[Federal Register Volume 70, Number 139 (Thursday, July 21, 2005)]
[Rules and Regulations]
[Pages 41939-41944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-14318]


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FEDERAL ELECTION COMMISSION

11 CFR Part 114

[Notice 2005-18]


Payroll Deductions by Member Corporations for Contributions to a 
Trade Association's Separate Segregated Fund

AGENCY: Federal Election Commission.

ACTION: Final rules and transmittal of rules to Congress.

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SUMMARY: The Federal Election Commission is amending its rules 
regarding contributions to the separate segregated fund (``SSF'') of a 
trade association by employee-stockholders and executive and 
administrative personnel of corporations that are members of the trade 
association (collectively, ``solicitable class employees''). The 
revised rules will no longer prohibit corporate members of a trade 
association from using a payroll deduction or check-off system for 
employee contributions to the trade association's SSF. Instead, these 
final rules will allow a corporate member of a trade association to 
provide incidental services to collect and forward contributions from 
its solicitable class employees to the SSF of the trade association, 
including use of a payroll deduction or check-off system, upon written 
request of the trade association. These final rules will also require 
any member corporation that provides incidental services for 
contributions to a trade association's SSF, as well as the 
corporation's subsidiaries, divisions, branches and affiliates, to 
provide the same services for contributions to the SSF of any labor 
organization that represents members working for the corporation, or 
the corporation's subsidiaries, divisions, branches or affiliates, upon 
written request of the labor organization and at a cost not to exceed 
actual expenses incurred. Additional information appears in the 
Supplementary Information that follows.

DATES: These rules are effective August 22, 2005.

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

SUPPLEMENTARY INFORMATION: The Commission is promulgating final rules 
at 11 CFR 114.2 and 114.8 as the last step in a rulemaking process that 
began in 2003, when the Commission received a petition for rulemaking 
(the ``Petition'') from America's Community Bankers and its SSF, the 
America's Community Bankers Community Campaign Committee (collectively, 
``Petitioners''). Petitioners asked the Commission to change its rules 
to allow a corporate member of a trade association to make payroll 
deductions and check-off systems available to the corporation's 
restricted class employees for their voluntary contributions to the 
trade association's SSF.
    The Commission issued a Notice of Availability stating that the 
Petition was available for public review and comment. See Notice of 
Availability, 68 FR 60887 (October 24, 2003). The comment period closed 
on November 24, 2003. The Commission received 30 comments in response 
to the Notice of Availability. All of the comments supported the 
Petition.
    After considering the comments on the Petition, the Commission 
issued a Notice of Proposed Rulemaking (``NPRM''). See 69 FR 76628 
(Dec. 22, 2004). The NPRM proposed to change the Commission's rules at 
11 CFR 114.2 and 114.8 to allow a corporate member of a trade 
association to provide incidental services to collect and forward 
voluntary contributions from its

[[Page 41940]]

solicitable class employees to the trade association's SSF, including 
use of a payroll deduction or check-off system, upon written request of 
the trade association. Under the proposed rules, any corporate member 
of a trade association that provided incidental services for 
contributions to the trade association's SSF also would have had to 
provide the same services for contributions to the SSF of any labor 
organization that represented members working for the corporation, upon 
written request of the labor organization and at a cost not to exceed 
actual expenses incurred.
    The Commission received 34 comments in response to the NPRM. None 
of the comments opposed the proposed changes to the Commission's rules, 
including a letter from the Internal Revenue Service stating that it 
had ``no comments at this time.'' The comments are discussed further in 
the Explanation & Justification, below.
    The Commission held a public hearing on May 17, 2005, on this 
rulemaking.\1\ At the hearing, representatives of Petitioner and two 
other commenters testified. For purposes of this document, the terms 
``comment'' and ``commenter'' apply to both written comments and oral 
testimony at the public hearing. The written comments and the 
transcripts of the hearing are available at http://www.fec.gov/law/law_rulemakings.shtml.
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    \1\ See Notice of Public Hearing, Candidate Solicitation at 
State, District and Local Party Fundraising Events; Definition of 
``Agent'' for BCRA Regulations; Payroll Deductions By Member 
Corporations for Contributions to a Trade Association's Separate 
Segregated Fund, 70 FR 21,163 (April 25, 2005).
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    Under the Administrative Procedure 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 July 15, 
2005.

Explanation and Justification

    The Federal Election Campaign Act of 1971, as amended (the 
``Act''), and the Commission's regulations permit any trade association 
to solicit contributions to the trade association's SSF from the 
stockholders and executive and administrative personnel, and their 
families, of the trade association's member corporations, so long as 
these member corporations separately and specifically approved the 
solicitation and have not approved a solicitation by any other trade 
association for the same calendar year. See 2 U.S.C. 441b(b)(4)(D); 11 
CFR 114.8(c). Once these conditions are met, ``[t]here is no limitation 
on the method of soliciting voluntary contributions or the method of 
facilitating the making of voluntary contributions which a trade 
association may use.'' 11 CFR 114.8(e)(3).
    Although the regulations do not limit the methods that a trade 
association may use to solicit and facilitate the making of voluntary 
contributions to its SSF from the solicitable class employees of 
consenting member corporations, before this rulemaking the regulations 
did limit the methods that a consenting member corporation may use to 
collect and forward those contributions. Specifically, prior to this 
rulemaking, 11 CFR 114.8(e)(3) stated that a ``member corporation may 
not use a payroll deduction or check-off system for executive or 
administrative personnel contributing to the separate segregated fund 
of the trade association.'' The Commission has interpreted this 
prohibition to extend to all employees of the corporation who may be 
solicited by the trade association (i.e., solicitable class employees), 
including the member corporation's employee-stockholders. See Advisory 
Opinion (``AO'') 1989-3.
    In recent years, the Commission has recognized that corporations 
have some latitude in collecting and forwarding contributions to a 
trade association's SSF, so long as the collection does not involve 
employee payroll deductions. For example, in AO 2003-22, the Commission 
interpreted the regulations to permit a corporate member of a trade 
association to collect voluntary contributions in the form of paper 
checks from its executive and administrative personnel, and to forward 
the contributions to the trade association's SSF. In that advisory 
opinion, the Commission also interpreted the regulations to permit 
corporate executives who were collecting employee contribution checks 
to use the member corporation's inter-office mail system to help 
collect the checks, and to provide envelopes and postage in which 
contributors could send their contributions to the trade association's 
SSF. See also AO 2000-4 (incorporated credit union members of a trade 
association permitted to deduct and transfer contributions to the trade 
association's SSF from the share accounts of the credit unions' 
individual members).
    These final rules are substantively identical to the rules proposed 
by the Commission in the NPRM, except for one change, discussed below. 
The rules:
     Remove the prohibition on corporate use of a payroll 
deduction or check-off system for solicitable class employee 
contributions to the SSF of a trade association of which the 
corporation is a member (11 CFR 114.8(e)(3));
     Specifically authorize a member corporation to provide 
incidental services to collect and forward contributions from its 
solicitable class employees to a trade association's SSF, including a 
payroll deduction or check-off system, upon written request of the 
trade association (new 11 CFR 114.8(e)(4));
     Require any corporation that provides these incidental 
services, and the corporation's subsidiaries, divisions, branches and 
affiliates, also to make the same services available to a labor 
organization representing members who work for the corporation, or the 
corporation's subsidiaries, divisions, branches or affiliates, for 
contributions to the labor organization's SSF by members of the labor 
organization, upon written request by the labor organization and at a 
cost not to exceed any actual expenses incurred (new 11 CFR 
114.8(e)(4)); and
     Clarify that the provision of incidental services pursuant 
to new 11 CFR 114.8(e)(4) is not prohibited corporate facilitation (new 
11 CFR 114.2(f)(5)).

1. 11 CFR 114.8--Trade Associations

    Generally, 11 CFR 114.8 sets out the circumstances under which an 
incorporated trade association may solicit contributions to its SSF. It 
defines the group of persons that may be solicited, e.g., stockholders 
and the executive and administrative personnel of member corporations 
that give a yearly prior approval to the trade association to solicit 
such personnel, and the methods that may be used for such solicitation. 
Section 114.8(e) more particularly addresses the timing and methods of 
such solicitation.
A. 11 CFR 114.8(e)(3)
    The Commission is deleting the second sentence of former 11 CFR 
114.8(e)(3) in its entirety. This second sentence prohibited a 
corporation from using a payroll deduction or check-off system for 
contributions by the corporation's solicitable class employees to the 
SSF of a trade association of which the corporation is a member. The 
Commission is making this change to conform paragraph 114.8(e)(3) with 
new paragraph 114.8(e)(4), discussed below.

[[Page 41941]]

B. 11 CFR 114.8(e)(4)
    The Commission is adding a new paragraph 114.8(e)(4) to allow, but 
not require, a corporation to provide incidental services to collect 
and forward contributions from its solicitable class employees to the 
SSF of a trade association of which the corporation is a member, upon 
written request of the trade association. The new rule expressly 
provides that incidental services may include a payroll deduction or 
check-off system.
(i) Incidental Services
    The Commission is changing the rules to allow a corporate member of 
a trade association to provide incidental services to collect and 
forward voluntary contributions from solicitable class employees to the 
trade association's SSF, because of the special relationship that 
exists between a trade association and its member corporations. This 
special relationship is firmly rooted in the Act. Although the Act 
generally prohibits a corporation and its SSF from soliciting 
contributions from anyone other than the corporation's own 
stockholders, executive and administrative personnel, and their 
families, the Act specifically allows a trade association, including an 
incorporated trade association and its SSF, to solicit contributions 
from the stockholders, executive and administrative personnel, and 
their families, of the trade association's member corporations, to the 
extent specifically approved by the member corporations. See 2 U.S.C. 
441b(b)(4)(A)(i); 2 U.S.C. 441b(b)(4)(D).\2\
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    \2\ A member corporation may not approve solicitations by more 
than one trade association in any calendar year. 2 U.S.C. 
441b(b)(4)(D); 11 CFR 114.8(c)(2).
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    The Commission has recognized this special relationship before. For 
example, the Commission specifically rejected an interpretation of the 
Act that would have required a trade association to reimburse its 
member corporations for incidental costs related to assistance with 
fundraising by the trade association for its SSF. As the Commission 
stated, ``to require a trade association to reimburse the corporation 
for incidental services, such as the distribution of the association's 
[SSF fundraising] material via the corporation's internal mailing 
system, seemed tenuous since the trade association will be paying for 
the substantial costs of the solicitation with the membership fees from 
corporations. Consequently, the Commission has not required the trade 
association to reimburse the corporation for such incidental 
expenditures.'' \3\ See also AO 1978-13 (``Just as a corporation is not 
precluded from giving incidental aid, which entails incidental 
expenditures, to solicitations made by a trade association, a corporate 
member of a trade association is not precluded from making incidental 
expenditures regarding administration of the trade association's 
[SSF].'') (citation omitted); and AO 1979-8 (``Since [the trade 
association] is permitted to spend dues monies from its corporate 
members for the establishment, administration, and solicitation of 
contributions to the PAC, it may also have the benefit of incidental 
services * * * provided by executive and administrative personnel of 
its member corporations who conduct those same activities.'').
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    \3\ Explanation and Justification, Federal Election Regulations, 
House Document No. 95-44, 95th Cong., 1st Session at 114 (1977).
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(ii) Payroll Deductions
    Nearly all the commenters observed that it no longer makes sense to 
distinguish between payroll deductions and other forms of permissible 
incidental services. The Commission agrees that technological and 
societal changes over the past 29 years support a change in the 
treatment of payroll deductions, when used by a corporate member of a 
trade association.
    The availability and use of electronic payments in general have 
changed considerably since 1976, when the Commission first prohibited 
corporate use of payroll deduction and check-off systems for employee 
contributions to a trade association's SSF. Although ``it has taken 
years of investments in electronic infrastructure at homes and 
businesses to support the use of electronic payments as a convenient 
and relatively low-cost alternative to checks,'' \4\ electronic payment 
systems are now widely used by Federal agencies, such as the Internal 
Revenue Service and the Social Security Administration, and by the 
private sector. In fact, there were almost 10 billion more electronic 
payments in this country than payments by paper check in 2003.\5\
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    \4\ Remarks by Alan Greenspan at the Federal Reserve Payments 
System Development Committee 2003 Conference, Oct. 29, 2003.
    \5\ Federal Reserve Board Press Release: Federal Reserve Studies 
Confirm Electronic Payments Exceed Check payments for the First Time 
(Dec. 6, 2004), available at http://www.federalreserve.gov/boarddocs/press/other/2004/20041206/default.htm (viewed June 2, 
2005).
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    Payroll deductions, in particular, are increasingly prevalent in 
the workplace. A large number of employees use them to pay for a 
variety of goods and services, such as health and life insurance 
premiums, flexible spending accounts, retirement savings plans, 
charitable contributions, loan and mortgage payments, gym memberships 
and club dues. Several commenters observed that payroll deductions are 
widely available, reliable, simple to administer, convenient, and 
impose minimal or no cost on the corporations that offer them. The 
Commission now believes that a member corporation's collection and 
forwarding of voluntary contributions from solicitable class employees 
to a trade association's SSF via payroll deduction under these 
circumstances is a permissible ``incidental service.''
    Several commenters pointed out the important public policy 
objectives that will be furthered by allowing solicitable class 
employees to contribute voluntarily through payroll deductions or 
check-off systems to the SSF of a trade association of which their 
corporation is a member. By permitting solicitable class employees to 
sign up for automatic payroll deductions, rather than requiring them to 
write a contribution check, these employees may spread out their 
contributions over time, thereby potentially enhancing their 
participation in the political process. Moreover, the ability to 
participate in the process by contributing to a trade association's SSF 
is particularly important for employees of the many small companies 
that rely exclusively on their trade associations' SSFs to serve as 
their political voice. This position was reiterated by two of the 
commenters at the Commission's May 17, 2005 hearing.
    As the Supreme Court noted in Buckley v. Valeo, ``[e]ncouraging 
citizen participation in political campaigns while continuing to guard 
against the corrupting potential of large financial contributions to 
candidates' is an important goal of the Act. Buckley v. Valeo, 424 U.S. 
1, 36 (1976). The Commission believes that permitting a corporation's 
solicitable class employees to make voluntary contributions to the SSF 
of the corporation's trade association through payroll deduction will 
help to achieve this objective.
    In addition, a number of commenters indicated that the use of 
payroll deductions for voluntary contributions from solicitable class 
employees to a trade association's SSF will make it easier for the SSF 
to track and report such contributions. The disclosure requirements of 
the Act serve three important government interests: (1) Providing the 
electorate with information; (2) deterring actual corruption and 
avoiding the appearance

[[Page 41942]]

of corruption; and (3) gathering data necessary for enforcement of the 
Act. See McConnell v. Federal Election Commission, 540 U.S. 93, 196 
(2003). The Commission believes that this final rule will help to 
further these important interests by enhancing the ability of a trade 
association's SSF to track and report individual employee 
contributions.
    Removing the regulatory prohibition on the use of payroll deduction 
and check-off systems could also help to reduce some perceived 
disadvantages in the fundraising abilities of trade association SSFs. 
Some commenters indicated that the current prohibition in 11 CFR 
114.8(e)(3) disadvantages SSFs sponsored by smaller trade associations 
that try to compete in the political arena against SSFs sponsored by 
larger trade associations, because SSFs sponsored by smaller trade 
associations have fewer resources to devote to fundraising. Other 
commenters complained that the prohibition further disadvantages SSFs 
sponsored by trade associations that try to compete with larger 
corporate and labor organization SSFs, because corporate and labor 
organization SSFs are allowed to offer payroll deductions for 
contributions to their own SSFs and are not required to obtain approval 
before soliciting restricted class or member employees. Removing the 
prohibition on member corporations' use of payroll deductions to 
collect solicitable class employee contributions to a trade 
association's SSF will help to reduce these perceived disadvantages.
    The Commission cautions, however, that the provision of incidental 
services by a member corporation to a trade association remains subject 
to certain requirements under the Act and Commission regulations. For 
example, the member corporation must first ``separately and 
specifically approve'' the solicitation of its solicitable class 
employees by a trade association, and it cannot authorize more than one 
trade association to solicit these employees in any calendar year. See 
2 U.S.C. 441b(b)(4)(D); 11 CFR 114.8(c), (d).
    Moreover, contributions made via payroll deduction or check-off 
system trigger special recordkeeping obligations for the recipient SSF. 
Each contributor must affirmatively authorize the deduction in writing, 
in advance, and the authorization must manifest the contributor's 
``specific and voluntary donative intent.'' See Federal Election 
Commission v. National Education Association, 457 F.Supp. 1102 (D.D.C. 
1978); AOs 2001-4 and 1997-25. The SSF must maintain the authorization 
for audit or inspection purposes for at least three years after the 
filing date of each report that discloses a contribution made pursuant 
to the authorization. See 11 CFR 104.14(b)(2), 102.9(c); AO 2000-4, 
n.3.
(iii) Equal Access for Labor Organizations
    Under the rule proposed in the NPRM, any member corporation that 
provided incidental services to collect and forward contributions by 
certain persons to a trade association's SSF also would have had to 
make these incidental services available to a labor organization 
representing members working for the corporation, upon written request 
of the labor organization and at a cost that does not exceed any actual 
expenses incurred. As stated in the NPRM, the Commission considers this 
requirement to be necessary to prevent circumvention of provisions in 
the Act and Commission regulations that seek to prevent corporate SSFs 
from gaining an unfair fundraising advantage over labor organization 
SSFs. See 69 FR 76631.
    One commenter asserted that the Act requires the Commission to 
change the proposed rule by extending the equal access requirement to a 
member corporation's subsidiaries, divisions, branches and affiliates, 
in addition to the corporation itself. The commenter argued that, if a 
corporate member of a trade association uses a payroll deduction or 
check-off system to collect and forward employee contributions from 
solicitable class employees to the trade association's SSF, then a 
labor organization representing any members that work for the 
corporation or for any of the corporation's subsidiaries, divisions, 
branches or affiliates would be entitled to require the corporation and 
the corporation's subsidiaries, divisions, branches or affiliates to 
provide a payroll deduction or check-off system to collect and forward 
contributions to the labor organization's SSF.
    The commenter stated that this change to the proposed rule is 
mandated by 2 U.S.C. 441b(b)(6). Section 441b(b)(6) provides that 
``[a]ny corporation, including its subsidiaries, branches, divisions, 
and affiliates,'' that uses a method of soliciting voluntary 
contributions or of facilitating the making of voluntary contributions, 
must make that method available to a labor organization ``representing 
any members working for such corporation, its subsidiaries, branches, 
divisions, and affiliates,'' upon written request of the labor 
organization and at a cost sufficient only to reimburse the corporation 
for its expenses. 2 U.S.C. 441b(b)(6).
    In support of the rule proposed in the NPRM, however, the 
Petitioner asserted that 2 U.S.C. 441b(b)(6) must be read together with 
2 U.S.C. 441b(b)(4)(D), the statutory provision enabling the 
solicitation of executive and administrative employees of member 
corporations for contributions to a trade association's SSF. While 
acknowledging that the Act and regulations strike a careful balance 
between corporations and labor organizations, the Petitioner argued 
that 2 U.S.C. 441b(b)(4)(D) specifically limits the scope of trade 
association solicitations of solicitable employees of the member 
corporation, and does not extend the scope of permissible solicitations 
to other employees of non-member subsidiaries or affiliates.
    The Commission believes that 2 U.S.C. 441b(b)(6) and its 
implementing regulation, 11 CFR 114.5(k)(1), require the proposed rule 
to be changed as requested by the commenter. Although, as noted by the 
Petitioner, a trade association's ability to seek solicitation rights 
from member corporations is governed by 2 U.S.C. 441b(b)(4)(D), the 
member corporations themselves are separately subject to the broad 
equal access provisions of 2 U.S.C. 441b(b)(6) and 11 CFR 114.5(k)(1). 
Moreover, these equal access provisions do not distinguish between 
corporate methods of facilitating the making of contributions to a 
corporation's own SSF and corporate methods of facilitating the making 
of contributions to the SSF of a trade association of which the 
corporation is a member. Rather, the provisions apply broadly to 
``[a]ny corporation * * * that utilizes a method of * * * facilitating 
the making of voluntary contributions.'' 2 U.S.C. 441b(b)(6); 11 CFR 
114.5(k). Methods of facilitating the making of contributions include 
payroll deduction and check-off systems. See 114.1(f).
    Thus, under this new rule, any corporate member of a trade 
association that chooses to provide incidental services to collect and 
forward voluntary contributions from its solicitable class employees to 
the trade association's SSF must provide the same services upon request 
to the SSF of a labor organization representing any members working for 
the corporation or the corporation's subsidiaries, divisions, branches, 
or affiliates. In addition, the subsidiaries, divisions, branches, and 
affiliates of the corporate member must also provide the same 
incidental services upon request to the SSF of a labor organization 
representing any members working for the corporation or the 
corporation's subsidiaries, divisions, branches, or affiliates.

[[Page 41943]]

    This result is also consistent with the Commission's application of 
the equal access provisions of 2 U.S.C. 441b(b)(6) to twice yearly 
solicitations. See 2 U.S.C. 441b(b)(4)(B); 11 CFR 114.6. In the context 
of twice yearly solicitations, if any corporate unit within a corporate 
family uses a method of facilitating the making of contributions to the 
corporation's SSF, then all units within that family must make the 
method available to a labor organization. See, e.g., AO 1990-25 (a 
parent corporation that uses a method of facilitation for only certain 
subsidiaries must nonetheless ensure that the method is available to a 
labor organization, even at subsidiaries that do not themselves use the 
method of facilitation).
    In addition to being compelled by the Act, there are strong policy 
reasons for making this change. The Petitioners and other commenters 
acknowledged that corporations that do not have their own SSF may rely 
exclusively on their trade associations' SSFs to serve as their proxy 
SSFs in representing their corporate interests in the political arena. 
In such circumstances, the Commission concludes that labor 
organizations should have the same rights that they would enjoy if the 
corporations had established their own SSFs.
    Moreover, under the rule proposed in the NPRM, corporate families 
that employ most of their administrative and management personnel in 
one corporation, and most of their members of labor organizations in 
another corporation, could have effectively undermined the equal access 
rights of labor organizations, by providing incidental services to 
collect and forward solicitable class employee contributions to a trade 
association's SSF only within the corporation employing executive and 
administrative personnel and not in the corporation employing labor 
organization members. This outcome would be inconsistent with the 
careful balance struck by Congress and the Commission between corporate 
SSFs and labor organization SSFs. See, e.g., 122 Cong. Rec. 3782 (daily 
ed. May 3, 1976) (Statement of Rep. Brademas, reprinted in Legislative 
History of the Federal Election Campaign Act Amendments of 1976 at 
1082).
    The Commission is also mindful that virtually all commenters 
indicated that payroll deductions are both easy to administer and 
common, and that this new rule requires any labor organization 
requesting access to such a method of facilitating contributions to 
reimburse the corporation for the expenses incurred.
(iv) Reimbursement by Labor Organizations
    This final rule distinguishes between providing incidental services 
to collect and forward solicitable class employee contributions to a 
trade association's SSF on the one hand, and providing incidental 
services to collect and forward employee-member contributions to a 
labor organization's SSF on the other hand, with regard to the 
requirement for reimbursement by the recipient SSF. As noted above, 
``incidental services by corporate members would not require 
reimbursement by the trade association since, in any event, 
reimbursement if required would come from membership dues paid to the 
trade association by its corporate members.'' AO 1979-8 (citation 
omitted); see also AO 1978-13. A labor organization or its SSF that 
receives incidental services from a corporate employer of members of 
the labor organization, by contrast, is required to reimburse the 
corporation for the cost of providing those services. See AOs 1981-39 
and 1979-21. The Commission has previously concluded that a prohibited 
corporate contribution would result from a failure by a labor 
organization to reimburse a corporation for actual expenses incurred by 
the corporation in providing a payroll deduction or check-off system 
for contributions to the labor organization's SSF. Id.

2. 11 CFR 114.2--Prohibitions on Contributions and Expenditures

    The Commission is making a conforming change to 11 CFR 114.2(f), 
which prohibits a corporation from facilitating the making of 
contributions to political committees, other than to the corporation's 
own SSF. The term ``facilitation'' means ``using corporate or labor 
organization resources or facilities to engage in fundraising 
activities in connection with any federal election.'' 11 CFR 
114.2(f)(1). Facilitation does not include, however, enrollment by a 
corporation or labor organization of members of the corporation's or 
labor organization's restricted class in a payroll deduction plan or 
check-off system to make contributions to the corporation's or labor 
organization's SSF. See 11 CFR 114.2(f)(4)(i).
    The Commission is adding a new paragraph (5) to 11 CFR 114.2(f), to 
specify that facilitation also does not include the provision of 
incidental services by a corporation to collect and forward voluntary 
contributions from its solicitable class employees to the SSF of a 
trade association of which the corporation is a member, pursuant to 11 
CFR 114.8(e)(4), as revised. New 11 CFR 114.2(f)(5) expressly permits a 
corporation to collect these contributions through a payroll deduction 
or check-off system. The Commission did not receive any comments on 
this change, which was proposed in the NPRM.
    Additionally, the Commission is revising the second sentence of 
paragraph (a) of 11 CFR 114.2 to correct two typographical errors. In 
the phrase that currently reads, `` * * * form making expenditures as 
defined in 11 FR 114.1(a) * * *,'' the Commission is changing the word 
``form'' to ``from'' and is correcting the citation to ``11 CFR 
114.1(a).'' Because these corrections are technical, they are not a 
substantive rule requiring notice and comment under the Administrative 
Procedure Act, 5 U.S.C. 553.

3. Other Issues

    In response to the NPRM, one commenter asked the Commission also to 
change 11 CFR 114.7, to allow a corporation to provide incidental 
services to collect and forward contributions to a membership 
organization's SSF from employees who are members of the membership 
organization. The Commission has determined, however, that this 
proposal falls outside of the scope of this rulemaking.

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

    The Commission certifies that the attached final rules would not 
have a significant economic impact on a substantial number of small 
entities. The basis for this certification is that the attached rules 
permit, but do not require, a corporation to provide incidental 
services to collect and forward contributions from its solicitable 
class employees to the separate segregated fund of a trade association 
of which the corporation is a member, including the use of a payroll 
deduction or check-off system. A corporation is currently permitted to 
collect and transmit contributions by other means to the SSF of a trade 
association of which the corporation is a member. The attached rules 
enable those corporations that wish to transmit employee contributions 
to trade association SSFs to do so more efficiently and use fewer 
resources.

List of Subjects in 11 CFR Part 114

    Business and industry, Elections, Labor.


0
For the reasons set out in the preamble, subchapter A of chapter 1 of 
title 11 of

[[Page 41944]]

the Code of Federal Regulations is amended as follows:

PART 114--CORPORATE AND LABOR ORGANIZATION ACTIVITY

0
1. The authority citation for part 114 continues to read as follows:

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


0
2. Section 114.2 is amended by revising the second sentence of 
paragraph (a) and by adding new paragraph (f)(5), to read as follows:


Sec.  114.2  Prohibitions on contributions and expenditures.

    (a) * * *
    National banks and corporations organized by authority of any law 
of Congress are prohibited from making expenditures as defined in 11 
CFR 114.1(a) for communications to those outside the restricted class 
expressly advocating the election or defeat of one or more clearly 
identified candidate(s) or the candidates of a clearly identified 
political party, with respect to an election to any political office, 
including any local, State, or Federal office.
* * * * *
    (f) * * *
    (5) Facilitating the making of contributions also does not include 
the provision of incidental services by a corporation to collect and 
forward contributions from its employee stockholders and executive and 
administrative personnel to the separate segregated fund of a trade 
association of which the corporation is a member, including collection 
through a payroll deduction or check-off system, pursuant to 11 CFR 
114.8(e)(4).

0
3. In Sec.  114.8, paragraph (e)(3) is revised, paragraph (e)(4) is 
redesignated as new paragraph (e)(5), and new paragraph (e)(4) is added 
to read as follows:


Sec.  114.8  Trade associations.

* * * * *
    (e) * * *
    (3) There is no limitation on the method of soliciting voluntary 
contributions or the method of facilitating the making of voluntary 
contributions which a trade association may use.
    (4) A corporation may provide incidental services to collect and 
forward contributions from its employee stockholders and executive and 
administrative personnel to the separate segregated fund of a trade 
association of which the corporation is a member, including a payroll 
deduction or check-off system, upon written request of the trade 
association. Any corporation that provides such incidental services, 
and the corporation's subsidiaries, branches, divisions, and 
affiliates, shall make those incidental services available to a labor 
organization representing any members working for the corporation or 
the corporation's subsidiaries, branches, divisions, or affiliates, 
upon written request of the labor organization and at a cost sufficient 
only to reimburse the corporation or the corporation's subsidiaries, 
branches, divisions, and affiliates, for the expenses incurred thereby.
* * * * *

    Dated: July 14, 2005.
Scott E. Thomas,
Chairman, Federal Election Commission.
[FR Doc. 05-14318 Filed 7-20-05; 8:45 am]
BILLING CODE 6715-01-P