[Federal Register Volume 63, Number 166 (Thursday, August 27, 1998)]
[Rules and Regulations]
[Pages 45679-45680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-22967]


=======================================================================
-----------------------------------------------------------------------

FEDERAL ELECTION COMMISSION

11 CFR Parts 9003 and 9033

[Notice 1998-13]


Electronic Filing of Reports by Publicly Financed Presidential 
Primary and General Election Candidates

AGENCY: Federal Election Commission.

ACTION: Final rule and transmittal of regulations to Congress.

-----------------------------------------------------------------------

SUMMARY: The Commission is issuing regulations concerning the 
electronic filing of reports by publicly financed Presidential primary 
and general election candidates. The rules specify that if Presidential 
candidates and their authorized committees have computerized their 
campaign finance records, they must agree to participate in the 
Commission's recently established electronic filing program as a 
condition of voluntarily accepting federal funding. These regulations 
implement the provisions of the Presidential Election Campaign Fund Act 
(``Fund Act'') and the Presidential Primary Matching Payment Account 
Act (``Matching Payment Act''), which establish eligibility 
requirements for Presidential candidates seeking public financing, as 
well as Public Law 104-79, which amended the reporting provisions of 
the Federal Election Campaign Act of 1971 (``FECA''). Further 
information is provided in the supplementary information which follows.

DATES: Further action, including the publication of a document in the 
Federal Register announcing an effective date, will be taken after 
these regulations have been before Congress for 30 legislative days 
pursuant to 26 U.S.C. 9009(c) and 9039(c).

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) 694-1650 or toll free (800) 
424-9530.

SUPPLEMENTARY INFORMATION: The Commission is publishing today the final 
text of revisions to its regulations at 11 CFR 9003.1(b)(11) and 
9033.1(b)(13), which set forth conditions that Presidential candidates 
agree to abide by in exchange for receiving public financing for their 
campaigns. The amendments indicate that Presidential candidates and 
their authorized committees must agree to file their campaign finance 
reports electronically. On June 17, 1998, the Commission issued a 
Notice of Proposed Rulemaking (NPRM) in which it sought comments on 
proposed revisions to these regulations. 63 F.R. 33012 (June 17, 1998). 
Written comments were received from the Internal Revenue Service and 
Bob DeWeese of Seattle, Washington in response to the NPRM. Other 
aspects of the public financing process for Presidential primary and 
general elections will be addressed separately in a forthcoming Notice 
of Proposed Rulemaking.
    Since these rules are not major rules within the meaning of 5 
U.S.C. 804(2), the Fund Act and Matching Payment Act control the 
legislative review process. See 5 U.S.C. 801(a)(4), Small Business 
Regulatory Reform Enforcement Fairness Act, Pub. L. No. 104-121, 
section 251, 110 Stat. 857, 869 (1996). Section 9009(c) and 9039(c) of 
Title 26, United States Code, require that any rules or regulations 
prescribed by the Commission to carry out the provisions of Title 26 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 August 21, 1998.

Explanation and Justification

Sec. 9003.1 Candidate and committee agreements; and Sec. 9033.1 
Candidate and committee agreements

    Recently, the Federal Election Commission implemented a system 
permitting political committees and other persons to file reports of 
campaign finance activity via computer diskettes and direct 
transmission of electronic data. See Explanation and Justification of 
11 CFR 104.18, 61 F.R. 42371 (Aug. 15, 1996). The Commission was 
required to make the electronic filing option available for all 
``report[s], designation[s], or statement[s] required by this Act to be 
filed with the Commission.'' Public Law 104-79, 109 Stat. 791 (1995) 
(adding 2 U.S.C. 434(a)(11)). The goals of the new system include the 
enhancement of on-line access to reports on file with the Commission, 
the reduction of paper filing and manual processing, and the promotion 
of more efficient and more cost-effective methods of operation for the 
filers and for the Commission. While the Commission encourages all 
political committees and other persons to file their reports 
electronically, under Public Law 104-79, participation in the 
Commission's electronic filing program is voluntary.
    With the advent of the first Presidential election cycle since the 
implementation of the new electronic filing system, the Commission 
published a NPRM seeking comments on modifying its candidate agreement 
regulations at 11 CFR 9003.1 and 9033.1 to provide that certain 
Presidential committees must agree to file their campaign finance 
reports electronically as a condition of voluntarily accepting public 
funding.
    Two comments were received in response to the NPRM. The Internal 
Revenue Service stated that it does not anticipate that the changes to 
the FEC's rules will conflict with the Internal Revenue Code or any 
rules or regulations thereunder. The other comment strongly urged the 
Commission to adopt the proposed changes to greatly improve the 
Commission's ability to provide timely and useful disclosure data to 
the public and to ensure ongoing campaign compliance by candidates 
throughout the campaign. This commenter pointed out that when the House 
of Representatives debated another portion of H.R. 2527 (Public Law 
104-79), several members extolled the bill's elimination of the three 
day delay for paper filings traveling from the Clerk of the House to 
the Commission, thereby demonstrating the importance of timeliness in 
the public availability of campaign finance reports. This commenter 
also believed that change in the Commission's rules would enhance the 
accuracy and usefulness of the information disclosed, improve the news 
media's ability to file timely stories on candidates' finances, and 
assist Commission staff in monitoring compliance with campaign finance 
laws during the campaign.
    The Commission has decided to proceed with the changes to the 
candidate agreement regulations that were described in the NPRM.

[[Page 45680]]

Consequently, the final rules which follow establish electronic filing 
as an additional prerequisite for the receipt of public funding. Please 
note, however, this new language only applies to the authorized 
committees of Presidential primary and general election candidates that 
decide to rely upon a computer system to maintain and use their 
campaign finance data. Currently, Presidential candidates whose 
committees have computerized their financial records must agree to 
produce magnetic tapes or diskettes of receipts, disbursements and 
other data prior to the beginning of audit fieldwork. 11 CFR 
9003.1(b)(4) and 9033.1(b)(5); see also, 11 CFR 9003.6, 9007.1(b)(1), 
9033.12, and 9038.1(b)(1). Thus, the revised rules, like the current 
rules, do not burden campaign committees with new requirements if they 
are not computerized.
    Electronic filing of Presidential committees' reports is intended 
to save a substantial amount of time and Commission resources that 
would otherwise be devoted to inputting these reports into the FEC's 
database. Although the number of political committees affected by this 
amendment to the regulations is relatively small, their reports can be 
voluminous, given the substantial number of contributions and 
expenditures listed in each report. Thus, these changes to the 
candidate agreement rules are expected to speed the reporting of 
campaign finance information and enhance public disclosure.
    Previously, the Commission issued technical specifications for 
reports filed electronically in its Electronic Filing Specification 
Requirements (EFSR), which is available free of charge. The EFSR 
contains technical specifications, including file requirements, for 
reports filed by Presidential campaign committees. However, the 
electronic filing software available from the FEC at no charge will not 
generate the forms used by Presidential committees. On request, the 
Commission's Data System Development Division will work with committees 
to assist them in generating the proper output. Any additional costs 
entailed may be treated and paid for like any other compliance cost 
pursuant to 11 CFR 9003.3(a)(2)(i)(B) and (F) or 9035.1(c)(1) if 
incurred after January 1, 1999. The NPRM noted that there are a number 
of differences between the specifications contained in the EFSR and 
those found in the Computerized Magnetic Media Requirements (CMMR) used 
by publicly financed committees to submit financial data for the 
Commission's audit and to submit digital images of contributions for 
matching funds. These differences are necessitated, in part, by the 
different purposes for which each of these databases are used. Neither 
of the comments received suggested ways in which these two standards 
could be better synchronized.
    The revisions to the candidate agreement regulations do not require 
electronic filing for statements of candidacy or statements of 
organization. While Presidential candidates and their authorized 
committees may file these statements electronically, if they wish, 
these forms have not been included in the free software available from 
the FEC. Also please note that the candidate agreements, themselves, 
should not be submitted in electronic form under the changes to 11 CFR 
9003.1 and 9033.1 which follow.
    Congress intended the new system of electronic filing to be 
voluntary. 141 Cong. Rec. H 12140-41 (daily ed. Nov. 13, 1995) 
(statements of Reps. Thomas, Hoyer, Fazio and Livingston). The 
Commission believes that a candidate's agreement to file campaign 
finance reports electronically in exchange for public funding is a 
voluntary decision materially indistinguishable from the candidate's 
voluntary decision to abide by the spending limits in exchange for 
federal funds. For this reason, it appears that the rules set forth 
below are within the scope of the Commission's authority under the Fund 
Act, the Matching Payment Act, the FECA, and Public Law 104-79.

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

    The attached final rules will not have a significant economic 
impact on a substantial number of small entities. The basis for this 
certification is that very few small entities will be affected by these 
rules, and the cost is not expected to be significant. Further, any 
small entities affected have voluntarily chosen to receive public 
funding and to comply with the requirements of the Presidential 
Election Campaign Fund Act or the Presidential Primary Matching Payment 
Account Act.

List of Subjects in 11 CFR Parts 9003 and 9033

    Campaign funds, Elections, Political candidates.

    For the reasons set out in the preamble, Subchapters E and F of 
Chapter I of Title 11 of the Code of Federal Regulations is amended as 
follows:

PART 9003--ELIGIBILITY FOR PAYMENTS

    1. The authority citation for 11 CFR Part 9003 continues to read as 
follows:

    Authority: 26 U.S.C. 9003 and 9009(b).

    2. In Sec. 9003.1, the introductory text of paragraph (b) is 
republished, and new paragraph (b)(11) is added to read as follows:


Sec. 9003.1  Candidate and committee agreements.

* * * * *
    (b) Conditions. The candidates shall:
* * * * *
    (11) Agree that they and their authorized committee(s) shall file 
all reports with the Commission in an electronic format that meets the 
requirements of 11 CFR 104.18 if the candidate or the candidate's 
authorized committee(s) maintain or use computerized information 
containing any of the information described in 11 CFR 104.3.

PART 9033--ELIGIBILITY FOR PAYMENTS

    3. The authority citation for Part 9033 continues to read as 
follows:

    Authority: 26 U.S.C. 9003(e), 9033 and 9039(b).

    4. In Sec. 9033.1, the introductory text of paragraph (b) is 
republished, and new paragraph (b)(13) is added to read as follows:


Sec. 9033.1  Candidate and committee agreements.

* * * * *
    (b) Conditions. The candidate shall agree that:
* * * * *
    (13) The candidate and the candidate's authorized committee(s) will 
file all reports with the Commission in an electronic format that meets 
the requirements of 11 CFR 104.18 if the candidate or the candidate's 
authorized committee(s) maintain or use computerized information 
containing any of the information described in 11 CFR 104.3.

    Dated: August 21, 1998.
Joan D. Aikens,
Chairman, Federal Election Commission.
[FR Doc. 98-22967 Filed 8-26-98; 8:45 am]
BILLING CODE 6715-01-P