[Federal Register Volume 59, Number 70 (Tuesday, April 12, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-8690]


[[Page Unknown]]

[Federal Register: April 12, 1994]


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FEDERAL ELECTION COMMISSION

11 CFR Part 102

[Notice 1994-5]

 

Special Fundraising Projects and Other Use of Candidate Names by 
Unauthorized Committees

AGENCY: Federal Election Commission.

ACTION: Final rule; transmittal of regulations to Congress.

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SUMMARY: The Commission is amending its regulations regarding an 
unauthorized committee's use of a candidate's name in the title of a 
special fundraising project or other communication on behalf of the 
unauthorized committee. The amendment permits such use, if the title 
clearly indicates opposition to the named candidate.

DATES: Further action, including the announcement of an effective date, 
will be taken after these regulations have been before Congress for 30 
legislative days pursuant to 2 U.S.C. 438(d). A document announcing the 
effective date will be published in the Federal Register.

FOR FURTHER INFORMATION CONTACT:
Ms. Susan E. Propper, Assistant General Counsel, 999 E Street NW., 
Washington, DC 20463, (202) 219-3690 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: On July 10, 1992, the Commission sent to 
Congress new rules on special fundraising projects and other uses of 
candidate names by unauthorized committees. The rules prohibit the use 
of a candidate's name in the title of any fundraising project or other 
communication by any committee that has not been authorized by the 
named candidate. 11 CFR 102.14(a). The rules became effective on 
November 4, 1992. 57 FR 47258 (Oct. 15, 1992).
    The rules construe 2 U.S.C. 432(e)(4), a provision of the Federal 
Election Campaign Act [``FECA'' or ``the Act''] that prohibits the use 
of a candidate's name in the name of an unauthorized political 
committee. Prior to the 1992 revision, the Commission had construed 
this prohibition as applying only to the name under which a committee 
registers with the Commission [the ``registered name''].
    The Notice of Proposed Rulemaking [``NPRM''] was published in the 
Federal Register on April 15, 1992, 57 FR 13056. The Commission 
received 14 comments in response to this Notice. The final rules were 
published on July 15, 1992. 57 FR 31424.
    On February 5, 1993, the Commission received a Petition for 
Rulemaking from Citizens Against David Duke [``CADD''], a proposed 
project of the American Ideas Foundation. The petition requested that 
the Commission reconsider and repeal the new rules, with particular 
emphasis on those titles that indicate opposition to, rather than 
support for, a named candidate.
    The Commission published a Notice of Availability in the Federal 
Register on March 3, 1993. 58 FR 12189. Three comments were received in 
response to this Notice.
    In response to these comments, the Commission published an NPRM 
proposing that the rule be amended so as to permit the use of candidate 
names in titles that clearly indicate opposition to the named 
candidate. 58 FR 65559 (Dec. 15, 1993). The Commission received four 
comments in response to this Notice, three of which reflected in whole 
or in part comments submitted earlier in the course of the rulemaking.
    Section 438(d) of Title 2, United States Code, requires that any 
rules or regulations prescribed by the Commission to carry out the 
provisions of Title 2 of the United States Code be transmitted to the 
Speaker of the House of Representatives and the President of the Senate 
30 legislative days before they are finally promulgated. These 
regulations were transmitted to Congress on April 6, 1994.

Explanation and Justification

    In Common Cause v. FEC, 842 F.2d 436 (D.C. Cir. 1988), the United 
States Court of Appeals for the District of Columbia Circuit upheld the 
Commission's authority to interpret the prohibition at 2 U.S.C. 
432(e)(4) on the use of a candidate's name in the name of an 
unauthorized committee as applying only to the name under which the 
committee registered with the Commission, since ``[an] agency's 
construction, if reasonable, must ordinarily be honored.'' Id. at 439-
40. However, the court recognized that an interpretation imposing a 
more extensive ban on the use of candidate names by unauthorized 
committees, such as prohibiting their use in the titles of any 
fundraising projects sponsored by an unauthorized committee, ``could 
also be accommodated within the provision's literal language.'' Id. at 
440.
    Some commenters on both the 1992 and the current NPRM noted that 
this rulemaking implicates protected first amendment rights, and that 
any infringement on these rights is subject to strict scrutiny by 
reviewing courts. However, it is well established that first amendment 
rights are not absolute when balanced against the government's interest 
in protecting the integrity of the electoral process. ``Even a 
`significant interference' with protected rights [  ] may be sustained 
if the State demonstrates a sufficiently important interest and employs 
means closely drawn to avoid unnecessary abridgment'' of those rights. 
Buckley v. Valeo, 424 U.S. 1, 25 (1975) (citations omitted). The Common 
Cause court deferred to the Commission's judgment that literal 
adherence to the language of section 432(e)(4), coupled with the 
disclaimer requirements of 2 U.S.C. 441d(a), struck the proper balance 
at that time. 842 F.2d at 440. Section 441d(a)(3) requires that 
communications by unauthorized committees include a disclaimer that 
clearly identifies who paid for the communication, and states whether 
it was authorized by any candidate or candidate's committee.
    The Common Cause decision grew out of the 1980 presidential 
election. Since that time, the Commission has become increasingly 
concerned over the possibility for confusion or abuse under the 
interpretation upheld in that case, that is, limiting the FECA's 
``name'' prohibition to a committee's registered name. Aware of these 
constitutional concerns, the 1992 NPRM sought comments on two 
modifications to the rules then in effect that fell short of an overall 
ban.
    Under the first proposal, the political committee sponsoring the 
project would have been required to include in the required disclaimer 
the name of the committee paying for the project, as well as a 
statement whether the project had been authorized by the candidate 
whose name appeared in the title, or by any other candidate. As part of 
this proposal, the Commission also sought comments on whether 
disclaimer size and/or location requirements should be imposed in this 
situation. Second, a committee would not have been allowed to accept 
checks received in response to a special project solicitation, unless 
the checks were made payable to the registered name of the committee.
    However, the Commission also sought comments on a proposed total 
bar on the use of a candidate's name in the project title of an 
unauthorized committee's special fundraising project; and several 
commenters endorsed this approach. After considering all comments 
received in response to that Notice, the Commission decided that the 
total ban was justified.
    The rulemaking record contains substantial evidence that potential 
contributors often confuse an unauthorized committee's registered name 
with the names of its fundraising projects, and wrongly believe that 
their contributions will be used in support of the candidate(s) named 
in the project titles. Although one commenter on the present rulemaking 
stated that the Commission had overstated the potential for fraud and 
abuse in this area, no comment provided information to refute this 
earlier determination.
    This rule is narrowly designed to further the legitimate 
governmental interest in minimizing the possibility of fraud and abuse 
in this situation. Committees are not barred from establishing 
specially designated projects: They are free to choose whatever project 
title they desire, as long as it does not include the name of a federal 
candidate. Also, committees may freely discuss any number of 
candidates, by name, in the body of a communication. The newly-revised 
rule further enhances unauthorized committees' constitutional rights by 
exempting from the ban those titles that clearly indicate opposition to 
the named candidate.
    It is clear from the rulemaking record that the situation today 
differs significantly from that of the early 1980's, when the Common 
Cause case was litigated. Prior to the adoption of the 1992 rules, the 
use of candidate names in the titles of projects or other unauthorized 
communications had increasingly become a device for unauthorized 
committees to raise funds or disseminate information. Under the former 
interpretation, a candidate who objected to the use of his or her name 
in this manner, who shared in none of the funds received in response to 
the solicitation, and/or who disagreed with the views expressed in the 
communication, was largely powerless to stop it. For example, in 1984 a 
United States Senator requested, and received, permission to obtain 
from Commission records the names and addresses of those who had 
responded to unauthorized solicitations made in his name, to inform 
these contributors that he had not authorized the solicitation. 
However, he could not suggest that contributors send donations instead 
to his campaign committee. See Advisory Opinion 1984-2.
    An examination of the record in the 1992 rulemaking, which contains 
information that was not available when that NPRM was put out for 
comment, further supports the Commission's conclusion that this balance 
has now shifted so as to justify a broader interpretation. For example, 
a comment from an authorized committee of a major party presidential 
candidate stated that an unauthorized project using that candidate's 
name raised over $10,000,000 during the 1988 presidential election 
cycle, despite the candidate's disavowal of and efforts to stop these 
activities. The same unauthorized committee was raising money by means 
of a comparable project, using that same candidate's name, in the 1992 
election cycle. This comment added that two other unauthorized projects 
by that same committee raised over $4,000,000 and nearly $400,000 in 
the name of two other presidential candidates in the 1988 election 
cycle. None of the named candidates received any of the money that was 
collected in their names. One of these candidates, a United States 
Senator, also submitted comments asking that the pertinent rules be 
strengthened.
    In addition, a television documentary, a videotape of which was 
placed in the rulemaking record, detailed how an unauthorized Political 
Action Committee had, over several election cycles, established 
numerous projects whose titles included the names of federal 
candidates. The named candidates had no connection with the projects, 
had not authorized the use of their names in this manner, and received 
no money from the $9 million raised in response to these appeals. 
Program investigators found that elderly people are particularly 
vulnerable to being misled in this manner, since they may not notice or 
fail to fully comprehend the disclaimers included with the 
solicitations.
    Such cases point up the potential for confusion or abuse when an 
unauthorized committee uses a candidate's name in the title of a 
special fundraising project, or other designation under which the 
committee operates. A person who receives such a communication may 
confuse the project name with the committee's registered name, and thus 
may not understand that the communication is made on behalf of the 
unauthorized committee rather than the candidate whose name appears in 
the project's title. Potential donors may think they are giving money 
to the candidate named in the project's title, when this is not the 
case.
    Some comments that opposed any modifications to the former standard 
argued that current disclaimer requirements at section 441d(a)(3) were 
sufficient to minimize the potential for confusion in this area. Others 
suggested stronger, or larger, disclaimers, in place of the overall 
ban. One suggested that the disclaimer be in as large and as bold a 
typeface as the largest, boldest use of the candidate's name anywhere 
in the communication. The Commission believes that such an approach 
could be more burdensome than the current ban, while still not solving 
the potential for fraud and abuse in this area. The requirement that 
checks be made only to the sponsoring committee's registered name would 
similarly not ensure that the contributor did not erroneously believe 
the money would be used to support the candidate(s) named in the 
project's title. It also would be difficult, if not practically 
impossible, to monitor and enforce, since nothing on the public record 
reflects who the payee is on a contributor's check.
    It is important to note that the ban applies only to project 
titles, and not to the body of the accompanying communication. 
Unauthorized committees remain free to discuss candidates throughout 
the communication; and to use candidates' names as frequently, and 
highlight them as prominently (in terms of size, typeface, location, 
and so forth) as they choose. In other words, while a committee could 
not establish a fundraising project called ``Citizens for Doe,'' if Doe 
is a federal candidate, it could use a subheading such as ``Help Us 
Elect Doe to Federal Office,'' and urge Doe's election, by name, in 
large, highlighted type, throughout the communication.
    Also, by amending the regulation to exclude from the ban names that 
indicate opposition to the named candidate, the Commission has acceded 
to the petitioner's main concern, amending the rules to permit the 
American Ideas Foundation to use the names of federal candidates in 
titles that clearly indicate opposition to such candidates. As stated 
in its summary of the petition (petition, p. 1), ``There is no danger 
of confusion or abuse inherent in the use of a candidate's name by a 
committee or project which opposes the candidate.'' The Commission 
recognizes that the potential for fraud and abuse is significantly 
reduced in the case of such titles, and has accordingly revised its 
rules to permit them.
    The petition also asked that the rule exclude from the ban the use 
of candidate names in titles by those committees ``that are authorized 
to use the candidate's name, which are engaged in activities which will 
not actively mislead the public or injure the candidate, or which 
otherwise clearly indicate that they are unauthorized.'' However, if a 
candidate authorizes the use of his or her name in a fundraising 
project, the committee becomes an authorized committee, and this rule 
would not apply. The phrase ``engaged in activities which will not 
actively mislead the public or injure the candidate'' is vague and 
would result in the need to determine on a case-by-case basis whether 
covered communications met this test. The Commission has already 
determined that a stronger disclaimer requirement would not be 
sufficient in and of itself to meet this concern. Given the wide range 
of options that committees continue to have regarding use of candidate 
names, imposing further requirements could well prove more burdensome 
than the present approach.
    The NPRM proposed that exempted titles would have to ``clearly and 
unambiguously [show] opposition to the named candidate by using words 
such as `defeat' or `oppose.''' The requirement that such specific 
``triggering words'' be included in the title has been deleted from the 
final rule, since the Commission recognizes that certain titles, such 
as ``Citizens Fed Up with Doe,'' may clearly and unambiguously indicate 
opposition to a candidate even though no individual word in the title 
has that import.
    One commenter argued that legislative action is necessary to 
effectuate this change, noting that the Commission has in the past 
included this issue in the legislative recommendations it submits to 
Congress each year. However, it is well established that courts will 
not rely on an agency's legislative recommendation to undermine the 
agency's construction of a statute as authorizing it to act. The 
Supreme Court has stated that holding an agency's legislative 
recommendation against it is disfavored, because ``[p]ublic policy 
requires that agencies feel free to ask [Congress for] legislation,'' 
and this freedom to act would be chilled if such requests could later 
be held against them. Wong Yang Sung v. McGrath, 339 U.S. 33, 47 
(1950); see also, Warner-Lambert Co. v. FTC, 562 F.2d 749, 758 n. 39 
and cases cited therein (D.C. Cir. 1977), cert. denied, 435 U.S. 950 
(1978).
    The Commission notes that David Duke is not currently a candidate 
for federal office, so the use of his name in a project title is not 
prohibited by these rules. Should he again become a federal candidate, 
such use of his name would be governed by these revised rules.

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

    This final rule will not have a significant economic impact on a 
substantial number of small entities. The basis for this certification 
is that any small entities affected are already required to comply with 
the Act's requirements in this area. Also, the rule broadens the 
Commission's interpretation of these requirements.

List of Subjects in 11 CFR Part 102

    Campaign funds, Political candidates, Political committees and 
parties, Reporting requirements.

    For the reasons set out in the preamble, subchapter A, chapter I of 
title 11 of the Code of Federal Regulations is amended to read as 
follows:

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

    1. The authority citation for part 102 continues to read as 
follows:

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

    2. Section 102.14 is amended by adding paragraph (b)(3) to read as 
follows:


Sec. 102.14  Names of political committees (2 U.S.C. 432(e)(4) and 
(5)).

* * * * *
    (b) * * *
    (3) An unauthorized political committee may include the name of a 
Sec. candidate in the title of a special project name or other 
communication if the title clearly and unambiguously shows opposition 
to the named candidate.
* * * * *
    Dated: April 6, 1994.
Trevor Potter,
Chairman.
[FR Doc. 94-8690 Filed 4-11-94; 8:45 am]
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