2024-08698. Amending Definition of Contribution to Include “Valuable Information”

AGENCY:

Federal Election Commission.

ACTION:

Notification of Disposition of Petition for Rulemaking.

SUMMARY:

The Commission announces its disposition of a Petition for Rulemaking filed on April 29, 2019. The Petition asked the Commission to amend the existing regulation defining “contribution” by adding a new section to include within the definition of contribution certain “valuable information.” The Petition would further require the Commission to initiate investigations and report to a law enforcement agency “automatically” and without a vote whenever the Commission receives notice that any person has received certain “foreign information” or “compromising information.” The Commission is not initiating a rulemaking at this time because it lacks the statutory authority to do so.

DATES:

April 24, 2024.

FOR FURTHER INFORMATION CONTACT:

Mr. Robert M. Knop, Assistant General Counsel, or Mr. Luis M. Lipchak, Attorney, 1050 First Street NE, Washington, DC 20463, [phone] or [phone].

SUPPLEMENTARY INFORMATION:

The Federal Election Campaign Act, 52 U.S.C. 30101-45 (the “Act”), and Commission regulations define a contribution as “any gift, subscription, loan, advance, or deposit of money or anything of value made by any person for the purpose of influencing any election for Federal office.” ^[1] “Anything of value” includes all in-kind contributions, such as the provision of goods and services without charge or at a charge that is less than the usual and normal charge.^[2] Moreover, Commission regulations identify the following as contributions: payment for attendance at a fundraiser, political event, or the purchase price of a fundraising item sold by a political committee; ^[3] compensation by a third party for personal services an individual provides unpaid to a political committee; ^[4] an extension of credit, unless the extension is extended in the ordinary course of a person's business and under terms and conditions that are substantially similar to credits extended to nonpolitical entities; ^[5] and anything of value given to a national party committee for the purchase or construction of an office building or facility.^[6]

On April 29, 2019, the Commission received a Petition for Rulemaking (“Petition”) from Sai, Fiat Fiendum, Inc., Make Your Laws PAC, Inc., and Make Your Laws Advocacy, Inc. (collectively “Petitioners”). The Petitioners asked the Commission to amend 11 CFR part 100, subpart B, by adding a new § 100.57 to include within the definition of contribution certain “valuable information.” ^[7]

The Petition proposes to define “valuable information” as information that: (1) is not freely available to the public; (2) is provided to a person regulated by the Act at a cost less than the market rate or by a person not hired by the recipient to generate such information; (3) would cost a non-trivial amount for the recipient to obtain at their own expense; and (4) is information that would likely have the effect of influencing any election for Federal office or that parties or candidate committees have traditionally expended money to obtain.^[8]

The proposal sets out two types of “valuable information” that would require special treatment: “foreign information” and “compromising information.” ^[9] “Foreign information” would include any information that comes from a source that is prohibited from making contributions under the Act.^[10] “Compromising information” would include “any information that could be used to blackmail or otherwise compromise any candidate for Federal office (including indirect coercion, such as of a candidate's family), regardless of source.” ^[11]

The Petition would require any person who receives “foreign information” or “compromising information,” or is offered any “foreign information” or “compromising information,” to notify the Commission in writing within three days.^[12] Any “compromising information” the Commission received would have to be maintained under seal unless the information was otherwise available to the public, or all persons against whom the information could be used had consented to the information being made public.^[13]

Under the Petitioners' proposal, upon learning of any “foreign information” or “compromising information,” the Commission would be required, automatically and without a vote of the Commission, to: (1) initiate investigations pursuant to 11 CFR 111.3 and 111.10; (2) provide a report to the Federal Bureau of Investigation; and (3) in the case of “compromising information,” provide a report to every reasonably identifiable person against whom such information could be used, or whose private information is disclosed by such information.^[14] The Petitioners' proposal would also require the Commission, upon learning of any “foreign information” or “compromising information,” to: (1) immediately provide a report to any other law enforcement entity with likely jurisdiction over the matter; (2) within 14 days, publicly issue a report on the matter, redacting any material under seal and any material the disclosure of which could compromise an ongoing law enforcement investigation; and (3) within 30 days after the conclusion of any law enforcement investigation, issue a public report on the matter, redacting any material under seal.^[15]

The Commission published a Notice of Availability (“NOA”) on July 31, 2019, asking for public comment on the Petition.^[16] The Commission received 39 comments from individuals supporting the Petition, two from individuals opposing the Petition, and one from an individual posing several questions regarding the Petition. The Commission also received comments from three organizations that opposed initiating a rulemaking in response to the Petition. The organizational comments raised various concerns with the petition, including that the proposed regulations are vague, would lead to confusion and burdens that would unnecessarily implicate the First Amendment, and that, as acknowledged by the Petition, the Act already covers “valuable information” addressed by the proposed regulation.

One organizational commenter opposed the Petition because the “proposed regulatory definition is redundant” and the information covered by the proposed amendment is “already a `contribution' within the meaning of the Act.” ^[17] Another organizational commenter argued that the Petition was “either unconstitutional or duplicative,” that the proposed definitions were vague, and that the proposed enforcement procedures were inconsistent with the statute.^[18]

In deciding whether to initiate a rulemaking in response to a petition, the Commission generally considers five factors: (1) the Commission's statutory authority; (2) policy considerations; (3) the desirability of proceeding on a case-by-case basis; (4) the necessity or desirability of statutory revision; and (5) available agency resources.^[19] After considering these factors and reviewing the comments received on the Petition, the Commission has decided not to initiate a rulemaking at this time.

First, and most significantly, the Commission lacks the statutory authority to promulgate the rule sought by the Petition. The Act empowers the Commission to “make, amend, or repeal such rules . . . as are necessary to carry out the provisions of [the] Act.” ^[20] The Act requires an affirmative vote of at least four Commissioners in order to initiate an investigation or report apparent violations to the appropriate law enforcement authorities.^[21] Thus, the Commission has no authority to promulgate a rule, as Petitioners wish, that would require the Commission to initiate an investigation or report an apparent violation to a law enforcement agency “automatically,” without a Commission vote. Furthermore, the Act prohibits the Commission from disclosing any information about a pending investigation without the written consent of the respondent.^[22] Thus, the Commission also lacks the authority to promulgate a rule, as the Petitioners propose, that would require the Commission to disseminate “compromising information” or other information that may be subject of a pending Commission enforcement action.

Additionally, the Commission chooses not to amend the definition of contribution to include “valuable information” as a matter of policy, because such an amendment would be redundant and potentially confusing to the public. The existing definition of contribution includes “anything of value.” ^[23]

Accordingly, after reviewing the comments received regarding the Petition and in consideration of the factors discussed, the Commission declines to initiate a rulemaking in response to the Petition.

Copies of the comments and the Petition for Rulemaking are available on the Commission's website, https://www.fec.gov/​fosers/​ (REG 2019-01 Amending Definition of Contribution to Include “Valuable Information” (2019)) and at the Commission's Public Records Office, 1050 First Street NE, Washington, DC 20463, Monday through Friday between the hours of 9 a.m. and 5 p.m.

Dated: April 18, 2024.

On behalf of the Commission.

Sean J. Cooksey,

Chairman, Federal Election Commission.

Footnotes

1.  52 U.S.C. 30101(8)(A)(i); see also11 CFR 100.52(a).

2.  11 CFR 100.52(d)(1).

3.  11 CFR 100.53.

4.  11 CFR 100.54.

5.  11 CFR 100.55.

6.  11 CFR 100.56.

7.  Petition at 3.

8.   Id.

9.   Id.

10.   Id.

11.   Id.

12.  Petition at 3-4.

13.   Id.

14.   Id.

15.   Id.

16.   See Notice of Availability, 84 FR 37154 (July 31, 2019).

17.  Campaign Legal Center, Comment.

18.  Institute for Free Speech, Comment.

19.  11 CFR 200.5.

20.  52 U.S.C. 30107(a)(8).

21.  52 U.S.C. 30106(c), 30107(a)(9), 30109(a)(2).

22.  52 U.S.C. 30109(a)(4), (12).

23.  52 U.S.C. 30101(8)(A)(i); 11 CFR 100.52(a). See also Petition at 2, which acknowledges that “valuable information” is already covered by the Act (“To be absolutely clear, we believe that the information covered in this amendment is already a “contribution” within the meaning of the Act, whether or not it is adopted.”).