[Federal Register Volume 68, Number 2 (Friday, January 3, 2003)]
[Rules and Regulations]
[Pages 421-458]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-90]


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FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 102, 109, 110, and 114

[Notice 2002--27]


Coordinated and Independent Expenditures

AGENCY: Federal Election Commission.

ACTION: Final rules and transmittal of regulations to Congress.

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SUMMARY: The Federal Election Commission is issuing final rules 
regarding payments for communications that are coordinated with a 
candidate, a candidate's authorized committee, or a political party 
committee. The final rules also address expenditures by political party 
committees that are made either in coordination with, or independently 
from, candidates. These final rules implement several requirements in 
the Bipartisan Campaign Reform Act of 2002 (``BCRA'') that 
significantly amend the Federal Election Campaign Act of 1971, as 
amended (``FECA'' or the ``Act''). Further information is contained in 
the Supplementary Information that follows.

EFFECTIVE DATE: February 3, 2003.

FOR FURTHER INFORMATION CONTACT: Mr. John Vergelli, Acting Assistant 
General Counsel, or Attorneys Mr. Mark Allen (coordinated party 
expenditures), and Mr. Richard Ewell (coordinated communications paid 
for by other political committees and other persons), 999 E Street NW., 
Washington, DC, 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: The Bipartisan Campaign Reform Act of 2002 
(``BCRA''), Public Law 107-155, 116 Stat. 81 (March 27, 2002), contains 
extensive and detailed amendments to the Federal Election Campaign Act 
of 1971 (``FECA'' or ``the Act''), as amended, 2 U.S.C. 431 et seq. 
This is one in a series of rulemakings the Commission is undertaking in 
order to implement the provisions of BCRA and to meet the rulemaking 
deadlines set out in BCRA.
    Section 402(c)(1) of BCRA establishes a general deadline of 270 
days for the Commission to promulgate regulations to carry out BCRA, 
which is December 22, 2002. The final rules do not apply with respect 
to runoff elections, recounts, or election contests resulting from the 
November 2002 general election. 2 U.S.C. 431 note.
    Because of the brief period before the statutory deadline for 
promulgating these rules, the Commission received and considered public 
comments expeditiously. The Notice of Proposed Rulemaking (``NPRM''), 
on which these final rules are based, was published in the Federal 
Register on September 24, 2002. 67 FR 60,042 (September 24, 2002). The 
written comments were due by October 11, 2002. The Commission received 
27 comments from 21 commenters. The names of the commenters and their 
comments are available at http://www.fec.gov/register.htm under 
``Coordinated and Independent Expenditures.'' A public hearing was held 
on Wednesday, October 23, 2002, and Thursday, October 24, 2002, at 
which 14 witnesses testified. A transcript of those hearings is also 
available at http://www.fec.gov/register.htm.
    Under the Administrative Procedures Act, 5 U.S.C. 553(d), and the 
Congressional Review of Agency Rulemaking Act, 5 U.S.C. 801(a)(1), 
agencies must submit final rules to the Speaker of the House of 
Representatives and the President of the Senate, and publish them in 
the Federal Register at least 30 calendar days before they take effect. 
The final rules on coordinated and independent expenditures were 
transmitted to Congress on December 18, 2002.

Introduction

    These final rules primarily address communications that are made in 
coordination with a candidate, an authorized committee of a candidate, 
or a political party committee. The regulations set forth the meaning 
of ``coordination.'' They also set forth statutory requirements for 
political party committees with respect to the permitted timing of 
independent and coordinated expenditures, and transfers and 
assignments.

Explanation and Justification

1. Statutory Overview

    FECA limits the amount of contributions to Federal candidates, 
their authorized committees, and other political committees. 2 U.S.C. 
441a(a). Under FECA and the Commission's regulations, these 
contributions may take the form of money or ``anything of value'' (the 
latter is an ``in-kind contribution'' provided to a candidate or 
political committee.) See 11 CFR 100.52(d)(1). Candidates must disclose

[[Page 422]]

all contributions they receive. 2 U.S.C. 434(b)(2). Since the recipient 
does not actually receive a cash payment from an in-kind contribution, 
the recipient must report the value of an in-kind contribution as both 
a contribution received and an expenditure made so that the receipt of 
the contribution will be reported without overstating the cash-on-hand 
in the committee's treasury. See 11 CFR 104.13.

2. Overview of BCRA's Changes to the FECA and Commission Regulations

    In BCRA, Congress revised the FECA's definition of ``independent 
expenditure'' in 2 U.S.C. 431(17). The revision added a reference to 
political party committees and their agents and reworked other aspects 
of the former definition. Corresponding revisions are being made to the 
regulations in 11 CFR 100.16.
    Congress repealed the Commission's pre-BCRA regulations regarding 
``coordinated general public political communications'' at former 11 
CFR 100.23, and directed the Commission to adopt new regulations on 
``coordinated communications'' in their place. Public Law 107-155, sec. 
214(b), (c) (March 27, 2002). A new section 11 CFR 109.21 implements 
this Congressional mandate.
    In addition, the new and revised rules implement several new 
restrictions found in BCRA on the timing of independent and coordinated 
expenditures made by committees of political parties. 2 U.S.C. 
441a(d)(4). Those regulations are located in new 11 CFR part 109, 
subpart D. Similarly, Congress established new restrictions on 
transfers between committees of a political party. 2 U.S.C. 441a(d)(4). 
Those changes, as well as amendments to the rules on the assignment of 
coordinated party expenditure authority in pre-BCRA 11 CFR 110.7, are 
reflected in new 11 CFR part 109, subpart D.
    Finally, Congress established new reporting obligations for 
independent expenditures. 2 U.S.C. 434(a)(5) and (g). These reporting 
obligations have been addressed in a separate rulemaking. See Final 
Rules and Explanation and Justification for Bipartisan Campaign Reform 
Act of 2002 Reporting, published elsewhere in this issue of the Federal 
Register. The comments received regarding the reporting of independent 
expenditures have been addressed separately in the Explanation and 
Justification for the amended reporting rules.

11 CFR 100.16 Definition of Independent Expenditure

    In light of several Congressional changes to the statutory 
definition of ``independent expenditure'' at 2 U.S.C. 431(17), the 
Commission is making several corresponding changes to the definition of 
the same term in 11 CFR 100.16. Most significantly, the statutory 
definition of ``independent expenditure'' is modified to exclude 
expenditures coordinated with a political party committee or its agents 
(in addition to the pre-BCRA exclusion of coordination with 
candidates). 2 U.S.C. 431(17).
    Paragraph (a) of section 100.16 contains the revised pre-BCRA 
section 100.16. The first sentence of paragraph (a) is being changed by 
adding a reference to political party committees and their agents, 
thereby tracking BCRA's changes in 2 U.S.C. 431(17).
    In BCRA, Congress deleted the term ``consultation'' from the list 
of activities that compromise the independence of expenditures. See 2 
U.S.C. 431(17)(B). Notwithstanding that change, in the NPRM the 
Commission proposed the retention of the term ``consultation'' because 
it remains, post-BCRA, in other related provisions of the Act. Most 
importantly, the term ``consultation'' was used in a closely related 
provision added by BCRA itself. See 2 U.S.C. 441a(a)(7)(B)(ii) as 
amended by Public Law 107-155, sec. 214(a) (expenditures made in 
``cooperation, consultation, or concert, with, or at the request or 
suggestion of, a national, State, or local committee of a political 
party''); see also 2 U.S.C. 441a(a)(7)(B)(i) (expenditures that are 
made in ``cooperation, consultation, or concert with, or at the request 
or suggestion of'' candidates, political committees, and agents thereof 
are contributions) (emphasis added).
    Similarly, while Congress referred to expenditures ``not made in 
concert or cooperation with * * * a political party committee or its 
agents'' in 2 U.S.C. 431(17) (emphasis added), it did not refer to 
agents of a party committee in 2 U.S.C. 441a(a)(7)(B)(ii) when 
describing coordination with a party committee. The Commission proposed 
in the NPRM including agents of political party committees as persons 
who might take actions that would cause a communication to be 
coordinated with that party committee.
    The Commission received one joint comment from two commenters \1\ 
on each of the two proposals above, urging the Commission to include in 
the final rules both terms as proposed. The final rules retain the term 
``consultation'' in paragraph (a) as an element in the regulatory 
definition of ``independent expenditure,'' for the reasons outlined in 
the NPRM. The Commission is similarly including agents of a political 
party within the scope of its independent expenditure definition. 11 
CFR 100.16(a).
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    \1\ For the purposes of this Explanation and Justification, all 
persons who expressed their views on the rules proposed in the NPRM 
are referred to as ``commenters'' without regard to whether those 
views were expressed to the Commission in writing or through 
testimony at the hearing.
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    In BCRA, Congress repealed the pre-BCRA regulatory definition of 
``coordinated general public political communication.'' See former 11 
CFR 100.23 (January 1, 2001), repealed by Public Law 107-155, section 
214(b) (March 27, 2002). Therefore, in one additional change to 
paragraph (a) of section 100.16, the Commission is deleting the term 
``coordinated general public political communication,'' and replacing 
it with references to a ``coordinated communication'' from section 
109.21 and a ``party coordinated communication'' from 11 CFR 109.37.
    The Commission is also moving pre-BCRA 11 CFR 109.1(e), which 
clarifies the basic definition of ``independent expenditure,'' to 
paragraph (b) of section 100.16, without other changes. This rule 
provides that expenditures made by a candidate's authorized committee 
on behalf of that candidate never qualify as independent expenditures.
    The Commission is adding a new paragraph (c) to provide examples of 
activities that would disqualify a communication from being treated as 
an independent expenditure. This provision does not in any way change 
the scope of the definition of coordinated communication in 11 CFR 
109.21; it is merely intended to provide additional guidance.

11 CFR 100.23 [Removed and Reserved]

    Prior to the enactment of BCRA, the Commission initiated a series 
of rulemakings in response to the Supreme Court's ruling on the 
appropriate application of the so-called ``coordinated party 
expenditure'' provisions of FECA. See Colorado Republican Federal 
Campaign Committee v. Federal Election Commission, 518 U.S. 604 (1996) 
(``Colorado I''). For example, the Commission addressed the issue of 
coordination when it promulgated former 11 CFR 100.23 (January 1, 2001) 
in December 2000. See Explanation and Justification of General Public 
Political Communications Coordinated with Candidates and Party 
Committees; Independent Expenditures, 65 FR 76,138 (Dec. 6, 2000). 
Former section 100.23 defined a new term, ``coordinated general public 
political communication,'' drawing from judicial guidance in Federal 
Election

[[Page 423]]

Commission v. The Christian Coalition, 52 F.Supp.2d 45, 85 (D.D.C. 
1999) (``Christian Coalition''), to determine whether expenditures for 
communications by unauthorized committees, advocacy groups, and 
individuals were coordinated with candidates or qualified as 
independent expenditures. Consistent with Christian Coalition, id. at 
92, the Commission's regulations stated that such coordination could be 
found when candidates or their representatives influenced the creation 
or distribution of the communications by making requests or suggestions 
regarding, or exercising control or decision making authority over, or 
engaging in ``substantial discussion or negotiation'' regarding, 
various aspects of the communications. Former 11 CFR 100.23(c)(2) 
(January 1, 2001). The regulations explained that ``substantial 
discussion or negotiation may be evidenced by one or more meetings, 
conversations or conferences regarding the value or importance of the 
communication for a particular election.'' Former 11 CFR 
100.23(c)(2)(iii) (January 1, 2001). The Commission provided an 
exception, however, for a candidate's or political party's response to 
an inquiry regarding the candidate's or party's position on legislative 
or public policy issues. See former 11 CFR 100.23(d) (January 1, 2001).
    As explained above, Congress repealed 11 CFR 100.23 in BCRA and 
directed the Commission to promulgate new regulations to address 
coordinated communications. Those new regulations are discussed below 
in the Explanation and Justification for 11 CFR part 109. Accordingly, 
the Commission is now removing former section 100.23 from Title 11, 
Chapter 1, of the Code of Federal Regulations.

11 CFR 102.6(a)(1)(ii) Transfers

    As a result of the enactment of 2 U.S.C. 441a(d)(4) and other 
provisions from BCRA affecting transfers between political party 
committees, the Commission revises 11 CFR 102.6(a)(1)(ii) to clarify 
the interaction of this section with those provisions of BCRA. Before 
BCRA, the Commission permitted unlimited transfers between or among 
national party committees, State party committees and/or any 
subordinate committees. See pre-BCRA 11 CFR 102.6(a)(1)(ii).
    First, in BCRA, Congress provided that a national committee of a 
political party, including a national Congressional campaign committee 
of a political party, may not solicit, receive, or direct to another 
person a contribution, donation, or transfer of funds or other thing of 
value, or spend any funds, that are not subject to the limitations, 
prohibitions, and reporting requirements of FECA. 2 U.S.C. 441i(a); see 
Explanation and Justification for 11 CFR 300.10(a), 67 FR 49,122 (July 
29, 2002).
    Second, in BCRA's ``Levin Amendment,'' Congress placed restrictions 
on how State, district, and local party committees raise ``Levin 
funds'' and prohibited certain transfers between political party 
committees. See 2 U.S.C. 441i(b)(2)(C)(i); Explanation and 
Justification for 11 CFR 300.31, 67 FR 49,124 (July 29, 2002).
    Third, also in the Levin Amendment, Congress provided that a State, 
district, or local committee of a political party that spends Federal 
funds and Levin funds for the newly defined term, Federal election 
activity, must raise those funds solely by itself. These committees may 
not receive or use transferred funds for this purpose. 2 U.S.C. 
441i(b)(2)(B)(iv); see Explanation and Justification for 11 CFR 
300.34(a) and (b), 67 FR 49,127 (July 29, 2002).
    Fourth, Congress provided in BCRA that a committee of a political 
party that makes coordinated party expenditures under 2 U.S.C. 441a(d) 
in connection with the general election campaign of a candidate shall 
not, during that election cycle, transfer any funds to, assign 
authority to make coordinated party expenditures under this subsection 
to, or receive a transfer from, a committee of the political party that 
has made or intends to make an independent expenditure with respect to 
the candidate. 2 U.S.C. 441a(d)(4)(C); see Explanation and 
Justification for 11 CFR 109.35(c), below.
    The Commission adds a new opening clause in paragraph (a)(1)(ii) of 
section 102.6 incorporating these restrictions by reference into the 
rules regarding the transfer of funds and the use of transferred funds.
    The Commission received no comments on this section, and the final 
rule is unchanged from the proposed rule.

Part 109--Coordinated and Independent Expenditures (2 U.S.C. 431(17), 
441a(a) and (d), and Pub. L. 107-155 Sec. 214(c))

    The Commission is reorganizing 11 CFR part 109 into four subparts 
in an effort to simplify and clarify its regulations while implementing 
the Congressional mandates in BCRA regarding payments for coordinated 
communications and coordinated expenditures by political party 
committees. Subpart A explains the scope of part 109 and defines the 
key term ``agent.'' Subpart B, which addresses the reporting and 
recordkeeping requirements for independent expenditures, has been 
addressed in a separate rulemaking. See Final Rules and Explanation and 
Justification for Bipartisan Campaign Reform Act of 2002 Reporting, 
published elsewhere in this issue of the Federal Register. Subpart C 
addresses coordination between a candidate or a political party and a 
person making a communication. Subpart D sets forth provisions 
applicable only to political party committees, including those 
pertaining to independent expenditures and support of candidates 
through coordinated party expenditures. See 2 U.S.C. 441a(d). The 
special authority for coordinated expenditures by political party 
committees, previously set forth in pre-BCRA 11 CFR 110.7, is being 
relocated to 11 CFR 109.32 and other sections in subpart D.

11 CFR Part 109, Subpart A--Scope and Definitions

11 CFR 109.1 When Will This Part Apply?

    New section 109.1 introduces the scope of part 109. Section 109.1 
explains that the regulations in part 109 set forth the general 
reporting requirements for both ``independent expenditures'' and 
``coordinated communications.'' Note that the definition of ``agent'' 
found in pre-BCRA section 109.1 is being revised and moved to section 
109.3. No comments were received regarding this section.

11 CFR 109.3 Definitions

    The Commission proposed new 11 CFR 109.3 to define the term 
``agent,'' which is used throughout 11 CFR part 109. This definition of 
agent is based on the same concept that the Commission used in framing 
the definition of ``agent'' in the revised ``soft money'' rules. See 
Final Rules and Explanation and Justification on Prohibited and 
Excessive Contributions: Non-Federal Funds or Soft Money, 67 FR 49,081 
(July 29, 2002). The definition of ``agent'' proposed in the NPRM 
focused on whether a purported agent has ``actual authority, either 
express or implied,'' to engage in one or more specified activities on 
behalf of specified principals.
    In the NPRM, the Commission listed those specific sets of 
activities, which vary slightly depending on whether the agent engages 
in those activities on behalf of a national, State, district, or local 
committee of a party committee, or on behalf of a Federal candidate or

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officeholder. See proposed 11 CFR 109.3(a) and (b), respectively. The 
activities specified in the NPRM closely paralleled the conduct 
activities associated with coordinated communications, as described in 
11 CFR 109.21(b). These activities included requesting or suggesting 
that a communication be created, produced, or distributed; making or 
authorizing certain campaign-related communications; and being 
materially involved in decisions regarding specific aspects of 
communications. See proposed 11 CFR 109.3(a)(1) through (5) and (b)(1) 
through (5).
    Several commenters requested additional clarification of the 
meaning of ``material involvement,'' while other commenters suggested 
broadening this provision to include authority to be ``materially 
involved'' in discussions, in addition to decisions, regarding a 
communication. The Commission notes that the term ``materially 
involved'' is merely incorporated into the specified activities of an 
agent to preserve the parallel structure between the definition of 
``agent'' and the coordination conduct standards in 11 CFR 109.21. See 
Explanation and Justification of 11 CFR 109.21(d)(2), below.
    One commenter noted that because the proposed regulations 
contemplate the possibility that one candidate for Federal office might 
pay for a communication that is coordinated with a different candidate 
for Federal office, proposed 11 CFR 109.3(a)(5) should also be included 
as a specified activity in 11 CFR 109.3(b). The Commission agrees and 
is adding a new paragraph (b)(6) to 11 CFR 109.3 to make it clear that 
a person who works for one candidate and is authorized by that 
candidate to make a communication on behalf of other candidates based 
on material information derived from those other candidates, is to be 
considered an agent.
    A number of commenters addressed the general scope of the 
definition. Seven commenters argued that the proposed definition would 
be overly broad because it would not expressly limit the definition of 
``agent'' to situations where the person is acting within the scope of 
his or her ``actual authority'' as an agent. These commenters also 
urged the addition of a requirement that an agent's ``coordination'' 
conduct (see 11 CFR 109.21(d), below) toward a third party be based on 
information that was gained only due to his or her role as an agent. 
One of these commenters asserted that a person should not be considered 
an ``agent'' solely based on his or her authority to act, but should 
only become an agent when he or she takes some action. Two commenters 
expressed their opposition to any attempt to categorize specific 
campaign positions or groups of people as agents per se, and one 
additional commenter suggested that if the Commission does include a 
class of per se agents, it should identify the specific persons within 
the campaign who would be placed in this category.
    Several commenters expressed concern as to a candidate's or 
political party committee's ``liability'' for a person who qualifies as 
an agent but takes actions beyond the scope of his or her actual 
authority. Two other commenters expressed concerns that a principal 
would assume ``liability'' for a person who represents more than one 
candidate or group engaged in specified conduct while ``wearing a 
different hat'' (acting on behalf of a different person or group.) One 
of these commenters recommended an amendment to the rule text to 
provide that actions must be undertaken ``on behalf of the principal'' 
in order for liability to attach to the principal. Another commenter 
raised a particular concern with respect to common vendors that an 
``agent'' who wears different hats for different groups might be deemed 
to engage in coordination per se by essentially sharing information 
within his or her own head.
    On the other hand, eight commenters, including BCRA's principal 
sponsors, expressed concern that the scope of the proposed definition 
was underinclusive and would allow candidates or political parties to 
effectively coordinate communications with an outside spender through 
the use of conduits, including lower-level employees, consultants, or 
others with ``apparent authority,'' who could sit in on a discussion 
and receive important information and convey that information to the 
third-party spender. BCRA's principal sponsors and two other commenters 
asserted that the definition of ``agent'' should not be drawn too 
narrowly because the analysis of whether a communication is coordinated 
should focus on whether the information was conveyed, not who conveyed 
it, or whether the conveyance was authorized. A different commenter 
suggested that the Commission's approach would create an incentive for 
a candidate, authorized committee, or a political party committee to 
share material information with staff members but make no effort to 
control the staff members' disclosures to outside entities. Three 
commenters urged that a person be deemed an agent if he or she 
discloses information to an outside entity in the absence of a strictly 
enforced policy against such disclosure. One of these commenters 
indicated that a non-disclosure agreement might be employed to rebut 
the presumption of agency.
    In the final rules, the Commission recognizes the Congressional 
determination that a spender can effectively coordinate a communication 
by acting in cooperation, consultation, or concert, with, or at the 
request or suggestion of, an agent as well as directly with a 
candidate, authorized committee, or political party committee. See, 
e.g., 2 U.S.C. 431(17) and 2 U.S.C. 441a(a)(7)(B)(i). In recognition of 
the concerns about overbreadth, the Commission is limiting the scope of 
the definition of ``agent'' in three ways. For the purposes of a 
coordination analysis under 11 CFR part 109, a person would only 
qualify as an ``agent'' when he or she: (1) Receives actual 
authorization, either express or implied, from a specific principal to 
engage in the specific activities listed in 109.3; (2) engages in those 
activities on behalf of that specific principal; and (3) those 
activities would result in a coordinated communication if carried out 
directly by the candidate, authorized committee staff, or a political 
party official. Contrary to the assertions of several commenters, a 
principal would not assume ``liability'' for agents who act outside the 
scope of their actual authority, nor would a person be considered an 
``agent'' of a candidate if that person approaches an outside spender 
on behalf of a different organization or person. See Restatement 
(Second) of Agency Sec.  219(1). The Commission rejects, however, the 
argument that a person who has authority to engage in certain 
activities should be considered to be acting outside the scope of his 
or her authority any time the person undertakes unlawful conduct. It is 
a settled matter of agency law that liability may exist ``for unlawful 
acts of [] agents, provided that the conduct is within the scope of the 
agent's authority, whether actual or apparent.'' U.S. v. Investment 
Enterprises, Inc., 10 F.3d 263, 266 (5th Cir. 1993).
    One commenter specifically requested an exemption for ``all persons 
in the legislative offices of federal officeholders'' unless the 
``person dealing with them knows that they are acting on behalf of the 
officeholder in her capacity as a candidate.'' The Commission has 
intentionally avoided promulgating a regulation based on apparent 
authority, which is the authority of an actor as perceived by a third 
party, because such authority is often difficult to discern and would 
place the definition of ``agent'' in the

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hands of a third party. Therefore, in the Commission's judgment, 
apparent authority is not a sufficient basis for agency for the 
purposes of revised 11 CFR part 109. The commenter's suggested approach 
would necessitate a determination of agency solely on the basis of 
apparent authority and is therefore inconsistent with the structure and 
purpose of the regulations.
    These limitations, however, are not intended to establish any 
presumption against the creation of an agency relationship. The grant 
and scope of the actual authority, whether the person is acting within 
the scope of his or her actual authority, and whether he or she is 
acting on behalf of the principal or a different person, are factual 
determinations that are necessarily evaluated on a case-by-case basis 
in accordance with traditional agency principles. For example, the 
issue of whether or not an authorized person is acting on behalf of the 
principal is an objective, fact-based examination that is not dependent 
on that person's own characterization of whether he or she is acting in 
an individual capacity or on behalf of a different principal.
    As explained in the NPRM, the Commission's pre-BCRA regulations 
include a special definition of ``person'' for 11 CFR part 109. See 
pre-BCRA 11 CFR 109.1(b)(1). The Commission did not include this 
separate definition of the term ``person'' in the NPRM because the term 
is already defined in pre-BCRA 11 CFR 100.10 and the Commission was 
concerned that a separate definition of ``person'' in 11 CFR part 109 
might be confusing or misinterpreted as permitting labor organizations, 
corporations not qualified under 11 CFR 114.10(c), or other entities or 
individuals otherwise prohibited from making contributions or 
expenditures under the Act and Commission regulations, to pay for 
coordinated communications or to make independent expenditures. See, 
e.g., 11 CFR 110.20 and 114.2. The Commission has specifically 
addressed these prohibitions in 11 CFR 109.22, below, and the 
Commission did not receive any comments on the inclusion of a separate 
definition of ``person'' in 11 CFR part 109. Therefore, no new 
definition of ``person'' is included in the final rules.

11 CFR Part 109, Subpart B--Independent Expenditures

11 CFR 109.10 How Do Political Committees and Other Persons Report 
Independent Expenditures?

    In the NPRM, the Commission included proposed 11 CFR 109.10 on 
reporting requirements for independent expenditures. The Commission 
announced in the NPRM its expectation that these rules would not be 
included in the final rule of this rulemaking but would instead be 
finalized in a separate rulemaking. The Commission has subsequently 
promulgated 11 CFR 109.10 as part of a separate rulemaking. See Final 
Rules and Explanation and Justification for Bipartisan Campaign Reform 
Act of 2002 Reporting, published elsewhere in this issue of the Federal 
Register. There are no changes to 11 CFR 109.10 in this rulemaking.

11 CFR 109.11 When is a Non-Authorization Notice (Disclaimer) Required? 
(2 U.S.C. 441d)

    The Commission is moving the disclaimer requirements for 
independent expenditures from pre-BCRA 11 CFR 109.3 to new 11 CFR 
109.11. There are no substantive changes to this section. Additional 
changes to disclaimer requirements are provided at 11 CFR 110.11, which 
the Commission addressed in a separate rulemaking in light of BCRA's 
changes to the statutory disclaimer requirement. See 2 U.S.C. 441d and 
Final Rules and Explanation and Justification for Disclaimers, 
Fraudulent Solicitation, Civil Penalties, and Personal Use of Campaign 
Funds, 67 FR 76,962 (Dec. 13, 2002).

11 CFR Part 109, Subpart C--Coordination

11 CFR 109.20 What Does ``Coordinated'' Mean?

    Congress did not define the term ``coordinated'' in FECA or in 
BCRA, but it did provide that an expenditure is considered to be a 
contribution to a candidate when it is ``made by any person in 
cooperation, consultation, or concert, with, or at the request or 
suggestion of,'' that candidate, the authorized committee of that 
candidate, or their agents. 2 U.S.C. 441a(a)(7)(B)(i). Similarly, in 
BCRA, Congress added a new paragraph to section 441a(a)(7)(B) to 
require that expenditures ``made by any person (other than a candidate 
or candidate's authorized committee) in cooperation, consultation, or 
concert, with, or at the request or suggestion of, a national, State, 
or local committee of a political party shall be considered to be 
contributions made to such party committee.'' 2 U.S.C. 
441a(a)(7)(B)(ii). Also, as explained above, an expenditure is not 
``independent'' if it is ``made in cooperation, consultation, or 
concert, with, or at the request or suggestion of,'' a candidate, 
authorized committee, or a political party committee. See 11 CFR 
100.16.
    New section 109.20(a) implements 2 U.S.C. 441a(a)(7)(B)(i) and (ii) 
by defining ``coordinated'' to mean ``made in cooperation, consultation 
or concert with, or at the request or suggestion of, a candidate, a 
candidate's authorized committee, or their agents, or a political party 
committee or its agents.'' While the definition of ``coordinated'' in 
11 CFR 109.20(a) potentially encompasses a variety of payments made by 
a person on behalf of a candidate or political party committee, 
paragraph (a) is not intended to change current Commission 
interpretations other than to recognize the addition of the concept of 
coordination with political party committees under 2 U.S.C. 
441a(a)(7)(B)(ii). The Commission notes that it may provide additional 
guidance in this area through a subsequent rulemaking.
    The Commission recognizes, however, that many issues regarding 
coordination involve communications, and in BCRA Congress required the 
Commission to address coordinated communications. Public Law 107-155, 
sec. 214(c) (March 27, 2002). Therefore, the regulations in 11 CFR 
109.21, explained below, specifically address the meaning of the phrase 
``made in cooperation, consultation, or concert, with, or at the 
request or suggestion of'' in the context of communications paid for by 
a person other than the candidate with whom the communication was 
coordinated, that candidate's authorized committee, or a political 
party committee. Similarly, the regulations in 11 CFR 109.37, explained 
further below, specifically address the meaning of the phrase ``made in 
cooperation, consultation, or concert with, or at the request or 
suggestion of'' in the context of communications paid for by a 
political party committee.
    In addition, paragraph (b) of section 109.20 addresses expenditures 
that are not made for communications but that are coordinated with a 
candidate, authorized committee, or political party committee. It is 
the successor to pre-BCRA 11 CFR 109.1(c). Paragraph (b) is being 
revised from its predecessor to reflect the addition of the concept of 
coordination with political party committees under 2 U.S.C. 
441a(a)(7)(B)(ii), as well as the replacement of the reference to 
former 11 CFR 100.23, see Public Law 107-155, section 214(b) (March 27, 
2002), and grammatical changes to reflect the new location of the rule. 
The Commission emphasizes that the relocation of paragraph (b) is not 
intended to change or alter current Commission interpretations of its 
predecessor in pre-BCRA section 109.1(c). One commenter asserted that 
only express advocacy

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communications can constitute coordination, and urged the Commission to 
provide explicitly that non-communication expenditures will not be 
considered to be coordination. The Commission disagrees with the 
commenter's assertion because Congress has not so limited the statutory 
provisions relating to coordination. See 2 U.S.C. 431(17) and 
441a(a)(7)(B)(i) and (ii). Therefore, the Commission is moving pre-BCRA 
11 CFR 109.1(c), to section 109.20(b) with revisions to make it clear 
that these other expenditures, when coordinated, are also in-kind 
contributions (or coordinated party expenditures, if a political party 
committee so elects) to the candidate or political party committee with 
whom or with which they are coordinated. The exceptions contained in 11 
CFR part 100, subpart C (exceptions to the definition of 
``contribution'') and subpart E (exceptions to the definition of 
``expenditure'') continue to apply.

11 CFR 109.21 What Is a ``Coordinated Communication''?

    In BCRA, Congress expressly repealed 11 CFR 100.23, Public Law 107-
155, sec. 214(b) (March 27, 2002), and instructed the Commission to 
promulgate new regulations on ``coordinated communications paid for by 
persons other than candidates, authorized committees of candidates, and 
party committees.'' Public Law 107-155, sec. 214(c) (March 27, 2002). 
Congress also mandated that the new regulations address four specific 
aspects of coordinated communications: (1) Republication of campaign 
materials; (2) the use of a common vendor; (3) communications directed 
or made by a former employee of a candidate or political party; and (4) 
communications made after substantial discussion about the 
communication with a candidate or political party. See Public Law 107-
155, sec. 214(c)(1) through (4) (March 27, 2002).
    The Commission is promulgating new 11 CFR 109.21 to comply with 
this Congressional mandate. This rule applies to communications 
coordinated with candidates, their authorized committees, political 
party committees, or the agents of any of the foregoing. Paragraph (a) 
of this section begins by defining ``coordinated communication.'' 
Paragraph (b) spells out the treatment of ``coordinated 
communications'' as in-kind contributions, which must be reported. 
Next, paragraph (c) sets out the content standard for coordinated 
communications. Paragraph (d) establishes conduct standards for the 
coordination analysis. Paragraph (e) addresses the Congressional 
guidance that an agreement or formal collaboration is not required for 
a communication to be considered ``coordinated.'' Paragraph (f) 
provides a safe harbor for certain inquiries as to legislative and 
policy issues.
    The Commission notes that Congress has provided that candidates and 
any entity ``acting on behalf of 1 or more candidates'' must not 
``solicit, receive, direct, transfer, or spend funds in connection with 
an election for Federal office, including funds for any Federal 
election activity, unless the funds are subject to the limitations, 
prohibitions, and reporting requirements of this Act. * * *'' 2 U.S.C. 
441i(e)(1)(A). The Commission has addressed this restriction in a 
separate rulemaking (see Final Rules and Explanation and Justification 
on Prohibited and Excessive Contributions: Non-Federal Funds or Soft 
Money, 67 FR 49,081 (July 29, 2002)), and does not necessarily equate 
activity resulting in a coordinated communication under 11 CFR 109.21 
with ``acting on behalf of 1 or more candidates'' in 2 U.S.C. 
441i(e)(1). Therefore, a determination of whether a coordinated 
communication exists must be made separately from, and without 
reference to, a determination of whether an entity is ``acting on 
behalf of 1 or more candidates'' under 2 U.S.C. 441i(e)(1)(A).
1. 11 CFR 109.21(a) Definition
    Paragraph (a) of new section 109.21 sets forth the required 
elements of a ``coordinated communication,'' which comprise a three-
pronged test. For a communication to be ``coordinated,'' all three 
prongs of the test must be satisfied. While no one of these elements 
standing alone fully answers the question of whether a communication is 
for the purpose of influencing a Federal election, see 11 CFR 
100.52(a), 100.111(a), the satisfaction of all three prongs of the test 
set out in new 11 CFR 109.21 justifies the conclusion that payments for 
the coordinated communication are made for the purpose of influencing a 
Federal election, and therefore constitute in-kind contributions. 
Nevertheless, the Commission notes that the inclusion of one prong of 
its test, the content standard, could function efficiently as an 
initial threshold for the coordination analysis.
    Under the first prong, in paragraph (a)(1), the communication must 
be paid for by someone other than a candidate, an authorized committee, 
a political party committee, or an agent of any of the foregoing. 
However, a person's status as a candidate does not exempt him or her 
from this section with respect to payments he or she makes for 
communications on behalf of a different candidate. Under paragraph 
(a)(2), the second prong of the three-pronged test is a ``content 
standard'' regarding the subject matter of the communication. Under 
paragraph (a)(3), the third prong of the test is a ``conduct standard'' 
regarding the interactions between the person paying for the 
communication and the candidate or political party committee. A 
sentence proposed in the NPRM regarding republication of campaign 
materials is being moved from proposed paragraph (a)(3) in the NPRM to 
paragraph (c)(2) in the final rules.
    Of the seven commenters who specifically commented on this three-
part structure for the regulations, two expressed general support for 
the approach. The other five, including BCRA's principal sponsors, 
urged the Commission to emphasize the actual conduct and minimize the 
importance of any content standard. The final rules, however, maintain 
the same structure as the proposed rules for the reasons described 
below. The Commission recognizes that a content requirement may serve 
to exclude some communications that are made with the subjective intent 
of influencing a Federal election, thereby potentially narrowing the 
reach of 2 U.S.C. 441a(a)(7)(B)(i) and (ii), but the Commission 
believes that a content standard provides a clear and useful component 
of a coordination definition in that it helps ensure that the 
coordination regulations do not inadvertently encompass communications 
that are not made for the purpose of influencing a federal election.
2. 11 CFR 109.21(b) Treatment as an In-Kind Contribution; Reporting
    Under the Act and the Commission's regulations, a ``contribution'' 
is defined as ``a gift, subscription, loan ... advance, or deposit of 
money or anything of value made by any person for the purpose of 
influencing any election for Federal office,'' subject to a number of 
specific exceptions. See 11 CFR 100.52(a), et seq.; see also 2 U.S.C. 
431(8)(A), et seq. An ``expenditure'' is similarly defined as ``any 
purchase, payment, distribution, loan, advance, deposit, or gift of 
money or anything of value made by any person for the purpose of 
influencing any election for Federal office,'' and is also subject to a 
list of specific exceptions. See 11 CFR 100.111(a), et seq.; see also 2 
U.S.C. 431(9)(A), et seq. Thus, a ``payment'' that is ``made for the 
purpose of influencing any election for Federal

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office'' qualifies as either an ``expenditure,'' a ``contribution,'' or 
both, unless it is specifically excepted.
    As explained above, the coordination provisions in the statute, 2 
U.S.C. 441a(a)(7)(B)(i) and (ii), state that ``expenditures made by any 
person in cooperation, consultation, or concert, with, or at the 
request or suggestion of,'' a candidate or a political party committee 
``shall be considered to be a contribution'' to that candidate or 
political party committee. Several commenters argued that the 
Commission must first determine whether or not the payment for a 
communication constitutes an ``expenditure'' before proceeding to a 
coordination analysis. The Commission concludes that, when read as 
whole sentences, 2 U.S.C. 441a(a)(7)(B)(i) and (ii) require that for a 
contribution to exist, three requirements must be met: (1) There must 
be some conduct to differentiate the activity from an ``independent 
expenditure,'' see 2 U.S.C. 431(17); (2) there must be some form of 
payment; and (3) that payment must be made for the purpose of 
influencing any election for Federal office. The Commission has 
determined that a payment that satisfies the content and conduct 
standards of 11 CFR 109.21 satisfies the statutory requirements for an 
expenditure in the specific context of coordinated communications, and 
thereby constitutes a contribution under 2 U.S.C. 441a(a)(7)(B)(i) and 
(ii).

A. 11 CFR 109.21(b)(1) General Rule

    Paragraph (b)(1) of section 109.21 provides that a payment for a 
coordinated communication is made ``for the purpose of influencing'' an 
election for Federal office, the same phrase used by Congress in the 
definition of both ``expenditure'' and ``contribution.'' 2 U.S.C. 
431(8)(A) and (9)(A). Paragraph (b)(1) also states the general rule 
that a payment for a coordinated communication constitutes an in-kind 
contribution to the candidate, authorized committee, or political party 
committee with whom or with which it is coordinated, unless excepted 
under subpart C of 11 CFR part 100. Please note that this section 
encompasses electioneering communications under 11 CFR 100.29(a)(1), in 
addition to other communications. Congress expressly provided that when 
these communications are coordinated with a candidate, authorized 
committee, or political party committee, they must be treated like 
other coordinated communications in that disbursements for these 
communications are in-kind contributions to the candidate or party 
committee with whom or which they were coordinated. See 2 U.S.C. 
441a(a)(7)(C). Under BCRA, these coordinated electioneering 
communications, like other coordinated communications, must be treated 
as expenditures by the candidate, authorized committee, or political 
party committee with whom or with which they are coordinated. Id.

B. 11 CFR 109.21(b)(2) In-Kind Contributions Resulting From Conduct 
Described in Paragraphs (d)(4) or (d)(5) of This Section

    Paragraph (b)(2) clarifies the application of the general rule of 
paragraph (b)(1) in a particular circumstance. Under the general rule 
in paragraph (b)(1), a candidate's authorized committee or a political 
party committee receives an in-kind contribution, subject to the 
contribution limits, prohibitions, and reporting requirements of the 
Act. As explained below, two of the conduct standards, found in 
paragraphs (d)(4) and (d)(5) of section 109.21, do not focus on the 
conduct of the candidate, the candidate's authorized committee or 
agents, but focus instead on the conduct of a common vendor or a former 
employee with respect to the person paying for the communication. To 
avoid the result where a candidate, authorized committee, or political 
party committee might be held responsible for receiving or accepting an 
in-kind contribution that did not result from its conduct or the 
conduct of its agents, the Commission explicitly provides that the 
candidate, the candidate's authorized committee, or political party 
committee does not receive or accept in-kind contributions that result 
from conduct described in the conduct standards of paragraphs (d)(4) 
and (d)(5) of this section. This treatment is generally analogous to 
the handling of republished campaign materials under new 11 CFR 109.23 
and the Commission's pre-BCRA regulations. See former 11 CFR 
109.1(d)(1). However, please note that the person paying for a 
communication that is coordinated because of conduct described in 
paragraphs (d)(4) or (d)(5) still makes an in-kind contribution for 
purposes of the contribution limitations, prohibitions, and reporting 
requirements of the Act.
    One commenter suggested that the text of paragraph (b)(2) should be 
clarified to indicate that a candidate or political party committee 
receives and accepts an in-kind contribution resulting from a 
coordinated communication in which an agent of either engages in the 
conduct described in paragraphs (d)(1) through (d)(3). The Commission 
agrees and is incorporating that suggested change into the final rules.

C. 11 CFR 109.21(b)(3) Reporting of Coordinated Communications

    Paragraph (b)(3) of 11 CFR 109.21 provides that a political 
committee, other than a political party committee, must report payments 
for coordinated communications as in-kind contributions made to the 
candidate or political party committee with whom or which they are 
coordinated. Paragraph (b)(3) also clarifies that the recipient 
candidate, authorized committee, or political party committee with 
which a communication is coordinated must report the payor's payment 
for that communication as an in-kind contribution received under 11 CFR 
104.13 and must also report making a corresponding expenditure in the 
same amount. 11 CFR 104.13.
3. 11 CFR 109.21(c) Content Standards
The NPRM sought comments as to whether content standards should be 
included in the coordinated communications rules, and if so, what the 
appropriate standard should be. A number of alternative content 
standards were included in the NPRM. Two commenters opposed the 
inclusion of any content standard, arguing that to do so would 
inappropriately narrow the scope of the rules when the conduct of the 
person paying for the communication and the candidate or political 
party committee is sufficient, by itself, to eliminate the independence 
of the communication, thereby creating an in-kind contribution under 2 
U.S.C. 441a(a)(7)(B)(i) and (ii). Several other commenters, however, 
generally supported the inclusion of a content standard, although they 
disagreed as to what that standard should be.
    The Commission is including content standards in the final rules on 
coordinated communications to limit the new rules to communications 
whose subject matter is reasonably related to an election. In the NPRM, 
the Commission proposed three distinct content standards, in paragraph 
(c), along with three alternatives for a fourth standard. The three 
proposed standards were an ``electioneering communication'' standard, a 
standard encompassing the republication of candidate campaign 
materials, and a standard for communications that ``expressly 
advocate'' the election or defeat of a clearly identified candidate for 
Federal office. In addition, the three alternative content standards 
ranged

[[Page 428]]

from a minimal threshold that would have encompassed any ``public 
communication'' that refers to a ``clearly identified candidate'' 
(Alternative A), a public communication that ``promoted, supported, 
attacked, or opposed'' a candidate for Federal office (Alternative B), 
and a public communication that was made during a specific time period 
shortly before an election, was directed to a specific group of voters, 
and discussed the views or record of a candidate (Alternative C). The 
Commission proposed that a communication that satisfies any one of the 
standards would satisfy the ``content'' requirement of 11 CFR 109.21.
    Commenters expressed a wide range of views as to the appropriate 
content standard. One commenter attempted to craft a stand-alone 
unitary content standard through a combination of the electioneering 
communication and republication standards. Four commenters argued that 
an ``express advocacy'' content standard is necessary to provide clear 
guidance and to ensure that the regulation is not vague or overly 
broad. Most other commenters acknowledged that the three standards of 
electioneering, republication, and express advocacy clearly comport 
with guidance from Congress and the courts, but three commenters argued 
that no additional content standards are warranted in the absence of 
any further directive from Congress. A joint comment by three 
commenters urged the Commission to focus the content standard on the 
content of the communication, rather than ``external criteria'' such as 
the timing or distribution of the communication. The same commenters 
also requested that the Commission adjust its content standard to 
ensure that communications between a political party committee and its 
``affiliates'' are not covered.
    Based generally on the approach taken by Congress with respect to 
electioneering communications, five commenters recommended a dual time-
period approach to the content standard in which communications made 30 
to 60 days before an election would be subject to lesser, if any, 
content restrictions than communications made outside of that time 
period. BCRA's principal sponsors agreed with this approach in their 
comments and observed that communications made within 30 days of a 
primary or 60 days of a general election are usually campaign related. 
A different commenter also recommended temporal limits, but suggested 
that any communications made outside the 30 or 60 days should be 
completely excluded from being treated as coordinated communications. 
BCRA's principal sponsors specifically rejected this approach in their 
comments.
    After considering the concerns raised by the commenters about 
overbreadth, vagueness, underinclusiveness, and potential circumvention 
of the restrictions in the Act and the Commission's regulations, the 
Commission is setting forth four content standards to implement the 
statutory requirements. These standards all provide bright-line tests 
and subject to regulation only those communications whose contents, in 
combination with the manner of its creation and distribution, indicate 
that the communication is made for the purpose of influencing the 
election of a candidate for Federal office.

A. 11 CFR 109.21(c)(1) Electioneering Communications

    Congress provided in BCRA that when ``any person makes * * * any 
disbursement for any electioneering communication * * * and such 
disbursement is coordinated with a candidate or an authorized committee 
of such candidate, a Federal, state, or local political party committee 
thereof, or an agent or official of any such candidate, party or 
committee * * * such disbursement shall be treated as a contribution to 
the candidate supported by the electioneering communication * * * and 
as an expenditure by that candidate.'' 2 U.S.C. 441a(a)(7)(C). To 
implement that statutory directive, the Commission proposed in the NPRM 
that the first content standard paragraph (c)(1) simply focus on 
whether the communication is an ``electioneering communication'' under 
11 CFR 100.29. See Final Rule on Electioneering Communications, 67 FR 
51,131 (Oct. 23, 2002). Although the proposed rule in the NPRM 
described a communication ``that would otherwise be an electioneering 
communication,'' this indirect reference has been removed and replaced 
with a direct reference to an electioneering communication.
    Four commenters opined that the electioneering communication 
provisions in BCRA are unconstitutional, and opposed their inclusion as 
a content standard. One of these commenters argued that the 
electioneering communication content standard should be limited to 
include only communications containing ``express advocacy.'' The 
Commission concludes, however, that such an interpretation would 
undermine the scope of Congress's definition of an electioneering 
communication, 2 U.S.C. 434(f)(3)(A), especially in light of the 
Congressional mandate in 2 U.S.C. 441a(a)(7)(C). Another commenter 
argued that the Commission should nonetheless exclude the 
electioneering communications from the content standards because 
Congress did not specifically require its inclusion in that exact 
manner. In the Commission's judgment, however, including the 
electioneering communication standard specifically authorized by 
Congress as one of the content standards in the definition of 
``coordinated communication'' is a simple and straightforward way to 
implement 2 U.S.C. 441a(a)(7)(C). As one commenter noted, the inclusion 
of electioneering communications as a content standard promotes 
consistency because the term is already defined by Congress at 2 U.S.C. 
434(f)(3)(A) and in the Commission's new rules at 11 CFR 100.29.
    The Commission considered and rejected constructing a separate 
definition of ``coordination'' that would have applied specifically to 
electioneering communications. A separate construction would be 
redundant because the relevant conduct under it would be identical to 
the conduct standards for other coordinated communication containing 
other types of content. Similarly, the Commission notes that Congress 
provided that an electioneering communication could be coordinated with 
an ``official'' of a candidate, party, or committee, in addition to the 
candidate, committees, and their agents. 2 U.S.C. 41a(a)(7)(C)(ii). The 
Commission is not, however, separately addressing coordination with an 
official in the final rule because such an official is subsumed within 
the definition of ``agent'' in 11 CFR 109.3.

B. 11 CFR 109.21(c)(2) Dissemination, Distribution, or Republication of 
Campaign Material

    The second content standard implements the Congressional mandate 
that the Commission's new rules on coordinated communications address 
the ``republication of campaign materials.'' See Public Law 107-155, 
sec. 214(c)(1) (March 27, 2002). The Commission's former rule on 
republication of campaign materials, which has been moved from former 
11 CFR 109.1(d) to new section 109.23 with minor changes explained 
below, sets out the required treatment of both the coordinated and 
uncoordinated dissemination, distribution, or republication of campaign 
material prepared by a candidate, an authorized committee, or an agent 
of either. Under section 109.23, discussed below, the

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reporting responsibilities of candidates, authorized committees, and 
political party committees vary depending on whether they 
``coordinate'' with a person financing the dissemination, distribution, 
or republication of a candidate's campaign material.
    In the final rules the ``republication'' content standard in 
paragraph (c)(2) of section 109.21 expressly links to paragraph (d)(6) 
of section 109.21. This link is important because paragraph (d)(6) of 
this section clarifies the application of the conduct standards of 
paragraph (d) of this section to the unique circumstances of 
republication. This change from the NPRM is intended to emphasize the 
relationship between paragraphs (c)(2) and (d)(6) of section 109.21. In 
addition, section 11 CFR 109.21(c)(2) includes a cross-reference to 11 
CFR 109.23 to ensure that certain uses of campaign material exempted by 
11 CFR 109.23(b) from the definition of ``contribution'' will not 
satisfy the content standard in 11 CFR 109.21(c)(2).
    The Commission is making one change to the republication content 
standard from the rule proposed in the NPRM. In the NPRM, a 
communication would have satisfied the content standard proposed in 11 
CFR 109.21(c)(2) when ``the communication'' disseminated, distributed, 
or republished campaign materials prepared by a candidate. The 
Commission is changing the standard so that the content standard will 
only be satisfied when ``the public communication'' disseminates, 
distributes, or republishes campaign materials. Although the Commission 
did not receive specific comments on this point, the Commission is 
employing the term ``public communication,'' as defined at 11 CFR 
100.26, to conform the scope of this standard with the approach the 
Commission has consistently taken for the other content standards 
discussed below, with the exception of the ``electioneering 
communication'' standard.

C. 11 CFR 109.21(c)(3) Express Advocacy

    The third content standard in paragraph (c)(3) of section 109.21 
states that a communication also satisfies the content standard if it 
``expressly advocates'' the election or defeat of a clearly identified 
candidate for Federal office. Although the commenters expressed widely 
differing opinions about whether this ``express advocacy'' standard 
should be the sole content standard, none of the commenters opposed 
including ``express advocacy'' as a content standard in the 
regulations.

D. 11 CFR 109.21(c)(4) Additional Content Standard

    In addition to electioneering communications described in 11 CFR 
100.29, communications that republish campaign materials, and 
communications that ``expressly advocate'' the election or defeat of a 
clearly identified candidate, the Commission proposed three other 
possible content standards in the NPRM and requested comment on 
additional alternatives. Each of these alternatives was premised on the 
communication qualifying as a ``public communication,'' with additional 
requirements. Alternative A required only that the communication 
qualify as a public communication and contain a reference to a clearly 
identified candidate for Federal office. Alternative B provided that 
the communication must also promote, support, attack, or oppose the 
clearly identified candidate. Alternative C required that the public 
communication refer to a clearly identified candidate, be made within 
120 days of an election, be directed to voters within the jurisdiction 
of that candidate, and include an ``express statement about the record 
or position or views on an issue, or the character, or the 
qualifications or fitness for office, or party affiliation,'' of the 
clearly identified candidate.
    Several commenters criticized Alternative A as overly broad, 
asserting that a clearly identified candidate is the minimal standard 
necessary to distinguish ``issue ads'' from communications made for the 
purpose of influencing an election. In contrast, several different 
commenters argued that the requirement of a clearly identified 
candidate was too restrictive because it would fail to encompass 
communications urging recipients to ``vote Democrat'' or ``vote 
Republican.'' These commenters suggested that at a minimum the 
Commission expand the reference to include a reference to a ``clearly 
identified political party.'' Furthermore, two commenters argued that 
the requirement of a clearly identified candidate also fails to 
encompass communications that ``reflect and reinforce the themes and 
messages of the campaign.''
    Five commenters criticized Alternative B, arguing that the terms 
``promote, support, attack, or oppose'' are overly broad. Two different 
commenters suggested that the proposed standard relied on subjective 
criteria and would discourage public speech and weaken the value of 
having a content standard.
    Several commenters also criticized Alternative C as overly broad 
and containing subjective criteria. One commenter specifically objected 
to including communications containing statements about a candidate's 
positions on an issue. A different commenter cited a lack of a 
statutory basis or empirical support for the 120-day time limit and 
pointed out that the rule might be applied to cover communications made 
in a jurisdiction other than the jurisdiction of the clearly identified 
candidate.
    In contrast, four commenters expressed general support for this 
standard, but with the removal of the 120 day limit, which they 
believed would exclude many coordinated communications made early in 
the election cycle. Two of these commenters also suggested that the 
Commission remove the word ``express'' from the requirement of an 
``express statement.'' In addition, a different commenter proposed an 
alternative standard to cover a communication that (1) ``expressly 
refers to'' a candidate in his capacity as a candidate; (2) refers to 
the next election; and (3) is publicly disseminated and actually 
reaches 100 eligible voters.
    The Commission is including a modified version of Alternative C in 
the final rules at 11 CFR 109.21(c)(4). Taking into consideration the 
suggestions of the commenters, this content standard is largely based 
on, but is somewhat broader than, Congress's definition of an 
electioneering communication. A communication meets this content 
requirement if (1) it is a public communication; (2) it refers to a 
clearly identified candidate or political party; (3) it is directed to 
voters in the jurisdiction of the clearly identified Federal candidate; 
and (4) it is publicly distributed or publicly disseminated 120 days or 
fewer before a primary or general election.
    The term ``publicly distributed'' refers to communications 
distributed by radio or television (see 11 CFR 100.29(b)(3)) and the 
term ``publicly disseminated'' refers to communications that are made 
public via other media, e.g., newspaper, magazines, handbills. In this 
respect, paragraph (c)(4) reflects the fact that coordinated 
communications can occur through media other than television and radio. 
Moreover, for purposes of establishing a content standard in a 
coordination rule, there is no reason to exclude communications that 
meet the content requirements of an electioneering communication, but 
fail to constitute an electioneering communication only because of the 
media chosen for the communication.

[[Page 430]]

    Perhaps most importantly, paragraph (c)(4) creates parallel 
requirements for those whose communications do not technically qualify 
as electioneering communications. Because electioneering communications 
are by definition limited to broadcast, cable, or satellite 
communications (see 11 CFR 100.29), communications made through other 
media, such as print communications, are not included under the 
electioneering communication-based content standard of paragraph 
(c)(1). Similarly, political committees such as separate segregated 
funds or non-connected committees do not make electioneering 
communications because their payments are treated as expenditures. 
Therefore, under new paragraph (c)(4), for example, where a candidate 
and the separate segregated fund paying for the communication satisfy 
the conduct requirements of new 11 CFR 109.21(d), the separate 
segregated fund makes a coordinated communication if it pays for a 
newspaper advertisement. Thus, to avoid an arbitrary distinction in the 
content standards, paragraph (c)(4) applies to all ``public 
communications,'' a term defined and set forth in BCRA by Congress. 2 
U.S.C. 431(22); 11 CFR 100.26. The use of the term ``public 
communication'' provides consistency within the regulations and 
distinguishes covered communications from, for example, private 
correspondence and internal communications between a corporation or 
labor organization and its restricted class. The three commenters who 
specifically addressed the proposed use of this term expressed support 
for its inclusion. One of these commenters pointed out that the use of 
``public communication'' provides ``helpful consistency within the 
regulations.'' In addition, a different commenter suggested that the 
Commission ``completely exempt'' e-mail and Internet communications 
from its coordination regulations. By framing the content standard in 
terms of a ``public communication,'' the Commission addresses that 
comment. Although the term ``public communication'' covers a broad 
range of communications, it does not cover some forms of 
communications, such as those transmitted using the Internet and 
electronic mail. 11 CFR 100.26.
    This new standard focuses as much as possible on the face of the 
public communication or on facts on the public record. This latter 
point is important. The intent is to require as little characterization 
of the meaning or the content of communication, or inquiry into the 
subjective effect of the communication on the reader, viewer, or 
listener as possible. See Buckley v. Valeo, 424 U.S. 1, 42-44 (1976). 
The new paragraph (c)(4) is applied by asking if certain things are 
true or false about the face of the public communication or with 
limited reference to external facts on the public record. This fourth 
content standard does not require a description of a candidate's views 
or positions, a requirement in the proposed rules that raised 
objections from commenters.
    Paragraph (c)(4)(ii) of section 109.21 requires that the public 
communication must be publicly distributed or publicly disseminated 120 
days or fewer before a primary election or a general election. The 120-
day time frame is based on 2 U.S.C. 431(20)(A)(i) (see 11 CFR 
100.24(b)(1)) and has several advantages. First, it provides a 
``bright-line'' rule. Second, it focuses the regulation on activity 
reasonably close to an election, but not so distant from the election 
as to implicate political discussion at other times. As noted, Congress 
has, in part, defined ``Federal election activity'' in terms of a 120-
day time frame, deeming that period of time before an election to be 
reasonably related to that election. See 2 U.S.C. 431(20)(A)(i). In 
contrast, the ``express advocacy'' content standard in paragraph (c)(3) 
of section 109.21 applies without time limitation. Similarly, this 120-
day time frame is more conservative than the treatment of public 
communications in the definition of Federal election activity, which 
regulates public communications without regard to timeframe. 2 U.S.C. 
431(20)(A)(iii); 11 CFR 100.24(b)(3).
    The Commission has considered, but rejected, the use of a shorter 
time-frame, specifically, thirty days before a primary election and 
sixty days before a general election. This shorter time-frame would 
have been derived by analogy from the definition of ``electioneering 
communication.'' See 2 U.S.C. 434(f)(3)(A). The shorter time-frames 
would have had the advantage of symmetry with the electioneering 
communication definition. There is, however, an important difference 
between the electioneering communication concept and the paradigm 
adopted here for regulating coordination. Although this content 
standard (i.e., paragraph (c)(4)(ii)) is obviously similar to the 
definition of ``electioneering communication,'' this content standard 
is only one part of a three-part test (see discussion of paragraph (a) 
of section 109.21, above), whereas the definition of ``electioneering 
communication'' is complete in itself. Under this final rule, even if a 
political communication satisfies the content standard, the conduct 
standards must still be satisfied before the political communication is 
considered ``coordinated.'' In this light, the content standard may be 
viewed as a ``filter'' or a ``threshold'' that screens outs certain 
communications from even being subjected to analysis under the conduct 
standards.\2\ Thus it is appropriate to consider a broader time-frame 
when applying this content standard because it serves only to identify 
political communications that may be coordinated if other conditions 
(i.e., the conduct standards) are satisfied, and thus may be 
inappropriately underinclusive if too narrow.
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    \2\ In effect, the content standard of paragraph (c)(4)(ii) 
operates as a ``safe harbor'' in that communications that are 
publicly disseminated or distributed more than 120 days before the 
primary or general election will not be deemed to be ``coordinated'' 
under this particular content standard under any circumstances.
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    The new standard also encompasses communications that refer to 
political parties as well as those that identify candidates, as 
suggested by several commenters. This extension of the content 
standards implements 2 U.S.C. 441a(a)(7)(B)(ii), added by section 
214(c) of BCRA, which provides that expenditures made by any person in 
coordination with a political party committee is considered to be a 
contribution to that party committee.
    Several commenters said that there should be an exception to the 
content standards for communications that refer to the ``popular name'' 
of a bill or law that includes the name of a Federal candidate who was 
a sponsor of the bill or law. In addition to questions whether such an 
exception is necessary in light of the other restrictions explained 
above, the Commission believes that the ``popular name'' proposal would 
also open new avenues for the circumvention of the Act and the 
Commission's regulations. Because the ``popular name'' of a bill is not 
a defined term, and is not subject to specific restrictions by 
Congress, an exemption for the use of a candidate's name in the popular 
name of a bill might shield a communication that clearly attacks or 
supports a candidate by naming the bill in a way that associates the 
candidate with a popular or disfavored stance. The Commission concludes 
that if one or more of the conduct standards is met and the 
communication is directed to voters in that candidate's jurisdiction 
and made within 60 days of general election, Congress does not intend 
for such a communication to be exempted from the statutory requirements 
merely

[[Page 431]]

because the communication contains a reference to a crafted name for a 
piece of legislation in addition to the name of the clearly identified 
candidate.
    The new standard also incorporates the concept of the ``targeting'' 
of the communication as an indication of whether it is election-
related. BCRA's principal sponsors commented that a ``key factor'' in 
determining whether a communication should be covered under these rules 
is whether the communication is ``targeted'' to a specific voter 
audience. By requiring that the communication be ``directed to voters 
in the jurisdiction of the clearly identified Federal candidate,'' the 
Commission is addressing this concern. In order to encompass 
communications that are coordinated with a political party committee 
and refer to a political party, but do not refer to a candidate, the 
Commission also provides that the content standard in paragraph (c)(4) 
would be satisfied when the communication is directed ``to voters in a 
jurisdiction in which one or more candidates of the political party 
appear on the ballot.'' The ``directed to voters'' requirement focuses 
on the intended audience of the communication, rather than a 
quantitative analysis of the number of possible recipients or the 
expected geographic limits of a particular media, that will be 
determined on a case-by-case basis from the content of the 
communication, its actual placement, and other objective indicators of 
the intended audience. For example, a public communication that 
otherwise makes express statements about promoting or attacking 
Representative X or Senator Y for their stance on the ``X-Y Bill'' does 
not satisfy this requirement if it is only broadcast in Washington, DC, 
and not in either Member's district or State. For purposes of new 
paragraph (c)(4), ``jurisdiction'' means a member of Congress' 
district, the State of a U.S. Senator, and the entire United States for 
the President and Vice President in the general election or before the 
national nominating convention.
4. 11 CFR 109.21(d) Conduct Standards
    Paragraph (d) of section 109.21 lists five types of conduct that 
satisfy the ``conduct standard'' of the three-part coordination test. 
Under these rules, if one of these types of conduct is present, and the 
other requirements described in paragraphs (a) and (c) are satisfied, 
the communication is not made ``totally independently'' from the 
candidate, the candidate's authorized committee, or the political party 
committee, see Buckley, 424 U.S. at 47, and thus is coordinated. The 
introductory sentence of paragraph (d) implements the Congressional 
mandate in BCRA that the coordination regulation not require 
``agreement or formal collaboration.'' Pub. L. 107-155, sec. 214(c) 
(March 27, 2002); see more complete discussion below.
    In the NPRM, the Commission proposed five categories of conduct 
that would each satisfy the conduct standard when material information 
is conveyed or used: (1) A request or suggestion; (2) material 
involvement in decisions; (3) a substantial discussion; (4) use of a 
common vendor; and (5) use of a former employee or independent 
contractor of a campaign committee or political party. Several 
commenters offered general observations regarding the Commission's 
approach to a conduct standard in the NPRM. One commenter applauded the 
Commission's decision to focus on specific transactions leading to a 
coordinated communication, rather than general contacts between an 
organization and a campaign. That same commenter, however, complained 
along with three other commenters that the standards still operated to 
establish a presumption of coordination and should be further narrowed 
to require a direct causal link between the sharing of information and 
its use in a particular communication. One other commenter expressed a 
concern that the proposed rules would operate to unduly restrict 
corporations or labor organizations from preparing voter guides or 
``scorecards'' to reflect the positions of candidates on specific 
legislation or issues.
    BCRA's principal sponsors urged the Commission to ensure that 
lobbying activities would not result in a finding of coordination under 
the final rules. Similarly, a different commenter suggested that the 
conduct standards be limited to contacts with a candidate in his or her 
role as a candidate, rather than simply in the capacity of a 
legislator. That commenter indicated that without such a restriction 
the conduct rules would improperly restrict the ability of 
organizations to coordinate issue advocacy with elected officials. ``An 
action alert from a nonprofit asking the public to call their Senators 
and urge them to pass McCain-Feingold,'' the commenter argued, ``is 
more effective if the timing and content can be coordinated with 
Senator McCain.''

A. 11 CFR 109.21(d)(1) Request or Suggestion

    Under the Act, as amended by BCRA, an expenditure made by any 
person at the ``request or suggestion'' of a candidate, an authorized 
committee, a political party committee, or an agent of any of the 
foregoing is a contribution to the candidate or political party 
committee. 2 U.S.C. 441a(a)(7)(B)(i), (ii). The first conduct standard, 
in 11 CFR 109.21(d)(1), implements this ``request or suggestion'' 
statutory provision. This standard has two prongs and satisfying either 
prong satisfies the conduct standard.
    Three commenters requested in a joint comment that the term 
``suggest'' be given additional definition or explanation, proposing 
that the definition should reflect a suggestion as a ``a palpable 
communication intended to, and reasonably understood to, convey a 
request for some action.'' The Commission notes that the ``request or 
suggest'' standard is derived from the Supreme Court's Buckley decision 
and has existed in the Commission's regulations without further 
definition for over two decades. See Buckley v. Valeo, 424 U.S. at 47 
(finding that ``the `authorized or requested' standard of the Act 
operates to treat all expenditures placed in cooperation with or with 
the consent of a candidate, his agents, or an authorized committee of 
the candidate as contributions''); see also H.R. Doc. No. 95-44, at 55 
(Jan. 12, 1977) (Explanation and Justification for 11 CFR 109.1, 
defining independent expenditure as an ``expenditure . . . which is not 
made * * * at the request or suggestion of'' a candidate, authorized 
committee, or their agents). A determination of whether a request or 
suggestion has occurred requires a fact-based inquiry that, even under 
the commenters' proffered explanation, can not be easily avoided 
through further definition.
    A different commenter expressed concern that the proposed rule 
would have broadly affected communications made with respect to all 
candidates after the person paying for such communications has received 
a request or suggestion from any candidate. In this final rule, the 
Commission does not intend such an application. Neither of the two 
prongs of this conduct standard can be satisfied without some link 
between the request or suggestion and the candidate or political party 
who is, or that is, clearly identified in the communication. Where 
Candidate A requests or suggests that a third party pay for an ad 
expressly advocating the election of Candidate B, and that third party 
publishes such a communication with no reference to Candidate A, no 
coordination will result between Candidate B and the third party payor. 
However, a candidate is not removed from the provisions of the conduct 
standards merely by virtue of being a candidate. If Candidate A is an 
``agent''

[[Page 432]]

for Candidate B in the example above, then the communication would be 
coordinated. Similarly, if Candidate A requests that Candidate B pay 
for a communication that expressly advocates the election of Candidate 
A, and Candidate B pays for such a communication, that communication is 
a coordinated communication and Candidate B makes an in-kind 
contribution to Candidate A.
    The first type of conduct, in paragraph (d)(1)(i), is satisfied if 
the person creating, producing, or distributing the communication does 
so at the request or suggestion of a candidate, authorized committee, 
political party committee, or agent of any of the foregoing. The 
Buckley court originally drew on the 1974 House and Senate Reports 
accompanying the 1974 amendments to the Act when it upheld the section 
in FECA that distinguished a communication made ``at the request or 
suggestion'' of the candidate or political party committee from those 
that are made ``totally independently from the candidate and his 
campaign.'' Buckley, 424 U.S. at 47 (citing H.R. Rep. No. 93-1239, at 6 
(1974) and S. Rep. No. 93-689, at 18 (1974)). A ``request or 
suggestion'' is therefore a form of coordination under the Act, as 
approved by Buckley. A request or suggestion encompasses the most 
direct form of coordination, given that the candidate or political 
party committee communicates desires to another person who effectuates 
them.
    In the NPRM, the Commission noted that this provision, for example, 
would not apply to a speech at a campaign rally, but, in appropriate 
cases, would apply to requests or suggestions directed to specific 
individuals or small groups for the creation, production, or 
distribution of communications. One commenter agreed with this 
approach, requesting that the rule itself more clearly reflect this 
explanation. However, the Commission is not amending its rules because 
it could be potentially confusing to delineate in a rule every 
conceivable situation that could arise. Instead, the Commission offers 
the following explanation of the new rule. The ``request or 
suggestion'' conduct standard in paragraph (d)(1) is intended to cover 
requests or suggestions made to a select audience, but not those 
offered to the public generally. For example, a request that is posted 
on a web page that is available to the general public is a request to 
the general public and does not trigger the conduct standard in 
paragraph (d)(1), but a request posted through an intranet service or 
sent via electronic mail directly to a discrete group of recipients 
constitutes a request to a select audience and thereby satisfies the 
conduct standard in paragraph (d)(1). Similarly, a request in a public 
campaign speech or a newspaper advertisement is a request to the 
general public and is not covered, but a request during a speech to an 
audience at an invitation-only dinner or during a membership 
organization function is a request to a select audience and thereby 
satisfies the conduct standard in paragraph (d)(1).
    The second way to satisfy the ``request or suggestion'' conduct 
standard (paragraph (d)(1)(ii)) is for a person paying for a 
communication to suggest the creation, production, or distribution of 
the communication to the candidate, authorized committee, political 
party committee, or agent of any of the foregoing, and for the 
candidate, authorized committee, political party committee, or agent to 
assent to the suggestion. The NPRM explained that this second way of 
satisfying the conduct standard is intended to prevent circumvention of 
the statutory ``request or suggestion'' test (2 U.S.C. 
441a(a)(7)(B)(i), (ii)) by, for example, the expedient of implicit 
understandings without a formal request or suggestion. Two commenters 
supported the addition of this new prong in order to prevent such 
circumvention of the Act. Two different commenters suggested that only 
affirmative assent should satisfy the conduct standard, although one of 
these commenters proposed that the rule should also cover situations 
where the parties have a prior agreement that a certain response be 
taken as an affirmative answer. Three other commenters opposed an 
assent standard entirely as overly complex and dependent on subjective 
criteria. One of these commenters argued that such an approach would 
undermine the Commission's efforts to create bright lines with respect 
to conduct resulting in coordination, and joined with another of these 
commenters in expressing concern that such a standard would be too 
easily triggered in the context of lobbying or other discussions with 
elected representatives. Another of these commenters also questioned 
whether certain responses, such as silence or ``when a Congressman's 
eyes light up at the mention of a certain communication,'' constitute 
assent. One commenter also questioned whether evidence of circumvention 
exists to justify this approach. This commenter warned that the assent 
standard could run afoul of the district court's decision in Christian 
Coalition, which, in the commenter's words, determined that 
``coordination does not exist where a union or corporation merely 
informs a candidate about its own political plans.''
    The Commission recognizes that the assent of a candidate may take 
many different forms, but it disagrees that a standard encompassing 
assent to a suggestion is overly complex. Assent to a suggestion is 
merely one form of a request; it is ``an expression of a desire to some 
person for something to be granted or done.'' See Black's Law Dict. 
(6th ed. 1990) p. 1304 (definition of ``request''). A determination of 
whether assent to a suggestion occurs is necessarily a fact-based 
determination, but no more so than a determination of whether other 
forms of a request or suggestion occur. The Commission therefore also 
disagrees with the commenter who suggested that the approach in the 
NPRM might not be permissible in light of the Christian Coalition 
decision. The Commission did not, as that commenter suggested, propose 
that coordination could result where a payor ``merely informs'' a 
candidate or political party committee of its plans. Rather, under the 
proposed rule, a candidate or a political party committee will have 
accepted an in-kind contribution only if there is assent to the 
suggestion; by rejecting the suggestion, the candidate or political 
party committee may unilaterally avoid any coordination.
    It is the Commission's judgment that the assent to a suggestion 
must be encompassed by this conduct standard to prevent the 
circumvention of the requirements of the Act in this area. Therefore, 
and in light of the reasons set forth in the NPRM and above, the 
Commission is promulgating the request or suggestion standard without 
change from its form in the NPRM.
    One commenter suggested that the Commission should permit a person 
to rebut the ``presumption'' of coordination after a request or 
suggestion ``by demonstrating that the organization had decided to make 
that communication prior to the contact with the candidate, campaign, 
or party.'' The Commission does not agree with the creation of such a 
``presumption.'' Instead, a request or suggestion must be based on 
specific facts, rather than presumed, to satisfy this conduct standard. 
Thus, the absence of a presumption obviates the need to establish a 
mechanism for rebuttal.
    As discussed above, the Buckley Court expressly recognized a 
request or suggestion by a candidate as a direct form of coordination 
resulting in a contribution. Buckley, 424 U.S. at 47. In the NPRM, the 
Commission sought

[[Page 433]]

comment on whether the unique nature of requests or suggestions by 
candidates or political party committees indicates that such conduct 
should be handled differently under the coordination regulations. 
Specifically, the Commission asked whether a request or suggestion for 
a communication by a candidate or political party committee should be 
viewed as a special case, and as sufficient, in and of itself, 
regardless of the contents of the communication, to establish 
coordination. Three commenters opposed any rule in which a request or 
suggestion, without any content standard, could constitute a 
coordinated communication. One of these commenters argued that such an 
approach would permit a ``false positive,'' such as when a group that 
has long planned a lobby effort meets with a legislator, and the 
legislator ``expresses her hope'' that the group will publicize a 
particular piece of legislation bearing her name. Similarly, another of 
these commenters asserted that there are ``numerous communications that 
may be made at the request or suggestion of a candidate that have no 
relationship to any election.'' The Commission agrees with these 
commenters' concerns. Even supporters of this approach appeared to 
acknowledge in their testimony that a request to run an advertisement 
well before the next election might not be in an ``electoral context'' 
and therefore should not necessarily be treated as a coordinated 
communication under the Commission's regulations. Therefore, the final 
rules do not create any exception from the content standard for the 
``request or suggestion'' conduct standard.

B. 11 CFR 109.21(d)(2) Material Involvement

    The second conduct standard, 11 CFR 109.21(d)(2), addresses 
situations in which a candidate, authorized committee, or a political 
party committee is ``materially involved in decisions'' regarding 
specific aspects of a public communication paid for by someone else. 
Those specific aspects are listed in paragraphs (i) through (vi) of 
paragraph (d)(2): (i) The content of the communication; (ii) the 
intended audience; (iii) the means or mode of the communication; (iv) 
the specific media outlet used; (v) the timing or frequency of the 
communication; or (vi) the size or prominence of a printed 
communication or duration of a communication by means of broadcast, 
cable, or satellite. Please note that ``the specific media outlet 
used'' includes those listed in the definition of ``public 
communication'' in 11 CFR 100.26, including the broadcast and print 
media, mass mailings, and telephone banks. The ``content of the 
communication'' would include the script of telephone calls.
    One commenter argued that this conduct standard should be limited 
to situations in which a candidate or political party has ``significant 
control or influence over decisions'' regarding the communication. The 
Commission disagrees, as such a standard would do little to clarify the 
rule or its application. The same commenter expressed concern about the 
scope of the ``material involvement'' standard, arguing that one 
candidate's actions with respect to a third-party spender might 
``taint'' all of that third-party's communications with respect to 
different candidates. For the same reasons discussed above in the 
context of the ``request or suggestion'' standard, the Commission is 
not tailoring its rules to address that perceived potential outcome.
    Two other commenters characterized the material involvement 
standard as redundant in light of the ``substantial discussion'' 
conduct standard, and one also opposed its inclusion because of 
vagueness and because Congress did not mandate this specific approach 
in BCRA, nor was it mandated by Christian Coalition. In contrast, four 
commenters indicated general support for the inclusion of this standard 
in the final rules and urged the Commission to expand it to cover 
material involvement in ``discussions,'' in addition to decisions, 
regarding a communication. The Commission recognizes that there is a 
potential overlap between the ``material involvement'' standard and the 
``substantial discussion'' standard explained below. Many activities 
that satisfy the ``substantial discussion'' conduct standard will also 
satisfy the ``material involvement'' standard, but the ``material 
involvement'' standard encompasses some activities that would not be 
encompassed by the ``substantial discussion'' standard or any of the 
other conduct standards. For example, a candidate is materially 
involved in a decision regarding the content of a communication paid 
for by another person if he or she has a staffer deliver to that person 
the results of a polling project recently commissioned by that 
candidate, and the polling results are material to the payor's decision 
regarding the intended audience for the communication. However, as 
explained below, the ``substantial discussion'' standard would not be 
satisfied by such delivery without some ``discussion'' or some form of 
interactive exchange between the candidate and the person paying for 
the communication. The Commission thus believes that the ``material 
involvement'' standard is necessary to address forms of ``real world'' 
coordination that would not be addressed in any of the other conduct 
standards.
    One commenter advised against any interpretation of the rule that 
would define ``material'' to require a showing of direct causation. For 
the purposes of 11 CFR part 109, ``material'' has its ordinary legal 
meaning, which is ``important; more or less necessary; having influence 
or effect; going to the merits.'' Black's Law Dict. (6th ed. 1990) p. 
976. Thus, the term ``materially involved in decisions'' does not 
encompass all interactions, only those that are important to the 
communication. The term ``material'' is included to safeguard against 
the inclusion of incidental participation that is not important to, or 
does not influence, decisions regarding a communication. The factual 
determination of whether a candidate's or authorized committee's 
involvement is ``material'' must be made on a case-by-case basis.
    The ``material involvement'' standard does not provide a ``bright-
line'' because its operation is necessarily fact-based. Nevertheless 
the inclusion of a ``materiality'' requirement serves to protect 
against overbreadth, consistent with Supreme Court jurisprudence. In 
construing the meaning of ``material'' in the context of Securities 
Exchange Commission regulations, the Supreme Court specifically 
rejected a ``bright-line rule'' for materiality:

    A bright-line rule indeed is easier to follow than a standard 
that requires the exercise of judgment in the light of all the 
circumstances. But ease of application alone is not an excuse for 
ignoring the purposes of the Securities Acts and Congress' policy 
decisions. Any approach that designates a single fact or occurrence 
as always determinative of an inherently fact-specific finding such 
as materiality, must necessarily be overinclusive or underinclusive.

Basic v. Levinson, 485 U.S. 224, 236 (1988). Therefore, the ``material 
involvement'' standard does not impose a requirement of direct 
causation, but focuses instead on the nature of the information 
conveyed and its importance, degree of necessity, influence or the 
effect of involvement by the candidate, authorized committee, political 
party committee, or their agents in any of the communication decisions 
enumerated in 11 CFR 109.21(d)(2)(i) through (vi).
    The Commission has considered and rejected the suggestion of the 
commenter who recommended that ``material involvement'' be narrowed to

[[Page 434]]

a ``but-for'' test, which would require proof that the communication 
would not have occurred but for the material involvement of a 
candidate, authorized committee, political party committee, or agent. 
The Commission is not adopting this approach or any similar requirement 
of direct causation in its final rules. Under such an analysis, 
information would only be ``material'' if all other potential 
influences on the content of the communication, its intended audience, 
its means or mode, the specific media outlet used, the timing or 
frequency of the communication, or the size, prominence, or duration of 
the communication could be eliminated. This would result in an 
extremely intrusive factual determination. For example, under the 
commenter's suggested approach, a candidate might propose a specific 
date for publication of a communication, but that candidate would not 
be materially involved in the decision regarding the timing of the 
communication unless the Commission could prove that no alternate 
factor could have led to the same timing decision. Such an approach is 
also unworkable because foreclosing all potential alternatives imposes 
an unnecessarily high burden of proof. The Commission also believes 
that such an approach would be unwarranted because the plain meaning of 
``material,'' as explained above, provides sufficient guidance for an 
inherently fact-based determination. For the same reasons, the 
Commission rejects any interpretation of ``material involvement'' that 
would require a showing that the communication is made ``as a result 
of'' the involvement of a candidate, an authorized committee, a 
political party committee, or an agent.
    Instead, a candidate, authorized committee, or political party 
committee is considered ``materially involved'' in the decisions 
enumerated in paragraph (d)(2) after sharing information about plans, 
projects, activities, or needs with the person making the 
communication, but only if this information is found to be material to 
any of the above-enumerated decisions related to the communication. 
Similarly, a candidate or political party committee is ``materially 
involved in decisions'' if the candidate, political party committee, or 
agent conveys approval or disapproval of the other person's plans. The 
candidate or representatives of an authorized committee or political 
party committee need not be present or included during formal 
decisionmaking process but need only participate to the extent that he 
or she assists the ultimate decisionmaker, much like a lawyer who 
provides legal advice to a client is materially involved in a client's 
decision even when the client ultimately makes the decision.
    The Commission notes that as with the ``request or suggest'' 
standard, the ``material involvement'' standard would not be satisfied, 
for example, by a speech to the general public, but is satisfied by 
remarks addressed specifically to a select audience, some of whom 
subsequently create, produce, or distribute public communications. 
However, it is not necessary that the involvement of the candidate or 
political party committee be traced directly to one specific 
communication. Rather, a candidate's or political party committee's 
involvement is material to a decision regarding a particular 
communication if that communication is one of a number of 
communications and the candidate or political party committee was 
materially involved in decisions regarding the strategy for those 
communications. For example, if a candidate is materially involved in a 
decision about the content or timing of a 10-part advertising campaign, 
then each of the 10 communications is coordinated without the need for 
further inquiry into the decisions regarding each individual ad on its 
own.
    In order to respond to requests by several commenters for 
additional clarification about how the standard would operate, the 
Commission is providing the following hypothetical: Candidate A reads 
in the newspaper that the Payor Group is planning an advertising 
campaign urging voters to support Candidate A. Candidate A faxes over 
her own ad buying schedule to Payor Group, hoping that Payor Group will 
plan its own ad buying schedule around Candidate A's schedule to 
maximize the effect of both ad campaigns. The Payor Group subsequently 
runs ads that are all on NBC and ABC during the 6:00 news hour and 
during the most expensive weekday timeslot on NBC, whereas Candidate 
A's ads are run on CBS during the 6:00 news hour and during the most 
expensive time slot on CBS. When asked, Payor Group acknowledges that 
it received the fax from Candidate A, but says only that its plans for 
the timing of the campaign were in flux at the time they received the 
fax. The analysis under the ``materially involved'' conduct standard 
focuses on whether the fax constituted material involvement by the 
candidate in a decision regarding the timing of the Payor Group 
communications. Significant facts might include that the Payor Group 
changed its previously planned schedule, or that Payor Group had not 
yet made plans and had factored in the fax in its decision to choose 
CBS and the same time slot, or show in some other way that the fax was 
``important; more or less necessary, having influence or effect, [or] 
going to the merits'' with respect to the Payor Group's decisions about 
the timing of its ads. The transmission and receipt of the fax in 
combination with the correlation of the two ad campaigns gives rise to 
a reasonable inference that Candidate A's involvement was material to 
the Payor Group's decision regarding the timing of its ad campaign. If, 
on the other hand, the example is changed so that the Payor Group's ads 
run on the same channel right after the candidate's ads in a way that 
lessens the effect of both ad campaigns, it may be appropriate to 
conclude that Candidate A's involvement was not material to the Payor 
Group's decision regarding the timing of its ad campaign. In other 
words, the degree to which the communications overlapped or did not 
overlap is one indication of whether Candidate A's involvement was 
material to the timing of the Payor Group communications.

C. 11 CFR 109.21(d)(3) Substantial Discussion

    In BCRA, Congress also directed the Commission to address 
``payments for communications made by a person after substantial 
discussion about the communication with a candidate or political 
party.'' Public Law 107-155, sec. 214(c)(4) (March 27, 2002). In the 
NPRM, the Commission proposed a third conduct standard that would apply 
when a communication satisfying one or more of the content standards 
``is created, produced, or distributed after one or more substantial 
discussions about the communication between the person paying for the 
communication'' and a candidate, authorized committee, political party 
committee, or an agent of any of the foregoing. 67 FR at 60,065 
(September 24, 2002). The proposed rule also specified that a 
discussion is substantial ``if information about the plans, projects, 
or needs of the candidate or political party committee is conveyed to a 
person paying for the communication, and that information is material 
to the creation, production, or distribution of the communication.'' 67 
FR at 60,066 (September 24, 2002).
    Three commenters supported the inclusion of this standard exactly 
as proposed in the NPRM. Two different commenters, however, 
characterized this standard as redundant in light of the ``material 
involvement'' standard

[[Page 435]]

and suggested that they be combined into a single standard. One other 
commenter asserted that there was ``insufficient quantification'' as to 
the meaning of a ``substantial'' discussion and recommended that 
``substantial discussion'' join ``material involvement'' as subjects 
for future rulemaking consideration. A different commenter advised that 
``material'' should be further defined in the context of this standard. 
Two commenters advocated a return to the Christian Coalition test of 
whether or not the candidate and the spender emerge as ``partners or 
joint venturers,'' while one of these commenters urged the Commission 
to specifically exclude discussions about policy and legislation in 
this context.
    The Commission is including the ``substantial discussion'' standard 
in the final rules on coordinated communications because, as stated 
above, Congress required it to address this issue. Public Law 107-155, 
sec. 214(c)(4) (March 27, 2002). Under paragraph (d)(3) of 11 CFR 
109.21, a communication meets the conduct standard if it is created, 
produced, or distributed after one or more substantial discussions 
between the person paying for the communication, or the person's 
agents, and the candidate clearly identified in the communication, his 
or her authorized committee, his or her opponent, or the opponent's 
authorized committee, a political party committee, or their agents. 
While the Commission recognizes the commenter's concerns that 
``substantial'' and ``material'' are not set forth as bright-line 
tests, the Commission views an analysis of a ``substantial discussion'' 
as necessarily fact-specific and not naturally conducive to a 
meaningful bright-line analysis. Nevertheless, the Commission is 
providing an analytical framework in which a finder of fact determines 
whether a discussion occurred, whether certain information was 
conveyed, and whether that information is material to the creation, 
production, or distribution of the communication. The Christian 
Coalition suggestion that a candidate and spender emerge as ``joint 
venturers'' would only serve to confuse readers. The ``substantial 
discussion'' conduct standard in this final rule addresses a direct 
form of coordination between a candidate, authorized committee, 
political party committee, or their agents and a third-party spender, 
and the Commission is narrowing the scope of this standard through the 
additional requirements that the discussion be ``substantial'' and the 
information conveyed be ``material.'' Paragraph (d)(3) explains that a 
``discussion'' is ``substantial'' if information about the plans, 
projects, activities, or needs of the candidate, authorized committee, 
or political party committee that is material to the creation, 
production or distribution of the communication is conveyed to a person 
paying for the communication. ``Discuss'' has its plain and ordinary 
meaning, which the Commission understands to mean an interactive 
exchange of views or information. ``Material'' has the meaning 
explained above in the context of the ``materially involved'' standard. 
In other words, the substantiality of the discussion is measured by the 
materiality of the information conveyed in the discussion.

D. 11 CFR 109.21(d)(4) Common Vendor

    In BCRA, Congress required the Commission to address ``the use of a 
common vendor'' in the context of coordination. Public Law 107-155, 
sec. 214(c)(2) (March 27, 2002). In the NPRM, the Commission proposed 
the conduct standard in paragraph (d)(4) of section 109.21 to implement 
this Congressional mandate. Proposed paragraphs (d)(4)(i) and (ii) 
provide that a common vendor is a commercial vendor who is contracted 
to create, produce, or distribute a communication by the person paying 
for that communication after that vendor has, during the same election 
cycle, provided any one of a number of listed services to a candidate 
who is clearly identified in that communication, or his or her 
authorized committee, or his or her opponent or the opponent's 
authorized committee, or a political party committee, or an agent of 
any of the foregoing. Under proposed paragraph (d)(4)(iii), the conduct 
standard would be satisfied if the common vendor conveys material 
information about the plans, projects, or needs of a candidate, 
authorized committee, or political party committee to the person paying 
for the communication, or if the vendor uses that material information 
in the creation, production, or distribution of a covered 
communication.
    Many commenters addressed the ``common vendor'' standard proposed 
in the NPRM. One commenter asserted that this rule would not be 
enforceable because the term ``common vendor'' was ``inadequately 
defined'' to cover most vendors. This commenter warned that proposed 
standard would not reach many vendors who continuously re-organize 
personnel, merge, or dissolve and reorganize as different entities 
during or between election cycles. The same commenter believed it was 
important to include in the list of covered services media production 
vendors, pollsters, and media buying firms (for purchasing time slots) 
because they work closely together.
    The Commission recognizes the possibility that commercial vendors 
may attempt to circumvent the new rules by re-organizing as different 
entities or replacing personnel. However, the Commission notes that the 
final rules focus on the use or conveyance of information used by a 
vendor, including its owner, officers, and employees, in providing 
services to a candidate, authorized committee, or political party 
committee, rather than the particular structure of the vendor. The 
specific reference to a vendor's owners and officers was not included 
in the proposed rule, but is being added to the final rule to address 
the commenter's concern. Therefore, if an individual or entity 
qualifies as a commercial vendor at the time that individual or entity 
contracts with the person paying for a communication to provide any of 
the specified services, then the individual or entity qualifies as a 
common vendor to the extent that the same individual or entity, ``or 
any owner, officer, or employee'' of the commercial vendor, has 
provided any of the enumerated services to the candidate during the 
specified time period. Thus, a commercial vendor may qualify as a 
common vendor under 11 CFR 109.21(d)(4) even after reorganizing or 
shifting personnel.
    Five commenters argued that the Commission should presume that the 
conduct standard is satisfied whenever a candidate and an outside 
spender use the same common vendor. According to these commenters, the 
rule proposed by the Commission in the NPRM would create an 
``impossibly high standard to meet'' if it required a showing that the 
common vendor actually ``uses'' particular information.
    In contrast, five different commenters asserted that any such 
presumption would be overly broad and ``taint'' the vendor, or submit 
the candidate, political party committee, vendor, or spender to 
unwarranted ``liability'' for communications presumed to be coordinated 
merely because of the use of the vendor. Several commenters in this 
latter group were concerned that an overly broad rule would chill 
speech and discourage vendors from providing services to candidates or 
political party committees, which the commenters warned would be 
particularly troublesome in areas where only a limited number of 
vendors provide specific services. One commenter

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argued that the proposed standard could lead to extensive and 
burdensome investigations that would place spenders at a disadvantage 
because it would be difficult for them to show that the vendor had not 
used certain information from a candidate's campaign committee or 
political party committee to create a communication. One commenter, who 
described himself as being in the business of ``buying media spot time 
on behalf of various political clients,'' stated that he had spent a 
substantial sum of money responding to investigations, and opposed any 
rule in which ``merely associating'' with a common vendor might expose 
the person paying for a communication to the risk of enforcement 
proceedings. Four of these commenters, however, were generally 
supportive of the Commission's proposal to require that the common 
vendor ``use or convey'' material information to the person making the 
communication at issue, as opposed to simply providing services to both 
a candidate or party and the spender.
    Similarly, three other commenters expressed concern about the ``per 
se inclusion of vendors by class'' and suggested that the inclusion of 
specific types of vendors should merely raise a ``rebuttable 
presumption.'' These three commenters further noted that the proposed 
reference to ``material information'' would include information ``used 
previously'' in providing services to the candidate or party. These 
commenters questioned how a vendor might account for the ``use'' of 
material information.
    After considering the wide range of comments, the Commission has 
decided to promulgate a final rule that is similar in many respects to 
the proposed rule, with certain modifications discussed below. It 
disagrees with those commenters who contended the proposed standard 
created any ``prohibition'' on the use of common vendors, and likewise 
disagrees with the commenters who suggested it established a 
presumption of coordination. Instead, the Commission notes that a 
different group of commenters urged the Commission to adopt such a 
presumption precisely because they believed the proposed standard did 
not already contain a presumption and would therefore be difficult to 
meet. The final rules in 11 CFR 109.21(d)(4) restrict the potential 
scope of the ``common vendor'' standard by limiting its application to 
vendors who provide specific services that, in the Commission's 
judgment, are conducive to coordination between a candidate or 
political party committee and a third party spender. But under this 
final rule, even those vendors who provide one or more of the specified 
services are not in any way prohibited from providing services to both 
candidates or political party committees and third-party spenders. This 
regulation focuses on the sharing of information about plans, projects, 
activities, or needs of a candidate or political party through a common 
vendor to the spender who pays for a communication that could not then 
be considered to be made ``totally independently'' from the candidate 
or political party committee.
    The only commenter who identified himself as providing vendor 
services indicated that it is not the common practice for vendors to 
make use of one client's media plans in executing the instructions of a 
different client, and sharing ``any client information given by 
another'' would ``compromise the professional relationship'' that is at 
the ``core of any service business.'' That commenter observed that 
``[c]ommon vendors, at whatever tier, who avoid such conduct should 
never be at risk of being deemed an instrument of coordination.'' No 
other commenters offered conflicting information on these points. Thus, 
because the Commission addresses only the use or conveyance of 
information material to the communication, the final rules narrowly 
target the coordination activity without unduly intruding into existing 
business practices.
    The common vendor rule is carefully tailored to ensure that all 
four of the following conditions must be met. First, under 11 CFR 
109.21(d)(4)(i), the person paying for the communication, or the agent 
of such a person, must contract with, or employ, a ``commercial 
vendor'' to create, produce, or distribute the communication. The term 
``commercial vendor'' is defined in the Commission's pre-BCRA 
regulations at 11 CFR 116.1(c) as ``any person[] providing goods or 
services to a candidate or political committee whose usual and normal 
business involves the sale, rental, lease, or provision of those goods 
or services.'' Thus, this standard only applies to a vendor whose usual 
and normal business includes the creation, production, or distribution 
of communications, and does not apply to the activities of persons who 
do not create, produce, or distribute communications as a commercial 
venture.
    The second condition, in paragraph (d)(4)(ii), is that the 
commercial vendor must have provided certain services to the candidate 
or political party committee that puts the commercial vendor in a 
position to acquire information about the campaign plans, projects, 
activities, or needs of the candidate or political party committee that 
is material to the creation, production or distribution of the 
communication. Nine specific services are enumerated in paragraphs 
(d)(4)(ii)(A) through (I). Providing these services places the ``common 
vendor'' in a position to convey information about the candidate's or 
party committee's campaign plans, projects, activities, or needs to the 
person paying for the communication where that information is material 
to the communication.
    The third condition is that the new rule only applies to common 
vendors who provide the specified services during the current election 
cycle. ``Election cycle'' is defined in 11 CFR 100.3. The Commission 
sought comment on whether a different time period, such as a fixed two-
year period, would more accurately align the rule with existing 
campaign practices. One commenter responded that a two-year period 
would be too long and suggested that the standard should pertain ``only 
to vendors who were common during the election year,'' or possibly 
further limited to vendors who provide services during the 30-day 
period before a primary election or the 60-day period before an 
election. That commenter also suggested that a time limit be placed on 
the use or conveyance of information received from a candidate or 
political party in recognition that such information would eventually 
become stale and unworthy of restriction. A different commenter, 
however, suggested that a two-year time limit would be too short 
because it would not appropriately encompass election activity that 
takes place throughout the six-year Senate election cycle. Another 
commenter advised that the time limit for common vendor activities 
should be limited to the period ``during the calendar year in which the 
candidate's name is on the ballot for election to Federal office.'' One 
commenter proposed an alternative in which a vendor's services would 
not be covered by the rule outside of the 30 days following the time 
the vendor ceased working for the candidate or political party 
committee.
    The Commission is retaining ``election cycle'' as the temporal 
limit in the final rules. The election cycle provides a clearly defined 
period of time that is reasonably related to an election. The mixture 
of an election cycle with a calendar year cutoff would likely cause 
confusion.
    The fourth condition, in paragraph (d)(4)(iii), requires that the 
commercial

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vendor ``uses or conveys information about the candidate's campaign 
plans, projects, activities, or needs'' or the political party 
committee's campaign plans, projects, activities, or needs where that 
information is material to the creation, production, or distribution of 
the communication. This requirement encompasses situations in which the 
vendor assumes the role of a conduit of information between a candidate 
or political party committee and the person making or paying for the 
communication, as well as situations in which the vendor makes use of 
the information received from the candidate or political party 
committee without actually transferring that information to another 
person. By referring in the final rule to the candidate's ``campaign'' 
plans, projects, activities, or needs, the Commission clarifies that 
this conduct standard is not intended to encompass lobbying activities 
or information that is not related to a campaign. The Commission notes, 
however, that to the extent information relates to campaign plans, 
projects, activities, or needs, that information would be covered by 
this provision even if that information also related to non-campaign 
plans, projects, activities, or needs of the candidate.
    Several commenters opposed the inclusion of the ``use or convey'' 
requirement as being exceedingly difficult to prove, while other 
commenters viewed it as necessary protection against an unduly 
burdensome rule. Two of the commenters who supported a general 
presumption of coordination suggested that a confidentiality agreement 
might be used to rebut the presumption, while three others opposed a 
general presumption suggested that the Commission establish a safe 
harbor for spenders who enter into a confidentiality agreement filed 
under seal with the Commission. A different commenter suggested that 
the ``use or convey'' provision would be ``unworkable'' unless it 
provided for some form of exception for the use of an ``ethical 
screen.'' Otherwise, according to that commenter, a single employee 
might ``disqualify'' an entire firm from providing services to both a 
candidate and a third-party spender.
    The final rule does not require the use of any confidentiality 
agreement or ethical screen because it does not presume coordination 
from the mere presence of a common vendor. The final rule also does not 
dictate any specific changes to the business relationship between a 
vendor and its clients. The Commission does not anticipate that a 
person who hires a vendor and who, irrespective of BCRA's requirements, 
follows prudent business practices, will be inconvenienced by the final 
rule. Nevertheless, the Commission does not agree that the mere 
existence of a confidentiality agreement or ethical screen should 
provide a de facto bar to the enforcement of the limits on coordinated 
communication imposed by Congress. Without some mechanism to ensure 
enforcement, these private arrangements are unlikely to prevent the 
circumvention of the rules.
    The Commission also sought comment on the list of common vendor 
services covered in paragraph (d)(4)(ii), and specifically whether 
purchasing advertising time slots for television, radio, or other media 
should be added to that list. Several commenters recommend excluding 
the following groups of vendor classes from those listed in the 
proposed rules on the principle that they lack adequate control as 
decisionmakers or they have little knowledge of communications: (1) 
``Media time buyers and others where the technical nature of their 
services diminishes their role in controlling the content of 
strategically sensitive communications;'' (2) fundraisers; (3) vendors 
involved in selecting personnel, contractors, or subcontractors; (4) 
vendors involved in consulting; and (5) vendors involved in identifying 
or developing voter lists, mailing lists, or donor lists. A media buyer 
urged the Commission not to include media buyers in the list of covered 
activities because they have little decisionmaking authority and act 
within ``predetermined strategic parameters including timing, 
geographic and demographic target audiences, and budget,'' but do not 
``create, produce, or distribute'' a communication by themselves.
    The Commission is incorporating the list of covered common vendor 
services into the final rules without change from its form in proposed 
section 109.21(d)(4)(ii) of the NPRM. The Commission recognizes that 
media buyers might potentially serve a number of different roles at the 
direction of various clients. Therefore, the Commission is not 
including ``purchasing advertising time slots for television, radio, or 
other media'' as a distinct category in the list of common vendor 
services covered in paragraph (d)(4)(ii). However, media buyers and 
other similar service providers are included to the extent that their 
services fit within one of the other categories already listed in 
paragraph (d)(4)(ii).

E. 11 CFR 109.21(d)(5) Former Employee/Independent Contractor

    In BCRA, Congress required the Commission to address in its revised 
coordination rules ``persons who previously served as an employee of'' 
a candidate or political party committee.'' Public Law 107-155, sec. 
214(c)(3) (March 27, 2002). In the NPRM, the Commission proposed 11 CFR 
109.21 (d)(5) to implement this Congressional requirement. Proposed 
paragraph (d)(5) would have applied to communications paid for by a 
person who was previously an employee or an independent contractor of a 
candidate, authorized committee, or political party committee, or by 
the employer of such a person. Under the rule proposed in the NPRM, the 
``former employee'' conduct standard would be satisfied if the former 
employee or independent contractor ``makes use of or conveys'' 
``material information'' about the candidate's or political party 
committee's plans, projects, or needs to the person paying for the 
communication.
    Commenters responding to the proposed rules made many of the same 
points about the ``former employee'' standard as they made with respect 
to the ``common vendor'' standard. One commenter opposed the proposal 
in the NPRM that covered the ``use'' of material information provided 
by a former employee. Such a standard, that commenter asserted, would 
be too broad and would amount to a ``per se'' rule that would lead to 
overly intrusive investigations. In contrast, four commenters argued 
that the proposed standard was not broad enough and suggested that the 
Commission establish a presumption of coordination when a former 
employee or an independent contractor of a campaign committee or 
political party committee pays for, or his or her current employer pays 
for, a communication that satisfies the content requirements of this 
section. These commenters argued that without such a presumption, it 
would be far too difficult to prove that an employee used material 
information or conveyed information to the new employer. In addition, 
however, three of these commenters suggested that the Commission limit 
the application of this presumption of coordination to a specified 
class of employees who are likely to ``possess material political 
information.'' A different commenter indicated that it would be 
difficult to enforce this conduct standard because the definition of 
``independent contractor'' in the NPRM was underinclusive in that it 
failed to account for the fact that an independent

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contractor might reorganize or change names, making it difficult to 
verify the identity of the independent contractor or former employee. 
As with the potential reorganization of common vendors discussed above, 
the Commission does not believe that new requirements are necessary at 
this time to address the commenter's concerns. Employees and 
independent contractors are natural persons, rather than corporations 
or other entities or legal constructs, so the Commission anticipates 
that reorganization for the purpose of circumventing the new rules is 
even less likely than in the context of common vendors.
    Three other commenters asserted that Congress had not mandated the 
proposed rule and expressed concern about the ``increased risk of legal 
liability'' for both party committees and former employees'' that they 
believed would ``stigmatize'' the former employee and make it difficult 
for that person to find subsequent employment.
    This proposed rule would have required that the employment or 
independent contractor relationship exist during the current election 
cycle. As discussed above with regard to paragraph (d)(4) on common 
vendors, the Commission requested comments on whether this time period 
should be a fixed two-year period, or the same election cycle, but not 
more than two years. Most comments on this provision were identical to 
the comments on the temporal requirements in paragraph (d)(4). One 
commenter believed the two-year time frame was ``inappropriate and 
overly injurious both to corporations trying to communicate about 
legislative topics and to those former employees of candidates seeking 
employment with such corporations.'' In contrast, a different commenter 
suggested a six-year time period and asserted that the two-year period 
was too short to fully address the real-world practices in this area. 
Another commenter offered the same proposal the commenter had offered 
with respect to common vendors: the former employee should be covered 
during the calendar year in which the candidate's name is on the ballot 
for election to Federal office. A fourth commenter suggested that the 
time frame be limited to the previous two years of the current election 
cycle.
    The final rule in paragraph (d)(5) incorporates the temporal limit 
of the ``election cycle,'' which is defined in 11 CFR 100.3. This time 
limit establishes a clear boundary based on an existing definition and 
ensures that there is a clear link between the conveyance or use of the 
material information and the time period in which that material might 
be relevant. In addition, the Commission disagrees with the single 
commenter who claimed that the two-year limit would harm the job 
prospects of former employees or inhibit discussions between 
corporations and candidates or political party committees. The 
Commission notes that the final rule focuses only on the use or 
conveyance of information that is material to a subsequent 
communication and does not in any way prohibit or discourage the 
subsequent employment of those who have previously worked for a 
candidate's campaign or a political party committee.
    One commenter proposed a ``cooling off period'' for a former 
employee instead of a temporal limit based on a calendar year or an 
election cycle. Under that proposed approach, the former employee or 
independent contractor of a candidate or political party would have to 
wait for a certain time period, which the commenter proposed as 30-60 
days, before providing services to a person paying for a communication 
covered by section 109.21(c). After that period, the former employee or 
independent contractor would not trigger the proposed conduct standard. 
The Commission is unwilling to impose a complete ban on an individual's 
employment opportunities, as a ``cooling off period'' requirement would 
function. Instead, the Commission views the narrowly tailored approach 
proposed in the NPRM as preferable and is therefore not incorporating a 
``cooling off period'' into the final rules.
    This conduct standard expressly extends to an individual who had 
previously served as an ``independent contractor'' of a candidate's 
campaign committee or a political party committee. One commenter 
opposed the inclusion of independent contractors, arguing that an 
``independent contractor'' is legally distinct from an ``employee'' and 
Congress, recognizing this distinction in other statutes, must have 
made an intentional decision to exclude independent contractors by 
using the term ``employee'' in section 214(c)(3). The Commission 
disagrees with this assumption and instead notes that the inclusion of 
independent contractors is entirely consistent with the use of 
``employee'' because both groups receive some form of payment for 
services provided to the candidate, authorized committee or political 
party committee. Therefore, the Commission includes the term 
``independent contractor'' in the final rule to preclude circumvention 
by the expedient of characterizing an ``employee'' as an ``independent 
contractor'' where the characterization makes no difference in the 
individual's relationship with the candidate or political party 
committee. This coordination standard also applies to the employer of 
an individual who was an employee or independent contractor of a 
candidate, authorized committee, or political party committee. The 
Commission interprets the Congressional intent behind section 214(c)(3) 
of BCRA to encompass situations in which former employees, who by 
virtue of their former employment have been in a position to acquire 
information about the plans, projects, activities, or needs of the 
candidate's campaign or the political party committee, may subsequently 
use that information or convey it to a person paying for a 
communication. The Commission has added the requirement that the 
information must be material to the subsequent communication in order 
to ensure that the conduct standard is not overly broad.
    One commenter argued that the proposed rule's incorporation of the 
phrase ``material information used * * * in providing services to the 
candidate'' was vague and overly broad, and should be limited to 
material information about ``campaign strategy and tactics,'' excluding 
policy views. This commenter also questioned whether the information 
must be material to the communication itself, or whether the 
information used to serve the candidate was material to those services. 
The Commission notes that in many cases the information may be material 
to both, but for the purposes of this final rule the Commission is only 
concerned with whether the information is material to the 
communication, not to the services previously provided to the 
candidate. As with the common vendor standard, this requirement 
encompasses both situations in which the former employee assumes the 
role of a conduit of information and situations in which the former 
employee makes use of the information but does not share it with the 
person who is paying for the communication.
    The Commission is including this conduct standard to address what 
it understands to be Congress' primary concern, which is a situation in 
which a former employee of a candidate goes to work for a third party 
that pays for a communication that promotes or supports the former 
employer/candidate or attacks or opposes the former employer/
candidate's opponent. One commenter proposed that the former employer 
(i.e., the candidate's campaign or a political party committee) must be 
shown to exercise ongoing control over its former employee. A different

[[Page 439]]

commenter, however, recognized that the Commission's proposed rules 
would address such a concern by removing the reporting duties that 
might otherwise be triggered by the actions of the former employee who 
acted without the knowledge of his or her former employer. This 
reporting rule is included in the final rules in 11 CFR 109.21(b)(2). 
This commenter, however, raised a similar concern by suggesting that 
the final rule should be limited to cover only former employees when 
they are acting under the direction or control of their new employer, 
the third-party spender, to ensure that the former employee does not 
use or convey material information without the spender's knowledge. The 
Commission notes, however, that such a limitation is unnecessary and 
confusing in cases where the former employee or independent contractor 
pays for the communication by himself or herself.
    The conduct standard in the final rule in 11 CFR 109.21(d)(5) does 
not require that the former employee act under the continuing direction 
or control of, at the behest of, or on behalf of, his or her former 
employer. This is because a former employee who acts under such 
circumstances is a present agent, and the revised rules covering agents 
apply to this individual. See 11 CFR 109.3. To give effect to the 
statutory language requiring that the Commission's coordination 
regulations address ``former employees'' (see Pub. L. 107-155, sec. 
214(c)(3)) the Commission concluded that a ``former employee,'' as that 
term is used in the statute, must be different from ``agent.'' 
Furthermore, the Commission does not find in BCRA, the FECA, or the 
general legal principles of employer-employee law, a need or 
justification for such an exception that would, in essence, 
categorically free employers from responsibility for the actions of 
their employees. Instead, the Commission reiterates its observation 
offered above with respect to the ``common vendor'' standard. 
Irrespective of the Congressional requirements in BCRA, employers may 
elect to clearly define the scope of employee responsibilities and to 
institute prudent policies or practices to ensure that the employee 
adheres to the scope of those expectations.
    One commenter supported an exception to the ``common vendor'' and 
``former employee'' conduct standards to permit persons in either of 
those classes to use or convey information if that vendor or former 
employee ``makes use of information in a manner that is adverse to the 
candidate or political party committee without any coordination with 
the candidate benefiting from the communication.'' In the Commission's 
judgment, such an exception would obfuscate otherwise bright lines and 
provide a clear path for the circumvention of the Act and the 
Commission's regulations without offering a discernible benefit. Under 
the proposed exception, ``use of information in a manner that is 
adverse to the candidate or political party committee'' requires a 
subjective determination of both the interests of the candidate or 
political party and the effect that the ``information'' has on those 
interests.
    The Commission also sought comment as to whether this conduct 
standard should be extended to volunteers, such as ``fundraising 
partners,'' who by virtue of their relationship with a candidate or a 
political party committee, have been in a position to acquire material 
information about the plans, projects, activities, or needs of the 
candidate or political party committee. Three commenters opposed the 
inclusion of volunteers. One of these commenters argued that volunteers 
traditionally participate in more than one campaign at a time and ``as 
a matter of practice, campaigns attempt to make volunteers feel more 
involved in the campaign by the intentional communication of `insider' 
information.'' While the FECA exempts campaign volunteers from certain 
requirements, this ``practice'' of sharing ``insider'' information is 
not adequate justification to exclude volunteers. Rather, the 
Commission recognizes that some, but not all, ``volunteers'' operate as 
highly placed consultants who might be given information about the 
plans, projects, activities, or needs of the candidate or political 
party committee with the expectation that the ``volunteer'' will use or 
convey that information to effectively coordinate a communication paid 
for by that ``volunteer'' or by a third-party spender. Nevertheless, 
the Commission is not extending the scope of the ``former employee'' 
standard in its final rules to encompass volunteers for a different 
reason. The Commission views the choice of the word ``employee'' in 
section 214(c)(3) as a significant indication of Congressional intent 
that the regulations be limited to individuals who were in some way 
employed by the candidate's campaign or political party committee, 
either directly or as an independent contractor. The Commission also 
notes that even though volunteers are not subject to the ``former 
employee'' conduct standard, their actions could nonetheless come 
within a different conduct standard in new 11 CFR 109.21(d). For 
example, if a candidate requests that a volunteer pay for a 
communication, and the volunteer does so, the communication is 
coordinated if the content of the communication satisfies one or more 
of the content standards in new 11 CFR 109.21(c). Also, in some cases a 
volunteer may qualify as an agent of a candidate or a political party 
under the definition in new 11 CFR 109.3.

F. 11 CFR 109.21(d)(6) Dissemination, Distribution, or Republication of 
Campaign Materials

    Paragraph (d)(6) clarifies the application of the conduct standards 
to a candidate or authorized committee after the initial preparation of 
campaign materials when those materials are subsequently disseminated, 
distributed, or republished, in whole or in part, by another person. In 
light of the candidate's initial role in preparing the campaign 
material that is subsequently incorporated into a republished 
communication, it is possible that the candidate's involvement in the 
original preparation of part or all of that content might be construed 
as triggering per se one or more of the conduct standards in paragraph 
(d) of 11 CFR 109.21. To avoid this result, the Commission is including 
11 CFR 109.21(d)(6) in the final rules to clarify that the candidate's 
actions in preparing the original campaign materials are not to be 
considered in the conduct analysis of paragraph (d)(1) through (d)(3) 
of section 109.21. (See above). Instead, 11 CFR 109.21(d)(6) explains 
that the focus is on the conduct of the candidate that occurs after the 
initial preparation the campaign materials. For example, if a candidate 
requests or suggests that a supporter pay for the republication of a 
campaign ad, the resulting communication paid for by the supporter 
satisfies both a content standard (republication) and conduct standard 
(request or suggestion), and is therefore a coordinated communication. 
However, without that request or suggestion, and assuming no other 
contacts with the candidate, the candidate's authorized committee, or 
their agents, the communication does not satisfy the ``request or 
suggestion'' conduct standard and is not a coordinated communication 
even though it contains campaign material prepared by the candidate.
    The final rules are being changed from the proposed rules to 
explain more clearly the application of the conduct standards in 
paragraphs (d)(4) and (d)(5) to republished campaign materials, as well 
as to clarify the relationship between paragraph (c)(2) and (d)(6) of

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section 109.21 as well as between 11 CFR 109.37(a)(2)(i) and paragraph 
(d)(6) of section 109.21. The conduct standards in paragraph (d)(4) and 
(d)(5) would not be affected by (d)(6). Whereas a candidate's or 
authorized committee's original preparation of campaign materials might 
have possibly been misconstrued as satisfying the conduct standards in 
(d)(1) through (d)(3) without the addition of (d)(6), there is no such 
danger that the (d)(4) ``common vendor'' standard or the (d)(5) 
``former employee'' standard would be satisfied by the candidate's or 
authorized committee's original preparation of campaign materials. 
However, to avoid any potential confusion, the second sentence in 
paragraph (d)(6) clarifies that a communication that satisfies the 
conduct standards in (d)(4) or (d)(5) is still a coordinated 
communication even if the communication only satisfies the content 
standard in paragraph (c)(2).
5. 11 CFR 109.21(e) No Requirement of Agreement or Formal Collaboration
    When Congress, in BCRA, required the Commission to promulgate new 
regulations on coordinated communications, it specifically barred any 
regulatory requirement of ``agreement or formal collaboration'' to 
establish coordination. Public Law 107-155, sec. 214(c) (March 27, 
2002). In the NPRM, the Commission noted that although Congress did not 
define this phrase, earlier versions of BCRA stated that 
``collaboration or agreement'' was not required to show coordination. 
See S. 27, 107th Cong., 1st Sess. (as passed by the Senate and 
transferred to the House, 478 Cong. Rec. H2547 (May 22, 2001)). The 
phrase ``agreement or formal collaboration'' reached its final form 
through a substitute amendment to H.R. 2356 offered by Representative 
Shays. See H. Amdt. 417, 478 Cong. Rec. H393 through H492 (February 13, 
2002). New 11 CFR 109.21(d) provides that each of the five conduct 
standards can be satisfied ``whether or not there is agreement or 
formal collaboration, which is defined in paragraph (e),'' thereby 
implementing the Congressional prohibition against any requirement of 
agreement or formal collaboration in the coordination analysis. The 
final rule follows the proposed rule, with only a small grammatical 
change.
    One commenter supported a distinction between ``formal 
collaboration'' and ``collaboration.'' Two other commenters strongly 
supported this paragraph as proposed in the NPRM. Another commenter 
recognized the Congressional prohibition on a requirement of agreement 
or formal collaboration, but urged the Commission to establish clear 
guidelines as to what is and is not permissible activity. The 
Commission attaches significance to the addition of the term ``formal'' 
as it modifies the term ``collaboration.'' Thus, paragraph (e) states 
that the conduct standards in paragraph (d) of section 109.21 require 
some degree of collaboration, but not ``formal'' collaboration in the 
sense of being planned or systematically approved or executed.
    New paragraph (e) also explains the term ``agreement.'' 
Coordination under section 109.21 does not require a mutual 
understanding or meeting of the minds as to all, or even most, of the 
material aspects of a communication. Any agreement means the 
communication is not made ``totally independently'' from the candidate 
or party. See Buckley, 424 U.S. at 47. In the case of a request or 
suggestion under paragraph (d)(1) of section 109.21, agreement is not 
required at all.
    A fourth commenter suggested that there should be no finding of 
coordination where ``the organization was not seeking the candidate's 
agreement and would have run the ad anyway.'' This commenter 
recommended that the Commission further refine the requirement so that 
a communication is considered coordinated only if the request, 
agreement or collaboration of the candidate or political party is shown 
to lead the organization to change some aspect of the communication.
    The Commission is not adopting either of these suggestions as they 
require a subjective determination of the intent of the spender and are 
therefore inconsistent with the Commission's approach of establishing 
clear guidance through objective determinations where possible. 
Paragraph (e) therefore does not require any particular form of 
investigation or finding, but simply implements the judgment of 
Congress by clarifying the two criteria that are not required.
6. 11 CFR 109.21(f) Safe Harbor for Responses to Inquiries About 
Legislative or Policy Issues
    In the NPRM, the Commission requested comment on whether any 
specific ``safe harbor'' provisions or exceptions to the conduct or 
content standards should be included in the final rules. Commenters 
recommended a number of possible exceptions and safe harbors. As 
explained below, the Commission is including one of the proposed 
exceptions in its final rules in 11 CFR 109.21(f).
    Several commenters urged the Commission to adopt an exception to 
the conduct standards for a candidate's response to an inquiry, whether 
in writing or other form, regarding his or her position on legislative 
or policy issues. These responses are helpful in preparing voter 
guides, voting records, in debates or other communications. One 
commenter cited constitutional considerations and argued that such an 
exception is required by Clifton v. FEC, 114 F.3d 1309 (1st Cir. 1997). 
Another advised that this exception would provide notice that the 
regulation is not intended to deter certain activities that groups or 
individuals ``might otherwise avoid out of an abundance of caution.'' A 
different commenter advocated an exemption for any public 
communications, including republication of materials from candidates, 
their committees or political parties, that meet the criteria of 11 CFR 
110.13 regarding candidate debates and forums, and 11 CFR 114.4(c) 
regarding voter registration drives and voter education.
    In new section 109.21(f) the Commission is providing a ``safe 
harbor'' to address the commenters'' concerns that the preparation of a 
voter guide or other inquiries about the views of a candidate or 
political party committee might satisfy one of the conduct standards in 
section 109.21(d). This safe harbor applies to inquiries regarding 
views on legislation or other policy issues, but does not include a 
response that conveys information about the candidate's or political 
party's campaign plans, projects, activities, or needs that is material 
to the creation, production, or distribution of a subsequent 
communication.
    This exception satisfies the requirements of Clifton v. FEC, 114 
F.3d 1309. See also new 11 CFR 114.4(c)(5), explained below. In 
Clifton, the Court examined the Commission's then-new regulations at 11 
CFR 114.4(c)(4) and (5). The Commission's old regulations permitted 
corporations and labor organizations to prepare and produce ``voter 
guides'' to the general public, subject to the following prohibition:

    [T]he corporation or labor organization shall not contact or in 
any other way act in cooperation, coordination, or consultation with 
or at the request or suggestion of the candidates, the candidates' 
committees or agents regarding the preparation, contents and 
distribution of the voter guide, except that questions may be 
directed in writing to the candidates included in the voter guide 
and the candidates may respond in writing;

11 CFR 114.4(c)(5)(ii)(A) (1996). While Clifton invalidated that 
regulation as unauthorized by the Act, 927 F. Supp. at 500, the Court 
nevertheless suggested that a safe harbor might have survived.

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The safe harbor in new 11 CFR 109.21(f) is more permissive than the 
regulations at issue in Clifton in several respects. First, the 
regulations in section 109.21 do not institute a general prohibition on 
any contact with the candidate or political party committee, so 
paragraph (f) functions as a safe harbor from less-restrictive 
regulations. For example, organizations whose activities are confined 
to producing voter guides may contact a candidate and discuss aspects 
of that candidate's campaign plans, projects, activities, or needs 
without making a coordinated communication so long as the voter guide 
does not contain express advocacy and it is not directed to voters in a 
specific jurisdiction and made available within the designated time 
period directly before an election, as provided in paragraphs 
109.21(c)(1) and (4). In addition, whereas the regulations at issue in 
Clifton specifically required that both the inquiry and the response be 
written, paragraph (f) does not.
    Three commenters urged the Commission to adapt its rules to exclude 
lobbying contacts with a candidate. Similarly, a different commenter 
proposed an exception for any legislative communication made prior to a 
vote, hearing, or other legislative consideration of the issue, and 
that ``coincidentally'' occurs prior to an election. Another commenter 
also urged the Commission to exempt grassroots communications that urge 
the people to contact state, local or national officials urging them to 
take action in their official capacity so long as they do not refer to 
the election or an official's status or qualifications as a federal 
candidate.
    The Commission has considered these possible exceptions as well as 
the statements of BCRA's principal sponsors that the Commission's 
regulations should not interfere with lobbying activities. Therefore, 
these final rules are not intended to restrict communications or 
discussions regarding pending legislation or other issues of public 
policy. The Commission has determined, however, that sufficient 
safeguards exist in the final rules to ensure that lobbying and other 
activities that are not reasonably related to elections will not be 
unduly restricted. Additional exceptions are unnecessary and 
inappropriate because they could be exploited to circumvent the 
requirements of 11 CFR part 109.
    One commenter proposed an exemption for a ``legislative 
communication'' made during legislative consideration of an issue when 
the communication ``coincidentally'' occurs just before an election. 
This exemption is neither necessary nor workable, as it hinges on a 
complex analysis of several separate factors, as well as a 
determination of what qualifies as a ``legislative communication.'' The 
potential number of communications that might satisfy the content 
standard, satisfy the conduct standard, and ``coincidentally'' occur 
just before an election is likely to be quite small in comparison to 
the potential number of communications that would actually be made for 
the purpose of influencing an election but carefully tailored to fit 
within the proposed exemption.
    In addition, one commenter cautioned that exceptions are not 
appropriate to the extent that they apply to communications that meet 
the ``electioneering communication'' content standard. This commenter 
asserted that the plain language of the BCRA provides the Commission 
with little to no room to craft exceptions with respect to 
electioneering communications. The Commission disagrees that any such 
Congressional directive can be derived from plain language of BCRA in 
the context of coordinated electioneering communications.

11 CFR 109.22 Who Is Prohibited From Making Coordinated Communications?

    The Commission requested comment on whether to include a separate 
section to clarify that any person who is otherwise prohibited under 
the Act from making a contribution or expenditure is also prohibited 
from making a coordinated communication. No comments addressed this 
provision. Section 109.22 is included in the final rules to avoid any 
potential misconception that 11 CFR 100.16, 11 CFR 109.23, or any 
portion of 11 CFR part 109 in any way permit a corporation, labor 
organization, foreign national, or other person to make a contribution 
or expenditure when that person is otherwise prohibited by any 
provision of the Act or the Commission's regulations from doing so.

11 CFR 109.23 How Are Payments for the Dissemination, Distribution, or 
Republication of Candidate Campaign Materials Treated and Reported?

    The Commission has decided to implement only those regulatory 
changes that are necessary to implement section 214 of BCRA at this 
time. In the NPRM, the Commission proposed moving former 11 CFR 
109.1(d) to proposed new section 11 CFR 100.57, along with several 
substantive changes. To whatever extent that proposed 11 CFR 100.57 
would have elaborated on former 11 CFR 109.1(d), the Commission has 
reconsidered and instead is addressing the payments for the 
republication of campaign materials in new 11 CFR 109.23, which more 
closely follows former section 109.1(d). New section 109.23 implements 
post-BCRA 2 U.S.C. 441a(a)(7)(B)(iii), with several changes made to 
reflect new requirements in BCRA. Paragraph (a) of section 109.23 
corresponds to former 11 CFR 109.1(d)(1), and paragraph (b) of section 
109.23 addresses the exceptions in former 11 CFR 109.1(d)(2), in 
addition to several new exceptions.
1. 11 CFR 109.23(a) Financing of the Dissemination, Distribution, or 
Republication of Campaign Materials Prepared by a Candidate
    Paragraph (a) of 11 CFR 109.23 addresses the financing of the 
dissemination, distribution, or republication of campaign materials 
prepared by the candidate, the candidate's authorized committee, or 
their agents and is the successor to former 11 CFR 109.1(d)(1). The 
only changes from the former rule are the replacement of one cross-
reference to former 11 CFR 100.23 (repealed by Congress in BCRA), a 
clarification that a candidate does not receive or accept an in-kind 
contribution unless there is coordination, and minor grammatical 
changes. Paragraph (a) provides that the financing of the distribution, 
or republication of campaign materials prepared by the candidate, the 
candidate's authorized committee, or an agent of either is considered a 
contribution for the purposes of the contribution limitations and 
reporting responsibilities by the person making the expenditure but is 
not considered an in-kind contribution received or an expenditure made 
by the candidate or the candidate's authorized committee unless the 
dissemination, distribution, or republication of campaign materials is 
coordinated.
    Under former 11 CFR 109.1(d)(1), coordination was determined by 
whether the dissemination, distribution, or republication of the 
campaign material qualified as a ``coordinated general public political 
communication'' under former 11 CFR 100.23, which was repealed by 
Congress in BCRA. Therefore, under new 11 CFR 109.23, whether the 
dissemination, distribution, or republication is coordinated is 
determined by reference to the new coordinated communication rules in 
11 CFR 109.21 and 109.37.
    As discussed above in the Explanation and Justification for 11 CFR 
109.21(c)(2) and 109.21(d)(6), a

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communication that disseminates, distributes, or republishes campaign 
material prepared by a candidate, the candidate's authorized committee, 
or an agent of either, and that satisfies one of the conduct standards 
in section 109.21(d), is a coordinated communication. Under 11 CFR 
109.21(b), and by implication from paragraph (a) of section 109.23, the 
financing of such a ``coordinated communication'' is an in-kind 
contribution received by the candidate, authorized committee, or 
political party committee with whom or with which it was coordinated. 
In other words, the person financing the dissemination, distribution, 
or republication of candidate campaign material has provided something 
of value to the candidate, authorized committee, or political party 
committee. See 2 U.S.C. 431(8)(A)(i). Note that this is the same result 
under former section 109.1(d)(1). Even though the candidate, authorized 
committee, or political party committee does not receive cash-in-hand, 
the practical effect of this constructive receipt is that the 
candidate, authorized committee, or political party committee must 
report the in-kind contribution in accordance with 11 CFR 104.13, 
meaning that it must report the amount of the payment as a receipt 
under 11 CFR 104.3(a) and also as an expenditure under 11 CFR 104.3(b).
    To the extent that the financing of the dissemination, 
distribution, or republication of campaign materials finances does not 
qualify as a coordinated communication, the candidate or authorized 
committee that originally prepared the campaign materials has no 
reporting responsibilities and has not received or accepted an in-kind 
contribution. However, whether or not the dissemination, distribution, 
or republication qualifies as a coordinated communication under 11 CFR 
109.21, paragraph (a) of section 109.23, like former section 
109.1(d)(1), requires the person financing such dissemination, 
distribution, or republication always to treat that financing, for the 
purposes of that person's contribution limits and reporting 
requirements, as an in-kind contribution made to the candidate who 
initially prepared the campaign material. In other words, the person 
financing the communication must report the payment for that 
communication if that person is a political committee or is otherwise 
required to report contributions. Furthermore, that person must count 
the amount of the payment towards that person's contribution limits 
with respect to that candidate under 11 CFR 110.1 (persons other than 
political committees) or 11 CFR 110.2 (multicandidate political 
committees), and with respect to the aggregate bi-annual contribution 
limitations for individuals set forth in 11 CFR 110.5.
    Although paragraph (a) of 11 CFR 109.23 is nearly otherwise 
unchanged from former 11 CFR 109.1(d)(1), the new reference to 11 CFR 
109.21 has an important impact because new section 109.21 reflects 
Congress's decision in post-BCRA 2 U.S.C. 441a(a)(7)(B)(ii) that 
expenditures may be coordinated with a political party committee. 
Therefore, the republication of campaign material may be coordinated 
with a political party committee. As explained above, the financing 
``by any person of the dissemination, distribution, or republication of 
campaign material prepared by a candidate qualifies as an expenditure 
for the purposes of 2 U.S.C. 441a(a)(7)(B)(ii).'' See 2 U.S.C. 
441a(a)(7)(B)(iii) (emphasis added.) Under 2 U.S.C. 441a(a)(7)(B)(ii), 
``expenditures'' that are coordinated with a political party committee 
``shall be considered to be contributions made to such party 
committee.'' Thus, reading 2 U.S.C. 441a(a)(7)(B)(ii) and (iii) 
together, the Commission concludes that when a person coordinates with 
a political party committee to finance the dissemination, distribution, 
or republication of a candidate's campaign material, that financing 
constitutes a contribution to the political party committee. Therefore, 
under paragraph (a) of section 109.23, the financing of the 
dissemination, distribution, or republication of campaign material 
prepared by a candidate constitutes an in-kind contribution to a 
political party committee with which it was coordinated, and the amount 
of that financing must be reported by that political party committee as 
both an in-kind contribution received and an expenditure made. See 11 
CFR 104.13. The Commission notes that section 109.23 does not encompass 
in this respect the dissemination, distribution, or republication of 
campaign material prepared by the political party committee, but only 
campaign material prepared by a candidate.
2. 11 CFR 109.23(b) Exceptions
    In the NPRM, the Commission proposed several exceptions to the 
general ``republication'' rule proposed 11 CFR 100.57. Proposed 11 CFR 
100.57(b) would have clarified that five listed uses of campaign 
material prepared by a candidate would not qualify as a contribution 
under proposed 11 CFR 100.57(a). The exceptions were largely drawn from 
uses already permitted by other rules.
    Several commenters focused on the proposed exceptions or proposed 
additional exemptions. One commenter proposed that republication should 
not be considered a contribution unless there is coordination. The 
Commission does not discern any instruction from Congress, nor any 
other basis, that justifies such a departure from the Commission's 
longstanding interpretation of the underlying republication provision 
in the Act, now set forth at 2 U.S.C. 441a(a)(7)(B)(iii). The same 
commenter also inquired as to whether a corporation or labor 
organization may pay for the republication of campaign materials for 
use outside its restricted class, so long as that republication is not 
coordinated with a candidate under the applicable conduct standards set 
forth in 11 CFR 109.21(d) (see below). The Commission normally 
addresses specific inquiries about the application of particular 
provisions through its Advisory Opinion process, rather than in the 
rulemaking context, but the Commission takes this opportunity to 
emphasize that this rulemaking is not intended to change existing law 
with respect to the practices of corporations or labor organizations. 
See 11 CFR 109.22. Both the pre- and post-BCRA regulations provide that 
the financing of the dissemination, distribution, or republication of a 
candidate's campaign material constitutes a contribution to that 
candidate. Furthermore, such financing for activities outside the 
restricted class of a corporation or labor organization would also 
constitute an expenditure by the labor organization or corporation made 
in connection with an election for Federal office that would therefore 
be prohibited by 2 U.S.C. 441b(a). Therefore, a corporation or labor 
organization may not disseminate, distribute, or republish campaign 
materials except as provided in 11 CFR 114.3(c)(1).
    The same commenter also proposed additional exceptions for 
paragraph (b) to cover republication and distribution of original 
campaign material that already exists in the public domain, such as 
presentations made by candidates, biographies, positions on issues or 
voting records. The Commission declines to promulgate a ``public 
domain'' exception because such an exception could ``swallow the 
rule,'' given that virtually all campaign material that could be 
republished could be considered to be ``in the public domain.'' In the 
event that a campaign retains the copyright to its campaign materials, 
and the campaign materials

[[Page 443]]

are thus not in the public domain as a matter of law, this means that 
the republisher would presumably have to obtain permission from the 
campaign to republish the campaign materials, raising issues of 
authorization or coordination. See 11 CFR 110.11.
    Similarly, a commenter suggested an exception to permit the ``fair 
use'' of campaign materials, which would presumably permit the 
republication of campaign slogans and other limited portions of 
campaign materials for analysis and other uses provided under the legal 
tests developed with respect to intellectual property law. This 
commenter also argued that the ``fair use'' exception should be 
available to supporters of the candidate who originally produced the 
materials, as well as that candidate's opponents.
    The Commission, however, believes that a ``fair use'' exception 
could swallow the rule. Furthermore, the Commission notes that ``fair 
use'' is an exception in the intellectual property arena intended to 
protect literary, scholastic, and journalistic uses of material without 
infringing upon the intellectual property rights of those who created 
the material. The Commission declines to import this concept into the 
political arena where it would not serve to promote the same important 
purposes, and where the exceptions to the definitions of 
``contribution'' and ``expenditure'' already address these concerns. 
See, e.g., 11 CFR 100.73 and 100.132 (exceptions to the definition of 
``contribution'' and ``expenditure,'' respectively, for news stories, 
commentary, and editorials.) In the context of intellectual property 
law, the republication of another person's work is generally viewed as 
undesirable by the original author, thus the ``fair use'' exception 
provides a limited exception to the general limitations on such 
republication. In contrast, Congress has addressed republication of 
campaign materials through 2 U.S.C. 441a(a)(7)(B)(iii) in a context 
where the candidate/author generally views the republication of his or 
her campaign materials, even in part, as a benefit. Given the different 
purpose served by intellectual property law and campaign finance law, a 
``fair use'' exception would be inappropriate and unworkable in the 
campaign arena. Additionally, the Commission believes that such 
legitimate benefits as would flow from a fair use exception are met 
through application of 11 CFR 109.23(b)(4).
    The Commission is including the exceptions proposed in 100.57(b) in 
its final rules at CFR 109.23(b). Under 11 CFR 109.23(b)(1), a 
candidate or political party committee is permitted to disseminate, 
distribute, or republish its own materials without making a 
contribution. Paragraph (b)(2) exempts the use of material in a 
communication advocating the defeat of the candidate or party who 
prepared the material. For example, Person A does not make a 
contribution to Candidate B if Person A incorporates part of Candidate 
B's campaign material into its own public communication that advocates 
the defeat of Candidate B. However, if the same public communication 
also urged the election of Candidate B's opponent, Candidate C, and 
incorporated a picture or quote that had been prepared by Candidate C's 
campaign, then the result does constitute a contribution to Candidate 
C.
    A third exception, in paragraph (b)(3), makes it clear that 
campaign material may be republished as part of a bona fide news story 
as provided in 11 CFR 100.73 or 11 CFR 100.132. In paragraph (b)(4), 
the Commission allows limited use of candidate materials in 
communications to illustrate a candidate's position on an issue.
    Finally, in paragraph (b)(5), the Commission recognizes that a 
national, State, or subordinate committee of a political party makes a 
coordinated party expenditure rather than an in-kind contribution when 
it uses its coordinated party expenditure authority under 11 CFR 109.32 
to pay for the dissemination, distribution, or republication of 
campaign material. This rule is based on former 11 CFR 109.1(d)(2), 
which provided that a State or subordinate party committee could engage 
in such dissemination, distribution, or republication as an agent 
designated by a national committee pursuant to former 11 CFR 
110.7(a)(4), but is somewhat broader than former 11 CFR 109.1(d)(2).

11 CFR Part 109, Subpart D--Special Provisions for Political Party 
Committees

11 CFR 109.30 How Are Political Party Committees Treated for Purposes 
of Coordinated and Independent Expenditures?

    A national, State, or subordinate committee of a political party 
may make expenditures up to prescribed limits in connection with the 
general election campaign of a Federal candidate that do not count 
against the committees' contribution limits. See 2 U.S.C. 441a(d). 
These expenditures are commonly referred to as ``coordinated party 
expenditures.'' Political party committees, however, need not 
demonstrate actual coordination with their candidates to avail 
themselves of this additional spending authority. Nor are political 
party committees restricted as to the nature of the expenditures they 
may make on behalf of a candidate that are treated as coordinated party 
expenditures. Political party committees may also make independent 
expenditures. See Colorado Republican Federal Campaign Committee v. 
Federal Election Commission, 518 U.S. 604 (1996) (``Colorado I'').
    In BCRA, Congress set certain new restrictions on these 
``coordinated party expenditures'' and related restrictions on 
political party committee independent expenditures. There are also 
certain new restrictions on transfers and assignments of coordinated 
party expenditure authorizations between party committees. 2 U.S.C. 
441a(d)(4)(A) through (C).
    Section 109.30 provides an introduction to subpart D of part 109 
that states how political party committees are treated for purposes of 
coordinated and independent expenditures. This new section first 
clarifies that political party committees may make independent 
expenditures subject to the provisions of sections 109.35 and 109.36. 
(See discussion below.) Second, section 109.30 explains that political 
party committees may support candidates with coordinated party 
expenditures and states that these coordinated party expenditures are 
subject to limits that are separate from and in addition to the 
contribution limits at 11 CFR 110.1 and 110.2.
    No comments were received on this section, and the final rule is 
unchanged from the proposed rule in the NPRM except that the reference 
to other 11 CFR part 109, subpart D provisions has been revised to 
exclude section 109.31.

11 CFR 109.31 [Reserved]

    The Commission in the NPRM proposed rules at 11 CFR 109.30 to 
109.37 regarding political party committees. The Commission is issuing 
final rules at 11 CFR 109.30 and 109.32 to 109.37, but not at 11 CFR 
109.31. The reasons regarding proposed section 109.31 are set forth 
below.
    Under FECA, certain political party committees have long been 
authorized to make what have come to be known as ``coordinated party 
expenditures.'' 2 U.S.C. 441a(d). Although this term is used 
extensively (see, e.g., the Commission's Campaign Guides), it is not 
formally defined in the Commission's regulations.
    The Commission in the NPRM proposed a rule which would have defined 
``coordinated party expenditure'' at 11 CFR 109.31. That proposed 
definition included payments

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made by a national committee of a political party, including a national 
Congressional campaign committee, or a State committee of a political 
party, including any subordinate committee of a State committee, under 
2 U.S.C. 441a(d) for anything of value in connection with the general 
election campaign of a candidate, including party coordinated 
communications defined at 11 CFR 109.37.
    The Commission received two comments on section 109.31 in support 
of the proposed rule. One witness at the hearing criticized this 
provision, asserting that in conjunction with 11 CFR 109.20 this 
provision would subject everything political parties do to the 
coordinated party expenditure limits.
    In light of the concern raised, the Commission's recognition that 
this rule is not required by BCRA, and in order to devote the 
Commission's resources to the rules that are most directly required by 
BCRA to be completed this calendar year, the Commission is not issuing 
a final rule at 11 CFR 109.31. Instead, the Commission is adding and 
reserving this section and may revisit the ``coordinated party 
expenditures'' definition in the future.
    The Commission notes, however, that the term ``coordinated party 
expenditures'' does appear in the final rules at 11 CFR 109.23(b), 
109.20(b), 109.30, 109.32, 109.33, 109.34, and 109.35. To prevent any 
confusion, the Commission clarifies in the absence of a definition at 
section 109.31 that the term ``coordinated party expenditure'' refers 
to an expenditure made by a political party committee pursuant to 2 
U.S.C. 441a(d). The Commission stresses that it is not restricting the 
traditional flexibility political parties have had in making 
coordinated expenditures in support of their candidate.

11 CFR 109.32 What Are the Coordinated Party Expenditure Limits?

    The Commission's restructuring of 11 CFR part 109 includes moving 
the coordinated party expenditure limits found at former 11 CFR 
110.7(a) and (b) to 11 CFR 109.32. This new section retains the basic 
organizational structure of paragraphs (a) and (b) of former section 
110.7, while making the revisions explained below. The final rule is 
unchanged from the proposed rule in the NPRM except where noted below.
1. 11 CFR 109.32(a) Coordinated Party Expenditure Limits for 
Presidential Elections
    The Commission sets forth in paragraph (a) of section 109.32, in 
amended fashion, the coordinated party expenditure limit for the 
national committee of a political party for Presidential elections that 
appeared at former section 110.7(a). Because political party committees 
may also make independent expenditures, Colorado I, 518 U.S. at 618, 
the heading of paragraph (a) clarifies that the ``expenditures'' 
referred to in section 109.32 are ``coordinated party expenditures.'' 
See 2 U.S.C. 441a(d). This clarification also appears in paragraphs 
(a)(1), (2), (3), and (4) of section 109.32.
    Paragraph (a)(1) authorizes the national committee of a political 
party to make coordinated party expenditures in connection with the 
general election campaign of any candidate for President of the United 
States affiliated with the party. The final rule deletes the words 
``the party's'' as surplusage that was inadvertently added into the 
proposed rule. Paragraph (a)(1) is the successor to former 11 CFR 
110.7(a)(1) and is unchanged from that rule except for the 
clarification noted above.
    Paragraph (a)(2) sets out the coordinated party expenditure limit, 
which is two cents multiplied by the voting age population of the 
United States, following former 11 CFR 110.7(a)(2). Paragraph (a)(2) of 
section 109.32 also states that this spending limit shall be increased 
in accordance with 11 CFR 110.17, which the Commission is adding to 
clarify that this spending limit is subject to increase. Section 110.17 
is the successor to former 11 CFR 110.9(c). See Final Rules and 
Explanation and Justification for Contribution Limitations and 
Prohibitions, 67 FR 69,928 (November 19, 2002). Paragraph (a)(2) of 
section 109.32 also refers to 11 CFR 110.18, the definition of the term 
``voting age population,'' which is discussed below.
    Paragraph (a)(3) provides that any coordinated party expenditure 
under paragraph (a) of this section is in addition to any expenditure 
by a national committee of a political party serving as the principal 
campaign committee of a candidate for President of the United States, 
as well as any contribution by the national committee to the candidate 
permissible under 11 CFR 110.1 or 110.2. Paragraph (a)(3) is the 
successor to former 11 CFR 110.7(a)(3) and is substantively unchanged 
from that rule.
    Paragraph (a)(4) provides that any coordinated party expenditures 
made by the national committee of a political party pursuant to 
paragraph (a) of this section, or made by any other party committee 
under authority assigned by a national committee of a political party 
under 11 CFR 109.33, on behalf of that party's Presidential candidate 
shall not count against the candidate's expenditure limitations under 
11 CFR 110.8. The only change to paragraph (a)(4) from the proposed 
rule is that the term ``designated'' has been changed to ``assigned'' 
in order to be consistent with the terminology applied in section 
109.33.
    Paragraph (a)(4) is the successor to former 11 CFR 110.7(a)(6), and 
is revised to clarify that only the national party committee has 
coordinated party expenditure authority for Presidential general 
elections and that any other political party committee making a 
coordinated party expenditure in such an election must be so assigned 
by the national committee.
2. 11 CFR 109.32(b) Coordinated Party Expenditure Limits for Other 
Federal Elections
    Paragraph (b) of section 109.32 addresses coordinated party 
expenditures in other Federal elections, and is the successor to former 
11 CFR 110.7(b). Paragraph (b) applies to the national committee of a 
political party and a State committee of a political party, including 
any subordinate committee of a State committee, for Federal elections 
other than Presidential elections. As in paragraph (a) above, paragraph 
(b) clarifies that the ``expenditures'' referred to in paragraphs 
(b)(1), (2), and (4) are coordinated party expenditures.
    Paragraph (b)(1) authorizes the national committee of a political 
party and a State committee of a political party, including any 
subordinate committee of a State committee, to make coordinated party 
expenditures in connection with the general election campaign of a 
candidate for Federal office in that State who is affiliated with the 
party. The phrase ``a candidate for Federal office in that State who is 
affiliated with the party'' is changed from the phrase ``the party's 
candidate for Federal office in that State'' that was inadvertently 
included in the proposed rule. Paragraph (b)(1) is the successor to 
former 11 CFR 110.7(b)(1) and is unchanged from the previous rule 
except for the clarification noted above.
    Paragraph (b)(2)(i) sets out the coordinated party expenditure 
limit for Senate candidates and for House candidates from a State that 
is entitled to only one Representative at the greater of two cents 
multiplied by the voting age population of the State or $20,000. 
Paragraph (b)(2)(ii) sets out the coordinated party expenditure limit 
for House candidates from any other State at $10,000. Paragraph (b)(2) 
follows

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former 11 CFR 110.7(a)(2). Paragraph (b)(2) of section 109.32 also 
refers to 11 CFR 110.18, the definition of the term ``voting age 
population,'' which is discussed below.
    Paragraph (b)(3) provides that the spending limitations in 
paragraph (b)(2) shall be increased in accordance with 11 CFR 110.17, 
which is the successor to former 11 CFR 110.9(c). See Final Rules and 
Explanation and Justification for Contribution Limitations and 
Prohibitions, 67 FR 69,928 (November 19, 2002). The Commission is 
adding paragraph (b)(3) to the rule in order to clarify that this limit 
is subject to increase. The Commission is changing the citation to 11 
CFR 110.17(c), as proposed in the NPRM, to a citation to 11 CFR 110.17, 
to make it consistent with the reference to section 110.17 in paragraph 
(a)(2) described above.
    Paragraph (b)(4) provides that any coordinated party expenditure 
under paragraph (b) of this section shall be in addition to any 
contribution by a political party committee to the candidate 
permissible under 11 CFR 110.1 or 110.2. Paragraph (b)(4) of 11 CFR 
109.32 is the successor to former 11 CFR 110.7(b)(3), and is unchanged 
apart from the clarification noted above and a clarification that the 
contributions referenced are those made by a political party committee.
    The Commission received two comments on this section, one which 
supported the rule proposed in the NPRM and another which stated the 
commenter's agreement with the statement of the coordinated party 
expenditure limits set forth in 2 U.S.C. 441a(d).

11 CFR 109.33 May a Political Party Committee Assign Its Coordinated 
Party Expenditure Authority to Another Political Party Committee?

    Section 109.33 restates and clarifies the pre-BCRA rule permitting 
assignment of coordinated party expenditure authority between political 
party committees. Section 109.33 replaces the authorizing provisions 
found in the pre-BCRA regulations at 11 CFR 110.7(a)(4) and (c); 
further changes to section 110.7 are addressed below.
    In light of the new statutory restrictions on coordination and 
independent expenditures in BCRA, such assignments of coordinated party 
expenditure authority are prohibited under certain circumstances in 
which the assigning political party committee has made coordinated 
party expenditures (using part of the spending authority) and the 
intended assignee political party committee has made or intends to make 
independent expenditures with respect to the same candidate during an 
election cycle. See 2 U.S.C. 441a(d)(4)(C) and 11 CFR 109.35(c). 
Therefore, paragraph (a) of section 109.33 begins with a cross-
reference to 11 CFR 109.35(c), which implements the statutory 
restrictions on assignments and transfers.
    Paragraph (a) of section 109.33 restates the Commission's 
longstanding policy that a political party committee with authority to 
make coordinated party expenditures may assign all or part of that 
authority to other political party committees, and that this 
interpretation extends to both national and State committees of 
political parties. See Campaign Guide for Political Party Committees at 
p.16 (1996). Paragraph (a) of section 109.33 provides that coordinated 
party expenditure authority may be assigned only to other political 
party committees. See 2 U.S.C. 441a(d). Pre-BCRA 11 CFR 110.7(a)(4) 
indicated that coordinated expenditures may be made ``through any 
designated agent, including State and subordinate party committees.'' 
[Emphasis added.] This limitation of assignment to other political 
party committees precludes possible circumvention of the new 
restrictions on transfers and assignments between political party 
committees found in BCRA. 2 U.S.C. 441a(d)(4)(B), (C). It is the 
Commission's understanding that, historically, political party 
committees have not assigned coordinated spending authority to entities 
that are not party committees, and thus this prophylactic measure 
should not adversely affect party committees.
    Paragraph (a) provides that whenever a political party committee 
authorized to make coordinated party expenditures assigns another 
political party committee to use part or all of its spending authority, 
the assignment must be in writing, must specify a dollar amount, and 
must be made before the party committee receiving the assignment 
actually makes the coordinated party expenditure. In this respect, the 
rule codifies longstanding Commission interpretation. See Campaign 
Guide for Political Party Committees at p.16 (1996). This provision 
applies to both national and State party committees wishing to assign 
their 2 U.S.C. 441a(d) authority.
    Paragraph (b) of section 109.33 is the successor to pre-BCRA 11 CFR 
110.7(c). It provides that, for purposes of the coordinated spending 
limits, a State committee includes subordinate committees of the State 
committee. Unlike its predecessor, pre-BCRA section 110.7(c), paragraph 
(b) of section 109.33 covers district and local political party 
committees (see 11 CFR 100.14(b)) to the extent that a State committee 
assigns to them its coordinated spending authority, given that these 
district or local committees may not qualify as ``subordinate State 
committees.''
    Paragraphs (b)(1) and (2) of section 109.33 restate with only minor 
non-substantive revision the pre-BCRA rule in 11 CFR 110.7(c)(1) and 
(2) setting out the State committees' methods of administering the 
coordinated party expenditure authority.
    Paragraph (c) of section 109.33 sets forth recordkeeping 
requirements. This new paragraph (c) provides that a political party 
committee that assigns its authority to make coordinated party 
expenditures under this section, or that receives an assignment of 
coordinated expenditure authority, must maintain the written assignment 
for at least three years in accordance with 11 CFR 104.14. This three-
year requirement is consistent with other recordkeeping requirements in 
the Act and in the Commission's regulations. See 2 U.S.C. 432(d); 11 
CFR 102.9(c).
    Although the Commission did not include this precise recordkeeping 
requirement in proposed section 109.33 in the NPRM, it sought comment 
more generally on whether to require political party committees to 
attach copies of written assignments to reports they file with the 
Commission, or to fax or e-mail them if they are electronic filers. The 
comments received regarding section 109.33, as described below, did not 
address the reporting issue.
    The Commission has decided to require recordkeeping rather than 
reporting in section 109.33. Recordkeeping is less burdensome for 
political party committees and should provide sufficient documentation 
of assignments of coordinated party expenditure authority should 
questions subsequently arise. Indeed, the required maintenance of such 
documentation may serve a political party committee's own interest. See 
MUR 5246.
    The Commission received two comments on this section as proposed in 
the NPRM. The commenters, while supporting the rule proposed in the 
NPRM, asserted that it should be made clear that nothing in the rule 
supersedes the prohibition on political party committees making both 
coordinated and independent expenditures with respect to a candidate 
after nomination. See 2 U.S.C. 441a(d)(4)(A); 11 CFR 109.35(b). The 
Commission does not intend for section 109.33 to supersede that 
prohibition, which is in the final rules at section 109.35(b). The 
Commission believes that section

[[Page 446]]

109.35(b), in its final rule formulation, and section 109.35(c) 
referenced within section 109.33, serve to maintain the prohibition 
against circumvention through assignments of coordination party 
expenditure authority under section 109.33.
    Finally, the Commission is making a non-substantive change from the 
NPRM in the title of section 109.33 in the final rule. The Commission 
is changing the word ``limit'' to ``authority'' in order to match the 
text of the rule. The only other changes to the NPRM aside from the 
addition of paragraph (c) are non-substantive changes to paragraphs (a) 
and (b).

11 CFR 109.34 When May a Political Party Committee Make Coordinated 
Party Expenditures?

    Section 109.34 restates without substantive revision the pre-BCRA 
rule in 11 CFR 110.7(d) permitting a political party committee to make 
coordinated party expenditures in connection with the general election 
campaign before or after its candidate has been nominated. All pre-
nomination coordinated expenditures continue to be subject to the 
coordinated party expenditure limitations, whether or not the candidate 
on whose behalf they are made receives the party's nomination. The 
Commission received one comment on this section, which supported the 
proposed rule.

11 CFR 109.35 What Are the Restrictions on a Political Party Committee 
Making Both Independent Expenditures and Coordinated Party Expenditures 
in Connection With the General Election of a Candidate?

    In BCRA, Congress prohibits political party committees, under 
certain conditions, from making both coordinated party expenditures and 
independent expenditures with respect to the same candidate, and from 
making transfers and assignments to other political party committees. 2 
U.S.C. 441a(d)(4). A critical threshold issue is identifying the 
political party committees to which these prohibitions apply. Congress 
provided that for the purposes of these new prohibitions, ``all 
political committees established and maintained by a national political 
party (including all Congressional campaign committees) and all 
political committees established and maintained by a State political 
party (including any subordinate committee of a State committee) shall 
be considered to be a single political committee.'' 2 U.S.C. 
441a(d)(4)(B). Congress plainly intended to combine certain political 
party committees into a collective entity or entities for purposes of 
these prohibitions. 2 U.S.C. 441a(d)(4)(B).
1. 11 CFR 109.35(a) Applicability
    In the NPRM, the Commission proposed a rule that divided a 
political party into a national group of political committees and 
various State and local groups of political committees for the purposes 
of implementing the BCRA provisions governing independent and 
coordinated expenditures by a political party. See 2 U.S.C. 441a(d)(4). 
The NPRM acknowledged the legislative history supporting a ``single 
committee'' interpretation that combined the national, State and local 
party committees, but proposed the ``dual groups'' interpretation in 
order to give the fullest possible effect to the transfer and 
assignment provision of the same statute. 67 FR at 60,054 (September 
24, 2002). Under the transfer and assignment provision, a ``committee 
of a political party'' that makes coordinated party expenditures under 
2 U.S.C. 441a(d) in connection with the general election campaign of a 
candidate must not, during that election cycle, transfer any funds to, 
assign authority to make coordinated party expenditures to, or receive 
a transfer from, ``a committee of the political party'' that has made 
or intends to make an independent expenditure with respect to that 
candidate. 2 U.S.C. 441a(d)(4)(C). The NPRM questioned whether, without 
more than one group or aggregation of political party committees, 
transfers or assignments between political party committees could occur 
as contemplated in section 441a(d)(4)(C).
    Several commenters, including BCRA's principal sponsors, urged that 
the Commission adopt the ``single committee'' approach, asserting that 
it followed from the statutory language as well as the legislative 
history.
    One commenter criticized the ``single committee'' approach as 
contrary to Colorado I, asserting that this Supreme Court decision 
permitted political party committees to make both coordinated and 
independent expenditures.
    Several witnesses testifying at the hearing argued that treating 
all party committees as a single entity is impractical because party 
committees at the national or State level do not control party 
committees at lower levels in their organizations. These commenters 
complained that a local party committee under the ``single committee'' 
approach, by making an independent expenditure with respect to a 
candidate, could preclude the State or national party committee from 
making coordinated party expenditures with respect to that candidate.
    No comments were received that supported the NPRM's ``dual groups'' 
approach, although two witnesses testified at the hearing that the dual 
approach would be preferable to the ``single committee'' approach (one 
of these commenters, however, also testified that the BCRA sponsors 
intended the ``single committee'' approach).
    Commenters favoring the ``single committee'' approach suggested 
examples of how the transfer and assignment provision could be given 
meaningful effect. One commenter proposed that the transfer and 
assignment provision may apply prior to nomination, unlike the 
prohibition on making both coordinated and independent expenditures 
with respect to a candidate, which applies only after nomination. Two 
commenters suggested that the transfer and assignment provision could 
be read to prohibit a national party from making coordinated party 
expenditures with respect to a candidate prior to nomination and then 
transferring funds to a State party committee that would then try to 
make supposedly independent expenditures with respect to that 
candidate.
    In the final rules, paragraph (a) of 11 CFR 109.35 generally tracks 
the statutory language in 2 U.S.C. 441a(d)(4)(B).
2. 11 CFR 109.35(b) Restrictions on Certain Coordinated and Independent 
Expenditures
    Congress provided in BCRA that on or after the date on which a 
political party nominates a candidate, no ``committee of the political 
party'' may make: (1) Any coordinated expenditure under 2 U.S.C. 
441a(d) with respect to the candidate during the election cycle at any 
time after it makes any independent expenditure with respect to the 
candidate during the election cycle; or (2) any independent expenditure 
with respect to the candidate during the election cycle at any time 
after it makes any coordinated expenditure under 2 U.S.C. 441a(d) with 
respect to the candidate during the election cycle. 2 U.S.C. 
441a(d)(4)(A).
    Section 109.35(b) generally tracks the statute.
    As noted above, the result that any political party committee 
within the ``single committee'' could bind all the political party 
committees within the ``single committee'' was criticized by several 
commenters at the hearing. These commenters asserted that this result 
would preclude a national or State committee of a political party from 
making a coordinated party expenditure with respect to a nominee if a 
local

[[Page 447]]

party committee first made an independent expenditure with respect to 
that same nominee, even of small size and without the State or national 
committee's prior knowledge or consent. The Commission notes the 
commenters' concerns, but points out that just that result is the 
apparent aim of the statute. 2 U.S.C. 441a(d)(4)(A).
3. 11 CFR 109.35(c) Restrictions on Certain Transfers and Assignments
    Congress provided in BCRA that a ``committee of a political party'' 
that makes coordinated party expenditures with respect to a candidate 
shall not, during an election cycle, transfer any funds to, assign 
authority to make coordinated party expenditures under 2 U.S.C. 441a(d) 
to, or receive a transfer of funds from, a ``committee of the political 
party'' that has made or intends to make an independent expenditure 
with respect to the candidate. 2 U.S.C. 441a(d)(4)(C).
    In the final rules, paragraph (c) of 11 CFR 109.35 generally tracks 
the statutory language in 2 U.S.C. 441a(d)(4)(C).
    Finally, the Commission noted in the NPRM that it was not proposing 
specific rules to implement the statutory language in the transfer and 
assignment provision that a political party committee ``intends to 
make'' an independent expenditure with respect to a candidate. 2 U.S.C. 
441a(d)(4)(C). The Commission received no comments on this issue and 
incorporates no specific language into section 109.35.
4. Impact of Political Party Committee Activity Carried Out Pursuant to 
Contribution Limits and Coordinated Party Expenditure Authority
    2 U.S.C. 441a(d)(4) applies to coordinated party expenditures and 
to political party committee independent expenditures. Congress did not 
directly address political party committees' monetary and in-kind 
contributions to candidates that are subject to the contribution limits 
under 2 U.S.C. 441a(a) and 441a(h). See 2 U.S.C. 441a(d)(1) 
(``Notwithstanding any other provision of law with respect to * * * 
limitations on contributions, [political party committees] may make 
expenditures in connection with the general election campaign of 
candidates for Federal office, subject to the limitations contained [in 
this subsection]'' [emphasis added]); 2 U.S.C. 441a(d)(4)(A) (addresses 
coordinated party expenditures made under section 441a(d) and does not 
directly address contributions). See also 11 CFR 109.30, 109.32.
    Political party committees may make in-kind contributions to a 
candidate in the form of coordinated activity. See 2 U.S.C. 
441a(a)(7)(B)(i) and 11 CFR 109.20, discussed above. The Commission 
notes that such coordination between a political party committee and a 
candidate may compromise the actual independence of any simultaneous or 
subsequent independent expenditures the political party committee may 
attempt with respect to that candidate. Similarly, coordinated party 
expenditures made by a political party committee with respect to a 
candidate prior to nomination, see 11 CFR 109.34, may be considered 
evidence that could compromise the actual independence of any 
simultaneous or subsequent independent expenditures the political party 
committee may attempt with respect to that candidate. See 11 CFR 
109.35; Buckley v. Valeo, 424 U.S. at 47 (in striking down limits on 
independent expenditures, the Court described such expenditures as made 
``totally independently of the candidate and his campaign'' [emphasis 
added]).
    Finally, the title of section 109.35 in this Explanation and 
Justification has been altered from the NPRM to match the title in the 
rule.

11 CFR 109.36 Are There Additional Circumstances Under Which a 
Political Party Committee Is Prohibited From Making Independent 
Expenditures?

    Prior to the enactment of BCRA, the Commission's rules prohibited a 
national committee of a political party from making independent 
expenditures in connection with the general election campaign of a 
candidate for President. See former 11 CFR 110.7(a)(5). In the NPRM, 
the proposed rule at 11 CFR 109.36 would have largely deleted this 
prohibition. The NPRM limited the remaining application of the 
prohibition to certain circumstances in which the national committee of 
a political party serves as the principal campaign committee or 
authorized committee of its Presidential candidate, as permitted under 
2 U.S.C. 432(e)(3)(A)(i) and 441a(d)(2). See 11 CFR 102.12(c)(1) and 
9002.1(c). Such a prohibition is consistent with 11 CFR 100.16(b) 
(redesignated from former section 109.1(e)) providing that no 
expenditure by an authorized committee of a candidate on behalf of that 
candidate shall qualify as an independent expenditure.
    The Commission received several comments on this section, each of 
which urged the Commission to retain the prohibition at former 11 CFR 
110.7(a)(5) regarding national party committee independent expenditures 
with respect to Presidential nominees. One commenter asserted that 
neither Colorado I nor BCRA require the deletion of the prohibition, 
and that in light of the significance of this issue, Congress would 
have expressly addressed it if Congress desired a change in the current 
regulation. The commenter noted that such a change in the rule is based 
upon a misinterpretation of BCRA, which should not be read as 
affirmatively authorizing political party committees to engage in any 
particular activity. Another commenter claimed that to allow in a broad 
fashion national party committees to make independent expenditures on 
behalf of their Presidential candidates is to invite abuse. The 
commenter stated that Presidential candidates and their parties are so 
inextricably intertwined as to preclude any meaningful possibility that 
one can operate ``independently'' of the other, and that the degree of 
coordination that exists between a national party committee and its 
Presidential candidate typically far exceeds even the level of 
coordination between a party committee and its congressional 
candidates.
    The Commission acknowledges the concerns expressed in the comments 
but for the following reasons is including 11 CFR 109.36 in the final 
rules. First, the Commission does not believe it appropriate to retain 
in its rules a conclusive presumption of coordination after Colorado I. 
Even though Colorado I expressly involved only Congressional races, and 
arguably the likelihood of coordination may be greater between a 
national party committee and its Presidential nominee, the rule at 
section 109.36 is consistent with the Supreme Court's decision.
    Second, the Commission concludes that Congress in BCRA effectively 
repealed the prohibition at 11 CFR 110.7(a)(5). See 2 U.S.C. 
441a(d)(4). Under a new statutory provision, Congress prohibits 
political party committees from making both post-nomination independent 
expenditures and post-nomination coordinated expenditures in support of 
a candidate. See 2 U.S.C. 441a(d)(4)(A). A national party committee 
could thus make independent expenditures with respect to a candidate 
after nomination, if not prohibited under section 441a(d)(4)(A). See 11 
CFR 109.35(a). Because this provision appears to apply equally to party 
committee expenditures on behalf of either Presidential or 
Congressional candidates, a national party committee may be able to 
make independent expenditures with respect to a

[[Page 448]]

Presidential candidate under certain circumstances. Thus, while 
Congress did not specifically require the deletion of the prohibition 
at former 11 CFR 110.7(a)(5), the Commission has concluded that a 
provision within BCRA is consistent with that result. To the extent 
that BCRA, and Colorado I as discussed above, do not require the 
Commission to promulgate the rule at section 109.36, the Commission 
nonetheless exercises its discretion to do so as a permissible 
interpretation of BCRA and Colorado I.
    Finally, the Commission notes that if coordination occurs between a 
national party committee and its Presidential nominee, it would negate 
the actual independence of independent expenditures the national party 
committee attempted with respect to that candidate. See Buckley v. 
Valeo, 424 U.S. at 47 (in striking down limits on independent 
expenditures, the Court described such expenditures as made ``totally 
independently of the candidate and his campaign'' [emphasis added]). 
The Commission recognizes that the ability of a national party 
committee to make such independent expenditures may be unlikely in 
practice, but the Commission's rules must allow for such a possibility, 
and as noted above, must reject a conclusive presumption that such 
expenditures are always coordinated.
    Finally, section 109.36 contains one non-substantive change from 
the NPRM, and the title of section 109.36 in this Explanation and 
Justification has been slightly altered from the NPRM to match the 
title in the rule.

11 CFR 109.37 What Is a ``Party Coordinated Communication''?

    In BCRA, Congress required the Commission to promulgate new 
regulations on ``coordinated communications'' that are paid for by 
persons other than candidates, authorized committees of candidates, and 
party committees. Public Law 107-155, sec. 214(b), (c); see 11 CFR 
109.21 above. Although Congress did not specifically direct the 
Commission to address coordinated communications paid for by political 
party committees, the Commission is doing so to give clear guidance to 
those affected by BCRA.
    The Commission in the NPRM proposed a rule which would have been at 
11 CFR 109.37, political party coordinated communications, using the 
same content and conduct standards as proposed in section 109.21 for 
coordinated communications by other persons.
    The Commission received a number of comments on this proposal. The 
comments fall into two general categories. One group of commenters 
urged the Commission to defer this party coordinated communication 
rulemaking, arguing (1) that it is not strictly required by BCRA, (2) 
that the Commission should be focusing its resources at this time on 
the rulemaking most directly required by BCRA, and (3) that the comment 
period was a difficult time for the political parties to focus on the 
rulemaking because it was shortly before the 2002 general election. 
These commenters also asserted that party coordinated communications is 
a complicated subject area, citing the many questions posed in the NPRM 
in their claim that the Commission should defer this rulemaking.
    On the substance of the proposed rule, this group of commenters 
testified at the hearing that the proposed content and conduct 
standards were both overbroad. (See the discussion above regarding 11 
CFR 109.21). These commenters noted that any coordination standard for 
political party committees must allow for the regular contacts between 
a political party committee and its candidates. Another commenter 
raised an equal protection argument, asserting that a regulation that 
on its face appears to treat political party committees the same as 
other persons may as a practical matter have an unequal impact on the 
political parties.
    The other group of commenters relied on the relationship between a 
political party committee and its candidates for the assertion that the 
Commission should promulgate a party coordinated communication rule 
using a rebuttable presumption that the communications are coordinated 
with candidates. These commenters stated that this presumption could be 
rebutted by a showing of actual independence. One commenter believed 
that the Commission's rule should describe ways in which a political 
party committee could establish its independence from a candidate. 
Another commenter noted that Colorado I, which struck down a conclusive 
presumption of coordination, does not prevent the use of a rebuttable 
presumption, and that such a rule is necessary to ensure that political 
party committee independent expenditures are in fact ``totally 
independent'' from candidates as required by the Supreme Court in 
Buckley.
    While the Commission recognizes that Congress in BCRA did not 
specifically direct the Commission to address coordinated 
communications paid for by political party committees, the Commission 
is doing so to give clear guidance to those affected by BCRA. Congress 
determined to regulate political party committees' independent 
expenditures and coordinated party expenditures, and thus it is 
appropriate and useful for the Commission to promulgate rules at this 
time detailing standards for party coordinated communications. See 2 
U.S.C. 441a(d)(4) and 11 CFR 109.35, discussed above.
    The Commission is promulgating final rules similar to those in 
proposed section 109.37, generally applying the same regulatory 
analysis to communications paid for by the political party committees 
that is applied to communications paid for by other persons. See 11 CFR 
109.21(a) through (f). This analysis determines when communications 
paid for by a political party committee are considered to be 
coordinated with a candidate, a candidate's authorized committee, or 
their agents.
    Following 11 CFR 109.21(a), section 109.37(a) defines the 
circumstances in which communications paid for by political party 
committees are considered to be coordinated with a candidate, a 
candidate's authorized committee, or agents of any of the foregoing. 
Under 11 CFR 109.37(a)(1) through (3), such communications are deemed 
to be ``party coordinated communications'' when they were paid for by a 
political party committee or its agent, satisfy at least one of the 
content standards in section 109.37(a)(2)(i) through (iii), and satisfy 
at least one of the conduct standards in 11 CFR 109.21(d)(1) through 
(d)(6), subject to the provisions of 11 CFR 109.21(e) and other 
conditions.
    The party coordinated communication content standards in section 
109.37(a)(2)(i) through (iii) are adopted from 11 CFR 109.21(c)(2) 
through (c)(4). The first content standard, at paragraph (a)(2)(i) of 
section 109.37, is a public communication that disseminates, 
distributes, or republishes, in whole or in part, campaign materials 
prepared by a candidate, the candidate's authorized committee, or an 
agent of any of the foregoing, unless the dissemination, distribution, 
or republication is excepted under 11 CFR 109.23(b). The Commission 
also provides in this content standard that for a communication that 
satisfies this standard, see the conduct standard in 11 CFR 
109.21(d)(6), under which the communication is evaluated. See the 
discussion above of 11 CFR 109.21(c)(2). This content standard at 11 
CFR 109.37(a)(2)(i) for party coordinated communications is the same as 
the standard set forth for coordinated

[[Page 449]]

communications by other persons in 11 CFR 109.21(c)(2).
    The second content standard, at paragraph (a)(2)(ii) of section 
109.37, is a public communication that expressly advocates the election 
or defeat of a clearly identified candidate for Federal office. This 
content standard for party coordinated communications is identical to 
the standard set forth for coordinated communications by other persons 
in 11 CFR 109.21(c)(3).
    The third content standard, at paragraph (a)(2)(iii) of section 
109.37, is a public communication that (1) refers to a clearly 
identified candidate for Federal office; (2) is publicly distributed or 
otherwise publicly disseminated 120 days or fewer before a general, 
special, or runoff election, or 120 days or fewer before a primary or 
preference election, or a convention or caucus of a political party 
that has authority to nominate a candidate; and (3) is directed to 
voters in the jurisdiction of the clearly identified candidate. 11 CFR 
109.37(a)(2)(iii)(A)-(C). See the discussion above of 11 CFR 
109.21(c)(4). This content standard at section 109.37(a)(2)(iii) is 
based on the content standard at section 109.21(c)(4) but limits its 
coverage to communications that refer to a clearly identified candidate 
for Federal office.
    Finally, the Commission notes that the content standard at 11 CFR 
109.21(c)(1), coordinated electioneering communications, is not applied 
to party coordinated communications because electioneering 
communications, as defined, exclude communications which constitute 
expenditures under the Act, which includes political party committee 
expenditures. See 2 U.S.C. 434(f)(3)(B)(ii); 11 CFR 100.29(c)(3).
    For the conduct standards for party coordinated communications, in 
paragraph (a)(3) of section 109.37, the Commission refers to the 
conduct standards set forth in 11 CFR 109.21(d)(1) through (d)(6), 
subject to the provisions of 11 CFR 109.21(e) and other conditions. As 
in 11 CFR 109.21(d), agreement or formal collaboration is not necessary 
for a finding that a communication is coordinated. See the discussion 
above of 11 CFR 109.21(d) and (e). Further, paragraph (a)(3) of section 
109.37 provides that a candidate's response to an inquiry about that 
candidate's positions on legislative or policy issues, but not 
including a discussion of campaign plans, projects, activities, or 
needs, does not satisfy any of the conduct standards in 11 CFR 
109.21(d)(1) through (d)(6). This safe harbor parallels the safe harbor 
at 11 CFR 109.21(f). See the discussion above of 11 CFR 109.21(f).
    The Commission also addresses in paragraph (a)(3) of section 109.37 
circumstances in which the in-kind contribution results solely from 
conduct in 11 CFR 109.21(d)(4) or (d)(5). Under these circumstances, 
the candidate does not receive or accept an in-kind contribution and is 
not required to report an expenditure. See the discussion above 
regarding 11 CFR 109.21(b)(2).
    Paragraph (b) of section 109.37 explains the treatment of party 
coordinated communications. This paragraph provides that political 
party committees must treat payments for communications coordinated 
with candidates as either in-kind contributions or coordinated party 
expenditures.
    The Commission excepts from 11 CFR 109.37(b) such payments that are 
otherwise excepted from the definitions of ``contribution'' and 
``expenditure'' found at 11 CFR part 100 subparts C and E. For example, 
the payment by a State or local committee of a political party of the 
costs of preparation, display, or mailing or other distribution 
incurred by such committee with respect to a printed slate card, sample 
ballot, palm card, or other printed listing(s) of three or more 
candidates for any public office for which an election is held in the 
State in which the committee is organized is not a contribution or an 
expenditure. 11 CFR 100.80 and 100.140. Thus, if such communications 
were coordinated with candidates, the payments for such communications 
would not be treated as either in-kind contributions or as coordinated 
party expenditures.
    For such a payment that a political party committee treats as an 
in-kind contribution, paragraph (b)(1) of section 109.37 states that it 
is made for the purpose of influencing a Federal election. See the 
discussion above regarding 11 CFR 109.21(b).
    For such a payment that a political party committee treats as a 
coordinated party expenditure, paragraph (b)(2) of section 109.37 
states that such expenditure is made pursuant to coordinated party 
expenditure authority under 11 CFR 109.32 in connection with the 
general election campaign of the candidate with whom it was 
coordinated.
    Finally, paragraphs (b)(1) and (b)(2) of section 109.37 each refer 
to the reporting obligations flowing from party coordinated 
communications under 11 CFR part 104.

11 CFR 110.1 Contributions by Persons Other Than Multicandidate 
Political Committees

    The Commission clarifies that the section 110.1 limitations on 
contributions to political committees making independent expenditures 
apply to contributions made by persons other than multicandidate 
committees to political party committees that make independent 
expenditures. See 11 CFR 110.1(n). Paragraph 110.1(n) replaces pre-BCRA 
paragraph (d)(2) of section 110.1 regarding the application of the 
contribution limits to contributions to committees that make 
independent expenditures.
    This section is being updated because under pre-BCRA paragraph 
(d)(2) of section 110.1, the Commission recognized that political 
committees other than party committees may make independent 
expenditures, but did not contemplate party committees doing so. See 
Colorado I, 518 U.S. at 618. For example, national party committees may 
receive contributions aggregating $20,000 per year from individuals, a 
contribution limit that Congress increased to $25,000 for contributions 
made on or after January 1, 2003. See 2 U.S.C. 441a(a)(1)(B). 
Consequently, under BCRA, the $20,000 ($25,000) contribution limit 
continues to apply when the recipient national party committee uses the 
contribution to make independent expenditures. The Commission notes 
that 11 CFR 110.1(h) regarding contributions to political committees 
supporting the same candidate, remains unchanged except to state that 
the support to candidates by political party committees may include 
independent expenditures. The Commission received no comments on this 
section.
    Additional changes to 11 CFR 110.1 are addressed in a separate 
rulemaking on BCRA's increased contribution limits. See Final Rules and 
Explanation and Justification for Contribution Limitations and 
Prohibitions, 67 FR 69,928 (November 19, 2002).

11 CFR 110.2 Contributions by Multicandidate Political Committees

    The Commission clarifies that the section 110.2 limitations on 
contributions to political committees making independent expenditures 
apply to contributions made by multicandidate committees to political 
party committees that make independent expenditures. See 11 CFR 
110.2(k). Paragraph 110.2(k) replaces pre-BCRA paragraph (d)(2) of 
section 110.2 regarding the application of the contribution limits to 
contributions to

[[Page 450]]

committees that make independent expenditures.
    This section is being updated for the reasons set forth above in 
the discussion regarding 11 CFR 110.1. The Commission received no 
comments on this section.
    Additional changes to 11 CFR 110.2 were addressed in a separate 
rulemaking on BCRA's increased contribution limits. See Final Rules and 
Explanation and Justification for Contribution Limitations and 
Prohibitions, 67 FR 69,928 (November 19, 2002).

11 CFR 110.7 Removed and Reserved

    The pre-BCRA regulations at 11 CFR 110.7 contained the coordinated 
party expenditure limits and related provisions. As explained above, 
the Commission is moving section 110.7, in amended form, to 11 CFR part 
109, subpart D. Specifically, the provisions in section 110.7 are 
revised and redesignated as follows: 11 CFR 110.7(a) and (b) to 11 CFR 
109.32(a) and (b) and 109.36; 11 CFR 110.7(c) to 11 CFR 109.33; and 11 
CFR 110.7(d) to 11 CFR 109.34.

11 CFR 110.8 Presidential Candidate Expenditure Limitations

    As in 11 CFR 109.32(a) and (b) discussed above, the Commission 
clarifies that the expenditure limits for publicly funded Presidential 
candidates are increased in accordance with 11 CFR 110.17. See 11 CFR 
110.8(a)(2). To accommodate this new section 110.8(a)(2), the 
Commission is re-designating pre-BCRA paragraphs (a)(1) and (a)(2) as 
(a)(1)(i) and (a)(1)(ii), respectively.
    In 11 CFR 110.8(a)(3), the Commission references the definition of 
``voting age population'' at 11 CFR 110.18. The voting age population 
is a factor in the calculation of expenditure limitations in 11 CFR 
110.8(a). No commenters addressed this section.
    The Commission also made additional changes to 11 CFR 110.9(c) in a 
separate rulemaking, including moving it to 11 CFR 110.17. See Final 
Rules and Explanation and Justification for Contribution Limitations 
and Prohibitions, 67 FR 69,928 (November 19, 2002).

11 CFR 110.14 Contributions to and Expenditures by Delegates and 
Delegate Committees

    In light of the Congressional repeal of former 11 CFR 100.23, the 
removal of the separate definition of ``independent expenditure'' under 
11 CFR 109.1, and the removal of 11 CFR 109.2, see Final Rules and 
Explanation and Justification for Bipartisan Campaign Reform Act of 
2002 Reporting, published elsewhere in this issue of the Federal 
Register, the Commission is making several necessary technical 
revisions to 11 CFR 110.14. These technical revisions were not 
originally proposed in the NPRM. Within 11 CFR 110.14, the Commission 
is replacing all references to a ``coordinated general public political 
communication under 11 CFR 100.23'' with references to ``coordinated 
communication under 11 CFR 109.21.'' In addition, the Commission is 
replacing all citations to former 11 CFR 109.2 with citations to 11 CFR 
109.10. Finally, the Commission is replacing all references to 
independent expenditures under 11 CFR part 109 with references to 
independent expenditures under 11 CFR 100.16 to reflect the removal of 
the definition of ``independent expenditure'' in former 11 CFR 109.1.

11 CFR 110.18 Voting Age Population

    The Commission is moving pre-BCRA section 110.9(d) regarding voting 
age population (``VAP'') to 11 CFR 110.18 as part of a reorganization 
of section 110.9. This provision is referenced in sections 109.32(a) 
and (b) (coordinated party expenditure limits) and 110.8(a)(3) 
(Presidential candidate expenditure limits) where the VAP is used as a 
factor in calculating the limits. Section 110.18 is revised from pre-
BCRA section 110.9(d) to clarify that the Secretary of Commerce each 
year certifies to the Commission and publishes in the Federal Register 
an estimate of the VAP pursuant to 2 U.S.C. 441a(e). No comments 
addressed this provision.
    Changes to the other provisions of section 110.9, including 
paragraph (c) of this section, are addressed in a separate rulemaking. 
See Final Rules and Explanation and Justification for Contribution 
Limitations and Prohibitions, 67 FR 69,928 (November 19, 2002).

11 CFR 114.4 Disbursements for Communications Beyond the Restricted 
Class in Connection With a Federal Election

    Paragraph (c)(5) of section 114.4 pertains to voter guides paid for 
by corporations and labor organizations. The Commission makes several 
changes to this paragraph to conform with other regulatory changes in 
response to BCRA.
    The pre-BCRA version of paragraphs (c)(5)(i) and (ii) of section 
114.4 provided that a corporation or labor organization must not, among 
other things, ``contact'' a candidate in the preparation of a voter 
guide, except in writing. In this rulemaking, the Commission is 
promulgating a safe harbor in the coordination rules that allows a 
person, such as a corporation or labor union, to contact a candidate to 
inquire about the candidate's positions on legislative or policy issues 
without a subsequent communication paid for by that person being deemed 
coordinated with the candidate (assuming there are no other actions 
resulting in coordination). See 11 CFR 109.21(f) and the above 
discussion relating to this provision.
    Accordingly, paragraph (c)(5)(i) of section 114.4 is being amended 
to delete the prohibition against any contact with a candidate in the 
preparation of a voter guide.
    Paragraph (c)(5)(ii) of section 114.4 is being amended to delete 
the requirement that contact with the candidate be in writing.
    The Commission is also making several non-substantive changes to 
paragraphs (c)(5)(i) and (ii) of section 114.4 to conform these 
provisions to the statutory provisions on which they are based. Compare 
2 U.S.C. 441a(a)(7)(B) with 11 CFR 114.5(c)(5)(i) and (ii).
    The Commission received three comments on this section, all of 
which urged the Commission to include an exception to the coordination 
standard at 11 CFR 109.21 for inquiries to candidates in connection 
with voter guides. The Commission is including the described safe 
harbor at 11 CFR 109.21(f) to address this concern.
    The Commission notes that an appeals court in one circuit 
invalidated portions of pre-BCRA 11 CFR 114.4(c)(5). See Clifton v. 
Federal Election Commission, 927 F. Supp. 493 (D. Me. 1996), modified 
in part and remanded in part, 114 F.3d 1309 (1st Cir. 1997), cert. 
denied, 522 U.S. 1108 (1998). Subsequently a Petition for Rulemaking 
asked the Commission to repeal its voter guide regulation. See Notice 
of Availability, 64 FR 46,319 (Aug. 25, 1999). The Commission's present 
rulemaking consists of changes necessitated by BCRA, although any 
additional changes to the voter guide regulations could be addressed in 
a future rulemaking.

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

    The Commission certifies that the attached rules 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, and other 
political committees are not small entities under 5 U.S.C. 601 because 
they are not small businesses, small organizations, or small 
governmental

[[Page 451]]

jurisdictions. Further, individual citizens operating under these rules 
are not small entities.
    To the extent that any political committee may fall within the 
definition of ``small entities,'' their numbers are not substantial, 
particularly the number that would coordinate expenditures with 
candidates or political party committees in connection with a Federal 
election.
    In addition, the small entities to which the rules apply will not 
be unduly burdened by the proposed rules because there is no 
significant extra cost involved, as any new potential recordkeeping 
responsibilities would be minimal and optional. Any commercial vendors 
whose clients include campaign committees or political party committees 
were previously subject to different rules regarding coordination, and 
will not experience a significant economic impact as a result of the 
new rules because the requirements of these new rules are no more than 
what is necessary to comply with the new statute enacted by Congress.

Derivation Table

    The following derivation table identifies the new sections in parts 
100, 109, and 110 and the corresponding pre-BCRA rules that addressed 
those subject areas.

------------------------------------------------------------------------
              New section                          Old section
------------------------------------------------------------------------
100.16(b).............................  109.1(e).
109.1.................................  New.
109.3.................................  109.1(b)(5).
109.11................................  109.3.
109.20................................  109.1(c).
109.21................................  New.
109.22................................  New.
109.23................................  109.1(d).
109.30................................  New.
109.31................................  New--Reserved.
109.32(a).............................  110.7(a) (except para. (a)(4)
                                         and para. (a)(5)).
109.32(b).............................  110.7(b).
109.33................................  110.7(a)(4) and (c).
109.34................................  110.7(d).
109.35................................  New.
109.36................................  110.7(a)(5).
109.37................................  New.
110.1(n)..............................  New.
110.2(k)..............................  New.
110.8(a)(2)...........................  New.
110.8(a)(3)...........................  New.
110.18................................  110.9(d).
------------------------------------------------------------------------

List of Subjects

11 CFR Part 100

    Elections.

11 CFR Part 102

    Political committees and parties, reporting and recordkeeping 
requirements.

11 CFR Part 109

    Elections, reporting and recordkeeping requirements.

11 CFR Part 110

    Campaign funds, political committees and parties.

11 CFR Part 114

    Business and industry, elections, labor.


    For the reasons set out in the preamble, subchapter A of chapter 1 
of title 11 of the Code of Federal Regulations is amended as follows:

PART 100--SCOPE AND DEFINITIONS

    1. The authority citation for part 100 is revised to read as 
follows:

    Authority: 2 U.S.C. 431, 434, and 438(a)(8).


    2. Section 100.16 is revised to read as follows:


Sec.  100.16  Independent expenditure (2 U.S.C. 431(17)).

    (a) The term independent expenditure means an expenditure by a 
person for a communication expressly advocating the election or defeat 
of a clearly identified candidate that is not made in cooperation, 
consultation, or concert with, or at the request or suggestion of, a 
candidate, a candidate's authorized committee, or their agents, or a 
political party committee or its agents. A communication is ``made in 
cooperation, consultation, or concert with, or at the request or 
suggestion of, a candidate, a candidate's authorized committee, or 
their agents, or a political party committee or its agents'' if it is a 
coordinated communication under 11 CFR 109.21 or a party coordinated 
communication under 11 CFR 109.37.
    (b) No expenditure by an authorized committee of a candidate on 
behalf of that candidate shall qualify as an independent expenditure.
    (c) No expenditure shall be considered independent if the person 
making the expenditure allows a candidate, a candidate's authorized 
committee, or their agents, or a political party committee or its 
agents to become materially involved in decisions regarding the 
communication as described in 11 CFR 109.21(d)(2), or shares financial 
responsibility for the costs of production or dissemination with any 
such person.


Sec.  100.23  [Reserved.]

    3. Remove and reserve Sec.  100.23.

PART 102--REGISTRATION, ORGANIZATION, AND RECORDKEEPING BY 
POLITICAL COMMITTEES (2 U.S.C. 433)

    4. The authority citation for Part 102 continues to read as 
follows:

    Authority: 2 U.S.C. 432, 433, 434(a)(11), 438(a)(8), and 441d.


    5. Section 102.6(a)(1)(ii) is revised to read as follows:


Sec.  102.6  Transfers of funds; collecting agents.

    (a) * * *
    (1) * * *
    (ii) Subject to the restrictions set forth at 11 CFR 109.35(c), 
300.10(a), 300.31 and 300.34(a) and (b), transfers of funds may be made 
without limit on amount between or among a national party committee, a 
State party committee and/or any subordinate party committee whether or 
not they are political committees under 11 CFR 100.5 and whether or not 
such committees are affiliated.
* * * * *

    6. Part 109 is revised to read as follows:

PART 109--COORDINATED AND INDEPENDENT EXPENDITURES (2 U.S.C. 
431(17), 441a(a) and (d), and Pub. L. 107-155 sec. 214(c))

Sec.
Subpart A--Scope and Definitions
109.1 When will this part apply?
109.2 [Reserved]
109.3 Definitions.
Subpart B--Independent Expenditures
109.10 How do political committees and other persons report 
independent expenditures?
109.11 When is a ``non-authorization notice'' (disclaimer) required?
Subpart C--Coordination
109.20 What does ``coordinated'' mean?
109.21 What is a ``coordinated communication''?
109.22 Who is prohibited from making coordinated communications?
109.23 Dissemination, distribution, or republication of candidate 
campaign materials.
Subpart D--Special Provisions for Political Party Committees
109.30 How are political party committees treated for purposes of 
coordinated and independent expenditures?
109.31 [Reserved]
109.32 What are the coordinated party expenditure limits?
109.33 May a political party committee assign its coordinated party 
expenditure authority to another political party committee?

[[Page 452]]

109.34 When may a political party committee make coordinated party 
expenditures?
109.35 What are the restrictions on a political party making both 
independent expenditures and coordinated party expenditures in 
connection with the general election of a candidate?
109.36 Are there additional circumstances under which a political 
party committee is prohibited from making independent expenditures?
109.37 What is a ``party coordinated communication''?

    Authority: 2 U.S.C. 431(17), 434(c), 438(a)(8), 441a, 441d; Sec. 
214(c) of Pub. L. 107-155, 116 Stat. 81.

Subpart A--Scope and Definitions


Sec.  109.1  When will this part apply?

    This part applies to expenditures that are made independently from 
a candidate, an authorized committee, a political party committee, or 
their agents, and to those payments that are made in coordination with 
a candidate, an authorized committee, a political party committee, or 
their agents. The rules in this part explain how these types of 
payments must be reported and how they must be treated by candidates, 
authorized committees, and political party committees. In addition, 
subpart D of part 109 describes procedures and limits that apply only 
to payments, transfers, and assignments made by political party 
committees.


Sec.  109.2  [Reserved]


Sec.  109.3  Definitions.

    For the purposes of 11 CFR part 109 only, agent means any person 
who has actual authority, either express or implied, to engage in any 
of the following activities on behalf of the specified persons:
    (a) In the case of a national, State, district, or local committee 
of a political party, any one or more of the activities listed in 
paragraphs (a)(1) through (a)(5) of this section:
    (1) To request or suggest that a communication be created, 
produced, or distributed.
    (2) To make or authorize a communication that meets one or more of 
the content standards set forth in 11 CFR 109.21(c).
    (3) To create, produce, or distribute any communication at the 
request or suggestion of a candidate.
    (4) To be materially involved in decisions regarding:
    (i) The content of the communication;
    (ii) The intended audience for the communication;
    (iii) The means or mode of the communication;
    (iv) The specific media outlet used for the communication;
    (v) The timing or frequency of the communication; or,
    (vi) The size or prominence of a printed communication, or duration 
of a communication by means of broadcast, cable, or satellite.
    (5) To make or direct a communication that is created, produced, or 
distributed with the use of material or information derived from a 
substantial discussion about the communication with a candidate.
    (b) In the case of an individual who is a Federal candidate or an 
individual holding Federal office, any one or more of the activities 
listed in paragraphs (b)(1) through (b)(6) of this section:
    (1) To request or suggest that a communication be created, 
produced, or distributed.
    (2) To make or authorize a communication that meets one or more of 
the content standards set forth in 11 CFR 109.21(c).
    (3) To request or suggest that any other person create, produce, or 
distribute any communication.
    (4) To be materially involved in decisions regarding:
    (i) The content of the communication;
    (ii) The intended audience for the communication;
    (iii) The means or mode of the communication;
    (iv) The specific media outlet used for the communication;
    (v) The timing or frequency of the communication;
    (vi) The size or prominence of a printed communication, or duration 
of a communication by means of broadcast, cable, or satellite.
    (5) To provide material or information to assist another person in 
the creation, production, or distribution of any communication.
    (6) To make or direct a communication that is created, produced, or 
distributed with the use of material or information derived from a 
substantial discussion about the communication with a different 
candidate.

Subpart B--Independent Expenditures


Sec.  109.10  How do political committees and other persons report 
independent expenditures?

    (a) Political committees, including political party committees, 
must report independent expenditures under 11 CFR 104.4.
    (b) Every person that is not a political committee and that makes 
independent expenditures aggregating in excess of $250 with respect to 
a given election in a calendar year shall file a verified statement or 
report on FEC Form 5 in accordance with 11 CFR 104.4(e) containing the 
information required by paragraph (e) of this section. Every person 
filing a report or statement under this section shall do so in 
accordance with the quarterly reporting schedule specified in 11 CFR 
104.5(a)(1)(i) and (ii) and shall file a report or statement for any 
quarterly period during which any such independent expenditures that 
aggregate in excess of $250 are made and in any quarterly reporting 
period thereafter in which additional independent expenditures are 
made.
    (c) Every person that is not a political committee and that makes 
independent expenditures aggregating $10,000 or more with respect to a 
given election any time during the calendar year up to and including 
the 20th day before an election, must report the independent 
expenditures on FEC Form 5, or by signed statement if the person is not 
otherwise required to file electronically under 11 CFR 104.18. (See 11 
CFR 104.4(f) for aggregation.) The person making the independent 
expenditures aggregating $10,000 or more must ensure that the 
Commission receives the report or statement by 11:59 p.m. Eastern 
Standard/Daylight Time on the second day following the date on which a 
communication is publicly distributed or otherwise publicly 
disseminated. Each time subsequent independent expenditures relating to 
the same election aggregate an additional $10,000 or more, the person 
making the independent expenditures must ensure that the Commission 
receives a new 48-hour report of the subsequent independent 
expenditures. Each 48-hour report must contain the information required 
by paragraph (e)(1) of this section.
    (d) Every person making, after the 20th day, but more than 24 hours 
before 12:01 a.m. of the day of an election, independent expenditures 
aggregating $1,000 or more with respect to a given election must report 
those independent expenditures and ensure that the Commission receives 
the report or signed statement by 11:59 p.m. Eastern Standard/Daylight 
Time on the day following the date on which a communication is publicly 
distributed or otherwise publicly disseminated. Each time subsequent 
independent expenditures relating to the same election aggregate $1,000 
or more, the person making the independent expenditures must ensure 
that the Commission receives a new 24-hour report of the subsequent 
independent expenditures. (See 11 CFR 104.4(f) for aggregation.) Such 
report or statement shall contain the information required by paragraph 
(e) of this section.

[[Page 453]]

    (e) Content of verified reports and statements and verification of 
reports and statements.
    (1) Contents of verified reports and statement. If a signed report 
or statement is submitted, the report or statement shall include:
    (i) The reporting person's name, mailing address, occupation, and 
the name of his or her employer, if any;
    (ii) The identification (name and mailing address) of the person to 
whom the expenditure was made;
    (iii) The amount, date, and purpose of each expenditure;
    (iv) A statement that indicates whether such expenditure was in 
support of, or in opposition to a candidate, together with the 
candidate's name and office sought;
    (v) A verified certification under penalty of perjury as to whether 
such expenditure was made in cooperation, consultation, or concert 
with, or at the request or suggestion of a candidate, a candidate's 
authorized committee, or their agents, or a political party committee 
or its agents; and
    (vi) The identification of each person who made a contribution in 
excess of $200 to the person filing such report, which contribution was 
made for the purpose of furthering the reported independent 
expenditure.
    (2) Verification of independent expenditure statements and reports. 
Every person shall verify reports and statements of independent 
expenditures filed pursuant to the requirements of this section by one 
of the methods stated in paragraph (e)(2)(i) or (ii) of this section. 
Any report or statement verified under either of these methods shall be 
treated for all purposes (including penalties for perjury) in the same 
manner as a document verified by signature.
    (i) For reports or statements filed on paper (e.g., by hand-
delivery, U.S. Mail, or facsimile machine), the person who made the 
independent expenditure shall certify, under penalty of perjury, the 
independence of the expenditure by handwritten signature immediately 
following the certification required by paragraph (e)(1)(v) of this 
section.
    (ii) For reports or statements filed by electronic mail, the person 
who made the independent expenditure shall certify, under penalty of 
perjury, the independence of the expenditure by typing the treasurer's 
name immediately following the certification required by paragraph 
(e)(1)(v) of this section.


Sec.  109.11  When is a ``non-authorization notice'' (disclaimer) 
required?

    Whenever any person makes an independent expenditure for the 
purpose of financing communications expressly advocating the election 
or defeat of a clearly identified candidate, such person shall comply 
with the requirements of 11 CFR 110.11.

Subpart C--Coordination


Sec.  109.20  What does ``coordinated'' mean?

    (a) Coordinated means made in cooperation, consultation or concert 
with, or at the request or suggestion of, a candidate, a candidate's 
authorized committee, or their agents, or a political party committee 
or its agents.
    (b) Any expenditure that is coordinated within the meaning of 
paragraph (a) of this section, but that is not made for a coordinated 
communication under 11 CFR 109.21 or a party coordinated communication 
under 11 CFR 109.37, is either an in-kind contribution to, or a 
coordinated party expenditure with respect to, the candidate or 
political party committee with whom or with which it was coordinated 
and must be reported as an expenditure made by that candidate or 
political party committee, unless otherwise exempted under 11 CFR part 
100, subparts C or E.


Sec.  109.21  What is a ``coordinated communication''?

    (a) Definition. A communication is coordinated with a candidate, an 
authorized committee, a political party committee, or an agent of any 
of the foregoing when the communication:
    (1) Is paid for by a person other than that candidate, authorized 
committee, political party committee, or agent of any of the foregoing;
    (2) Satisfies at least one of the content standards in paragraph 
(c) of this section; and
    (3) Satisfies at least one of the conduct standards in paragraph 
(d) of this section.
    (b) Treatment as an in-kind contribution and expenditure; 
Reporting.
    (1) General rule. A payment for a coordinated communication is made 
for the purpose of influencing a Federal election, and is an in-kind 
contribution under 11 CFR 100.52(d) to the candidate, authorized 
committee, or political party committee with whom or which it is 
coordinated, unless excepted under 11 CFR part 100, subpart C, and must 
be reported as an expenditure made by that candidate, authorized 
committee, or political party committee under 11 CFR 104.13, unless 
excepted under 11 CFR part 100, subpart E.
    (2) In-kind contributions resulting from conduct described in 
paragraphs (d)(4) or (d)(5) of this section. Notwithstanding paragraph 
(b)(1) of this section, the candidate, authorized committee, or 
political party committee with whom or which a communication is 
coordinated does not receive or accept an in-kind contribution, and is 
not required to report an expenditure, that results from conduct 
described in paragraphs (d)(4) or (d)(5) of this section, unless the 
candidate, authorized committee, or political party committee, or an 
agent of any of the foregoing, engages in conduct described in 
paragraphs (d)(1) through (d)(3) of this section.
    (3) Reporting of coordinated communications. A political committee, 
other than a political party committee, that makes a coordinated 
communication must report the payment for the communication as a 
contribution made to the candidate or political party committee with 
whom or which it was coordinated and as an expenditure in accordance 
with 11 CFR 104.3(b)(1)(v). A candidate, authorized committee, or 
political party committee with whom or which a communication paid for 
by another person is coordinated must report the usual and normal value 
of the communication as an in-kind contribution in accordance with 11 
CFR 104.13, meaning that it must report the amount of the payment as a 
receipt under 11 CFR 104.3(a) and as an expenditure under 11 CFR 
104.3(b).
    (c) Content standards. Each of the types of content described in 
paragraphs (c)(1) through (c)(4) satisfies the content standard of this 
section.
    (1) A communication that is an electioneering communication under 
11 CFR 100.29.
    (2) A public communication that disseminates, distributes, or 
republishes, in whole or in part, campaign materials prepared by a 
candidate, the candidate's authorized committee, or an agent of any of 
the foregoing, unless the dissemination, distribution, or republication 
is excepted under 11 CFR 109.23(b). For a communication that satisfies 
this content standard, see paragraph (d)(6) of this section.
    (3) A public communication that expressly advocates the election or 
defeat of a clearly identified candidate for Federal office.
    (4) A communication that is a public communication, as defined in 
11 CFR 100.26, and about which each of the following statements in 
paragraphs (c)(4)(i), (ii), and (iii) of this section are true.
    (i) The communication refers to a political party or to a clearly 
identified candidate for Federal office;

[[Page 454]]

    (ii) The public communication is publicly distributed or otherwise 
publicly disseminated 120 days or fewer before a general, special, or 
runoff election, or 120 days or fewer before a primary or preference 
election, or a convention or caucus of a political party that has 
authority to nominate a candidate; and
    (iii) The public communication is directed to voters in the 
jurisdiction of the clearly identified candidate or to voters in a 
jurisdiction in which one or more candidates of the political party 
appear on the ballot.
    (d) Conduct standards. Any one of the following types of conduct 
satisfies the conduct standard of this section whether or not there is 
agreement or formal collaboration, as defined in paragraph (e) of this 
section:
    (1) Request or suggestion.
    (i) The communication is created, produced, or distributed at the 
request or suggestion of a candidate or an authorized committee, 
political party committee, or agent of any of the foregoing; or
    (ii) The communication is created, produced, or distributed at the 
suggestion of a person paying for the communication and the candidate, 
authorized committee, political party committee, or agent of any of the 
foregoing, assents to the suggestion.
    (2) Material involvement. A candidate, an authorized committee, a 
political party committee, or an agent of any of the foregoing, is 
materially involved in decisions regarding:
    (i) The content of the communication;
    (ii) The intended audience for the communication;
    (iii) The means or mode of the communication;
    (iv) The specific media outlet used for the communication;
    (v) The timing or frequency of the communication; or
    (vi) The size or prominence of a printed communication, or duration 
of a communication by means of broadcast, cable, or satellite.
    (3) Substantial discussion. The communication is created, produced, 
or distributed after one or more substantial discussions about the 
communication between the person paying for the communication, or the 
employees or agents of the person paying for the communication, and the 
candidate who is clearly identified in the communication, or his or her 
authorized committee, or his or her opponent or the opponent's 
authorized committee, or a political party committee, or an agent of 
any of the foregoing. A discussion is substantial within the meaning of 
this paragraph if information about the candidate's or political party 
committee's campaign plans, projects, activities, or needs is conveyed 
to a person paying for the communication, and that information is 
material to the creation, production, or distribution of the 
communication.
    (4) Common vendor. All of the following statements in paragraphs 
(d)(4)(i) through (d)(4)(iii) of this section are true:
    (i) The person paying for the communication, or an agent of such 
person, contracts with or employs a commercial vendor, as defined in 11 
CFR 116.1(c), to create, produce, or distribute the communication;
    (ii) That commercial vendor, including any owner, officer, or 
employee of the commercial vendor, has provided any of the following 
services to the candidate who is clearly identified in the 
communication, or his or her authorized committee, or his or her 
opponent or the opponent's authorized committee, or a political party 
committee, or an agent of any of the foregoing, in the current election 
cycle:
    (A) Development of media strategy, including the selection or 
purchasing of advertising slots;
    (B) Selection of audiences;
    (C) Polling;
    (D) Fundraising;
    (E) Developing the content of a public communication;
    (F) Producing a public communication;
    (G) Identifying voters or developing voter lists, mailing lists, or 
donor lists;
    (H) Selecting personnel, contractors, or subcontractors; or
    (I) Consulting or otherwise providing political or media advice; 
and
    (iii) That commercial vendor uses or conveys to the person paying 
for the communication:
    (A) Information about the clearly identified candidate's campaign 
plans, projects, activities, or needs, or his or her opponent's 
campaign plans, projects, activities, or needs, or a political party 
committee's campaign plans, projects, activities, or needs and that 
information is material to the creation, production, or distribution of 
the communication; or
    (B) Information used previously by the commercial vendor in 
providing services to the candidate who is clearly identified in the 
communication, or his or her authorized committee, or his or her 
opponent or the opponent's authorized committee, or a political party 
committee, or an agent of any of the foregoing, and that information is 
material to the creation, production, or distribution of the 
communication.
    (5) Former employee or independent contractor. Both of the 
following statements in paragraph (d)(5)(i) and (d)(5)(ii) of this 
section are true:
    (i) The communication is paid for by a person, or by the employer 
of a person, who was an employee or independent contractor of the 
candidate who is clearly identified in the communication, or his or her 
authorized committee, or his or her opponent or the opponent's 
authorized committee, or a political party committee, or an agent of 
any of the foregoing, during the current election cycle; and
    (ii) That former employee or independent contractor uses or conveys 
to the person paying for the communication:
    (A) Information about the clearly identified candidate's campaign 
plans, projects, activities, or needs, or his or her opponent's 
campaign plans, projects, activities, or needs, or a political party 
committee's campaign plans, projects, activities, or needs, and that 
information is material to the creation, production, or distribution of 
the communication; or
    (B) Information used by the former employee or independent 
contractor in providing services to the candidate who is clearly 
identified in the communication, or his or her authorized committee, or 
his or her opponent or the opponent's authorized committee, or a 
political party committee, or an agent of any of the foregoing, and 
that information is material to the creation, production, or 
distribution of the communication.
    (6) Dissemination, distribution, or republication of campaign 
material. A communication that satisfies the content standard of 
paragraph (c)(2) of this section or 11 CFR 109.37(a)(2)(i) shall only 
satisfy the conduct standards of paragraphs (d)(1) through (d)(3) of 
this section on the basis of conduct by the candidate, the candidate's 
authorized committee, or the agents of any of the foregoing, that 
occurs after the original preparation of the campaign materials that 
are disseminated, distributed, or republished. The conduct standards of 
paragraphs (d)(4) and (d)(5) of this section may also apply to such 
communications as provided in those paragraphs.
    (e) Agreement or formal collaboration. Agreement or formal 
collaboration between the person paying for the communication and the 
candidate clearly identified in the communication, his or her 
authorized committee, his or her opponent, or the opponent's authorized 
committee, a political party committee, or an agent of any of the 
foregoing, is not required for a

[[Page 455]]

communication to be a coordinated communication. Agreement means a 
mutual understanding or meeting of the minds on all or any part of the 
material aspects of the communication or its dissemination. Formal 
collaboration means planned, or systematically organized, work on the 
communication.
    (f) Safe harbor for responses to inquiries about legislative or 
policy issues. A candidate's or a political party committee's response 
to an inquiry about that candidate's or political party committee's 
positions on legislative or policy issues, but not including a 
discussion of campaign plans, projects, activities, or needs, does not 
satisfy any of the conduct standards in paragraph (d) of this section.


Sec.  109.22  Who is prohibited from making coordinated communications?

    Any person who is otherwise prohibited from making contributions or 
expenditures under any part of the Act or Commission regulations is 
prohibited from paying for a coordinated communication.


Sec.  109.23  Dissemination, distribution, or republication of 
candidate campaign materials

    (a) General rule. The financing of the dissemination, distribution, 
or republication, in whole or in part, of any broadcast or any written, 
graphic, or other form of campaign materials prepared by the candidate, 
the candidate's authorized committee, or an agent of either of the 
foregoing shall be considered a contribution for the purposes of 
contribution limitations and reporting responsibilities of the person 
making the expenditure. The candidate who prepared the campaign 
material does not receive or accept an in-kind contribution, and is not 
required to report an expenditure, unless the dissemination, 
distribution, or republication of campaign materials is a coordinated 
communication under 11 CFR 109.21 or a party coordinated communication 
under 11 CFR 109.37.
    (b) Exceptions. The following uses of campaign materials do not 
constitute a contribution to the candidate who originally prepared the 
materials:
    (1) The campaign material is disseminated, distributed, or 
republished by the candidate, the candidate's authorized committee, or 
an agent of either of the foregoing who prepared that material;
    (2) The campaign material is incorporated into a communication that 
advocates the defeat of the candidate or party that prepared the 
material;
    (3) The campaign material is disseminated, distributed, or 
republished in a news story, commentary, or editorial exempted under 11 
CFR 100.73 or 11 CFR 100.132;
    (4) The campaign material used consists of a brief quote of 
materials that demonstrate a candidate's position as part of a person's 
expression of its own views; or
    (5) A national political party committee or a State or subordinate 
political party committee pays for such dissemination, distribution, or 
republication of campaign materials using coordinated party expenditure 
authority under 11 CFR 109.32.

Subpart D--Special Provisions for Political Party Committees


Sec.  109.30  How are political party committees treated for purposes 
of coordinated and independent expenditures?

    Political party committees may make independent expenditures 
subject to the provisions in this subpart. See 11 CFR 109.35 and 
109.36. Political party committees may also make coordinated party 
expenditures in connection with the general election campaign of a 
candidate, subject to the limits and other provisions in this subpart. 
See 11 CFR 109.32 through 11 CFR 109.35.


Sec.  109.31  [Reserved]


Sec.  109.32  What are the coordinated party expenditure limits?

    (a) Coordinated party expenditures in Presidential elections.
    (1) The national committee of a political party may make 
coordinated party expenditures in connection with the general election 
campaign of any candidate for President of the United States affiliated 
with the party.
    (2) The coordinated party expenditures shall not exceed an amount 
equal to two cents multiplied by the voting age population of the 
United States. See 11 CFR 110.18. This limitation shall be increased in 
accordance with 11 CFR 110.17.
    (3) Any coordinated party expenditure under paragraph (a) of this 
section shall be in addition to--
    (i) Any expenditure by a national committee of a political party 
serving as the principal campaign committee of a candidate for 
President of the United States; and
    (ii) Any contribution by the national committee to the candidate 
permissible under 11 CFR 110.1 or 110.2.
    (4) Any coordinated party expenditures made by the national 
committee of a political party pursuant to paragraph (a) of this 
section, or made by any other party committee under authority assigned 
by a national committee of a political party under 11 CFR 109.33, on 
behalf of that party's Presidential candidate shall not count against 
the candidate's expenditure limitations under 11 CFR 110.8.
    (b) Coordinated party expenditures in other Federal elections.
    (1) The national committee of a political party, and a State 
committee of a political party, including any subordinate committee of 
a State committee, may each make coordinated party expenditures in 
connection with the general election campaign of a candidate for 
Federal office in that State who is affiliated with the party.
    (2) The coordinated party expenditures shall not exceed:
    (i) In the case of a candidate for election to the office of 
Senator, or of Representative from a State which is entitled to only 
one Representative, the greater of--
    (A) Two cents multiplied by the voting age population of the State 
(see 11 CFR 110.18); or
    (B) Twenty thousand dollars.
    (ii) In the case of a candidate for election to the office of 
Representative, Delegate, or Resident Commissioner in any other State, 
$10,000.
    (3) The limitations in paragraph (b)(2) of this section shall be 
increased in accordance with 11 CFR 110.17.
    (4) Any coordinated party expenditure under paragraph (b) of this 
section shall be in addition to any contribution by a political party 
committee to the candidate permissible under 11 CFR 110.1 or 110.2.


Sec.  109.33  May a political party committee assign its coordinated 
party expenditure authority to another political party committee?

    (a) Assignment. Except as provided in 11 CFR 109.35(c), the 
national committee of a political party and a State committee of a 
political party, including any subordinate committee of a State 
committee, may assign its authority to make coordinated party 
expenditures authorized by 11 CFR 109.32 to another political party 
committee. Such an assignment must be made in writing, must state the 
amount of the authority assigned, and must be received by the assignee 
committee before any coordinated party expenditure is made pursuant to 
the assignment.
    (b) Compliance. For purposes of the coordinated party expenditure 
limits, State committee includes a subordinate committee of a State 
committee and includes a district or local committee to which 
coordinated party expenditure authority has been assigned. State 
committees and subordinate State

[[Page 456]]

committees and such district or local committees combined shall not 
exceed the coordinated party expenditure limits set forth in 11 CFR 
109.32. The State committee shall administer the limitation in one of 
the following ways:
    (1) The State committee shall be responsible for insuring that the 
coordinated party expenditures of the entire party organization are 
within the coordinated party expenditure limits, including receiving 
reports from any subordinate committee of a State committee or district 
or local committee making coordinated party expenditures under 11 CFR 
109.32, and filing consolidated reports showing all coordinated party 
expenditures in the State with the Commission; or
    (2) Any other method, submitted in advance and approved by the 
Commission, that permits control over coordinated party expenditures.
    (c) Recordkeeping.
    (1) A political party committee that assigns its authority to make 
coordinated party expenditures under this section must maintain the 
written assignment for at least three years in accordance with 11 CFR 
104.14.
    (2) A political party committee that is assigned authority to make 
coordinated party expenditures under this section must maintain the 
written assignment for at least three years in accordance with 11 CFR 
104.14.


Sec.  109.34  When may a political party committee make coordinated 
party expenditures?

    A political party committee authorized to make coordinated party 
expenditures may make such expenditures in connection with the general 
election campaign before or after its candidate has been nominated. All 
pre-nomination coordinated party expenditures shall be subject to the 
coordinated party expenditure limitations of this subpart, whether or 
not the candidate on whose behalf they are made receives the party's 
nomination.


Sec.  109.35  What are the restrictions on a political party committee 
making both independent expenditures and coordinated party expenditures 
in connection with the general election of a candidate?

    (a) Applicability. For the purposes of this section, all political 
committees established and maintained by a national political party 
(including all congressional campaign committees) and all political 
committees established and maintained by a State political party 
(including any subordinate committee of a State committee) shall be 
considered to be a single political committee.
    (b) Restrictions on certain coordinated and independent 
expenditures. On or after the date on which a political party nominates 
a candidate for election to Federal office, no committee of the 
political party may make:
    (1) Any coordinated party expenditure under 11 CFR 109.32 with 
respect to the candidate during the election cycle at any time after it 
makes any independent expenditure with respect to the candidate during 
the election cycle; or
    (2) Any independent expenditure with respect to the candidate 
during the election cycle at any time after it makes any coordinated 
expenditure under 11 CFR 109.32 with respect to the candidate during 
the election cycle.
    (c) Restrictions on certain transfers and assignments. A committee 
of a political party that makes coordinated expenditures under 11 CFR 
109.32 with respect to a candidate shall not, during the election 
cycle, transfer any funds to, assign authority to make coordinated 
expenditures under 11 CFR 109.32 to, or receive a transfer of funds 
from, a committee of the political party that has made or intends to 
make an independent expenditure with respect to the candidate.


Sec.  109.36  Are there additional circumstances under which a 
political party committee is prohibited from making independent 
expenditures?

    The national committee of a political party must not make 
independent expenditures in connection with the general election 
campaign of a candidate for President of the United States if the 
national committee of that political party is designated as the 
authorized committee of its Presidential candidate pursuant to 11 CFR 
9002.1(c).


Sec.  109.37  What is a ``party coordinated communication''?

    (a) Definition. A political party communication is coordinated with 
a candidate, a candidate's authorized committee, or agent of any of the 
foregoing, when the communication satisfies the conditions set forth in 
paragraphs (a)(1), (a)(2), and (a)(3) of this section.
    (1) The communication is paid for by a political party committee or 
its agent.
    (2) The communication satisfies at least one of the content 
standards described in paragraphs (a)(2)(i) through (a)(2)(iii) of this 
section.
    (i) A public communication that disseminates, distributes, or 
republishes, in whole or in part, campaign materials prepared by a 
candidate, the candidate's authorized committee, or an agent of any of 
the foregoing, unless the dissemination, distribution, or republication 
is excepted under 11 CFR 109.23(b). For a communication that satisfies 
this content standard, see 11 CFR 109.21(d)(6).
    (ii) A public communication that expressly advocates the election 
or defeat of a clearly identified candidate for Federal office.
    (iii) A communication that is a public communication, as defined in 
11 CFR 100.26, and about which each of the following statements in 
paragraphs (a)(2)(iii)(A) through (a)(2)(iii)(C) of this section are 
true.
    (A) The communication refers to a clearly identified candidate for 
Federal office;
    (B) The public communication is publicly distributed or otherwise 
publicly disseminated 120 days or fewer before a general, special, or 
runoff election, or 120 days or fewer before a primary or preference 
election, or a convention or caucus of a political party that has 
authority to nominate a candidate; and
    (C) The public communication is directed to voters in the 
jurisdiction of the clearly identified candidate.
    (3) The communication satisfies at least one of the conduct 
standards in 11 CFR 109.21(d)(1) through (d)(6), subject to the 
provisions of 11 CFR 109.21(e). A candidate's response to an inquiry 
about that candidate's positions on legislative or policy issues, but 
not including a discussion of campaign plans, projects, activities, or 
needs, does not satisfy any of the conduct standards in 11 CFR 
109.21(d)(1) through (d)(6). Notwithstanding paragraph (b)(1) of this 
section, the candidate with whom a party coordinated communication is 
coordinated does not receive or accept an in-kind contribution, and is 
not required to report an expenditure, that results from conduct 
described in 11 CFR 109.21(d)(4) or (d)(5), unless the candidate, 
authorized committee, or an agent of any of the foregoing, engages in 
conduct described in 11 CFR 109.21(d)(1) through (d)(3).
    (b) Treatment of a party coordinated communication. A payment by a 
political party committee for a communication that is coordinated with 
a candidate, and that is not otherwise exempted under 11 CFR part 100, 
subpart C or E, must be treated by the political party committee making 
the payment as either:
    (1) An in-kind contribution for the purpose of influencing a 
Federal election under 11 CFR 100.52(d) to the candidate with whom it 
was coordinated, which must be reported under 11 CFR part 104; or

[[Page 457]]

    (2) A coordinated party expenditure pursuant to coordinated party 
expenditure authority under 11 CFR 109.32 in connection with the 
general election campaign of the candidate with whom it was 
coordinated, which must be reported under 11 CFR part 104.

PART 110--CONTRIBUTION AND EXPENDITURE LIMITATIONS AND PROHIBITIONS

    7. The authority citation for part 110 continues to read as 
follows:

    Authority: 2 U.S.C. 431(8), 431(9), 432(c)(2), 437d, 438(a)(8), 
441a, 441b, 441d, 441e, 441f, 441g, 441h, and 441k.


    8. In section 110.1, paragraph (d) is revised and paragraph (n) is 
added to read as follows:


Sec.  110.1  Contributions by persons other than multicandidate 
political committees.

* * * * *
    (d) Contributions to other political committees. No person shall 
make contributions to any other political committee in any calendar 
year which, in the aggregate, exceed $5,000.
* * * * *
    (n) Contributions to committees making independent expenditures. 
The limitations on contributions of this section also apply to 
contributions made to political committees making independent 
expenditures under 11 CFR Part 109.

    9. In section 110.2, paragraph (d) is revised and paragraph (k) is 
added to read as follows:


Sec.  110.2  Contributions by multicandidate political committees.

* * * * *
    (d) Contributions to other political committees. No multicandidate 
political committee shall make contributions to any other political 
committee in any calendar year which, in the aggregate, exceed $5,000.
* * * * *
    (k) Contributions to multicandidate political committees making 
independent expenditures. The limitations on contributions of this 
section also apply to contributions made to multicandidate political 
committees making independent expenditures under 11 CFR Part 109.


Sec.  110.7  [Reserved].

    10. Remove and reserve Sec.  110.7.

    11. In section 110.8, paragraph (a) is amended as follows:
    (a) Paragraph (a)(1) is redesignated as paragraph (a)(1)(i);
    (b) The introductory text is redesignated as paragraph (a)(1);
    (c) Paragraph (a)(2) is redesignated as paragraph (a)(1)(ii);
    (d) Paragraph (a)(2) is revised; and
    (e) A paragraph (a)(3) is added.
    The revised text reads as follows:


Sec.  110.8  Presidential candidate expenditure limitations.

    (a) * * *
    (2) The expenditure limitations in paragraph (a)(1) of this section 
shall be increased in accordance with 11 CFR 110.17.
    (3) Voting age population is defined at 11 CFR 110.18.
* * * * *

    12. Section 110.14 is amended as follows:
    (a) Paragraph (f)(2)(i) intro text is revised;
    (b) Paragraph (f)(2)(ii) intro text is revised;
    (c) Paragraph (f)(3)(iii) is revised;
    (d) Paragraph (i)(2)(i) intro text is revised;
    (e) Paragraph (i)(2)(ii) is revised;
    (f) Paragraph (i)(3)(iii) is revised.
    The revised text reads as follows:


Sec.  110.14  Contributions to and expenditures by delegates and 
delegate committees.

    (f) * * *
    (2) * * *
    (i) Such expenditures are independent expenditures under 11 CFR 
100.16 if they are made for a communication expressly advocating the 
election or defeat of a clearly identified Federal candidate that is 
not a coordinated communication under 11 CFR 109.21.
* * * * *
    (ii) Such expenditures are independent expenditures under 11 CFR 
100.16 if they are made for a communication expressly advocating the 
election or defeat of a clearly identified Federal candidate that is 
not a coordinated communication under 11 CFR 109.21.
* * * * *
    (B) The delegate shall report the portion of the expenditure 
allocable to the Federal candidate as an independent expenditure in 
accordance with 11 CFR 109.10.
    (3) * * *
    (iii) Such expenditures are not chargeable to the presidential 
candidate's expenditure limitation under 11 CFR 110.8 unless they were 
coordinated communications under 11 CFR 109.21.
* * * * *
    (i) Expenditures by a delegate committee referring to a candidate 
for public office--* * *
    (2) * * *
    (i) Such expenditures are in-kind contributions to a Federal 
candidate if they are coordinated communications under 11 CFR 109.21.
* * * * *
    (ii) Such expenditures are independent expenditures under 11 CFR 
100.16 if they are made for a communication expressly advocating the 
election or defeat of a clearly identified Federal candidate that is 
not a coordinated communication under 11 CFR 109.21.
    (A) Such independent expenditures must be made in accordance with 
the requirements of 11 CFR part 100.16.
    (B) The delegate committee shall report the portion of the 
expenditure allocable to the Federal candidate as an independent 
expenditure in accordance with 11 CFR 109.10.
    (3) * * *
    (iii) Such expenditures are not chargeable to the presidential 
candidate's expenditure limitation under 11 CFR 110.8 unless they were 
coordinated communications under 11 CFR 109.21.
* * * * *

    13. Section 110.18 is added to read as follows:


Sec.  110.18  Voting Age Population.

    There is annually published by the Department of Commerce in the 
Federal Register an estimate of the voting age population based on an 
estimate of the voting age population of the United States, of each 
State, and of each Congressional district. The term voting age 
population means resident population, 18 years of age or older.

PART 114--CORPORATE AND LABOR ORGANIZATION ACTIVITY

    14. The authority citation for part 114 continues to read as 
follows:

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

    15. In section 114.4, paragraphs (c)(5)(i) and (c)(5)(ii)(A) are 
revised to read as follows:


Sec.  114.4  Disbursements for communications beyond the restricted 
class in connection with a Federal election.

* * * * *
    (c) Communications by a corporation or labor organization to the 
general public. * * *
    (5) Voter guides. * * *
    (i) The corporation or labor organization must not act in 
cooperation, consultation, or concert with or at the request or 
suggestion of the candidates, the candidates' committees or agents 
regarding the

[[Page 458]]

preparation, contents and distribution of the voter guide, and no 
portion of the voter guide may expressly advocate the election or 
defeat of one or more clearly identified candidate(s) or candidates of 
any clearly identified political party.
    (ii) (A) The corporation or labor organization must not act in 
cooperation, consultation, or concert with or at the request or 
suggestion of the candidates, the candidates' committees or agents 
regarding the preparation, contents and distribution of the voter 
guide;
* * * * *

    Dated: December 17, 2002.
David M. Mason,
Chairman, Federal Election Commission.
[FR Doc. 03-90 Filed 1-2-03; 8:45 am]
BILLING CODE 6715-01-P