[Federal Register Volume 67, Number 163 (Thursday, August 22, 2002)]
[Proposed Rules]
[Pages 54366-54379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21277]


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

FEDERAL ELECTION COMMISSION

11 CFR Part 110

[Notice 2002--14]


Contribution Limitations and Prohibitions

AGENCY: Federal Election Commission.

ACTION: Notice of proposed rulemaking.

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

SUMMARY: The Federal Election Commission seeks comments on proposed 
changes to its rules relating to contribution limitations and 
prohibitions under the Federal Election Campaign Act of 1971, as 
amended (``FECA'' or ``the Act''). The proposed rules are based on the 
Bipartisan Campaign Reform Act of 2002 (``BCRA''), which increases 
contribution limits for individuals and political committees; prohibits 
contributions and donations by minors to certain political committees; 
and prohibits contributions, donations, and certain expenditures and 
disbursements by foreign nationals. Please note that the draft rules 
that follow do not represent

[[Page 54367]]

a final decision by the Commission on the issues presented by this 
rulemaking. Further information is provided in the supplementary 
information that follows.

DATES: Comments must be received on or before September 13, 2002. If 
the Commission receives sufficient requests to testify, it will hold a 
hearing on these proposed rules on October 3, 2002, at 10 a.m. Persons 
wishing to testify at the hearing should so indicate in their written 
or electronic comments.

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 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 the 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 the 
comment period. If the Commission conducts a hearing on these proposed 
rules, the hearing will be held in the Commission's ninth floor meeting 
room, 999 E Street, NW., Washington, DC.

FOR FURTHER INFORMATION CONTACT: Ms. Mai T. Dinh, Acting Assistant 
General Counsel, or Attorneys Mr. Michael Marinelli (contribution 
limitations), Ms. Dawn Odrowski (minor contributions), or Ms. Anne A. 
Weissenborn (foreign nationals), 999 E Street, NW., Washington, DC 
20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: The Bipartisan Campaign Reform Act of 2002, 
Public Law 107-155, 116 Stat. 81 (March 27, 2002), contains extensive 
detailed amendments to the Federal Election Campaign Act of 1971, as 
amended, 2 U.S.C. 431 et seq. This Notice of Proposed Rulemaking 
(``NPRM'') is part of a continuing series of rulemakings the Commission 
is publishing over the next several months in order to meet the 
rulemaking deadlines set out in BCRA.
    This NPRM addresses the increase in contribution limits, the 
prohibition on contributions and donations by minors to certain 
political committees, and the prohibition on contributions, donations, 
and certain expenditures by foreign nationals. These changes to the Act 
addressed in this NPRM are only a few of many changes made to the Act 
by BCRA. 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) electioneering 
communications (for NPRM, see 67 FR 51131 (Aug. 7, 2002)); (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 (for final rules, see 67 FR 50582, 
August 5, 2002). 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. Section 402(c) of 
BCRA establishes a 270-day deadline for the Commission to promulgate 
these rules. Since BCRA was signed into law on March 27, 2002, the 270-
day deadline is December 22, 2002.
---------------------------------------------------------------------------

    \1\ This NPRM will also address certain communications that are 
coordinated with candidate or political party committees that would 
otherwise constitute electioneering communications.
---------------------------------------------------------------------------

Introduction

    The Act limits the amounts that individuals and entities are 
permitted to contribute, and who may contribute those amounts, to 
candidates, political committees, and political party committees for 
use in Federal elections. 2 U.S.C. 441a and 441e. BCRA amends the FECA 
by increasing some of the contribution limits in 2 U.S.C. 441a (but 
only for contributions made on or after January 1, 2003), and by 
prohibiting certain contributions by minors in new 2 U.S.C. 441k. BCRA 
also amends 2 U.S.C. 441e, which prohibits contributions, donations, 
and expenditures made by foreign nationals. The proposed rules would 
implement these amendments.

Increases in Contribution Limits

1. Increases in the Contribution Limits for Individuals (11 CFR 110.1 
and 110.5)

    The Act limits the amount that individuals may contribute to 
candidates, political committees, and political parties for use in 
Federal elections. 2 U.S.C. 441a. The pre-BCRA provisions of the Act 
permit persons to contribute up to $1,000 to Federal candidates per 
election and up to $20,000 per year to political committees established 
and maintained by national political parties.\2\ For contributions made 
on or after January 1, 2003, BCRA amends 2 U.S.C. 441a(a)(1)(A) to 
increase the amount persons can contribute to Federal candidates to 
$2,000 per election and amends 2 U.S.C. 441a(a)(1)(B) to increase the 
amount that may be contributed by individuals to committees maintained 
and controlled by national political parties to $25,000 per year.
---------------------------------------------------------------------------

    \2\ The Act also permits a person to contribute up to $5,000 per 
year to any other political committees. 2 U.S.C. 441a (a)(1)(C). 
This limit was left unchanged by BCRA. However BCRA did revise 2 
U.S.C. 441a(a)(1) by adding paragraph (D), which permits persons to 
make up to $10,000 in contributions to a political committee 
established and maintained by a State committee of a political party 
in a calendar year. This provision is addressed in a separate 
rulemaking. See Prohibited and Excessive Contributions: Non-Federal 
Funds or Soft Money Final Rules, 67 FR 49063 (July 29, 2002).
---------------------------------------------------------------------------

    Current 11 CFR 110.1(b)(1) and (c)(1), which contain the 
contribution limits in 2 U.S.C. 441a(a)(1)(A) and (B), would be amended 
to incorporate the new increased contribution limits. Proposed 
paragraph (b)(1) would establish the new base contribution limit of 
$2,000 that a person may contribute to a candidate for election to any 
Federal office. Under proposed paragraph (b)(1)(i), that limit of 
$2,000 would be increased if necessary each election cycle by the 
difference in the price index in accordance with proposed 11 CFR 
110.17, which is discussed below. Once the limit is increased, proposed 
paragraph (b)(1)(ii) would establish the effective dates of the 
increase from the day after the last general election to the day of the 
next general election. Because the contribution limits could change 
every two years, depending upon the consumer price index, proposed 
paragraph (b)(1)(iii) states that the Commission would publish the new 
contribution limits in effect in the Federal Register every odd-
numbered year and maintain that information on its Web Site. Proposed 
section 110.1(c)(1) would parallel proposed section 110.1(b)(1), except 
it would establish the base contribution limit that

[[Page 54368]]

a person would be able to make to a political committee of a national 
political party at $25,000 per calendar year. Proposed paragraphs 
(c)(1)(i), (ii), and (iii) would mirror proposed paragraph (b)(1)(i), 
(ii), and (iii), applying the same indexing as necessary each election 
cycle with the same effective dates.
    The limit for the calendar year when the change becomes effective 
would be affected as well. These new contribution limits would be 
effective January 1, 2003, and would apply to contributions made on or 
after that date. The Commission seeks comments on whether these 
increased contribution limits should apply to elections that occurred 
before the effective date of the increase in the contribution limits. 
For example, if the contribution limit were to be increased from $2,000 
to $2,100, effective November 3, 2004, and contributor X makes a $2,000 
contribution to candidate Y in October of 2004, could contributor X 
make a $100 contribution after November 3, 2004 designated for the 
general election, provided that candidate Y's principal campaign 
committee still has net debts outstanding?
    BCRA also amends the provisions in the Act that establish the 
aggregate contributions that may be made by individuals. Under 2 U.S.C. 
441a(a)(3), individuals have been permitted to make no more than 
$25,000 in aggregate contributions per calendar year. This section has 
been revised by BCRA to establish new bi-annual aggregate limits that 
permit individuals to make up to $95,000 in contributions, including up 
to $37,500 in contributions to candidates and their authorized 
committees and up to $57,500 in contributions to any other committees. 
2 U.S.C. 441a(a)(3)(A) and (B). The $57,500 aggregate contribution 
limit contains a further restriction in that no more than $37,500 of 
this amount may be given to committees that are not the political 
committees of national political parties. 2 U.S.C. 441a(a)(3)(B).
    Current 11 CFR 110.5(b) would be amended to incorporate the 
increased bi-annual aggregate contribution limits, which will be 
effective January 1, 2003. Proposed paragraph (b)(1)(i) would contain 
the new bi-annual aggregate limit for contributions to candidates and 
their authorized committees. Proposed paragraph (b)(1)(ii) would 
contain the new bi-annual aggregate limit for contributions to other 
political committees.
    However, 2 U.S.C. 441a(i)(1)(C) and 441a-1(a)(1)(B) contain an 
important exception to the contribution limits that has implications 
for the bi-annual aggregate limits for individuals. Under these 
sections, the individual contribution limits to candidates for the U.S 
House of Representatives and U.S. Senate are increased if the candidate 
is opposing another candidate who makes expenditures from his or her 
personal funds above a certain threshold. Contributions made under 
these provisions do not apply to the individual contributor's bi-annual 
aggregate limits. 2 U.S.C. 441a(i)(1)(C) and 441a-1(a)(1)(B). Proposed 
paragraph 110.5(b)(1)(iii) would reflect this exception, which will be 
addressed in greater detail in a separate NPRM concerning the so-called 
``millionaires' amendment.''
    Proposed paragraph (b)(2) of 11 CFR 110.5 would reference the 
increase, if necessary, in the bi-annual aggregate limits by the 
percent difference in the price index as described in proposed 11 CFR 
110.17 (see the discussion below). Proposed paragraph (b)(3) would 
provide that the time period in which the price indexing applies also 
applies to the aggregation of contributions for purposes of the 
application of the bi-annual aggregate limits. An example of how the 
time period would operate for both the increase and the aggregation 
would also be included in proposed paragraph (b)(3). Proposed paragraph 
(b)(4) would restate the Commission's intention to publish information 
regarding the adjusted limits in the Federal Register and on the 
Commission's web site.

2. Increases in the Limits for Contributions by Party Committees to 
Senate Candidates (11 CFR 110.2)

    Under pre-BCRA 2 U.S.C. 441a(h), the Republican and Democratic 
Senatorial campaign committees or the national committee of a political 
party or any combination of such committees were permitted to 
contribute $17,500 to a candidate for election or nomination to the 
U.S. Senate during the year of the election. BCRA amends this section 
of the Act to increase the amount that may be contributed by these 
committees to senatorial candidates to $35,000 on or after January 1, 
2003. Current 11 CFR 110.2(e), which contains this limit, would be 
amended to increase the limit to $35,000.

3. Extension of Indexing to Inflation for Some Contribution Limitations 
(11 CFR 110.5 and 110.17)

    Pre-BCRA 2 U.S.C. 441a(c) mandated yearly indexing to inflation of 
the expenditure limitations established by 2 U.S.C. 441a(b) (the limits 
on expenditures by candidates for the office of President of the United 
States who accept public funding) and 2 U.S.C. 441a(d) (the limits on 
expenditures by national party committees, State party committees, or 
their subordinate committees in connection with the general election 
campaign of candidates for Federal office).
    BCRA amends 2 U.S.C. 441a(c) to extend the inflation indexing to: 
the limitations for contributions made by persons under 2 U.S.C. 
441a(a)(1)(A) and 441a(a)(1)(B); the bi-annual aggregate contribution 
limits for individuals now found at 2 U.S.C. 441a(a)(3); and the 
limitation for contributions made to U.S. Senate candidates by certain 
party committees at 2 U.S.C. 441a(h). 2 U.S.C. 441a(c)(1)(B). The 
adjustments for inflation for 2 U.S.C. 441a(a)(1)(A), 441a(a)(1)(B), 
441a(a)(3) and 441a(h) are to be made only in odd-numbered years and 
such increases will be in effect for the 2-year period beginning on the 
first day following the date of the general election in the year 
preceding and ending on the date of the next general election. 2 U.S.C. 
441a(c)(1)(C).
    BCRA, however, presents a conflict concerning the interaction of 2 
U.S.C. 441a(a)(3), which establishes the bi-annual aggregate 
contribution limits for individuals, and 2 U.S.C. 441a(c)(1)(C), which 
mandates indexing to inflation of these bi-annual aggregate limits. 
Section 441a(a)(3) of the Act specifically provides that the bi-annual 
aggregate limits for contributions made by individuals should apply 
during the period that begins on January 1 of an odd-numbered year and 
ends on December 31 of the next even-numbered year. For example, the 
dollar aggregate limits operate from January 1, 2005 to December 31, 
2006. However, the inflation indexing for this provision as applied by 
2 U.S.C. 441a(c)(1)(C) would operate from the day after the general 
election to the date of the next general election, e.g. November 3, 
2004 to November 7, 2006, after which date the next two year inflation 
indexing period would alter the bi-annual aggregate contribution limits 
again. Thus, these competing time limits seem to dictate different 
contributions limits for the period from November 3, 2004 to January 1, 
2005 and could not be applied simultaneously. Therefore, the conflict 
between 2 U.S.C. 441a(a)(3) and 441a(c)(1)(C) must be resolved to 
determine the time period in which the bi-annual aggregate contribution 
limits apply.
    It is one principle of legislative interpretation that where two 
provisions of a statute are in conflict, the conflicting provision 
which is last in time or last in order of arrangement

[[Page 54369]]

prevails. See Inter-Continental Promotions v. MacDonald, 367 F.2d 293 
(5th Cir. 1966). Following this principle, because 2 U.S.C. 
441a(c)(1)(C) appears later than 2 U.S.C. 441a(a)(3) in order of 
arrangement, both in BCRA and as codified in the Act, 2 U.S.C. 
441a(c)(1)(C) would determine the time period of the bi-annual 
contribution limits for 2 U.S.C. 441a(a)(3). Therefore, the proposed 
rules would set the time period for the bi-annual contribution limits 
from the day after the general election, i.e. the first Wednesday 
following the first Monday in November of an even numbered year, to the 
date of the next general election, i.e. the first Tuesday following the 
first Monday in November of the next even numbered year. See proposed 
11 CFR 110.5(b) and 110.17 below. Under this approach, runoff elections 
following the general election would not postpone the increase in the 
annual contribution limits. The Commission seeks comment on whether 
this interpretation of the statutory language and the proposed time 
period for the bi-annual aggregate contribution limits is appropriate.
    Another question for the interpretation of the BCRA amendments to 2 
U.S.C. 441a(c) relates to a timing issue in the administrative 
application of the inflation indexing. The increased contribution 
limits of 2 U.S.C. 441a(a)(1)(A) and (B), 441a(a)(3), and 441a(h) apply 
to contributions made on or after January 1, 2003. However, under the 
interpretation outlined above, 2 U.S.C. 441a(c)(1)(C) requires that 
these same contribution limits be increased through indexing for 
inflation in odd-numbered years with the increase in effect starting 
with the day following the last general election in the previous year. 
This could imply that initial contribution limits authorized by BCRA to 
take legal effect on January 1, 2003, should also be increased by the 
difference in the price index. Comments are requested on this possible 
interpretation, which is not included in the proposed revisions to 
section 110.5 below.
    A further change in 2 U.S.C. 441a(c) is the introduction of a 
rounding provision for all the amounts that are increased by the 
indexing to inflation in 2 U.S.C. 441a. If the final amount is not a 
multiple of $100, it is rounded to the nearest multiple of $100. 2 
U.S.C. 441a(c)(1)(B)(iii).
    The current regulation at 11 CFR 110.9(c) that describes the 
expenditure limits subject to inflation indexing does not include any 
of the inflation indexing discussed above. In order to address the 
price indexing for the new contributions and expenditures limitations 
in a comprehensive manner, the Commission proposes to add new section 
110.17 to track the changes to 2 U.S.C. 441a(c). In this new section 
110.17, proposed paragraph (a) would restate current section 110.9(c) 
for the price index increases that previously existed for the party 
committee and Presidential candidate spending limits established by 11 
CFR 110.7 and 110.8.
    However, proposed paragraph (a) would contain one important change 
from current 11 CFR 110.9(c). Section 110.9(c) had incorrectly stated 
that the expenditure limitations established by sections 110.7 and 
110.8 would be increased by the annual percent difference of the price 
index, as certified to the Commission by the Secretary of Labor. 
Section 441a(c) of the Act does not use an annual percent difference of 
the price index to calculate the increases. Instead, it requires the 
use of the percent difference between the price index for the 12 months 
preceding the beginning of the calendar year in which the change is 
made and the base period. For party committee expenditures limitations 
and Presidential candidate expenditures limitations, the base period is 
calendar year 1974 with the change being in effect for that calendar 
year. Proposed paragraph (a) would correctly state the standard to be 
applied and would delete the term ``annual'' from the regulation.
    Proposed paragraph (b) of new section 110.17 would track 2 U.S.C. 
441a(c)(1)(B) and state that the following contributions limits would 
be indexed to inflation: Proposed 11 CFR 110.1(b)(1) (limits for 
individuals contributing to candidates and authorized political 
committees); proposed 110.1(c)(1) (limits for contributions made to 
national party committees); proposed 110.2(e) (limits for contributions 
made by party committees to Senatorial candidates); and proposed 110.5 
(bi-annual aggregate contribution limits for individuals). 
Consequently, current paragraph 110.9(c) would be removed.
    Proposed section 110.17(b)(1) would specify that these contribution 
limitations would be increased during odd numbered years and that the 
increased limit would be in effect for a two-year period. Proposed 
paragraph (b)(2) would establish that 2001 is the base year for the 
calculation of the price index difference. Proposed paragraph 110.17(c) 
would implement the new rounding provision found at 2 U.S.C. 
441a(c)(B)(iii).
    The Act at 2 U.S.C. 441a(c)(2)(A) and proposed paragraph 110.17(d) 
specifically identify the price index as the average over a calendar 
year of the Consumer Price Index (all items-United States city average) 
published by the Bureau of Labor Statistics. The Department of Labor 
computes the CPI using two population groups: All Urban Consumers (CPI-
U) and Clerical Workers (CPI-W). The CPI-U represents approximately 87% 
of the total United States population while the CPI-W, a subset of the 
CPI-U, represents 32% of the total United States population.\3\ While 
neither the Act nor BCRA have specified which population group is to be 
used, the Commission has historically used the more inclusive CPI-U 
since that would seem the best method to calculate changes in the 
affected limitation. The Commission invites comments on whether this or 
an alternative approach would be preferable.
---------------------------------------------------------------------------

    \3\ The CPI published by the Department of Labor may be found 
over the Internet at http://www.bls.gov/cpi/home.htm.
---------------------------------------------------------------------------

    Proposed paragraph 110.17(e) would state that the Commission would 
provide information concerning the amount of the adjusted contribution 
limitations through the Federal Register and the Commission's web site.
    In order to alert the reader to these contribution limit increases, 
each section containing a contribution increase that is subject to the 
indexing also contains a new paragraph referring to these increases. 
These would be proposed paragraphs 110.1(b)(1)(i), (ii), and (iii); 
(c)(1)(i), (ii), and (iii); 110.2(e)(2); and 110.5(b)(2).

Prohibition on Contributions by Minors

    Senator McCain, a primary sponsor of BCRA, stated during the Senate 
debate that the prohibition on contributions by minors is intended to 
prevent evasion of FECA's contribution limits and ``restores the 
integrity of the individual contribution limits by preventing parents 
from funneling contributions through their children, many of whom are 
simply too young to make such contributions knowingly.'' 148 Cong. Rec. 
S2145-2146 (daily ed. March 20, 2002).
    During the debate, BCRA's sponsors acknowledged that many 
individuals younger than 18 years old enthusiastically supported 
candidates and pointed out that they could continue to do so by 
volunteering on campaigns and expressing their views through speaking 
and writing. See 148 Cong. Rec. S2146 (daily ed. March 20, 2002).

[[Page 54370]]

1. 11 CFR 110.19 Contributions by Minors

    BCRA prohibits minors (individuals 17 years old and younger) from 
making a contribution to a candidate or a contribution or donation to a 
political party committee. See 2 U.S.C. 441k. The Commission is 
proposing to place the regulations that address this prohibition in a 
new section 11 CFR 110.19.
    Under current regulations, a child under 18 years of age may make 
contributions in accordance with the limits of the Act provided that 
the child voluntarily and willingly makes the decision to contribute, 
the funds, goods or services contributed are owned or controlled 
exclusively by the child, and the contribution is not made from the 
proceeds of a gift given to the child to make a contribution or is not 
in any way controlled by an individual other than the child. See 
current 11 CFR 110.1(i)(2). Consequently, the proposed rules would 
amend current 11 CFR 110.1(i)(2) to conform with BCRA. See below for 
discussion of the proposed conforming amendments.
    Proposed paragraph (a) of new 11 CFR 110.19 would address 
contributions by minors to candidates. That paragraph would state that 
an individual who is 17 years old or younger must not make a 
contribution to a candidate for Federal office. Proposed paragraph (a) 
would further clarify that a contribution to a Federal candidate 
includes a contribution to a candidate's principal campaign committee, 
to any other authorized committee of that candidate, or to any entity 
directly or indirectly established, financed, maintained or controlled 
by one or more Federal candidates.
    The Commission believes that prohibiting contributions by minors to 
entities directly or indirectly established, financed, maintained or 
controlled by a Federal candidate is within the scope of BCRA, but it 
seeks comment on this issue. The Commission also seeks comment on 
whether minors who are emancipated under State law should be exempt 
from the prohibition. A condition of emancipation under State law 
usually entails a showing that a minor manages his or her own financial 
affairs, which would lessen the likelihood that a parent would funnel 
contributions through the emancipated minor child. Finally, the 
Commission seeks comment on whether the regulations should make clear 
that the relevant time for determining whether a minor has made a 
prohibited contribution is the age of the minor at the time he or she 
makes a contribution, i.e., when the minor relinquishes control over 
the contribution. See 11 CFR 110.1(b)(6).
    Proposed Sec. 110.19(b) addresses contributions and donations made 
by minors to political party committees. Because BCRA specifically 
prohibits donations as well as contributions by minors to ``a committee 
of a political party,'' proposed paragraph (b) states that individuals 
17 years old or younger may not make contributions or donations to a 
national, State, district or local committee of a political party. 
Thus, as proposed, the regulations would interpret BCRA as prohibiting 
minors from making any donations whatsoever to non-Federal accounts of 
State, district and local party committees. To the extent that a non-
Federal account of a State or local party committee may contain Levin 
funds, i.e., funds raised under State law but limited under Federal law 
to $10,000 per contributor, to finance certain Federal election 
activity such as voter registration and get-out-the vote activities, 
prohibiting donations by minors to State, district and local party 
committees has a clear nexus to Federal elections. It should be noted 
that this interpretation may preempt certain State laws to the extent 
that States permit minors to donate to state and local political 
parties.
    The Commission seeks comment, however, as to whether a narrower 
construction of the prohibition on donations by minors to state, 
district, and local political party committees may be warranted. For 
example, the prohibition on donations by minors in 2 U.S.C. 441k could 
be interpreted to apply only to donations used to conduct activities 
that have some effect on Federal elections. Consequently, under this 
interpretation, a minor may make a donation only if the recipient 
state, district, or local party committee can show through a reasonable 
accounting method or by establishing a separate account that the 
donation is used exclusively for purposes that have no effect upon any 
Federal election to the extent permitted by State law. It is important 
to note, however, that a number of State laws treat contributions by 
minors as contributions by their parent(s) or guardian(s). See for 
example, Kan. Stat. Ann. 25-4153(c) and Okla. Stat. t. 74, 257:10-1-
2(a)(1) and (h)(2).
    Proposed 11 CFR 110.19(c) addresses contributions to other 
political committees, such as separate segregated funds and non-
connected committees. The proposed rule would prohibit an individual 
who is 17 years old or younger from making a contribution to any such 
political committee if the contribution is earmarked or otherwise 
directed to one or more Federal candidates or political committees or 
organizations covered in proposed paragraphs (a) and (b).
    Proposed 11 CFR 110.19(d) would make clear that minors are not 
prohibited from volunteering their services to Federal candidates, 
political party committees or other political committees. The exclusion 
of volunteer services is based on the statement made by Senator McCain 
in the BCRA Senate debate, as noted above, that Congress intended that 
minors could continue to participate in campaigns by volunteering.
    Proposed paragraph (e) would define an entity ``directly or 
indirectly established, financed, maintained, or controlled'' by a 
candidate for purposes of the prohibition on minors' contributions to 
candidates as one that meets the definition of ``directly or indirectly 
establish, finance, maintain or control'' at 11 CFR 300.2(c). For the 
definition, see Final Rules for ``Excessive and Prohibited 
Contributions: Non-Federal Funds or Soft Money,'' 67 FR 49063 (July 29, 
2002).

2. Conforming Amendments to 11 CFR 110.1(i)

    As discussed above, beginning on November 6, 2002, BCRA prohibits 
individuals who are 17 years old or younger from making contributions 
to Federal candidates and contributions or donations to political party 
committees. However, BCRA also provides that this prohibition will not 
apply with respect to runoff elections, recounts or election contests 
resulting from elections held prior to November 6, 2002. See 2 U.S.C. 
431 note. Consequently, the current regulation concerning contributions 
by minors at 11 CFR 110.1(i)(2) would be amended by adding new 
paragraph (i)(3) to clarify that the provisions of 11 CFR 110.1(i)(2) 
would continue to apply to contributions made by minors to authorized 
committees and political party committees in connection with runoff 
elections, recounts or election contests resulting from elections held 
prior to November 6, 2002. It would also clarify that contributions 
made by minors to authorized committees and political party committees 
for all other elections held after November 6, 2002 would be governed 
by proposed 11 CFR 110.19.
    Because 2 U.S.C. 441k specifically prohibits contributions by 
minors to candidates and political party committees rather than to 
political committees in general, the proposed rules contemplate that 
minors could

[[Page 54371]]

continue to make contributions to political committees other than 
authorized committees or political party committees in accordance with 
the requirements of 11 CFR 110.1(i)(2). Consequently, 11 CFR 
110.1(i)(2) would be amended to reflect this interpretation. The 
Commission seeks comment on whether 2 U.S.C. 441k could be interpreted 
to also prohibit contributions by minors to these other political 
committees.

Reattribution and Redesignation

    With BCRA's renewed focus on contribution limits, the Commission is 
considering updating and streamlining its rules for designating 
contributions for a particular election or attributing contributions to 
particular donors. Current 11 CFR 110.1 and 110.2 set forth the 
procedures for the redesignation or reattribution of excessive 
contributions. Section 110.1(b)(5) permits an excessive contribution to 
a candidate that is not designated in writing for a particular election 
to be designated for a different election, provided that a signed, 
written redesignation is obtained from the contributor within 60 days. 
See 11 CFR 110.1(b)(5)(i)(C) and 110.1(b)(5)(ii). Given the amount of 
resources the Commission and the regulated community have had to devote 
to authorized committees' failure to properly follow these procedures, 
the Commission seeks comment on several ways to address this problem. 
Although BCRA does not address the procedures for handling excessive 
contributions, the Commission seeks comment on the following possible 
changes to Secs. sections 110.1, 110.2 and 102.9 as a matter of 
administrative convenience and to better effectuate donor intent.
    One possible change to Sec. 110.1(b)(5) would be to presume that 
when a contributor makes an undesignated, excessive contribution to a 
candidate's authorized committee before a primary election, the 
contributor intends to contribute the excessive amount to the general 
election, provided that the total amount contributed does not exceed 
the limitations on contributions for both elections. If this 
presumption were allowed, the authorized committee would be permitted 
to treat the excessive amount of the contribution as a contribution 
made with respect to the general election without needing to obtain 
written permission from the contributor, or even to notify the 
contributor that such action had been taken. This approach, which is 
included in the proposed rules as Alternative 1-A in 
Sec. 110.1(b)(5)(ii)(B), would be designed to minimize the 
administrative burden on authorized committees when a contributor's 
intent could be reasonably inferred.
    Alternatively, or in conjunction with the presumption approach, the 
committee could be required to inform the contributor as to how the 
contribution had been designated, and that the contributor may request 
a refund. This approach is included in the proposed rules as 
Alternative 1-B in Sec. 110.1(b)(5)(ii)(B). As with the presumption 
approach, no confirmation from the contributor would be required. If 
the Commission were to adopt the notification approach, then 11 CFR 
110.1(l) would need to be amended to specify the documentation required 
to be retained under such an approach.
    The Commission seeks comment on how this notification approach 
compares to or fits with the presumption approach. Would the benefit of 
requiring notification of contributors outweigh the administrative 
burden to authorized committees of providing and retaining records of 
such notification? What methods of notification (e.g., mail, electronic 
mail or oral communication accompanied by a contemporaneous signed 
record of the conversation) should be permitted if this notification 
approach is adopted? Should notification be required within thirty days 
of the treasurer's receipt of the contribution? If a contributor 
requests a refund, should the treasurer be required to make the refund 
within thirty days of receipt of the request?
    The Commission specifically seeks comment on the merits of applying 
the presumption or notification approach described above to an 
undesignated, excessive contribution received before a primary 
election. In addition, the Commission seeks comment on whether it 
should allow the presumption or notification approach for other types 
of redesignations, or for reattributions. See 11 CFR 110.1(b)(5)(i), 
110.1(k) and 110.2(b)(5)(i). For example, should the Commission permit 
backward-looking presumptions, so that excessive general election 
contributions received after a primary election may be designated by an 
authorized committee to pay off primary debt? Alternatively, should it 
be presumed that a contributor intended to contribute an excessive 
amount beyond a current election cycle? Are backward-looking 
presumptions or presumptions beyond a current election cycle consistent 
with what contributors can be reasonably expected to have intended? 
More generally, if the Commission adopts the presumption or 
notification approach for certain contributions in Sec. 110.1, should 
the Commission make conforming changes to the requirements for 
contributions by multicandidate political committees in Sec. 110.2? Are 
there circumstances where the presumption or notification approach 
would be appropriate for the reattribution of a contribution to a 
different donor, such as when a contribution made by written instrument 
is imprinted with the names of more than one account holder? 
Alternatives 2-A and 2-B in proposed 11 CFR 110.1(k)(3)(ii)(B) sets 
forth how the presumption and notification approaches could be applied 
under those circumstances. If the Commission adopts the presumption or 
notification approach for certain types of redesignations or 
reattributions, conforming amendments will be required in Secs. 110.1 
and 110.2.
    Whether or not the Commission decides to allow the presumption or 
notification approach for certain types of redesignations or 
reattributions, there will remain circumstances where redesignation or 
reattribution might not be appropriate without some form of 
authorization from the contributor. See, e.g., 11 CFR 
110.1(b)(5)(i)(B). Under current Secs. 110.1 and 110.2, authorization 
from the contributor can only be obtained through written authorization 
signed by the contributor. The Commission seeks comment on whether it 
should eliminate the signature requirement for all redesignations and 
reattributions under 11 CFR 110.1 and 110.2, and instead permit 
authorization from the contributor by email or through oral 
communications with the contributor when there is a contemporaneous 
signed record of the conversation, as is permitted under the 
Commission's best efforts regulations (see 11 CFR 104.7(b)(2)). 
Eliminating the signature requirement or permitting committees to 
obtain authorization orally or by e-mail for redesignations and 
reattributions would require amendments to Secs. 110.1 and 110.2.
    In addition to concerns about balancing administrative burdens with 
adequate protection of contributors' intent, the Commission has 
concerns about some committees' illegal use of contributions received 
for the general election during the primary election, despite the 
existing requirement that authorized committees distinguish 
contributions received for the primary election and contributions 
received for the general election. See 11 CFR 102.9(e). In order to 
reduce the illegal use of funds during the primary election through the 
use of contributions intended for the general election, the Commission 
seeks comment on whether

[[Page 54372]]

all committees should be required to segregate contributions for the 
primary election from contributions for the general election. This 
could be done by tightening the requirements currently set forth in 11 
CFR 102.9(e) so that separate accounts for primary and general election 
contributions would be mandatory, not optional.
    Recordkeeping also plays a crucial role in ensuring compliance with 
the Act's contribution limitations. The Commission seeks comment on 
whether the recordkeeping duties set forth in 11 CFR 102.9 should 
explicitly require political committees to retain certain records of 
all contributions over $50. Should political committees be required to 
keep copies of contribution checks, either as photocopies or as digital 
images? Should committees be required to keep records of contributions 
made by credit card or debit card, such as credit card slips, 
processing batch reports, or other records created by the committee or 
provided by the credit or debit card processor? Many committees keep 
such records now, so it is not anticipated that it would create a 
significant additional administrative burden if such a recordkeeping 
requirement were adopted. Finally, the Commission seeks comment on 
whether 11 CFR 102.9 should include an explicit requirement that 
political committees maintain copies of all written solicitations.

Prohibition on Contributions, Donations, Expenditures and 
Disbursements by Foreign Nationals (11 CFR 110.20)

    As indicated by the title of section 303 of BCRA, ``Strengthening 
Foreign Money Ban,'' Congress amended 2 U.S.C. 441e to further 
delineate and expand the ban on campaign contributions and donations by 
foreign nationals. BCRA expressly applies the ban to contributions and 
donations solicited or made directly or indirectly to candidates for 
State and local as well as Federal office. 2 U.S.C. 441e(a)(1)(A) and 
(a)(2). Furthermore, the prohibition is expressly applied to 
contributions and donations to committees of political parties and is 
extended to disbursements for electioneering communications as well as 
to expenditures and independent expenditures. 2 U.S.C. 441e(a)(1)(B) 
and (C).
    Consequently, the Commission proposes to amend 11 CFR part 110 to 
implement the revised statutory provision. The proposed rules would 
remove and reserve 11 CFR 110.4(a), the current regulation that 
addresses foreign nationals. In its place, new Sec. 110.20 would be 
created to describe the prohibitions on contributions, donations, 
expenditures, independent expenditures, and disbursements by foreign 
nationals. This new section would also incorporate the provision in 2 
U.S.C. 441e(a)(2) which prohibits persons from soliciting, accepting, 
or receiving contributions and donations from foreign nationals.

1. ``Indirectly'' versus ``Through Any Other Person''

    BCRA bans foreign national contributions and donations made 
``directly or indirectly.'' Former 2 U.S.C. 441e(a) banned foreign 
national contributions made directly ``or through any other person.'' 
It is unclear what Congress intended in changing the terminology. While 
both phrases would address contributions made through conduits, the 
term ``indirectly'' could have a broader scope because the general 
purpose of section 303 of BCRA is to strengthen the ban on 
contributions and donations by foreign nationals. Comments are 
solicited as to whether ``indirectly'' should be construed to have a 
broader meaning than ``through any other person'' and if so, whether 
the rules should explicitly reflect this interpretation by defining 
``indirectly.'' Please note that the proposed rule does not define 
``indirectly.''
    Given the above-cited statutory provisions, proposed paragraph 
110.20(a) would explicitly state that foreign nationals shall not, 
directly or indirectly, make contributions or donations in connection 
with any election for Federal, State, or local office. Because BCRA 
retains the provision on express or implied promise, proposed paragraph 
(a) would also include that language. Additionally, proposed paragraph 
(a) would define ``election'' in accordance with 11 CFR 100.2 and 
proposed 11 CFR 110.20(j). While current Sec. 100.2 addresses Federal 
elections, proposed paragraph (j) would define ``election'' generically 
so that it would include State and local elections.
    Comment is also sought on whether ``indirectly'' should cover a 
foreign controlled U.S. corporation, including a U.S. subsidiary of a 
foreign corporation, when such corporation seeks to make (1) non-
federal donations of corporate treasury funds, or (2) federal 
contributions through a political action committee. Specifically, the 
Commission seeks comment on whether BCRA's new statutory language 
prohibits foreign controlled U.S. corporations, including a U.S. 
subsidiary of a foreign corporation, from making corporate donations, 
or from making federal contributions from their PACs, or both.

2. Impact of the Addition of ``Donation'' in the Foreign National Ban

    In BCRA, Congress added the ``donation'' of funds by foreign 
nationals to its prior ban on ``contributions'' by foreign nationals. 
In 2000, the Commission included in its legislative recommendations to 
Congress a proposal that 2 U.S.C. 441e be amended to clarify that the 
statutory prohibition on foreign national contributions extends to 
State and local elections. The Commission noted that this could be 
accomplished by changing ``contribution'' to ``donation.''
    In BCRA, Congress chose to retain ``contribution'' and to add 
``donation'' as a prohibited activity, while also explicitly listing 
``a Federal, State, or local election'' as the elections in connection 
with which such contributions and donations must not be made. By means 
of this two-fold approach, Congress left no doubt as to its intention 
to prohibit foreign national support of candidates and their committees 
for all Federal, State, and local elections.
    According to the section-by-section analysis of BCRA by Senator 
Feingold, the revision to 2 U.S.C. 441e ``prohibits foreign nationals 
from making any contribution to a committee of a political party or any 
contribution in connection with federal, state or local elections, 
including any electioneering communications. This clarifies that the 
ban on contributions [by] foreign nationals applies to soft money 
donations.'' (Statement of Sen. Feingold, 148 Cong. Rec. S1991-1997 
(daily ed. Mar. 18, 20020)).
    While final rules entitled ``Prohibited and Excessive 
Contributions: Non-Federal Funds or Soft Money'' define ``donation'' at 
11 CFR 300.2(e) for purposes of 11 CFR part 300, the proposed rules do 
not define ``donation'' for purposes of this rulemaking. The Commission 
seeks comments on whether it should include a definition of 
``donation'' and, if so, should the definition be limited to proposed 
11 CFR 110.20 or 11 CFR part 110, or should it be included in 11 CFR 
part 100 and have general applicability to all of the Commission's 
regulations.

3. Effects on Committees of Political Parties

    BCRA also expressly extends the prohibition on foreign national 
contributions and donations to those made to committees of political 
parties, with foreign nationals prohibited from making any donations to 
such

[[Page 54373]]

committees. 2 U.S.C. 441e(a)(1)(B). The particular committees covered 
would include the national party committees, the national congressional 
campaign committees, as well as all State, district, local, and 
subordinate committees. In light of the addition of ``donation'' to the 
statutory language, it appears that the prohibition on foreign national 
funds would extend to all political party organizations, whether or not 
they are political committees under the Act. In addition, because many 
party committee activities affect Federal, State, and local elections, 
this interpretation is supported by, and would reinforce, the 
prohibition in 2 U.S.C. 441e(a)(1)(A) on foreign national contributions 
and donations in connection with a Federal, State, or local election. 
Consequently, proposed 11 CFR 110.20(b) would adopt this 
interpretation. Comments are requested on whether the proposed rules 
should adopt a different interpretation.

4. Expenditures, Independent Expenditures, and Disbursements for 
Electioneering Communications

    BCRA prohibits a foreign national from making ``an expenditure, 
independent expenditure, or disbursement for an electioneering 
communication.'' \4\ 2 U.S.C. 441e(a)(1)(C). This provision, read 
alone, could be construed so that ``expenditure,'' ``independent 
expenditure,'' and ``disbursement'' modify ``for an electioneering 
communication,'' therefore narrowing the scope of ``expenditure'' and 
``independent expenditure'' to include only ``electioneering 
communications.'' BCRA, however, expressly exempts from the definition 
of ``electioneering communication'' ``a communication which constitutes 
an expenditure or an independent expenditure under this Act. * * *'' 2 
U.S.C. 434(f)(3)(B)(ii). Thus, statutory construction would require 
that the phrase ``for an electioneering communication'' at 2 U.S.C. 
441e(a)(1)(C) is read as modified only by the term ``disbursement,'' 
with the prohibitions against an expenditure'' or an ``independent 
expenditure'' being general in scope, i.e., not limited to 
electioneering communications.
---------------------------------------------------------------------------

    \4\ BCRA defines ``electioneering communication'' as a 
``broadcast, cable, or satellite communication'' that ``refers to a 
clearly identified candidate for Federal office,'' that is made 
within particular time frames, and that is targeted to the relevant 
electorate if it refers to a candidate other than those for the 
office of President or Vice-President. 2 U.S.C. 434(f)(3)(A)(i)(I). 
For a discussion of electioneering communications, see the Notice of 
Proposed Rulemaking entitled ``Electioneering Communication,'' 67 FR 
51131 (August 7, 2002).
---------------------------------------------------------------------------

    Consequently, proposed 11 CFR 110.20(d) would prohibit 
expenditures, independent expenditures, and disbursements \5\ by 
foreign nationals for activities in connection with Federal, State, or 
local elections. Proposed paragraph (e) would specifically prohibit 
disbursements for electioneering communications by foreign nationals.
---------------------------------------------------------------------------

    \5\ See below for discussion on disbursements.
---------------------------------------------------------------------------

5. Other Disbursements

    BCRA expressly prohibits all expenditures and independent 
expenditures by foreign nationals, and also prohibits all disbursements 
by foreign nationals for electioneering communications. Section 
431(9)(A)(1) of FECA defines ``expenditure'' as ``any purchase, 
payment, * * * or anything of value made for the purpose of influencing 
any election for Federal office,'' and 2 U.S.C. 431(17) defines 
``independent expenditure'' as ``an expenditure by a person expressly 
advocating the election or defeat of a clearly defined candidate which 
is made without cooperation or consultation with any candidate * * * 
.'' Thus, the terms ``expenditure'' and ``independent expenditure'' 
apply only to activities related to Federal elections. In contrast, 
``disbursement,'' a term used in both FECA and BCRA, but not defined in 
the statutes, is now defined in new 11 CFR 300.2(d) as ``any purchase 
or payment made by (1) a political committee; or (2) any other person, 
including an organization that is not a political committee, that is 
subject to the Act.'' This definition of ``disbursement'' covers all 
payments including ``expenditures,'' ``independent expenditures,'' and 
those made in connection with non-Federal elections.
    However, BCRA does not contain an express prohibition against 
foreign national disbursements for activities other than electioneering 
communications. This omission leaves in question the status of 
disbursements by foreign nationals for activities in connection with 
State and local elections that are by definition not ``expenditures'' 
or ``independent expenditures'' because they are not made to influence 
Federal elections. How the Commission addressed a similar issue in the 
past, however, provides guidance on this question.
    Former 2 U.S.C. 441e contained no express prohibition against 
expenditures by foreign nationals. In response to this statutory 
silence, the Commission in 1989 revised 11 CFR 110.4(a) to state that 
foreign nationals were prohibited from making expenditures as well as 
contributions. The Explanation and Justification for that amendment 
stated: ``The FECA generally prohibits expenditures when it prohibits 
contributions by a specific category [of] persons, thereby ensuring 
that the person cannot accomplish indirectly what they are prohibited 
from doing directly.'' 54 FR 8581 (Nov. 24, 1989). The Explanation and 
Justification continued: ``Nothing in Section 441e's legislative 
history suggests that Congress intended to deviate from the FECA's 
general pattern of treating contributions and expenditures in parallel 
fashion.'' Id.
    As discussed above, BCRA adds ``donations'' to the activities 
prohibited to foreign nationals, this being one way in which the reach 
of the statute is extended to State and local elections to which the 
term ``contributions'' does not apply. As was the case earlier with the 
FECA, there is nothing in BCRA that would indicate an intent on the 
part of Congress to treat disbursements for State or local elections 
any differently than it now treats expenditures for Federal elections. 
Therefore, the Commission in the regulations proposes to treat 
``donations'' and ``disbursements'' in the same parallel fashion as it 
has treated ``contributions'' and ``expenditures'' in the past.
    Consequently, proposed 11 CFR 110.20(d) would also prohibit 
disbursements by foreign nationals whether or not they are made for 
electioneering communications. Comments are sought as to whether a 
definition of ``disbursement'' using language similar to that in 11 CFR 
300.2(d) should be included in 11 CFR 110.20.

6. Building Funds

    The FECA prohibits foreign nationals from making any contribution 
or donation to national party committees, including donations for the 
purchase or construction of an office building. See 2 U.S.C. 441e. In 
addition, new 11 CFR 300.35(a) explicitly provides that the 
prohibitions in BCRA against contributions and donations by foreign 
nationals do not permit party committees to spend funds contributed or 
donated by foreign nationals for the purchase or construction of State 
or local party committee office buildings. Final Rule and Explanation 
and Justification, 67 FR 49101, 49127 (July 29, 2002). The Explanation 
and Justification for 11 CFR 300.35 indicates that this prohibition on 
foreign national funding also extends to in-kind contributions or 
donations. Consistent with new 11 CFR 300.35(a), the Commission 
proposes to add paragraph

[[Page 54374]]

(f) to 11 CFR 110.20 to explicitly state that foreign nationals are 
prohibited from making contributions or donations to committees of a 
political party for the construction or purchase of any office 
building.

7. Soliciting, Accepting, or Receiving Contributions or Donations from 
Foreign Nationals; Assisting Foreign Nationals to Make Contributions or 
Donations

    BCRA prohibits any person from soliciting, accepting, or receiving 
from a foreign national a contribution or donation made in connection 
with a Federal, State, or local election, or made to a party committee. 
2 U.S.C. 441e(a)(2). However, both the former and the current foreign 
national prohibitions in 2 U.S.C. 441e are silent as to the degree of 
knowledge, if any, that such person should be shown to have had 
regarding the foreign national status of the contributor or donor 
before the person will be deemed to have violated the statute. In 
contrast, other parts of FECA and BCRA expressly provide that knowledge 
is an element of the violation.\6\
---------------------------------------------------------------------------

    \6\ ``No candidate or political committee shall knowingly accept 
any contribution or make any expenditure in violation of the 
provisions of this section * * * .'' 2 U.S.C. 441a(f) (emphasis 
added).
---------------------------------------------------------------------------

    The Commission in recent years has addressed the issue of required 
knowledge in a number of complex enforcement matters arising under 
former 2 U.S.C. 441e(a). In these matters, the Commission has 
confronted the questions of whether the statute or the First Amendment 
requires a person to have had knowledge of the contributor or donor's 
foreign national status in order to have been in violation of the 
foreign-national prohibition, and, if so, what degree of knowledge was 
required. Should, for example, actual knowledge at the time of a 
solicitation or receipt have been a prerequisite for a violation, or 
should the person have been required to follow up on certain factors 
that would have raised the suspicions of an objective observer?
    Whether the foreign national prohibition as amended by BCRA 
contains a knowledge requirement is an important issue that may affect 
the implementation of this prohibition. One alternative is to assume, 
given the silence in both FECA and BCRA on this question, that Congress 
intended this to be a strict liability statute. The fact that Congress 
has used ``knowingly'' in other provisions of FECA and BCRA but did not 
include this standard with regard to the solicitation, acceptance or 
receipt of foreign national contributions and donations could be 
construed as intent not to require knowledge in this regard. However, 
an exception to the plain meaning rule is that it is not applied when 
an injustice would result. Sutherland Statutory Construction 47:25. 
Based upon Commission enforcement experience with political committees, 
and, in particular, with the involvement of volunteers in the 
solicitation and receipt of contributions and donation, a knowledge 
requirement, and related standards for the levels of knowledge to be 
required, may produce a less harsh result than a strict liability 
standard. Proposed 11 CFR 110.20(g), discussed below, would include a 
knowledge requirement with three different degrees of knowledge. 
Comments are sought regarding the addition of a knowledge requirement 
and of standards to be applied in determining whether such knowledge 
existed in a particular situation.
    Additionally, the foreign national prohibition raises issues 
concerning the liability of persons who knowingly assist foreign 
nationals in making contributions or donations. Recently the Commission 
has addressed situations in which the liability of someone who served 
as a conduit or intermediary for a foreign national contribution was in 
question because he or she had not technically solicited, accepted or 
received the contribution at issue. Section 441e of FECA does not 
explicitly address those who assist others to violate its prohibition 
on foreign national contributions and donations. However, the 
Commission has taken the position in enforcement matters that, because 
2 U.S.C. 441e prohibits foreign nationals from making contributions 
directly or through another person, and because the statute also 
prohibits persons from soliciting, accepting or receiving such 
contributions or donations, even a U.S. citizen's use of money acquired 
from a foreign national is prohibited, if that money was acquired for 
the purpose of enabling the foreign national to make political 
contributions.
    Accordingly, proposed 11 CFR 110.20(g)(1) would prohibit any person 
from knowingly soliciting, accepting or receiving a contribution or 
donation from a foreign national. Proposed 11 CFR 110.20(g)(2) would 
prohibit any person from knowingly acting as a conduit or intermediary 
for receipt of a contribution or donation from a foreign national. 
Proposed 11 CFR 110.20(g)(3) would prohibit any person from knowingly 
providing substantial assistance with regard to the making of a 
contribution or donation by a foreign national.
    Proposed paragraph (g)(4) would set forth the standards to be 
applied in determining whether the knowledge required by proposed 
paragraphs (g)(1), (2), and (3) exists in particular situations. 
Proposed paragraph (g)(4)(i) through (iii) would provide three 
alternative ways, any one of which would establish that a person has 
knowingly solicited, accepted or received a contribution or donation 
from a foreign national, or that a person knowingly acted as a conduit 
or intermediary for a foreign national to make a contribution or 
donation.
    The first knowledge standard at proposed paragraph (g)(4)(i) would 
be that of actual knowledge. The second standard at proposed paragraph 
(g)(4)(ii) would require awareness on the part of the person 
soliciting, accepting or receiving a contribution or donation of 
certain facts that would lead a reasonable person to conclude that 
there is a substantial probability that the contribution or donation 
has come from a foreign source. This second standard would be in effect 
a ``reason to know'' standard, and is different from a ``should have 
known'' standard. Restatement (Second) of Agency, sec. 9, cmts. d and e 
(1958). The third standard at proposed paragraph (g)(4)(iii) would 
address situations in which the person soliciting, accepting or 
receiving a contribution is or becomes aware of facts that should have 
led any reasonable person to inquire about the status of the 
contributor or donor; however, the solicitor or recipient failed to so 
inquire. This third alternative would be in effect a willful blindness 
standard covering situations in which a known fact may not equal a 
substantial probability of illegality but at least should prompt an 
inquiry. Proposed paragraph (g)(5) would set out several categories of 
facts that are intended to be illustrative of the types of information 
that should lead a recipient to question the origins of a contribution 
or donation under proposed paragraph (g)(4)(ii) or (iii).
    Comments are requested as to whether the standards or levels of 
knowledge at proposed paragraph (g)(4) are appropriate and whether 
there are other potential facts that should be added to those at 
proposed paragraph (g)(5). Further, comments are requested as to 
whether the regulation should expressly require that recipient 
candidates and committees actively seek information about the 
nationality of contributors and donors whenever one of the factors 
listed is at issue.
    Current Commission regulations provide that political committee 
treasurers shall examine all

[[Page 54375]]

contributions received for evidence of illegality. See 11 CFR 103.3(b). 
Contributions that ``present genuine questions'' as to whether they 
were made by corporations, labor organizations, foreign nationals, or 
other prohibited sources may, within 10 days of receipt, either be 
deposited or returned to the contributor. Id. If any such contribution 
is deposited, the treasurer has an affirmative duty to investigate the 
contribution and use best efforts to determine the legality of the 
contribution. 11 CFR 103.3(b)(1). If, despite such due diligence, the 
treasurer is unable to determine the legality of the contribution 
within 30 days, the treasurer is required to refund the contribution to 
the contributor. Id.
    If a treasurer of a political committee later discovers that a 
contribution is illegal based on new information that was not available 
at the time the contribution was received and deposited, the treasurer 
must refund the contribution to the contributor within 30 days of the 
date in which the illegality is discovered. 11 CFR 103.3(b)(2). This 
provision applies ``to contributions from foreign nationals or Federal 
contractors when there is no evidence of illegality on the face of the 
contributions themselves.'' Explanation and Justification, 52 FR 760, 
768-69 (Jan. 9, 1987).
    In light of BCRA's new statutory provisions regarding the foreign-
national ban, the Commission seeks comment on when political committees 
and their treasurers have an affirmative duty to investigate 
contributions and donations to confirm that they do not come from 
foreign sources. Specifically, the Commission seeks comment on whether 
such an affirmative duty is limited to circumstances when contributions 
and donations ``present genuine questions'' as to whether they are 
lawful, as outlined in 11 CFR 103.3. Are there additional circumstances 
when such an affirmative duty arises? Are the circumstances limited to 
when there is ``evidence of illegality on the face of the contributions 
themselves'' (Explanation and Justification, 52 FR at 768-69) or when 
the political committee otherwise has specific, credible information at 
the time of the contribution indicating that the contribution may be 
from a foreign source? See proposed 11 CFR 110.20(g)(5) (identifying 
specific factual circumstances). Should the Commission consider 
creating any safe harbors within which political committees are deemed 
to have satisfied whatever affirmative duty exists to investigate 
contributions or donations to confirm that they do not come from 
foreign sources? One possible safe harbor could be for political 
committees who acquire proof of U.S. citizenship (such as copies of 
U.S. passports) for donors who reside outside the United States or who 
list a foreign address or who make a contribution or donation through a 
foreign bank. If a political committee later discovers that a 
contribution or donation is illegal based on new information that was 
not available at the time the contribution or donation was received and 
deposited, is the political committee immunized from liability under 
section 303 of BCRA, provided that the political committee refunds the 
contribution or donation within 30 days of the date in which the 
illegality is discovered pursuant to 11 CFR 103.3(b)(2)? Comments are 
sought on all of these issues.
    In addition, comments are sought as to whether the Commission 
should incorporate into proposed Sec. 110.20(g) the definition of 
``solicit'' in 11 CFR 300.2(m),\7\ whether it should leave the term 
undefined, or whether it should give the term a more expansive or a 
narrower reading in this context.
---------------------------------------------------------------------------

    \7\ The definition is part of the recently adopted final rules 
entitled ''Prohibited and Excessive Contributions: Non-Federal Funds 
or Soft Money,'' 67 FR 49063 (July 29, 2002).
---------------------------------------------------------------------------

    Proposed 11 CFR 110.20(h) would retain the current prohibition at 
11 CFR 110.4(a)(3) on participation by foreign nationals in the 
decision-making process of any person, including entities such as 
corporations, labor organizations or political committees, related to 
Federal and non-Federal election-related activities. Foreign nationals 
would thus continue to be prohibited from taking part in decisions 
about contributions to any candidates or committees and about 
expenditures made in support of, or in opposition to, such candidates 
or committees. Foreign nationals would also continue to be prohibited 
from involvement in the direct management of a political committee, 
including a separate segregated fund and a non-connected committee.

8. Definitions

    Proposed new 11 CFR 110.20(i) would retain the definition of 
``foreign national'' currently found at 11 CFR 110.4(a)(4). Proposed 11 
CFR 110.20(i)(1) and (2) would include the current exemptions for 
certain foreign principals as provided in 22 U.S.C. 611(b) and for 
permanent resident aliens as defined in 8 U.S.C. 1101(a)(20). At 
proposed 11 CFR 110.20(i)(3), however, the definition of ``foreign 
national'' would be narrowed by the exclusion of U.S. nationals as they 
are in turn defined in 8 U.S.C. 1101(a)(22).\8\
---------------------------------------------------------------------------

    \8\ ``National of the United States'' is defined as ``(A) a 
citizen of the United States, or (B) a person who, though not a 
citizen of the United States, owes permanent allegiance to the 
United States.'' 8 U.S.C. 1101(a)(22).
---------------------------------------------------------------------------

    Proposed new 11 CFR 110.20(j) would define ``election'' for 
purposes of this section. Although ``election'' is defined at 11 CFR 
100.2, the definition at that section is stated expressly in terms of 
Federal elections. New 11 CFR 110.20(j) would extend the overall 
definition to include elections at all political levels.

9. Donations to Presidential Inaugural Committees

    Section 308 of BCRA amends section 510 of Title 36, United States 
Code, to prohibit Presidential inaugural committees from accepting 
donations from foreign nationals as defined in 2 U.S.C. 441e(b). 36 
U.S.C. 510(c). Although section 308 does not amend Title 2, United 
States Code, its prohibition on donations by foreign nationals to 
Presidential inaugural committees, including its reference to the 
definition of ``foreign national'' in the Act, fits naturally within 11 
CFR 110.20. Therefore, proposed new 11 CFR 110.20(c) has been created 
for this purpose.
    Section 308 does not include a prohibition against the making of 
donations to Presidential inaugural committees by foreign nationals. 
Comments are sought as to whether the regulations should include a 
prohibition in this regard.

Conforming Amendment to 11 CFR 110.9

    Current 11 CFR 110.9, entitled ``Miscellaneous provisions,'' 
includes four paragraphs that address: (a) Violations of the 
contribution limitations; (b) fraudulent misrepresentations; (c) price 
index increase; and (d) voting age population. Because this rulemaking 
and other BCRA rulemaking projects \9\ would amend and move the 
provisions on fraudulent misrepresentation, the price index increase, 
and voting age population, only paragraph (a) of Sec. 110.9, addressing 
violations of the contribution limitations, would remain. Therefore, 
the proposed rules would amend Sec. 110.9 so that it contains only the 
provisions of paragraph (a) and the title of Sec. 110.9 would be 
amended to

[[Page 54376]]

``Violations of limitations'' to reflect that change.
---------------------------------------------------------------------------

    \9\ The BCRA rulemaking project entitled ``Other Provisions'' 
will address the fraudulent misrepresentation provisions and the 
BCRA rulemaking project entitled ``Coordination and Independent 
Expenditures'' will address the voting age population provisions.
---------------------------------------------------------------------------

    The proposed rules would also add the word ``knowingly'' in two 
places pertaining to the acceptance of contributions in violation of 
the limitations and prohibitions set forth in 11 CFR part 110. This 
revision would better reflect the knowledge requirement in 2 U.S.C. 
441a(f) and 441f.

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

    The Commission certifies that the attached proposed rules, if 
promulgated, will not have a significant economic impact on a 
substantial number of small entities. The basis of this certification 
is that the national, State, and local party committees of the two 
major political parties are not small entities under 5 U.S.C. 601 
because they are not small businesses, small organizations, or small 
governmental jurisdictions.
    Minors and most of foreign nationals are individuals, and 
therefore, not small entities. Furthermore, the proposed rules, which 
are based on statutory language, clarify and describe in further detail 
the already existing ban on contributions by foreign nationals. 
Additionally, to the extent that there may be foreign nationals that 
may fall within the definition of ``small entities,'' their numbers are 
not substantial, particularly the number that would make a donation, 
expenditure, independent expenditure, or disbursement in connection 
with a Federal, State, or local election.
    In addition, the small entities to which the rules would apply 
would not be unduly burdened by the proposed increased contribution 
levels, which would give such small entities more latitude in the 
amount they contribute. The increase in contribution limits for 
individuals and national party committees would not create a burden for 
them even if they were small entities.

List of Subjects in 11 CFR Part 110

    Campaign funds, Political committees and parties.
    For 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 110--CONTRIBUTION AND EXPENDITURE LIMITATIONS AND PROHIBITIONS

    1. The authority citation for part 110 would be revised to read as 
follows:

    Authority: 2 U.S.C. 431(8), 431(9), 432(c)(2), 437d(a)(8), 
438(a)(8), 441a, 441b, 441d, 441e, 441f, 441g, 441h, and 441k.
    2. Section 110.1 would be amended by revising paragraphs (a), 
(b)(1), (b)(5)(ii), (c)(1), (i), and (k)(3)(ii) to read as follows:


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

    (a) Scope. This section applies to all contributions made by any 
persons as defined in 11 CFR 110.10, except multicandidate political 
committees as defined in 11 CFR 110.5(e)(3) or entities and individuals 
prohibited from making contributions under 11 CFR 110.19 and 110.20 and 
11 CFR parts 114 and 115.
    (b) Contributions to candidates; designations; and redesignations. 
(1) No person shall make contributions to any candidate, his or her 
authorized political committees or agents with respect to any election 
for Federal office that, in the aggregate, exceed $2,000.
    (i) The limitation in the introductory text of paragraph (b)(1) of 
this section shall be increased by the percent difference in the price 
index in accordance with 11 CFR 110.17.
    (ii) The increased limitation shall be in effect for the 2-year 
period beginning on the first day following the date of the last 
general election in the year preceding the year in which the amount is 
increased and ending on the date of the next general election. For 
example, an increase in the limitation made in January 2005 is 
effective from November 3, 2004 to November 7, 2006.
    (iii) In every odd numbered year, the Commission will publish in 
the Federal Register the amount of the contribution limit in effect and 
place such information on the Commission's Web site.
* * * * *
    (5) * * *
    (ii) (A) A contribution shall be considered to be redesignated for 
another election if--
    (1) The treasurer of the recipient authorized political committee 
requests that the contributor provide a written redesignation of the 
contribution and informs the contributor that the contributor may 
request the refund of the contribution as an alternative to providing a 
written redesignation; and
    (2) Within sixty days from the date of the treasurer's receipt of 
the contribution, the contributor provides the treasurer with a written 
redesignation of the contribution for another election, which is signed 
by the contributor.

Alternative 1-A

    (B) Notwithstanding paragraph (b)(5)(ii)(A) of this section or any 
other provision of this section, the treasurer of the recipient 
authorized political committee may treat all or part of the amount of 
the contribution that exceeds the contribution limits in paragraph 
(b)(1) of this section as made with respect to the general election, 
provided that:
    (1) The contribution was made before the primary election;
    (2) The contribution was not designated for a particular election;
    (3) The contribution would exceed the limitation on contributions 
set forth in paragraph (b)(1) of this section if it were treated as a 
contribution made for the primary election; and
    (4) Such redesignation would not cause the contributor to exceed 
any of the limitations on contributions set forth in paragraph (b)(1) 
of this section.

Alternative 1-B

    (B) Notwithstanding paragraph (b)(5)(ii)(A) of this section or any 
other provision of this section, the treasurer of the recipient 
authorized political committee may treat all or part of the amount of 
the contribution that exceeds the contribution limits in paragraph 
(b)(1) of this section as made with respect to the general election, 
provided that:
    (1) The contribution was made before the primary election;
    (2) The contribution was not designated for a particular election;
    (3) The contribution would exceed the limitation on contributions 
set forth in paragraph (b)(1) of this section if it were treated as a 
contribution made for the primary election;
    (4) Such redesignation would not cause the contributor to exceed 
any of the limitations on contributions set forth in paragraph (b)(1) 
of this section;
    (5) The treasurer of the recipient authorized political committee 
notifies the contributor of how the contribution was redesignated and 
that the contributor may request a refund of the contribution; and
    (6) Within thirty days from the date of the treasurer's receipt of 
the contribution, the treasurer shall provide notification required in 
paragraph (b)(5)(ii)(B)(5) of this section to the contributor in 
writing; by electronic mail; or through oral communication with the 
contributor, provided that the treasurer makes a contemporaneous, 
signed record of the conversation.
* * * * *
    (c) Contributions to political party committees. (1) No person 
shall make contributions to the political committees established and 
maintained by a national political party in any calendar year that in 
the aggregate exceed $25,000.

[[Page 54377]]

    (i) The limitation in paragraph (c)(1) of this section shall be 
increased by the percent difference in the price index in accordance 
with 11 CFR 110.17.
    (ii) The increased limitation shall be in effect for the 2-year 
period beginning on the first day following the date of the last 
general election in the year preceding the year in which the amount is 
increased and ending on the date of the next general election. For 
example, an increase in the limitation made in January 2005 is 
effective from November 3, 2004 to November 7, 2006.
    (iii) In every odd numbered year, the Commission will publish in 
the Federal Register the amount of the contribution limit in effect and 
place such information on the Commission's web site.
* * * * *
    (i) Contributions by spouses and minors. (1) The limitations on 
contributions of this section shall apply separately to contributions 
made by each spouse even if only one spouse has income.
    (2) Minor children (children under 18 years of age) may make 
contributions to any political committee, other than an authorized 
committee or a political party committee, which in the aggregate do not 
exceed the limitations on contributions of this section, if--
    (i) The decision to contribute is made knowingly and voluntarily by 
the minor child;
    (ii) The funds, goods, or services contributed are owned or 
controlled exclusively by the minor child, such as income earned by the 
child, the proceeds of a trust for which the child is the beneficiary, 
or a savings account opened and maintained exclusively in the child's 
name; and
    (iii) The contribution is not made from the proceeds of a gift, the 
purpose of which was to provide funds to be contributed, or is not in 
any other way controlled by another individual.
    (3) Paragraph (i)(2) of this section will apply to contributions 
made by minor children to authorized committees and political party 
committees for runoff elections, recounts or election contests 
resulting from elections held prior to November 6, 2002. For all other 
elections held after November 6, 2002, contributions by minor children 
to authorized committees and political party committees are prohibited. 
See 11 CFR 110.19.
* * * * *
    (k) * * *
    (3) * * *
    (ii) (A) A contribution shall be considered to be reattributed to 
another contributor if--
    (1) The treasurer of the recipient authorized political committee 
asks the contributor whether the contribution is intended to be a joint 
contribution by more than one person, and informs the contributor that 
he or she may request the return of the excessive portion of the 
contribution if it is not intended to be a joint contribution; and
    (2) Within sixty days from the date of the treasurer's receipt of 
the contribution, the contributor provides the treasurer with a written 
reattribution of the contribution, which is signed by each contributor, 
and which indicates the amount to be attributed to each contributor if 
equal attribution is not intended.

Alternative 2-A

    (B) Notwithstanding paragraph (k)(3)(ii)(A) of this section or any 
other provision of this section, a contribution described in paragraph 
(k)(3)(i) of this section that was made by a written instrument that is 
imprinted with the names of more than one account holder may be 
apportioned equally between the account holders, unless a different 
instruction is provided by the account holder(s) on the instrument or 
in a separate writing, provided that such apportionment would not cause 
a contributor to exceed any of the limitations on contributions set 
forth in paragraph (b)(1) of this section.

Alternative 2-B

    (B)(1) Notwithstanding paragraph (k)(3)(ii)(A) of this section or 
any other provision of this section, a contribution described in 
paragraph (k)(3)(i) of this section that was made by a written 
instrument that is imprinted with the names of more than one account 
holder may be apportioned equally between the account holders, unless a 
different instruction is provided by the account holder(s) on the 
instrument or in a separate writing, provided that such apportionment 
would not cause a contributor to exceed any of the limitations on 
contributions set forth in paragraph (b)(1) of this section.
    (2) The treasurer of the recipient authorized political committee 
shall notify each account holder of how the contribution was 
apportioned and that the contributors may request the return of the 
excessive portion of the contribution if it is not intended to be a 
joint contribution. Within thirty days from the date of the treasurer's 
receipt of the contribution, the treasurer shall provide such 
notification to each account holder in writing; by electronic mail; or 
through oral communication, provided that the treasurer makes a 
contemporaneous, signed record of the conversation(s).
* * * * *
    3. Section 110.2 would be amended by revising the section heading 
and paragraph (e) to read as follows:


Sec. 110.2  Contributions by multi-candidate political committees (2 
U.S.C. 441a(a)(2)).

* * * * *
    (e) Contributions by political party committees to Senatorial 
candidates. (1) Notwithstanding any other provision of the Act, or of 
these regulations, the Republican and Democratic Senatorial campaign 
committees, or the national committee of a political party, may make 
contributions of not more than a combined total of $35,000 to a 
candidate for nomination or election to the Senate during the calendar 
year of the election for which he or she is a candidate. Any 
contribution made by such committee to a Senatorial candidate under 
this paragraph in a year other than the calendar year in which the 
election is held shall be considered to be made during the calendar 
year in which the election is held.
    (2) The limitation in paragraph (e)(1) of this section shall be 
increased by the percent difference in the price index in accordance 
with 11 CFR 110.17. The increased limitation shall be in effect for the 
2-year period beginning on the first day following the date of the last 
general election in the year preceding the year in which the amount is 
increased and ending on the date of the next general election. For 
example, an increase in the limitation made in January 2005 is 
effective from November 3, 2004 to November 7, 2006. In every odd 
numbered year, the Commission will publish in the Federal Register the 
amount of the contribution limit in effect and place such information 
on the Commission's web site.
* * * * *
    4. Section 110.4 would be amended by revising the section heading 
and by removing and reserving paragraph (a).


Sec. 110.4  Prohibited contributions (2 U.S.C. 441f, 441g, 432(c)(2)).

* * * * *
    5. Section 110.5 would be amended by revising the section heading 
and paragraphs (a), (b), (d), and (e) to read as follows:


Sec. 110.5  Aggregate bi-annual contribution limitation for individuals 
(2 U.S.C. 441a(a)(3)).

    (a) Scope. This section applies to all contributions made by any 
individual, except individuals prohibited from making contributions 
under 11 CFR 110.19 and 110.20 and 11 CFR part 115.

[[Page 54378]]

    (b) Bi-annual limitations. (1) In the two-year period described in 
paragraphs (b)(2) and (3) of this section, no individual may make 
contributions aggregating more than $95,000, including:
    (i) $37,500 in the case of contributions to candidates and the 
authorized committees of candidates; and
    (ii) $57,500 in the case of any other contributions, of which not 
more than $37,500 may be attributable to contributions to political 
committees which are not political committees of national political 
parties;
    (iii) However, contributions made under the increased limits under 
11 CFR part 400 are not subject to the limitations of paragraph 
(b)(1)(i) and (ii) of this section.
    (2) The limitation in paragraph (b)(1) of this section shall be 
increased by the percent difference in the price index in accordance 
with 11 CFR 110.17. The increased limitation shall be in effect for the 
2-year period beginning on the first day following the date of the last 
general election in the year preceding the year in which the amount is 
increased and ending on the date of the next general election.
    (3) The contribution limits in paragraph (b)(1) must be aggregated 
within the same time period as described in paragraph (b)(2). For 
example, an increase in the limitation made in January 2005 is 
effective from November 3, 2004 to November 7, 2006. Contributions must 
likewise be aggregated from November 3, 2004 to November 7, 2006.
    (4) In every odd numbered year, the Commission will publish in the 
Federal Register the amount of the contribution limit in effect and 
place such information on the Commission's web site.
* * * * *
    (d) Independent expenditures. The bi-annual limitation on 
contributions in this section applies to contributions made to persons, 
including political committees, making independent expenditures under 
11 CFR part 109.
    (e) Contributions to delegates and delegate committees. The bi-
annual limitation on contributions in this section applies to 
contributions to delegate and delegate committees under 11 CFR 110.14.
    6. Section 110.9 would be revised to read as follows:


Sec. 110.9  Violation of limitations.

    No candidate or political committee shall knowingly accept any 
contribution or make any expenditure in violation of the provisions of 
part 110. No officer or employee of a political committee shall 
knowingly accept a contribution made for the benefit or use of a 
candidate, or make any expenditure on behalf of a candidate, in 
violation of any limitation imposed on contributions and expenditures 
under this part 110.


Secs. 110.15 and 110.16  [Added and Reserved]

    7. Sections 110.15 and 110.16 would be added and reserved.
    8. Section 110.17 would be added to read as follows:


Sec. 110.17  Price index increase.

    (a) Price index increases for party committee expenditure 
limitations and Presidential candidate expenditure limitations. The 
limitations on expenditures established by 11 CFR 110.7 and 110.8 shall 
be increased by the percent difference between the price index, as 
certified to the Commission by the Secretary of Labor, for the 12 
months preceding the beginning of the calendar year and the price index 
for the base period.
    (1) Each amount so increased shall be the amount in effect for that 
calendar year.
    (2) For purposes of this paragraph (a) the term base period means 
calendar year 1974.
    (b) Price index increases for contributions by persons, by 
political parties to Senatorial candidates, and the bi-annual aggregate 
contribution limitation for individuals. The limitations on 
contributions established by 11 CFR 110.1(b) and (c), 110.2(e), and 
110.5, shall be increased only in odd-numbered years by the percent 
difference between the price index, as certified to the Commission by 
the Secretary of Labor, for the 12 months preceding the beginning of 
the calendar year and the price index for the base period.
    (1) The increased limitations shall be in effect for the 2-year 
period beginning on the first day following the date of the last 
general election in the year preceding the year in which the amounts 
are increased and ending on the date of the next general election. For 
example, increases in the limitations made in January 2005 are 
effective from November 3, 2004 to November 7, 2006.
    (2) For purposes of this paragraph (b) the term base period means 
calendar year 2001.
    (c) Rounding of price index increases. If any amount after 
adjustment under paragraph (a) or (b) of this section is not a multiple 
of $100, such amount shall be rounded to the nearest multiple of $100.
    (d) Definition of price index. For purposes of this section, the 
term price index means the average over a calendar year of the Consumer 
Price Index (all items-United States city average) published monthly by 
the Bureau of Labor Statistics.
    (e) Publication of price index increases. In every odd numbered 
year, the Commission will publish in the Federal Register the amount of 
the contribution limits in effect and place such information on the 
Commission's web site.


Secs. 110.18  [Added and Reserved]

    9. Section 110.18 would be added and reserved.
    10. Section 110.19 would be added to read as follows:


Sec. 110.19  Contributions by minors.

    (a) Contributions to candidates. An individual who is 17 years old 
or younger shall not make a contribution to a candidate for Federal 
office, including a contribution to any of the following:
    (1) A principal campaign committee designated pursuant to 11 CFR 
101.1(a);
    (2) Any other political committee authorized by a candidate under 
11 CFR 101.1(b) and 102.13 to receive contributions or make 
expenditures on behalf of such candidate; or
    (3) Any entity directly or indirectly established, financed, 
maintained or controlled by one or more Federal candidates.
    (b) Contributions to political party committees. An individual who 
is 17 years old or younger shall not make a contribution or donation 
to:
    (1) A national, State, district or local committee of a political 
party, including a national congressional campaign committee; or
    (2) Any entity directly or indirectly established, financed, 
maintained or controlled by a national, State, district or local 
committee of a political party.
    (c) Contributions to other political committees. An individual who 
is 17 years old or younger shall not make a contribution to any other 
political committee if that contribution is earmarked or otherwise 
directed to one or more Federal candidates or political committees or 
organizations covered by paragraphs (a) and (b) of this section. See 11 
CFR 110.6.
    (d) Volunteer services. Nothing in this section shall prohibit an 
individual who is 17 years old or younger from providing volunteer 
services to any Federal candidate or political committee.
    (e) Definition of directly or indirectly established, financed, 
maintained or controlled. Directly or indirectly established, financed, 
maintained or controlled has the same meaning as in 11 CFR 300.2(c).

[[Page 54379]]

    11. Section 110.20 would be added to read as follows:


Sec. 110.20  Prohibition on contributions, donations, expenditures and 
disbursements by foreign nationals.

    (a) A foreign national shall not, directly or indirectly, make a 
contribution or a donation of money or other thing of value, or 
expressly or impliedly promise to make a contribution or donation in 
connection with any local, State or Federal election as defined in 11 
CFR 100.2 and paragraph (j) of this section.
    (b) A foreign national shall not, directly or indirectly, make a 
contribution or donation to a committee of a political party. For 
purposes of this section, a committee of a political party includes a 
national party committee, a national congressional campaign committee, 
a State, district, or local party committee, or a subordinate committee 
of a State party committee, whether or not it is a political committee.
    (c) A Presidential inaugural committee shall not knowingly accept 
any donation from a foreign national.
    (d) A foreign national shall not, directly or indirectly, make any 
expenditure, independent expenditure, or disbursement in connection 
with any Federal, State, or local election as defined in 11 CFR 100.2 
and paragraph (j) of this section.
    (e) A foreign national shall not, directly or indirectly, make any 
disbursement for an electioneering communication as defined in 11 CFR 
100.29.
    (f) A Foreign national shall not, directly or indirectly, make a 
contribution or donation to a committee of a political party for the 
purchase or construction of an office building. See 11 CFR 300.10 and 
300.35.
    (g)(1) No person shall knowingly solicit, accept, or receive from a 
foreign national any contribution or donation prohibited by paragraphs 
(a) through (c) of this section.
    (2) No person shall knowingly receive funds as a conduit or 
intermediary for a contribution or donation prohibited by paragraphs 
(a) through (c) of this section.
    (3) No person shall knowingly provide substantial assistance with 
regard to the making of a contribution or donation prohibited by 
paragraphs (a) through (c) of this section.
    (4) For purposes of paragraphs (c) and (g) of this section, 
knowingly means that a person must:
    (i) Have actual knowledge that the source of the funds solicited, 
accepted or received is a foreign national, or
    (ii) Have been aware of facts that would lead a reasonable person 
to conclude that there is a substantial probability that the source of 
the funds solicited, accepted or received is a foreign national; or
    (iii) Have been aware of facts that would have led a reasonable 
person to inquire whether the source of the funds solicited, accepted, 
or received is a foreign national, but the person failed to conduct a 
reasonable inquiry.
    (5) For purposes of paragraphs (g)(4)(ii) and (iii) of this 
section, pertinent facts include, but are not limited to:
    (i) The use by the contributor or donor of a foreign passport or 
passport number for identification purposes;
    (ii) The provision by the contributor or donor of a foreign 
address;
    (iii) The contribution or donation is made by means of a check or 
other written instrument drawn on a foreign bank or by a wire transfer 
from a foreign bank; or
    (iv) The contributor or donor resides abroad.
    (h) A foreign national shall not direct, dictate, control, or 
directly or indirectly participate in the decision-making process of 
any person, such as a corporation, labor organization, or political 
committee, with regard to such person's Federal or non-Federal 
election-related activities, such as decisions concerning the making of 
contributions or expenditures in connection with elections for any 
local, State, or Federal office or decisions concerning the 
administration of a political committee.
    (i) For purposes of this section, foreign national means--
    (1) A foreign principal, as defined in 22 U.S.C. 611(b); or
    (2) An individual who is not a citizen of the United States and who 
is not lawfully admitted for permanent residence as defined in 8 U.S.C. 
1101(a)(20); however,
    (3) Foreign national shall not include any individual who is a 
citizen of the United States, or who is a national of the United States 
as defined in 8 U.S.C. 1101(a)(22).
    (j) For purposes of this section, election means the process by 
which individuals, whether opposed or unopposed, seek nomination for 
election, or election, to public office. This definition includes any 
general, primary, special and runoff election, and a caucus or 
convention of a political party.

    Dated: August 16, 2002.
Karl J. Sandstrom,
Vice Chairman, Federal Election Commission.
[FR Doc. 02-21277 Filed 8-21-02; 8:45 am]
BILLING CODE 6715-01-P