[Federal Register Volume 62, Number 86 (Monday, May 5, 1997)]
[Proposed Rules]
[Pages 24367-24374]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11590]


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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 62, No. 86 / Monday, May 5, 1997 / Proposed 
Rules  

[[Page 24367]]


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FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 104, 109, and 110

[Notice 1997-8]


Independent Expenditures and Party Committee Expenditure 
Limitations

AGENCY: Federal Election Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Election Commission is considering proposed new 
rules regarding independent expenditures and coordinated expenditures 
made by national, state and local party committees on behalf of federal 
candidates. The Commission is also considering possible changes to the 
regulations regarding the definition of ``coordination,'' which would 
apply to party committees as well as other committees, corporations, 
labor organizations, and individuals. These topics were the subject of 
a recent Supreme Court opinion concerning portions of the Federal 
Election Campaign Act of 1971, as amended (the Act or FECA). This 
notice addresses issues raised by the Democratic Senatorial Campaign 
Committee and the Democratic Congressional Campaign Committee in a 
Petition for Rulemaking filed with the Commission on July 11, 1996. The 
draft rules which follow do not represent a final decision by the 
Commission regarding the petition or the Supreme Court opinion. Further 
information is provided in the supplementary information which follows.

DATES: Comments must be received on or before May 30, 1997. If the 
Commission receives requests to testify, it will hold a hearing on June 
18, 1997 at 10:00 a.m. Persons wishing to testify should so indicate in 
their written comments.

ADDRESSES: Comments must be made in writing and addressed to: Ms. Susan 
E. Propper, Assistant General Counsel, 999 E Street, N.W., Washington, 
D.C. 20463. The hearing will be held in the Commission's ninth floor 
meeting room, 999 E Street, N.W., Washington, D.C.

FOR FURTHER INFORMATION CONTACT: Ms. Susan E. Propper, Assistant 
General Counsel, or Ms. Rosemary C. Smith, Senior Attorney, or Ms. 
Teresa A. Hennessy, Attorney, at (202) 219-3690 or toll free (800) 424-
9530.

SUPPLEMENTARY INFORMATION: The Commission is seeking public comment on 
proposed revisions to 11 CFR 110.7 regarding coordinated and 
independent expenditures by party committees. In addition, comment is 
sought on a revised definition of coordination, located in new 11 CFR 
100.23, which would apply to determining whether payments constitute 
independent expenditures, coordinated expenditures, or in-kind 
contributions. Corresponding amendments would also be made to sections 
100.7(a) (contributions), 104.4(a) (reporting), 109.1(b) (definitions), 
110.1 (contribution limits), 110.2 (multicandidate committee limits), 
and 110.11 (disclaimers). These proposals are intended to implement the 
Supreme Court's plurality opinion in Colorado Republican Federal 
Campaign Committee v. Federal Election Commission, 116 S. Ct. 2309 
(1996) (Colorado) concerning the expenditure limitations of section 
441a(d) of the FECA, 2 U.S.C. 431 et seq. In that decision, the Court 
concluded that political parties are capable of making independent 
expenditures on behalf of their candidates for federal office, and that 
it would violate the First Amendment to subject such independent 
expenditures to the expenditure limits found in section 441a(d) of the 
FECA. Id. at 2315.
    Section 441a(d) permits national, state, and local committees of 
political parties to make limited general election campaign 
expenditures on behalf of their candidates, which are in addition to 
the amount they may contribute directly to those candidates. 2 U.S.C. 
441a(d). These section 441a(d) expenditures are commonly referred to as 
``coordinated expenditures.'' Prior to the Colorado case, it was 
presumed that party committees could not make expenditures independent 
of their candidates. Please note that not all coordinated expenditures 
constitute communications. In fact, party committees may use their 
coordinated expenditure limits to pay for other types of expenses 
incurred by candidates, including staff costs, polling and other 
services.
    Based on the Colorado Supreme Court decision, the Democratic 
Senatorial Campaign Committee and the Democratic Congressional Campaign 
Committee filed a Petition for Rulemaking urging the Commission to: (1) 
repeal or amend 11 CFR 110.7(b)(4) to the extent that it prohibited 
national committees of political parties from making independent 
expenditures for congressional candidates; (2) repeal or amend 11 CFR 
Part 109 with respect to which expenditures qualify as ``independent''; 
and (3) issue new rules to provide meaningful guidance regarding 
independent expenditures by the national committees of political 
parties. Please note that although the Petition for Rulemaking urged 
changes only in the rules applicable to national committees of 
political parties, the Commission's rulemaking will also cover possible 
changes to the provisions governing state and local party committees.
    In response to the Colorado decision, the Commission promulgated a 
Final Rule on August 7, 1996 which repealed paragraph (b)(4) of section 
110.7. See 61 F.R. 40961 (Aug. 7, 1996). On the same date, the 
Commission also published a Notice of Availability seeking comment on 
the remainder of the Petitioners' requests. See 61 F.R. 41036 (Aug. 7, 
1996). No statements supporting or opposing the petition were received 
by the close of the comment period.
    The attached proposed rules are explained more fully below.

Section 100.7--Contribution

    The Commission is proposing adding new language to the definition 
of contribution in 11 CFR 100.7(a) regarding coordinated communications 
and other things of value. Comments are sought on two different 
alternative versions of this new provision. Alternative 1-A would 
specify that the term ``contribution'' includes a payment for a 
communication or anything of value which is coordinated with a 
candidate, authorized committee or other political committee. 
Alternative 1-B is similar, except that it would include the concept 
that the communication or thing of value must be for the purpose of 
influencing a federal election. Coordination is discussed in greater 
detail below. Please note that under either alternative this

[[Page 24368]]

new provision would apply not only to contributions from party 
committees, but also to any other person, including individuals, 
corporations, labor organizations, and nonconnected committees, who 
coordinate with candidates or committees. Alternative 1-A of the 
proposed rule would also reference 11 CFR 114.2(c), which explains that 
some forms of coordination by a corporation or labor organization may 
not necessarily result in the making of a contribution.

Section 100.23--Coordination

    The Commission's current regulations at 11 CFR 109.1(b)(4) indicate 
that an expenditure will be presumed to be coordinated rather than 
independent when it is ``[b]ased on information about the candidate's 
plans, projects or needs provided to the expending person by the 
candidate or the candidate's agents, with a view toward having an 
expenditure made,'' or when it is ``[m]ade by or through any person who 
is, or has been, authorized to raise or expend funds, who is, or has 
been, an officer of an authorized committee, or who is, or has been, 
receiving any form of compensation or reimbursement from the candidate, 
the candidate's committee or agent.'' 11 CFR 109.1(b)(4)(i). The 
present language is drawn from the statutory definitions of 
``independent expenditure'' at 2 U.S.C. 431(17) and ``contribution'' at 
2 U.S.C. 441a(a)(7)(B). The FECA defines independent expenditure to 
mean ``an expenditure by a person expressly advocating the election or 
defeat of a clearly identified candidate which is made without 
cooperation or consultation with any candidate, or any authorized 
committee or agent of such candidate, and which is not made in concert 
with, or at the request or suggestion of, any candidate, or any 
authorized committee or agent of such candidate.'' 2 U.S.C. 431(17); 
See also 11 CFR 109.1(a). Similarly, in Colorado, the Court referred to 
independent expenditures as those which are ``developed * * * 
independently and not pursuant to any general or particular 
understanding with [the candidates and their agents].'' 116 S. Ct. at 
2315.
    While the Commission does not propose to change its definition of 
independent expenditure in 11 CFR 109.1(a), the attached draft rules 
would more clearly tie the concept of what negates the independence of 
expenditures to a revised explanation of what constitutes coordination. 
Accordingly, the Commission seeks comments on replacing the current 
language in section 109.1(b)(4) with new language in section 100.23 
that more fully explains what is meant by ``coordination with a 
candidate.'' Comments are sought on several different alternative 
versions of this provision. The proposed rule would add some new 
examples of coordination, although these would not constitute an 
exhaustive list. The examples include situations set out in section 
441a(a)(7)(B) of the FECA where a person finances the reproduction, 
republication, display, distribution or other form of dissemination of 
the candidate's campaign materials, with several exceptions. The 
exceptions consist of situations where the campaign materials are used 
in communications that advocate the candidate's defeat, or that are 
incorporated into an exempt news story, commentary or editorial, or 
that are incorporated into a corporation's or labor organization's 
expression of its own views. See 11 CFR 100.7(b)(2), 114.3(c)(1) and 
Advisory Opinion 1996-48.
    The new language in section 100.23(a)(1) would retain some portions 
of the language of current 11 CFR 109.1(b)(4), which is based on 
section 431(17) of the FECA, with regard to payments made in 
cooperation or consultation or concert with, or at the request or 
suggestion of, any candidate, or any authorized committee or agent of a 
candidate. Alternative 2-A would not provide separate definitions for 
each term contained in section 431(17). It incorporates both the 
statutory standard and language from the plurality opinion in Colorado. 
Alternatives 2-B, 2-C and 2-D would define the terms to provide 
guidance to the regulated community. However, the definitions in 
Alternative 2-B are broader and more inclusive than in Alternatives 2-C 
or 2-D. The definitions in Alternative 2-C would and to stress the 
mutuality of the plan of action connoted by the statutory terms which 
make up ``coordination.'' Alternative 2-D generally follows Alternative 
2-C, except for other changes described below.
    Alternatives 2-A, 2-B, and 2-C also propose to add new language to 
the definition of coordination in proposed section 100.23(a) based on 
the plurality opinion in Colorado. The plurality indicated that 
independent expenditures are those which are ``developed . . . 
independently and not pursuant to any general or particular 
understanding with [the candidates and their agents].'' Colorado at 
2315. These alternatives indicate that coordination occurs when there 
is a general or particular understanding or arrangement with a 
candidate. Alternative 2-D of proposed section 100.23(a) excludes this 
new language in favor of the statutory language. Comments are sought 
concerning whether the new language should be added to the definition 
of ``coordination'' or whether the Supreme Court intended this phrase 
to be limited to its discussion of independent expenditures made by 
party committees.
    In addition, comments are sought as to whether coordination between 
a person making an expenditure and a candidate or campaign committee 
only results from a specific agreement on a particular advertisement or 
communication, or other expenditure, or whether a more general 
understanding or arrangement is sufficient to constitute coordination.
    In paragraph (a)(3), of new section 100.23, Alternative 3-A would 
continue the Commission's current approach of including payments based 
on information about the candidate's plans, projects or needs provided 
to the expending person by the candidate or the candidate's agents or 
authorized committee. However, Alternative 3-A of the revised rules 
would eliminate the current language regarding information provided 
``with a view toward having an expenditure made. This alternative takes 
the view that the term ``with a view toward having an expenditure 
made'' requires a subjective determination of the candidate's or 
committee's intentions, and the receipt of such information from the 
candidate is sufficient to establish coordination. In contrast, 
Alternatives 3-B and 3-C would retain the phrase ``with a view toward 
having an expenditure made'' to provide further guidance in defining 
the statutory term ``for the purpose of influencing a federal 
election'' in light of the examples given in proposed section 100.23(a) 
(1), (2), and (3). Alternative 3-C would define what is not meant by 
``coordination'' so as to clarify the limits of the term to the 
regulated community. Comments are sought as to whether an exchange of 
information regarding the expending person's plans, projects or needs 
also results in ``coordination.''
    All the alternatives would also eliminate the current language 
indicating when expenditures will be ``presumed'' to be coordinated. 
This ``presumption'' has not provided sufficient certainty to the 
regulated community.
    Proposed new section 100.23 also explains more fully who is 
considered to be an agent of a candidate. Alternative 4-A of paragraph 
(b) of this draft rule would indicate that agents include persons who 
during the same election cycle in which the payment is made hold 
executive, policymaking, or

[[Page 24369]]

other significant advisory or fundraising positions with the 
candidate's authorized committee; or have participated in strategic or 
policymaking discussions with the candidate or campaign officials; or 
provide campaign-related services such as polling, media advice, direct 
mail, fundraising or campaign research. Alternative 4-B of paragraph 
(b) of this draft rule would add an additional provision that agents 
must have an express or implied grant of authority from the principal 
to act on its behalf either generally or with regard to particular 
matters. However, under both of these alternatives the rules would 
specifically exclude entities that are not actively involved in 
campaign decision-making, such as messenger and delivery services, and 
other passive vendors. In addition, under proposed paragraph (c), as 
under current 11 CFR 109.1, coordination would not result merely from 
providing the expending person with Commission guidelines on 
independent expenditures.
    Additional issues related to coordination by party committees are 
discussed below. These include the related questions of whether there 
should be a different definition of ``independent expenditure'' and a 
different standard as to what constitutes ``coordination'' for party 
committees than for individuals and other political committees.

Section 109.1--Independent Expenditure Definition

    The proposed regulations would make one modification to 11 CFR 
109.1(a), which defines ``person'' for purposes of making independent 
expenditures. The definition of ``person'' already includes political 
committees. Nevertheless, the attached rules would add a reference to 
party committees to recognize that, consistent with Colorado, party 
committees may make independent expenditures.
    In paragraph (b)(4) of section 109.1, Alternative 5-A would modify 
the definition of the phrase ``made with the cooperation or with the 
prior consent of, or in consultation with, or at the request of 
suggestion of'' by referring the reader to the definition of 
``coordination'' in 11 CFR 100.23. Alternative 5-B would eliminate 
paragraph (b)(4) of this section.

Section 110.7--Party Committee Coordinated Expenditures and Independent 
Expenditures

    Section 110.7 of the Commission's regulations implements a 
statutory exception to the contribution limits set forth at 2 U.S.C. 
441a. This exception allows national, state and subordinate committees 
of political parties to make expenditures up to specifically prescribed 
amounts on behalf of the general election campaigns of federal 
candidates without counting such expenditures against the committees' 
contribution limits. See 2 U.S.C. 441a(d). These expenditures are 
commonly referred to as ``coordinated'' because the FECA permits party 
committees to make such expenditures after extensive consultation with 
the candidates and their campaign staffs. Prior to the Colorado 
decision, the Commission's regulations at 11 CFR 110.7(a)(5) and (b)(4) 
also barred national, state and local party committees from making 
independent expenditures. As noted above, at an earlier point in this 
rulemaking, the Commission repealed paragraph (b)(4) of this section, 
although paragraph (a)(5), barring national party committees from 
making independent expenditures in the general election campaigns of 
Presidential candidates, remains in effect. See 61 F.R. 40961 (Aug. 7, 
1996).
    In Colorado, the Supreme Court's plurality opinion delivered by 
Justice Breyer (joined by Justices O'Connor and Souter) held that, 
``The independent expression of a political party's views is `core' 
First Amendment activity no less than is the independent expression of 
individuals, candidates, or other political committees. [Citation 
omitted]'' Colorado at 2316. The plurality stated, ``We therefore 
believe this Court's prior case law controls the outcome here. We do 
not see how a Constitution that grants to individuals, candidates, and 
ordinary political committees the right to make unlimited independent 
expenditures could deny the same right to political parties.'' Id. at 
2317. The First Amendment rights of individuals and political 
committees to make independent expenditures were initially delineated 
by the Supreme Court in Buckley v. Valeo, 424 U.S. 1 (1976) (Buckley), 
and Federal Election Commission v. National Conservative Political 
Action Committee, 470 U.S. 480 (1985) (NCPAC), respectively. With 
respect to coordinated expenditures, the Supreme Court's Colorado 
decision did not modify or eliminate the existing statutory limits on 
coordinated expenditures. The plurality opinion did not reach the 
broader question of whether ``the First Amendment forbids congressional 
efforts to limit coordinated expenditures as well as independent 
expenditures.'' Colorado at 2319. However, those limits are the subject 
of pending judicial proceedings.
    In light of the Colorado decision, the Commission is seeking 
comments on several proposed amendments to 11 CFR 110.7, including 
alternative language, regarding both coordinated and independent 
expenditures. First, the title of this section, and the references to 
``expenditures'' found throughout, would be modified to clarify which 
portions of this section apply to expenditures which are coordinated 
with the candidate on whose behalf they are made, and which portions 
apply to independent expenditures. For the convenience of the reader, 
titles for each paragraph would also be added.
1. Independent Expenditures for Congressional Candidates
    In light of the prior repeal of 11 CFR 110.7(b)(4), the attached 
proposed rules do not limit the total amount of money political party 
committees at all levels may devote to independent expenditures on 
behalf of their congressional candidates. However, funds used to make 
independent expenditures would continue to be subject to FECA 
requirements. Party committee expenditures on behalf of House and 
Senate candidates would not count towards the contribution limits when 
those expenditures are genuinely independent of the candidates in that 
election. Conversely, party committee expenditures on behalf of 
candidates which do not qualify as independent must be treated as 
either in-kind contributions subject to the limits of section 441a(a) 
or (h) of the Act (See 2 U.S.C. 441a(a)(7)(B)), or as coordinated 
expenditures subject to the limits of section 441a(d) of the Act, 
unless they qualify as exempt activities under 2 U.S.C. 431(8)(B)(v), 
(x) and (xii) and 431(9)(B)(iv), (viii) and (ix).
    The Colorado opinion indicates that political party committees have 
the same rights to make independent expenditures as other persons 
covered by the FECA. Colorado at 2317. Consequently, under the proposed 
new rules, independent expenditures made by political party committees 
would be treated as subject to the same standards and conditions as 
independent expenditures made by other entities. This includes the same 
standards for avoiding coordination with candidates, as well as the 
same reporting requirements, disclaimers and contribution limits. 
Nevertheless, comments are requested as to whether different standards 
should apply to party committees.
    The Petition for Rulemaking argued that party committees are in 
regular contact with their candidates, help develop candidate messages 
and campaign strategy, and routinely share

[[Page 24370]]

overlapping consultants, pollsters, fundraisers and other campaign 
agents. According to the petition, these consultations, discussions, 
and arrangements involve face-to-face meetings, telephone 
conversations, and exchanges of paper and electronic mail on a regular 
basis, sometimes daily, and take place at both the staff level and 
higher levels. If the party has such ties to a candidate, it would be 
difficult for the committees to achieve sufficient insulation from that 
candidate so as to avoid any general or particular understanding that 
would result in coordination, thereby destroying the independence of 
their expenditures. As Justice Kennedy stated, concurring in the result 
in Colorado, in most cases, the answer to the question of ``whether a 
party's spending is made `in cooperation, consultation, or concert 
with' its candidate * * * will be yes * * *.'' Colorado at 2322. 
Nevertheless, the Court found it was possible for the Colorado 
Republican Party to make independent expenditures in the specific 
circumstances presented in the Colorado case. These circumstances 
included the fact that the expenditures were made months before the 
primary election, three individuals were vying for the nomination, and 
no general election candidate had yet been selected. Id. at 2315. It 
was also significant that the only ``politically relevant individuals'' 
to read the script were the state party chairman, executive director 
and political director. Id. In Advisory Opinion 1984-30, the Commission 
concluded that contacts during the primary campaign would raise a 
rebuttable presumption that general election expenditures would be 
based on the information about the candidate's plans, projects or needs 
raised in the course of such contacts.
    Nevertheless, the Commission seeks comments as to whether and how a 
party committee could make expenditures which are genuinely independent 
of a candidate when the party committee has already made, or is in the 
process of making, coordinated expenditures or in-kind contributions 
for that candidate. For example, would it be feasible for a party 
committee to create a separate subdivision or other unit for the 
exclusive purpose of making independent expenditures, and to 
sufficiently insulate this unit from its regular staff and its daily 
campaign activities? Would this separate unit have to be established 
before the beginning of the election cycle, or before the first 
campaign-related discussions any party officials or staff have with the 
candidate's campaign staff? In the alternative, would it be sufficient 
for the party committee to create this organization at any time before 
the party's nominee is chosen? Does a party committee's ability to make 
independent expenditures end when it nominates a candidate? Once a 
party committee has coordinated with a particular candidate in a given 
election, would it ever be possible to cease coordinating and begin 
making independent expenditures with respect to that particular 
candidate and election?
    Similarly, if party committees are affiliated, the question arises 
as to whether coordination by one party committee automatically 
destroys the ability of other affiliated party committees to make 
independent expenditures. In this regard, comments are sought as to 
whether there may be a significant distinction between the relationship 
between national, state and local committees on the one hand, and the 
relationship between the national committee and its House and Senate 
campaign committees? Another question concerns candidates who are 
nominated at state party conventions. If the candidate who is nominated 
faces little or no opposition at the convention, does this mean the 
party organization staging the convention has sufficiently coordinated 
with the nominee so as to preclude subsequent independent expenditures 
by the state or local party committee in connection with the general 
election campaign?
2. Independent Expenditures for Presidential Campaigns
    In Colorado, the Supreme Court indicated that its decision involved 
only congressional races, and did not ``address issues that might grow 
out of the public funding of Presidential campaigns.'' Id. at 2314. 
Previously, in NCPAC, the Supreme Court addressed the constitutionality 
of one public-funding provision, section 9012(f) of the Presidential 
Election Campaign Fund Act. 26 U.S.C. 9001 et seq. This provision 
barred political committees from expending more than $1000 to further 
the election of publicly-funded Presidential candidates in the general 
election. The Supreme Court found 26 U.S.C. 9012(f) to violate the 
First Amendment to the extent that it limited independent expenditures 
by nonconnected political committees. NCPAC at 497. The Court 
emphasized the ``fundamental constitutional difference between money 
spent to advertise one's views independently of a candidate's campaign 
and money contributed to the candidate to be spent on his campaign. * * 
* [T]he absence of prearrangement and coordination undermines the value 
of the expenditure to the candidate, and thereby alleviates the danger 
that expenditures will be given as a quid pro quo for improper 
commitments from the candidate.'' Id. at 497-98. However, this case did 
not involve political party committees.
    For a number of reasons, the proposed rules in paragraph (a)(4) of 
section 110.7 would continue the current ban on national party 
committees making independent expenditures on behalf of the general 
election campaigns of Presidential candidates. One reason for retaining 
these regulations is that they may still be necessary to implement the 
provisions of 2 U.S.C. 441a(d), which were not invalidated by the 
Supreme Court. The rules recognize that it may be difficult, perhaps 
impossible, for a national party committee to be wholly independent of 
its presidential candidate if the chair of the national party was 
selected by the Presidential candidate or has worked closely with his 
or her campaign staff over a period of time. Accordingly, the 
Commission seeks comments regarding the extent of coordination between 
party committees and Presidential candidates, in practice. Sections 
432(e)(3)(A)(i) and 441a(d)(2) of the FECA allow the national committee 
of a political party to serve as the principal campaign committee or 
authorized committee of its Presidential candidate. See 11 CFR 
102.12(c)(1) and 9002.1(c). In such a case, it does not seem possible 
for party committees to operate independently of the candidate and the 
candidate's agents.
    Comments are also sought on several other issues addressed in 
proposed paragraph (a)(4) of section 110.7. First, should the ban on 
independent expenditures be extended to include those made in 
connection with Presidential primaries? Secondly, should this provision 
explicitly bar congressional campaign committees, as well as state and 
local party committees, from making these independent expenditures? The 
Commission is considering whether coordination between a national party 
committee and its Presidential candidate destroys the ability of 
affiliated state or local party committees to make independent 
expenditures on behalf of that candidate. In the alternative, are such 
independent expenditures precluded only when the state or local party 
committee, itself, coordinates with the Presidential candidate's 
committee? Another approach would be to establish a rebuttable 
presumption that any party committee communications mentioning 
Presidential candidates are coordinated

[[Page 24371]]

with those candidates in both the primary and the general election.
    Another issue concerns the role of public funding. Comments are 
sought on whether the ban on party committee independent expenditures 
for Presidential candidates should only apply to those party committees 
whose nominees accept public funding. Alternative 6-B of section 
110.7(a) would implement this approach. In contrast, Alternative 6-A 
would cover all Presidential candidates. Comments are also sought on 
revising 11 CFR 110.7 and 9008.3(a)(4) to condition the grant of public 
funding for national nominating conventions on the party committee's 
and convention committee's agreement not to make independent 
expenditures for either the primary or general election campaigns of 
its Presidential and Vice Presidential candidates. Such a requirement, 
while not appearing in the attached draft rules, would be predicated on 
the assumption that nominating conventions are extensively coordinated 
with these candidates, thereby precluding the possibility of 
simultaneous or subsequent independent expenditures. However, this may 
not be true if the nomination is still being contested by the time of 
the convention.
3. Other Changes to Section 110.7
    The Commission seeks comments on adding language to paragraph (c) 
of section 110.7 to set forth the Commission's current policy regarding 
the assignment of coordinated expenditure limits. The revised rule 
would state that whenever a party committee authorizes another party 
committee to use part or all of its coordinated expenditure limitation, 
the authorization must be in writing, must specify a dollar amount, and 
must be made before the committee so authorized actually makes the 
coordinated expenditure. See Campaign Guide for Political Party 
Committees (1996). This would apply to both the national committee and 
state committees. Consequently, it would replace the language in 
current paragraph (a)(4), that permits national committees of political 
parties to assign their spending limits but does not specify how this 
should be accomplished. Comments are requested as to whether copies of 
such written authorizations should be attached to the committees' 
disclosure reports.
    New paragraph (d) of section 110.7 would indicate that the 
explanation of ``coordinated'' in 11 CFR 100.23 and 109.1(b)(4) would 
apply in determining whether expenditures are coordinated for purposes 
of the coordinated expenditure limits of 11 CFR 110.7. Please note that 
under the proposed rules, the Commission's standards for determining 
whether a communication by a party committee is a coordinated 
expenditure under 2 U.S.C. 441a(d) would continue to depend on whether 
it contains an electioneering message and mentions a clearly identified 
candidate.

Section 104.4(a)--Reporting Independent Expenditures

    Paragraph (a) of this section sets out the reporting obligations of 
political committees making independent expenditures. The draft rules 
which follow would add a specific reference to party committees to make 
clear that national, state and subordinate committees of political 
parties would be subject to the same reporting requirements as other 
political committees. Consequently, other regulations which establish 
reporting requirements would apply in the same manner and to the same 
extent that they apply to other political committees making independent 
expenditures. E.g. 11 CFR 104.3(b)(3)(vii)(A) through (C) and 104.5(g).

Section 110.1(n) and 110.2(k)--Contributions to Committees Making 
Independent Expenditures

    The Commission requests comments on proposed new paragraph (n) of 
section 110.1 and new paragraph (k) of section 110.2, which would 
replace current paragraphs (d)(2) of these sections regarding the 
application of the contribution limits to contributions to committees 
that make independent expenditures. These sections need to be updated 
because current paragraphs (d)(2) of each section recognize that non-
party committees may make independent expenditures, but do not 
contemplate party committees doing so. Individuals may donate up to 
$20,000 to national party committees. Consequently, under the proposed 
new language, the $20,000 contribution limit would continue to apply 
when the recipient national party committee uses the contribution to 
make independent expenditures.

Section 110.11(a)--Party Committee Disclaimers

    The Commission seeks comments on two changes to paragraph (a)(2) of 
section 110.11 regarding disclaimers for party committee 
communications. First, new language would be added to paragraph 
(a)(2)(i) to state that the required disclaimer for communications 
which constitute coordinated expenditures must indicate who authorized 
the communication. Accordingly, the present language in paragraph 
(a)(2)(ii) would be deleted. Currently, 11 CFR 110.11(a)(2)(ii) states 
that coordinated expenditures need not include an authorization 
statement if the communication is made before the party's candidate is 
nominated. However, in the event that the Commission decides to 
continue to treat party committee communications mentioning 
Presidential candidates as inherently coordinated, comments are sought 
as to whether paragraph (a)(2)(ii) should remain as it is now and not 
require party committees to state which Presidential candidates 
authorized these pre-primary communications.
    Second, new paragraph (a)(2)(ii) would indicate that when party 
committees make independent expenditure communications, the disclaimer 
must state that the party committee paid for the communication, and 
that the communication is not authorized by any candidate or authorized 
committee. Given that independent expenditures contain express 
advocacy, they are subject to the disclaimer requirements of 2 U.S.C. 
Sec. 441d.
    The Commission welcomes comments on proposed new 11 CFR 100.23, the 
proposed amendments to 11 CFR 100.7(a), 104.4(a), 109.1(b), 110.1, 
110.2, 110.7, and 110.11(a) as well as the issues raised in this 
notice.

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

    These proposed rules will not, if promulgated, have a significant 
economic impact on a substantial number of small entities. The basis 
for this certification is that the rules would conform to a recent 
Supreme Court decision by permitting, but not requiring, small entities 
to make independent expenditures. Therefore, no significant economic 
impact would result.

List of Subjects

11 CFR Part 100

    Elections.

11 CFR Part 104

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

11 CFR Part 109

    Elections, Reporting and recordkeeping requirements.

[[Page 24372]]

11 CFR Part 110

    Campaign funds, Political committees and parties.
    For the reasons set out in the preamble, it is proposed to amend 
Subchapter A, Chapter I of title 11 of the Code of Federal Regulations 
as follows:

PART 100--SCOPE AND DEFINITIONS (2 U.S.C. 431)

    1. The authority citation for Part 100 would continue to read as 
follows:

    Authority: 2 U.S.C. 431, 438(a)(8).

    2. Section 100.7 would be amended by adding new paragraph (a)(5) to 
read as follows:


Sec. 100.7  Contribution (2 U.S.C. 431(8)).

    (a) * * *

Alternative 1-A

    (5) Any payment made for a communication or anything of value that 
is made in coordination with a candidate, or a candidate's authorized 
committee or agent, or in coordination with a political committee or 
its agent, except as otherwise provided in 11 CFR 114.2(c).

Alternative 1-B

    (5) Any payment made for a communication or anything of value that 
is made for the purpose of influencing any election for Federal office 
and that is made in coordination with a candidate, or a candidate's 
authorized committee or agent, or in coordination with a political 
committee or its agent, except as otherwise provided.

(End of Alternatives for Sec. 100.7)

* * * * *
    3. Part 100 would be amended by adding new section 100.23 to read 
as follows:


Sec. 100.23  Coordination (2 U.S.C. 431(17).

    (a) Payments made in ``coordination'' with a candidate include:

Alternative 2-A

    (1) Payments made by any person in cooperation, consultation or 
concert with, at the request or suggestion or direction of, or pursuant 
to any general or particular understanding or arrangement with a 
candidate or a candidate's authorized committee or agent;

Alternative 2-B

    (1) Payments made by any person in cooperation, consultation or 
concert with, at the request or suggestion or direction of, or pursuant 
to any general or particular understanding or arrangement with a 
candidate or a candidate's authorized committee or agent, as defined 
below:
    (i) In cooperation or concert with means acting, working or 
operating together, or conferring or discussing or jointly deciding or 
planning for one or more persons to take action(s);
    (ii) In consultation with means providing information to one or 
more persons and obtaining their reactions, suggestions or responses;
    (iii) At the request, suggestion or direction of means asking, 
ordering, requiring, indicating, telling, or otherwise expressly or 
impliedly expressing the hope or desire that one or more persons take 
action(s);
    (iv) Pursuant to any general or particular understanding or 
arrangement means an express or implied agreement or intention for one 
or more persons to take action necessary to achieve a common goal;

Alternative 2-C

    (1) Payments made by any person in cooperation, consultation or 
concert with, at the request or suggestion or direction of, or pursuant 
to any general or particular understanding or arrangement with a 
candidate or a candidate's authorized committee or agent as defined 
below. See the definition of person in 11 CFR 109.1(b)(1).
    (i) In cooperation with means the act of persons working or 
operating together in the formation of a plan;
    (ii) In consultation with means a meeting of persons to discuss, 
decide, or plan something;
    (iii) In concert with means an agreement of two or more persons in 
a design or plan;
    (iv) At the request, suggestion or direction of means asking, 
ordering, requiring, indicating, telling, or otherwise expressly or 
impliedly expressing the hope or desire that one or more persons take 
action(s);
    (v) Pursuant to any general or particular understanding or 
arrangement means an express or implied agreement or intention for one 
or more persons to take action necessary to achieve a common goal;

Alternative 2-D

    (1) Payments made by any person in cooperation, consultation or 
concert with, at the request or suggestion or direction of a candidate 
or a candidate's authorized committee or agent as defined below. See 
the definition of person in 11 CFR 109.1(b)(1).
    (i) In cooperation with means the act of persons working or 
operating together in the formation of a plan;
    (ii) In consultation with means a meeting of persons to discuss, 
decide, or plan something;
    (iii) In concert with means an agreement of two or more persons in 
a design or plan;
    (iv) At the request, suggestion or direction of means asking, 
ordering, requiring, indicating, telling, or otherwise expressly or 
impliedly expressing the hope or desire that one or more persons take 
action(s);

(End of Alternatives for Paragraph (a)(1))

    (2) Payments made by any person to finance the dissemination, 
distribution, display, republication or reproduction, in whole or in 
part, of any broadcast or any written, graphic or other form of 
campaign materials prepared by the candidate or any agent or authorized 
committee of the candidate, but not including the use of those 
materials in communications that advocate the candidate's defeat or are 
incorporated into a news story, commentary or editorial exempted under 
11 CFR 100.7(b)(2) or are incorporated into a corporation's or labor 
organization's expression of its own views under 11 CFR 114.3(c)(1); 
and

Alternative 3-A

    (3) Payments made based on information about the candidate's plans, 
projects or needs provided to the expending person by the candidate, or 
the candidate's authorized committee or agents.

Alternative 3-B

    (3) Payments made based on information about the candidate's plans, 
projects or needs provided to the expending person by the candidate, or 
the candidate's authorized committee or agents with a view toward 
having an expenditure made.

Alternative 3-C

    (3) Payments made based on information about the candidate's plans, 
projects or needs provided to the expending person by the candidate, or 
the candidate's authorized committee or agents with a view toward 
having an expenditure made, but not including mere contacts with 
persons who are not empowered to commit their organizations, or which 
do not result in coordinated action with persons empowered to commit 
their organization, or which do not meet the definition of coordination 
as defined in (a)(1) of this section.

[[Page 24373]]

(End of Alternatives for Paragraph (a)(3))

    (b) A candidate's agents include persons who during the same 
election cycle in which the payment is made--

Alternative 4-A

    (1) Hold or have held executive, policymaking, or other significant 
advisory or fundraising positions with the candidate's authorized 
committee;
    (2) Have participated in strategic or policymaking communications 
with the candidate or campaign officials; or
    (3) Are providing or have provided campaign-related services such 
as polling, media advice, direct mail, fundraising or campaign 
research, unless such persons do not make decisions, or participate in 
decision-making, regarding the candidate's plans, projects or needs.

Alternative 4-B

    (1) Have an express or implied grant of authority from the 
principal to act on its behalf either generally or only with regard to 
particular matters; and
    (2) (i) Hold or have held executive, policymaking, or other 
significant advisory or fundraising positions with the candidate's 
authorized committee;
    (ii) Have participated in strategic or policymaking communications 
with the candidate or campaign officials; or
    (iii) Are providing or have provided campaign-related services such 
as polling, media advice, direct mail, fundraising or campaign 
research, unless such persons do not make decisions, or participate in 
decision-making, regarding the candidate's plans, projects or needs.

(End of Alternatives for Paragraph (b))

    (c) Payments made in coordination with a candidate do not include 
payments by any person whose only contact with the candidate, 
candidate's authorized committee or agents is to receive Commission 
guidelines on independent expenditures.

PART 104--REPORTS BY POLITICAL COMMITTEES (2 U.S.C. 434)

    4. The authority citation for part 104 would continue to read as 
follows:

    Authority: 2 U.S.C. 431(1), 431(8), 431(9), 432(i), 434, 
438(a)(8), 438(b), 439a.

    5. Section 104.4 would be amended by revising paragraph (a) to read 
as follows:


Sec. 104.4  Independent expenditures by political committees (2 U.S.C. 
434(c)).

    (a) Every political committee, including a party committee, which 
makes independent expenditures shall report all such expenditures on 
Schedule E in accordance with 11 CFR 104.3(b)(3)(vii). Every person 
(other than a political committee) shall report independent 
expenditures in accordance with 11 CFR part 109.
* * * * *

PART 109--INDEPENDENT EXPENDITURES (2 U.S.C. 431(17), 434(c))

    6. The authority citation for part 109 would continue to read as 
follows:

    Authority: 2 U.S.C. 431(17), 434(c), 438(a)(8), 441d.

    7. Section 109.1 would be amended by revising paragraphs (b)(1) and 
(b)(4) to read as follows:


Sec. 109.1  Definitions (2 U.S.C. 431(17).

* * * * *
    (b) * * *
    (1) Person means an individual, partnership, committee (including a 
party committee), association, qualified nonprofit corporation under 11 
CFR 114.10(c), or any organization or group of persons, including a 
separate segregated fund established by a labor organization, 
corporation, or national bank (See part 114) but does not mean a labor 
organization, corporation not qualified under 11 CFR 114.10(c), or 
national bank.
* * * * *

Alternative 5-A

    (4) Made with the cooperation or with the prior consent of, or in 
consultation with, or at the request or suggestion of, a candidate or 
any agent or authorized committee of the candidate means coordination 
with the candidate prior to the publication, distribution, display or 
broadcast of the communication, as defined in 11 CFR 100.23.

Alternative 5-B

(No Corresponding Provision)
* * * * *

PART 110--CONTRIBUTION AND EXPENDITURE LIMITATIONS AND PROHIBITIONS

    8. 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(a)(8), 441a, 
441b, 441d, 441e, 441f, 441g and 441h.

    9. In section 110.1, paragraph (d)(2) would be removed, paragraph 
(d)(1) would be redesignated as paragraph (d), and a new paragraph (n) 
would be added to read as follows:


Sec. 110.1  Contributions by persons other than multicandidate 
political committees (2 U.S.C. 441a(a)(1)).

* * * * *
    (n) Contributions to committees making independent expenditures. 
The limitations on contributions of this section also apply to 
contributions made to political committees making independent 
expenditures under 11 CFR part 109.
    10. In section 110.2, paragraph (d)(2) would be removed, paragraph 
(d)(1) would be redesignated as paragraph (d), and a new paragraph (k) 
would be added to read as follows:


Sec. 110.2  Contributions by multicandidate political committees (2 
U.S.C. 441a(a)(2)).

* * * * *
    (k) Contributions to multicandidate political committees making 
independent expenditures. The limitations on contributions of this 
section also apply to contributions made to multicandidate political 
committees making independent expenditures under 11 CFR Part 109.
    11. Section 110.7 would be revised to read as follows:


Sec. 110.7  Party committee coordinated expenditures and independent 
expenditures (2 U.S.C. 441a(d)).

    (a) Presidential elections. (1) The national committee of a 
political party may make coordinated expenditures in connection with 
the general election campaign of any candidate for President of the 
United States affiliated with the party.
    (2) The coordinated expenditures shall not exceed an amount equal 
to 2 cents multiplied by the voting age population of the United 
States.
    (3) Any coordinated expenditure under paragraph (a) of this section 
shall be in addition to--
    (i) Any expenditure by a national committee of a political party 
serving as the principal campaign committee of a candidate for 
President of the United States; and
    (ii) Any contribution by the national committee to the candidate 
permissible under 11 CFR 110.1 or 110.2.

Alternative 6-A

    (4) Political party committees may not make independent 
expenditures (See 11 CFR Part 109) in connection with an election 
campaign of a candidate for nomination or election to the office of 
President of the United States.

Alternative 6-B

    (4) Political party committees affiliated with a publicly funded 
Presidential candidate may not make independent expenditures (See 11 
CFR

[[Page 24374]]

Part 109) in connection with an election campaign of a candidate for 
nomination or election to the office of President of the United States.

(End of Alternatives for Paragraph (a)(4))

    (5) Any coordinated expenditures made by the national, state and 
subordinate committees of a political party pursuant to paragraph (a) 
of this section on behalf of that party's Presidential candidate shall 
not count against the candidate's expenditure limitations under 11 CFR 
110.8.
    (b) Other federal elections. (1) The national committee of a 
political party, and a State committee of a political party, including 
any subordinate committee of a State committee, may each make 
coordinated expenditures in connection with the general election 
campaign of a candidate for Federal office in that State who is 
affiliated with the party.
    (2) The coordinated expenditures shall not exceed--
    (i) In the case of a candidate for election to the office of 
Senator, or of Representative from a State which is entitled to only 
one Representative, the greater of--
    (A) Two cents multiplied by the voting age population of the State; 
or
    (B) Twenty thousand dollars; and
    (ii) In the case of a candidate for election to the office of 
Representative, Delegate, or Resident Commissioner in any other State, 
$10,000.
    (3) Any coordinated expenditure under paragraph (b) of this section 
shall be in addition to any contribution by a committee to the 
candidate permissible under 11 CFR 110.1 or 110.2.
    (c) Assignment of coordinated expenditure limits; compliance. The 
national committee and State committees of a political party may make 
the coordinated expenditures specified in this section by designating 
another party committee as its agent, provided that before the 
coordinated expenditure is made, the national or State committee 
specifies in writing the amount the designated party committee may 
spend. For limitation purposes, ``State committee'' includes 
subordinate State committees. State committees and subordinate State 
committees combined shall not exceed the limits in paragraph (b)(2) of 
this section. To ensure compliance with the limitations, the State 
committee shall administer the limitation in one of the following ways:
    (1) The State central committee shall be responsible for insuring 
that the coordinated expenditures of the entire party organization are 
within the limitations, including receiving reports from any 
subordinate committees making coordinated expenditures under paragraph 
(b) of this section, and filing consolidated reports showing all 
expenditures in the State with the Commission; or
    (2) Any other method, submitted in advance and approved by the 
Commission which permits control over expenditures.
    (d) Definition of coordinated expenditure. The provisions of 11 CFR 
100.23 and 109.1(b)(4) will apply for purposes of determining whether 
an expenditure is coordinated under this section.
    12. Section 110.11 would be amended by revising paragraph (a)(2) to 
read as follows:


Sec. 110.11  Communications; advertising (2 U.S.C. 441d).

    (a) * * *
    (2) Independent and coordinated party expenditures. (i) For a 
communication paid for by a party committee pursuant to 2 U.S.C. 
441a(d), the disclaimer required by paragraph (a)(1) of this section 
shall identify the committee that makes the expenditure as the person 
who paid for the communication, regardless of whether the committee was 
acting in its own capacity or as the designated agent of another 
committee, and shall identify the candidate(s) or authorized 
committee(s) who authorized the communication.
    (ii) For a communication made by a party committee which 
constitutes an independent expenditure, the disclaimer required by 
paragraph (a)(1) of this section shall state that the party committee 
paid for the communication and that the communication is not authorized 
by any candidate or candidate's committee.
* * * * *
    Dated: April 30, 1997.
John Warren McGarry,
Chairman, Federal Election Commission.
[FR Doc. 97-11590 Filed 5-2-97; 8:45 am]
BILLING CODE 6715-01-P