[Federal Register Volume 62, Number 83 (Wednesday, April 30, 1997)]
[Rules and Regulations]
[Pages 23335-23337]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11183]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 62, No. 83 / Wednesday, April 30, 1997 /
Rules and Regulations
[[Page 23335]]
=======================================================================
-----------------------------------------------------------------------
FEDERAL ELECTION COMMISSION
11 CFR Part 104
[Notice 1997-7]
Recordkeeping and Reporting by Political Committees: Best Efforts
AGENCY: Federal Election Commission.
ACTION: Final Rule; Transmittal of regulations to Congress.
-----------------------------------------------------------------------
SUMMARY: The Federal Election Commission is revising its regulations
implementing the requirement of the Federal Election Campaign Act
(``FECA'') that treasurers of political committees exercise best
efforts to obtain, maintain and report the complete identification of
each contributor whose contributions aggregate more than $200 per
calendar year. The new rules change the required statement that must
accompany solicitations for contributions. The revisions also state
that separate segregated funds must report contributor information in
the possession of their connected organizations. Further information is
provided in the supplementary information which follows.
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, or Ms. Rosemary C. Smith, Senior Attorney, 999 E
Street N.W., Washington, D.C. 20463, (202) 219-3690 or toll free (800)
424-9530.
SUPPLEMENTARY INFORMATION: The Commission is publishing today the text
of revisions to its regulations at 11 CFR 104.7(b)(1) and (b)(3), which
set forth steps needed to ensure that political committees use their
best efforts to obtain, maintain and submit the names, addresses,
occupations and employers of contributors whose donations exceed $200
per year. These regulations implement section 432(i) of the Federal
Election Campaign Act of 1971, as amended (``the Act'' or ``FECA''). 2
U.S.C. 432(i).
On October 9, 1996 the Commission issued a Notice of Proposed
Rulemaking (NPRM) in which it sought comments on proposed revisions to
these regulations. 61 F.R. 52901 (Oct. 9, 1996). The comment period was
subsequently extended to January 31, 1997. 61 F.R. 68688 (Dec. 30,
1996). Written comments were received from the Center for Responsive
Politics (CRP), the Republican National Committee (RNC), Washington
State Coalition Against Violent Crime (WSCAV), the Internal Revenue
Service (IRS), Hervey W. Herron, and a joint comment from Seafarers
Political Activity Donation (SPAD) and Seafarers International Union
(SIU).
Since these rules are not major rules within the meaning of 5
U.S.C. 804(2), the FECA controls the legislative review process. See 5
U.S.C. 801(a)(4), Small Business Regulatory Reform Enforcement Fairness
Act, Public Law 104-121, section 251, 110 Stat. 857, 869 (1996).
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 25, 1997.
Explanation and Justification
The FECA specifies that reports filed by political committees
disclose ``the identification of each * * * person (other than a
political committee) who makes a contribution to the reporting
committee * * * whose contribution or contributions [aggregate over
$200 per calendar year] * * * together with the date and amount of any
such contribution.'' 2 U.S.C. 434(b)(3)(A). For an individual,
``identification'' means his or her full name, mailing address,
occupation and employer. 2 U.S.C. 431(13). Treasurers of political
committees must be able to show they have exercised their best efforts
to obtain, maintain and report this information. 2 U.S.C. 432(i).
The Commission's regulations at 11 CFR 104.7(b), which implement
these requirements of the FECA, are being revised to resolve two
issues. The first concerns the phrasing of the request for contributor
identifications and other information which must be included in all
political committee solicitations. The second concerns the measures
separate segregated funds should take if they do not receive the
necessary information from contributors.
Section 104.7(b)(1)
The Commission's current regulations at 11 CFR 104.7(b)(1) require
the inclusion of the following statement on all solicitations:
``Federal law requires political committees to report the name, mailing
address, occupation and name of employer for each individual whose
contributions aggregate in excess of $200 in a calendar year.''
Recently, the Court of Appeals for the D.C. Circuit concluded that this
mandatory statement is inaccurate and misleading. Republican National
Committee v. Federal Election Commission, 76 F.3d 400, 406 (D.C. Cir.
1996), cert. denied, 117 S.Ct. 682 (1997). The court pointed out that
the FECA only requires committees to use their best efforts to collect
the information and to report whatever information donors choose to
provide. Other provisions of the ``best efforts'' regulations were
upheld by the court.
Consequently, the NPRM proposed revising paragraph (b)(1) of
section 104.7 by requiring political committees to include in their
solicitations an accurate statement of the statutory requirements. The
notice indicated that either of the following two examples would
satisfy this requirement, but would not be the only allowable
statements: (1) ``Federal law requires us to use our best efforts to
collect and report the name, mailing address, occupation and name of
employer of individuals whose contributions exceed $200 in a calendar
year.'' (2) ``To comply with Federal law, we must use best efforts to
obtain, maintain, and submit the name, mailing address, occupation and
name of employer of individuals whose contributions exceed $200 per
calendar year.'' Alternatively,
[[Page 23336]]
comments were also sought on whether it would be preferable to simply
require all political committees to use one or the other of these two
formulations.
The public comments reflected a variety of reactions to this
proposed rule. Two commenters misunderstood the proposed rule in that
they believed political committees would be penalized if they fail to
use one of the FEC-prescribed statements. As explained, below, that
would not be the case, as long as political committees use an accurate
statement of the law. One commenter expressed concerns as to the
statutory authority and constitutionality of the Commission's proposed
rule. These considerations have already been resolved in Republican
National Committee v. Federal Election Commission, 76 F.3d 400, 406
(D.C. Cir. 1996), cert. denied, 117 S.Ct. 682 (1997). Another commenter
expressed general concerns regarding the impact of contributions in
political campaigns and urged various legislative changes. The Internal
Revenue Service found no conflict between the FEC's proposed rules and
the Internal Revenue Code or IRS rules promulgated thereunder.
Another commenter urged the adoption of stronger measures, such as
notifying contributors that their contributions will not be deposited
and must be returned if they do not provide complete contributor
identifications. This commenter believes that differences in reporting
rates are attributable to variations in the seriousness of different
committees' efforts to comply with the statutory requirements. It is
concerned that the Commission's present best efforts rules are
inadequate in ensuring sufficient disclosure. The Commission has
previously considered and rejected this approach because it is beyond
the statutory authority granted to the Commission at this time. See
Explanation and Justification 58 F.R. 55727-28 (Oct. 27, 1993). The
commenter also urged the Commission to prohibit the use of ``vague''
descriptions of occupations such as ``business owner,'' ``chairman,''
``administrator,'' ``manager,'' and ``self-employed.'' The Commission
is reluctant to bar the use of the titles the commenter believes to be
vague because many of them are commonly-used official titles which
provide meaningful information in combination with the name of the
contributor's employer.
In the final rules which follow, paragraph (b)(1) of section 104.7
states that solicitations must contain an accurate statement, and
provides two examples of statements that will be acceptable. However,
for the reasons raised by the commenters, the Commission has decided
not to require political committees to use only the statements listed.
Consequently, the final regulations have been revised to allow for the
use of other accurate statements of federal law regarding best efforts.
Thus, the Commission has made every effort to ensure that committees
have as much flexibility as possible. Nevertheless, please note that
statements such as ``Federal law requires political committees to ask
for this information,'' without more, do not provide contributors with
a complete statement regarding Federal law, and hence, do not meet the
requirements of revised 11 CFR 104.7(b)(1).
Section 104.7(b)(3)
The NPRM proposed revising paragraph (b)(3) of section 104.7 to
indicate that separate segregated funds are expected to report
contributor information in the possession of their connected
organizations. This includes corporations (including corporations
without capital stock), labor organizations, trade associations,
cooperatives and membership organizations. In some situations, it may
be more efficient for separate segregated funds to obtain the missing
contributor information from their connected organizations than from
the contributors.
One commenter supported this proposal. The Internal Revenue Service
found no conflict between the FEC's proposed rules and the Internal
Revenue Code or IRS rules promulgated thereunder. Another commenter
expressed concerns that this proposal would alter the resolution
reached by the Commission in Advisory Opinion 1996-25, issued to the
Seafarers Political Activity Donation and its connected organization,
the Seafarers International Union.
The Commission has decided to add the proposed new language to 11
CFR 104.7(b)(3). This will ensure that contributor identifications are
reported as accurately and as completely as possible. Since many
separate segregated funds are already reporting most, if not all, of
this information, the effect of this provision should be minimal. Given
that connected organizations establish, administer and financially
support their separate segregated funds, it is reasonable for them to
provide necessary information in their records when the contributors do
not do so. Please note that it is not the Commission's intention at
this time to modify or supersede AO 1996-25. Thus, the procedures
described in A0 1996-25 will continue to satisfy the revised best
efforts regulations for those entities entitled to rely on that
opinion.
Certification of no Effect Pursuant to 5 U.S.C. 605(b) [Regulatory
Flexibility Act]
The attached final rules will not, if promulgated, have a
significant economic impact on a substantial number of small entities.
The basis for this certification is that a portion of the attached
rules will provide any small entities affected with greater flexibility
in complying with the best efforts requirements of the Act by giving
them new options as to the statement to be included in their
solicitations. Small entities will be affected by the remaining portion
of the attached rules only if they are separate segregated funds.
Experience has shown that the large majority of these separate
segregated funds are already in compliance with the requirements on
reporting contributor information. Thus, obtaining missing contributor
information from their connected organizations will not have a
significant economic effect on a substantial number of these small
entities.
List of Subjects in 11 CFR Part 104
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 as follows:
PART 104--REPORTS BY POLITICAL COMMITTEES (2 U.S.C. 434)
1. The authority citation for Part 104 continues to read as
follows:
Authority: 2 U.S.C. 431(1), 431(8), 431(9), 432(i), 434,
438(a)(8), 438(b).
2. Section 104.7 is amended by revising paragraphs (b)(1) and
(b)(3) to read as follows:
Sec. 104.7 Best efforts (2 U.S.C. 432(i)).
* * * * *
(b) * * *
(1) All written solicitations for contributions include a clear
request for the contributor's full name, mailing address, occupation
and name of employer, and include an accurate statement of Federal law
regarding the collection and reporting of individual contributor
identifications. The following are examples of acceptable statements,
but are not the only allowable statements: ``Federal law requires us to
use our best efforts to collect and report the name, mailing address,
occupation and name of employer of individuals whose
[[Page 23337]]
contributions exceed $200 in a calendar year;'' and ``To comply with
Federal law, we must use best efforts to obtain, maintain, and submit
the name, mailing address, occupation and name of employer of
individuals whose contributions exceed $200 per calendar year.'' The
request and statement shall appear in a clear and conspicuous manner on
any response material included in a solicitation. The request and
statement are not clear and conspicuous if they are in small type in
comparison to the solicitation and response materials, or if the
printing is difficult to read or if the placement is easily overlooked.
* * * * *
(3) The treasurer reports all contributor information not provided
by the contributor, but in the political committee's possession, or in
its connected organization's possession, regarding contributor
identifications, including information in contributor records,
fundraising records and previously filed reports, in the same two-year
election cycle in accordance with 11 CFR 104.3; and
* * * * *
Dated: April 25, 1997.
John Warren McGarry,
Chairman, Federal Election Commission.
[FR Doc. 97-11183 Filed 4-29-97; 8:45 am]
BILLING CODE 6715-01-P