[Federal Register Volume 69, Number 212 (Wednesday, November 3, 2004)]
[Rules and Regulations]
[Pages 63919-63921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-24475]



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 Rules and Regulations
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  Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / 
Rules and Regulations  

[[Page 63919]]



FEDERAL ELECTION COMMISSION

11 CFR Parts 102, 106, and 109

[Notice 2004-14]


Coordinated and Independent Expenditures by Party Committees

AGENCY: Federal Election Commission.

ACTION: Final rules.

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SUMMARY: The Federal Election Commission is removing its rules 
restricting the ability of political party committees to make both 
independent expenditures and coordinated party expenditures with 
respect to the same candidate's general election campaign for Federal 
office. The Commission is also repealing its rules prohibiting 
political party committees that make coordinated party expenditures 
with respect to a candidate from transferring funds to, or assigning 
authority to make coordinated party expenditures to, or receiving a 
transfer of funds from, a political party committee that has made or 
intends to make an independent expenditure with respect to that 
candidate. These rules were originally promulgated to implement section 
213 of the Bipartisan Campaign Reform Act of 2002. However, in 
McConnell v. FEC, the U.S. Supreme Court held that section 213 is 
unconstitutional. Therefore, the Commission is now removing the rules 
implementing section 213. Further information is provided in the 
SUPPLEMENTARY INFORMATION that follows.

DATES: Effective Date: December 3, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. Brad C. Deutsch, Assistant General 
Counsel, or Mr. Ron B. Katwan, Attorney, 999 E Street NW., Washington, 
DC 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: The Notice of Proposed Rulemaking 
(``NPRM''), on which these final rules are based, was published in the 
Federal Register on June 30, 2004. 69 FR 39,373 (June 30, 2004). The 
comment period closed on July 30, 2004. The Commission received three 
written comments on the proposed rules. These Final Rules are identical 
to the rules proposed in the NPRM.
    Under the Administrative Procedures Act, 5 U.S.C. 553(d), and the 
Congressional Review of Agency Rulemaking Act, 5 U.S.C. 801(a)(1), 
agencies must submit final rules to the Speaker of the House of 
Representatives and the President of the Senate, and publish them in 
the Federal Register at least 30 calendar days before they take effect. 
The final rules that follow were transmitted to Congress on October 28, 
2004.

Explanation and Justification

    To conform its regulations to the Supreme Court's invalidation of 
section 213 of the Bipartisan Campaign Reform Act of 2002 (Pub. L. 107-
155 (Mar. 27, 2002)) (``BCRA'') in McConnell v. FEC, 540 U.S. 93, 199-
205 (2003), the Commission is removing its regulations at 11 CFR 109.35 
and deleting any cross-references to that section in other regulations.

I. 11 CFR 102.6--Transfer of Funds; Collecting Agents

    The Commission is revising section 102.6 by deleting the cross-
reference to section 109.35, which is being removed.

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

    The Commission is revising section 106.8 by deleting the cross-
reference to section 109.35, which is being removed.

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

    The Commission is revising section 109.30 by deleting the cross-
references to section 109.35, which is being removed.

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

    The Commission is revising section 109.33 by deleting the cross-
reference to section 109.35, which is being removed.

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

    Under the Federal Election Campaign Act of 1971 (the ``Act''), as 
amended, 2 U.S.C. 431 et seq., a national committee, State committee, 
or a subordinate committee of a State committee of a political party 
may make expenditures in coordination with a Federal candidate for that 
candidate's general election campaign \1\ up to prescribed limits 
without these expenditures counting against the party committee's 
contribution limits. 2 U.S.C. 441a(d)(1)-(3); 11 CFR 109.32. While the 
Act limits coordinated expenditures, the Supreme Court has determined 
that political party committees may make unlimited ``independent 
expenditures,'' \2\ which are not coordinated with a candidate or a 
candidate's authorized committees or agents. See Colorado Republican 
Federal Campaign Committee v. FEC, 518 U.S. 604 (1996) (``Colorado 
I'').\3\
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    \1\ See 2 U.S.C. 441a(a)(7)(B)(i)-(ii) for a definition of 
coordinated party expenditures. See also 11 CFR 109.20(b).
    \2\ ``Independent expenditure'' is defined in 2 U.S.C. 431(17) 
See also 11 CFR 100.16.
    \3\ The holding of Colorado I is limited to independent 
expenditures in connection with Congressional campaigns. The opinion 
in Colorado I did not address the issue of whether regulation of 
independent expenditures is constitutionally permissible in 
connection with Presidential campaigns. (``Since this case involves 
only the provision concerning congressional races we do not address 
issues that might grow out of the public funding of presidential 
campaigns.'') 518 U.S. at 612. Thus, the opinion in Colorado I did 
not reach the issue of whether former 11 CFR 110.7(a)(5) which 
prohibited independent expenditures by the national committee of a 
political party in connection with a Presidential campaign was 
constitutional. Subsequently, however, BCRA effectively repealed 
section 110.7(a)(5) and the Commission replaced the section with 11 
CFR 109.36, which prohibits a national committee of a political 
party from making independent expenditures in connection with a 
presidential campaign only in certain circumstances in which the 
national committee of a political party serves as the principal 
campaign committee or authorized committee of its Presidential 
candidate. See Coordinated and Independent Expenditures; Final 
Rules, 68 FR 421, 447-48 (January 3, 2003).
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    BCRA section 213 amended 2 U.S.C. 441a(d), by prohibiting political 
party committees, under certain conditions, from making both 
coordinated party expenditures and independent expenditures with 
respect to the same candidate, and from making transfers

[[Page 63920]]

and assignments to other political party committees. 2 U.S.C. 
441a(d)(4).
    In 2002, the Commission promulgated rules at 11 CFR 109.35 to 
implement BCRA section 213. Coordinated and Independent Expenditures, 
Final Rules, 68 FR 421, 422 (January 3, 2003).
    Subsequently, in McConnell v. FEC, the Supreme Court found BCRA 
section 213 unconstitutional. The Court held that by requiring 
political parties to choose between coordinated and independent 
expenditures during the post-nomination, pre-election period, BCRA 
section 213 placed an unconstitutional burden on the parties' right to 
make unlimited independent expenditures. 540 U.S. at 199-205. 
Accordingly, the NPRM proposed removing the regulations at 11 CFR 
109.35, which implemented BCRA section 213.
    The Commission received three comments on this rulemaking. The 
Internal Revenue Service submitted a comment informing the Commission 
that it had no comments. A second comment, while urging the Commission 
to remove the regulations implementing BCRA section 213 on the grounds 
that it was unconstitutional, primarily addressed issues beyond the 
scope of this rulemaking. A third brief comment concerned issues also 
not within the scope of this rulemaking. The Commission received no 
comments opposing the removal of its regulations at 11 CFR 109.35 as 
proposed in the NPRM. Accordingly, the Commission is removing and 
reserving section 109.35 because the statutory foundation for this 
section, 2 U.S.C. 441a(d)(4), has been invalidated by the Supreme Court 
in McConnell v. FEC.

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

    The Commission is revising section 109.36 by deleting the word 
``additional'' in the heading of section 109.36, because, as a result 
of the removal of section 109.35, the circumstances described in 
section 109.36 are the only circumstances under which a political party 
committee is prohibited from making independent expenditures.

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

    The attached rules will not have a significant economic impact on a 
substantial number of small entities. The basis of this certification 
is that the national, State, and local party committees of the two 
major political parties are not small entities under 5 U.S.C. 601 
because they are not small businesses, small organizations, or small 
governmental jurisdictions.
    To the extent that political party committees may fall within the 
definition of ``small entities,'' their number is not substantial. In 
addition, the rules do not add but remove restrictions applicable to 
political party committees.

List of Subjects

11 CFR Part 102

    Political committees and parties, reporting and recordkeeping 
requirements.

11 CFR Part 106

    Political candidates, campaign funds, political committees and 
parties.

11 CFR Part 109

    Coordinated expenditures, independent expenditures, political 
committees and parties.

0
For the reasons set out in the preamble, the Federal Election 
Commission is amending Subchapter A of Chapter I of Title 11 of the 
Code of Federal Regulations as follows:

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

0
1. The authority citation for part 102 continues to read as follows:

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


0
2. Section 102.6 is amended by revising paragraph (a)(1)(ii) to read as 
follows:


Sec.  102.6  Transfers of funds; collecting agents.

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

PART 106--ALLOCATIONS OF CANDIDATE AND COMMITTEE ACTIVITIES

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

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


0
4. Section 106.8 is amended by revising paragraph (b)(2)(ii) to read as 
follows:


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

* * * * *
    (b) * * *
    (2) * * *
    (ii) A coordinated expenditure or an independent expenditure, 
subject to the limitations, restrictions, and requirements of 11 CFR 
109.10, 109.32, and 109.33; or
* * * * *

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

0
5. The authority citation for Part 109 continues to read as follows:

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


0
6. Section 109.30 is revised to read as follows:


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

    Political party committees may make independent expenditures 
subject to the provisions in this subpart. See 11 CFR 109.36. Political 
party committees may also make coordinated party expenditures in 
connection with the general election campaign of a candidate, subject 
to the limits and other provisions in this subpart. See 11 CFR 109.32 
through 11 CFR 109.34.

0
7. Section 109.33 is amended by revising paragraph (a) to read as 
follows:


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

    (a) Assignment. The national committee of a political party and a 
State committee of a political party, including any subordinate 
committee of a State committee, may assign its authority to make 
coordinated party expenditures authorized by 11 CFR 109.32 to another 
political party committee. Such an assignment must be made in writing, 
must state the amount of the authority assigned, and must be received 
by the assignee committee before any coordinated party expenditure is 
made pursuant to the assignment.
* * * * *

[[Page 63921]]


0
8. Section 109.35 is removed and reserved.


Sec.  109.35  [Removed and reserved]

0
9. Section 109.36 is amended by revising the heading to read as 
follows:


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

* * * * *

    Dated: October 28, 2004.
Bradley A. Smith,
Chairman, Federal Election Commission.
[FR Doc. 04-24475 Filed 11-2-04; 8:45 am]
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