[Federal Register Volume 79, Number 201 (Friday, October 17, 2014)]
[Proposed Rules]
[Pages 62361-62363]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-24660]


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FEDERAL ELECTION COMMISSION

11 CFR Part 110

[NOTICE 2014-12]


Aggregate Biennial Contribution Limits

AGENCY: Federal Election Commission.

ACTION: Advance notice of proposed rulemaking.

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SUMMARY: In addition to publishing in today's Federal Register an 
Interim Final Rule to remove the aggregate contribution limits from the 
Commission's regulations, the Commission requests comments on whether 
to begin a rulemaking to revise other regulations in light of certain 
language from the Supreme Court's recent decision in McCutcheon v. FEC. 
The Commission intends to review the comments it receives as it decides 
what revisions, if any, it will propose making to its rules.

DATES: Comments must be received on or before January 15, 2015. The 
Commission will hold a hearing on these issues on February 11, 2015. 
Anyone wishing to testify at the hearing must file written comments by 
the due date and must include a request to testify in the written 
comments.

ADDRESSES: All comments must be in writing. Comments may be submitted 
electronically via the Commission's Web site at sers.fec.gov, reference 
REG 2014-01. Commenters are encouraged to submit comments 
electronically to ensure timely receipt and consideration. 
Alternatively, comments may be submitted in paper form. Paper comments 
must be sent to the Federal Election Commission, Attn.: Amy L. 
Rothstein, Assistant General Counsel, 999 E Street NW., Washington, DC 
20463. All comments must include the full name and postal service 
address of a commenter, and of each commenter if filed jointly, or they 
will not be considered. The Commission will post comments on its Web 
site at the conclusion of the comment period.

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

[[Page 62362]]


SUPPLEMENTARY INFORMATION:

Background

    The Federal Election Campaign Act, 52 U.S.C. 30101-46 (formerly 2 
U.S.C. 431-57) (``FECA''), imposes two types of limits on the amount 
that individuals may contribute in connection with federal elections. 
The ``base limits'' restrict how much an individual may contribute to a 
particular candidate or political committee per election or calendar 
year. See 52 U.S.C. 30116(a)(1) (formerly 2 U.S.C. 441a(a)(1)). The 
``aggregate limits'' restrict how much an individual may contribute to 
all candidate committees, political party committees, and other 
political committees in each two-year election cycle.\1\ See 52 U.S.C. 
30116(a)(3) (formerly 2 U.S.C. 441a(a)(3)). The Commission has 
implemented the aggregate limits in its regulations at 11 CFR 110.5.
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    \1\ Under the aggregate limits, as indexed for inflation in the 
2013-14 election cycle, an individual could contribute up to $48,600 
to candidates and their authorized committees, and up to $74,600 to 
other political committees, of which no more than $48,600 could be 
contributed to political committees other than national party 
committees. See Price Index Adjustments for Contribution and 
Expenditure Limitations and Lobbyist Bundling Disclosure Threshold, 
78 FR 8530, 8532 (Feb. 6, 2013).
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    On April 2, 2014, the United States Supreme Court held that the 
aggregate contribution limits at 52 U.S.C. 30116(a)(3) (formerly 2 
U.S.C. 441a(a)(3)) are unconstitutional. McCutcheon v. FEC, 572 U.S. _, 
134 S. Ct. 1434, 1442, 1450-59 (2014) (plurality op.). The Court's 
decision did not affect the base limits. See id. at 1442. Accordingly, 
in an Interim Final Rule published today in the Federal Register, the 
Commission deleted 11 CFR 110.5 and made technical and conforming 
changes to 11 CFR 110.1(c), 110.14(d) and (g), 110.17(b), and 110.19 to 
conform its regulations to the McCutcheon decision.
    The Commission also seeks comment on whether it should further 
modify its regulations or practices in response to certain language 
from the McCutcheon decision.\2\ The Commission acknowledges that these 
issues are not presented in this Advance Notice of Proposed Rulemaking 
in a way to fully apprise interested parties with sufficient clarity 
and specificity for the Commission to enact a final rule.
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    \2\ McCutcheon, 134 S. Ct. at 1453-54, 1458-60.
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    Although it held the aggregate limits to be unconstitutional, the 
Supreme Court indicated that there are ``multiple alternatives 
available to Congress that would serve the Government's interest in 
preventing circumvention while avoiding `unnecessary abridgment' of 
First Amendment rights.'' McCutcheon, 134 S. Ct. at 1458 (quoting 
Buckley v. Valeo, 424 U.S. 1, 25 (1976)). The Court identified 
mechanisms that could be implemented or amended to prevent 
circumvention of the base limits, including: Earmarking regulations, 11 
CFR part 110; affiliation factors, 11 CFR 100.5; joint fundraising 
committee regulations, 11 CFR 102.17; and disclosure regulations, 11 
CFR part 104. The Commission seeks comment on whether it should modify 
its regulations or practices in these areas, as discussed below. The 
Commission also seeks comment on whether it should make any other 
regulatory changes in light of the decision.

Earmarking

    The Act provides that ``all contributions made by a person, either 
directly or indirectly, on behalf of a particular candidate, including 
contributions which are in any way earmarked or otherwise directed 
through an intermediary or conduit to such candidate,'' are 
contributions from that person to the candidate. 52 U.S.C. 30116(a)(8) 
(formerly 2 U.S.C. 441a(a)(8)). The Commission's regulations define the 
term ``earmarked'' to mean ``a designation, instruction, or 
encumbrance, whether direct or indirect, express or implied, oral or 
written, which results in all or any part of a contribution or 
expenditure being made to, or expended on behalf of, a clearly 
identified candidate or a candidate's authorized committee.'' 11 CFR 
110.6(b)(1).
    In analyzing whether the aggregate contribution limits served to 
prevent circumvention of the base limits, the Court relied on this 
``broad[ ]'' definition of ``earmarked'' at 11 CFR 110.6(b)(1) to 
conclude that Commission rules already cover ``implicit agreements to 
circumvent the base limits.'' McCutcheon, 134 S. Ct. at 1447, 1452-56, 
1459; see also id. at 1453 (``[A donor] cannot . . . even imply that he 
would like his money recontributed to [a candidate].''). In enforcement 
actions, however, the Commission has determined that funds are 
considered to be ``earmarked'' only when there is ``clear documented 
evidence of acts by donors that resulted in their funds being used'' as 
contributions.\3\ Should the Commission revisit the manner in which it 
enforces its earmarking regulations to encompass the ``implicit 
agreements'' addressed by the Court?
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    \3\ Factual & Legal Analysis at 6-7, MUR 5732 (Matt Brown for 
U.S. Senate) (Apr. 4, 2007) (concluding that there was no reason to 
believe earmarking had occurred where ``there were no cover letters 
or other instructions accompanying the checks'' or ``on the checks 
themselves'') (citing MURs 4831/5274 (Nixon)); see also First 
General Counsel's Report at 14-16, MUR 5445 (Geoffrey Davis for 
Congress) (Feb. 2, 2005); First General Counsel's Report at 9, MUR 
5125 (Paul Perry for Congress) (Dec. 20, 2002) (finding no reason to 
believe where there was no ``designation, instruction, or 
encumbrance on the contribution'').
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    In its discussion of the Commission's earmarking regulations, the 
Court also considered 11 CFR 110.1(h). McCutcheon, 134 S. Ct. at 1453-
56. That rule ``governs the circumstances under which contributions to 
a candidate . . . must be aggregated with contributions to other 
political committees for purposes of the [Act's] contribution limits.'' 
Contribution and Expenditure Limitations and Prohibitions; 
Contributions by Persons and Multicandidate Political Committees, 52 FR 
760, 765 (Jan. 9, 1987). Section 110.1(h) provides that a person may 
contribute both to a candidate for a given election and to a political 
committee that supports the same candidate for the same election so 
long as: (1) The political committee is not an authorized committee or 
a single-candidate committee; (2) the contributor does not give with 
the knowledge that a substantial portion of the contribution will be 
contributed to, or expended on behalf of, that candidate for the same 
election; and (3) the contributor does not retain control over the 
funds. 11 CFR 110.1(h).\4\ These criteria help to ``disarm'' the risk 
of circumvention, McCutcheon, 134 S. Ct. at 1453, and the Court 
accordingly suggested that the Commission ``might strengthen'' 11 CFR 
110.1(h)(2) by ``defining how many candidates a PAC must support in 
order to ensure that `a substantial portion' of a donor's contribution 
is not rerouted to a certain candidate.'' Id. at 1459. Should the 
Commission make such a change to 11 CFR 110.1(h), for example, by 
establishing a minimum number of candidates a PAC must support or by 
establishing a maximum percentage of a PAC's funds that can go to a 
single candidate? \5\ Would such a change

[[Page 62363]]

unnecessarily limit the ability of PACs to associate with candidates? 
In light of the McCutcheon decision and discussion above, should the 
Commission revise any of its other earmarking rules? If so, how?
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    \4\ In Advisory Opinion 2010-09 (Club for Growth) at 5, the 
Commission concluded that ``11 CFR 110.1(h) and its rationale do not 
apply to [an independent-expenditure-only political committee's] 
solicitations or any contributions it receives that are earmarked 
for specific independent expenditures.''
    \5\ In 1985, the Commission proposed revising 11 CFR 110.1(h) to 
clarify its interpretation of the regulation and included a proposal 
to articulate ``indicia of a contributor's `knowledge.' '' See 
Contribution and Expenditure Limitations and Prohibitions: 
Contributions by Persons and Multicandidate Political Committees, 50 
FR 15169, 15172-75 (Apr. 17, 1985). Ultimately, the Commission 
decided not to revise that section. Contribution and Expenditure 
Limitations and Prohibitions; Contributions by Persons and 
Multicandidate Political Committees, 52 FR 760, 765 (Jan. 9, 1987).
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Affiliation

    In addition to the earmarking provisions discussed above, the Court 
cited the anti-proliferation provisions of the Act and Commission 
regulations as mechanisms that limit circumvention of the base limits. 
McCutcheon, 134 S. Ct. at 1453-54 (citing former 2 U.S.C. 441a(a)(5); 
11 CFR 100.5(g)). Commission regulations provide that ``[a]ll 
committees . . . established, financed, maintained, or controlled, by 
the same . . . person, or group of persons . . . are affiliated,'' and 
thus are subject to a single contribution limit. 11 CFR 100.5(g)(2), 
110.3(a)(1)(ii). These regulations include a number of affiliation 
factors, see 11 CFR 100.5(g)(4), 110.3(a)(3), which the Court indicated 
the Commission could use--when presented with ``suspicious patterns of 
PAC donations''--to determine whether political committees are 
affiliated. See McCutcheon, 134 S. Ct. at 1454. Are the current 
affiliation factors at 11 CFR 100.5(g)(4) and 110.3(a)(3) adequate to 
prevent circumvention of the base contribution limits? Should the 
Commission revisit its affiliation factors? If so, how?

Joint Fundraising Committees

    The Act and Commission regulations authorize the creation of joint 
fundraising committees, see 52 U.S.C. 30102(e)(3)(A)(ii) (formerly 2 
U.S.C. 432(e)(3)(A)(ii)); 11 CFR 102.17, as well as the transfer of 
funds between and among participating committees. See 11 CFR 
102.6(a)(1)(iii), 110.3(c)(2). The Court noted that these rules could 
be revised to limit the opportunity for using joint fundraising 
committees to circumvent the base limits. See McCutcheon, 134 S. Ct. at 
1458-59. The Court suggested, for instance, that joint fundraising 
committees could be limited in size, or that funds received by 
participants in a joint fundraising committee could be spent only ``by 
their recipients.'' Id.
    The Act includes the following provisions that can affect transfers 
between committees engaged in joint fundraising. Candidates may 
transfer contributions they receive, ``without limitation, to a 
national, State, or local committee of a political party.'' 52 U.S.C. 
30114(a)(4) (formerly 2 U.S.C. 439a(a)(4)). The limits on contributions 
found at 52 U.S.C. 30116(a)(1) and (2) (formerly 2 U.S.C. 441a(a)(1) 
and (2)) do not apply to transfers ``between and among political 
committees which are national, State, district or local committees 
(including any subordinate committee thereof) of the same political 
party.'' 52 U.S.C. 30116(a)(4) (formerly 2 U.S.C. 441a(a)(4)). The Act 
provides that contributions made by political committees that are 
``established or financed or maintained or controlled'' by the same 
entity shall be considered to have been made by a single committee, 
except that this provision does not ``limit transfers between political 
committees of funds raised through joint fundraising efforts.'' 52 
U.S.C. 30116(a)(5)(A) (formerly 2 U.S.C. 441a(a)(5)(A)).
    In light of the McCutcheon decision and the statutory provisions 
described above, can or should the Commission revise its joint 
fundraising rules? If so, how?

Disclosure

    The Supreme Court observed that disclosure requirements ``may . . . 
`deter actual corruption and avoid the appearance of corruption by 
exposing large contributions and expenditures to the light of 
publicity.' '' McCutcheon, 134 S. Ct. at 1459-60 (quoting Buckley v. 
Valeo, 424 U.S. 1, 67 (1976)). Particularly due to developments in 
technology--primarily the internet--the Court observed that 
``disclosure offers much more robust protections against corruption'' 
because ``[r]eports and databases are available on the FEC's Web site 
almost immediately after they are filed.'' Id. at 1460.
    Given these developments in modern technology, what regulatory 
changes or other steps should the Commission take to further improve 
its collection and presentation of campaign finance data?

    On behalf of the Commission,

    Dated: October 9, 2014.
Lee E. Goodman,
Chairman, Federal Election Commission.
[FR Doc. 2014-24660 Filed 10-16-14; 8:45 am]
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