[Federal Register Volume 67, Number 152 (Wednesday, August 7, 2002)]
[Proposed Rules]
[Pages 51131-51147]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-19996]


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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. 67, No. 152 / Wednesday, August 7, 2002 / 
Proposed Rules  

[[Page 51131]]



FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 104, 105 and 114

[Notice 2002-13]


Electioneering Communications

AGENCY: Federal Election Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Election Commission is seeking comment on proposed 
rules regarding electioneering communications, which are certain 
broadcast, cable, and satellite communications that refer to a clearly 
identified Federal candidate within 60 days of a general election or 
within 30 days of a primary election for Federal office. The proposed 
rules implement the Bipartisan Campaign Reform Act of 2002 (``BCRA''), 
which adds to the Federal Election Campaign Act (``FECA'' or ``the 
Act'') new provisions regarding ``electioneering communications.'' The 
proposed rules would require any person who makes disbursements for 
electioneering communications in excess of $10,000 in a calendar year 
to file a disclosure statement within 24 hours of the time the 
disbursements exceed $10,000. Additionally, BCRA prohibits incorporated 
entities and labor organizations from making electioneering 
communications. The proposed rules would implement this prohibition. 
Please note that the draft rules that follow do not represent a final 
decision by the Commission on the issues presented by this rulemaking. 
In fact, some of the draft rules are offered as alternatives. 
Regardless, the Commission seeks comments on all of the issues that are 
raised in this rulemaking. Further information is provided in the 
supplementary information that follows.

DATES: The Commission will hold a hearing on these proposed rules on 
August 28-29, 2002, at 9:30 a.m. Commenters wishing to testify at the 
hearing must submit their request to testify along with their written 
or electronic comments by August 21, 2002. Commenters who do not wish 
to testify must submit their written or electronic comments by August 
29, 2002.

ADDRESSES: All comments should be addressed to Ms. Mai T. Dinh, Acting 
Assistant General Counsel, and must be submitted in either electronic 
or written form. Electronic mail comments should be sent to 
[email protected] and must include the full name, electronic mail 
address, and postal service address of the commenter. Electronic mail 
comments that do not contain the full name, electronic mail address, 
and the postal service address of the commenter will not be considered. 
Faxed comments should be sent to (202) 219-3923, with printed copy 
follow-up to ensure legibility. Written comments and printed copies of 
faxed comments should be sent to Federal Election Commission, 999 E 
Street, NW., Washington, DC 20463. Commenters are strongly encouraged 
to submit comments electronically to ensure timely receipt and 
consideration. The Commission will make every effort to post public 
comments on its Web site within ten business days of the close of each 
comment period. The hearing will be held in the Commission's ninth 
floor meeting room, 999 E. St. NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Ms. Mai T. Dinh, Acting Assistant 
General Counsel, Mr. J. Duane Pugh, Jr., Acting Special Assistant 
General Counsel, or Mr. Anthony T. Buckley, Attorney, 999 E Street, 
NW., Washington, DC 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: The Bipartisan Campaign Reform Act of 2002, 
Pub. L. 107-155, 116 Stat. 81 (March 27, 2002), contains extensive and 
detailed amendments to the Federal Election Campaign Act of 1971, as 
amended, 2 U.S.C. 431 et seq. This is one of a series of Notices of 
Proposed Rulemakings (``NPRM'') the Commission will publish over the 
next several months in order to meet the rulemaking deadlines set out 
in BCRA.
    This NPRM addresses electioneering communications, that is, certain 
broadcast, cable, or satellite communications that refer to a clearly 
identified candidate for Federal election that are made within 60 days 
of a general election or within 30 days of a primary election. Other 
rulemakings have addressed or will address: (1) Non-Federal funds or 
``soft money'' promulgated on June 22, 2002 (67 FR 49063 (July 29, 
2002)); (2) coordinated and independent expenditures; \1\ (3) the so-
called ``millionaires' amendment,'' which increases contribution limits 
for congressional candidates facing self-financed candidates on a 
sliding scale, based on the amount of personal funds the opponent 
contributes to his or her campaign; (4) new or amended contribution 
limitations and prohibitions; (5) other new and amended provisions, 
including inaugural committees, fraudulent solicitations, disclaimers, 
personal use of campaign funds, and civil penalties; (6) reporting; and 
(7) reorganization of ``contribution'' and ``expenditure'' definitions. 
The reporting NPRM will contain the reporting rules proposed in several 
of the other NPRMs and will restructure 11 CFR part 104 to make the 
reporting rules more user-friendly. The deadline for the promulgation 
of the remaining rules (including those proposed in this NPRM) is 270 
days after the date of BCRA's enactment, or December 22, 2002.
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    \1\ That future NPRM will also address electioneering 
communications that are coordinated with candidate and political 
party committees.
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What Is an Electioneering Communication?

I. Introduction

    BCRA at 2 U.S.C. 434(f)(3) defines a new term, called 
``electioneering communications.'' This term includes broadcast, cable, 
or satellite communications: (1) That refer to a clearly identified 
Federal candidate; (2) that are transmitted within certain time periods 
before a primary or general election; and (3) that are ``targeted to 
the relevant electorate,'' that is, the relevant congressional district 
or State that candidates for the U.S. House of Representatives or the 
U.S. Senate seek to represent. Communications that refer to candidates 
for President or Vice-President do not need to be targeted to be 
electioneering communications. Those paying for the communications must 
meet certain disclosure requirements, and they cannot use funds from 
national banks, corporations, foreign nationals,\2\ or labor 
organizations to pay for the communications. See 2 U.S.C.

[[Page 51132]]

441b(b)(2) and 441e(a)(2), as amended by BCRA section 203(b) and 303.
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    \2\ The ban on foreign national funds will be addressed in a 
separate rulemaking.
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    BCRA's sponsors have explained that these new ``electioneering 
communications'' provisions, set out at new 2 U.S.C. 434(f) and 
441b(b)(2), are designed to ensure that campaign advertisements are 
paid for with funds subject to the prohibitions and limitations of 
campaign finance laws. According to the sponsors, putative ``issue 
ads'' have been used to circumvent FECA's prohibition on the use of 
union and corporate treasury funds in connection with Federal 
elections. In the sponsors' view, this is accomplished by creating and 
airing advertisements that avoid the specific language that the Supreme 
Court has said expressly advocates the election or defeat of a 
candidate. See 148 Cong. Rec. S2140-2141 (daily ed. Mar. 20, 2002) 
(statement of Sen. McCain); see also Buckley v. Valeo, 424 U.S. 1, 44, 
fn. 52 (1976); 11 CFR 100.22.\3\
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    \3\ ``Express advocacy'' was first defined by the Supreme Court 
as ``communications containing express words of advocacy of election 
or defeat, such as `vote for,'' `elect,'' `cast your ballot for,'' 
`Smith for Congress,'' `vote against,'' `defeat,'' `reject.` '' 
Buckley at 44. fn. 52 (1976). The Supreme Court created the express 
advocacy test to save the statutory phrase ``for the purpose of * * 
* influencing''--the ``critical phrase'' within the definitions of 
``expenditure'' and ``contribution'' at 2 U.S.C. 431(8) and (9)--
from unconstitutional vagueness while furthering the goal of 
Congress ``to insure both the reality and the appearance of the 
purity and openess of the federal election process.'' Buckley v. 
Valeo. 424 U.S. 1, 77-78 (1976). The Court's express advocacy test 
marked the dividing line between advocacy regulated by the FECA and 
the advocacy of ``issues of public interest,'' both of which are 
constitutionally protected , Id. at 42, 44, 80.
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    BCRA's sponsors cited various studies and investigations that they 
say show that the express advocacy test does not distinguish genuine 
issue ads from campaign ads. 148 Cong. Reg. at S2140-2141 (statement of 
Sen. McCain). For example, Senator McCain cited a study by the Brennan 
Center for Justice, Buying Time 2000, that found that ``97 percent of 
the electioneering ads reviewed'' did not use the words and phrases 
cited by the Buckley Court, and that more than 99 percent of the 
``group-sponsored soft money ads'' studied were in fact campaign ads. 
Id. at S2141. Senators Snowe and Jeffords stated that, because the 
electioneering communications provisions focus on the key elements of 
when, how, and to whom a communication is made, rather than relying on 
the express advocacy test or the intent of the advertiser, they are a 
clearer, more accurate test of whether an advertisement is campaign-
related. Id. at S2117-18 (statement of Sen. Jeffords); S2135-37 
(statement of Sen. Snowe).
    Accordingly, the proposed rules would add a new definition for 
``electioneering communication,'' to be located at proposed 11 CFR 
100.29. The new definition would be added to current 11 CFR part 100 
because it has general applicability to Title 11 of the Code of Federal 
Regulations.

II. Alternative Definition

    BCRA at 2 U.S.C. 434(f)(3)(A)(ii) provides an alternative 
definition of ``electioneering communication,'' which would take effect 
in the event the definition in section 434(f)(3)(A)(i) is held to be 
constitutionally insufficient ``by final judicial decision.'' The 
alternative definition of ``electioneering communication'' is ``any 
broadcast, cable, or satellite communication which promotes or supports 
a candidate for that office, or attacks or opposes a candidate for that 
office (regardless of whether the communication expressly advocates a 
vote for or against a candidate) and which also is suggestive of no 
plausible meaning other than an exhortation to vote for or against a 
specific candidate.'' Id. The Commission is not proposing regulations 
to implement this alternative statutory definition at this time. 
Proposing two definitions for the same term, one to take effect only 
after the other may be held invalid, could be confusing to those who 
are affected by this new law. Additionally, any court decision 
regarding 2 U.S.C. 434(f)(3)(A) may provide guidance as to the 
appropriate standard. Consequently, the Commission intends to 
promulgate regulations to implement this alternative definition when 
and if it becomes necessary to do so. Nevertheless, in the alternative, 
the Commission seeks comment as to whether it should promulgate an 
alternative definition now. If so, should this definition simply 
reiterate the wording of the statute, or should it provide additional 
guidance as to what types of communications promote, support, attack, 
or oppose a candidate and suggest no plausible meaning other than an 
exhortation to vote for or against a candidate?

III. Definition of ``Electioneering Communication''

A. Overview
    BCRA amends 2 U.S.C. 434 by adding a new term, ``electioneering 
communication,'' at section 434(f)(3). BCRA defines ``electioneering 
communication'' as a broadcast, cable, or satellite communication that: 
(1) Refers to a clearly identified candidate for Federal office; (2) is 
made within 60 days before a general, special, or runoff election, or 
within 30 days before a primary or preference election, or a convention 
or caucus of a political party that has authority to nominate a 
candidate, for the office sought by the candidate; (3) does not fall 
within any of the exceptions to the electioneering communication 
specified in the statute; and (4) in the case of a candidate for an 
office other than President or Vice-President, is targeted to the 
relevant electorate. BCRA also provides exceptions to the definition, 
and authorizes the Commission to approve additional exceptions.
    The proposed definition of electioneering communication at proposed 
11 CFR 100.29(a) largely tracks the language in BCRA. However, the word 
``made'' as in ``made within 60 days'' would be changed to ``publicly 
distributed'' to clarify that it refers to the broadcasting or airing 
of the communication rather than the making of a disbursement for an 
electioneering communication. The proposed definition would also 
clarify that, in the case of a candidate for nomination for President 
or Vice-President, the 30-day window applies in those States that will 
hold a primary or preference election, or a convention or caucus of a 
political party that has authority to nominate a candidate for 
President or Vice-President, during that time.
    The Commission's current rules at 11 CFR 100.2 contain definitions 
of ``general election,'' ``primary election,'' ``runoff election,'' 
``caucus or convention,''and ``special election.'' Under 11 CFR 
100.2(f), a ``special election'' could be a primary, general, or runoff 
election. BCRA, however, groups ``special election'' with general and 
runoff elections for purposes of an electioneering communication. 
Proposed new paragraph 100.29(a)(2) would clarify that, for purposes of 
section 100.29 only, ``special elections'' and ``runoff elections'' 
would be considered primary elections, if held to nominate a candidate; 
and general elections, if held to elect a candidate. Comments are 
sought on this approach.
B. Definition of ``Refers to a Clearly Identified Candidate''
    Proposed 11 CFR 100.29(b) would set out definitions of the terms 
used in 11 CFR 100.29(a). The first definition, at proposed 11 CFR 
100.29(b)(1), defines the term ``refers to a clearly identified 
candidate.'' This term is already defined in the Commission's rules at 
11 CFR 100.17, which states that ``clearly identified'' means the 
candidate's name, nickname, photograph, or drawing appears, or the 
identity of the candidate

[[Page 51133]]

is otherwise apparent through an unambiguous reference such as ``the 
President,'' ``your Congressman,'' or ``the incumbent,'' or through an 
unambiguous reference to his or her status as a candidate such as ``the 
Democratic presidential nominee'' or ``the Republican candidate for 
Senate in the State of Georgia.'' The proposed rule at 11 CFR 100.29(b) 
would track the language of the current rule in 11 CFR 100.17. This 
approach appears to be consistent with legislative intent. See 148 
Cong. Rec. S2144 (daily ed. Mar. 20, 2002) (statement of Sen. Feingold 
indicating that a communication ``refers to a clearly identified 
candidate'' if it ``mentions, identifies, cites, or directs the public 
to the candidate's name, photograph, drawing or otherwise makes an 
'unambiguous reference' to the candidate's identity''). Please note 
that the definition would not be based on the intent or purpose of the 
person making the communication.
C. Definition of ``Broadcast, Cable or Satellite Communication''
    Proposed 11 CFR 100.29(b)(2) would define ``broadcast, cable, or 
satellite communication'' to mean a communication that is publicly 
distributed by a television station, radio station, cable television 
system, or satellite system. The term ``distribute'' reflects the 
legislation's apparent focus on the means of dissemination rather than 
on the means of receipt.
    The definition would exclude ``webcasts'' or other communications 
that are distributed only over the Internet, but would include 
television or radio communications that are simultaneously webcast over 
the Internet, or archived for listening over the Internet. Internet 
subscribers would not be included in the calculation of how many 
persons a communication can reach in a particular district or state. 
The Commission seeks comment on whether this is an appropriate reading 
of the statute.
    The legislative history, which is discussed below, makes it clear 
that this regulation should be limited to television and radio. The 
Commission seeks comment to confirm that this interpretation is 
correct. All other types of communications, such as print media, 
billboards, telephones, and the Internet, would therefore, not be 
considered electioneering communications. Consequently, proposed 11 CFR 
100.29(c)(1) would specifically list these as exceptions to the 
definition.
    The Commission also seeks comment on whether it would also be 
appropriate to exempt some types of television and radio broadcasting 
from the definition of ``broadcast, radio or satellite.'' The 
Commission seeks comment on whether communications transmitted by 
digital audio radio satellite would be considered electioneering 
communications. Although newly added section 304(f)(3)(a) of BCRA seems 
to include communications by satellite without limitation as to the 
type of transmission, section 316(c)(6)(B) suggests that the term is 
limited to ``satellite television service.'' Proposed 11 CFR 100.29(b) 
would exempt Low Power FM Radio (LPFM), Low Power Television (LPTV), 
and citizens band (CB) radio. Are there other types of television and 
broadcasting that should also be exempt? How should ``web TV'' (in 
which viewers access the Internet using television sets) be treated for 
purposes of these rules?
D. Definition of ``Targeted to the Relevant Electorate''
    Proposed 11 CFR 100.29(b)(3) would track the language of BCRA at 2 
U.S.C. 434(f)(3)(C) in defining ``targeted to the relevant electorate'' 
as a communication that can be received by 50,000 or more persons: In 
the district the candidate seeks to represent, in the case of a 
candidate for Representative in, or Delegate or Resident Commissioner 
to, the U.S. House of Representatives; or in the State the candidate 
seeks to represent, in the case of a candidate for the U.S. Senate.
    Please note that the definition of ``targeted to the relevant 
electorate'' would include communications that can be received beyond 
the relevant geographical area. A communication that can also be 
received by large numbers of persons outside the relevant district or 
State would still be considered a targeted communication, as long as 
50,000 persons in the relevant area could also receive it. Conversely, 
for example, an electioneering communication would not include a 
communication that reaches fewer than 50,000 persons in the State or 
district where the clearly identified candidate is running, even if at 
the same time it also reaches 50,000 or more persons in a State or 
district where the clearly identified candidate is not running.
    Regarding whether a communication reaches 50,000 or more persons, 
the Commission seeks comment as to how to measure, and where to obtain 
the data concerning, the number of persons a communication reaches. For 
example, what signal measurement (e.g., Grade B contour) should be used 
in determining how many people a broadcast signal reaches, and how does 
one determine if a broadcast station's signal could potentially reach 
50,000 or more persons in a particular district or state? Should a 
broadcast station be required to provide the Federal Communications 
Commission with information regarding the cable system(s) and satellite 
system(s) that carry it in order that the cable and satellite systems' 
audience can be included in the calculation of the number of persons 
reached by the broadcast station? If such audiences were included in 
this calculation, how could double counting of some viewers (those that 
can receive the station's signal both over the air and through a cable 
or satellite system) be avoided? Is subscriber information the only 
basis for measuring the audience of a cable or satellite system? If so, 
must the FCC compel cable and satellite companies to provide it with 
this data because they are the only possible source of this 
information? How should subscriber information be converted into the 
chosen definition of ``person'' in new 2 U.S.C. 434(f)(3)(C), discussed 
herein? If, for whatever reason, it cannot be determined whether a 
particular communication will reach 50,000 or more persons in a 
relevant district or state, should it be presumed that the 
communication reaches fewer or more than 50,000 persons?
    Theoretically, one ad could be publicly distributed via several 
small outlets, each of which reaches fewer than 50,000 persons in the 
relevant area, but in the aggregate reach 50,000 or more persons in the 
relevant area. Practically, the size of radio and television audiences 
may eliminate this concern. The Commission seeks comments on whether 
the regulations should address this situation to require aggregation of 
recipients of the same ad from multiple outlets and, if so, whether the 
regulations should aggregate substantially similar ads for this 
purpose.
    The term ``person'' is defined in 2 U.S.C. 431(11) and in current 
Commission regulations at 11 CFR 100.10 to mean an individual, 
partnership, association, corporation, labor organization and any other 
organization or group of persons. It is not clear from the legislative 
history of BCRA whether the term ``person'' in new 2 U.S.C. 
434(f)(3)(C) is intended to be restricted to only individuals, 
households, U.S. citizens, voters, those within the voting age 
population, or any other category of ``person.'' The Commission 
believes that BCRA's policies are best served by construing the term 
``person'' as applying to natural persons residing in a given 
jurisdiction, regardless of their citizenship status or whether they 
are of voting age. The

[[Page 51134]]

Commission seeks comments on which interpretation is correct. Whatever 
definition of ``person'' commenters choose should be associated with 
clearly identified sources of information needed to implement this 
section of BCRA.
    Pursuant to section 201(b) of BCRA,\4\ the Federal Communications 
Commission must ``compile and maintain'' any information the Federal 
Election Commission may require to ensure that proper disclosure of 
electioneering communications is made. The FCC is required to make such 
information publicly available on its website. These requirements 
appear to be necessary to promote compliance with the disclosure 
requirements in the new law regarding electioneering communications. 
Those who wish to make communications that meet the timing and medium 
requirements of the electioneering communication definition, must be 
able to easily determine whether the radio or television stations, 
cable systems, or satellite systems on which they wish to publicly 
distribute their communications will reach 50,000 or more persons in 
the State or congressional district in which the candidate mentioned in 
the communication is running for office. Consequently, the Commission 
has preliminarily concluded that a database searchable by State, 
congressional district, radio and television station call letters, 
cable system or satellite system, and radio station frequencies, should 
be created, and that a search under any of these options should reveal 
whether 50,000 or more persons in a specified State or congressional 
district are capable of receiving a communication transmitted through a 
broadcast station, cable system or satellite system. The Commission 
seeks comments as to whether any additional information or searchable 
options for the FCC's website are necessary or desirable.
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    \4\ This section of BCRA has not been codified.
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    It would also be helpful for the FCC's website to contain a link to 
the new electioneering communication forms (Form 9 and Schedule J) that 
the Commission will create for reporting electioneering communications. 
Further, the Commission anticipates placing a link on its own website 
to the page on the FCC website containing the database. The Commission 
seeks comments on what, if any, additional features on the FEC or FCC 
websites should be made available. Proposed 11 CFR 100.29(b)(5) would 
list the types of information the FCC may determine it will provide on 
its website.
    The Commission anticipates that the information on the FCC website 
will also allow interested parties to determine easily whether a given 
communication is capable of reaching 50,000 persons. Thus, the 
information on the FCC website is intended to serve as definitive 
evidence of whether a communication could have been received by 50,000 
or more persons. For example, if the information on the FCC website 
indicated that a certain radio station can reach fewer than 50,000 
persons in a certain congressional district, and an ad was run only on 
that station 45 days before the general election that referred to a 
House candidate in that district, then the persons paying for that 
communication would not have to disclose the communication under the 
proposed reporting rules and would have a complete defense against any 
charge that they violated that portion of BCRA. For a discussion of the 
determination of whether a communication reaches 50,000 or more 
persons, see above. Comments are sought as to whether this approach is 
correct.
E. Presidential Primary Candidates
    With respect to Presidential primary candidates, one plausible 
reading of 2 U.S.C. 434(f)(3)(C) is that a communication that refers to 
a Presidential candidate does not need to be ``targeted to the relevant 
electorate'' to qualify as an ``electioneering communication.'' Thus, 
under this interpretation, a communication referring to a clearly 
identified primary candidate for President that meets BCRA's timing and 
medium requirements, and that does not fall within any of the statutory 
exceptions, might be considered an electioneering communication, 
regardless of the number or geographic location of persons receiving 
the communication. For example, an ad referring to a primary candidate 
for President that is run anywhere in the United States could be 
considered an ``electioneering communication'' if the ad aired on a 
television or radio station within 30 days of a primary election taking 
place anywhere in the United States, even if the primary election were 
months away or had already taken place in the State or States in which 
the ad actually aired.
    However, the Commission is concerned that such a sweeping impact on 
communications would be insufficiently linked to pending primary 
elections, may not have been contemplated by Congress and could raise 
constitutional concerns. It would result in a nationwide blackout on 
ads mentioning a Presidential candidate for more than 240 day between 
mid-December of the year preceding the election and the election 
itself. So interpreted, the restrictions on electioneering 
communications would take effect even if an ad were aired only in a 
State that has already held its primary, and thus would restrict ads 
more than 60 days before a general election, an apparent contravention 
of BCRA. Therefore, the Commission is proposing a definition of 
``publicly distributed within 30 days of a primary election'' to make 
clear that an ad mentioning a candidate for President or Vice-President 
is not deemed to have been transmitted within 30 days before a primary 
election unless the ad is transmitted to an audience of 50,000 or more 
persons in an area in which a primary election is scheduled within 30 
days. (This definition is listed as Alternative 1-B in proposed 11 CFR 
100.29.) Such a definition, which would be placed within 11 CFR 
100.29(b), would state that a communication that refers to a clearly 
identified candidate for President or Vice President would be 
``publicly distributed'' within 30 days before a primary election, 
preference election, or convention or caucus of a political party only 
where and when the communication can be received by 50,000 or more 
persons within the State holding such election, convention or caucus. 
No such clarification is necessary for Presidential and Vice-
Presidential nominees in the 60 days preceding the general election, as 
the date of the general election does not vary from State to State.
    As an alternative means of addressing this concern, the Commission 
could adopt a provision stating that an advertisement be considered an 
electioneering communication only if the advertisement can be received 
by 50,000 or more persons in either a State in which a Presidential 
primary will occur within 30 days, or nationwide if within 30 days of 
the national nominating convention of that candidate's party. If 
adopted, this provision would appear at new 11 CFR 100.29(a)(1)(iv), 
rather than 11 CFR 100.29(b)(4), and appears in the proposed rules as 
Alternative 1-A.
    Comments are sought on the alternative approaches, which are 
consistent with a requirement that the communication occur within a 
fixed number of days before a primary election, and would involve a far 
lesser impact on fundamental First Amendment rights. The Commission 
especially seeks comment on whether either alternative is allowed under 
BCRA.

[[Page 51135]]

    Separately, comments are sought on whether BCRA's electioneering 
communications restrictions apply at all to communications depicting 
Presidential or Vice-Presidential candidates, other than 30 days before 
a party's national convention and 60 days before the general election, 
given that candidates can only be nominated for President or Vice-
President at their parties' national convention.

What is Not an Electioneering Communication?

I. Specific Types of Communications

    Consistent with 2 U.S.C. 434(f)(3)(B), proposed 11 CFR 100.29(c) 
would list examples of communications that are not ``electioneering 
communications.''
    It appears clear from the legislative history of BCRA that the term 
``electioneering communications'' only applies to communications that 
are publicly distributed by television or radio, and not through other 
media. For this reason the definition of ``electioneering 
communications'' is narrowly tailored, listing only three types of 
communications: broadcast, cable, and satellite communications.
    The electioneering communication provisions were originally offered 
as an amendment to the predecessor of BCRA by Senators Snowe and 
Jeffords in 1998. That amendment, and all versions of that amendment 
prior to the 107th Congress, defined an electioneering communication to 
include ``any broadcast from a television or radio broadcast station.'' 
See 144 Cong. Record S938 (daily ed. Feb. 24, 1998); see also S.26 
(106th Congress), 145 Cong. Rec. S425 (daily ed. Jan. 19, 1999). 
Likewise, the floor debates on the electioneering communications 
provision during the 107th Congress frequently referred to ``television 
and radio ads.'' During a final explanation of these provisions, 
Senator Snowe again stated that they would apply to ``so-called issue 
ads run on television and radio only.'' 148 Cong. Rec. S2135 (daily ed. 
Mar. 20, 2002) (statement of Sen. Snowe).
    Consistent with this legislative history, proposed 11 CFR 
100.29(c)(1) provides examples of communications that are not included 
in the definition of ``electioneering communication.'' The proposed 
list of exemptions includes communications appearing in print media, 
including a newspaper or magazine, handbills, brochures, yard signs, 
posters, billboards, and other written materials, including mailings; 
communications over the Internet, including electronic mail; and 
telephone communications.
    The Internet is included in the above list of exceptions because, 
in most instances, it is not a broadcast, cable, or satellite 
communication, and it is not sufficiently akin to television and radio. 
During an early debate on the amendment, Senator Snowe was asked 
whether the definition of electioneering communication would ``apply to 
the Internet.'' She replied, ``No. Television and radio.'' See 144 
Cong. Rec. S973 and S974 (daily ed. Feb. 25, 1998) (statement of Sen. 
Snowe). The Commission seeks comment confirming that this is a correct 
interpretation of BCRA.

II. The News Story, Commentary, or Editorial Exception

    Proposed 11 CFR 100.29(c)(2) tracks the language in BCRA at 2 
U.S.C. 434(f)(3)(B)(i) by excluding communications that appear in a 
``news story, commentary, or editorial'' distributed from a 
broadcasting station, unless the broadcasting station is owned or 
controlled by any political party or committee, or candidate. The 
proposed rule, however, would add that the exception would apply to 
broadcasting stations owned or controlled by a party, committee, or 
candidate if the communication meets the requirements of 11 CFR 
100.132(a) and (b). Please note that this portion of BCRA refers only 
to ``broadcasting stations.'' While this is consistent with the use of 
the term throughout 2 U.S.C. 431, which sets out general definitions 
under the FECA, it is narrower than the term ``broadcast, cable or 
satellite communication'' found in the general definition of 
``electioneering communication'' at 2 U.S.C. 434(f)(3)(A). The 
Commission is proposing to use the broader term in section 
100.29(c)(2), as the legislative history gives no reason for this 
disparate treatment. However, it welcomes comments on whether the 
narrower term would be appropriate. In the alternative, the Commission 
could decline to create a new media exemption for electioneering 
communications, but instead rely on its existing media exemption at 11 
CFR 100.132. The Commission seeks comment on which is the appropriate 
course of action.

III. Exception for Expenditures and Independent Expenditures

    Proposed 11 CFR 100.29(c)(3) implements the language in BCRA at 2 
U.S.C. 434(f)(3)(B)(ii) excluding communications that are 
``expenditures'' or ``independent expenditures'' from the definition of 
``electioneering communications.'' Senator Feingold explained that 
independent expenditures were excluded because they contain express 
advocacy, apparently in contrast to electioneering communications, 
which do not contain express advocacy. See 148 Cong. Rec. S1993 (daily 
ed. Mar. 18, 2002) (statement and section-by-section analysis of BCRA 
by Sen. Feingold).
    In this regard, the Commission is proposing two alternatives. One 
interpretation put forward by the Commission would be that any 
disbursement of funds for a communication that constitutes an 
expenditure or an independent expenditure under FECA is not an 
electioneering communication. See Alternative 2-A, below. In addition, 
any expenditure of a Federal political committee would remain subject 
to FECA's reporting requirements. 2 U.S.C. 434(b)(4)(A). Thus, Federal 
political committees would not be required to file an additional 
electioneering communication report for expenditures for communications 
that otherwise meet the definition of electioneering communication. 
Consequently, the segregated bank account provisions of 2 U.S.C. 
434(f)(2)(E) would not apply to expenditures either.
    It can be argued that FECA adequately addresses expenditures, 
independent expenditures and Federal political committee outlays, and 
BCRA's Title II was intended to address disbursements that are not 
subject to FECA's treatment of such expenditures. Similarly, the 
exclusion may represent an effort to avoid duplicative reporting 
requirements. To include communications that are expenditures and 
independent expenditures would subject such communications to 
duplicative and often conflicting reporting requirements.
    The Commission also seeks comment on whether to limit the exclusion 
to candidate-specific expenditures reportable as independent 
expenditures, in-kind contributions or a party coordinated expenditure 
by non-authorized Federal political committees. See Alternative 2-B, 
below. This would subject non-authorized Federal political committees 
making non-coordinated non-express advocacy communications to 
duplicative reporting requirements. In addition, the Commission notes 
that all expenditures of authorized committees are, by definition, for 
the purpose of influencing the candidate's election to Federal office. 
For this reason, the Commission is seeking comment on excepting from 
the definition of electioneering communication expenditures for any 
public communication made by a

[[Page 51136]]

Federal candidate or officeholder's authorized campaign committee.
    The Commission seeks comment on the approach and issues raised 
above and on any other interpretation of the exemption of 2 U.S.C. 
434(f)(3)(B)(ii) that reconciles the exclusion of expenditures and 
independent expenditures from the definition of electioneering 
communication with FECA's treatment of expenditures and independent 
expenditures.

IV. Exception for Candidate Debates or Forums

    Proposed 11 CFR 100.29(c)(4) tracks the language in BCRA at 2 
U.S.C. 434(f)(3)(B)(iii) excluding communications that constitute ``a 
candidate debate or forum conducted pursuant to regulations adopted by 
the Commission, or which solely promotes such a debate or forum and is 
made by or on behalf of the person sponsoring the debate or forum.''
    The Commission's regulations at 11 CFR 110.13(a)(2) and 114.4(f) 
authorize incorporated broadcasters and other media organizations to 
stage and cover candidate debates without making impermissible 
contributions or expenditures. Section 110.13(c) requires those 
organizations staging debates to use pre-established objective criteria 
in determining which candidates may participate in a debate. It further 
prohibits staging organizations from using nomination by a major party 
as the sole objective criterion for choosing candidates to participate 
in a general election debate.\5\
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    \5\ The Commission received a Petition for Rulemaking from a 
number of corporations owning and operating news organizations, 
television stations, newspapers, cable channels, and other media 
ventures, as well as media trade associations. The petition asked 
the Commission to amend its regulation on sponsorship of candidate 
debates to ``make clear that it does not apply to the sponsorship of 
a candidate debate by a news organization or a trade organization 
composed of, or representing, members of the press.'' The petition 
asserts that any regulation of the sponsorship of debates by news 
organizations or related trade associations is contrary to the clear 
intent of the U.S. Congress, irreconcilable with other FEC 
decisions, in conflict with the regulatory decisions of the Federal 
Communications Commission, and unconstitutional. A Notice of 
Availability for the petition was published on May 9, 2002 (65 Fed. 
Reg. 31164). Two comments were received by the end of the public 
comment period, on June 10, 2002. However, the Commission intends to 
defer consideration of whether to issue a Notice of Proposed 
Rulemaking until after the statutorily required BCRA rulemakings are 
completed by the end of the year. In the meantime, the Commission's 
debate regulations remain in effect.
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V. Other Exceptions

    New 2 U.S.C. 434(f)(3)(B)(iv) provides that ``to ensure the 
appropriate implementation'' of the electioneering communication 
provisions, the Commission may promulgate regulations exempting other 
communications from the ``electioneering communications'' definition, 
provided that the exemption otherwise complies with the new 
electioneering communication provision and is not described in 2 U.S.C. 
431(20)(A)(iii) (``public communications'' that refer to a clearly 
identified candidate for Federal office that promote or support a 
candidate for that office, or attack or oppose a candidate for that 
office). The Commission is interested in receiving specific suggestions 
on whether there should be exemptions for communications that refer to 
a clearly identified candidate but that promote local tourism, or a 
ballot initiative, or a referendum. The Commission is also interested 
in receiving suggestions on whether there should be exemptions for 
communications that refer to a clearly identified candidate but that 
are public service announcements or that promote a candidate's business 
or professional practice. Absent such exemptions, such communications 
could be electioneering communications even if they contain only a 
glimpse of a Federal candidate. Proposed 11 CFR 100.29(c)(1), (c)(5), 
(c)(6) (including four alternatives) and (c)(7) would set forth such 
exemptions. Proposed paragraph (c)(1) was discussed above.
    Proposed paragraph (c)(5) would exempt a communication that refers 
to a bill or law by its popular name where that name happens to include 
the name of a Federal candidate, if the popular name is the sole 
reference made to a Federal candidate.
    Four alternatives (Alternatives 3-A, 3-B, 3-C, and 3-D) for 
proposed paragraph (c)(6) would exempt communications that are devoted 
to urging support for or opposition to particular pending legislation 
or other matters, where the communications request recipients to 
contact various categories of public officials regarding the issue. The 
Commission seeks comment as to which, if any, alternative is most 
consonant with the language and purposes of BCRA.
    Proposed paragraph (c)(7) would exempt communications by State or 
local candidates or officeholders that refer to a clearly identified 
federal candidate, provided that such mention of a federal candidate 
was merely incidental to the candidacy of one or more individuals for 
State or local office. For example, under this approach an ad for a 
State or local candidate that featured such candidate's views on 
education would not be rendered an electioneering communication if the 
ad were to indicate whether the State or local candidate supported or 
opposed the President's education policy.
    The Commission seeks comments as to whether any other 
communications should be exempt from the ``electioneering 
communication'' definition, as well as whether the proposed exemptions 
are too broadly or narrowly crafted. For example, the Brennan Center 
report cited by Senator McCain states that so-called ``genuine'' issue 
ads discuss public policy issues and usually contain a toll-free 
number, whereas so-called ``sham'' issue ads do not. Buying Time 2000, 
p. 31-32. In light of this study, and to avoid overbreadth, should the 
Commission exempt ads that: (1) Do not include express advocacy; and 
(2) include both a telephone number and a reference to a specific piece 
of legislation either by formal name (for example, the ``Bipartisan 
Campaign Reform Act of 2002''), popular name (for example, ``Shays-
Meehan''), or bill number (for example, ``H.R. 2356'')?
    If the Commission creates an exemption like any of the proposed 
alternatives at paragraph (c)(6), because most Congressional offices do 
not maintain toll free numbers, should it be sufficient to list a non-
toll free number? Must the number be to a Congressional or district 
office? Is it acceptable to provide the number for a campaign office? 
Alternatively, to what extent should these distinctions turn on whether 
the ad refers to a general issue, such as Medicare, without mentioning 
specific legislation? See Buying Time 2000, p. 103.
    Another possible exemption might be for entertainment shows, such 
as television talk shows, which may fall outside of the news exemption, 
which feature a candidate as a guest, or a television drama or comedy 
in which a picture of a candidate appears. The Commission seeks 
comments on the appropriateness of all of the above-mentioned possible 
exemptions from the ``electioneering communication'' definition, and 
whether additional exemptions should be considered. Should the 
definition of electioneering communication be limited to paid 
advertisements? Should the Commission create an exemption for 
communications publicly distributed exclusively over public access 
channels? Should the Commission limit any of the exemptions to ads that 
do not promote, support, attack, or oppose any clearly identified 
candidate?

[[Page 51137]]

Who May Make or Fund Electioneering Communications?

    BCRA allows the following persons to make electioneering 
communications: (1) Individuals; (2) ``political committees'' as 
defined under FECA, including authorized committees, party committees, 
separate segregated funds, and nonconnected committees; (3) 
unincorporated organizations, including partnerships, limited liability 
companies (LLCs) that do not qualify as corporations, unincorporated 
trade associations or membership organizations, unincorporated 
501(c)(3) or (4)'s, and unincorporated 527's, as long as they do not 
use funds received from corporations or labor organizations to pay for 
the electioneering communications; and (4) incorporated 501(c)(4)'s and 
527's, as long as they meet certain requirements discussed more fully 
below. The Commission seeks comment on whether there is any section in 
BCRA that would prevent an entity prohibited from making an 
electioneering communication from being affiliated with an entity that 
is permitted to make electioneering communications, provided that the 
permissible entity received no prohibited funds from the prohibited 
entity. In addition, the Commission seeks comment on whether a 
501(c)(4) or a 527 organization that was previously incorporated and 
that changes its status to become a limited liability company or 
similar type of entity under State law would be permitted to pay for 
electioneering communications with funds that had been donated from 
individuals to the 501(c)(4) or 527 organization during the time it was 
incorporated.

Who May Not Make or Fund Electioneering Communications?

I. Effect of the Snowe-Jeffords and Wellstone Amendments on 501(c)(4) 
and 527 Organizations

    The BCRA provisions popularly known as the Snowe-Jeffords amendment 
expanded the prohibitions on corporations and labor organizations to 
prohibit use of general treasury funds to make electioneering 
communications. 2 U.S.C. 441b(b)(2). BCRA treats an electioneering 
communication as being made by a corporation or labor organization if 
that corporation or labor organization directly or indirectly disburses 
any amount for any of the costs of the electioneering communication. 2 
U.S.C. 441b(c)(3)(A). The Snowe-Jeffords provisions included an 
exception, however, allowing corporations organized under 26 U.S.C. 
501(c)(4) or 26 U.S.C. 527(e)(1) to make electioneering communications, 
as long as they use funds that do not come from prohibited sources.\6\ 
As noted by Senator Snowe, these same section 501(c)(4) and 527 
organizations must comply with BCRA's newly-enacted disclosure 
provisions. See 2 U.S.C. 434(f); see also proposed 11 CFR 104.19. Under 
Snowe-Jeffords, organizations that engaged in business activities or 
accepted corporate or labor organization funds would have been 
permitted to establish a segregated bank account to which only 
individuals (U.S. citizens, U.S. nationals, and green card holders) 
could contribute to pay for all electioneering communications. 2 U.S.C. 
441b(c)(3)(B). It is important to note that the account required by 
Snowe-Jeffords is not a separate segregated fund or a political 
committee within the meaning of 2 U.S.C. 431(4)(B), and does not have 
the same registration, reporting and recordkeeping obligations of such 
a fund or committee.
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    \6\ During the Senate debate, Senator McCain described these 
provisions as intended to be consistent with FEC v. Massachusetts 
Citizens for Life, Inc., 479 U.S. 238 (1986) (``MCFL''). 148 Cong. 
Rec. S2141 (daily ed. mar. 20, 2002).
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    The Snowe-Jeffords amendment was substantially modified in this 
regard by the Wellstone amendment. 2 U.S.C. 441b(c)(6). Where Snowe-
Jeffords exempted section 501(c)(4) and section 527 corporations from 
the prohibition on using treasury funds to make electioneering 
communications under certain circumstances, the Wellstone amendment 
withdraws that exemption in the case of what are called ``targeted 
communications.'' 2 U.S.C. 441b(c)(6)(A). The Wellstone amendment then 
defines ``targeted communication'' to encompass all electioneering 
communications. Specifically, it defines ``targeted communication'' to 
mean ``an electioneering communication (as defined in section 
304(f)(3)) [2 U.S.C. 434(f)(3)] that is distributed from a television 
or radio broadcast station or provider of cable or satellite television 
service and, in the case of a communication which refers to a candidate 
for an office other than President or Vice-President, is targeted to 
the relevant electorate.'' 2 U.S.C. 441b(c)(6)(B). The Wellstone 
amendment then defines ``targeted to the relevant electorate'' by 
referencing the definition in the Snowe-Jeffords amendment. 2 U.S.C. 
441b(c)(6)(C). Under the interpretation of the Wellstone amendment in 
the proposed rules, ``targeted communication'' would not be limited to 
communications referring only to candidates for the U.S. House of 
Representatives and the U.S. Senate directed to the relevant 
electorate, but would also include communications that refer to 
Presidential and Vice-Presidential candidates, with all of the relevant 
restrictions being applicable. Further, it appears that Senator 
Wellstone intended his amendment to be applicable to Presidential and 
Vice-Presidential elections. During the Senate debate, one of the 
examples of the communications his amendment was intended to reach were 
ads run by an organization during a presidential primary campaign. See 
147 Cong. Rec. S2848 (daily ed. Mar. 26, 2001).
    An alternative interpretation of BCRA would remove communications 
that refer to a candidate for the office of President or Vice-President 
from the definition of ``targeted communication.'' This interpretation 
of 2 U.S.C. 441b(c)(6)(B) is based on the reading that because the 
second condition in the section does not apply to candidates for 
President or Vice-President, the Wellstone amendment does not apply to 
these candidates. Under this interpretation, incorporated section 
501(c)(4) organizations and section 527 organizations that accept 
corporate and labor organization funds would be able to make 
electioneering communications with respect to Presidential and Vice-
Presidential elections, as described above, using funds that do not 
come from corporations, labor organizations or foreign nationals. 
Although this alternative is not set out in the proposed rules that 
follow, the Commission seeks comment on it.
    Because the Wellstone amendment defines ``targeted communication'' 
to include all electioneering communications, see 2 U.S.C. 
441b(c)(6)(B), the result of the Wellstone amendment is that any 
corporations whatever, including incorporated 501(c)(4) and 527 
organizations, are prohibited from making electioneering 
communications. Because the restrictions exist within the ambit of 
section 441b, the Wellstone amendment does not restrict unincorporated 
501(c)(4) and 527 organizations from making electioneering 
communications.
    An initial reading of the Wellstone amendment suggests that it may 
go further than allowed by MCFL, in that it bans electioneering 
communications from all section 501(c)(4) corporations. In order to 
interpret the Wellstone amendment consistent with MCFL, an exception to 
the ban on corporations making electioneering communications should 
apply to section 501(c)(4) corporations that meet the conditions

[[Page 51138]]

for MCFL groups at 11 CFR 114.10. Proposed 11 CFR 114.2(b)(2) would ban 
only electioneering communications by incorporated section 501(c)(4) 
organizations that do not meet the 11 CFR 114.10 conditions.
    Alternatively, in the absence of the Wellstone amendment, the 
Snowe-Jeffords provision by itself would have allowed all incorporated 
tax-exempt organizations that are described in 26 U.S.C. 501(c)(4), and 
political organizations described in 26 U.S.C. 527, to make 
electioneering communications, provided their funds do not come from 
corporations or labor organizations. 2 U.S.C. 441b(c).

II. Proposed Rules at 11 CFR 114.2, 114.10, and 114.14

    To implement the new restrictions on corporate and labor 
organization activity, current 11 CFR 114.2(b) would be revised to 
reflect the restrictions found in the Snowe-Jeffords provision and the 
Wellstone amendment. For purposes of clarity, current paragraph 
114.2(b) would be restructured. The general prohibition on corporations 
and labor organizations making contributions would be placed in 
proposed paragraph 114.2(b)(1). The corresponding prohibitions on 
corporate and labor organization expenditures would be located in 
paragraph (b)(2)(i). The restriction on express advocacy by 
corporations and labor organizations to those outside the restricted 
class would be moved to proposed paragraph 114.2(b)(2)(ii). Proposed 
paragraph 114.2(b)(2)(iii) would contain the new prohibition on 
electioneering communications by corporations and labor organizations.
    Current paragraph 114.2(b) references the exception at 11 CFR 
114.10 for qualified nonprofit corporations that wish to make 
independent expenditures. As redrafted, the reference to section 114.10 
would also apply to electioneering communications.
    Section 114.10 itself would be redrafted to incorporate references 
to electioneering communications. Thus, the title of section 114.10 
would be redrafted to reflect its application to electioneering 
communications, as would the discussion of the scope of section 114.10 
found at paragraph 114.10(a). Current paragraph 114.10(d) would be 
redesignated as ``Permitted corporate independent expenditures and 
electioneering communications.'' Current paragraph 114.10(d)(2) would 
be redesignated as proposed paragraph 114.10(d)(3). Proposed paragraph 
114.10(d)(2) would track the language of current paragraph 
114.10(d)(1), except that it would substitute ``electioneering 
communication'' for ``independent expenditure,'' and it would reference 
the definition of ``electioneering communication'' at 11 CFR 100.29.
    The procedures for certification of qualified nonprofit corporation 
status would be revised to provide separate procedures for those making 
electioneering communications. Thus, the procedures for corporations 
making independent expenditures, which are currently found at 11 CFR 
114.10(e)(1)(i), and (ii), would be redesignated as 11 CFR 
114.10(e)(1)(i)(A) and (B). Proposed 11 CFR 114.10(e)(1)(ii)(A) and (B) 
would be added to describe the procedures for demonstrating qualified 
nonprofit corporation status when making electioneering communications. 
In all respects this provision is similar to the one for qualified 
nonprofit corporations making independent expenditures, except that the 
threshold for certification would be $10,000. The amount would be set 
at $10,000 because that is the amount that first triggers the reporting 
requirement for electioneering communications.
    Further, 11 CFR 114.10(g) would be revised to require qualified 
nonprofit corporations to comply with the requirements of 11 CFR 110.11 
regarding non-authorization notices (``disclaimers'') when making 
electioneering communications. BCRA amended 2 U.S.C. 441d to require 
disclaimers for electioneering communications. Section 110.11 will be 
amended in a separate rulemaking.
    Proposed paragraph 114.10(h) would serve as a notification to 
qualified nonprofit corporations that they may establish a segregated 
bank account for the purpose of depositing funds to be used to pay for 
electioneering communications, as identified in 11 CFR 104.19(b)(6) and 
(7).
    Proposed paragraph 114.10(i) would track the language in 2 U.S.C. 
441b(c)(5), which states that nothing in 2 U.S.C. 441b(c) shall be 
construed to authorize an organization exempt from taxation under 
section 501(a) of the Internal Revenue Code of 1986 to carry out any 
activity that is prohibited under the Internal Revenue Code. For the 
reasons explained above, the proposed rule would clarify that this 
statutory prohibition specifically applies to any qualified nonprofit 
corporation.
    Certain courts have interpreted MCFL to allow an incorporated 
501(c)(4) organization to accept a de minimis amount of corporate or 
labor organization funds and still be able to make independent 
expenditures without violating 2 U.S.C. 441b. See, e.g., Minnesota 
Citizens Concerned for Life, Inc. v. FEC, 936 F.Supp. 633 (D.Minn. 
1996), aff'd, 113 F.3d 129 (8th Cir. 1997).\7\ Regarding BCRA, the 
Commission understands that the phrase ``paid for exclusively by funds 
provided by individuals'' at 2 U.S.C. 441b(c)(2), when read in 
conjunction with the Wellstone amendment at 2 U.S.C. 441b(c)(6)(A), is 
intended to establish a bright-line rule that, even if an organization 
accepted only a de minimis amount of corporate or labor organization 
funds, it is nevertheless barred under 2 U.S.C. 441b from making an 
electioneering communication. The Commission seeks comment as to 
whether the conclusion regarding acceptance of de minimis amounts of 
corporate or labor organization general treasury funds is appropriate 
and likely to survive constitutional scrutiny and, if so, whether it 
should be stated in the rule. Comment is sought, however, as to whether 
the certification of its status under 11 CFR 114.10(e) as a qualified 
nonprofit corporation should be revised for purposes of making either 
independent expenditures or electioneering communication so that a 
corporation could certify its status on the basis of a court decision 
rather than the criteria in the Commission's regulations.
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    \7\ Prior to enactment of BCRA, the MCFL status of incorporated 
501(c)(4) organizations could change from year to year depending on 
the absolute total amount of corporate contributions received by 
these organizations. FEC v. National Rifle Association, 254 F.3d 173 
(D.C. Cir 2001). In FEC v. NRA, the court held that $1000 in 
corporate contributions that the NRA received in 1980 was de minimis 
and did not affect in MCFL status for that year; however, the 
corporate contributions of $7,000 and $39,786 that it received in 
1978 and 1982, respectively, were substantial and rendered the NRA 
ineligible for the MCFL exemption in 1978 and 1982. Id. at 192.
---------------------------------------------------------------------------

    Further, proposed 11 CFR 114.14 would be added to the regulations 
to implement the provisions in 2 U.S.C. 441b(b)(2), (c)(1) and (c)(3) 
prohibiting corporations and labor organizations from directly or 
indirectly disbursing any amount from general treasury funds for any of 
the costs of an electioneering communication.\8\ Proposed 11 CFR 
114.14(a) would contain the prohibition that applies to corporations 
and labor organizations generally, and is meant to eliminate any 
instance of a corporation or labor organization providing funds out of 
their general treasury funds for the purpose of paying for an 
electioneering communication, including through a non-Federal account. 
The Commission does not view

[[Page 51139]]

BCRA as in any way prohibiting or restricting corporations and labor 
organizations from paying for electioneering communications out of 
funds raised and spent by the Federal accounts of their separate 
segregated funds. The Commission seeks comment on what factors should 
be used to determine that the purpose element of this prohibition has 
been met.
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    \8\ The prohibition on direct disbursements of corporate or 
labor organization funds is contained at proposed new 11 CFR 
114.2(b)(2). National banks would also be subject to proposed 11 CFR 
114.14 through the operation of current 11 CFR 114.2(a)(2).
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    Proposed paragraph (b) of new 11 CFR 114.14 would prohibit any 
person who accepts corporate or labor organization funds from using 
those funds to pay for an electioneering communication, or to provide 
those funds to any other person who would subsequently use those funds 
to pay for all or part of the costs of an electioneering communication. 
This proposed rule would be similar to the ban on contributions made in 
the name of another. See 2 U.S.C. 441f; 11 CFR 110.4(b). The rule would 
be intended to effectuate BCRA's treatment of an electioneering 
communication as being made by a corporation or labor organization if 
such an entity indirectly disburses any amount for the cost of the 
communication out of their general treasury funds. 2 U.S.C. 
441b(c)(3)(A).
    The Commission also seeks comments on contributor liability. Should 
contributors be held liable in instances where their contributions were 
not intended to be used for electioneering communications but the 
recipient used them for that purpose regardless of the contributors' 
intent?
    Proposed paragraph (c) of 11 CFR 114.14 would provide certain 
limited exceptions to allow corporations or labor organizations to 
provide funds that might subsequently be used for electioneering 
communications. The first exception would cover salary, royalties, or 
any other income earned from bona fide employment or other contractual 
arrangements, including a pension or other retirement income. The 
second exception would cover interest earnings, stock or other 
dividends, or proceeds from the sale of stock or other investments. 
These exceptions are drawn from 11 CFR 110.10, which applies only to 
candidates' funds, by recognizing that such amounts constitute personal 
funds. The third proposed exception covers a corporation or labor 
organization payment of the fair market value for goods provided or 
services rendered to the corporation or labor organization.
    Proposed paragraph 11 CFR 114.14(d) would require persons who 
receive funds from a corporation or a labor organization that do not 
meet the exceptions of proposed paragraph 11 CFR 114.14(c) to be able 
to demonstrate through a reasonable accounting method that no such 
funds were used to pay for any portion of an electioneering 
communication. The Commission seeks comment on whether a specific 
accounting method should be required, such as first-in-first-out 
(FIFO), last-in-first-out (LIFO), or any other method.
    The Commission seeks comment on whether proposed 11 CFR 114.14 
covers all instances where corporate or labor organization general 
treasury funds might indirectly be used to pay for electioneering 
communications, without going beyond the bounds of BCRA.

Are Amounts Given to Persons Making Electioneering Communications 
Contributions? When Are These Amounts Subject to the Contribution 
Limits? Would They Trigger Political Committee Status?

    In the new reporting provisions of BCRA, monies provided for 
electioneering communications are characterized as ``funds 
contributed,'' and the persons providing the monies as 
``contributors.'' 2 U.S.C. 434(f)(2)(E) and (F). BCRA amends the FECA's 
prohibitions against corporate and labor organization contributions and 
expenditures at 2 U.S.C. 441b(b)(2) by defining ``contribution or 
expenditure'' to include ``any direct or indirect payment * * * for any 
applicable electioneering communication.'' It also amends the ban on 
contributions and donations by foreign nationals at 2 U.S.C. 441e to 
include electioneering communications. BCRA, however, does not amend 
the definition of contribution at 2 U.S.C. 431(8) to include monies 
given for electioneering communications. The Commission would interpret 
this statutory language to mean that such monies would be 
``contributions'' when provided by any person to the Federal account of 
a political organization and, therefore, would be subject to the 
contribution limits and prohibitions of the FECA, as amended by BCRA. 
However, funds provided to persons that are not political committees 
would not be ``contributions'' and hence would not be subject to the 
contribution limits or prohibitions. Nor would these amounts trigger 
political committee status when given to an organization that is not 
already a political committee. Please note that amounts donated by an 
entity covered by 2 U.S.C. 441b or by a foreign national covered by 2 
U.S.C. 441e nonetheless are subject to the bans on electioneering 
communications contained in those provisions. The Commission requests 
comments on this approach.
    BCRA also prohibits the national party committees from donating 
non-Federal funds for any purpose, including electioneering 
communications. 2 U.S.C. 441i(a). BCRA prohibits a State, district, or 
local committee of a political party from donating non-Federal funds 
for ads that refer to a clearly identified candidate for Federal office 
and promote, support, attack or oppose that candidate. 2 U.S.C. 
431(20)(A)(iii) and 441i(b). Such ads, with rare exception, encompass 
electioneering communications. For these reasons, the Commission would 
interpret monies provided by any person for electioneering 
communications to political committees that are the national, State, 
district or local committee of a political party (``party committees'') 
to be contributions subject to the limitations or prohibitions of the 
FECA, as amended by BCRA. However, comments are sought as to whether 
funds provided for electioneering communications to a non-Federal 
account of a separate segregated fund or a non-connected committee 
should or should not be contributions subject to limitations or 
prohibitions, if the funds are not provided by a corporation, labor 
organization, foreign national or party committee, and if they are not 
coordinated with any candidate.
    Funds provided by persons other than corporations, unions, foreign 
nationals or party committees to persons that are not political 
committees are not contributions. Thus, these amounts would not trigger 
political committee status when given to an organization that is not 
already a political committee. Persons that are not party committees or 
political committees, including individuals, would be able to raise and 
spend funds for electioneering communications without limitation as to 
amount, unless the funds are provided by corporations, unions, foreign 
nationals or party committees. The Commission requests comments on this 
approach.

Who Must Report Electioneering Communications?

I. Who Is Included in ``Persons''?

    BCRA, as codified at 2 U.S.C. 434(f)(1), requires all persons 
making electioneering communications to file statements when the 
disbursements for the electioneering communications exceed $10,000 in a 
calendar year. Under 2 U.S.C. 431(11) and 11 CFR 100.10, ``persons'' 
includes ``an individual, partnership, committee, association, 
corporation, labor organization, and any other organization or group of 
persons.'' This definition of

[[Page 51140]]

``person'' would apply to proposed 11 CFR 104.19(a).
    While all political committees are included as ``persons'' who 
would be required to report electioneering communications under 
proposed section 104.19(a), BCRA excludes communications that 
constitute an expenditure or an independent expenditure under FECA from 
the definition of electioneering communications. 2 U.S.C. 
434(f)(3)(B)(ii). Thus, political committees will not be required to 
report their expenditures as electioneering communications.
    The Commission seeks comments on eliminating this exemption when 
the authorized committee of a candidate makes an expenditure for a 
communication that refers to that candidate or that candidate's 
opponent. Under this approach, which is not included in the proposed 
rules that follow, if a candidate committee makes an expenditure for a 
communication that refers to that candidate or that candidate's 
opponent and that meets the definition of electioneering communication 
(other than the exclusion of expenditures in 2 U.S.C. 
434(f)(3)(B)(ii)), then the candidate committee would have to report 
the cost as an electioneering communication within the 24-hour time 
requirement, if the costs of such ads exceed $10,000. The Commission 
recognizes that these amounts would be reported a second time on the 
authorized committee's regular report as expenditures. Comment is 
sought as to whether this limitation on the exemption for authorized 
committees would be consistent with BCRA.
    The Commission requests comments on whether State and local party 
committees should be exempt from ``persons'' who must file reports of 
electioneering communications. State and local party committees' 
candidate-specific expenditures and independent expenditures that are 
otherwise reportable as such are not subject to the definition of 
electioneering communications under the Commission's construction of 2 
U.S.C. 434(f)(3)(B)(ii). See above. However, certain other 
disbursements by a State party committee that include a reference to a 
clearly identified Federal candidate would be subject to the definition 
of electioneering communication, such as issue ads that do not require 
candidate-specific reporting. Exempting State and local party 
committees from 11 CFR 104.19 would mean that they would report such 
disbursements on their regular reporting schedule, as current law 
allows, rather than under the electioneering communications reporting 
requirements. Comments are requested.

II. Who Is Responsible for Filing Reports by Organizations That Are Not 
Political Committees?

    Under the Commission's regulations at 11 CFR 104.1 and the FECA at 
2 U.S.C. 432(i) and 434(a)(1), the treasurer is the individual 
responsible for the accuracy, and the filing, of a political 
committee's reports. BCRA requires organizations that are not political 
committees to report their electioneering communications. 2 U.S.C. 
434(f)(2)(E). However, such organizations are not required by BCRA or 
the FECA to have a treasurer who is responsible for the filing. The 
Commission requests comments on whether to require that the individual 
responsible for filing the statement of electioneering communications 
on behalf of an organization that is not a political committee have 
actual knowledge of the receipts and disbursements for, and the 
contents and timing of, the electioneering communications.

When Must Electioneering Communications Be Reported?

    The question of when electioneering communications must be reported 
presents several subsidiary issues. First, does the $10,000 threshold 
include the costs for producing electioneering communications, or for 
airing electioneering communications, or both? Second, must the 
electioneering communications be reported at the time the disbursements 
exceed $10,000 in a calendar year, or not until the disbursements 
exceed $10,000 and the communications have been aired? Third, when does 
the 24-hour period begin and end, and what would serve as proof of 
timely filing? These issues are discussed below.

I. Does the $10,000 Reporting Threshold Include the Direct Costs of 
Both Producing and Airing Electioneering Communications, or Does It 
Include Only One or the Other?

    BCRA requires disbursements, and contracts to make disbursements, 
for the direct costs of producing and airing electioneering 
communications to be reported within 24 hours of the ``disclosure 
date.'' 2 U.S.C. 434(f)(1). However, BCRA defines ``disclosure date'' 
as the date on which the direct costs of producing or airing exceed 
$10,000. 2 U.S.C. 434(f)(4). Thus, the proposed rules would require 
that when the direct costs of either producing or airing electioneering 
communications exceed $10,000, the person making the electioneering 
communications must report the direct costs of both producing and 
airing the electioneering communications within 24 hours. Specifically, 
proposed 11 CFR 104.19(a) would require every person who makes 
disbursements, or who executes contracts to disburse funds for the 
direct costs of producing or airing electioneering communications 
aggregating in excess of $10,000, to report certain information 
regarding the sources of the funds used for producing and airing the 
electioneering communications.
    The Commission requests comments on this interpretation. Does BCRA 
intend for persons to report only if the aggregate production costs or 
the aggregate airing costs exceed $10,000? For example, if Person K 
pays $7,000 to produce an electioneering communication and $7,000 to 
air the communication, would Person K have any reporting requirements 
at all because neither the cost of production nor the cost of airing 
the communication when treated separately exceeded $10,000? 
Alternatively, does the statute intend for persons to report when the 
aggregate of all direct production costs and all direct airing costs 
exceed $10,000? For example, if Person J pays $7,000 to produce an 
electioneering communication and pays $7,000 to air it, would Person J 
be required to report all $14,000 because the aggregate costs of 
producing and airing exceed $10,000?
    Proposed paragraph (a)(2) would provide guidance with regard to 
what are considered to be direct costs of producing or airing an 
electioneering communication. The proposed regulation would provide a 
list of costs that would be considered ``direct.'' The list would not 
be exhaustive. As proposed, the direct costs of producing a 
communication would include any costs charged by a production company, 
such as studio rental time, staff salaries, costs of video or audio 
recording media, hired talent, and any other cost involved in producing 
the video or audio communication. Direct costs of airtime would include 
the cost of airtime on broadcast, cable or satellite radio and 
television stations, and the charges for a broker to purchase the 
airtime. The Commission seeks comments on other examples of direct 
costs of producing or airing electioneering communications.
    Direct costs for producing or airing electioneering communications 
would not include the cost of polling to determine the contents of a 
communication or whether to create or air the communication. 
Additionally,

[[Page 51141]]

such costs would not include the cost of a focus group or other polling 
to determine the effectiveness of the communication. The Commission 
seeks comment on whether these exceptions should be specifically 
included in the rules and what other types of costs should be excluded 
from ``direct costs.'' Further, the Commission seeks comment on whether 
these lists should be exhaustive, thereby including everything that 
would be considered a direct cost.

II. Must Reports Be Filed When the Disbursements Exceed the Threshold, 
or When the Electioneering Communication Is Aired?

    As noted above, BCRA requires persons making electioneering 
communications to report the disbursements for such communications 
within 24 hours of the ``disclosure date.'' 2 U.S.C. 434(f)(1). 
``Disclosure date'' is defined at 2 U.S.C. 434(f)(4) as the date 
``during any calendar year by which a person has made disbursements for 
the direct costs of producing or airing electioneering communications 
aggregating in excess of $10,000.'' Therefore, proposed 11 CFR 
104.19(a) would track the statutory language to require that statements 
of electioneering communications be filed within 24 hours of the time 
the $10,000 threshold is exceeded. Following the statutory language, 
proposed paragraph (a) would require that persons begin aggregating the 
direct costs of producing or airing electioneering communications anew 
after each disclosure date. Each time the aggregation of disbursements 
for electioneering communications exceeds $10,000 (since the most 
recent disclosure date), an additional statement of electioneering 
communications would be required.
    Alternatively, the Commission could determine that a person makes 
disbursements for electioneering communications only when a 
communication is aired, and require reporting of disbursements that 
meet the statute's monetary thresholds at that time. One policy reason 
supporting such an interpretation is the practical difficulty or 
impossibility of determining whether a given communication has met 
BCRA's targeting requirements before a communication is actually aired. 
Another reason is that until a person or entity actually airs an 
electioneering communication, it is impossible to know with certainty 
that the person or entity ever will air a communication that 
constitutes an electioneering communication under BCRA; accordingly, to 
require reporting beforehand could lead to speculative and even 
inaccurate reporting through no fault of the reporting person or 
entity. Finally, there could be constitutional issues with compelling 
disclosure of potential electioneering communications before they are 
finalized and aired, particularly when such disclosure could force 
reporting entities to divulge confidential strategic and political 
information, and could force them to report information, under the 
penalty of perjury, that later turns out to be misleading or inaccurate 
if the reporting entity does not subsequently air any electioneering 
communications. The Commission seeks comments on these issues and 
specifically whether, in light of these constitutional and policy 
concerns, it should consider construing BCRA's electioneering 
communication reporting requirements to apply only when an 
electioneering communication is actually aired. The Commission further 
requests comments on whether it should limit reporting of 
electioneering communications to only the 30 days before a primary 
election or the 60 days before a general election.
    The current rules at 11 CFR 104.5 set forth filing dates for each 
type of filer (e.g., authorized committees, unauthorized committees, 
party committees) and for other required reports that are not part of 
the regular filing schedule (e.g., certain reports of independent 
expenditures). Proposed new paragraph (i) of section 104.5 would state 
the filing deadlines for 24-hour statements of electioneering 
communications and would cross-reference proposed section 104.19.
    BCRA at 2 U.S.C. 434(f)(2) requires, as do the proposed regulations 
at 11 CFR 104.5(i), that statements of electioneering communications be 
filed under penalty of perjury. Note that 24-hour reports of 
independent expenditures are also required to be filed under penalty of 
perjury.\9\ Perjury consists of a false statement as to material fact 
willfully made under an oath authorized by a law of the United States 
taken before a competent tribunal, officer, or person. 28 U.S.C. 1621. 
In addition, 18 U.S.C. 1001(a)(3) establishes criminal penalties for 
``knowingly and willfully making or using false writings or documents'' 
in connection with matters within the jurisdiction and before a 
government agency. Lastly, such violations may be subject to the FECA 
at 2 U.S.C. 437g, which establishes civil penalties of specified 
amounts for violations of the FECA. The Commission seeks comment on how 
2 U.S.C. 437g would apply to violations of the requirements for 
electioneering communications, given that the defined terms in 2 U.S.C. 
437g are different than the terms used in 2 U.S.C. 434(f).
---------------------------------------------------------------------------

    \9\ Like independent expenditure reporting, one concern 
regarding reporting expenditures for communications before the 
communications are publicly disseminated, is the possibility that 
the report will be erroneous if the communication is never publicly 
disseminated. Thus, if a person pays more than $10,000 for the 
production or airing of an electioneering comunication and properly 
reports those payments within 24 hours, but later decides not to air 
the ad, that person would not have committed perjury as long as the 
report reflected what the person knew to be true at the time it was 
filed.
---------------------------------------------------------------------------

III. Filed Within 24 Hours vs. Received Within 24 Hours

    Under 2 U.S.C. 434(f)(1), electioneering communications must be 
reported within 24 hours of the time the $10,000 threshold is exceeded 
(i.e., on the ``disclosure date'', see below). The Commission proposes 
to add new paragraph (f) to 11 CFR 100.19 to require these 24-hour 
statements to be received by the Commission within 24 hours of the 
disclosure date, rather than filed within 24 hours of the disclosure 
date. In addition, to assist filers with meeting this deadline, the 
proposed rule would allow them to file their 24-hour statements by 
facsimile machine or e-mail. This proposed paragraph would follow the 
timing and filing methods of 24-hour reports for independent 
expenditures. The Commission proposes this interpretation to achieve 
the kind of disclosure contemplated by the 24-hour requirement. Under 
the proposed rules, a 24-hour statement of electioneering 
communications would be available to the public no later than 48 hours 
after its receipt by the Commission. Further, since these statements 
are required within 24-hours of the disclosure date, they are similar 
to 24-hour reports of independent expenditures and, thus, should be 
treated similarly. The Commission requests comments on this 
interpretation of ``filed'' in 2 U.S.C. 434(f).
    The Commission recently concluded that sending 24-hour reports of 
independent expenditures by mail is not a viable option because it is 
unlikely that these reports will be received by the Commission within 
24 hours of the making of the independent expenditure. (See Explanation 
and Justification for Independent Expenditure Reporting Rules, 65 FR 
12834, March 20, 2002.) Thus, current paragraph (b) of 11 CFR 100.19 
does not allow 24-hour reports of independent expenditures to be 
considered filed when postmarked, even if sent by registered or 
certified mail. These reports are only considered

[[Page 51142]]

timely filed if they are received by the Commission or Secretary of the 
Senate within 24 hours of the time the independent expenditure was 
made. For the same reasons, the Commission is also proposing to amend 
paragraph (b) to preclude filing 24-hour statements of electioneering 
communications by certified or registered mail. However, as explained 
above, these statements could be filed by facsimile machine or 
electronic mail, except by those persons who are required to file 
electronically under 11 CFR 104.18.
    In addition to the substantive revisions noted above, all 
paragraphs in section 100.19 would be given titles to assist the reader 
in finding the appropriate information, and technical changes would be 
made to paragraph (d).

IV. When Does the 24 Hour Period Begin and End?

    The Commission currently considers the term ``24 hours'' with 
regard to certain reports of independent expenditures to mean 24 
contiguous hours even if the time period begins or ends on a weekend or 
holiday. The proposed rules would interpret the 24-hour reporting 
requirement for statements of electioneering communications the same 
way, since neither FECA nor BCRA appear to contemplate a different 
result. Both facsimile and electronic mail transmissions may be filed 
at any time and have a date and time stamp embedded for purposes of 
proof. However, the Commission requests comments on whether to use a 
different interpretation of ``24 hours'' for electioneering 
communications than is currently used for 24-hour reports of 
independent expenditures. For example, if the $10,000 threshold is 
exceeded on a Saturday at 5 p.m., should the statement be filed by 
Sunday at 5 p.m. or Monday at 5 p.m.? Would it be confusing to filers 
if this rule were different for electioneering communication statements 
than for other notices, statements or reports?
    The Commission also requests comments on how a person should prove 
that he or she timely sent these 24-hour statements. For example, if 
reports were sent by fax, would a copy of the sender's fax cover page 
containing the date and time of the transmission be sufficient to prove 
timely receipt?

What Information Must Be Reported About Electioneering 
Communications?

    BCRA at 2 U.S.C. 434(f)(2) requires that all persons making 
electioneering communications report the funds spent on those 
communications. This new statute is very specific regarding the types 
of information that must be reported. Consequently, the proposed rules 
at 11 CFR 104.19 would closely follow the statutory reporting 
requirements for ``electioneering communications.'' These new 24-hour 
statements will require the Commission to create a new form for 
reporting electioneering communications. The Commission intends to 
create FEC Form 9 for persons other than political committees and to 
create Schedule J as part of FEC Form 3, 3X, or, 3P, as appropriate, 
for political committees. These forms would be available on the 
Commission's website and by Faxline.
    Proposed 11 CFR 104.19(a) is discussed above. (See Who must report 
electioneering communications? When must electioneering communications 
be reported?)
    Proposed 11 CFR 104.19(b) would specify the contents of the 
statement required under BCRA and the proposed rules. Because BCRA 
quite specifically addresses the contents of these statements, the 
proposed rules closely follow the statutory language. See 2 U.S.C. 
434(f)(2). As discussed above, both BCRA and the proposed rules would 
require that these 24-hour reports be filed under the penalties for 
perjury.
    Proposed paragraph (b)(1) would require the identification\10\ of 
the person making the disbursement(s) for electioneering 
communications. If the person making the disbursement is not an 
individual, proposed paragraph (b)(1) would also require the person's 
principal place of business.
---------------------------------------------------------------------------

    \10\ 11 CFR 100.12 defines ``identification'' as: ``in the case 
of an individual, his or her full name, including: First name, 
middle name or initial, if available, and last name; mailing 
address; occupation; and the name of his or her employer; and, in 
the case of any other person full name and address.''
---------------------------------------------------------------------------

    Proposed paragraph (b)(2) would require the identification of any 
person sharing or exercising direction or control over the activities 
of the person making the disbursement. The Commission requests comments 
as to whether ``direction or control over the activities'' should be 
further defined, and if so, what types of actions would constitute 
``direction or control over the activities?''
    The Commission also seeks comment on whether it should draw upon in 
whole or in part its existing earmarking regulations, 11 CFR 110.6(d), 
in determining the scope of the statutory phrase ``direction or 
control.'' These rules provide that if a conduit exercises any 
direction or control over the choice of the recipient candidate, the 
earmarked contribution shall be considered a contribution by both the 
original contributor and the conduit for both limitation and reporting 
purposes. The Commission determined that a conduit exercised direction 
over a contribution when it determined whether a contribution should be 
made, and, if so, the recipient, the amount, and the timing of any 
contribution. See Advisory Opinion (``AO'') 1986-4. In two other AOs, 
the Commission determined that conduits did not exercise direction or 
control over a contribution when the original contributor made the same 
choices. See AO 1981-57 and AO 1980-46. The Commission seeks comment on 
whether a similar analysis should be used to define ``direction and 
control'' in this rulemaking.
    The recently promulgated regulations on non-Federal funds (67 FR 
49063 (July 29, 2002)) contained a definition of ``direct'' with regard 
to the making of contributions. That regulation defines ``to direct'' 
as ``to ask a person who has expressed an intent to make a 
contribution, donation, or transfer of funds, or to provide anything of 
value, to make that contribution, donation, or transfer of funds, or to 
provide that thing of value, including through a conduit or 
intermediary.'' 11 CFR 300.2(n). The Commission requests comments as to 
whether this definition of ``to direct'' could be adopted for purposes 
of this rulemaking as the definition of ``direction.'' The Commission 
further requests comments on whether ``direction'' and ``control'' 
should have the same meaning and, if not, what the distinction is.
    Another issue that might be addressed is whether direction or 
control should be limited to influence over certain aspects of the 
electioneering communications (e.g., the contents, timing, frequency, 
duration or intended audience of the communication, or the specific 
media outlet used). In the alternative, should these terms encompass 
all activities of the person making the electioneering communication, 
even when those activities are not related to the electioneering 
communication? This approach is reflected in Alternative 4-B of the 
proposed rule at 11 CFR 104.19(b)(2).
    The Commission requests comments on these issues as well as any 
other issues relevant to this point.
    Proposed paragraph (b)(3) would require the identification of the 
custodian of the books and accounts of the person or persons making the 
disbursements.
    Proposed paragraph (b)(4) would require the amount of each

[[Page 51143]]

disbursement of more than $200 during the period covered by the 
statement, the date the disbursement was made, and the identification 
of the person to whom the disbursement was made.
    Alternative 5-A of proposed paragraph (b)(5) would closely track 
the wording of BCRA by requiring the identification of all elections to 
which the electioneering communications pertain and the names (if 
known) of the candidates clearly identified or to be clearly identified 
in the communication. Alternative 5-B of proposed paragraph (b)(5) 
would require disclosure of all clearly identified candidates referred 
to in the communication and the elections in which they are candidates. 
The Commission seeks comment on whether Alternative 5-B is preferable 
to the statutory language, in that it is easier to follow and takes 
into consideration 2 U.S.C. 434(f)(3), which makes reference to a 
clearly identified candidate a threshold requirement for a 
communication to be deemed an electioneering communication.
    Proposed paragraph (b)(6) would apply only to qualified nonprofit 
corporations under 11 CFR 104.10 that pay for electioneering 
communications only from a segregated bank account under 11 CFR 
114.10(h). This proposed paragraph follows 2 U.S.C. 434(f)(2)(E) by 
providing that if a qualified nonprofit corporation pays for its 
electioneering communications only from its segregated bank account, it 
must report the name and address of only those individuals who provided 
$1,000 or more to the account, aggregating from January 1 of the 
preceding calendar year. If a qualified nonprofit corporation pays for 
its electioneering communications from any account other than its 
segregated bank account, it would be required to report all 
contributors who contributed $1,000 or more to the organization in 
general (as opposed to the segregated bank account for electioneering 
communications) under proposed paragraph (b)(7). Proposed paragraph 
(b)(7) would apply to qualified nonprofit corporations that pay for 
electioneering communications from an account other than that described 
in 11 CFR 114.10(h), and to all other persons who make electioneering 
communications.
    Proposed paragraph (b)(7) would follow 2 U.S.C 434(f)(2)(F) by 
requiring the name and address of any contributor who contributed an 
amount aggregating $1,000 or more since the first day of the preceding 
calendar year to the person making the disbursement. Note that BCRA 
also requires the name and addresses of every U.S. citizen, U.S. 
national, or permanent resident contributing $1,000 or more to ``a 
segregated bank account.'' See 2 U.S.C. 434(f)(2)(E). Sections 
434(f)(2)(E) and 441b(c)(3)(B) of FECA, when read together, appear to 
contemplate that this segregated bank account is required only for 
section 501(c)(4) corporations. However, as explained above, section 
501(c)(4) corporations (with the possible exception of qualified 
nonprofit corporations under MCFL) are prohibited from making 
electioneering communications. Therefore, the Commission proposes to 
omit this information from the required contents of reports, for all 
persons except qualified nonprofit corporations. Comments are sought on 
this approach.
    In following 2 U.S.C. 434(f)(2)(E) and (F), proposed 11 CFR 
104.19(b)(6) and (7) would require the identification of those persons 
who have contributed in excess of $1,000 since January 1 of the 
preceding calendar year. The Commission requests comments on whether to 
require all donations from these donors to be itemized every time the 
person making the electioneering communication files reports even if 
some of them were previously reported. An alternative would be to 
require the itemization of these funds in the same way that 
contributions are currently itemized under 11 CFR 104.8 on Schedule A. 
Thus, each time a person provides funds to the person making the 
electioneering communications, the filer would report the receipts but 
would not be required to itemize them until they aggregate in excess of 
$1,000. However, for each contribution/donation thereafter, the filer 
would be required to report the ``to-date'' total along with the 
itemization of any new funds provided by that donor since the last 
report, but the filer would not be required to re-report previous 
contribution/donations in each subsequent report. The Commission 
envisions that this alternative would require FEC Form 9 and Schedule J 
to contain space for reporting donations that would be similar to the 
current Schedule A. Comments are requested on this approach and on 
other possible methods of implementation of 2 U.S.C. 434(f)(2)(E) and 
(F) to avoid duplicative reporting.
    Proposed paragraph (b)(8) would require the reporting of the 
disclosure date, as defined in proposed 11 CFR 104.19(a)(1). While BCRA 
does not specifically require the disclosure date to be reported, the 
Commission notes the necessity of this information as the triggering 
mechanism for filing the statement. This is similar to requiring the 
date an independent expenditure aggregating in excess of $1,000 is made 
during the 24-hour reporting period. The Commission requests comments 
on whether or not to require persons making electioneering 
communications to report the disclosure date.
    Proposed paragraph (c) would require all persons (except qualified 
nonprofit corporations) making electioneering communications or 
accepting contributions for the purpose of making electioneering 
communications to comply with the Commission's current recordkeeping 
regulations at 11 CFR 104.14. Qualified nonprofit corporations would be 
exempt from the recordkeeping requirements in order to mirror the 
requirements for such entities that make independent expenditures. The 
Commission seeks comment on what records should be required to be 
maintained by persons who make electioneering communications. Should 
the recordkeeping requirements for electioneering communications and 
independent expenditures be the same? If so, what should those 
requirements be?

Where Must Electioneering Communications Statements Be Filed?

    Currently, the FECA and 11 CFR 105.2 require that reports by, and 
solely regarding, candidates for the U.S. Senate be filed with the 
Secretary of the Senate as custodian for the Commission. BCRA requires 
that statements of electioneering communications that refer to Senate 
candidates must be filed with the Commission. 2 U.S.C. 434(f)(1). 
Therefore, proposed revisions to 11 CFR 105.2 would renumber the 
current section 105.2 as paragraph 105.2(a) under the heading of 
``General rule.'' Proposed new paragraph (b) would contain the 
exceptions to that rule, i.e., persons who make electioneering 
communications that refer to candidates for Senate would report to the 
Commission rather than to the Secretary of the Senate. BCRA also 
requires that all 24-hour and 48-hour reports of independent 
expenditures be filed with the Commission regardless of whether they 
support or oppose a candidate for Senate. 2 U.S.C. 434(g)(3)(A). These 
independent expenditure reports would be added to revised section 105.2 
in a separate rulemaking at a later point.

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

    The Commission certifies that these proposed rules, if promulgated, 
would not have a significant economic impact on a substantial number of 
small entities. The basis of this certification is that since all 
political committees already have reporting requirements,

[[Page 51144]]

these additional statements do not create a significant new burden. 
Persons other than political committees would not have to report until 
they exceed a $10,000 threshold, at which point their reporting 
obligations would be no more than what is strictly necessary to comply 
with the new statutory requirements. In addition, they would have 
considerable flexibility in the method of filing the requisite 
statement.

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 105

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

11 CFR Part 114

    Business and industry, Elections, Labor.

    For the reasons set out in the preamble, it is proposed to amend 
subchapter A of 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, 434, and 438(a)(8).

    2. Paragraphs (b) and (d) of section 100.19 would be revised, 
titles would be added to paragraphs (a), (c), and (e), and paragraph 
(f) would be added to read as follows:


Sec. 100.19  File, filed or filing (2 U.S.C. 434(a)).

* * * * *
    (a) Where to deliver reports. * * *
    (b) Timely filed. General rule. A document, other than a report or 
statement covered by paragraphs (c) through (f) of this section, is 
timely filed upon deposit as registered or certified mail in an 
established U.S. Post Office and postmarked no later than midnight of 
the day of the filing date, except that pre-election reports so mailed 
must be postmarked no later than midnight of the fifteenth day before 
the date of the election. Documents sent by first class mail must be 
received by the close of business on the prescribed filing date to be 
timely filed.
    (c) Electronic filing. * * *
    (d) 24-hour reports of independent expenditures. A 24-hour report 
of independent expenditures under 11 CFR 104.4(b) or 109.2(c) is timely 
filed when it is received by the appropriate filing officer as listed 
in 11 CFR 104.4(c) after a disbursement is made, or, in the case of a 
political committee, a debt reportable under 11 CFR 104.11(b) is 
incurred, for an independent expenditure, but no later than 24 hours 
from the time the independent expenditure was made. In addition to 
other permissible means of filing, a 24-hour report of independent 
expenditures may be filed using a facsimile machine or by electronic 
mail if the filer is not required to file electronically in accordance 
with 11 CFR 104.18.
    (e) 48-hour statements of last-minute contributions. * * *
    (f) 24-hour statements of electioneering communications. A 24-hour 
statement of electioneering communications under 11 CFR 104.19 is 
timely filed when it is received by the Commission within 24 hours of 
the disclosure date (see 11 CFR 104.19(a)(1)). In addition to other 
permissible means of filing, a 24-hour statement of electioneering 
communications may be filed using a facsimile machine or by electronic 
mail if the filer is not required to file electronically in accordance 
with 11 CFR 104.18.
    3. New section 100.29 would be added to read as follows:


Sec. 100.29  Electioneering communication.

    (a)(1) Electioneering communication means any broadcast, cable, or 
satellite communication that:
    (i) Refers to a clearly identified candidate for Federal office;
    (ii) Is publicly distributed within 60 days before a general 
election for the office sought by the candidate; or within 30 days 
before a primary or preference election, or a convention or caucus of a 
political party that has authority to nominate a candidate, for the 
office sought by the candidate;
    (iii) Is targeted to the relevant electorate, in the case of a 
candidate for Senate or the House of Representatives; and

Alternative 1-A

    (iv) In the case of a candidate for nomination for President:
    (A) Can be received by 50,000 or more persons in a State where a 
primary election, as defined in 11 CFR 9032.7, is being held if 
publicly distributed within 30 days before the election; or
    (B) Can be received by 50,000 or more persons anywhere in the 
United States if publicly distributed within 30 days before the 
national nominating convention.
    (2) For purposes of this section only, a special election or a 
runoff election is a primary election if held to nominate a candidate. 
A special election or a runoff election is a general election if held 
to elect a candidate.
    (b) For purposes of this section--
    (1) Refers to a clearly identified candidate means that the 
candidate's name, nickname, photograph, or drawing appears, or the 
identity of the candidate is otherwise apparent through an unambiguous 
reference such as ``the President,'' ``your Congressman,'' or ``the 
incumbent,'' or through an unambiguous reference to his or her status 
as a candidate such as ``the Democratic presidential nominee'' or ``the 
Republican candidate for Senate in the State of Georgia.''
    (2) Broadcast, cable, or satellite communication means a 
communication that is publicly distributed by a television station, 
radio station, cable television system, or satellite system, but does 
not include any communication publicly distributed exclusively by Low 
Power FM Radio, Low Power Television or Citizens Band Radio, as those 
terms are defined by the Federal Communications Commission.
    (3) Targeted to the relevant electorate means the communication can 
be received by 50,000 or more persons--
    (i) In the district the candidate seeks to represent, in the case 
of a candidate for Representative in or Delegate or Resident 
Commissioner to, the Congress; or
    (ii) In the State the candidate seeks to represent, in the case of 
a candidate for Senator.

Alternative 1-B

    (4) A communication that refers to a clearly identified candidate 
for President or Vice-President is publicly distributed within 30 days 
before a primary election, preference election, or convention or caucus 
of a political party only where and when the communication can be 
received by 50,000 or more persons within the State holding such 
election, convention or caucus.
    (5) For purposes of paragraph (b)(3) of this section, information 
on the number of persons in the congressional district or State that 
can receive a communication publicly distributed by a television 
station, radio station, a cable television system, or satellite system, 
is available on the Federal Communications Commission's website, http://www.fcc.gov. A link to that site is available on the Federal Election

[[Page 51145]]

Commission's website, http://www.fec.gov. It shall be a complete 
defense against any charge that a communication reached 50,000 or more 
persons when the maker of an electioneering communication relies on 
such information posted on the website of the Federal Communications 
Commission prior to the date the communication is publicly distributed.
    (6) Publicly distributed means aired, broadcast, cablecast or 
otherwise disseminated through the facilities of a television station, 
radio station, cable television system, or satellite system. This 
definition also applies to the term airing in 11 CFR 104.5 and 104.19.
    (c) Electioneering communication does not include any communication 
that:
    (1) Is publicly distributed through a means of communication other 
than a broadcast, cable, or satellite television or radio station. For 
example, electioneering communication does not include communications 
appearing in print media, including a newspaper or magazine, handbill, 
brochure, yard sign, poster, billboard, and other written materials, 
including mailings; communications over the Internet, including 
electronic mail; or telephone communications;
    (2) Appears in a news story, commentary, or editorial distributed 
through the facilities of any broadcast, cable, or satellite television 
or radio station, unless such facilities are owned or controlled by any 
political party, political committee, or candidate. A news story 
distributed through a broadcast, cable, or satellite television or 
radio station owned or controlled by any political party, political 
committee, or candidate is nevertheless exempt if the news story meets 
the requirements described in 11 CFR 100.132(a) and (b);

Alternative 2-A

    (3) Constitutes an expenditure or an independent expenditure.

Alternative 2-B

    (3) Constitutes a candidate-specific expenditure reportable as an 
in-kind contribution or party coordinated expenditure, or an 
independent expenditure;
    (4) Constitutes a candidate debate or forum conducted pursuant to 
11 CFR 110.13, or that solely promotes such a debate or forum and is 
made by or on behalf of the person sponsoring the debate or forum;
    (5) Refers to a bill or law by its popular name where that name 
includes the name of a Federal candidate, provided that the popular 
name is the sole reference made to a Federal candidate;

Alternative 3-A

    (6) Is devoted exclusively to urging support for or opposition to 
particular pending legislative or executive matters, where the 
communication only requests recipients to contact a specific Member of 
Congress or public official, without promoting, supporting, attacking 
or opposing the candidate, or indicating the candidate's past or 
current position on the legislation;

Alternative 3-B

    (6) Concerns only a pending legislative or executive matter, and 
the only reference to a Federal candidate is a brief suggestion that he 
or she be contacted and urged to take a particular position on the 
matter, and there is no reference to the candidate's record, position, 
statement, character, qualifications, or fitness for an office or to an 
election, candidacy, or voting;

Alternative 3-C

    (6)(i) Does not include express advocacy;
    (ii) Refers to a specific piece of legislation or legislative 
proposal, either by formal name, popular name or bill number; or refers 
to a general public policy issue capable of redress by legislation or 
executive action; and
    (iii) Contains a phone number, toll free number, mail address, or 
electronic mail address, internet home page or other world wide web 
address for the person or entity that the ad urges the viewer or 
listener to contact;

Alternative 3-D

    (6) Urges support of or opposition to any legislation, resolution, 
institutional action, or any policy proposal and only refers to 
contacting a clearly identified candidate who is an incumbent 
legislator to urge such legislator to support or oppose the matter, 
without referring to any of the legislator's past or present positions; 
or
    (7) Refers to a clearly identified Federal candidate in a public 
communication by a candidate for State or local office, individual 
holding State or local office, or an association or similar group of 
candidates for State or local office or of individuals holding State or 
local office, if such mention of a Federal candidate is merely 
incidental to the candidacy of one or more individuals for State or 
local office.

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) and (b) and 439a.

    5. In section 104.5, paragraph (j) would be added as follows:


Sec. 104.5  Filing dates (2 U.S.C. 434(a)(2)).

* * * * *
    (j) 24-hour statements of electioneering communications. Every 
person who makes a disbursement or executes a contract to make a 
disbursement for the direct costs of producing or airing electioneering 
communications as defined in 11 CFR 100.29 aggregating in excess of 
$10,000 during any calendar year shall, within 24 hours of each 
disclosure date, file with the Commission a statement under penalty of 
perjury in accordance with 11 CFR 104.19.
    6. New section 104.19 would be added to read as follows:


Sec. 104.19  Reporting electioneering communications (2 U.S.C. 434(f)).

    (a) Who must report. Every person who makes a disbursement or 
executes a contract to make a disbursement for the direct costs of 
producing or airing electioneering communications as defined in 11 CFR 
100.29 aggregating in excess of $10,000 during any calendar year shall, 
within 24 hours of the disclosure date, file with the Commission a 
statement under penalty of perjury containing the information set forth 
in paragraph (b) of this section. Persons other than political 
committees must file these 24-hour statements on FEC Form 9. Political 
committees must file these 24-hour statements on Schedule J of FEC 
Forms 3, 3X, or 3P.
    (1) Disclosure date means during a calendar year:
    (i) The first date by which a person has made one or more 
disbursements, or has executed one or more contracts to make 
disbursements, for the direct costs of producing or airing 
electioneering communications aggregating in excess of $10,000; and
    (ii) Any other date in a calendar year by which a person has made 
one or more disbursements, or has executed one or more contracts to 
make disbursements, for the direct costs of producing or airing 
electioneering communications aggregating in excess of $10,000 since 
the most recent disclosure date during such calendar year.
    (2) Direct costs of producing or airing electioneering 
communications include, but are not limited to, the following:
    (i) Costs charged by a production company, such as studio rental 
time, staff salaries, costs of video or audio recording media, and 
talent; and

[[Page 51146]]

    (ii) The cost of airtime on broadcast, cable or satellite radio and 
television stations, and the charges for a broker to purchase the 
airtime.
    (b) Contents of statement. Every person described in paragraph (a) 
of this section shall disclose the following information:
    (1) The identification (see 11 CFR 100.12) of the person making the 
disbursement and, if the person is not an individual, the person's 
principal place of business;

Alternative 4-A

    (2) The identification (see 11 CFR 100.12) of any person sharing or 
exercising direction or control over the electioneering communication 
activities of the person making the disbursement;

Alternative 4-B

    (2) The identification (see 11 CFR 100.12) of any person sharing or 
exercising direction or control over the contents, timing, duration, 
intended audience, frequency of placement of the electioneering 
communication or the specific media outlet used;
    (3) The identification (see 11 CFR 100.12) of the custodian of the 
books and accounts from which the disbursements for electioneering 
communications were made;
    (4) The amount of each disbursement of more than $200 during the 
period covered by the statement, the date the disbursement was made, 
and the identification (as defined in 11 CFR 100.12) of the person to 
whom that disbursement was made;

Alternative 5-A

    (5) All elections to which the electioneering communication 
pertains and all names (if known) of clearly identified candidates 
referred to or to be referred to in the communication;

Alternative 5-B

    (5) All clearly identified candidates referred to in the 
communication and the elections in which they are candidates;
    (6) If the disbursements are paid out of a segregated bank account 
of a qualified nonprofit corporation under 11 CFR 114.10(h) consisting 
of funds provided solely by individuals who are U.S. citizens, U.S. 
nationals, or who are lawfully admitted for permanent residence under 8 
U.S.C. 1101(a)(20), the name and address of each contributor who 
contributed an amount aggregating $1,000 or more to the segregated bank 
account, aggregating since the first day of the preceding calendar 
year;
    (7) If the disbursements are not paid out of the segregated bank 
account of a qualified nonprofit corporation under 11 CFR 114.10(h), 
the name and address of each contributor who contributed an amount 
aggregating $1,000 or more to the person making the disbursement, 
aggregating since the first day of the preceding calendar year; and
    (8) The disclosure date as defined in this section.
    (c) Recordkeeping. All persons, except qualified nonprofit 
corporations (see 11 CFR 114.10), who make electioneering 
communications or who accept contributions for the purpose of making 
electioneering communications, must maintain records in accordance with 
11 CFR 104.14.

PART 105--DOCUMENT FILING (2 U.S.C. 432(g))

    7. The authority citation for part 105 would be revised to read as 
follows:

    Authority: 2 U.S.C. 432(g), 434, 438(a)(8).

    8. Section 105.2 would be revised to read as follows:


Sec. 105.2  Place of filing; Senate candidates, their principal 
campaign committees, and committees supporting only Senate candidates 
(2 U.S.C. 432(g)(2)).

    (a) General rule. Except as provided in paragraph (b) of this 
section all designations, statements, reports, and notices as well as 
any modification(s) or amendment(s) thereto, required to be filed under 
11 CFR parts 101, 102, and 104 by a candidate for nomination or 
election to the office of United States Senator, by his or her 
principal campaign committee or by any other political committee(s) 
that supports only candidates for nomination for election or election 
to the Senate of the United States shall be filed in original form 
with, and received, by the Secretary of the Senate, as custodian for 
the Commission.
    (b) Exceptions. Statements of electioneering communications filed 
in accordance with 11 CFR 104.19, regardless of whether the 
communication refers to a candidate for Senate, House of 
Representatives or President or Vice-President, must be filed in 
original form with, and received by the Commission.

PART 114--CORPORATE AND LABOR ORGANIZATION ACTIVITY

    9. The authority citation for part 114 would continue to read as 
follows:

    Authority: 2 U.S.C. 431(8)(B), 431(9)(B), 432, 434(a)(11), 
437d(a)(8), 438(a)(8), 441b.

    10. In section 114.2, paragraph (b) would be revised to read as 
follows:


Sec. 114.2  Prohibitions on contributions and expenditures.

* * * * *
    (b)(1) Any corporation whatever or any labor organization is 
prohibited from making a contribution as defined in 11 CFR part 100, 
subpart B. Any corporation whatever or any labor organization is 
prohibited from making a contribution as defined in 11 CFR 114.1(a) in 
connection with any Federal election.
    (2) Except as provided at 11 CFR 114.10, corporations and labor 
organizations are prohibited from:
    (i) Making expenditures as defined in 11 CFR part 100, subpart D;
    (ii) Making expenditures with respect to a Federal election (as 
defined in 11 CFR 114.1(a)), for communications to those outside the 
restricted class that expressly advocate the election or defeat of one 
or more clearly identified candidate(s) or the candidates of a clearly 
identified political party; or
    (iii) Making payments for an electioneering communication to those 
outside the restricted class.
* * * * *
    11. In section 114.10, paragraphs (a), (d), (e) and (g) would be 
revised and paragraphs (h) and (i) would be added to read as follows:


Sec. 114.10  Nonprofit corporations exempt from the prohibition on 
independent expenditures and electioneering communications.

    (a) Scope. This section describes those nonprofit corporations that 
qualify for an exemption in 11 CFR 114.2. It sets out the procedures 
for demonstrating qualified nonprofit corporation status, for reporting 
independent expenditures and electioneering communications, and for 
disclosing the potential use of donations for political purposes.
* * * * *
    (d) Permitted corporate independent expenditures and electioneering 
communications.
    (1) A qualified nonprofit corporation may make independent 
expenditures, as defined in 11 CFR part 109, without violating the 
prohibitions against corporate expenditures contained in 11 CFR part 
114.
    (2) A qualified nonprofit corporation may make electioneering 
communications, as defined in 11 CFR 100.29, without violating the 
prohibitions against corporate expenditures contained in 11 CFR part 
114.
    (3) Except as provided in paragraph (d)(1) and (2) of this section, 
qualified nonprofit corporations remain subject to the requirements and 
limitations of 11 CFR part 114, including those

[[Page 51147]]

provisions prohibiting corporate contributions, whether monetary or in-
kind.
    (e) Qualified nonprofit corporations; reporting requirements.
    (1) Procedures for demonstrating qualified nonprofit corporation 
status.
    (i) If a corporation makes independent expenditures under paragraph 
(d)(1) of this section that aggregate in excess of $250 in a calendar 
year, the corporation shall certify, in accordance with paragraph 
(e)(1)(i)(B) of this section, that it is eligible for an exemption from 
the prohibitions against corporate expenditures contained in 11 CFR 
part 114.
    (A) This certification is due no later than the due date of the 
first independent expenditure report required under paragraph (e)(2)(i) 
of this section. However, the corporation is not required to submit 
this certification prior to making independent expenditures.
    (B) This certification may be made either as part of filing FEC 
Form 5 (independent expenditure form) or, if the corporation is not 
required to file electronically under 11 CFR 104.18, by submitting a 
letter in lieu of the form. The letter shall contain the name and 
address of the corporation and the signature and printed name of the 
individual filing the qualifying statement. The letter shall also 
certify that the corporation has the characteristics set forth in 
paragraphs (c)(1) through (c)(5) of this section.
    (ii) If a corporation makes electioneering communications under 
paragraph (d)(2) of this section that aggregate in excess of $10,000 in 
a calendar year, the corporation shall certify, in accordance with 
paragraph (e)(1)(ii)(B) of this section, that it is eligible for an 
exemption from the prohibitions against corporate expenditures 
contained in 11 CFR part 114.
    (A) This certification is due no later than the due date of the 
first electioneering communication statement required under paragraph 
(e)(2)(ii) of this section. However, the corporation is not required to 
submit this certification prior to making electioneering 
communications.
    (B) This certification must be made as part of filing FEC Form 9 
(electioneering communication form).
    (2) Reporting independent expenditures and electioneering 
communications.
    (i) Qualified nonprofit corporations that make independent 
expenditures aggregating in excess of $250 in a calendar year shall 
file reports as required by 11 CFR 109.2.
    (ii) Qualified nonprofit corporations that make electioneering 
communications aggregating in excess of $10,000 in a calendar year 
shall file statements as required by 11 CFR 104.19.
* * * * *
    (g) Non-authorization notice. Qualified nonprofit corporations 
making independent expenditures or electioneering communications under 
this section shall comply with the requirements of 11 CFR 110.11.
    (h) Segregated bank account. A qualified nonprofit corporation may, 
but is not required to, establish a segregated bank account into which 
it deposits only funds provided by individuals, as described in 11 CFR 
104.19(b)(6).
    (i) Activities prohibited by the Internal Revenue Code. Nothing in 
this section shall be construed to authorize any organization exempt 
from taxation under 26 U.S.C. 501(a), including any qualified nonprofit 
corporation, to carry out any activity that it is prohibited from 
undertaking by the Internal Revenue Code, 26 U.S.C. 501, et seq.
    12. Section 114.14 would be added to read as follows:


Sec. 114.14  Further restrictions on the use of corporate and labor 
organization funds for electioneering communications.

    (a) No corporation or labor organization may give, disburse, donate 
or otherwise provide funds, the purpose of which is to pay for an 
electioneering communication, to any other person.
    (b) No person who accepts funds given, disbursed, donated or 
otherwise provided by a corporation or labor organization may use those 
funds to:
    (1) Pay for any electioneering communication; or
    (2) Provide any portion of those funds to any person, for the 
purpose of defraying any of the costs of an electioneering 
communication.
    (c) The prohibitions at paragraphs (a) and (b) of this section 
shall not apply to funds disbursed by a corporation or labor 
organization, or received by a person, that constitute--
    (1) Salary, royalties, or other income earned from bona fide 
employment or other contractual arrangements, including pension or 
other retirement income;
    (2) Interest earnings, stock or other dividends, or proceeds from 
the sale of the person's stocks or other investments; or
    (3) Receipt of payments representing fair market value for goods 
provided or services rendered to a corporation or labor organization.
    (d) Persons who receive funds from a corporation or a labor 
organization that do not meet the exceptions of paragraph (c) of this 
section must be able to demonstrate through a reasonable accounting 
method that no such funds were used to pay any portion of an 
electioneering communication.

    Dated: August 2, 2002.
Karl J. Sandstrom,
Vice Chairman, Federal Election Commission.
[FR Doc. 02-19996 Filed 8-6-02; 8:45 am]
BILLING CODE 6715-01-P