[Federal Register Volume 69, Number 48 (Thursday, March 11, 2004)]
[Proposed Rules]
[Pages 11736-11760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5290]



[[Page 11735]]

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Part III





Federal Election Commission





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11 CFR Parts 100, 102, 104, 106, and 114



Political Committee Status; Proposed Rule

  Federal Register / Vol. 69, No. 48 / Thursday, March 11, 2004 / 
Proposed Rules  

[[Page 11736]]


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FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 102, 104, 106, and 114

[Notice 2004-6]


Political Committee Status

AGENCY: Federal Election Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Election Commission is seeking comment on whether 
to amend the definition of ``political committee'' applicable to 
nonconnected committees. The Commission is also considering amending 
its current regulations to address when disbursements for certain 
election activity should be treated as ``expenditures.'' Related 
amendments to the allocation regulations for nonconnected committees 
and separate segregated funds are also under consideration to determine 
whether those regulations need further refinement. While the Commission 
requests comments on proposed changes to its rules, it has made no 
final decisions on any of the proposed revisions in this notice. 
Further information is provided in the supplementary information that 
follows.

DATES: The Commission will hold a hearing on these proposed rules on 
April 14 and 15, 2004, at 10 a.m. Commenters wishing to testify at the 
hearing must submit their request to testify along with their written 
or electronic comments by April 5, 2004. Commenters who do not wish to 
testify must submit their written or electronic comments by April 9, 
2004.

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

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

SUPPLEMENTARY INFORMATION:

I. Introduction

    The Bipartisan Campaign Reform Act of 2002 (``BCRA''), which 
amended the Federal Election Campaign Act (``FECA'' or ``the Act''), 
was signed into law on March 27, 2002. The Supreme Court upheld most of 
BCRA in McConnell v. FEC, 540 U.S. --, 124 S. Ct. 619 (2003).
    McConnell recognized that regulation of certain activities that 
affect Federal elections is a valid measure to prevent circumvention of 
FECA's contribution limitations and prohibitions. Consequently, the 
Commission is undertaking this rulemaking to revisit the issue of 
whether the current definition of ``political committee'' adequately 
encompasses all organizations that should be considered political 
committees subject to the limitations, prohibitions and reporting 
requirements of FECA.
    FECA, and the Commission's regulations, with certain exceptions, 
define a political committee as ``any committee, club, association, or 
other group of persons which receives contributions aggregating in 
excess of $1,000 in a calendar year or which makes expenditures 
aggregating in excess of $1,000 during a calendar year.'' 2 U.S.C. 
431(4)(A); 11 CFR 100.5(a). FECA subjects political committees to 
certain registration and reporting requirements, as well as limitations 
and prohibitions on the contributions they receive and make, that do 
not apply to organizations that are not political committees. See, 
e.g., 2 U.S.C. 432, 433, 441a, 441b; 11 CFR part 102.
    While the statutory and regulatory definitions of ``political 
committee'' set forth above depend solely on the dollar amount of 
annual contributions received and expenditures made, the Supreme Court, 
in Buckley v. Valeo, explained that to fulfill the purposes of FECA, 
the definition of political committee ``need only encompass 
organizations that are under the control of a candidate or the major 
purpose of which is the nomination or election of a candidate,'' and 
does not ``reach groups engaged purely in issue discussion.'' Buckley 
v. Valeo, 424 U.S. 1, 79 (1976) (emphasis added). The Supreme Court has 
reaffirmed the applicability of the ``major purpose'' test in 
subsequent opinions. See FEC v. Massachusetts Citizens for Life, Inc., 
479 U.S. 238 (1986)(``MCFL''). Therefore, the definition of ``political 
committee'' arguably should have two elements: First, the $1,000 
contribution or expenditure threshold;\1\ and second, the major purpose 
test for organizations not controlled by Federal candidates.
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    \1\ This threshold, however, does not apply to separate 
segregated funds and state or local party committees. See 2 U.S.C. 
431(4)(B) and (C) and 11 CFR 100.5(b) and (c).
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    The FECA generally defines ``expenditures'' as ``(i) 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 (ii) a written contract, promise, 
or agreement to make an expenditure.'' 2 U.S.C. 431(9)(A). The 
definition also includes a lengthy list of exceptions. 2 U.S.C. 
431(9)(B). Commission regulations at 11 CFR part 100, subparts D and E 
implement this statutory definition. Since the enactment of the FECA, 
there have been debates about whether certain activities, not 
specifically mentioned in the statutory or regulatory definitions, were 
expenditures. BCRA did not amend the definition of expenditure, but 
instead categorized certain election-related activities into new 
statutory definitions. McConnell shed light on what the Supreme Court 
considered to be activities that could affect Federal elections. See 
McConnell, 124 S. Ct. at 673-675 and 696-697 (upholding BCRA's 
provisions concerning Federal election activity and electioneering 
communications).
    This notice of proposed rulemaking (``NPRM'') explores whether and 
how the Commission should amend its regulations defining whether an 
entity is a nonconnected political committee \2\ and what constitutes 
an ``expenditure'' under 11 CFR 100.5(a) or 11 CFR part 100, subparts D 
and E. With respect to the second element of the definition of 
``political committee,'' the Commission's regulations do not expressly 
incorporate the ``major purpose'' test into 11 CFR 100.5(a). However, 
the Commission does apply the ``major purpose'' test when assessing

[[Page 11737]]

whether an organization is a political committee. See, e.g., Advisory 
Opinions (``AOs'') 1994-25 and 1995-11. In this NPRM, the Commission is 
seeking comment on whether to amend its regulations to incorporate the 
major purpose test into the regulatory definition of ``political 
committee'' in 11 CFR 100.5(a). Furthermore, the Commission seeks 
comment on whether the effective date for any final rules that the 
Commission may adopt should be delayed until after the next general 
election and whether there is a legal basis for delaying the effective 
date. The Commission also seeks comment on whether changing the 
definition of basic terms such as ``political committee,'' 
``expenditure,'' and ``contribution,'' in the middle of an election 
year would cause undue disruption to the regulated community.\3\
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    \2\ The Commission is not proposing to change the definition of 
``political committee'' applicable to party committees, Federal 
candidates' authorized committees or separate segregated funds.
    \3\ By way of historical background, on March 7, 2001, the 
Commission published an Advance Notice of Proposed Rulemaking 
(``ANPR'') seeking comment on the definitions of ``political 
committee,'' ``contribution'' and ``expenditure.'' See ``Definition 
of Political Committee; Advance Notice of Proposed Rulemaking,'' 66 
FR 13681 (Mar. 7, 2001). After receiving comments on the ANPR, the 
Commission voted on September 27, 2001, to hold that rulemaking in 
abeyance pending changes in legislation, future judicial decisions, 
or other action. The ANPR and related comments are available on the 
FEC's Web site at: http://www.fec.gov/register.htm under 
``Definition of Political Committee.'' This NPRM is a separate 
proceeding.
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II. Expenditures

    In Buckley, 424 U.S. at 62-63, the Supreme Court first examined 
FECA's definitions of ``expenditure'' and ``contribution'' and their 
operative phrase, which is ``for the purpose of influencing any 
election for Federal office.'' See 2 U.S.C. 431(8) and (9). The Supreme 
Court found that the ambiguity of this phrase posed constitutional 
problems as applied to expenditures made by individuals other than 
candidates and organizations other than political committees. Buckley, 
424 U.S. at 77. To avoid the vagueness and potential overbreadth of the 
statutory definition, Buckley adopted a narrowing construction so that 
FECA's definition of ``expenditure'' reached ``only funds used for 
communications that expressly advocate the election or defeat of a 
clearly identified candidate.'' Buckley, 424 U.S. at 79-80.\4\
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    \4\ A communication refers to a clearly identified candidate if 
it includes ``the candidate's name, nickname, photograph, or 
drawing'' or if ``the identity of the candidate is otherwise aparent 
through unambiguous reference [or] through unambiguous reference to 
his or her status a candidate.'' 11 CFR 100.17.
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A. McConnell v. FEC, 540 U.S. --, 124 S. Ct. 619 (2003).

    The Supreme Court clarified in McConnell that Buckley's ``express 
advocacy'' test is not a constitutional barrier in determining whether 
an expenditure is ``for the purpose of influencing any Federal 
election.'' McConnell, 124 S.Ct. at 688-89. The Supreme Court 
explained: ``In narrowly reading the FECA provisions in Buckley to 
avoid problems of vagueness and overbreadth, we nowhere suggested that 
a statute that was neither vague nor overbroad would be required to toe 
the same express advocacy line.'' McConnell, 124 S.Ct. at 688.
    With this understanding of express advocacy, the Supreme Court 
found constitutional Congress' regulation of two types of activities 
addressed in BCRA: ``Federal election activity,'' as defined in 2 
U.S.C. 431(20), and ``electioneering communication,'' as defined in 2 
U.S.C. 434(f)(3)(A)(i). McConnell, 124 S.Ct. at 670-77 and 685-99. In 
upholding BCRA's amendments to FECA, the Supreme Court discussed the 
effects that Federal election activities and electioneering 
communications have on Federal elections.
1. Federal Election Activities
    As the Supreme Court observed in McConnell, ``[t]he core of 
[section 441i(b)] is a straightforward contribution regulation: It 
prevents donors from contributing nonfederal funds to state and local 
party committees to help finance ``Federal election activity.' '' 124 
S.Ct. at 671.\5\ The Supreme Court noted that this regulation arises 
out of Congressional recognition of ``the close ties between federal 
candidates and state party committees.'' Id., at 670. ``Federal 
election activity'' encompasses four distinct categories of activities: 
(1) Voter registration activity during the 120 days preceding a 
regularly scheduled Federal election; (2) voter identification, get-
out-the-vote (``GOTV''), and generic campaign activity that is 
conducted in connection with an election in which a candidate for 
Federal office appears on the ballot; (3) a public communication that 
refers to a clearly identified Federal candidate and that promotes, 
supports, attacks, or opposes a candidate for that office; and (4) the 
services provided by certain political party committee employees. See 2 
U.S.C. 431(20) through (24); 11 CFR 100.24 through 100.28. McConnell 
referred to all four types of Federal election activities as 
``electioneering,'' and found BCRA's definition of Federal election 
activities to be ``narrowly focused'' on ``those contributions to state 
and local parties that can be used to benefit federal candidates 
directly.'' McConnell, 124 S.Ct. at 671 and 674.
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    \5\ The Supreme Court acknowledged that the Levin Amendment 
``carves out an exception to this general rule.'' McConnell, 124 
S.Ct. at 671.
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    Considering the first two types of Federal election activities, 
which include certain voter registration, voter identification, GOTV 
and generic campaign activities, the Supreme Court determined that all 
of these activities ``confer substantial benefits on federal 
candidates.'' McConnell, 124 S.Ct. at 675. The Supreme Court also 
stated that ``federal candidates reap substantial rewards from any 
efforts that increase the number of like-minded registered voters who 
actually go to the polls.'' Id., 124 S.Ct. at 674. McConnell described 
the factual record as ``show[ing] that many of the targeted tax-exempt 
organizations engage in sophisticated and effective electioneering 
activities for the purpose of influencing elections, including waging 
broadcast campaigns promoting or attacking particular candidates and 
conducting large scale voter registration and GOTV.'' Id., 124 S.Ct. at 
678 n.68. Like the first two types, public communications that promote, 
support, attack, or oppose a clearly identified Federal candidate, 
``also undoubtedly have a dramatic effect on Federal elections. Such 
ads were a prime motivating force behind BCRA's passage * * *. [A]ny 
public communication that promotes or attacks a clearly identified 
federal candidate directly affects the election in which he is 
participating.'' Id., 124 S.Ct. at 675. Because the fourth type of 
Federal election activities applies on its face only to certain 
political party committees, it is not considered further in this 
proposal. 2 U.S.C. 431(20)(A)(iv).
2. Electioneering Communications
    An ``electioneering communication'' is any broadcast, cable, or 
satellite communication that refers to a clearly identified Federal 
candidate, is publicly distributed for a fee within 60 days before a 
general election or 30 days before a primary election or convention, 
and is targeted to the relevant electorate. See 2 U.S.C. 
434(f)(3)(A)(i); 11 CFR 100.29. For communications that refer to 
congressional candidates, targeting means the communication can be 
received by 50,000 persons in the relevant State or congressional 
district. 2 U.S.C. 434(f)(3)(C); 11 CFR 100.29(b)(5). For 
communications that refer to presidential candidates in the nomination 
context, ``publicly distributed'' means the communication

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can be received by 50,000 persons in the relevant State prior to its 
presidential primary election or anywhere in the United States prior to 
the presidential nominating convention. 11 CFR 100.29(b)(3)(ii). BCRA 
establishes disclosure requirements for persons who make electioneering 
communications. 2 U.S.C. 434(f); 11 CFR 104.20. McConnell upheld 
regulation of electioneering communications against a facial challenge, 
explaining that the definition of ``electioneering communication'' 
serves ``to replace the narrowing construction of FECA's disclosure 
provisions adopted by this Court in Buckley,'' which, for nonpolitical 
committee groups, was the express advocacy construction. McConnell, 124 
S.Ct. at 686 and 695. In so holding, the Court observed that ``the 
definition of ``electioneering communication'' raises none of the 
vagueness concerns that drove our analysis in Buckley.'' Id., at 689.
    BCRA also amended the definition of ``contribution or expenditure'' 
in 2 U.S.C. 441b to include any payment for an electioneering 
communication, thereby expressly prohibiting corporations and labor 
organizations from using their general treasury funds to pay for 
electioneering communications. McConnell described electioneering 
communications subject to 2 U.S.C. 441b as ``communications that are 
intended to, or have the effect of, influencing the outcome of federal 
elections.'' McConnell, 124 S.Ct. at 654.
    BCRA further provides that any disbursement for an electioneering 
communication that is coordinated with a candidate, candidate 
authorized committee, or a Federal, State, or local political party 
committee shall be treated as a contribution to the candidate or the 
candidate's party and as an expenditure by that candidate or party. 2 
U.S.C. 441a(a)(7)(C).
    In rejecting various challenges to BCRA's electioneering 
communication requirements, the Supreme Court addressed the purpose and 
effect of electioneering communications in several instances. McConnell 
concluded that while advertisers seeking to evade the express advocacy 
line create advertisements that ``do not urge the viewer to vote for or 
against a candidate in so many words, they are no less clearly intended 
to influence the election.'' McConnell, 124 S.Ct. at 689. The Supreme 
Court also referred a second time to the use of electioneering 
communications ``to influence federal elections'' and quoted 
approvingly from the decision below, which referred to electioneering 
communications as either ``designed to influence federal elections'' 
or, in fact, ``influencing elections.'' Id., at 691 (quoting McConnell 
v. FEC, 251 F.Supp.2d 176, at 237 (D.D.C. 2003)). The Supreme Court 
also concluded that ``the vast majority'' of advertisements that 
qualify as electioneering communications had an ``electioneering 
purpose,'' which the Court equated with advertisements that are 
``intended to influence the voters' decisions and [that] have that 
effect.'' McConnell, 124 S.Ct. at 696. The Court considered such 
advertisements to be ``the functional equivalent of express advocacy.'' 
Id.
    The Commission seeks comment on whether the Supreme Court's 
treatment of Federal election activity or electioneering communications 
in McConnell requires or permits the Commission to change its 
regulations defining ``expenditure'' and ``contribution'' in 11 CFR 
part 100, subparts B, C, D and E to include those concepts. In the 
alternative, the Commission seeks comment on whether McConnell 
recognizes additional activities that may be constitutionally regulated 
by Congress, but in the absence of new legislation doing so, the 
Commission is prohibited from expanding the regulatory definitions of 
``expenditure'' and ``contribution.''
    The Commission further seeks comment on whether, even if it may so 
amend its regulations, the Commission should refrain from redefining 
such fundamental and statutorily defined terms, in the absence of 
further guidance from Congress. Is it consistent with BCRA to include 
all Federal election activity within the regulatory definition of 
``expenditure'' when BCRA only added electioneering communications to 
the definition of ``contribution or expenditure'' in 2 U.S.C. 
441b(b)(2)? Does BCRA's specification in 2 U.S.C. 441a(a)(7)(C) that 
coordinated ``disbursements'' for electioneering communications can be 
contributions provide any guidance regarding whether payments for 
electioneering communications should be considered expenditures? Is it 
consistent with Congressional intent for the Commission to categorize 
voter registration, voter identification, get-out-the-vote and generic 
campaign activities by a State or local candidate committee as ``for 
the purpose of influencing any election to Federal office?''
    Does the definition of ``independent expenditure'' in 2 U.S.C. 
431(17)(A), which requires express advocacy, limit Commission's ability 
to define an ``expenditure'' to communications that include express 
advocacy? If not, can communications be considered ``expenditures'' if 
they fail to meet both the definition of ``independent expenditure'' in 
2 U.S.C. 431(17) and the definition of ``coordinated communication'' 
under 11 CFR 109.21? Is the function of the definition of ``independent 
expenditure'' in 2 U.S.C. 431(17)(A) limited to the 24-hour and 48-hour 
reporting requirements in 2 U.S.C. 434(g)?

B. Proposed Regulations

    In this NPRM, the Commission considers whether, in light of 
McConnell, it should revise current regulations to reflect that certain 
communications and certain voter drive activities have the purpose of 
influencing Federal elections. This proposal includes several 
alternatives. The Commission has not made any final decisions on any of 
the proposed rules or alternatives, which are described below, and 
seeks comment on all of them.
1. Proposed 11 CFR 100.5--Definition of ``political committee''
    Current 11 CFR 100.5(a) specifies that any committee, club, 
association, or other group of persons that receives contributions 
aggregating in excess of $1,000 or which makes expenditures aggregating 
in excess of $1,000 during a calendar year is a political committee. In 
addition to considering amending this regulation to include Buckley's 
major purpose test, the proposal for which is discussed separately 
below, the Commission is considering amending this definition so that 
the first three types of Federal election activity and electioneering 
communications would be counted toward the $1,000 expenditure 
thresholds.
    Alternative 1-A would define those ``expenditures'' that count 
toward the $1,000 threshold, but this definition would not apply in any 
other context in which the term ``expenditure'' is used in FECA or in 
the Commission's regulations.
    The Commission is considering a number of issues related to 
Alternative 1-A. Should persons other than political party committees 
be subject to a rule that treats the first three types of Federal 
election activities as ``expenditures'' for purposes of the $1,000 
threshold in the definition of ``political committee?'' Should all of 
Federal election activity and all electioneering communications count 
toward political committee status, or should the Commission make 
distinctions to count only certain types of Federal election activity 
or only certain electioneering communications toward political 
committee status? For

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example, should Federal election activity that does not refer to a 
clearly identified Federal candidate count toward political committee 
status? Would a definition of ``expenditure'' that includes voter drive 
activities by State or local candidate committees on behalf of their 
own candidacies be overly broad?
    Should funds received for Federal election activities types 1 
through 3 or electioneering communications count as contributions for 
purposes of the $1,000 threshold? If any disbursements for these 
activities should count as expenditures, should the corresponding funds 
received to make those disbursements count as contributions? Should the 
Commission treat funds raised by a State or local candidate committee 
through solicitations advocating their own election, as well as 
incidentally expressly advocating the election or defeat of a clearly 
identified Federal candidate, or promoting, supporting, attacking or 
opposing a clearly identified Federal candidate, as funds contributed 
``for the purpose of influencing any election for Federal office?'' 
Please note that none of the regulatory text set forth below relates to 
this proposal regarding ``contributions'' as used in proposed 11 CFR 
100.5(a)(1)(i).
    Finally, should the Commission confine any reexamination of the 
definition of ``expenditure'' to apply only as that term is used as 
part of the definition of ``political committee?'' FECA already 
provides two definitions of ``expenditure,'' one in 2 U.S.C. 431(9) and 
a broader definition in 2 U.S.C. 441b. Currently, ``expenditure'' in 11 
CFR 100.5(a) uses the definition in 2 U.S.C. 431(9) and 11 CFR part 
100, subpart D. Should the Commission create by regulation a third 
definition of ``expenditure'' for determining political committee 
status?
2. 11 CFR Part 100, Subpart D--Definition of ``expenditure''
    The Commission is also considering amendments to its general 
definition of ``expenditure'' to reflect McConnell's conclusion that 
certain communications and certain voter drives have the purpose or 
effect of influencing Federal elections.
    One approach would be to add payments for the Federal election 
activities described in 2 U.S.C. 431(20)(A)(i) through (iii) and 
payments for electioneering communications to the definition of 
``expenditure'' in 11 CFR part 100, subpart D. In evaluating this 
approach to amending its rules, the Commission will consider the same 
issues raised above concerning BCRA's application of the concepts of 
Federal election activities and electioneering communications in 
connection with Alternative 1-A.
    BCRA imposes prohibitions and restrictions related to Federal 
election activities on national party committees (2 U.S.C. 441i(c)), 
State, district, and local political party committees (2 U.S.C. 
441i(b)), Federal candidates (2 U.S.C. 441i(e)(1)(A), (e)(4)(A), and 
(e)(4)(B)), and State candidates (2 U.S.C. 441i(f)). Consequently, most 
of the Supreme Court's consideration of Federal election activities 
arose with respect to political party committees. In this context, the 
``close relationship'' of Federal officeholders and candidates to their 
political parties was part of the justification of the Government's 
interest in regulating Federal election activities. See McConnell, 124 
S.Ct. at 668 and n.51. In fact, in disposing of an equal protection 
claim that BCRA discriminates against political party committees in 
favor of ``interest groups,'' the Supreme Court acknowledged: 
``Interest groups, however, remain free to raise soft money to fund 
voter registration, GOTV activities, mailings, and broadcast 
advertising (other than electioneering communications).'' Id., 124 
S.Ct. at 686.
    The approach of including all funds disbursed for Federal election 
activities in the definition of ``expenditure,'' if adopted, would 
extend restrictions related to Federal election activities beyond 
political party committees and Federal candidates to all persons, 
including a State or local candidate committee.\6\ Would such a 
regulation be consistent with FECA, as amended by BCRA? Would it be 
consistent with Congressional intent?
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    \6\ State and local candidate committees are subject to 
limitations with respect to their type 3 Federal election 
activities. 2 U.S.C. 441i(f).
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    Similarly, BCRA amended the definition of ``contribution or 
expenditure'' in the corporate and labor organization prohibitions to 
include payments ``for any applicable electioneering communication.'' 2 
U.S.C. 441b(b)(2). BCRA did not amend, however, the definition of 
``expenditure'' with a broader application in 2 U.S.C. 431(9). Would 
the approach of including all payments for electioneering 
communications in the regulations implementing the 2 U.S.C. 431(9) 
definition of ``expenditure'' be consistent with FECA, as amended by 
BCRA? Would it be consistent with Congressional intent?
    The proposed rules that follow as Alternative 1-B present a 
narrower approach. Although the Supreme Court's discussion of Federal 
election activities in McConnell was framed in the political party and 
candidate context, it recognized that these same activities by tax-
exempt organizations do affect Federal elections. McConnell, 124 S.Ct. 
at 678 n.68. Given the Supreme Court's conclusions that types 1 through 
3 of Federal election activities have a demonstrable effect on Federal 
elections, can the Commission conclude that the same communications and 
the same activities by actors other than political party committees and 
candidates are not expenditures, i.e., payments for the purpose of 
influencing a Federal election? In an effort to take the Supreme 
Court's conclusions into consideration, Alternative 1-B would 
incorporate the concepts of Federal election activities types 1 through 
3, but would also recognize that applying these concepts to actors 
other than political party committees and candidates requires some 
tailoring of Federal election activities.
    A proposal to regulate Federal election activities by persons other 
than political party committees and candidates requires a reexamination 
of those activities in order to determine whether those activities 
carried out by such persons are the functional equivalent of the same 
activities when carried out by political party committees and 
candidates. Inherent in any activities conducted by political party 
committees or candidates is a partisan purpose, as the Supreme Court 
has recognized in other contexts. See FEC v. Colorado Republican 
Federal Campaign Committee, 533 U.S. 431, 450 (2001) (noting ``the 
seemingly unexceptionable premise that parties are organized for the 
purpose of electing candidates'' and agreeing that ``political parties 
are dominant players, second only to the candidates themselves, in 
federal elections''). When the proposed rules in Alternative 1-B 
consider Federal election activities conducted by other persons, they 
attempt to be consistent with McConnell by limiting the activities 
included in the ``expenditure'' definition to those with a partisan 
purpose.
    Are the proposed rules consistent with McConnell? Do they limit the 
activities included in the ``expenditure'' definition to those 
activities that have a partisan purpose? Is Alternative 1-B's treatment 
of a State or local candidate committee's partisan activities 
consistent with BCRA? Is Alternative 1-B consistent with 2 U.S.C. 
441i(e)(4), which permits Federal candidates to solicit up to $20,000 
per individual for certain Federal election activities or for an entity 
whose principal purpose is to

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conduct certain Federal election activities?
    a. Proposed 11 CFR 100.115--Federal election activity: Partisan 
voter drives. Because the Supreme Court recognized that voter 
registration activity that takes place within 120 days before a Federal 
election, voter identification, and get-out-the-vote activities 
``confer substantial benefits on federal candidates'' and because voter 
drives may be for the purpose of influencing Federal elections even 
when performed by tax-exempt organizations, Alternative 1-B would 
incorporate these aspects of Federal election activities in the 
definition of ``expenditure.'' See McConnell, 124 S.Ct. at 675, 678 
n.68, and the discussion above in part II, A., 1. Proposed section 
100.34 would define ``partisan voter drives,'' and proposed section 
100.115 would include payments for voter registration, voter 
identification, and GOTV activities into the regulatory definition of 
``expenditure,'' subject to the exceptions described below.
    As reflected in FECA, the proposed rules in Alternative 1-B would 
distinguish partisan from nonpartisan Federal election activities. FECA 
exempts ``nonpartisan activity designed to encourage individuals to 
vote or register to vote'' from the definition of ``expenditure.'' 2 
U.S.C. 431(9)(B)(ii). In order for voter drives to be ``nonpartisan,'' 
Commission regulations currently require that no effort is or has been 
made to determine the party or candidate preference of individuals 
before encouraging them to vote. 11 CFR 100.133.
    Alternative 1-B includes proposed changes to section 100.133. 
First, the proposal would expressly state that if voter registration or 
get-out-the-vote activities included a communication that promotes, 
supports, attacks, or opposes a Federal or non-Federal candidate or if 
it promotes or opposes a political party, then the voter registration 
or get-out-the-vote activities is partisan. See proposed 11 CFR 
100.133(a). Second, the proposal would add a provision that if 
information concerning likely party or candidate preference has been 
used to determine which voters to encourage to register to vote or to 
vote, the voter registration and get-out-the-vote activities would be 
partisan. See proposed 11 CFR 100.133(b).
    These proposed changes would achieve more harmony between the 
Commission's approach to this issue and the Internal Revenue Service's 
(``the IRS's'') approach. The IRS regulations provide that ``to be 
nonpartisan, voter registration and `get-out-the-vote' campaigns must 
not be specifically identified by the organization with any candidate 
or political party.'' 26 CFR 1.527-6(b)(5). In a private letter ruling, 
the IRS determined that a voter drive was partisan, even though the 
activities ``may not be specifically identified with a candidate or 
party in every case.'' It did so due to ``the intentional and 
deliberate targeting of individual voters or groups of voters on the 
basis of their expected preference for pro-issue candidates, as well as 
the timing of the dissemination and format of the materials used.'' 
Priv. Ltr. Rul. 99-25-051 (Mar. 29, 1999). Should the Commission 
otherwise clarify this rule or consider any other criteria?
    Should voter identification be considered part of get-out-the-vote 
activities subject to section 100.133? If so, what changes to the 
proposed rules, if any, are necessary?
    The proposed new rules for voter registration and get-out-the-vote 
activities at 11 CFR 100.34(a) and (c) would retain by reference the 
nonpartisan exception to the definition of ``expenditure'' in proposed 
11 CFR 100.133. Similarly, proposed 11 CFR 100.34(b) would exclude 
disbursements for voter identification when no effort has been or will 
be made to determine or record the party or candidate preference of 
individuals on the voter list from the definition of ``partisan voter 
drive'' and therefore ``expenditure.'' See proposed 11 CFR 100.34(b) 
and 100.115.
    The proposed rule at new 11 CFR 100.115 would also exclude Levin 
funds from the definition of ``expenditure.'' Levin funds are funds 
raised by State, district, or local political party committees and 
party organizations pursuant to 11 CFR 300.31 and disbursed by the same 
committee or organization pursuant to 11 CFR 300.32. BCRA specifically 
permits State, district, and local political party committees to raise 
and spend Levin funds for an allocable portion of voter registration, 
voter identification, and get-out-the-vote activities, rather than 
requiring these committees to use entirely Federal funds for these 
Federal election activities. 2 U.S.C. 441i(b)(2). This exception in 
BCRA would be preserved for State, district, and local political party 
committees and organizations by the exclusion of Levin funds from the 
proposed rules.
    State and local political party committees may also conduct voter 
drives under the ``coattails'' exception to the definition of 
``expenditure.'' 2 U.S.C. 431(9)(B)(ix); 11 CFR 100.149. Under certain 
conditions, voter registration and GOTV activities conducted by these 
party committees on behalf of the Presidential nominees are not treated 
as expenditures. In order to leave this exemption unaffected by the 
inclusion of the types 1 and 2 of Federal election activity in the 
definition of ``expenditure,'' the proposed rules would also amend 11 
CFR 100.149 to provide expressly that the ``coattails'' exemption would 
apply notwithstanding proposed 11 CFR 100.115.
    A proposal for the allocation of these expenditures is discussed 
below. Proposed section 100.155 would state that any non-Federal funds 
permissibly disbursed by a separate segregated fund or a nonconnected 
committee for partisan voter drives pursuant to the allocation rule in 
proposed 11 CFR 106.6 would not be ``expenditures.'' Consequently, the 
non-Federal funds would not count toward the $1,000 of expenditures 
required for political committee status under current 11 CFR 100.5(a) 
(or proposed 11 CFR 100.5(a)(1)(i)). The Commission seeks comment on 
whether this is an appropriate conclusion.
    Additionally, the Commission seeks comment on the following 
questions. Are proposed sections 100.34 and 100.115 sufficiently 
tailored to reflect the application of Federal election activities to 
persons other than political party committees and candidates? The 
proposed regulations would treat many of the voter activities conducted 
by State and local candidate committees on behalf of their own 
candidacies as ``expenditures.'' Is there any evidence that Congress 
intended for the Commission to categorize such activities as ``for the 
purpose of influencing any election for Federal office?'' Should the 
Commission give any consideration in this context to the statutory 
exemptions from the definition of Federal election activity set forth 
in 2 U.S.C. 431(20)(B)? Should the proposed rules include an exception 
for the receipt of funds solicited by Federal candidates under 2 U.S.C. 
441i(e)(4)(B)(ii), which under certain circumstances permits Federal 
candidates to solicit funds from individuals of up to $20,000--an 
amount that exceeds the contribution limit applicable to certain 
political committees in 2 U.S.C. 441a? Or, should the exception in 2 
U.S.C. 441i(e)(4)(B)(ii) be limited to entities that are not political 
committees or that confine their voter registration, voter 
identification, and get-out-the-vote activities to nonpartisan 
activities? If the exception were confined to nonpartisan activities, 
what evidence, if any, is there that Congress intended for the 
exception

[[Page 11741]]

in 2 U.S.C. 441i(e)(4)(B)(ii) to be interpreted in such a way?
    The definition of ``partisan voter drive'' in proposed section 
100.34 would not include some voter registration and get-out-the-vote 
activities that would simultaneously fail to qualify for the exemption 
of ``nonpartisan voter registration and get-out-the-vote activities'' 
in section 100.133, in either its current form or as proposed to be 
amended. For example, some voter registration activity could take place 
more than 120 days before an election, which would mean that payments 
for it would not be expenditures. See proposed 11 CFR 100.34(a) (citing 
current 11 CFR 100.24(b)(1)) and 100.115. That same activity could also 
fail to qualify as nonpartisan under proposed 11 CFR 100.133 if it is 
subject to any of that section's exclusions, which include, for 
example, directing voter drives to supporters of a political party. Any 
voter registration or get-out-the-vote activities that fall in this 
``gap'' would not be expenditures under proposed section 100.115, even 
though they would not qualify as ``nonpartisan'' under the exception in 
proposed section 100.133. This gap may be appropriate in that it 
reflects that such activity cannot be considered nonpartisan for 
purpose of the exemption, but it may not rise to the level of an 
``expenditure'' under proposed sections 100.34 and 100.115 for the same 
reason that similar activity by a political party committee would be 
excluded from the definition of ``Federal election activity.'' 11 CFR 
100.24(b)(1).
    Alternatively, this gap could be eliminated by either adding an 
additional exemption from the definition of ``expenditure'' in 11 CFR 
part 100, subpart E, or dropping the time limitations of current 11 CFR 
100.24(a)(1), (a)(3)(i), and (b)(1) from proposed section 100.34. Under 
the latter approach, the time limitations in current section 100.24 
would be maintained with respect to the political party committees 
whose Federal election activities are subject to BCRA's time limits. 2 
U.S.C. 431(20)(A)(i). The Commission seeks comment on these issues.
    b. Proposed 11 CFR 100.116--Certain public communications. 
Alternative 1-B would also incorporate into the definition of 
``expenditure'' payments for public communications that refer to a 
political party or a clearly identified Federal candidate and promote 
or support, or attack or oppose any political party or any Federal 
candidate. See proposed 11 CFR 100.116. This proposed rule is based on 
two types of Federal election activities: generic campaign activities, 
which are public communications that promote or oppose a political 
party, and public communications that promote, support, attack, or 
oppose a clearly identified candidate. See 2 U.S.C. 431(20)(A)(ii) and 
(iii); 11 CFR 100.24(a)(1); (b)(2)(ii); (b)(3); 100.25; and 100.26. 
Proposed section 100.155 would state that any non-Federal funds 
permissibly disbursed by a separate segregated fund or a nonconnected 
committee for public communications pursuant to the allocation rule in 
proposed 11 CFR 106.6 would not be ``expenditures.'' The Commission 
seeks comment on whether this is an appropriate conclusion.
    The Supreme Court found that public communications that promote, 
support, attack or oppose a clearly identified Federal candidate ``have 
a dramatic effect on federal elections.'' McConnell, 124 S.Ct. at 675. 
The Supreme Court also found that generic campaign activity ``confer[s] 
substantial benefits on federal candidates.'' Id. If the Commission 
were to apply the voter drive activities of types 1 and 2 of Federal 
election activities outside of the political party committee context, 
these concepts may require modification to incorporate a partisan 
element. In contrast, generic campaign activity and type 3 of Federal 
election activities, by definition, include material that either 
promotes, supports, attacks or opposes a clearly identified Federal 
candidate or promotes or opposes a political party. This partisan 
content obviates the need to tailor these concepts for application 
outside the political party and candidate context.
    Consistent with this approach, the Commission recently issued 
Advisory Opinion 2003-37 in which it stated that ``communications that 
promote, support, attack or oppose a clearly identified Federal 
candidate have no less a `dramatic effect' on Federal elections when 
aired by other types of political committees, rather than party 
committees or candidate committees.'' AO 2003-37, at 3. In that 
advisory opinion, the Commission concluded that public communications 
that promote, support, attack or oppose a clearly identified Federal 
candidate when made by political committees are expenditures. Proposed 
section 100.116 would incorporate this conclusion in the Commission's 
regulations. It would also treat public communications that promote or 
oppose political parties in a similar fashion, and it would apply to 
communications made by all persons, not just political committees. If 
new rules apply the ``promote, support, attack or oppose'' standard to 
actors other than political party committees and candidates, should a 
temporal element be included in any such rule? Might an advertisement 
by a person other than a political party committee or candidate be 
properly understood as, for example, promoting a Federal candidate if 
publicly distributed close to an election, but the same advertisement 
by the same person publicly distributed far from an election might not 
promote the candidate? Should any of FECA's temporal limitations, which 
are discussed in connection with expenditures generally below, be 
adapted for this purpose?
    Would the ``promote, support, attack or oppose'' standard be 
appropriate for those 527 organizations (tax exempt ``political 
organizations,'' discussed more infra) that by their very nature have 
influencing elections as a primary purpose? Would the ``promote, 
support, attack or oppose'' standard be appropriate for all 527 
organizations? Should the Commission adopt a different standard for 
501(c) organizations (other tax exempt organizations, discussed more 
infra) that would require not only ``promote, support, attack or 
oppose'' content, but also some basis for concluding the message is to 
influence a Federal election? Such additional bases could include: (1) 
Reference to the clearly identified candidate as a candidate; (2) 
reference to the election or to the voting process; (3) reference to 
the clearly identified candidate's opponent; or (4) reference to the 
character or fitness for office of the clearly identified candidate. 
Alternatively, should the Commission adopt the ``promote, support, 
attack or oppose'' standard for 501(c) organizations, but build in an 
exception for a message that is confined to expressly advocating 
seeking action by the clearly identified candidate on an upcoming 
legislative or executive decision without reference to any candidacy, 
election, voting, opponent, character, or fitness for office? In 
essence, the Commission seeks comment on whether it should define what 
is an expenditure in a way that follows the functional distinctions in 
the Internal Revenue Code and recognizes that some organizations engage 
in ``grassroots lobbying'' campaigns primarily designed to affect 
upcoming legislative or executive actions. If so, what regulatory 
language would be appropriate?
    In different contexts, FECA now provides at least three content 
standards for communications--express advocacy; promote, support, 
attack or oppose; and reference to a clearly identified Federal 
candidate. See, e.g., 2 U.S.C. 431(17)(A); (20)(A)(iii); 
434(f)(3)(A)(i)(I) and

[[Page 11742]]

441d(a). What other content standards that are not vague or overbroad, 
if any, should be included in the definition of ``expenditure?''
    c. Electioneering communications. Alternative 1-B does not include 
payments for electioneering communications in the definition of 
``expenditures.'' Many electioneering communications either already are 
included in the definition of ``expenditure'' or would be included 
under the proposal. Under the current rules, political committees must 
report communications that satisfy the general definition of 
``electioneering communications'' in 2 U.S.C. 434(f)(3)(A) as 
expenditures. 11 CFR 104.20(b). In addition, if an electioneering 
communication promotes, supports, attacks, or opposes a Federal 
candidate, it would also be a public communication that promotes, 
supports, attacks, or opposes a Federal candidate, which would make it 
an expenditure under proposed section 100.116. Consequently, the only 
electioneering communications that would not be treated as expenditures 
under Alternative 1-B would be those made by persons other than 
political committees that do not promote, support, attack, or oppose a 
clearly identified Federal candidate. Should the final rules include 
all electioneering communications in the definition of ``expenditure?''
    d. Other potential approaches. The Commission also seeks comments 
on other potential approaches to amending the definition of 
``expenditure'' in 11 CFR part 100, subpart D. Should a payment's 
status as an ``expenditure'' depend on the identity of the maker? For 
example, should payments for public communications that promote, 
support, attack or oppose a Federal candidate be expenditures only if 
made by a Federal political committee?
    Are there other identifying characteristics that should be 
considered in determining whether a payment is an expenditure? For 
example, should payments by a tax-exempt, charitable organization 
operating under 26 U.S.C. 501(c)(3) be exempt from the definition of 
``expenditure?'' In this regard, how should the Commission interpret 
the Internal Revenue Service's Technical Advice Memorandum 89-36-002 
(Sept. 8, 1989), which permitted a 501(c)(3) organization to make 
advertisements that ``support or oppose a candidate in an election 
campaign,'' without losing its 501(c)(3) status for intervening in a 
political campaign?
    Should the Commission consider an organization's status under 
section 501(c) or 527 of the Internal Revenue Code in determining 
whether a payment is an expenditure? Should some activities be 
expenditures if made by a section 527 organization, regardless of 
whether it is a Federal political committee? Should the same rules or 
different rules apply to organizations operating under section 
501(c)(3), (4), or (6)?
    Should the timing of a payment affect whether it is an 
``expenditure?'' FECA and BCRA provide several temporal limitations on 
various provisions that recognize the significance of proximity to an 
election. FECA provides that certain independent expenditures must be 
reported within 24 hours if made during the twenty days before an 
election. 2 U.S.C. 434(g)(1) (formerly 2 U.S.C. 434(c)(2)(C)). BCRA 
limits electioneering communications to the thirty days before a 
primary election and the sixty days before a general election. 2 U.S.C. 
434(f)(3)(A)(i)(II). BCRA also includes voter registration activity in 
Federal election activity only in the 120 days before a regularly 
scheduled Federal election. 2 U.S.C. 431(20)(A)(i). Do any of these 
time periods provide an appropriate temporal standard for any 
expenditures?
    Should the rules address expenditures that might be in connection 
with more than one Federal election? The Commission recently concluded 
in an advisory opinion that an advertisement that was coordinated by a 
Congressional candidate with a presidential campaign committee could be 
a contribution to the presidential campaign committee in connection 
with the upcoming Presidential primary election in that State and an 
expenditure of the Congressional candidate in connection with her 
special election. AO 2004-1. Should this conclusion be incorporated 
into regulations or should it be reconsidered?
    The Commission also seeks comment on whether any aspect of 
Alternative 1-B should be revised in order to harmonize the definition 
of ``expenditure'' in the Commission's regulations with the approach 
taken by the IRS. Section 527(e)(2) of the Internal Revenue Code of 
1986, as amended, defines the term ``exempt function'' as ``the 
function of influencing or attempting to influence the selection, 
nomination, election, or appointment of any individual to any Federal, 
State, or local public office or office in a political organization, or 
the election of Presidential or Vice Presidential electors, whether or 
not such individual or electors are selected, nominated, elected, or 
appointed.'' 26 U.S.C. 527(e)(2). IRS regulations implementing this 
statutory definition provide that ``the term `exempt function' includes 
all activities that are directly related to and support the process of 
influencing or attempting to influence the selection, nomination, 
election, or appointment of any individual to public office or office 
in a political organization.'' 26 CFR 1.527-2(c)(1). IRS regulations 
also specify that whether an expenditure is for an exempt function 
depends on all the facts and circumstances. Id.
    A Revenue Ruling issued by the IRS on December 23, 2003, stated 
that ``[w]hen an advocacy communication explicitly advocates the 
election or defeat of an individual to public office, the expenditure 
clearly is for an exempt function under Sec.  527(e)(2).'' Rev. Rul. 
04-6, at 4. The Revenue Ruling also identified a non-exhaustive list of 
factors that ``tend to show'' whether an advocacy communication on a 
public policy issue is for an exempt function or not, in the absence of 
``explicit advocacy.'' The six identified factors that tend to show a 
communication is for an exempt function are: (a) The communication 
identifies a candidate for public office; (b) the timing of the 
communication coincides with an electoral campaign; (c) the 
communication targets voters in a particular election; (d) the 
communication identifies that candidate's position on the public policy 
issue that is the subject of the communication; (e) the position of the 
candidate on the public policy issue has been raised as distinguishing 
the candidate from others in the campaign, either in the communication 
itself or in other public communications; and (f) the communication is 
not part of an ongoing series of substantially similar advocacy 
communications by the organization on the same issue. The five factors 
that tend to show a communication is not for an exempt function are: 
(a) The absence of one or more of the factors listed in (a) through (f) 
above; (b) the communication identifies specific legislation, or a 
specific event outside the control of the organization, that the 
organization hopes to influence; (c) the timing of the communication 
coincides with a specific event outside the control of the organization 
that the organization hopes to influence; (d) the communication 
identifies the candidate solely as a government official who is in a 
position to act on the public policy issue in connection with the 
specific event; and (e) the communication identifies the candidate 
solely in the list of key or principal sponsors of the legislation that 
is the subject of the communication.

[[Page 11743]]

    To what extent should Alternative 1-B be modified for harmony with 
the IRS's approach?
3. 11 CFR Part 100, Subpart B--Definition of ``contribution''
    The Commission is also considering amending the definition of 
``contribution'' in 11 CFR part 100, subpart B to make changes that 
would correspond to those proposed for the definition of 
``expenditure'' in Alternative 1-B. Additionally, the Commission is 
considering amending its definition of ``contribution'' to include any 
funds that are received in response to a communication containing 
express advocacy of a clearly identified candidate.
    a. Amendments corresponding to amendments to ``expenditure'' 
definition. Current 11 CFR 102.5(b) imposes requirements on 
organizations that do not qualify as ``political committees'' under 
current 11 CFR 100.5 and that make contributions or expenditures. The 
organization must demonstrate through a reasonable accounting method 
that, whenever it makes expenditures, it has received sufficient funds 
subject to the limitations and prohibitions of FECA to make the 
expenditures. Such organizations must also keep records of receipts and 
disbursements and, upon request, must make such records available to 
the Commission. See current 11 CFR 102.5(b)(1). Consequently, if the 
definition of ``expenditure'' is amended in any way, then any entity 
making such expenditures would be required to do so using only 
contributions that comply with the amount limitations and source 
prohibitions of FECA. If the Commission adopts the amended definition 
of ``expenditure,'' as proposed in Alternative 1-B, is an amendment to 
Commission regulations needed to state that funds used for any 
expenditures are contributions to that entity? Please note that 
proposed rule text for this approach is not included below, but if the 
Commission were to decide to adopt Alternative 1-B and this approach, 
then the text in the final rules amending the definition of 
``contribution'' would be similar to the text in proposed sections 
100.115 and 100.116 regarding ``expenditure.'' Should entities that are 
not political committees be required to report their contributions 
received and expenditures made in this context?
    b. Proposed 11 CFR 100.57--Funds solicited with express advocacy. 
The Commission is considering whether solicitations containing express 
advocacy of federal candidates establish that any funds received in 
response are necessarily ``for the purpose of influencing any election 
for Federal office,'' so that they are contributions. Proposed section 
100.57 would state that any funds provided in response to a 
solicitation that contained express advocacy for or against a clearly 
identified Federal candidate are contributions. If a solicitation 
states that the solicitor intends to take actions to elect or defeat a 
particular candidate, is it then logical to treat funds that are 
provided in response as funds that are ``for the purpose of influencing 
a Federal election?'' Should the standard be that the solicitation must 
not just include express advocacy but state that the funds will be used 
for express advocacy? Should funds raised by a State or local candidate 
for his or her own candidacy be treated as contributions ``for the 
purpose of influencing a Federal election'' if the State or local 
candidate's solicitation includes express advocacy for or against a 
clearly identified Federal candidate? Should proposed section 100.57 
also include solicitations that expressly advocate the election or 
defeat of Federal candidates of a particular party without clearly 
identifying the particular candidates? Should the new rule use a 
standard other than express advocacy, such as a solicitation that 
promotes, supports, attacks, or opposes a Federal candidate, or 
indicates that funds received in response thereto will be used to 
promote, support, attack, or oppose a clearly identified Federal 
candidate? Should the new rule specify which contributions result from 
which solicitations? Should the new rule incorporate the standards in 
current 11 CFR 102.5(a)(2)(i) through (iii) to clarify further the 
types of funds received that must be treated as contributions? A 
conforming amendment to current 11 CFR 102.5(a)(2)(ii) would be 
necessary if any rule based on proposed section 100.57 is adopted.
4. Proposed 11 CFR 114.4--Corporate and Labor Organization 
Communications
    Current 11 CFR 114.4(c)(2) and (d) permit corporations and labor 
organizations to conduct voter registration and get-out-the-vote 
activities beyond their restricted class provided that any 
communication does not expressly advocate the election or defeat of any 
clearly identified candidate(s) or candidates of a clearly identified 
political party and subject to other restrictions. The Commission seeks 
comment on proposed rules that would amend paragraphs (c)(2) and (d) 
and add new paragraph (c)(3) to specify that such voter registration 
and get-out-the-vote activities would be subject to the conditions set 
forth in proposed 11 CFR 100.133, as discussed above. The purpose of 
such a revision would be to ensure that corporations and labor 
organizations would be subject to the same conditions as political 
committees, as well as other conditions specific to corporations and 
labor organizations, when spending non-Federal funds on these voter 
registration and get-out-the-vote activities. The Commission seeks 
comment on whether the same rules should apply not only to corporations 
and labor organizations, but also to any person or entity who uses 
corporate or labor organization general treasury funds for these 
purposes.
    The Commission also seeks comment on whether current 11 CFR 100.133 
should be amended to make clear that, when a corporation or labor 
organization conducts voter registration or get-out-the-vote 
activities, it would be subject to the requirements of 11 CFR 100.133 
and 114.4(c) and (d). Additionally, the Commission seeks comment on 
whether the ``express advocacy'' standard set forth in 11 CFR 
114.4(c)(2) and (d)(1) should be changed to the ``promote, support, 
attack or oppose'' standard. Would the latter standard be an 
appropriate standard for determining whether a communication has the 
``purpose of influencing a Federal election?'' Would such an approach 
be consistent with MCFL?
    Corporations and labor organizations may also conduct certain voter 
registration and GOTV activities aimed at their restricted classes. 11 
CFR 114.3(c)(4). Because these activities are permitted by 11 CFR part 
114, they are exempt from the definition of ``expenditure.'' 2 U.S.C. 
431(9)(B)(v); 11 CFR 100.141. No changes to section 114.3(c)(4) are 
proposed because the Commission intends to retain this exception to the 
definition of ``expenditure.''

III. Major Purpose

A. Major Purpose Requirement

    The Commission seeks comment as to whether the existing definition 
of ``political committee'' in 11 CFR 100.5(a) should be amended by 
incorporating the major purpose requirement, and if so, how that should 
be accomplished. Under the proposed section 100.5(a)(1), a committee, 
club, association or group of persons that receives in excess of $1,000 
in total contributions or makes in excess of $1,000 in total 
expenditures would be a political committee only if ``the nomination or 
election of one or more

[[Page 11744]]

Federal candidates is a major purpose'' of the committee, club, 
association or group of persons (emphasis added).
1. Major Purpose or Primary Purpose?
    The proposed rule would include the indefinite article ``a'' to 
modify ``major purpose,'' rather than the definite article ``the.'' The 
consequence would be that the major purpose element of the definition 
of ``political committee'' may be satisfied if the nomination or 
election of a candidate or candidates is one of two or more major 
purposes of an organization, even if it is not its primary purpose. The 
Commission seeks comment regarding whether, to satisfy the major 
purpose requirement, the nomination or election of candidates must be 
the predominant purpose of the organization, or whether the major 
purpose standard is satisfied when the nomination or election of 
candidates is a major purpose of the organization, even when the 
organization spends more funds for another purpose.
    In first articulating the major purpose requirement in Buckley, the 
Supreme Court determined that the definition of political committee 
``need only encompass organizations that are under the control of a 
candidate or the major purpose of which is the nomination or election 
of a candidate.'' Buckley, 424 U.S. at 79 (emphasis added). Likewise, 
in MCFL, the Supreme Court observed that:

should MCFL's independent spending become so extensive that the 
organization's major purpose may be regarded as campaign activity, 
the corporation would be classified as a political committee. As 
such it would automatically be subject to the obligations and 
restrictions applicable to those groups whose primary objective is 
to influence political campaigns.

MCFL, 479 U.S. at 262 (emphasis added and citations omitted). These 
passages indicate that the nomination or election of candidates must be 
the major purpose or, put another way, the primary objective of the 
organization. In light of the Supreme Court's repeated use of the term 
``the major purpose,'' can the Commission substitute the term ``a major 
purpose,'' which appears to have a different meaning?
    Could the major purpose standard in Buckley nevertheless be 
interpreted to require that the nomination or election of candidates be 
``a'' major purpose of the organization, even when the organization has 
other, perhaps more significant, purposes? The Commission notes that 
the ``major purpose'' requirement appears only in judicial opinions not 
in any statute, and that the Supreme Court has warned against 
``dissect[ing] the sentences of the United States Reports as though 
they were the United States Code.'' St. Mary's Honor Ctr. v. Hicks, 509 
U.S. 502, 515 (1993). In Aka v. Washington Hosp. Ctr., 156 F.3d 1284 
(D.C. Cir. 1998), the Circuit Court explained that ``the [Supreme] 
Court's every word and sentence cannot be read in a vacuum; its 
pronouncements must be read in light of the holding of the case and to 
the degree possible, so as to be consistent with the Court's apparent 
intentions.'' Id. at 1291.
    As explained above, in Buckley, the Court imposed the ``major 
purpose'' requirement because it was concerned that the statutory 
definition of political committee ``could be interpreted to reach 
groups engaged purely in issue discussion.'' Buckley, 424 U.S. at 79. 
Consequently, the ``apparent intention'' of the Court appears to have 
been to limit the applicability of the definition of political 
committee so that it would not cover organizations involved ``purely in 
issue discussion'' but that nevertheless engage in some incidental 
activity that might otherwise satisfy the Act's $1,000 expenditure or 
contribution political committee thresholds. Would it be consistent 
with the Court's apparent intention for the Commission to amend its 
definition of ``political committee'' to only require that the 
nomination or election of candidates be a major purpose rather than the 
primary purpose of the organization? It seems that an organization that 
has the nomination or election of candidates as a major purpose is not 
``engaged purely in issue discussion.'' Moreover, such a definition of 
political committee appears unlikely to cover organizations that engage 
in some incidental activity that causes them to exceed the $1,000 
expenditure or contribution thresholds.
    In United States v. Harriss, 347 U.S. 612, 621-22 (1954), the 
Supreme Court interpreted the meaning of the term ``principal purpose'' 
in the Federal Regulation of Lobbying Act. That statute provided that 
certain provisions applied only to those persons whose ``principal 
purpose'' is to aid in the passage or defeat of legislation. Id. at 
619. The Court refused to interpret the statute to require that the 
influencing of legislation be the person's most important--or primary--
purpose. Instead, the Court concluded that the phrase ``principal 
purpose'' was designed to exclude from the coverage of the act those 
persons ``having only an incidental purpose of influencing 
legislation.'' Id. at 622. According to the Supreme Court:

[i]f it were otherwise,--if an organization, for example, were 
exempted because lobbying was only one of its main activities--the 
Act would in large measure be reduced to a mere exhortation against 
abuse of the legislative process. In construing the Act narrowly to 
avoid constitutional doubts, we must also avoid a construction that 
would seriously impair the effectiveness of the Act in coping with 
the problem it was designed to alleviate.

Id. at 622-23.
    The Court's ruling in Harriss may be instructive because, in that 
case, the Court was interpreting the meaning of the word ``principal,'' 
which, when used as an adjective, is defined as ``most important.'' See 
Webster's II New Riverside Dictionary 556 (1st ed. 1984). The term 
``major,'' on the other hand, is defined as ``greater in importance 
rank or stature'' or ``demanding great attention.'' Webster's II New 
Riverside Dictionary 421 (1st ed. 1984). Thus, ``major,'' unlike 
``principal,'' does not signify ``most important'' or ``primary'' or 
``first in rank.'' Given that the Supreme Court has interpreted the 
phrase ``principal purpose'' in a statute to include an organization 
for which lobbying is merely ``one of its main activities,'' would the 
Commission be justified in interpreting the phrase ``major purpose'' in 
Buckley to also mean ``one of its main activities?'' Is it significant 
that the Court in Buckley chose to use the phrase ``major purpose'' 
instead of ``primary purpose'' or ``principal purpose?''
2. Particular Federal Candidates
    The proposed rule would require that the organization have as a 
major purpose the nomination or election of candidates for Federal 
office, as opposed to non-Federal office. The Commission seeks comment 
regarding whether the proposed rule should be limited to the nomination 
or election of Federal candidates or, instead, whether the nomination 
or election of all candidates, including candidates for non-Federal 
office will suffice. Likewise, the Commission asks whether the major 
purpose requirement mandates that the organization be involved in the 
nomination or election of one or more particular candidates or, 
instead, whether it is sufficient for the organization to have a major 
purpose of nominating or electing certain categories of candidates, 
such as Democrats or Republicans, or women, or candidates who take a 
position on a particular issue. In FEC v. GOPAC, Inc., 917 F. Supp. 851 
(D.D.C. 1996), the District Court interpreted Buckley and MCFL to 
require that the major purpose of the organization be ``the nomination 
or election of a particular candidate or

[[Page 11745]]

candidates for federal office.'' GOPAC, 917 F. Supp. at 859 (emphasis 
added). The Commission seeks comment as to whether this is a proper 
reading of Buckley and MCFL. Should the Commission issue regulations 
that conflict with the GOPAC decision?
3. Existing 11 CFR 100.5(b) through (e)
    Please note that current 11 CFR 100.5(b) through (e), which 
identify certain organizations that are considered to be political 
committees (separate segregated funds, local party committees, 
principal campaign committees, and multi-candidate committees), do not 
incorporate the ``major purpose'' standard. This is because the 
Commission has determined that these organizations, by their nature or 
by definition, have as their major--if not primary--purpose, the 
nomination or election of candidates.
    For example, current 11 CFR 100.5(b) provides that a separate 
segregated fund established under 2 U.S.C. 441b(b)(2)(C) is a political 
committee because, pursuant to 2 U.S.C. 441b(b)(2)(C), a separate 
segregated fund is ``to be utilized for political purposes.'' 2 U.S.C. 
441b(b)(2)(C). Current 11 CFR 100.5(c) provides that, under certain 
circumstances, the local committee of a political party is a political 
committee because, like national parties, these organizations exist for 
the purpose of nominating and electing candidates. See 2 U.S.C. 
431(4)(C). Moreover, such organizations are organized under section 527 
of the Internal Revenue Code, which requires that these organizations 
be organized and operated primarily for the purpose of influencing or 
attempting to influence the nomination, election or appointment of 
individuals to public office. See 26 U.S.C. 527(e); see also discussion 
of 527 organizations below. Current 11 CFR 100.5(d) and (e)(1) provide 
that an individual's principal or authorized campaign committees are 
political committees because these organizations are established for 
the purpose of nominating or electing an individual to public office. 
See 2 U.S.C. 431(5) and (6). Moreover, such organizations are ``under 
the control of a candidate,'' and therefore are not subject to the 
major purpose requirement. See Buckley, 424 U.S. at 79. Finally, 
current 11 CFR 100.5(e)(3) provides that multi-candidate committees are 
political committees because these organizations make and receive 
contributions for Federal elections. Consequently, these organizations 
satisfy the major purpose test.
    The Commission proposes no changes to existing 11 CFR 100.5(b) 
through (e). Nevertheless, the Commission seeks comments regarding 
whether any amendments to these paragraphs are necessary.

B. Major Purpose Tests

    The Commission seeks comment on proposed 11 CFR 100.5(a)(2)(i) 
through (iv), which provides four tests for determining when an entity 
would satisfy the major purpose requirement. Please note that the 
Commission has not made any decisions on whether to adopt any of the 
proposals for the major test(s). If the Commission were to decide to 
adopt one or more of the proposed major purpose tests, an organization 
that meets any of the major purpose tests would be considered to have 
as a major purpose the nomination or election of Federal candidates. 
Consequently, if that organization exceeds the $1,000 contribution or 
expenditure threshold in 11 CFR 100.5(a)(1)(i), it would be a political 
committee and would have to comply with the registration, reporting and 
other requirements for political committees. Are the criteria 
appropriate? Would other criteria be more appropriate?
1. Proposed 11 CFR 100.5(a)(2)(i)--Avowed Purpose and Spending
    The first of the four proposed major purpose tests, which is set 
forth in proposed section 100.5(a)(2)(i), would use the organization's 
public pronouncements and spending to determine if its major purpose is 
to nominate or elect candidates. An organization would satisfy the 
major purpose element in proposed section 100.5(a)(2)(i) if: (1) Its 
organizational documents, solicitations, advertising, other similar 
written materials, public pronouncements, or any other communications 
demonstrate that its major purpose is to nominate, elect, defeat, 
promote, attack, support, or oppose a clearly identified candidate or 
candidates for Federal office or the Federal candidates of a clearly 
identified political party; and (2) it disburses more than $10,000 in 
the current calendar year or any of the previous four calendar years on 
the following: (1) Expenditures (including independent expenditures); 
(2) contributions; (3) payments for types 1 through 3 of Federal 
election activity; and (4) payments for all or any part of an 
electioneering communication, as defined in 11 CFR 100.29.
    The first prong of the major purpose test in proposed section 
100.5(a)(2)(i) would rely on an organization's written characterization 
of its own activities. This would include the organization's 
organizational documents, such as its charter, constitution, by-laws, 
etc. The second prong would require that an organization's 
disbursements in connection with a Federal election exceed $10,000. 
This two-pronged approach would ensure that documents or communications 
that demonstrate that an organization's avowed purpose is to nominate, 
elect, defeat, promote, attack, support or oppose a candidate or 
candidates are substantiated by its actual disbursements in connection 
with a Federal election.
    a. Public Pronouncements. For an organization's public 
pronouncements and other communications to demonstrate that the 
organization has a major purpose of nominating, electing, promoting, 
attacking, supporting, or opposing clearly identified Federal 
candidates or the Federal candidates of a clearly identified political 
party, the written materials and other communications must refer to 
Federal candidates of a clearly identified political party or to a 
``clearly identified candidate,'' which is defined in 11 CFR 100.17. 
Thus, under proposed paragraph (a)(2)(i), an organization would not be 
considered to have the nomination or election of candidates as a major 
purpose where the organization's public communications merely indicate 
that its major purpose is to elect candidates holding particular 
positions (e.g., pro-business candidates or pro-environmental 
candidates) without specifying which candidates hold those positions. 
Such an organization, however, could still be considered to have the 
nomination or election of candidates as a major purpose under the other 
three major purpose tests--proposed paragraphs (a)(2)(ii) through (iv), 
which are discussed below.
    The Commission seeks comment regarding whether it is appropriate to 
base its major purpose analysis on the written public statements, 
documents, solicitations, and other communications by an organization. 
Are there circumstances where an organization's written public 
statements, documents, solicitations, and other communications would 
not be an appropriate measure of its major purpose? Should the final 
rule take into account the organization's oral, as well as written, 
communications to determine if it satisfies the first prong of the 
major purpose test in proposed section 100.5(a)(2)(i)?
    The Commission also seeks comment regarding how this provision 
should operate with respect to disavowed major purposes or apparently 
contradictory statements of the organization's major purposes. For 
example, what would be

[[Page 11746]]

the outcome if the leader (e.g., president, chairperson, etc.) of the 
organization disavows the organization's previously stated purpose? 
What if this disavowal is attempted by someone other than the 
organization's leader? Should the rules account for the possibility 
that an organization can disavow its previous statements regarding its 
major purpose? Should there be a time limit on the applicability of 
statements made in the organization's communications? For example, 
should statements from five years ago be given less weight than more 
current statements? Are these concerns alleviated by the second prong 
of the major purpose test set forth in proposed section 100.5(a)(2)(i), 
which would require that the organization exceed $10,000 in 
disbursements in connection with a Federal election?
    Similarly, what if some of the organization's communications 
indicate that its major purpose is the nomination or election of 
candidates, but other communications indicate that it has one or more 
other major purposes? How should the major purpose of the organization 
be assessed in these situations? Should some communications or types of 
communications be afforded greater weight then others when assessing 
major purpose under this proposed paragraph? For example, should the 
Commission give greater weight to statements in the organization's 
solicitations or in its governing documents than it gives to 
potentially self-serving, ambiguous or contradictory statements by its 
leaders or its members? Should the Commission consider only the 
statements it makes in its solicitations or in its organizational 
documents and ignore statements found elsewhere? Would these concerns 
be alleviated by the second prong of the major purpose test set forth 
in proposed section 100.5(a)(2)(i), which would require that the 
organization exceed $10,000 in disbursements in connection with a 
Federal election?
    b. $10,000 Disbursement Threshold. To satisfy the second prong of 
the major purpose test set forth in proposed section 100.5(a)(2)(i), 
the organization's disbursements in connection with any election for 
Federal office would have to exceed the $10,000 threshold in the 
current year or any of the previous four calendar years. For example, 
to assess whether this threshold has been met in 2004, the Commission 
would examine the organization's disbursements in 2000, 2001, 2002, 
2003 and 2004. If it exceeded the $10,000 threshold in any of those 
years, it would satisfy the $10,000 disbursement requirement in 
proposed paragraph (a)(2)(i). Because this threshold is an absolute 
dollar amount rather than a percentage of total spending, the current 
year spending would be relevant to the analysis. Consequently, this 
provision, unlike proposed paragraph (a)(2)(ii), would apply to both 
existing and newly established organizations. The Commission seeks 
comment regarding the use of this time period in proposed paragraph 
(a)(2)(i). Should the threshold have to be met in all four preceding 
years? If the Commission does adopt such a four-year look-back 
provision, would it be fair to implement it prior to 2008?
    The Commission also seeks comment regarding the proposed $10,000 
threshold. The Commission notes that Congress established a $10,000 
threshold to trigger the reporting requirements for electioneering 
communications under 2 U.S.C. 434(f) and 48-hour reporting of 
independent expenditures under 2 U.S.C. 434(g)(2). By establishing 
these $10,000 thresholds, Congress indicated that it believed $10,000 
in activity to be significant enough to require reporting within 48 
hours of the activity. Is it appropriate for the Commission to adopt a 
similar threshold to use in the major purpose test set forth in 
proposed paragraph (a)(2)(i), or is a higher or lower threshold more 
appropriate and why?
    The Commission also seeks comment on the proposal to count the 
following types of disbursements toward the $10,000 threshold: (1) 
Expenditures (including independent expenditures); (2) contributions; 
(3) payments for types 1 to 3 of Federal election activity; and (4) 
payments for all or any part of an electioneering communication, as 
defined in 11 CFR 100.29. Payments for Federal election activity would 
be limited to only the first three of the four types of Federal 
election activity described in 11 CFR 100.24(b) because the fourth type 
of Federal election activity--services provided during any month by an 
employee of a State, district, or local committee of a political party 
who spends more than 25 percent of that individual's compensated time 
during that month on activities in connection with a Federal election--
applies only to certain political party committees, which are presumed 
to satisfy the major purpose requirement.
    The Commission seeks comment regarding the types of disbursements 
that would count toward the $10,000 threshold. Is it appropriate to 
count expenditures (including independent expenditures), contributions, 
Federal election activity (types 1 through 3), and electioneering 
communications toward the spending threshold? Are there other 
categories or types of disbursements that should be included, such as 
administrative costs, overhead, and costs associated with volunteer 
activities? Should certain exceptions be included and, if so, how 
should those exceptions be crafted? For example, since some Federal 
election activity by non-party organizations might be truly non-
partisan, should the types of voter registration, voter identification, 
get-out-the-vote, and generic campaign activity captured in the major 
purpose analysis be confined to partisan activity? Since the major 
purpose test envisioned in the proposed rules uses ``a major purpose to 
influence Federal elections'' test, should the four types of 
disbursements be subject to an allocation regime similar to those in 11 
CFR 106.1 and 106.6, where only the allocable Federal portion would 
count toward the $10,000 threshold?
    As discussed above with regard to the proposed amendments to the 
definition of ``expenditure,'' certain Federal election activity 
influences Federal elections. Does this justify counting the three 
types of Federal election activity toward the $10,000 disbursement 
threshold? McConnell concluded that ``[w]hile the distinction between 
``issue'' and express advocacy seemed neat in theory, the two 
categories of advertisements proved functionally identical in important 
respects.'' McConnell, 124 S.Ct. at 650. The Supreme Court went on to 
explain that both types of communications ``were used to advocate the 
election or defeat of clearly identified candidates, even though the 
so-called issue ads eschewed the use of magic words.'' Id. Nonetheless, 
since some electioneering communications (and even some ``promote, 
support, attack, or oppose'' messages) by certain non-party 
organizations, such as 501(c) organizations might, be confined to 
advocating action regarding a particular legislative or executive 
decision, is there a need to develop a more focused content analysis 
for the major purpose test? McConnell held that it is permissible to 
treat an organization as a political committee even when the 
organization makes only independent expenditures and does not make any 
contributions to Federal candidates. Id. at 665 n.48. Does this justify 
counting independent expenditures toward the spending threshold?
2. Proposed 11 CFR 100.5(a)(2)(ii)--50 Percent Disbursement Threshold
    The second of the four proposed major purpose tests is set forth in

[[Page 11747]]

proposed paragraph (a)(2)(ii). This paragraph would consider an 
organization to have a major purpose of nominating or electing 
candidates if more than 50 percent of the organization's total annual 
disbursements during any of the previous four calendar years was spent 
on: (1) Expenditures (including independent expenditures); (2) 
contributions; (3) payments for types 1 through 3 of Federal election 
activity; and (4) payments for all or any part of an electioneering 
communication, as defined in 11 CFR 100.29.
    The Commission notes that, unlike proposed paragraph (a)(2)(i), 
this major purpose test does not consider the organization's public 
pronouncements. An organization that exceeds the 50 percent threshold 
would be considered to have the election or nomination of candidates as 
a major purpose regardless of whether or not the organization's public 
pronouncements or other communications indicate that it has such a 
major purpose. The Commission seeks comments regarding whether this 
major purpose test should also include consideration of the 
organization's public pronouncements or other communications, as is the 
case in proposed paragraph (a)(2)(i).
    As set forth above, the relevant years for proposed paragraph 
(a)(2)(ii) would be the previous four calendar years. For example, to 
apply proposed paragraph (a)(2)(ii) for an organization during the year 
2004, the relevant years would be 2000, 2001, 2002, and 2003. If an 
organization's election-related spending exceeded the 50 percent 
threshold in any of these years, it would be considered to have the 
nomination or election of candidates as a major purpose. Alternatively, 
should the organization's election-related spending have to exceed the 
50 percent threshold in each of the preceding four years to trigger 
political committee status? Because an organization's total annual 
disbursements are typically unknown until the end of the year, the 
current year spending would not be examined under this proposed major 
purpose test. That is why, in the example given above, the 
organization's spending during 2004 was not considered. For the same 
reason, this proposed provision would be inapplicable to newly 
established organizations that have no spending in any prior years. 
However, newly established organizations would still be subject to the 
other three proposed major purpose tests, including the $50,000 
disbursement threshold in proposed paragraph (a)(2)(iii).
    The Commission also seeks comment on the proposal to consider the 
organization's spending during the previous four calendar years, which 
would cover groups that are active only during presidential election 
years. Should the proposed rule look back more years or fewer years? If 
so, how many calendar years would it be appropriate to examine? What 
should be the effective date of a rule that looks back four years?
    The types of spending that would be counted toward the 50 percent 
threshold in the major purpose test set forth in proposed paragraph 
(a)(2)(ii) would be the same as those that would be counted toward the 
$10,000 spending threshold in proposed paragraph (a)(2)(i). The 
Commission seeks comment regarding counting these categories of 
disbursements toward the 50 percent threshold. The Commission 
specifically refers commenters to the questions and issues raised above 
with respect to counting these categories of disbursements toward the 
$10,000 disbursement threshold in proposed paragraph (a)(2)(i).
    The Commission also seeks comment on the use of the 50 percent 
threshold. Is another percentage more appropriate to assess an 
organization's major purpose? Should the Commission apply a 25 percent 
threshold? Could a very large organization that spends less than 50 
percent of its funds on election-related disbursements nevertheless 
have a profound effect on Federal elections? Does this justify the 
Commission adopting a threshold lower than 50 percent or would this 
situation be addressed by absolute dollar thresholds that would be used 
in proposed paragraphs (a)(2)(i) and (a)(2)(iii).
    Should the size of the percentage threshold depend upon the 
determination of whether the nomination or election of candidates must 
be the major purpose of the organization, or must be only a major 
purpose of the organization? If the proper interpretation of the major 
purpose requirement is that the nomination or election of candidates 
must be the organization's primary purpose, should this proposed 50 
percent threshold be the only test for major purpose adopted by the 
Commission in the final rules? In other words, if the nomination or 
election of candidates must be the organization's most important 
purpose, perhaps only those organizations that spend most (i.e., more 
than 50 percent) of their funds on the nomination or election of 
candidates satisfy the major purpose requirement.
    On the other hand, how should the final rule address organizations 
that spend a plurality, but not a majority, of their money on 
nomination and election activities? For example, should an organization 
be considered to satisfy the major purpose requirement if it spends 
only 30 percent of its funds on election-related activities (i.e., 
those items that would count toward the proposed 50 percent threshold) 
but does not spend more than 30 percent on any other activity? To apply 
such a rule, would the Commission have to adopt categories of non-
election spending so that the 70 percent of funds that the organization 
spent on non-election purposes would not be combined into a single 
category of ``non-election activities,'' thereby allowing the 
organization to avoid political committee status? If such categories 
are required, how should they be crafted?
3. Proposed 11 CFR 100.5(a)(2)(iii)--$50,000 Disbursement Threshold
    The third of the four proposed major purpose tests, which is set 
forth in proposed paragraph (a)(2)(iii), would consider an organization 
to have the nomination or election of Federal candidates as a major 
purpose if it spends more than $50,000 in the current calendar year or 
any of the previous four calendar years on the following: (1) 
Expenditures (including independent expenditures); (2) contributions; 
(3) payments for types 1 through 3 of Federal election activity; and 
(4) payments for all or any part of an electioneering communication, as 
defined in 11 CFR 100.29. When an organization exceeds the $50,000 
spending threshold, it would satisfy the major purpose standard. For 
example, to conclude that an organization has a major purpose of 
nominating and electing candidates in 2004, under proposed paragraph 
(a)(2)(iii), the organization would have to exceed the $50,000 
threshold in either 2000, 2001, 2002, 2003 or 2004. The relevant time 
period in proposed 11 CFR 100.5(a)(2)(iii) is the current calendar year 
or any of the four previous calendar years. Because this threshold is 
an absolute dollar amount instead of a percentage of total spending, 
the current year spending would be relevant to the analysis. 
Consequently, this provision, unlike proposed paragraph (a)(2)(ii) 
would apply to newly established organizations. The Commission seeks 
comment regarding the use of this time period in proposed paragraph 
(a)(2)(iii). Would it be more appropriate to require that the threshold 
be met in each of the four preceding calendar years?
    The Commission seeks comment regarding the proposed $50,000 
threshold. The Commission notes that it uses a $50,000 threshold to 
determine

[[Page 11748]]

when a political committee is subject to mandatory electronic filing of 
its financial disclosure statements. See 11 CFR 104.18(a). Is this an 
appropriate dollar threshold for triggering major purpose under this 
proposed test or is a higher or lower threshold more appropriate and 
why? Is a higher or lower threshold more appropriate in certain 
situations or with respect to particular types of organizations? Should 
the proposed rule incorporate a sliding-scale dollar threshold that 
would increase or decrease depending upon the size or type of 
organization, or the type of activity in which the organization 
engages? How might such a sliding scale specifically work? Is it 
preferable not to have any major purpose criteria based upon a strict 
dollar amount and, if so, how would the Commission assess the major 
purpose of a newly established organization?
    Like proposed paragraphs (a)(2)(i) and (a)(2)(ii), proposed 
paragraph (a)(2)(iii) would count the following types of disbursements 
toward the spending threshold: (1) Expenditures (including independent 
expenditures); (2) contributions; (3) payments for types 1 through 3 of 
Federal election activity; and (4) payments for all or any part of an 
electioneering communication, as defined in 11 CFR 100.29. The 
Commission seeks comment regarding counting these categories of 
disbursements toward the $50,000 threshold. The Commission specifically 
refers commenters to the questions and issues raised above with respect 
to counting these categories of disbursements toward the $10,000 
spending threshold in proposed paragraph (a)(2)(i).
4. Proposed 11 CFR 100.5(a)(2)(iv)--527 Organizations
    Proposed 11 CFR 100.5(a)(2)(iv) offers two alternatives for the 
fourth of the four proposed major purpose tests. Both alternatives 
address ``527 organizations,'' which are entities organized under 
section 527 of the Internal Revenue Code, 26 U.S.C. 527. A 527 
organization is ``a party, committee, association, fund, or other 
organization (whether or not incorporated) organized and operated 
primarily for the purpose of directly or indirectly accepting 
contributions or making expenditures, or both, for an exempt 
function.'' 26 U.S.C. 527(e)(1). An exempt function is defined as ``the 
function of influencing or attempting to influence the selection, 
nomination, election, or appointment of any individual to any Federal, 
State, or local public office or office in a political organization, or 
the election of Presidential or Vice Presidential electors.'' 26 U.S.C. 
527(e)(2).
    Alternative 2-A provides that all 527 organizations would be 
considered to have the nomination or election of candidates as a major 
purpose, but carves out five exceptions: (1) Any 527 organization that 
is the campaign organization of an individual seeking nomination, 
election, appointment or selection to a non-Federal office; (2) any 527 
organization that is organized solely for the purpose of promoting the 
nomination or election of a particular individual to a non-Federal 
office; (3) any 527 organization that engages in nomination and 
election activities only with respect to elections in which there is no 
candidate for Federal office on the ballot; (4) any 527 organization 
that operates in only one State and which is required by the law of 
that State to file financial disclosure reports with a State agency; 
and (5) any 527 organization that is organized solely for the purpose 
of influencing the selection, appointment, or nomination of individuals 
to non-elective office, or the election, selection, nomination or 
appointment of persons to leadership positions within a political 
party.
    The first proposed exception would recognize that the major purpose 
of a campaign organization for an individual seeking non-Federal office 
is the nomination or election of that individual to non-Federal office. 
Consequently, such an organization is not likely to have as a major 
purpose the nomination or election of candidates to Federal office. The 
second proposed exception would address those organizations that are 
organized solely to promote the nomination or election of individuals 
to non-Federal offices, but do not fall within the first exception 
because they are not under the control of that particular non-Federal 
candidate.
    The third and fourth proposed exceptions pertain to State political 
organizations. The exception in proposed section 100.5(a)(2)(iv)(C) 
would address 527 organizations that operate only in connection with 
non-Federal elections and only in States, such as Virginia, that hold 
non-Federal elections in years where there is no regularly scheduled 
Federal election (i.e., odd-numbered years). Such an organization, 
which does not engage in activity in connection with any election for 
Federal office, is not likely to have as a major purpose the nomination 
or election of Federal candidates. The exception in proposed section 
100.5(a)(2)(iv)(D) would address organizations that operate in only one 
State and, under State law, must disclose their financial activity to a 
State agency. Such organizations, because they operate in only one 
State, would not be deemed to have a major purpose of nominating or 
electing Federal candidates solely because they are 527 organizations.
    The fifth proposed exception would recognize that 527 organizations 
established solely to influence the selection, appointment or 
nomination of individuals to non-elective office (e.g., judicial 
appointments), or the nomination or election of candidates for 
leadership positions within a political party, should be exempt from 
this proposed major purpose test because they appear unlikely to have a 
major purpose of nominating or electing candidates to Federal office.
    Organizations that do not satisfy any of the five exceptions and 
that receive $1,000 in contributions or make $1,000 in expenditures 
would be Federal political committees under proposed section 100.5(a) 
if they are organized under section 527 of the Internal Revenue Code. 
Should the Commission consider additional exceptions to proposed 
section 100.5(a)(2)(iv) to exclude more organizations, or should the 
Commission conclude that other organizations should be treated as 
Federal political committees if they satisfy the $1,000 thresholds in 
proposed section 100.5(a)(1)?
    The Commission notes that any 527 organization that falls within 
one or more of the exceptions contained in Alternative 2-A could 
nevertheless be considered to have a major purpose of nominating or 
electing Federal candidates under one of the first three major purpose 
tests, such as by exceeding the 50 percent threshold set forth in 
proposed paragraph (a)(2)(ii) or the $50,000 spending threshold set 
forth in proposed paragraph (a)(2)(iii). The Commission seeks comment 
on whether the exceptions contained in Alternative 2-A are appropriate 
and whether Alternative 2-A should include additional exceptions. 
Alternative 2-B, in contrast, would provide that all 527 organizations 
would be considered to have the nomination or election of candidates as 
a major purpose, and does not provide for any exceptions.
    The Commission seeks comment regarding whether it is necessary and 
appropriate to mention 527 organizations in the proposed rule, or 
whether it would be better to eliminate the fourth major purpose test 
and instead subject 527 organizations, like any other organization, to 
analysis under the first three tests. To the extent that 527 
organizations should be explicitly mentioned in the proposed rule, 
which alternative is more

[[Page 11749]]

appropriate, Alternative 2-A, Alternative 2-B, or some other 
alternative?
5. Other Tax-Exempt Organizations
    The proposed rule does not expressly mention other tax-exempt 
organizations, such as those organized under section 501(c) of the 
Internal Revenue Code, because, unlike 527 organizations, these 
organizations could lose their tax-exempt status if their primary 
purpose were to influence elections. Should the final rule state that 
certain tax-exempt organizations, such as those organized under 
501(c)(3) or (c)(4) of the Internal Revenue Code, will not meet any of 
the major purpose tests because of the nature of their tax-exempt 
status, and exempt them from the definition of political committee? Or 
should the final rule not provide an exemption for 501(c) 
organizations, recognizing that the various thresholds in the major 
purpose tests are set high enough that certain 501(c) organizations may 
continue to conduct incidental or low levels of election activities 
without satisfying any of the major purpose tests and triggering 
political committee status? \7\ Would it be more appropriate to discard 
``a major purpose'' analysis and use instead ``the major purpose'' 
analysis for these types of organizations? In this regard, should the 
Commission fashion a test whereby it would recognize three broad 
categories of activity for 501(c) organizations--``election influencing 
activity,'' ``legislative or executive lobbying activity,'' and 
``educational, research, or other activity.'' If the organization put 
more resources, either financially or timewise, into ``election 
influencing activity'' than it put into either of the other two 
activities, the major purpose test would be met.
---------------------------------------------------------------------------

    \7\ This is especially true for 501(c)(3) organizations because 
their communications are exempt from the definition of 
``electioneering communications.'' See 11 CFR 100.29(c)(6). Thus, 
any disbursements for such communications would not count toward a 
501(c)(3)'s major purpose as electioneering communications. 
Furthermore, the Supreme Court recognized that the Massachusetts 
Citizens for Life, Inc., a nonprofit corporation, could become a 
political committee if its independent expenditures become ``so 
extensive'' that it satisfies the major purpose requirement. MCFL, 
479 U.S. at 262.
---------------------------------------------------------------------------

C. Treatment of Contributions for the Major Purpose Requirement

    Should the major purpose requirement apply when an organization's 
status as a political committee is based upon its making in excess of 
$1,000 in any contributions or expenditures, or only when its status as 
a political committee is based solely upon its making of independent 
expenditures in excess of $1,000? In Akins v. FEC, 101 F.3d 731 (D.C. 
Cir. 1996), vacated, 524 U.S. 11 (1998), one appeals court interpreted 
Buckley and MCFL to require application of the major purpose test only 
when political committee status is based upon the organization's 
independent expenditures, not when it is based upon the organization's 
other expenditures, including contributions to political committees. 
See Akins, 101 F.3d at 742 (``the Court clearly distinguished 
independent expenditures and contributions as to their constitutional 
significance, and its references to a `major purpose' test seem to 
implicate only the former''). Should the Akins court's interpretation 
be incorporated into the proposed rule, or should the major purpose 
requirement apply to organizations that exceed $1,000 in expenditures, 
not just those that exceed $1,000 in independent expenditures 
exclusively?

D. Proper Application of the Major Purpose Requirement

    The Commission seeks comment regarding whether the definition of 
political committee in 11 CFR 100.5(a) should include a major purpose 
test along the lines set forth above or whether it should instead 
incorporate the major purpose requirement as an exception to the 
definition of ``political committee.'' For example, if the major 
purpose requirement is incorporated into the definition of political 
committee (as it is in the proposed rules), an organization, regardless 
of the amount of its contributions and expenditures, will not be 
considered to be a political committee unless it is shown to have a 
major purpose of nominating or electing candidates. This is essentially 
how the proposed rules described above would work. An alternative 
approach, which is not reflected in the proposed rules, would be to use 
the major purpose requirement as an exception to the definition of 
political committee. Under this alternative approach, an organization 
would be considered to be a political committee if its expenditures or 
contributions exceed the $1,000 threshold unless the organization has a 
major purpose other than nominating or electing candidates. This 
alternative approach would, to a certain extent, place the burden on 
the organization to show that it does not have a major purpose of 
nominating or electing candidates. Would this alternative approach 
reflect the correct reading of the major purpose requirement as set 
forth in Buckley, MCFL and other cases?
    Although not reflected in the proposed rules, the Commission seeks 
comment on the proper application of the major purpose requirement to 
complex organizations that include a political committee within the 
organization. For instance, should the Commission impute major purpose 
across such organizations? Thus, if an organization includes a 
political committee, should all other committees or organizations 
within the complex organization be deemed to satisfy the major purpose 
test? Or should the Commission conclude that its current affiliation 
rules at 11 CFR 100.5(g) sufficiently address this issue and no 
amendments to the regulations are necessary?

IV. Conversion of Federally Permissible Funds to Federal Funds

    The Commission recognizes that there may be a need to provide 
guidance to organizations that become political committees after 
operating for some time as a non-political committee organization, 
especially concerning two issues: (1) how the new political committee 
should demonstrate that the contributions and expenditures that it made 
prior to becoming a political organization were paid for with Federally 
permissible funds and (2) how it should treat the funds it has cash-on-
hand on the day that it became a political committee. Consequently, to 
address these issues, this NPRM includes proposed subpart A--
Organizations that Become Political Committees, which would set forth 
the requirements for existing organizations that become political 
committees under 11 CFR 100.5(a). The proposed rules would not apply to 
organizations that register with the Commission as a political 
committee prior to making any contributions, expenditures, independent 
expenditures or allocable expenditures. The proposed rules do not 
replace any of the Commission's existing rules applicable to political 
committees. All political committees, including the political 
committees subject to these proposed rules, would remain subject to all 
of the Commission's rules applicable to political committees.
    One purpose of the proposed 11 CFR part 102, subpart A is to 
provide a mechanism for organizations that become political committees 
to convert into Federal funds some or all of the funds received prior 
to the time that they became political committees. As explained below, 
a political committee could convert these funds into Federal funds by 
contacting its recent donor(s), making certain disclosures, and seeking

[[Page 11750]]

the donor(s)' consent to use the funds for the purpose of influencing 
Federal elections. Allowing new political committees to convert pre-
existing funds into Federal funds would achieve two goals. First, it 
would allow political committees to account for contributions and 
expenditures made before they became political committees that were 
required under the Act and the Commission's regulations to be paid for 
with Federal funds (i.e., funds that comply with the source 
prohibitions, amount limitations and other requirements of the Act). 
Non-political committees are already required to ``demonstrate through 
a reasonable accounting method that, whenever such an organization 
makes a contribution or expenditure, or payment, the organization has 
received sufficient funds subject to the limitations and prohibitions 
of the Act to make such contribution, expenditure, or payment.'' 11 CFR 
102.5(b)(1). The proposed rules would provide guidance on the initial 
reporting requirements for non-political committees that subsequently 
become political committees but would not impose any new requirements 
on those groups that never become political committees. Second, the 
proposed rules would, under certain circumstances, allow political 
committees to transfer to their Federal account some of the funds in 
their possession when they became political committees.
    The Commission seeks comment regarding the need for a mechanism for 
political committees to convert funds received prior to becoming a 
political committee into Federal funds. The proposed rules, as 
mentioned above, would apply only to those organizations that, prior to 
becoming a political committee, made contributions or expenditures that 
were required by the Act and the Commission's regulations to be paid 
for with funds that are subject to the amount limitations and source 
prohibitions of the Act. Should the Commission also provide a mechanism 
in the final rules for political committees that, prior to becoming a 
political committee, did not make any disbursements that were required 
to be paid for with funds that are subject to the limitations and 
prohibitions of the Act, to convert some or all of its funds received 
prior to becoming a political committee into Federal funds and then 
transfer those converted funds into its Federal account?

A. Proposed 11 CFR 102.50

    Proposed 11 CFR 102.50 would set forth the definitions of four 
terms used in proposed subpart A. ``Allocable expenditures'' would be 
defined as expenditures that are allocable under 11 CFR 106.1 or 106.6. 
Given that proposed 11 CFR 100.115 would make partisan voter 
registration, partisan voter identification and partisan get-out-the-
vote activities ``expenditures'' and that some of these activities 
would be encompassed by ``generic voter drive'' and subject to 
allocation in current section 106.6, should the final rules include 
these types of voter drive activities as ``allocable expenditures?''
    ``Covered period'' would be defined as the period of time beginning 
on January 1 of the calendar year immediately preceding the calendar 
year in which the organization first satisfies the definition of 
``political committee'' in 11 CFR 100.5(a) and ending on the date that 
the organization first satisfies the definition of ``political 
committee'' in 11 CFR 100.5(a). This covered period is similar to the 
period in 2 U.S.C. 434(f)(2)(E) for disclosing information pertaining 
to individuals who donate $1,000 or more to persons who make 
electioneering communications. Should the Commission adopt a shorter or 
a longer covered period in the final rule?
    For example, if an organization first satisfies the definition of 
political committee in 11 CFR 100.5(a) on March 15, 2004, the covered 
period for that organization would be January 1, 2003, until March 15, 
2004. For an organization that first became a political committee on 
December 31, 2005, would have a covered period of January 1, 2004, 
until December 31, 2005. Consequently, the covered period for any 
organization would be at least one year, but would be no longer than 
two years.
    ``Federal funds'' would have the same meaning as in 11 CFR 
300.2(g). Thus, it would mean funds that comply with the limitations, 
prohibitions and reporting requirements of the Act.
    ``Federally permissible funds'' would be defined as funds that 
comply with the amount limitations and source prohibitions of the Act 
and were received during the covered period by the organization 
becoming a political committee. Federally permissible funds are 
different from Federal funds because, although both comply with the 
source prohibitions and amount limitations of the Act, federally 
permissible funds do not comply with the solicitation and reporting 
requirements of the Act. Moreover, federally permissible funds would be 
limited to those funds received during the organization's covered 
period. Only a political committee's federally permissible funds would 
be able to be converted to Federal funds under the proposed rules.
    Consequently, not all of the organizations pre-existing funds would 
be subject to conversion to Federal funds under the proposed rules. 
Only those pre-existing funds that comply with the amount limitations 
and source prohibitions of the Act (i.e., federally permissible funds) 
would be subject to conversion to Federal funds. Consequently, funds 
donated to the organization by a corporation, a labor organization or 
foreign national could not be converted to Federal funds because these 
are prohibited sources under the Act. See 2 U.S.C. 441b and 441e. 
Likewise, a political committee would not be able to convert to Federal 
funds an entire $20,000 donation to the organization from an individual 
because this amount would exceed the $5,000 limit for individual 
contributions to non-connected political committees. See 2 U.S.C. 
441a(a)(1)(C). Only the first $5,000 of such a donation would be able 
to be converted to Federal funds under the proposed rule. The remaining 
$15,000 would have to be treated as non-Federal funds.

B. Proposed 11 CFR 102.51

    Proposed 11 CFR 102.51 provides that subpart A would apply to a 
committee, club, association, or other group of persons that satisfies 
the definition of ``political committee'' under 11 CFR 100.5(a) and 
that made contributions, expenditures, independent expenditures or 
allocable expenditures during the covered period. Consequently, the 
proposed rules would apply to any organization that meets the following 
two criteria: (1) It satisfies the Commission's definition of 
``political committee'; and (2) it has made expenditures, allocable 
expenditures or allocable disbursements during the covered period.

C. Proposed 11 CFR 102.52

    Proposed 11 CFR 102.52 would set forth the requirements for 
political committees that would be subject to proposed subpart A. 
Proposed paragraphs (a) and (b) would remind these political committees 
that they are required to register with the Commission and to establish 
a campaign depository. These requirements already exist under 11 CFR 
102.1(d) and 103.2 and would not be altered under the proposed rules.
    Proposed paragraph (c) would require each political committee that 
would be subject to proposed subpart A to determine the amount of 
expenditures and allocable expenditures and disbursements it made 
during its

[[Page 11751]]

covered period. Thus, under this provision, political committees would 
be required to determine how much of its spending in the period of time 
immediately before it became a political committee was required to have 
been paid for with Federal funds. For example, if a disbursement was an 
``expenditure'' under the Act or the Commission's regulations, it would 
count toward this amount. Likewise, if a disbursement was an allocable 
expenditure, it would also go toward this amount.
    Proposed paragraph (d) would require political committees subject 
to proposed subpart A to determine the amount of federally permissible 
funds that the political committee received during its covered period. 
Thus, only donations of $5,000 or less from persons other than 
corporations, labor organizations, foreign nationals and other 
prohibited sources would be counted toward this amount, provided that 
these donations were received by the organization during its covered 
period.
    Proposed paragraph (e) would require the political committees that 
would be subject to proposed subpart A to file financial disclosure 
reports with the Commission in accordance with part 104 of the 
Commission's regulations and proposed 11 CFR 102.56. Part 104 of the 
Commission's regulations are the general reporting requirements 
applicable to all political committees, including those that also would 
be subject to proposed subpart A. Proposed 11 CFR 102.56 are reporting 
requirements that the Commission proposes to adopt as part of these 
proposed rules. These additional reporting requirements are discussed 
in detail below.

D. Proposed 11 CFR 102.53

    Proposed 11 CFR 102.53(a) would require a political committee 
subject to proposed subpart A to treat the amount of expenditures and 
allocable expenditures and disbursements made during its covered period 
as debt owed by its Federal account to its non-Federal account. For 
example, if, under proposed section 102.52(c), a political committee 
determined that, during its covered period, it made $100,000 in 
expenditures and allocable expenditures and disbursements, its Federal 
account would owe $100,000 to its non-Federal account. Consequently, 
virtually every political committee that would be subject to proposed 
subpart A would, at the time it becomes a political committee, have 
debt owed by its Federal account to its non-Federal account.
    Under proposed paragraph (b), a political committee would not be 
permitted to make any contributions, expenditures, independent 
expenditures or allocable expenditures until the debt owed by the 
Federal account to the non-Federal account is satisfied. Thus, a 
political committee would be unable to make any disbursements that must 
be paid for with Federal funds until the debt is satisfied pursuant to 
proposed section 102.53(c).
    Proposed paragraph (c) would provide two methods for a political 
committee subject to proposed subpart A to satisfy the debt owed by its 
Federal account to its non-Federal account. The first method would be 
for the political committee to raise Federal funds and transfer those 
funds to its non-Federal account. The other method would be for the 
political committee to convert some or all of its federally permissible 
funds to Federal funds. The proposed rule would allow the political 
committee to satisfy the debt owed by its Federal account by using 
either method or both methods in combination.
    As set forth above, the Commission is seeking comment regarding 
whether political committees should be permitted to maintain non-
Federal accounts. How would the conversion to Federal funds operate if 
the Commission were to adopt a final rule prohibiting Federal political 
committees from maintaining non-Federal accounts?

E. Proposed 11 CFR 102.54

    Proposed section 102.54 would set forth the procedure through which 
a political committee that is subject to proposed subpart A may convert 
some or all of its federally permissible funds to Federal funds. The 
proposed rule would provide a two-step process for a political 
committee to convert its federally permissible funds into Federal 
funds. First, the political committee would be required to send written 
notification to the donor(s) of any Federally permissible funds to be 
converted into Federal funds. The written notification would need to:

(1) Inform the donor(s) that the political committee has registered as 
a Federal political committee;
(2) Make all disclaimers required by 11 CFR 110.11;
(3) Inform the donor(s) of the amount of the federally permissible 
funds donated by the donor(s) that the political committee seeks to 
convert to Federal funds and request that the donor(s) grant written 
consent for the political committee to use that amount of federally 
permissible funds for the purpose of influencing Federal elections;
(4) Advise the donor(s) that they may grant written consent for an 
amount of federally permissible funds lower than the amount requested, 
and that they may refuse to grant consent entirely; and
(5) Inform the donor(s) that, by granting consent, the donor(s) will be 
deemed to have made a contribution to a Federal political committee, 
that the contribution is subject to the amount limitations and source 
prohibitions of the Act, and that the contribution will be deemed to 
have been made on the date that the written consent is signed by the 
donor(s).

Second, the political committee would be required to receive the 
written consent from the donor(s) within 60 days after the political 
committee first satisfies the definition of ``political committee'' in 
11 CFR 100.5.
    If the political committee satisfies the requirements of proposed 
11 CFR 102.54, the funds for which it receives written consent pursuant 
to proposed paragraph (b) would be considered to be converted to 
Federal funds and may be used to satisfy the debt owed by the Federal 
account. The Commission notes that, under the proposed rules, the 
political committee would need to receive the written consent from the 
donor(s) within sixty days after the political committee becomes a 
political committee under 11 CFR 100.5. The funds for which the 
political committee receives written consent from the donor(s) after 
that date would not be able to be converted to Federal funds and used 
to satisfy the debt owed by the Federal account.
    The Commission seeks comment generally regarding the proposed 
procedure for converting federally permissible funds into Federal 
funds. The written notice requirements under proposed section 102.54(a) 
are designed to serve at least two purposes. First, they would ensure 
that the donor(s) are fully informed that their donations will be or 
have been used by the political committee for the purpose of 
influencing Federal elections and that the donor(s) are given a 
reasonable opportunity to object to such use. Second, the disclosures 
would ensure that the donor(s) have adequate information to comply with 
the contributions limitations of the Act. Are any of the requirements 
for the written notice under proposed paragraph 102.54(a) unnecessary? 
Should any other requirements be added? Is it appropriate to require 
that the donor(s) grant their consent to the conversion of their 
donated funds in writing? Should

[[Page 11752]]

oral consent, perhaps subject to a requirement that the oral consent be 
memorialized in writing, be sufficient?
    Should the Commission adopt the 60-day time limit in proposed 
paragraph 102.54(b)? The 60-day time limit is designed to ensure that 
any conversion of Federally permissible funds to Federal funds occurs 
shortly after the political committee achieves political committee 
status under 11 CFR 100.5(a). Limiting the time period for conversion 
also will allow for the Commission and the public to more easily assess 
a political committee's compliance with these proposed rules. Is a time 
limit necessary? Would a time period other than 60 days be preferable? 
If so, how long should the conversion period last?
    Would it be preferable to adopt an implied consent procedure, 
whereby the political committee would send a written notification to 
the donor(s), but would not have to wait for the donor(s) to 
affirmatively consent to the conversion. Instead, the political 
committee may consider the donor(s) to have consented to the transfer 
unless and until it receives an affirmative objection to the conversion 
from the donor(s). Such a procedure would be similar to the procedures 
the Commission adopted for redesignation and reattribution of certain 
apparently excessive contributions to authorized candidate committees 
under 11 CFR 110.1(k)(3)(ii)(B) and 11 CFR 110.1(b)(5)(ii)(B). Are 
there reasons that the Commission should or should not adopt a similar 
regime to govern conversion of federally permissible funds to Federal 
funds in proposed subpart A?

F. Proposed 11 CFR 102.55

    Proposed 11 CFR 102.55 would provide a mechanism for political 
committees to convert an amount of Federally permissible funds to 
Federal funds that is greater than the amount of debt owed by its 
Federal account. A political committee that successfully converts an 
amount of federally permissible funds to Federal funds that is greater 
than the amount of debt owed by its Federal account would be required 
to first use the converted funds to satisfy the debt owed by its 
Federal account. The surplus converted Federal funds (i.e., the amount 
of converted federally permissible funds exceeding the amount of debt 
owed by the political committee's Federal account) may then be 
transferred to the political committee's Federal account. The amount of 
converted Federal funds transferred to the Federal account under this 
proposed section, however, may be no greater than the amount of cash-
on-hand that the political committee had in its possession at the time 
it first became a political committee under 11 CFR 100.5(a).
    For example, if a political committee has $50,000 in debt owed by 
its Federal account and is able to convert $75,000 of its Federally 
permissible funds into Federal funds pursuant to proposed section 
102.54, it would be able to transfer the surplus $25,000 to its Federal 
account if it had at least $25,000 cash-on-hand in its possession at 
the time it became a political committee. If the political committee, 
however, had only $10,000 of cash-on-hand in its possession when it 
became a political committee, it would be able to transfer only $10,000 
from its non-Federal account to its Federal account. If the political 
committee had zero cash-on-hand in its possession when it became a 
political committee, it would not be permitted to transfer any funds to 
its Federal account.
    The Commission seeks comment regarding whether it is appropriate 
for the proposed rules to allow this surplus amount to be transferred 
to a political committee's Federal account. Would it be preferable to 
limit the conversion procedures only to the amount needed by the 
political committee to satisfy the debt owed by its Federal account? If 
it is advisable for the Commission to allow political committees to 
convert as much of their federally permissible funds into Federal funds 
as possible, and to transfer any surplus to their Federal account, 
should the rule limit the amount transferred to the amount of cash-on-
hand in the possession of the political committee when it became a 
political committee?

G. Proposed 11 CFR 102.56

    Proposed section 102.56 would set forth the initial reporting 
requirements for political committees that would be subject to proposed 
subpart A. Under proposed section 102.56, political committees that 
would be subject to proposed subpart A would be required to report 
certain information along with other required information in the 
political committee's first report due under 11 CFR 104.5. Thus, 
political committees that are subject to proposed subpart A are also 
subject to the reporting requirements of 11 CFR part 104, which apply 
to all political committees. Proposed section 102.56 would merely 
require a political committee that would be subject to proposed subpart 
A to report certain additional information related to its compliance 
with proposed subpart A. The additional subpart A information would be 
due whenever the political committee's first financial disclosure 
report is due under 11 CFR part 104.
    Under proposed paragraph (a) a political committee that would be 
subject to proposed subpart A would be required to report the amount of 
expenditures and allocable expenditures and disbursements made by the 
political committee during its covered period. This figure would 
reflect the amount of debt the political committee's Federal account 
owes to its non-Federal account pursuant to proposed section 102.53(a). 
Under proposed paragraph (b), a political committee that would be 
subject to subpart A would be required to report the amount of any 
federally permissible funds converted to Federal funds under proposed 
11 CFR 102.54. This figure would reflect the amount of converted 
Federal funds that are available for the political committee to satisfy 
the debt owed by its Federal account and, possibly, the amount of 
surplus converted Federal funds that the political committee may 
transfer to its Federal account pursuant to proposed 11 CFR 102.55(b).
    Proposed paragraph (c) would require a political committee that is 
subject to proposed subpart A to report the identifying information 
required under 11 CFR 104.3(a)(4)(i). This is the contributor 
information that all political committees must report to the Commission 
when they receive contributions. This proposed provision is designed to 
require political committees that would be subject to subpart A to 
report this information for any donation of federally permissible funds 
that is converted to Federal funds.
    Proposed paragraph (d) would require a political committee to 
report the difference between the amount reported under proposed 
paragraph (a), which is the amount of debt owed by the political 
committee's Federal account under proposed 11 CFR 102.53(a), and the 
amount reported under proposed paragraph (b), which is the amount of 
federally permissible funds converted to Federal funds under proposed 
11 CFR 102.54. Consequently, the amount reported pursuant to proposed 
paragraph (d) would reflect whether the political committee has 
converted a sufficient amount of federally permissible funds to Federal 
funds to allow it to satisfy the debt owed by its Federal account. If 
not, the deficiency would be required to be reported as a debt owed by 
the Federal account. It would also reflect whether the political 
committee has converted an amount of federally permissible funds to 
Federal funds in excess of the amount of debt owed by the Federal 
account, thereby possibly permitting the political

[[Page 11753]]

committee to transfer some or all of the surplus funds to its Federal 
account pursuant to proposed 11 CFR 102.55(b).
    Proposed paragraph (e) would require a political committee that 
would be subject to proposed subpart A to report the amount and date of 
any transfers to its Federal account made pursuant to proposed 11 CFR 
102.55(b). This would permit the Commission to assess whether the 
political committee complied with the transfer requirements under 
proposed paragraph 102.55(b).
    The Commission seeks comment regarding these additional reporting 
requirements that would apply to political committees that would be 
subject to proposed subpart A. Are any of these reporting requirements 
unnecessary or unduly burdensome? Are there additional reporting 
requirements that the Commission should include in the proposed rules?

V. Proposed 11 CFR 106.6--Allocation

    Alternative 1-B includes proposed changes to the allocation rules 
to reflect other changes proposed in Alternative 1-B and for other 
purposes. The Commission has not determined that any changes to its 
allocation rules are appropriate, and is thus seeking comment to 
determine what, if any, changes are advisable. Although BCRA 
invalidated the Commission's allocation regime for national party 
committees and substituted a different allocation regime for other 
political party committees, it did not address the Commission's 
allocation regulations for separate segregated funds and nonconnected 
committees. Although McConnell criticized aspects of the Commission's 
allocation regulations regarding political party committees, allocation 
by nonconnected committees and separate segregated funds was not before 
the Supreme Court. McConnell, 124 S.Ct. at 660 and 661. Accordingly, 
the Commission seeks comments on whether either BCRA or McConnell 
requires, permits, or prohibits changes to the allocation regulations 
for separate segregated funds and nonconnected committees. Does either 
provide any guidance as to how the Commission should exercise any 
discretion it may have in this regard? Given McConnell's criticism of 
the Commission's prior allocation rules for political parties, is it 
appropriate for the regulations to allow political committees to have 
non-Federal accounts and to allocate their disbursements between their 
Federal and non-Federal accounts? If an organization's major purpose is 
to influence Federal elections, should the organization be required to 
pay for all of its disbursements out of Federal funds and therefore be 
prohibited from allocating any of its disbursements? Should any changes 
to the allocation regulations be effective immediately, or should their 
effective date be January 1, 2005, which is the first day of the year 
following the completion of the current election cycle? Does the 
Commission have a legal basis for delaying the effective date of any 
final rules it adopts?
    Under the proposed rules in Alternative 1-B, separate segregated 
funds and nonconnected committees would be permitted to allocate 
expenses for partisan voter drives and for communications that promote 
or oppose a political party between Federal and non-Federal accounts 
according to the ``funds expended'' method, which is consistent with 
the requirements of current section 106.6(c) for administrative 
expenses and generic voter drives. The proposal would add a minimum 
Federal percentage to the ``funds expended'' method, and would also 
clarify the ratio in the ``funds expended'' method by further 
describing the Federal component of that ratio. Finally, the proposal 
would specify an allocation method for communications that promote both 
candidates and political parties.

A. Partisan Voter Drives

    The proposal would replace the references to ``generic voter 
drives'' in current 11 CFR 106.6(b)(1)(iii) and (2)(iii) with 
references to ``partisan voter drives'' as defined in proposed 11 CFR 
100.34. Political committees are currently required to allocate the 
costs for ``generic voter drives,'' which include voter drives that 
urge the general public to support candidates of a particular party or 
associated with a particular issue, without mentioning a specific 
candidate. Under Alternative 1-B, most ``generic voter drives'' would 
be considered an allocable expenditure as a ``partisan voter drive'' 
under proposed 11 CFR 100.34 and 106.6(b)(1)(iii), (2)(iii), and (c). 
Voter drives that urge the general public to register, vote or support 
candidates associated with a particular issue would continue to be 
allocable under proposed 11 CFR 106.6(b)(1)(iii), (b)(2)(iii), and (c).
    Partisan voter drives that include any communication that promotes, 
supports, attacks, opposes, or expressly advocates a clearly identified 
Federal candidate are expenditures subject to allocation under current 
11 CFR 106.1, or, if the communication also promotes or opposes a 
political party, the partisan voter drive would be allocated under 
proposed 11 CFR 106.6(f), which is described below. In all other 
instances, expenditures for partisan voter drives would be allocable 
under the ``funds expended'' method of proposed 11 CFR 106.6(c). 
Because ``partisan voter drives'' would be defined as ``expenditures'' 
under proposed 11 CFR 100.34 and 100.115, the communications involved 
would not be limited to those that meet the definition of ``public 
communication'' in current 11 CFR 100.26 through 100.28.
    Current 11 CFR 106.1(a)(1) provides that the allocation methods in 
that section shall be used to allocate payments involving both 
expenditures on behalf of one or more clearly identified Federal 
candidates and disbursements on behalf of one or more clearly 
identified non-Federal candidates. Proposed section 106.6(f), which is 
described below, would provide an allocation method similar in some 
respects to the ``expected benefit'' method under current section 
106.1. Proposed section 106.6(g) would specify that public 
communications that promote, support, attack or oppose a clearly 
identified Federal candidate, without also promoting or opposing a 
political party, would be allocable under section 106.1 as expenditures 
or disbursements on behalf of the clearly identified Federal or non-
Federal candidates. Under this approach, the Commission is not 
proposing any changes to 11 CFR 106.1(a)(1) and instead would rely on 
the limitations in proposed section 106.6(b), (c), (f) and (g) to 
ensure that all partisan voter drives except those that promote, 
support, attack, oppose, or expressly advocate a clearly identified 
Federal candidate would be subject to allocation under section 
106.6(c). Comments are sought on this approach.

B. Public Communications That Promote or Support a Political Party

    The proposal would also require nonconnected committees and 
separate segregated funds to allocate costs of public communications 
that promote or oppose a political party, which would be expenditures 
under proposed 11 CFR 100.116(b), under the ``funds expended'' method 
in proposed 11 CFR 106.6(c). If such a communication also promotes, 
supports, attacks, or opposes a clearly identified Federal candidate, 
it would be allocable under proposed 11 CFR 106.6(f), described below. 
Nonpartisan voter drives that include a public communication would be 
subject to the same allocation regime. A public communication that 
promotes or opposes a political party, but that does not also promote, 
support, attack or oppose a clearly identified Federal candidate, would 
be allocable under

[[Page 11754]]

proposed 11 CFR 106.6(c), without regard to references to Federal 
candidates or even express advocacy of candidates for State office. 
Thus, a communication that, for example, promotes the Republican Party 
and the Governor of New York's reelection would be allocable under 
proposed 11 CFR 106.6(c).
    The charts below illustrate the allocation methods that would be 
required under Alternative 1-B.

Allocation for Nonconnected Committees and Separate Segregated Funds of 
Partisan Voter Drives That Include a Communication

    In the communication,

------------------------------------------------------------------------
                   Does it
  How is the      promote or    Does it clearly
    Federal        oppose a     identify a Non-    Allocation: citation
   Candidate      political         Federal             and method
   Depicted?        party?        Candidate?
------------------------------------------------------------------------
None            NO             NO                106.6(c) fund expended.
                               YES               106.6(c) fund expended.
                YES            NO                106.6(c) fund expended.
                               YES               106.6(c) fund expended.
Clearly ID'd    NO             NO                106.6(c) fund expended.
 Candidate
                               YES               106.6(c) fund expended.
                YES            NO                106.6(c) fund expended.
                               YES               106.6(c) fund expended.
PASO'd or       NO             NO                106.1 = time/space
 Express                                          (100% Fed).
 Advocacy
                               YES               106.1 = time/space.
                YES            NO                106.6(f) time/space &
                                                  fund exp.
                               YES               106.6(f) time/space &
                                                  fund exp.
------------------------------------------------------------------------

Allocation for Nonconnected Committees and Separate Segregated Funds of 
Public Communications and Non-Partisan Voter Drives That Include a 
Public Communication

    In the communication,

------------------------------------------------------------------------
                   Does it
  How is the      promote or    Does it clearly
    Federal        oppose a     identify a Non-    Allocation: citation
   Candidate      political         Federal             and method
   Depicted?        party?         Candidate?
------------------------------------------------------------------------
None            NO             NO                 N/A
                               YES                106.1 = time/space
                                                   (100% NF)
                YES--See partisan voter drive allocation chart.
Clearly ID'd    NO             NO                 N/A
 candidate
                               YES                106.1 = time/space
                YES--See partisan voter drive allocation chart.
PASO'd or       See partisan voter drive allocation chart.
 Express
 Advocacy
------------------------------------------------------------------------

C. Minimum Federal percentage

    The proposal would add a minimum Federal percentage to the ``funds 
expended'' allocation method. This minimum would be the same percentage 
that is applicable to State, district, and local political party 
committees' allocation of voter drives under current 11 CFR 
106.7(d)(3). It varies with the Federal offices that appear on a 
particular State's ballot, ranging from 15%, in election years in which 
a State votes for candidates for the United States House of 
Representatives only, to 36%, in election years in which a State votes 
for president and a senator as well. See current 11 CFR 106.7(d)(3)(i) 
through (iv). Related changes to reporting requirements are also 
proposed for 11 CFR 104.10.
    For nonconnected committees and separate segregated funds that 
conduct partisan voter drives, or engage in other activities subject to 
the ``funds expended'' allocation method, in more than one State, two 
alternative proposed rules are presented. Alternative 3-A would require 
such committees to use the greatest percentage applicable to any of the 
States in which the committee conducted such activities for all its 
disbursements allocable under proposed 11 CFR 106.6(c). Alternative 3-B 
would permit such committees to allocate such costs on a State-by-State 
basis according to the percentage applicable in each State. Under 
Alternative 3-B, a committee could choose to simplify its allocation by 
using the highest applicable percentage to avoid the complications of a 
State-by-State allocation.
    The Commission is considering other minimum Federal percentages as 
alternatives to those presented in the proposed rules. Should the rules 
in 11 CFR 106.6 apply different minimum Federal percentages than those 
for State, district and local political party committees? Should the 
Commission adopt a fixed minimum Federal percentage? Should it select a 
higher minimum for committees that conduct activities in several 
States? For example, the allocation rule could specify that 
nonconnected committees and separate segregated funds that conduct 
activities in fewer than 10 States must use a minimum Federal 
percentage of 25 percent, while those that do so in 10 or more States 
would face a minimum Federal percentage of 50 percent. The 25 percent 
figure was chosen as the average of the four percentages in current 11 
CFR 106.7(d)(3), and the 50 percent figure was chosen to reflect the 
broader scope of activities and as a slight reduction to the 60 percent 
or 65 percent applicable to national party committees under previous 11 
CFR 106.5(b)(2), prior to its sunset on December 31, 2002. See 11 CFR 
106.5(h)(2003). If the final rule should take such an approach, what 
should the minimum Federal percentages be?

D. Clarifying the Ratio in the ``Funds Expended'' Method

    The ``funds expended'' allocation method provides that expenses are 
allocated between the Federal and non-

[[Page 11755]]

Federal accounts of a nonconnected committee or a separate segregated 
fund based on the ratio of Federal expenditures to total Federal and 
non-Federal disbursements made by the committee during the two-year 
Federal election cycle. Current section 106.6(c)(1) specifies that: 
``In calculating its federal expenditures, the committee shall include 
only amounts contributed to or otherwise spent on behalf of specific 
federal candidates.'' The proposal would clarify that ``amounts * * * 
spent on behalf of specific Federal candidates'' includes independent 
expenditures and amounts spent on public communications that promote, 
support, attack, support, or oppose a clearly identified Federal 
candidate. See proposed 11 CFR 106.6(c)(1)(i). This proposal reflects 
the Commission's application of current regulations in a recent 
Advisory Opinion. See AO 2003-37, at 4 n.5. The Commission seeks 
comment on whether the conclusion in this Advisory Opinion should be 
expressly stated in proposed 11 CFR 106.6(c)(1)(i).

E. Public Communications That Promote a Political Party and a Federal 
Candidate

    Proposed section 106.6(f) would specify an allocation method for 
public communications that promote or oppose a political party and 
promote, support, attack or oppose a clearly identified Federal 
candidate. This method would apply to this communication whether or not 
the communications also clearly identify a non-Federal candidate.
    Proposed section 106.6(f) would provide an allocation method that 
combines the ``time and space'' method and the ``funds expended'' 
method for communications that support Federal candidates and a 
political party. The communication would first be subject to a ``time 
and space'' analysis to split the communication among the candidates 
and the political party. The portions attributed to candidates would be 
allocated to either the Federal or non-Federal accounts based on the 
candidates' status. The portion attributed to the political party would 
be allocated under the ``funds expended'' method in proposed 11 CFR 
106.6(c).
    This approach would be consistent with the Commission's analysis 
and conclusions based on the application of current regulations in a 
recent Advisory Opinion. See AO 2003-37, at 12. Should the Commission 
expressly incorporate this result in its allocation regulations?

F. Public Communications That Promote a Federal Candidate, Without 
Promoting or Opposing a Political Party

    Proposed section 106.6(g) would specify that public communications 
that promote, support, attack or oppose a clearly identified Federal 
candidate without promoting or opposing a political party by a 
nonconnected committee or separate segregated fund would be allocable 
under current section 106.1. Nonpartisan voter drives that include a 
public communication with similar content would be subject to the same 
allocation requirements. The only other expenditures or disbursements 
by a nonconnected committee or separate segregated fund for a public 
communication or voter drive that would be allocable under current 
section 106.1 would involve communications that clearly identify non-
Federal candidates, but do not promote, support, attack, oppose, or 
expressly advocate a Federal candidate.

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

    When an agency issues certain rulemaking proposals, the Regulatory 
Flexibility Act (``RFA'') requires the agency to ``prepare and make 
available for public comment an initial regulatory flexibility 
analysis'' which will describe the impact of the proposed rule on small 
entities. 5 U.S.C. 603(a). Section 605 of the RFA allows an agency to 
certify a rule, in lieu of preparing an initial regulatory flexibility 
analysis, if the proposed rulemaking is not expected to have a 
significant economic impact on a substantial number of small entities.

Political Committees

    One part of the proposed rule would amend the Commission's 
definition of ``political committee.'' Under the Federal Election 
Campaign Act of 1971, as amended, and the Commission's regulations, 
political committees have certain reporting obligations that do not 
apply to non-political committees. Moreover, there are restrictions and 
limitations on the receipt of funds by political committees that do not 
apply to non-political committees. This part of the proposed rule would 
directly affect only those organizations that are not currently 
political committees, but would fall within the amended definition of 
``political committee'' in the proposed rule, if the Commission decides 
to amend the definition.
    It is difficult for the Commission to estimate the number of 
organizations that may be affected by the proposed change in the 
definition of political committee. The Commission believes, however, 
that most of the organizations that would be affected by the proposed 
rule are ``political organizations'' organized under section 527 of the 
Internal Revenue Code. Under the North American Industry Classification 
System (``NAICS''), political organizations are considered to be 
``small entities'' if they have less than $6 million in average annual 
receipts. The Commission estimates that all but a few of the 527 
organizations that may be affected by the proposed rules, if adopted, 
have less than $6 million in average annual receipts and, therefore, 
qualify as small entities under the NAICS.
    The Commission notes that a number of these political organizations 
are already registered with the Commission as political committees and 
therefore, would not be affected by the proposed change to the 
definition of political committee. The proposed rule also includes 
various exceptions. For example, the proposed rule would only affect 
those political organizations that: (1) Meet the ``major purpose'' test 
set forth in proposed section 100.5(a)(2) of the proposed rule; and (2) 
exceed the $1,000 expenditure and disbursement thresholds set forth in 
proposed section 100.5(a)(1) of the proposed rule. Moreover, the 
proposed rule would exempt from political committee status those 
political organizations that are involved primarily in state, as 
opposed to Federal, political activity. Consequently, while it is 
difficult for the Commission to estimate precisely the number of 
organizations that would be affected by the proposed rule, the 
Commission believes that, as a result of the exceptions described 
above, the proposed rule would not have an economic effect on a 
substantial number of the small entities.
    Furthermore, the Commission does not believe that the proposed 
rule, if adopted, will have a significant economic impact on those 
small entities that would be affected. As stated above, the effect of 
the proposed rule would be to impose certain reporting requirements and 
restrictions on funding certain activities upon those political 
organizations that would become political committees under the amended 
definition of ``political committee.''
    The reporting requirements, however, are not complicated and would 
not be costly to complete. For the most part, the reports would be 
filed electronically, using free software provided by the Commission. 
The Commission also provides free technical support and free access to 
the

[[Page 11756]]

Commission's Information Specialists to assist political committees in 
submitting the reports. It is highly unlikely that a political 
committee would need to hire additional staff or retain professional 
services to comply with the reporting requirements.
    The Commission also notes that the Act and the Commission's 
regulations do not place any limit on the amount of funds that a 
political committee would be permitted to spend. The proposed rule 
would merely limit the types of funds that may be used to pay for 
certain activities, which are essentially those activities that fall 
within the definition of ``expenditure.'' Political committees are, and 
will remain, free to spend unlimited funds on those activities that do 
not fall within the definition of expenditure. Moreover, the Commission 
is considering alternatives that would have even less of an impact than 
those described above, including the possibility of not making any 
changes to the definition of ``political committee.''

Expenditures and Allocation

    The proposed rule would also amend the Commission's definition of 
``expenditure'' to include payments for activities that are not 
expressly included in the Commission's existing definition of 
expenditure. Whether a disbursement qualifies as an ``expenditure'' 
determines whether the disbursement must be paid for with Federal funds 
or may be paid for with non-Federal funds. It also impacts whether an 
organization satisfies the $1,000 expenditure threshold for political 
committee status. The proposed rule would also revise the Commission's 
rules regarding the allocation of certain disbursements between a 
political committee's Federal account and non-Federal account. 
Consequently, these parts of the proposed rule could impact any 
organization or individual that engages in activities in connection 
with a Federal election.
    As explained above with respect to the proposed amendment of the 
definition of ``political committee,'' the proposed changes are 
unlikely to have a significant economic impact on small entities. 
Neither the proposed change in the definition of ``expenditure'' nor 
the proposed change in the allocation rules would limit the amount of 
money that may be raised or spent on electoral activity. The proposed 
rules would merely require that only funds raised in accordance with 
the Act may be spent in connection with Federal elections. Moreover, 
the Commission is considering alternatives that would have even less of 
an impact than those described above, including the possibility of not 
making any changes to the definition of ``expenditure'' and the 
allocation rules.

Certification

    For the foregoing reasons, the Commission hereby certifies that 
this proposed rule would not have a significant economic impact on a 
substantial number of small entities. The Commission invites comment 
from members of the public who believe that the proposed rule will have 
a significant economic impact on a substantial number of small 
entities.

List of Subjects

11 CFR Part 100

    Elections.

11 CFR Part 102

    Political committees and parties, Reporting and recordkeeping 
requirements.

11 CFR Part 104

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

11 CFR Part 106

    Campaign funds, Reporting and recordkeeping requirements.

11 CFR Part 114

    Business and industry, Elections, Labor.

    For the reasons set out in the preamble, it is proposed to amend 
subchapter A of chapter I of title 11 of the Code of Federal 
Regulations as follows:

PART 100--SCOPE AND DEFINITIONS (2 U.S.C. 431)

    1. The authority citation for part 100 would continue to read as 
follows:

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

    2. Section 100.5 would be amended by revising the introductory 
paragraph and paragraph (a) to read as follows:


Sec.  100.5  Political committee (2 U.S.C. 431 (4), (5), (6)).

    Political Committee means any group meeting the conditions set 
forth in paragraph (a), (b), (c), (d) or (e) of this section.
    (a)(1) Except as provided in paragraphs (b), (c), (d), (e)(1), and 
(e)(3) of this section, political committee means any committee, club, 
association, or other group of persons:
    (i) That receives contributions aggregating in excess of $1,000 or 
that makes expenditures aggregating in excess of $1,000 during a 
calendar year; and
    (ii) For which the nomination or election of one or more Federal 
candidates is a major purpose.

Alternative 1-A

    (iii) For purposes of paragraph (a)(1)(i) of this section only, the 
term expenditure shall include payments for Federal election activities 
described in 11 CFR 100.24(b)(1) through (b)(3) and payments for all or 
any part of an electioneering communication as defined in 11 CFR 
100.29.
    End of Alternative 1-A. For Alternative 1-B, see 11 CFR 100.34 to 
114.4.
    (2) For purposes of paragraph (a)(1) of this section, a committee, 
club, association or group of persons has the nomination or election of 
a candidate or candidates as a major purpose if it satisfies the 
conditions set forth in paragraph (a)(2)(i), (a)(2)(ii), (a)(2)(iii), 
or (a)(2)(iv) of this section.
    (i) The organizational documents, solicitations, advertising, other 
similar written materials, public pronouncements, or any other 
communication of the committee, club, association or group of persons 
demonstrate that its major purpose is to nominate, elect, defeat, 
promote, support, attack or oppose a clearly identified candidate or 
candidates for Federal office or the Federal candidates of a clearly 
identified political party; and during the current calendar year or 
during any of the previous four calendar years, the committee, club, 
association or group of persons makes more than $10,000 total 
disbursements composed of any combination of the following:
    (A) Contributions;
    (B) Expenditures (including independent expenditures);
    (C) Payments for Federal election activities described in 11 CFR 
100.24(b)(1) through (b)(3); and
    (D) Payments for all or any part of an electioneering communication 
as defined in 11 CFR 100.29.
    (ii) More than 50 percent of the committee's, club's association's 
or group's total annual disbursements during any of the previous four 
calendar years are composed of any combination of the following:
    (A) Contributions;
    (B) Expenditures (including independent expenditures);
    (C) Payments for Federal election activities described in 11 CFR 
100.24(b)(1) through (b)(3); and
    (D) Payments for all or any part of an electioneering communication 
as defined in 11 CFR 100.29.
    (iii) During the current calendar year or during any of the 
previous four

[[Page 11757]]

calendar years, the committee, club, association or group of persons 
makes more than $50,000 in total disbursements composed of any 
combination of the following:
    (A) Contributions;
    (B) Expenditures (including independent expenditures);
    (C) Payments for Federal election activities described in 11 CFR 
100.24(b)(1) through (b)(3); and
    (D) Payments for all or any part of an electioneering communication 
as defined in 11 CFR 100.29.

Alternative 2-A

    (iv) The committee, club, association or group of persons is 
organized under Section 527 of the Internal Revenue Code, 26 U.S.C. 
527, except that this paragraph (a)(2)(iv) shall not apply to:
    (A) The campaign organization of an individual seeking nomination, 
election, appointment or selection to a non-Federal office;
    (B) A committee, club, association or group of persons that is 
organized solely for the purpose of promoting the nomination or 
election of a candidate or candidates to a non-Federal office;
    (C) A committee, club, association or group of persons whose 
election or nomination activities relate solely to elections where no 
candidate for Federal office appears on the ballot;
    (D) A committee, club, association, or group of persons that 
operates solely within one State and, pursuant to State law, must file 
financial disclosure reports with one or more branches, departments or 
agencies of that State's government, showing all its activities in that 
State; or
    (E) A committee, club, association, or group of persons that is 
organized solely for the purpose of influencing the nomination or 
appointment of individuals to a non-elected office, or the nomination, 
election, or selection of individuals to leadership positions within a 
political party.

Alternative 2-B

    (iv) The committee, club, association or group of persons is 
organized under Section 527 of the Internal Revenue Code, 26 U.S.C. 
527.
* * * * *

Alternative 1-B

    3. Section 100.34 would be added to read as follows:


Sec.  100.34  Partisan voter drives.

    Partisan voter drive means any or all of the following:
    (a) Voter registration activity as described in 11 CFR 100.24(a)(2) 
and (b)(1), except for voter registration activity described in 11 CFR 
100.133;
    (b) Voter identification as described in 11 CFR 100.24(a)(1), 
(a)(4), and (b)(2)(i), except for voter identification when no effort 
has been or will be made to determine or record the party or candidate 
preference of individuals on the voter list; and
    (c) Get-out-the-vote activity as described in 11 CFR 100.24(a)(1), 
(a)(3), and (b)(2)(iii), except for get-out-the-vote activity described 
in 11 CFR 100.133.
    4. Section 100.57 would be added to subpart B to read as follows:


Sec.  100.57  Solicitations with express advocacy.

    A gift, subscription, loan, advance, or deposit of money or 
anything of value made by any person in response to any communication 
that includes material expressly advocating, as defined in 11 CFR 
100.22, a clearly identified Federal candidate is a contribution to the 
person making the communication.
    5. Section 100.115 would be added to subpart D to read as follows:


Sec.  100.115  Partisan voter drives.

    A payment, distribution, loan, advance, or deposit of money or 
anything of value made by, or on behalf of any person for partisan 
voter drives, as described in 11 CFR 100.34, is an expenditure, except 
Levin funds, as defined in 11 CFR 300.2(i), that are disbursed for 
partisan voter drives are not expenditures.
    6. Section 100.116 would be added to subpart D to read as follows:


Sec.  100.116  Certain public communications.

    A payment, distribution, loan, advance, or deposit of money or 
anything of value made by, or on behalf of any person for a public 
communication, as defined in 11 CFR 100.26, is an expenditure if the 
public communication:
    (a) Refers to a clearly identified candidate for Federal office, 
and promotes or supports, or attacks or opposes any candidate for 
Federal office; or
    (b) Promotes or opposes any political party.
    7. Section 100.133 would be revised to read as follows:


Sec.  100.133  Nonpartisan voter registration and get-out-the-vote 
activities.

    Any cost incurred for activity designed to encourage individuals to 
register to vote or to vote is not an expenditure if:
    (a) It does not include a communication that promotes, supports, 
attacks, or opposes a Federal or non-Federal candidate or that promotes 
or opposes a political party;
    (b) No effort is or has been made to determine the party or 
candidate preference of individuals before encouraging them to register 
to vote or to vote; and
    (c) Information concerning likely party or candidate preference has 
not been used to determine which individuals to encourage to register 
to vote or to vote.
    (d) Corporations and labor organizations that engage in such 
activity shall comply with the additional requirements set forth in 11 
CFR 114.4(c) and (d). See also 11 CFR 114.3(c)(4).
    8. Section 100.149 would be amended by revising the introductory 
paragraph to read as follows:


Sec.  100.149  Voter registration and get-out-the-vote activities for 
Presidential candidates (``coattails'' exception).

    Notwithstanding 11 CFR 100.115, the payment by a State or local 
committee of a political party of the costs of voter registration and 
get-out-the-vote activities conducted by such committee on behalf of 
the Presidential and Vice Presidential nominee(s) of that party is not 
an expenditure for the purpose of influencing the election of such 
candidate(s) provided that the following conditions are met:
* * * * *
    9. Section 100.155 would be added to read as follows:


Sec.  100.155  Allocated amounts.

    Notwithstanding 11 CFR 100.115 or 100.116, any non-Federal funds 
disbursed by a separate segregated fund pursuant to 11 CFR 
106.6(b)(1)(iii) through (vi) or by a nonconnected committee pursuant 
to 11 CFR 106.6(b)(2)(iii) through (vi) are not expenditures.

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

    10. The authority citation for part 102 would continue to read as 
follows:

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

    11. Sections 102.18 through 102.49 would be added and reserved.
    12. Subpart A would be added to read as follows:
Subpart A--Conversion Rules
Sec.
102.50 What are the definitions for this subpart A?
102.51 To which organizations does this subpart A apply?
102.52 What must a committee, club, association, or other group of 
persons do

[[Page 11758]]

upon becoming a political committee under 11 CFR 100.5(a)?
102.53 How must a new political committee treat the amount of 
contributions, expenditures, independent expenditures and allocable 
expenditures that it made during the covered period (before it 
became a political committee)?
102.54 How can a political committee convert its Federally 
permissible funds to Federal funds?
102.55 What if the political committee is able to convert an amount 
of Federally permissible funds to Federal funds that is greater than 
the amount of contributions, expenditures, independent expenditures 
and allocable expenditures that it made during the covered period?
102.56 What are the initial reporting requirements?

Subpart A--Conversion Rules


Sec.  102.50  What are the definitions for this subpart A?

    For purposes of this subpart A, the following terms are defined as 
follows:
    Allocable expenditures mean expenditures that are allocable under 
11 CFR 106.1 or 106.6.
    Covered period means the period of time beginning on January 1 of 
the calendar year immediately preceding the calendar year in which a 
committee, club, association, or other group of persons first satisfies 
the definition of ``political committee'' in 11 CFR 100.5(a) and ending 
on the date that the committee, club, association, or other group of 
persons first satisfies the definition of ``political committee'' in 11 
CFR 100.5(a).
    Federal funds has the same meaning as in 11 CFR 300.2(g).
    Federally permissible funds mean funds that comply with the amount 
limitations and source prohibitions of the Act and were received during 
the covered period by the committee, club, association, or other group 
of persons that becomes a political committee.


Sec.  102.51  To which organizations does this subpart A apply?

    This subpart A applies to a committee, club, association, or other 
group of persons that satisfies the definition of ``political 
committee'' under 11 CFR 100.5(a) and that made contributions, 
expenditures, independent expenditures, or allocable expenditures 
during the covered period.


Sec.  102.52  What must a committee, club, association, or other group 
of persons do upon becoming a political committee under 11 CFR 100.5?

    The committee, club, association, or other group of persons, upon 
becoming a political committee shall:
    (a) File a Statement of Organization pursuant to 11 CFR 102.1(d);
    (b) Establish a campaign depository pursuant to 11 CFR 103.2;
    (c) Determine the amount of contributions, expenditures, 
independent expenditures and allocable expenditures that it made during 
the covered period;
    (d) Determine the amount of federally permissible funds that it 
received; and
    (e) File financial disclosure reports with the Commission in 
accordance with 11 CFR part 104 and 11 CFR 102.56.


Sec.  102.53  How must a new political committee treat the amount of 
contributions, expenditures, independent expenditures and allocable 
expenditures that it made during the covered period (before it became a 
political committee)?

    (a) A political committee must treat the amount of contributions, 
expenditures, independent expenditures, and allocable expenditures that 
it made during the covered period as a debt owed by its Federal account 
to its non-Federal account.
    (b) The political committee may not make any additional 
contributions, expenditures, independent expenditures or allocable 
expenditures until this debt is satisfied.
    (c) The political committee may satisfy this debt by:
    (1) Converting some or all of its Federally permissible funds to 
Federal funds pursuant to this subpart A;
    (2) Raising new Federal funds and transferring the Federal funds to 
the non-Federal account; or
    (3) A combination of paragraphs (c)(1) and (c)(2) of this section.


Sec.  102.54  How can a political committee convert its Federally 
permissible funds to Federal funds?

    A political committee may convert its Federally permissible funds 
to Federal funds only in accordance with this section. To convert 
Federally permissible funds to Federal funds, the political committee 
shall:
    (a) Send a written notification to the donor(s) of the Federally 
permissible funds that the political committee seeks to convert to 
Federal funds. The written notification must:
    (1) Inform the donor(s) that the political committee has registered 
with the Commission as a Federal political committee;
    (2) Make all disclaimers required by 11 CFR 110.11;
    (3) Inform the donor(s) of the amount of their donation that the 
political committee seeks to convert to Federal funds and request that 
the donor(s) grant written consent for the political committee to use 
that amount of their donation for the purpose of influencing Federal 
elections;
    (4) Advise the donor(s) that they may grant written consent for an 
amount less than the amount the political committee seeks to convert to 
Federal funds and that they may refuse to grant consent to convert any 
of the funds; and
    (5) Advise the donor(s) that, by granting written consent, the 
donor(s) will be considered to have made a contribution to the 
political committee, that the contribution will be subject to the 
amount limitations in 2 U.S.C. 441a(a), and that the contribution will 
be considered made on the date that the written consent is signed by 
the donor(s); and
    (b) Receive the written consent described in paragraph (a) of this 
section within 60 days after first satisfying the definition of 
``political committee'' in 11 CFR 100.5(a).


Sec.  102.55  What if the political committee is able to convert an 
amount of Federally permissible funds to Federal funds that is greater 
than the amount of contributions, expenditures, independent 
expenditures and allocable expenditures that it made during the covered 
period?

    If the political committee is able to convert an amount of 
Federally permissible funds to Federal funds that is greater than the 
amount of contributions, expenditures, independent expenditures, and 
allocable expenditures that it made during the covered period, the 
political committee:
    (a) Must use the converted Federal funds to satisfy the debt 
described in 11 CFR 102.53; and
    (b) May, but is not required to, transfer to its Federal account 
the remaining converted Federal funds. The amount of converted Federal 
funds transferred to the political committee's Federal account under 
this section, however, may not exceed the total amount of funds the 
political committee had cash-on-hand on the date that it first 
satisfied the definition of political committee under 11 CFR 100.5(a).


Sec.  102.56  What are the initial reporting requirements?

    In addition to filing its Statement of Organization under 11 CFR 
102.2, the political committee shall include the following information 
along with other required information in the first report due under 11 
CFR 104.5:
    (a) All contributions, expenditures, independent expenditures and 
allocable expenditures it made during the covered period;
    (b) The amount of any Federally permissible funds that have been

[[Page 11759]]

converted to Federal funds pursuant to 11 CFR 102.54;
    (c) The information required in 11 CFR 104.3(a)(4)(i) for each 
donor who provided written consent under 11 CFR 102.54;
    (d) The amount described in paragraph (a) of this section minus the 
amount described in paragraph (b) of this section as a debt owed by the 
Federal account to the non-Federal account; and
    (e) The amount and date of any transfers made under 11 CFR 102.55.

PART 104--REPORTS BY POLITICAL COMMITTEES (2 U.S.C. 434)

    13. The authority citation for part 104 would continue to read as 
follows:

    Authority: 2 U.S.C. 431(1), 431(8), 431(9), 432(i), 434, 
438(a)(8) and (b), 439a, and 441a.

    14. Section 104.10 would be amended by revising the introductory 
text in paragraph (b), the heading in (b)(1), and paragraph (b)(1)(i) 
and the introductory text in paragraph (b)(1)(ii) to read as follows:


Sec.  104.10  Reporting by separate segregated funds and nonconnected 
committees of expenses allocated among candidates and activities.

* * * * *
    (b) Expenses allocated among activities. A political committee that 
is a separate segregated fund or a nonconnected committee and that has 
established separate Federal and non-Federal accounts under 11 CFR 
102.5(a)(1)(i) shall allocate between those accounts its administrative 
expenses and its costs for fundraising and partisan voter drives 
according to 11 CFR 106.6, and shall report those allocations according 
to paragraphs (b)(1) through (5) of this section, as follows:
    (1) Reporting of allocation of administrative expenses and costs of 
partisan voter drives.
    (i) In the first report in a calendar year disclosing a 
disbursement for administrative expenses or partisan voter drives, as 
described in 11 CFR 106.6(b), the committee shall state the allocation 
ratio to be applied to these categories of activity according to 11 CFR 
106.6(c), (f), or (g), as applicable, and the manner in which it was 
derived. The committee shall also state whether the calculated ratio or 
the minimum Federal percentage required by 11 CFR 106.6(c)(1)(ii) will 
be used.
    (ii) In each subsequent report in the calendar year itemizing an 
allocated disbursement for administrative expenses or partisan voter 
drives:
* * * * *

PART 106--ALLOCATIONS OF CANDIDATE AND COMMITTEE ACTIVITIES

    15. The authority citation for part 106 would continue to read as 
follows:

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

    16. Section 106.6 would be amended by:
    a. Removing the words ``(c) and (d)'' from paragraph (a) and adding 
in their place the words ``(c), (d), (f) and (g)''; and
    b. Revising the introductory text in paragraph (c) and paragraphs 
(b)(1)(iii), (b)(2)(iii), (c)(1), and (e)(2)(ii)(B) and adding 
paragraphs (b)(1)(iv), (b)(1)(v), (b)(1)(vi), (b)(2)(iv), (b)(2)(v), 
(b)(2)(vi), (f) and (g) to read as follows:


Sec.  106.6  Allocation of expenses between Federal and non-Federal 
activities by separate segregated funds and nonconnected committees.

* * * * *
    (b) * * *
    (1) * * *
    (iii) Partisan voter drives as described in 11 CFR 100.34 or any 
other activities that urge the general public to register, vote or 
support candidates of a particular party or associated with a 
particular issue, without including a public communication that is 
described in paragraph (b)(1)(iv), (v), or (vi) of this section;
    (iv) Public communications that promote or oppose a political 
party, as described in 11 CFR 100.116(b), but do not promote, support, 
attack, or oppose a clearly identified Federal candidate, as described 
in 11 CFR 100.116(a);
    (v) Public communications that promote, support, attack, or oppose 
a clearly identified Federal candidate, as described in 11 CFR 
100.116(a), and that promote or oppose a political party, as described 
in 11 CFR 100.116(b); and
    (vi) Public communications that promote, support, attack, or oppose 
a clearly identified Federal candidate, as described in 11 CFR 
100.116(a), but that do not promote or oppose a political party, as 
described in 11 CFR 100.116(b).
    (2) * * *
    (iii) Partisan voter drives as described in 11 CFR 100.34 or any 
other activities that urge the general public to register, vote or 
support candidates of a particular party or associated with a 
particular issue, without including a public communication that is 
described in paragraph (b)(2)(iv), (v), or (vi) of this section;
    (iv) Public communications that promote or oppose a political 
party, as described in 11 CFR 100.116(b), but do not promote, support, 
attack, or oppose a clearly identified Federal candidate, as described 
in 11 CFR 100.116(a);
    (v) Public communications that promote, support, attack, or oppose 
a clearly identified Federal candidate, as described in 11 CFR 
100.116(a), and that promote or oppose a political party, as described 
in 11 CFR 100.116(b); and
    (vi) Public communications that promote, support, attack, or oppose 
a clearly identified Federal candidate, as described in 11 CFR 
100.116(a), but that do not promote or oppose a political party, as 
described in 11 CFR 100.116(b).
    (c) Method for allocating administrative expenses, costs of 
partisan voter drives, and certain public communications. Nonconnected 
committees and separate segregated funds shall allocate their 
administrative expenses, costs of partisan voter drives, and costs of 
public communications that promote or support any political party as 
described in paragraph (b)(1)(i) through (iv) or (b)(2)(i) through (iv) 
of this section, according to the funds expended method, described in 
paragraphs (c)(1) and (2) as follows:
    (1)(i) Under this method, expenses shall be allocated based on the 
ratio of Federal expenditures to total Federal and non-Federal 
disbursements made by the committee during the two-year Federal 
election cycle, subject to the minimum Federal percentage described in 
paragraph (c)(1)(ii) of this section. This ratio shall be estimated and 
reported at the beginning of each Federal election cycle, based upon 
the committee's Federal and non-Federal disbursements in a prior 
comparable Federal election cycle or upon the committee's reasonable 
prediction of its disbursements for the coming two years. In 
calculating its Federal expenditures, the committee shall include only 
amounts contributed to or otherwise spent on behalf of specific Federal 
candidates, including independent expenditures and amounts spent on 
public communications that promote, attack, support, or oppose clearly 
identified Federal candidates. Calculation of total Federal and non-
Federal disbursements shall also be limited to disbursements for 
specific candidates, and shall not include overhead or other generic 
costs.
    (ii) Minimum Federal percentage for administrative expenses, 
partisan voter drives, and certain public communications. The minimum 
Federal percentage for any costs allocable under paragraph (c) of this 
section is as follows:
    (A) For a nonconnected committee or a separate segregated fund that 
conducts

[[Page 11760]]

partisan voter drives in or distributes public communications subject 
to allocation under paragraph (c) of this section to only one State, 
the minimum Federal percentage shall be the percentage in 11 CFR 
106.7(d)(3)(i), (ii), (iii), or (iv) that is applicable to the Federal 
elections in that State.

Alternative 3-A

    (B) For a nonconnected committee or a separate segregated fund that 
conducts partisan voter drives in or distributes public communications 
subject to allocation under paragraph (c) of this section to more than 
one State, the minimum Federal percentage shall be the greatest 
percentage in 11 CFR 106.7(d)(3)(i), (ii), (iii), or (iv) that is 
applicable to any of the Federal elections in any of the States in 
which the nonconnected committee or separate segregated fund conducts 
activities allocable under paragraph (c) of this section.

Alternative 3-B

    (B) For a nonconnected committee or a separate segregated fund that 
conducts partisan voter drives in or distributes public communications 
subject to allocation under paragraph (c) of this section to more than 
one State, the minimum Federal percentage for each State in which the 
nonconnected committee or separate segregated fund conducts activities 
allocable under paragraph (c) of this section shall be the percentage 
in 11 CFR 106.7(d)(3)(i), (ii), (iii), or (iv) that is applicable to 
the Federal elections in that State.
* * * * *
    (e) * * *
    (2) * * *
    (ii) * * *
    (B) Except as provided in paragraph (d)(2) of this section or in 11 
CFR part 102, subpart A, such funds may not be transferred more than 10 
days before or more than 60 days after the payments for which they are 
designated are made.
* * * * *
    (f) Method for allocating public communications that promote, 
support, attack or oppose a clearly identified Federal candidate, and 
promote or oppose a political party. Nonconnected committees and 
separate segregated funds shall allocate public communications 
described in paragraphs (b)(1)(v) or (b)(2)(v) of this section as 
follows:
    (1) The public communication shall be attributed according to the 
proportion of space and time devoted to each candidate and political 
party as compared to the total space and time devoted to all candidates 
and political party;
    (2) The portion of the public communication that is attributed to 
the Federal candidate(s) shall be allocated to the nonconnected 
committee's or separate segregated fund's Federal account;
    (3) The portion of the public communication that is attributed to 
the political party shall be allocated in accordance with paragraph (c) 
of this section; and
    (4) The portion of the public communication that is attributed to 
clearly identified non-Federal candidate(s), if any, may be allocated 
to either the Federal or non-Federal account.
    (g) Method for allocating public communications that promote, 
support, attack or oppose a clearly identified Federal candidate, 
without promoting or opposing a political party. Nonconnected 
committees and separate segregated funds shall allocate public 
communications described in paragraphs (b)(1)(vi) and (b)(2)(vi) of 
this section under 11 CFR 106.1 as expenditures or disbursements on 
behalf of the clearly identified candidates.

PART 114--CORPORATE AND LABOR ORGANIZATION ACTIVITY

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

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

    18. Section 114.4 would be amended by revising paragraphs (c)(2), 
(c)(3), and the introductory text of paragraph (d) to read as follows:


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

* * * * *
    (c) * * *
    (2) Registration and voting communications. A corporation or labor 
organization may make registration and get-out-the-vote communications 
to the general public, only to the extent permitted by 11 CFR 100.133, 
and provided that the communications do not expressly advocate the 
election or defeat of any clearly identified candidate(s) or candidates 
of a clearly identified political party. The preparation and 
distribution of registration and get-out-the-vote communications shall 
not be coordinated with any candidate(s) or political party. A 
corporation or labor organization may make communications permitted 
under this section through posters, billboards, broadcasting media, 
newspapers, newsletter, brochures, or similar means of communication 
with the general public.
    (3) Official registration and voting information. A corporation or 
labor organization may engage in the activities described in paragraphs 
(c)(3)(i) through (iii) of this section only to the extent permitted by 
11 CFR 100.133.
* * * * *
    (d) Registration and get-out-the-vote drives. A corporation or 
labor organization may support or conduct voter registration and get-
out-the-vote drives that are aimed at employees outside its restricted 
class and the general public in accordance with the conditions set 
forth in paragraphs (d)(1) through (d)(6) of this section and only to 
the extent permitted by 11 CFR 100.133. Registration and get-out-the-
vote drives include providing transportation to the polls or to the 
place of registration.
* * * * *

    Dated: March 4, 2004.
Bradley A. Smith,
Chairman, Federal Election Commission.
[FR Doc. 04-5290 Filed 3-10-04; 8:45 am]
BILLING CODE 6715-01-P