04-8064. Contributions and Donations by Minors

AGENCY:

Federal Election Commission.

ACTION:

Notice of Proposed Rulemaking.

SUMMARY:

The Federal Election Commission requests comments on proposed amendments to its rules governing contributions and donations by minors to candidates and political committees. These proposed rules would conform to the Supreme Court's decision in McConnell v FEC finding unconstitutional section 318 of the Bipartisan Campaign Reform Act of 2002. BCRA section 318 had forbidden contributions to candidates and contributions or donations to political party committees by individuals 17 years old or younger. The Commission rules at 11 CFR 110.19 implement BCRA section 318. No final decision has been made by the Commission on the issues presented in this rulemaking. Further information is provided in the supplementary information that follows.

DATES:

Comments must be received on or before May 10, 2004. If the Commission receives sufficient requests to testify, it may hold a hearing on these proposed rules. Commenters wishing to testify at the hearing must so indicate in their written or electronic comments.

ADDRESSES:

All comments should be addressed to John C. Vergelli, Acting Assistant General Counsel, and must be submitted in either electronic or written form. Commenters are strongly encouraged to submit comments electronically to ensure timely receipt and consideration. Electronic mail comments should be sent to [e-mail] and must include the full name, electronic mail address, and postal service address of the commenter. Electronic mail comments that do not contain the full name, electronic mail address and postal service address of the commenter will not be considered. If the electronic mail comments include an attachment, the attachment must be in the Adobe Acrobat (.pdf) or Microsoft Word (.doc) format. Faxed comments should be sent to [phone], with printed copy follow-up to ensure legibility. Written comments and printed copies of faxed comments should be sent to the Federal Election Commission, 999 E Street, NW., Washington, DC 20463. The Commission will post public comments on its web site. If the Commission decides that a hearing is necessary, the hearing will be held in its ninth floor meeting room, 999 E. St. NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Mr. John C. Vergelli, Acting Assistant General Counsel, or Mr. Steve N. Hajjar, Attorney, 999 E Street, NW., Washington, DC 20463, [phone] or [phone].

SUPPLEMENTARY INFORMATION:

The Bipartisan Campaign Reform Act of 2002, Public Law 107-155, 116 Stat. 81 (Mar. 27, 2002) (“BCRA”), contained extensive and detailed amendments to the Federal Election Campaign Act of 1971 (“FECA” or “the Act”), as amended, 2 U.S.C. 431 et seq. One of those amendments, BCRA section 318, codified at 2 U.S.C. 441k, prohibited minors from making contributions to candidates or from making contributions or donations to political party committees. In 2002, the Commission promulgated rules at 11 CFR 110.19 implementing section 318. 67 FR 69,928 (Nov. 19, 2002). In McConnell v. FEC, 540 U.S._, 124 S.Ct. 619 (2003), the Supreme Court, however, found unconstitutional section 318, necessitating these proposed amendments to 11 CFR 110.19. The cumulative effect of these proposed changes to 11 CFR 110.19, governing contributions and donations by minors, would be essentially to return these rules to their state prior to BCRA.

Former 11 CFR 110.1(i)(2) (2002) provided that individuals under 18 years of age (“minors”) could make contributions to candidates or political committees in accordance with the limits of the Act so long as the minor knowingly and voluntarily made the decision to contribute, and the funds, goods, or services contributed were owned or controlled exclusively by the minor. Additionally, the contributions must not have been made from the proceeds of a gift given to the minor for the purpose of making a contribution or in any other way controlled by an individual other than the minor. The proposed rules at 11 CFR 110.19 would return to the former regulations at 11 CFR 110.1(i)(2). The only difference between the pre-BCRA rules and the Commission's proposed rules would be to substitute “an individual who is 17 years old or younger” or “individual” for “minor” or “child.”

The Commission proposes to remove paragraphs (a) and (b) of current 11 CFR 110.19, which implement the prohibitions of 2 U.S.C. 441k. Paragraph (a) of 11 CFR 110.19 prohibits contributions by minors to Federal candidates and specifies that this prohibition encompasses contributions to a candidate's principal campaign committee, any other authorized committee of that candidate, and any entity directly or indirectly established, financed, maintained, or controlled by one or more federal candidate. Paragraph (b) of 11 CFR 110.19 prohibits minors from making contributions and donations to national, State, district, and local party committees. Because the Supreme Court struck down 2 U.S.C. 441k in its entirety, McConnell, 540 U.S. at __, 124 S.Ct. at 711, the statutory basis for these paragraphs no longer exists, and the Commission proposes to eliminate them.

Current paragraph (c) specifies that minors may make contributions to political committees not described in current paragraphs (a) and (b) as long as the minor voluntarily and knowingly makes the decision to contribute; the funds, goods or services contributed are owned or controlled exclusively by the minor; the contribution is not made from the proceeds of a gift given to the minor to make a contribution or is not in any way controlled by an individual other than the minor; and the contribution is not earmarked or otherwise directed to one or more Federal candidates, political committees, or organizations described in current paragraphs (a) and (b). 11 CFR 110.19(c)(1) through (c)(4).

Because the Commission proposes to eliminate current paragraphs (a) and (b), which prohibit minors from making contributions to candidates or from making contributions or donations to political party committees, the resulting proposed § 110.19 would differ from current 110.19(c) in two respects. First, proposed § 110.19 would allow minors to make contributions that do not exceed the Act's limitations to any candidate or political committee. Second, proposed § 110.19 would eliminate current paragraph (c)(4), which prohibits minors from making contributions that are earmarked or otherwise directed to entities described in current paragraphs (a) and (b). The provisions of current paragraphs (c)(1) through (c)(3) would be renumbered as paragraphs (a) through (c) of proposed section 110.19 and would apply to all contributions and donations by minors. The Commission seeks comment on whether the requirement in current paragraph (c)(2), proposed paragraph (b), that the funds, goods, and services contributed be owned or controlled exclusively by the minor is permissible in light of McConnell. Should the Commission require exclusive ownership or control at all considering that in many jurisdictions a minor may not be able, for example, to open a bank account without a parent's or guardian's signature or manage an investment account without adult direction?

The Commission also proposes to remove paragraphs (d) and (e) of current § 110.19. Paragraph (d) provides that minors are not prohibited from volunteering their services to Federal candidates, political party committees or other party committees, notwithstanding BCRA's restrictions on political giving by minors. Because the prohibitions at 2 U.S.C. 441k no longer exist, McConnell, 540 U.S. at __, 124 S.Ct. at 711, the rationale for this paragraph has also ceased to exist, and the Commission proposes to eliminate it.

Current paragraph (e) defines an entity “directly or indirectly established, financed, maintained, or controlled” by a candidate for purposes of the prohibition on contributions by minors to candidates as one that meets the definition of “directly or indirectly establish, finance, maintain or control” at 11 CFR 300.2(c). Because the Supreme Court has struck down the prohibition on minors contributing to candidates, this provision is no longer necessary and the Commission proposes to eliminate paragraph (e).

The Commission seeks comment regarding whether it has authority to establish a minimum age, lower than had been set by BCRA section 318, for the making of contributions. If so, should the Commission prohibit individuals below a certain age from making contributions, recognizing that those individuals lack the capacity to manage their finances and dispose of property and therefore could not knowingly and voluntarily contribute on their own behalf? What would be the appropriate minimum age? Should the Commission instead establish a rebuttable presumption that individuals below a certain age could not make contributions? If the Commission chooses this approach, what should the Commission require from that individual and his or her parents or guardian to rebut that presumption? Or should the Commission combine a categorical prohibition with a rebuttable presumption similar to the approach adopted by some jurisdictions with regard to the tort liability of children? See, e.g., Restatement (Third) of Torts § 10 cmt. b (Tentative Draft No. 1, 2001) (“[F]or children above 14 there is a rebuttable presumption in favor of the child's capacity to commit negligence; for children between seven and 14, there is a rebuttable presumption against capacity; children under the age of seven are deemed incapable of committing negligence”).

Certification of No Effect Pursuant to 5 U.S.C. 605(b) (Regulatory Flexibility Act)

The Commission certifies that the attached proposed rules, if promulgated, would not have a significant economic impact on a substantial number of small entities. The basis of this certification is that these proposed rules would only apply to individuals age 17 years old or younger. Such individuals are not small entities. Moreover, these rules remove existing restrictions in accordance with controlling Supreme Court precedent and do not impose any additional costs on contributors, candidates, or political committees. Therefore these proposed rules would impose no further economic burdens on them.

List of Subjects in 11 CFR Part 110

• Campaign funds
• Political committees and parties

For the reasons set forth in the preamble, the Federal Election Commission proposes to amend Subchapter A of Chapter 1 of Title 11 of the Code of Federal Regulations as follows:

PART 110—CONTRIBUTION AND EXPENDITURE LIMITATIONS AND PROHIBITIONS

1. The authority citation for Part 110 would continue to read as follows:

Authority: 2 U.S.C. 431(8), 431(9), 432(c)(2), 437d, 438(a)(8), 441a, 441b, 441d, 441e, 441f, 441g, and 441h.

2. Section 110.19 would be revised to read as follows:

§ 110.19

Contributions and donations by minors.

An individual who is 17 years old or younger may make contributions to any candidate or political committee which in the aggregate do not exceed the limitations on contributions of 11 CFR 110.1 and 110.5, if—

(a) The decision to contribute is made knowingly and voluntarily by that individual;

(b) The funds, goods, or services contributed are owned or controlled exclusively by that individual, such as income earned by that individual, the proceeds of a trust for which that individual is the beneficiary, or a savings account opened and maintained exclusively in that individual's name; and

(c) The contribution is not made from the proceeds of a gift, the purpose of which was to provide funds to be contributed, or is not in any other way controlled by another individual.

Dated: April 5, 2004.

Michael E. Toner,

Commissioner, Federal Election Commission.