03-21462. Multicandidate Committees and Biennial Contribution Limits

AGENCY:

Federal Election Commission.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The Federal Election Commission requests comments on proposed changes to its rules covering three areas: (1) Multicandidate political committee status, (2) annual contributions by persons other than multicandidate committees to national party committees, and (3) biennial contribution limits for individuals. The proposed changes would clarify the qualifications for multicandidate political committee status and require a political committee to notify the Commission when it has qualified as a multicandidate committee. The proposed changes would also update the limit on contributions from persons other than multicandidate committees to national party committees. In addition, the proposed changes would adjust the attribution of contributions to candidates from individuals under the biennial limits. No final decisions have been made by the Commission on any of the proposed revisions in this Notice. Further information is provided in the supplementary information that follows.

Dates:

Comments must be received on or before September 19, 2003. If the Commission receives sufficient requests to testify, it will hold a hearing on these proposed rules on October 1, 2003, at 9:30 a.m. Commenters wishing to testify at the hearing must so indicate in their written or electronic comments.

ADDRESSES:

All comments should be addressed to Ms. Mai T. Dinh, Acting Assistant General Counsel, and must be submitted in either electronic or written form. 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. Commenters are strongly encouraged to submit comments electronically to ensure timely receipt and consideration. The Commission will make every effort to post public comments on its Web site within ten business days of the close of the comment period. The hearing will be held in the Commission's ninth floor meeting room, 999 E Street, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT:

Ms. Mai T. Dinh, Acting Assistant General Counsel, or Mr. Richard T. Ewell, Attorney, 999 E Street NW., Washington, DC 20463, [phone] or [phone].

SUPPLEMENTARY INFORMATION:

The Commission is considering changes to several separate rules to address three different issues. First, the Commission proposes changes to its rules regarding the certification requirements and contribution limits of a political committee that qualifies as a multicandidate committee. Second, the Commission proposes updating the annual limit on contributions from person other than multicandidate committees to national party committees in order to conform to the change made by Congress in the Bipartisan Campaign Reform Act of 2002 (“BCRA”). Finally, the Commission proposes corrections to its rules on the annual limit on aggregate individual contributions in light of BCRA. These proposed rules would implement the provisions of the Federal Election Campaign Act of 1971, as amended (“FECA” or the “Act”), 2 U.S.C. 431 et seq.

I. Proposed Changes to 11 CFR 102.2, 110.2 Multicandidate Committee Status

A. Proposed 11 CFR 110.2—Contributions by Multicandidate Political Committees

Section 110.2 sets forth contribution limits for multicandidate political committees in accordance with the limits established by 2 U.S.C. 441a(a)(2). Section 441a(a)(4) of the FECA provides that, “the term ‘multicandidate committee’ means a political committee which has been registered with [the Commission or Secretary of the Senate] for a period of not less than six months, which has received contributions from more than 50 persons, and except for any State political party organization, has made contributions to 5 or more candidates for Federal office.” 2 U.S.C. 441a(a)(4). On the basis of this statutory provision, the Commission's rules at 11 CFR 1005.(e)(3) define a “multicandidate committee” as a political committee meeting these three requirements.

FECA, prior to BCRA, provided significantly higher limits on contributions to candidates for political committees with multicandidate status than for those without that status ($5,000 per election versus $1,000). BCRA raised and indexed for inflation the contribution limit for non-multicandidate committees (to $2,000 per election), and due to the inflation adjustment such limit may eventually become higher than the limit imposed on multicandidate committees. See 2 U.S.C. 441a(c). Thus, this contribution limit itself one day may create a substantial disincentive for attaining multicandidate political committee status.

In addition, the limit on contributions to national party committees from multicandidate committees is $15,000 per year (as it was prior to BCRA), yet BCRA increased the limit on contributions to the same national party committees from non-multicandidate committees to $25,000 per year. 2 U.S.C. 441a(a)(2)(B) and (1)(B). Furthermore, the contribution limit for multicandidate committees is not indexed for inflation, which means that over time the current $10,000 difference in the contribution limit to national party committees will increase. 2 U.S.C. 441a(c).

These statutory changes have raised the issue of whether political committees may opt out of multicandidate committee status. The Commission preliminarily concludes that the definition of “multicandidate committee” in 2 U.S.C. 441a(a)(4) means that a political committee becomes a multicandidate committee by operation of law, not committee choice. Consequently the Commission proposes the addition of a sentence to 11 CFR 110.2(a) to state that a political committee automatically becomes a multicandidate committee at the time it satisfies the six-month waiting period, receives contributions from fifty or more contributors, and makes contributions to five or more candidates.

In the alternative, the Commission seeks comments on whether multicandidate political committee status may be considered optional. Commenters addressing this alternative are requested to provide the legal basis that would support this interpretation of 2 U.S.C. 441a(a)(4). Please note that the wording of the proposed rule in 11 CFR 110.2(a) does not implement this alternative.

B. Proposed 11 CFR 102.2(a)(3)—Certification of Multicandidate Status

To monitor compliance with the contribution limits, the Commission has required multicandidate political committees to file FEC Form 1M with the Commission to certify that they satisfied the criteria described above for becoming multicandidate political committees. Specifically, current 11 CFR 102.2(a)(3) requires that this certification be filed before a political committee may avail itself of the multicandidate committee contribution limits.

The Commission proposes to amend 11 CFR 102.2(a)(3) to eliminate the requirements that a political committee file Form 1M with the Commission before making any contributions under the increased contribution limits with respect to candidates in 11 CFR 110.2(b). Instead, § 102.2(a)(3) would specify that a political committee must certify its status as a multicandidate committee within ten days of satisfying the requirements of 11 CFR 1005.(e)(3). This certification provides clear notice of the political committee's status to the Commission and to recipients of contributions from the committee. The ten-day period corresponds to the usual time allotted for a political committee to report any changes to its Statement of Organization. See 11 CFR 102.2(a)(2). Thus, failure to file the form within the requisite time period would be a violation of the reporting requirements of 2 U.S.C. The Commission seeks comments on how it should address a failure to file the certification of multicandidate status. Specifically, how should the Commission address a situation where a political committee qualifies for multicandidate status, does not certify its status within ten days, but makes a contribution over $2,000 to a candidate for Federal office? The Commission also seeks comments on what certification process, if any, should be used if the Commission adopts an alternative approach and allows multicandidate status to be optional at the choice of the committee.

II. 11 CFR 110.1 Conforming Change to Contributions by Persons Other Than Multicandidate Political Committees

In section 307(a)(2) of BCRA, Congress raised the annual aggregate limit on contributions by persons other than multicandidate committees to national political party committees from $20,000 to $25,000. 2 U.S.C. 441a(a)(1)(B). The Commission proposes to revise the corresponding regulation in 11 CFR 110.1 to reflect this statutory change.

III. 11 CFR 110.5 Aggregate Biennial Contribution Limitation for Individuals

BCRA amended the provisions in the Act that limit the total amount of contributions that may be made by individuals. Section 441a(a)(3) of the FECA previously permitted individuals to make no more than $25,000 in aggregate contributions per calendar year. This provision was revised by BCRA to establish new biennial aggregate limits that permit individuals to make up to $95,000 in contributions, including up to $37,500 in contributions to candidates and their authorized committees, and up to $57,500 in contributions to any other political committees. 2 U.S.C. 441a(a)(3)(A) and (B). The $57,500 aggregate contribution limit contains a further restriction in that no more than $37,500 of this amount may be given to committees that are not the political committees of national political parties. 2 U.S.C. 441a(a)(3)(B). Regulations implementing these changes were issued as part of the rulemaking entitled “Contribution Limitations and Prohibitions.” See Contribution Limitations and Prohibitions; Final Rules, 67 FR 69928 (November 19, 2002). Previously, 2 U.S.C. 441a(a)(3) also provided that, for the purposes of the annual limitation, any contribution made to a candidate “in a year other than the calendar year in which the election is held with respect to which such contribution is made, is considered to be made during the calendar year in which such election is held.” BCRA deleted this language from the Act. However, the Commission retained 11 CFR 110.5(c), which specifically addressed contributions made in a non-election year. The proposed rules would amend § 110.5(c) to delete the current language and to replace it with language affirmatively stating that for the purposes of the biennial contribution limits in 11 CFR 110.5 (which are set forth in paragraph (b)), a contribution to a candidate will be attributed to the two-year period in which the contribution is actually made, regardless of when the election will be held. For example, for the purposes of the biennial limit, a contribution made in 2004 to a candidate in a 2006 Senate race would be attributed to the individual's limit for the 2003-2004 period. Similarly, a contribution made in 2005 to a candidate in the 2008 presidential race would be attributed to the individual's limit for the 2005-2006 period. In addition, a contribution made during 2007 to retire debt from a 2006 House election would be attributed to the individual's two-year limit for the 2007-2008 period, not for the 2005-2006 period.

The Commission seeks comments on whether the proposed revisions are consistent with BCRA. If the Commission revises its regulations in this manner, the Commission seeks comment on when such revisions should become effective.

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 for this certification is that few, if any, small entities would be affected by these proposals. These rules propose no sweeping changes, and are largely intended to simplify the process of determining the status of political committees and the aggregate biennial amounts that individuals may contribute to candidates for Federal office. Several of the proposed changes are purely technical, and those few proposals that might increase the cost of compliance by small entities would not do so in such an amount as to cause a significant economic impact.

List of Subjects

11 CFR Part 102

• Political committees and parties, reporting and recordkeeping requirements

11 CFR Part 110

• Campaign funds, political committees and parties

For the reasons set out 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 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 102.2 would be amended by revising paragraph (a)(3) to read as follows:

§ 102.2

Statement of organization: Forms and committee identification number (2 U.S.C. 433(b), (c)).

(a) * * *

(3) A committee shall certify to the Commission that it has satisfied the criteria for becoming a multicandidate committee set forth at 11 CFR 100.5(e)(3) by filing FEC Form 1M no later than ten (10) calendar days after qualifying for multicandidate committee status.

* * * * *

PART 110—CONTRIBUTION AND EXPENDITURE LIMITATIONS AND PROHIBITIONS

3. 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, 441, 441f, 441g, 441h, and 441k. 4. Section 110.1 would be amended by revising paragraph (c)(3) to read as follows:

§ 110.1

Contributions by persons other than multicandidate political committees (2 U.S.C. 441a(a)(1)).

* * * * *

(c) * * *

(3) Each recipient committee referred to in 11 CFR 110.1(c)(2) may receive up to the $25,000 limitation from a contributor, but the limits of 11 CFR 110.5 shall also apply to contributions made by an individual.

* * * * *

5. Section 110.2 would be amended by revising paragraph (a)(1) to read as follows:

§ 110.2

Contributions by multicandidate political committees (2 U.S.C. 441a(a)(2)).

(a)(1) Scope. This section applies to all contributions made by any multicandidate political committee as defined in 11 CFR 100.5(e)(3). See 11 CFR 102.2(a)(3) for multicandidate political committee certification requirements. A political committee becomes a multicandidate committee whether or not the political committee has certified its status as a multicandidate committee with the Commission in accordance with 11 CFR 102.2(a)(3)

* * * * *

6. Section 110.5 would be amended by revising paragraph (c) to read as follows:

§ 110.5

Aggregate bi-annual contribution limitation for individuals (2 U.S.C. 441a(a)(3)).

* * * * *

(c) Contributions made in a nonelection year. For purposes of the biennial limitation on contributions, any contribution to a candidate or his or her authorized committee with respect to a particular election shall be considered to be made during the two-year period described in paragraph (b)(1) of this section in which the contribution is actually made, regardless of the year in which the particular election is held. See 11 CFR 110.1(b)(6). This paragraph (c) also applies to earmarked contributions and contributions to a single candidate committee that has supported or anticipates supporting the candidate.

* * * * *

Dated: August 18, 2003.

Michael E. Toner,

Commissioner, Federal Election Commission.