[Federal Register Volume 68, Number 220 (Friday, November 14, 2003)]
[Rules and Regulations]
[Pages 64517-64520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-28472]


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FEDERAL ELECTION COMMISSION

11 CFR Part 106

[Notice 2003-20]


Party Committee Telephone Banks

AGENCY: Federal Election Commission.

ACTION: Final rule and transmittal of regulations to Congress.

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SUMMARY: The Federal Election Commission is promulgating final rules 
regarding the attribution of political party committee disbursements 
for telephone bank communications made on behalf of a clearly 
identified Federal candidate. The final rules address the proper 
attribution of a party committee's or party organization's 
disbursements for communications that refer to a clearly identified 
Federal candidate when the party's other candidates are referred to 
generically, but not by name. The entire disbursement must be paid for 
with Federal funds. Further information is provided in the 
Supplementary Information that follows.

EFFECTIVE DATE: December 15, 2003.

FOR FURTHER INFORMATION CONTACT: Ms. Mai T. Dinh, Acting Assistant 
General Counsel, or Mr. Jonathan M. Levin, Senior Attorney, 999 E 
Street NW., Washington, DC 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: In the months leading up to a general 
election, political party committees, or party committees in 
conjunction with the principal campaign committees of Federal 
candidates, may conduct phone banks to get out the vote (``GOTV'') or 
otherwise promote the party and its candidates. Such phone banks may 
involve the reading of scripted messages that include a statement 
asking the person called specifically to vote, or get their family and 
friends out to vote, for the named Federal candidate and that then make 
one or more general promotional references to the party's other 
candidates. An example would be: ``Please tell your family and friends 
to come out and vote for President John Doe and our great Party team.'' 
Given that no other Federal or non-Federal candidates are specifically 
mentioned, the question is whether the entire cost of the 
communication, or only a portion of the cost, should be attributed to 
the Federal candidate. The Commission is issuing final rules to provide 
clear guidance on how to attribute the cost of these communications.
    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 party committee phone banks were transmitted to Congress 
on November 7, 2003.

Explanation and Justification

    The Commission published a Notice of Proposed Rulemaking (``NPRM'') 
on September 4, 2003, in which it sought comment on proposed rules that 
would add a new section to 11 CFR part 106 to address telephone bank 
expenditures by political party committees and organizations. 68 FR 
52529 (Sept. 4, 2003). The comment period was originally set to close 
on September 25, 2003, but the Commission extended the comment period 
until September 29, 2003. In addition to the comments concerning the 
proposed rules, the NPRM sought comments on a number of other issues 
including: (1) Whether the scope of the rulemaking should be expanded 
to include other types of communications such as broadcast or print 
media and to include candidates for the Senate or House of 
Representatives; (2) whether the final rules should explicitly state 
that a State party committee's use of its coordinated party expenditure 
authority to pay for these phone banks is subject to the restrictions 
of 11 CFR 109.33; and (3) whether the final rules should explicitly 
state that party committees are prohibited from using contributions 
designated for a particular candidate to pay for these phone bank 
expenditures.
    The Commission received one comment in response to the NPRM. The 
Commission did not receive any requests to testify on the subject of 
party committee's disbursements for telephone banks at its hearing on 
October 1, 2003.

11 CFR 106.8 Allocation of Expenses for Political Party Committee Phone 
Banks That Refer to a Clearly Identified Federal Candidate

    The Commission is adding new section 106.8 to address the costs of 
phone banks conducted by national, State and local party committees and 
party organizations on behalf of clearly identified Federal candidates. 
In Federal election years, party committees and organizations conduct 
such phone banks to encourage voters to support the entire ticket. 
Although the specific mention of the clearly identified Federal 
candidate provides something of value to the candidate being promoted, 
it also provides the party with a benefit. The final rules, discussed 
below, reflect that such communications benefit both the candidate and 
the party.
1. 11 CFR 106.8(a) Scope
    New section 106.8(a) begins by stating the conditions under which 
the special attribution rule in paragraph (b) would apply. Paragraphs 
(a)(1) through (a)(5) of new section 106.8 describe the communications 
that are subject to the final rule. The proposed rules would have 
limited the scope of the new section 106.8 to presidential and vice 
presidential nominees, although the Commission asked whether they 
should be expanded to include candidates for the Senate and the House 
of Representatives. The commenter urged that the rules be extended to 
these candidates while noting that the underlying coordinated party 
expenditure limits would differ for these candidates. Because there is 
no apparent reason to distinguish presidential and vice presidential 
candidates from other Federal candidates, and to maintain a consistent 
approach for all Federal candidates, the

[[Page 64518]]

Commission is extending the final rules to all Federal candidates.
    Consequently, the conditions set forth in 11 CFR 106.8(a)(1) 
through (a)(5) implement this approach. Under paragraph (a)(1) the 
communication must refer to a clearly identified Federal candidate. The 
term ``clearly identified'' is defined in 2 U.S.C. 431(18) and 11 CFR 
100.17. Second, the communication must also refer to no other clearly 
identified Federal or non-Federal candidate under paragraph (a)(2). 
Third, under paragraph (a)(3), the communication must refer generically 
to the other candidates of the clearly identified Federal candidate's 
party without clearly identifying them. Generic references to ``our 
great Republican team'' or ``our great Democratic ticket'' would 
satisfy the latter requirement. The commenter suggested that the final 
rules make clear that the generic reference is to other candidates and 
not to the clearly identified Federal candidate. For instance, 
according to the commenter, a reference to the ``great Presidential 
Candidate X team'' with no other generic reference to other candidates 
should not fall within the scope of the final rules because the word 
``team'' should be treated as a reference to the presidential ticket 
and not as a reference to other candidates of the same party. The 
language in paragraph (a)(3) is slightly different from the proposed 
rule to make clear that the communication must include another 
reference that generically refers to other candidates and not the 
clearly identified Federal candidate.
    Under paragraph (a)(4), the communication must not solicit 
contributions, donations, or any funds from any person for any Federal 
or non-Federal candidate, or for any political committee or political 
organization, or any entity disbursing funds in connection with a 
Federal or non-Federal election. If such a solicitation were made, it 
would change the nature of the communication and may require a 
different determination as to the attribution of the party's spending 
for the communication among candidates or committees.
    Under paragraph (a)(5), the phone bank must not be exempt from the 
definitions of ``contribution'' and ``expenditure'' under 11 CFR 100.89 
and 100.149. These sections implement the statutory exceptions for 
certain voter registration and GOTV activities conducted by party 
committees under 2 U.S.C. 431(8)(B)(xi) and 431(9)(B)(ix). 
Consequently, a State or local party committee's voter registration and 
GOTV activities, including phone banks operated by volunteers under 11 
CFR 100.89(e) or 100.149(e) conducted on behalf of a presidential or 
vice presidential nominee, which are exempt from the definitions of 
``contribution'' and ``expenditure,'' are not affected by new section 
106.8, provided that the conditions set forth in 11 CFR 100.89(a) 
through (g) or 100.149(a) through (g) are satisfied. Thus, State and 
local party committees may continue to spend on behalf of publicly 
financed presidential candidates for these purposes without making an 
expenditure or a contribution.
    The Commission did not receive any comments in response to its 
question as to whether the final rules should specifically prohibit 
State and local party committees from using contributions that were 
designated for a particular Federal candidate to make expenditures for 
these phone banks. See 11 CFR 100.89(c) and 100.149(c). This situation 
is already governed by the ``coattails'' exception in 2 U.S.C. 
431(8)(B)(xi) and (9)(B)(ix) and is not relevant to situations 
addressed in new section 106.8. The Commission therefore is not 
including this prohibition in the final rules. In answer to the 
Commission's question of whether 11 CFR 106.8 should include other 
forms of communications such as broadcast or print media, the commenter 
urged the Commission to defer consideration of extending the final 
rules to include other forms of communications. The Commission has 
decided to limit the scope of new section 106.8 to phone banks at this 
time because each type of communication presents different issues that 
need to be considered in further detail before establishing new rules.
2. 11 CFR 106.8(b) Attribution
    The NPRM included two alternatives for new section 106.8(b) to 
establish the attribution of the party committee's payments for the 
phone bank. Under Alternative A, party committees and organizations 
would have attributed fifty percent of the disbursement to clearly 
identified presidential and vice presidential nominees, and the 
remaining fifty percent would not have been attributable to any Federal 
or non-Federal candidate but would have to be paid solely with Federal 
funds. Alternative B would have provided that 100 percent of the 
disbursement must be attributed to the clearly identified presidential 
and vice presidential nominees.
    The Commission sought comment on which of these two alternatives 
would be preferable, or on whether the percentage should be based on 
the actual space or time used to refer to the presidential nominee, or 
some other factor. The commenter argued that a fifty percent 
attribution to the presidential or vice presidential nominee is 
permissible provided that the entire phone bank expenditure is paid for 
with Federal funds.
    The Commission is incorporating Alternative A in the final rules. 
Because these phone bank communications contain two references--one to 
a clearly identified Federal candidate and one that generically refers 
to other candidates--it is appropriate that the disbursement for the 
communications be attributed evenly between the two references. Thus, 
new section 106.8(b)(1) states that fifty percent of the disbursement 
for the phone bank is not attributed to any candidate because the 
generic reference does not refer to any clearly identified candidate 
and therefore cannot be attributed to any specific candidate.
    The Commission has determined that Federal funds must be used to 
pay for all disbursements for telephone banks that fall within the 
scope of new section 106.8, even the portion that is not attributed to 
any particular candidate. Barring the unlikely event that the phone 
bank will involve 500 or fewer calls, a message such as, ``Please vote 
for President John Doe and our great Party team,'' would be a public 
communication that refers to a clearly identified Federal candidate and 
promotes that candidate. It would thus be a form of Federal election 
activity that must be paid for entirely with Federal funds, pursuant to 
11 CFR 300.33(c)(1), if conducted by a State, district, or local party 
committee. See 11 CFR 100.24(b)(3), 100.26 and 100.28. It must also be 
paid for entirely with Federal funds if conducted by a national party 
committee, which only has Federal funds under 2 U.S.C. 441i(a) and 11 
CFR 300.10. The amount that is not attributed to a Federal candidate, 
however, is not considered an in-kind contribution to any candidate, a 
coordinated party expenditure, or an independent expenditure by the 
party committee or organization.
    Section 106.8(b)(2) requires that the remaining fifty percent of 
the disbursement be attributed to the clearly identified Federal 
candidate and that this portion of the disbursement must be paid for 
with Federal funds. Generally, party committees have several options in 
how to treat the attributed portion of a disbursement `` as an in-kind 
contribution, a coordinated party expenditure, or an independent 
expenditure, depending on the circumstances. They may also obtain

[[Page 64519]]

reimbursement from the clearly identified Federal candidate of some or 
the entire attributed portion of the disbursement. Consequently, 
paragraph (b)(2) allows party committees and organizations to treat the 
portions of disbursements attributed to clearly identified Federal 
candidates as in-kind contributions, or as coordinated or independent 
expenditures, or as expenses to be reimbursed by the clearly identified 
Federal candidates, or a combination of any of these. Under paragraph 
(b)(2)(i), if the disbursement is treated as an in-kind contribution, 
it is subject to the contribution limitations of 11 CFR 110.1 or 110.2.
    The Commission notes that a State party committee would be able to 
make coordinated party expenditures (under 2 U.S.C. 441a(d)) to pay for 
phone bank communications on behalf of its presidential candidate 
subject to new 11 CFR 106.8 only if the national party committee has 
made a written assignment of a specific amount of its coordinated party 
expenditure authority to the State party committee. See 11 CFR 
109.33(a). Similarly, a district or local party committee may spend 
some of the amount authorized by the national or the State party 
committee upon receiving a written authorization to do so. See 11 CFR 
109.33(b). The Commission did not receive any comments in response to 
its question on whether the final rule should refer to this requirement 
or whether it is understood that this final rule would not exempt a 
State, district, or local party committee from these requirements. The 
Commission is including a reference to 11 CFR 109.33 as well as to 
section 109.32 in new section 106.8(b)(2)(ii) to ensure that party 
committees understand that these sections apply to disbursements for 
phone banks that are treated as coordinated expenditures.
    New section 106.8(b)(2)(ii) also provides for the disbursements 
attributed to the clearly identified Federal candidate to be treated as 
independent expenditures. As independent expenditures, they are also 
subject to the requirements of 11 CFR 109.10, and a reference to that 
section is included in paragraph (b)(2)(ii). This paragraph also 
includes a reference to 11 CFR 109.35 requiring party committees to 
choose between making either coordinated party expenditures or 
independent expenditures, but not both, on behalf of a Federal 
candidate after the party has nominated that candidate. Once, a party 
committee makes a coordinated party expenditure on behalf of a Federal 
candidate, it may not make an independent expenditure on behalf of that 
Federal candidate, and vice versa.
3. Examples
    The following examples illustrate the scope and operation of new 
section 106.8.
    Example 1: A week before the general election, a local party 
committee operates a phone bank through the use of volunteers and the 
message is: ``You can show your support for the Green Party 
presidential nominee by going to the polls next Tuesday and 
contributing to the local party committee so that it can help others to 
get to the polls too.''
    The costs of the phone bank would not fall within the scope of 11 
CFR 106.8 for three reasons. First, by using volunteers to run a phone 
bank that seeks to get out the vote for the presidential and vice 
presidential nominee, and by complying with other requirements in 11 
CFR 100.89(e) and 100.149(e), the local party committee does not make a 
contribution or expenditure under 11 CFR 100.89 and 100.149, and, 
therefore, these costs are excluded from the provisions of section 
106.8. Second, the communication only contains a reference to the 
clearly identified Federal candidate (``Green Party presidential 
nominee'') and does not refer generically to other candidates. Thus, it 
does not meet the condition set forth in 11 CFR 106.8(a)(3). Finally, 
the message includes a solicitation for the local party committee, and, 
therefore, does not meet the condition set forth in section 
106.8(a)(4).
    Example 2: The Republican National Committee (``RNC'') operates a 
phone bank and the message is: ``When you vote for Representative Jane 
Smith on Tuesday, remember to vote for the other Republican 
candidates.'' The cost of operating this phone bank is $20,000. The RNC 
has already made an independent expenditure on behalf of Representative 
Smith but has not made any contributions to her authorized committee.
    The costs of the phone bank would come within the scope of 11 CFR 
106.8 because the communication: (1) Contains a reference to a clearly 
identified Federal candidate (``Representative Jane Smith''); (2) 
contains a generic reference to other Republican candidates; (3) does 
not include a reference to any other clearly identified candidate; (4) 
does not solicit a contribution or donation from any person; and (5) is 
conveyed by paid workers, not volunteers, and is thus not exempt from 
the definitions of ``contribution'' and ``expenditure.'' The RNC must 
attribute $10,000 to Representative Smith. Because the RNC has already 
made an independent expenditure on behalf of Representative Smith, it 
cannot treat this $10,000 as a coordinated party expenditure. See 2 
U.S.C. 441a(d)(4)(A)(i); 11 CFR 109.35(b)(1). Rather it may treat the 
entire amount as an independent expenditure provided that it has not 
coordinated with Representative Smith or her authorized committee or 
agents. If the RNC or its agents coordinated this phone bank with 
Representative Smith or her agents, then it may treat $5,000 as an in-
kind contribution to her authorized committee under the limits of 2 
U.S.C. 441a(a)(2)(A), and it must seek reimbursement from her 
authorized committee for the other $5,000. The remaining fifty percent 
of the expenditure ($10,000) is not attributed to any candidate and the 
entire $20,000 must be paid for with Federal funds.
    Example 3: A State party committee operates a phone bank and the 
message is: ``Show your support for Senator John Doe and the great 
Democratic team by voting for them.'' The cost of operating the phone 
bank is $34,000. The State party committee's coordinated party 
expenditure limit under 2 U.S.C. 441a(d) is $20,000 and it already 
spent $5,000 in coordinated party expenditures on behalf of Senator 
Doe. The State party committee is a multicandidate committee and has 
made a $1,000 contribution to his campaign.
    The costs of this phone bank are within the scope of 11 CFR 106.8 
because the communication: (1) Contains a reference to a clearly 
identified Federal candidate (``Senator John Doe''); (2) contains a 
generic reference to other Democratic candidates; (3) does not include 
a reference to any other clearly identified candidate; (4) does not 
solicit a contribution or donation from any person; and (5) does not 
qualify for the 11 CFR 100.89 and 100.149 exceptions. Because the State 
party committee has already made a coordinated party expenditure on 
behalf of Senator Doe after the nomination, the State party committee 
cannot make a subsequent independent expenditure on his behalf. See 2 
U.S.C. 441a(d)(4)(A)(ii); 11 CFR 109.35(b)(2). The State party 
committee does not have to attribute $17,000 to any candidate but must 
still use all Federal funds to pay for that $17,000. The remaining 
$17,000 must be attributed to Senator Doe and must also be paid for 
with Federal funds. The State party committee may treat $15,000, which 
is equal to its remaining coordinated party spending authority, of the 
attributed amount as a coordinated party expenditure. The remaining 
$2,000 may

[[Page 64520]]

be treated as an in-kind contribution because when aggregated with the 
earlier $1,000 contribution, it does not exceed the State party 
committee's $5,000 contribution limit under 11 CFR 110.2.

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

[Regulatory Flexibility Act]

    The attached final rules do not have a significant economic impact 
on a substantial number of small entities. The basis for this 
certification is that few, if any, small entities are affected by these 
rules, which apply only to committees of political parties and other 
party organizations. National, State and many local party committees of 
the two major political parties and other political committees and 
organizations are not small entities under 5 U.S.C. 601 because they 
are not small businesses, small organizations, or small governmental 
jurisdictions. The final rules simplify the determination as to the 
amount of a party committee disbursement that must be attributed to a 
clearly identified Federal candidate in the case of certain telephone 
bank communications and clarify what funding is permissible. Any 
increase in the cost of compliance that might result from these 
proposed rules would not be in an amount sufficient to cause a 
significant economic impact.

List of Subjects in 11 CFR Part 106

    Campaign funds, political committees and parties, political 
candidates.

0
For the reasons set out in the preamble, the Federal Election 
Commission amends subchapter A of chapter 1 of title 11 of the Code of 
Federal Regulations as follows:

PART 106--ALLOCATIONS OF CANDIDATE AND COMMITTEE ACTIVITIES

0
1. The authority citation for part 106 continues to read as follows:

    Authority: 2 U.S.C. 438(a)(8), 441a(b), 441a(g).


0
2. New section 106.8 is added to read as follows:


Sec.  106.8  Allocation of expenses for political party committee phone 
banks that refer to a clearly identified Federal candidate.

    (a) Scope. This section applies to the costs of a phone bank 
conducted by a national, State, district, or local committee or 
organization of a political party where--
    (1) The communication refers to a clearly identified Federal 
candidate;
    (2) The communication does not refer to any other clearly 
identified Federal or non-Federal candidate;
    (3) The communication includes another reference that generically 
refers to other candidates of the Federal candidate's party without 
clearly identifying them;
    (4) The communication does not solicit a contribution, donation, or 
any other funds from any person; and
    (5) The phone bank is not exempt from the definition of 
``contribution'' under 11 CFR 100.89 and is not exempt from the 
definition of ``expenditure'' under 11 CFR 100.149.
    (b) Attribution. Each disbursement for the costs of a phone bank 
described in paragraph (a) of this section shall be attributed as 
follows:
    (1) Fifty percent of the disbursement is not attributable to any 
other Federal or non-Federal candidate, but must be paid for entirely 
with Federal funds; and
    (2) Fifty percent of the disbursement is attributed to the clearly 
identified Federal candidate and must be paid for entirely with Federal 
funds. This disbursement may be one or a combination of the following:
    (i) An in-kind contribution, subject to the limitations set forth 
in 11 CFR 110.1 or 110.2; or
    (ii) A coordinated expenditure or an independent expenditure, 
subject to the limitations, restrictions, and requirements of 11 CFR 
109.10, 109.32, 109.33 and 109.35; or
    (iii) Reimbursed by the clearly identified Federal candidate or his 
or her authorized committee.

    Dated: November 7, 2003.
Bradley A. Smith,
Vice Chairman, Federal Election Commission.
[FR Doc. 03-28472 Filed 11-13-03; 8:45 am]
BILLING CODE 6715-01-P