the Federal and non-Federal accounts of
leadership PACs directly or indirectly established, financed,
maintained, or controlled by that Federal candidate or officeholder.
Rather, for their leadership PACs, they are limited to raising a total
of $5,000 from any one source, per election cycle. See Final Rules on
Prohibited and Excessive Contributions: Non-Federal Funds or Soft
Money, 67 FR 49064, 49107 (July 29, 2002) (``Although
[[Page 67016]]
candidate PACs and Leadership PACs are not specifically mentioned, the
legislative history indicates that 2 U.S.C. 441i(e)(1) is intended to
prohibit Federal officeholders and candidates from soliciting any funds
for these committees that do not comply with FECA's source and amount
limitations.'') Therefore Federal candidates will not violate BCRA
merely by establishing and raising money for their leadership PACs
within the amount limitations and source prohibitions of FECA and BCRA.
3. Other Concerns
Two commenters, a leadership PAC and a joint comment from
leadership PACs and Members of the House of Representatives, stated
that their support of challengers helped those candidates who are often
at a fundraising disadvantage when compared to incumbents.\2\ One
commenter argued that leadership PAC support for open seat candidates
is sometimes critical to the viability of these candidates. Another
commenter urged that the rule should be clear to ``encourage and
validate'' the important role of these committees. This same commenter
argued that leadership PACs should be encouraged as an avenue for
Federal officeholders to support local and State parties and candidates
in a manner that is disclosed to the Commission. This commenter also
noted the importance of leadership PACs in their role of replacing the
loss of non-Federal funds due to BCRA.
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\2\ One commenter cited the Commission recent approval of
campaign payment of candidate's salaries under certain circumstances
as recognition of the importance of challengers receiving adequate
funds.
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In response to the commenters arguing that BCRA precludes the
result of the final rule issued today, the Commission concludes that
BCRA's structure and wording answer these concerns. BCRA contemplates
Federal candidate control of unauthorized committees. Otherwise, there
would be no need to apply ``hard money'' limits. 2 U.S.C. 441i(e)(1).
Thus, BCRA cannot be read generally to prohibit leadership PACs or to
require that they be affiliated with a candidate's authorized
committee. To the contrary, had Congress believed it was mandating a
per se rule of affiliation between the two types of committees, BCRA
would have gone further to require that contributions to those
committees be aggregated with contributions to the candidate's
authorized committee. BCRA requires no such aggregation.
IV. Final Rule
In previous advisory opinions and compliance matters, the
Commission has examined leadership PACs whose activities were
significantly intertwined with the activities of a Federal candidate's
authorized committee. In such circumstances, the Commission had two
competing, but equally valid, theories it could pursue. The Commission
could consider whether the leadership PAC's actions made it affiliated
with the authorized committee, or the Commission could consider the
committees unaffiliated and determine whether the leadership PAC made
in-kind contributions to the authorized committee. The Commission has
declined in several instances to find that a leadership PAC was
affiliated with a candidate's authorized committee, even where it was
apparent that the committees were controlled by the same person. See
affiliation factors at 11 CFR 100.5(g). Instead, the Commission
exercised its discretion to determine that a leadership PAC made in-
kind contributions to the related Federal candidate's campaign.
Nonetheless, the Commission maintained its discretion to pursue either
of the two competing approaches. In making these findings, the
Commission typically found that committees formed by a candidate to
further his or her campaign were affiliated; those formed for other
purposes were not.
New Sec. 100.5(g)(5) clarifies the relationship between an
authorized committee and a leadership PAC by removing the possibility
that a candidate's authorized committee can be affiliated with an
entity that is not an authorized committee, even if the candidate
established, financed, maintained, or controlled that entity.
In promulgating this final rule, the Commission has considered the
25-year history of Commission enforcement and policy precedent (see,
e.g., Advisory Opinions 1978-12, 1984-46, 2003-12; MURs 1870, 2897 and
3740) and the comments received in response to the NPRM. Alternatives A
and B, with per se affiliation factors, would have been too rigid and
overbroad. They would have created a basis for affiliation in
situations where interaction between an authorized committee and a
leadership PAC would not merit such designations if those interactions
were undertaken by committees where neither committee was authorized in
writing by the candidate. Although Alternative C reflects the
Commission's historic approach to leadership PACs, it suggests that the
Commission would examine them on a case-by-case basis. While the
Commission has discretion to pursue either an affiliation or in-kind
contributions analysis under FECA on a case-by-case basis when
considering the circumstances surrounding leadership PACs, the
Commission has decided, as a matter of policy, to adopt the in-kind
contribution analysis as a rule of general applicability as they
pertain to leadership PACs. See Michigan v. EPA, 268 F.3d 1075, 1087
(D.C. Cir. 2001) (discussing agency's discretion to choose rulemaking
or case-by-case adjudicative procedure, citing SEC v. Chenery, 332 U.S.
174, 203 (1947) and Vermont Yankee Nuclear Power Corp. v. Natural
Resources Defense Council, Inc., 435 U.S. 519, 543 (1978)).
This decision does not affect affiliation between an authorized
committee and any joint fundraising committee under 2 U.S.C.
432(e)(3)(ii) and 11 CFR 102.13(c)(1). Nor does it affect the ability
of a national committee of a political party to be designated as the
principal campaign committee of that party's presidential candidate
under 2 U.S.C. 432(e)(3)(i) and 11 CFR 102.13(c)(2). Nor does this rule
allow a leadership PAC to provide support to the Federal candidate or
officeholder with whom it is associated in amounts different than those
available to other similar political committees. Rather, a leadership
PAC's provision of funds, goods, or services to any authorized
committee will be treated as a contribution as defined in 2 U.S.C.
431(8), and thus limited to the amount at either 2 U.S.C. 441a(a)(1)(A)
or 441a(a)(2)(A) per election, depending on whether the leadership PAC
has attained multicandidate committee status, unless the activity falls
within an exception to the definition of ``contribution'' or
``expenditure,'' or is a fair market value exchange of goods or
services for the usual and normal charge. See also 2 U.S.C. 431(8).
The Commission considered the issue of whether its treatment of
leadership PACs comports with the purpose of the affiliation rule: the
protection of contribution limitations. In adopting new Sec.
100.5(g)(5), the Commission is applying the affiliation rule separately
to distinct types of political committees to enforce different
contribution limits. Typically, committees that become affiliated
already operate under similar limitations on the amounts of
contributions that they can make and accept. The fact of affiliation
simply means that they now share one common limitation. One of the
complications in affiliating authorized committees with leadership PACs
is that these types of committees are subject to different
[[Page 67017]]
amount limitations for making and receiving contributions. Requiring
them to abide by a single contribution limit means choosing a
limitation that is not intended for one of those committees.\3\
Consequently, it is logical to view an authorized committee and a
leadership PAC as separate committees, and transactions between them
that benefit the authorized committee as contributions and not as a
basis to find them affiliated.
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\3\ Indeed, the NPRM sought comment on which of the two separate
contribution limitations applicable to authorized and unauthorized
committees should obtain in the event the Commission determined such
committees would be affiliated. The one commenter who addressed this
question believed that the FECA allowed the Commission no discretion
in this matter, and that the lower contribution limits applicable to
the authorized committee would have to be applied to the leadership
PAC.
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Further, the consequences of new 11 CFR 100.5(g)(5) with respect to
leadership PAC contribution limits are no different after the
promulgation of this rule than before. Leadership PACs operating as
unauthorized political committees--that is, political committees whose
purpose is to support more than one Federal candidate--may receive up
to $5000 per year from individuals, other persons, and multicandidate
committees, and once they qualify as multicandidate committees, may
contribute up to $5000 per candidate per election. See 2 U.S.C.
432(e)(3), 441a(a)(1)(C) and 441a(a)(2)(A); 11 CFR 110.1(d) and
110.2(b). Although such leadership PACs are not exposed to the
consequences of affiliation with authorized committees, leadership PACs
may still be deemed affiliated with other unauthorized committees. See
11 CFR 100.5(g)(2), (3), and (4); see also Advisory Opinion 1990-16
(where the Commission found that a committee organized under State law
and devoted to supporting candidates for election to State and local
office, that had previously been the campaign committee of the State's
then-governor, was affiliated with a Federal political committee that
had been organized by the governor and that had as its purpose
supporting candidates for Federal office). Thus, the rule in new 11 CFR
100.5(g)(5) provides no new avenue for circumventing the separate
contribution limitations applicable to authorized and unauthorized
committees.
The Commission concludes that since its first examination of
leadership PACs, these committees cannot be assumed to be acting as
authorized committees. Rather, these PACs are worthy of the same
treatment as other unauthorized committees that operate without
presumptions as to their status. To the extent that leadership PACs are
used to pay for costs that could and should otherwise be paid for by a
candidate's authorized committee, such payments are in-kind
contributions, subject to the Act's contribution limits and reporting
requirements.
The Commission also concludes that in instances when leadership PAC
activity results in an in-kind contribution to a candidate, Commission
regulations adequately regulate such activity. 11 CFR 100.52(a) and
(d), 109.20, 109.21, 109.23, 109.37; see MUR 5376 (Campaign America/
Quayle); Report of the Audit Division on Bauer for President 2000,
Inc., FEC Agenda Doc. No. 02-37, dated May 8, 2002 (considered in the
Open Sessions on May 16, 2002 and May 23, 2002) (recommendations with
respect to Campaign for Working Families PAC); MUR 3367 (Committee for
America/Haig). These regulations, which define ``contribution'' and
which address coordinated activities, will serve to ensure that
leadership PACs are not used improperly to support the ``associated''
candidate's campaign.
The final rule at 11 CFR 100.5(g)(5) properly places the
enforcement focus on the activity at issue. To support the proposition
that rules governing in-kind contributions properly capture this
activity, the Commission need look no further than its recently-issued
final rule ``to treat certain expenses incurred by multicandidate
committees as in-kind contributions benefiting publicly funded
Presidential candidates.'' Final Rules on Public Financing of
Presidential Candidates and Nominating Conventions, 68 FR 47386, 47407
(Aug. 8, 2003); 11 CFR 9034.10; 11 CFR 110.2(l). Although that rule was
aimed at a somewhat different range of activity, the explanation and
justification stated, ``For other situations not addressed [in the new
regulations governing pre-candidacy activity with a nexus to a
Presidential campaign], including when expenditures are paid for by
multicandidate committees after candidacy, the general provisions
describing in-kind contributions at 11 CFR 100.52(a) and (d), 109.20,
109.21, 109.23, and 109.37 would apply.'' Final Rules on Public
Financing of Presidential Candidates and Nominating Conventions, 68 FR
at 47407. The Commission intends symmetry between its regulations with
respect to leadership PACs and its new rules applicable to certain pre-
candidacy activity benefiting Presidential candidates by multicandidate
committees.
The Commission also noted that the final rules in the Public
Financing of Presidential Candidates and Nominating Conventions, 68 FR
at 47408, ``in no way address situations where the Commission
determines that the multicandidate political committee and the
candidate's principal campaign committee are affiliated under 11 CFR
100.5(g)(4).'' With the new rule, the Commission has decided to examine
these situations with a contribution analysis, instead of an
affiliation analysis.
By its terms, new 11 CFR 100.5(g)(5) also applies to entities that
are not political committees. Recently, the Commission examined the
situation of a State ballot initiative committee that had been
established by a Federal candidate and officeholder, but was not a
registered Federal committee. AO 2003-12. The Commission found that the
relationship between the ballot initiative committee and the Federal
candidate and officeholder was sufficiently similar to the relationship
between a traditional leadership PAC and its connected Federal
candidate to warrant treating the Federal candidate and officeholder
and the ballot initiative committee in the same manner as the
Commission had historically treated leadership PACs for affiliation
purposes. Therefore, under new 11 CFR 100.5(g)(5), the Commission would
not examine the transactions between the Federal candidate and
officeholder and the ballot initiative committee to determine whether
the ballot initiative committee is affiliated with the Federal
candidate and officeholder's authorized committee. Rather, the
Commission would analyze the facts to determine whether the ballot
initiative committee made an in-kind contribution to the Federal
candidate and officeholder. Furthermore, the Commission will continue
to use the affiliation factors in 11 CFR 300.2(c) to determine whether
the Federal candidate and officeholder or his agent directly or
indirectly established or finance or maintained or controlled the
ballot initiative committee for purposes of the restrictions on the
solicitation, receipt, transfer or disbursement of non-Federal funds in
2 U.S.C. 441i(e).
V. Effect on Previous Advisory Opinions
As the Commission noted earlier, these new rules merely codify the
discretion the Commission has exercised when the question of
affiliation between an authorized committee and an unauthorized
committee has come before it in the past. Thus, the final rules
supersede
[[Page 67018]]
Advisory Opinions 1978-12, 1984-46, 1987-12, 1990-7, 1991-12, and 1993-
22, only to the extent these advisory opinions suggest that an
authorized committee can be affiliated with an unauthorized committee.
11 CFR 102.2 Statement of Organization: Forms and Committee
Identification Number
The Commission's previous reporting regulations at 11 CFR
102.2(b)(1)(i) provided, in part, for the eventuality of an authorized
committee being affiliated with an unauthorized committee, and mandated
that a principal campaign committee disclose on its statement of
organization the names and addresses of all unauthorized committees
with which it is affiliated. Because the new rule in 11 CFR 100.5(g)(5)
eliminates the possibility of a principal campaign committee, i.e. an
authorized committee, being affiliated with an unauthorized committee,
the provisions of Sec. 102.2(b)(1)(i) addressing such a possibility
are no longer valid. Accordingly, the Commission is revising Sec.
102.2(b)(1)(i) to eliminate these provisions. Pursuant to the revised
Sec. 102.2(b)(1)(i), a principal campaign committee will still be
required to disclose the names and addresses of all other authorized
committees that have been authorized by its candidate. While this
revision was not addressed in the NPRM, it is a logical and technical
change necessitated by the new 11 CFR 100.5(g)(5).
Certification of No Effect Pursuant to 5 U.S.C. 605(b) (Regulatory
Flexibility Act)
The Commission certifies that the final rules do not have a
significant economic impact on a substantial number of small entities.
The basis of this certification is that these rules only codify current
Commission practice with respect to whether certain entities
established, financed, maintained, controlled by, or acting on behalf
of, Federal candidates, are affiliated with authorized committees of
Federal candidates. Accordingly, these rules do not impose any
additional costs on the contributors or the committees. Further, the
primary purpose of the proposed revisions is to clarify the
Commission's rules regarding affiliation and limits on contributions.
This does not impose a significant economic burden because entities
affected are already required to comply with the Act's requirements in
these areas.
List of Subjects
11 CFR Part 100
Elections.
11 CFR Part 102
Registration, organization, and recordkeeping by political
committees.
0
For the reasons set out in the preamble, the Federal Election
Commission amends subchapter A of Chapter I of Title 11 of the Code of
Federal Regulations as follows:
PART 100--SCOPE AND DEFINITIONS
0
1. The authority citation for part 100 continues to read as follows:
Authority: 2 U.S.C. 431, 434, 438(a)(8).
0
2. In Sec. 100.5, paragraph (g)(5) is added to read as follows:
Sec. 100.5 Political committee (2 U.S.C. 431(4), (5), (6)).
* * * * *
(g) * * *
(5) Notwithstanding paragraphs (g)(2) through (g)(4) of this
section, no authorized committee shall be deemed affiliated with any
entity that is not an authorized committee.
PART 102--REGISTRATION, ORGANIZATION, AND RECORDKEEPING BY
POLITICAL COMMITTEES
0
3. The authority citation for part 102 continues to read as follows:
Authority: 2 U.S.C. 432, 433, 434(a)(11), 438(a)(8), 441d.
0
4. In Sec. 102.2, paragraph (b)(1)(i) is revised to read as follows:
Sec. 102.2 Statement of organization: Forms and committee
identification number (2 U.S.C. 433(b), (c)).
* * * * *
(b) * * *
(1) * * *
(i) A principal campaign committee is required to disclose the
names and addresses of all other authorized committees that have been
authorized by its candidate. Authorized committees need only disclose
the name of their principal campaign committee.
* * * * *
Dated: November 24, 2003.
Bradley A. Smith,
Vice Chairman, Federal Election Commission.
[FR Doc. 03-29752 Filed 11-28-03; 8:45 am]
BILLING CODE 6715-01-P