04-14817. Coordinated and Independent Expenditures by Party Committees

AGENCY:

Federal Election Commission.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Federal Election Commission requests comments on the proposed deletion of its current rules that restrict the ability of political party committees to make both independent expenditures and coordinated party expenditures with respect to the same candidate in connection with a general election for Federal office. The current rules also prohibit a political party committee that makes coordinated expenditures with respect to a candidate from transferring funds to, or assigning authority to make coordinated expenditures to, or receive a transfer of funds from, a political party committee that has made or intends to make an independent expenditure with respect to that candidate. These rules were promulgated in order to implement section 213 of the Bipartisan Campaign Reform Act of 2002. However, in McConnell v. FEC, the U.S. Supreme Court held that section 213 is unconstitutional. Therefore, the Commission proposes to remove the rules implementing section 213. 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 July 30, 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 Mr. Brad C. Deutsch, 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 a hearing is necessary, the hearing will be held in the Commission's ninth floor meeting room, 999 E Street NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Mr. Brad C. Deutsch, Assistant General Counsel, or Mr. Ron B. Katwan, Attorney, 999 E Street, NW., Washington, DC 20463, [phone] or [phone].

SUPPLEMENTARY INFORMATION:

Under the Federal Election Campaign Act of 1971 (“FECA” or the “Act”), as amended, 2 U.S.C. 431 et seq., a national committee, State committee, or a subordinate committee of a State committee of a political party may make expenditures in coordination with a Federal candidate for that candidate's general election campaign up to prescribed limits without these expenditures counting against the party committee's contribution limits. 2 U.S.C. 441a(d)(1)-(3). While the Act limits coordinated expenditures, political party committees may make unlimited “independent expenditures,” which are not coordinated with a candidate's campaign. See Colorado Republican Federal Campaign Committee v. FEC, 518 U.S. 604 (1996) (“Colorado I”).^[1]

Section 213 of the Bipartisan Campaign Reform Act of 2002 (Pub. L. 107-155 (Mar. 27, 2002)) (“BCRA”) amended 2 U.S.C. 441a(d), by prohibiting political party committees, under certain conditions, from making both coordinated party expenditures and independent expenditures with respect to the same candidate, and from making transfers and assignments to other political party committees. 2 U.S.C. 441a(d)(4).

In 2002, the Commission promulgated rules at 11 CFR 109.35 to implement section 213. Coordinated and Independent Expenditures; Final Rules, 68 FR 421, 422 (January 3, 2003).

Subsequently, in McConnell v. FEC, 540 U.S.__; 124 S.Ct. 619, 700-704 (2003), the Supreme Court found section 213 unconstitutional. The Court held that by requiring political parties to choose between coordinated and independent expenditures during the post-nomination, pre-election period, section 213 placed an unconstitutional burden on the parties' right to make unlimited independent expenditures. 124 S.Ct. at 700-704. Accordingly, the Commission now proposes to remove its regulations at 11 CFR 109.35 implementing BCRA section 213 and to delete from other regulations cross-references to the rules that would be removed.

I. Proposed 11 CFR 102.6—Transfer of Funds; Collecting Agents

The Commission proposes to revise section 102.6 by deleting the cross-reference to current section 109.35, which the Commission proposes to remove.

II. Proposed 11 CFR 106.8—Allocation of Expenses for Political Party Committee Phone Banks That Refer to Clearly Identified Federal Candidate

The Commission proposes to revise section 106.8 by deleting the cross-reference to current section 109.35, which the Commission proposes to remove.

III. Proposed 11 CFR 109.30—How Are Political Party Committees Treated for Purposes of Coordinated and Independent Expenditures?

The Commission proposes to revise section 109.30 by deleting the cross-references to current section 109.35, which the Commission proposes to remove.

IV. Proposed 11 CFR 109.33—May a Political Party Committee Assign Its Coordinated Party Expenditure Authority to Another Political Party Committee?

The Commission proposes to revise section 109.33 by deleting the cross-reference to current section 109.35, which the Commission proposes to remove.

V. Proposed 11 CFR 109.35—What Are the Restrictions on a Political Party Committee Making Both Independent Expenditures and Coordinated Party Expenditures in Connection With the General Election of a Candidate?

The Commission proposes to remove and reserve current section 109.35, because, as explained above, the statutory foundation for this section, 2 U.S.C. 441a(d)(4), has been invalidated by the Supreme Court.

VI. Proposed 11 CFR 109.36—Are There Additional Circumstances Under Which a Political Party Committee Is Prohibited From Making Independent Expenditures?

The Commission proposes to revise section 109.36 by deleting the word “additional” in the heading of section 109.36, because, if section 109.35 is removed, the circumstances described in section 109.36 will be the only circumstances under which a political party committee is prohibited from making independent expenditures.

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

Regulatory Flexibility Act

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 the national, State, and local party committees of the two major political parties are not small entities under 5 U.S.C. 601 because they are not small businesses, small organizations, or small governmental jurisdictions.

To the extent that political party committees may fall within the definition of “small entities,” their number is not substantial. In addition, the proposed rules would remove, not add, restrictions applicable to political party committees.

List of Subjects

11 CFR Part 102

• Political committees and parties, reporting and recordkeeping requirements

11 CFR Part 106

• Political candidates, campaign funds, political committees and parties

11 CFR Part 109

• Coordinated expenditures, independent expenditures, political committees and parties

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

PART 102—REGISTRATION, ORGANIZATION, AND RECORDKEEPING BY POLITICAL COMMITTEES (2 U.S.C. 433)

1. The authority citation for Part 102 would continue to read as follows:

Authority: 2 U.S.C. 432, 433, 434(a)(11), 438(a)(8), 441d.

2. Section 102.6 would be amended by revising paragraph (a)(1)(ii) to read as follows:

§ 102.6

Transfers of funds; collecting agents.

(a) * * *

(1) * * *

(ii) Subject to the restrictions set forth at 11 CFR 300.10(a), 300.31 and 300.34(a) and (b), transfers of funds may be made without limit on amount between or among a national party committee, a State party committee and/or any subordinate party committee whether or not they are political committees under 11 CFR 100.5 and whether or not such committees are affiliated.

* * * * *

PART 106—ALLOCATIONS OF CANDIDATE AND COMMITTEE ACTIVITIES

3. The authority citation for Part 106 would continue to read as follows:

Authority: 2 U.S.C. 438(a)(8), 441a(b), 441a(g).

4. Section 106.8 would be amended by revising paragraph (b)(2)(ii) to read as follows:

§ 106.8

Allocation of expenses for political party committee phone banks that refer to a clearly identified Federal candidate.

* * * * *

(b) * * *

(2) * * *

(ii) A coordinated expenditure or an independent expenditure, subject to the limitations, restrictions, and requirements of 11 CFR 109.10, 109.32, and 109.33; or

* * * * *

PART 109—COORDINATED AND INDEPENDENT EXPENDITURES (2 U.S.C. 431(17), 441a(a) and (d), AND PUB. L. 107-155 SEC. 214(c))

5. The authority citation for Part 109 would continue to read as follows:

Authority: 2 U.S.C. 431(17), 434(c), 438(a)(8), 441a, 441d; Sec. 214(c) of Pub. L. 107-155, 116 Stat. 81.

6. Section 109.30 would be revised to read as follows:

§ 109.30

How are political party committees treated for purposes of coordinated and independent expenditures?

Political party committees may make independent expenditures subject to the provisions in this subpart. See 11 CFR 109.36. Political party committees may also make coordinated party expenditures in connection with the general election campaign of a candidate, subject to the limits and other provisions in this subpart. See 11 CFR 109.32 through 11 CFR 109.34.

7. Section 109.33 would be amended by revising paragraph (a) to read as follows:

§ 109.33

May a political party committee assign its coordinated party expenditure authority to another political party committee?

(a) Assignment. The national committee of a political party and a State committee of a political party, including any subordinate committee of a State committee, may assign its authority to make coordinated party expenditures authorized by 11 CFR 109.32 to another political party committee. Such an assignment must be made in writing, must state the amount of the authority assigned, and must be received by the assignee committee before any coordinated party expenditure is made pursuant to the assignment.

* * * * *

§ 109.35

[Removed and Reserved]

8. Section 109.35 would be removed and reserved.

9. Section 109.36 would be amended by revising the heading to read as follows:

§ 109.36

Are there circumstances under which a political party committee is prohibited from making independent expenditures?

* * * * *

Dated: June 24, 2004.

Ellen L. Weintraub,

Vice Chair, Federal Election Commission.

Footnotes

1.  The holding of Colorado I is limited to independent expenditures in connection with congressional campaigns. The opinion in Colorado I did not address the issue of whether regulation of independent expenditures is constitutionally permissible in connection with Presidential campaigns. (“Since this case involves only the provision concerning congressional races, we do not address issues that might grow out of the public funding of Presidential campaigns.”) 518 U.S. at 612. Thus, the opinion in Colorado I did not reach the issue of whether former 11 CFR 110.7(a)(5) which prohibited independent expenditures by the national committee of a political party in connection with a presidential campaign was constitutional. Subsequently, however, BCRA effectively repealed section 110.7(a)(5) and the Commission replaced the section with 11 CFR 109.36, which prohibits independent expenditures by the national committee of a political party in connection with a presidential campaign only in certain circumstances in which the national committee of a political party serves as the principal campaign committee or authorized committee of its Presidential candidate. See Coordinated and Independent Expenditures; Final Rules, 68 FR 421, 447-48 (January 3, 2003).