[Federal Register Volume 79, Number 203 (Tuesday, October 21, 2014)]
[Rules and Regulations]
[Pages 62797-62819]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-24666]
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FEDERAL ELECTION COMMISSION
11 CFR Parts 104 and 114
[Notice 2014-10]
Independent Expenditures and Electioneering Communications by
Corporations and Labor Organizations
AGENCY: Federal Election Commission.
ACTION: Final rules.
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SUMMARY: The Federal Election Commission is revising its rules
regarding corporate and labor organization funding of expenditures,
independent expenditures, and electioneering communications. The
Commission is issuing these rules in response to a Petition for
Rulemaking filed by the James Madison Center for Free Speech
petitioning the Commission to amend its regulations in response to the
decision of the Supreme Court in Citizens United v. FEC.
DATES: These rules will be effective once they have been before
Congress for 30 legislative days. 52 U.S.C. 30111(d) (formerly 2 U.S.C.
438(d)). A document announcing the effective date will be published in
the Federal Register.
FOR FURTHER INFORMATION CONTACT: Mr. Robert M. Knop, Assistant General
Counsel, or Attorneys Ms. Esther D. Gyory, Ms. Cheryl A.F. Hemsley, or
Ms. Joanna S. Waldstreicher, 999 E Street NW., Washington, DC 20463,
(202) 694-1650 or (800) 424-9530. Documents relating to the rulemaking
record are available on the Commission's Web site at http://www.fec.gov/fosers/ (REG 2010-01 Independent Expenditures and
Electioneering Communications by Corporations and Labor Organizations
(Citizens United)).
SUPPLEMENTARY INFORMATION: The Commission is revising its regulations
at 11 CFR Part 114 concerning the making of independent expenditures
and electioneering communications by corporations and labor
organizations. The Commission is: (1) Removing the prohibitions in 11
CFR 114.2 on the use of corporate and labor organization general
treasury funds to finance independent expenditures and electioneering
communications; (2) removing the prohibitions in 11 CFR 114.4 regarding
express advocacy communications to the general public and revising the
standards in 11 CFR 114.3 for voter registration and get-out-the-vote
(``GOTV'') drives, while revising these sections to maintain certain
existing exemptions for the activities addressed therein; (3) revising
the regulation at 11 CFR 114.10, which currently governs the making of
independent expenditures and electioneering communications by qualified
nonprofit corporations; (4) removing 11 CFR 114.14 and 114.15, which
prohibit corporations and labor organizations from making certain
electioneering communications; and (5) revising certain provisions in
11 CFR 104.20 that govern the reporting of electioneering
communications. The Commission is also making technical and conforming
changes to 11 CFR 114.1 and 114.2. The Commission is
[[Page 62798]]
not, at this time, revising 11 CFR 114.9, which governs the use of
corporate and labor organization facilities for political activity.
Transmission of Final Rules to Congress
Before final promulgation of any rules or regulations to carry out
the provisions of the Federal Election Campaign Act, the Commission
transmits the rules or regulations to the Speaker of the House of
Representatives and the President of the Senate for a thirty-
legislative-day review period. 52 U.S.C. 30111(d) (formerly 2 U.S.C.
438(d)). The final rules that follow were transmitted to Congress on
October 10, 2014.
Explanation and Justification
I. Background
The Federal Election Campaign Act of 1971, as amended \1\ (the
``Act''), prohibits corporations and labor organizations from using
general treasury funds to make contributions or expenditures in
connection with federal elections. 52 U.S.C. 30118 (formerly 2 U.S.C.
441b). The term ``contribution or expenditure'' includes any ``direct
or indirect payment, distribution, loan, advance, deposit, or gift of
money, or any services, or anything of value . . . to any candidate,
campaign committee, or political party or organization,'' in connection
with any federal election. 52 U.S.C. 30118(b)(2) (formerly 2 U.S.C.
441b(b)(2)); 11 CFR 114.1(a)(1); see also 52 U.S.C. 30101(8)(A), (9)(A)
(formerly 2 U.S.C. 431(8)(A), (9)(A)); 11 CFR 100.52, 100.111. As
enacted, the Act's prohibition on expenditures by corporations and
labor organizations included ``independent expenditures,'' which are
expenditures expressly advocating the election or defeat of a clearly
identified candidate that are not made in concert or cooperation with,
or at the request or suggestion of, a clearly identified candidate, the
candidate's authorized political committee, or their agents, or a
political party committee and its agents. 52 U.S.C. 30101(17) (formerly
2 U.S.C. 431(17)); 11 CFR 100.16(a).
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\1\ 52 U.S.C. 30101-30146 (formerly 2 U.S.C. 431-457).
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The Bipartisan Campaign Reform Act of 2002 \2\ (``BCRA'') amended
the Act also to prohibit corporations and labor organizations from
using general treasury funds to make electioneering communications. 52
U.S.C. 30118(b)(2) (formerly 2 U.S.C. 441b(b)(2)). Electioneering
communications are broadcast, cable, or satellite communications that
refer to a clearly identified candidate for federal office, are
publicly distributed within 60 days before a general election or 30
days before a primary election, and are targeted to the relevant
electorate. 52 U.S.C. 30104(f)(3)(A)(i), (C) (formerly 2 U.S.C.
434(f)(3)(A)(i), (C)); 11 CFR 100.29(a)(1)-(3).
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\2\ Public Law 107-155, 116 Stat. 81 (2002).
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The Commission's regulations implementing the prohibitions on
independent expenditures and electioneering communications by
corporations and labor organizations are found at 11 CFR part 114.
The Act and Commission regulations require entities that make
independent expenditures and electioneering communications to report
certain information to the Commission, which then places the reports on
the public record. 52 U.S.C. 30104(c), (f) (formerly 2 U.S.C. 434(c),
(f)); 11 CFR 104.20, 109.10. The Act and Commission regulations also
require communications expressly advocating the election or defeat of a
clearly identified candidate, as well as electioneering communications,
to include disclaimers stating who paid for the communication and
whether the communication was authorized by a federal candidate or a
federal candidate's authorized political committee or its agents. 52
U.S.C. 30120(a) (formerly 2 U.S.C. 441d(a)); 11 CFR 110.11.
A. The Rulemaking Record
These final rules respond to a Petition for Rulemaking filed on
behalf of the James Madison Center for Free Speech and to the decision
of the Supreme Court in Citizens United v. FEC, 558 U.S. 310 (2010),
discussed below. The Commission published a Notice of Availability
seeking public comment on the Petition for Rulemaking in the Federal
Register on June 21, 2011. Independent Expenditures and Electioneering
Communications by Corporations and Labor Organizations, 76 FR 36001
(June 21, 2011). The comment period closed on August 22, 2011. The
Commission received three comments in response to the Notice of
Availability.
The Commission published a Notice of Proposed Rulemaking (``NPRM'')
in the Federal Register on December 27, 2011. Independent Expenditures
and Electioneering Communications by Corporations and Labor
Organizations, 76 FR 80803 (Dec. 27, 2011). The NPRM comment period
ended on February 3, 2012, and the reply comment period ended on
February 17, 2012. The Commission received nine comments from 21
commenters in response to the NPRM.
The Commission held a public hearing on March 7, 2012. Five
commenters testified.
B. Citizens United
In Citizens United, the Supreme Court held that the Act's
prohibitions on financing independent expenditures and electioneering
communications with corporate general treasury funds were
unconstitutional.\3\ Citizens United, a non-profit corporation,
released a film in January 2008 in theaters and on DVD about then-
Senator Hillary Clinton, who was a candidate in the Democratic Party's
2008 presidential primary elections. Citizens United wanted to pay
cable companies to make the film available to digital cable subscribers
for free through video-on-demand, which allows subscribers to view
programming, including movies. Citizens United planned to make the film
available within 30 days before the 2008 primary elections.
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\3\ Although Citizens United did not directly address whether
labor organizations also have a First Amendment right to use their
general treasury funds for independent expenditures and
electioneering communications, the Act and Commission regulations
generally treat labor organizations similarly to corporations. See
52 U.S.C. 30118 (formerly 2 U.S.C. 441b); see generally 11 CFR part
114; see also Advisory Opinion 2010-11 (Commonsense Ten) at n.3.
When addressing corporations, the Court in Citizens United often
referred to labor organizations, see, e.g., 558 U.S. at 318, 343,
and the Court provided no basis for treating labor organization
communications differently than corporate communications under the
First Amendment. Therefore, as proposed in the NPRM, the final rules
make the same regulatory changes for both corporations and labor
organizations.
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Citizens United filed suit, arguing that the ban on corporate
electioneering communications at 52 U.S.C. 30118(b)(2) (formerly 2
U.S.C. 441b(b)(2)) was unconstitutional as applied to payments to make
the film available through video-on-demand. Citizens United also argued
that the disclosure and disclaimer requirements at 52 U.S.C. 30104(f)
and 30120 (formerly 2 U.S.C. 434(f) and 441d) were unconstitutional as
applied to payments for the film and for three planned advertisements
for the movie.
The Supreme Court invalidated section 30118's (formerly 2 U.S.C.
441b) restrictions on corporate independent expenditures and
electioneering communications. 558 U.S. at 365. The Court held that the
prohibition on corporate independent expenditures and electioneering
communications was a ban on speech and concluded that section 30118
(formerly 2 U.S.C. 441b) was therefore ``subject to strict scrutiny.''
Id. at 339-40.
[[Page 62799]]
The Court noted that ``[p]olitical speech is `indispensable to
decisionmaking in a democracy, and this is no less true because the
speech comes from a corporation rather than an individual.' '' Id. at
349 (quoting First Nat'l Bank of Boston v. Bellotti, 435 U.S. 765, 777
(1978)). The Court stated that the anti-distortion rationale previously
used to justify restrictions on corporate speech ``interferes with the
`open marketplace of ideas' protected by the First Amendment.'' Id. at
354.\4\ The Supreme Court also found that corporate independent
expenditures could not be limited in order to protect dissenting
shareholders from being compelled to fund corporate political speech.
Id. at 361-62. Such disagreements, the Court found, could be corrected
by shareholders through the procedures of corporate democracy. Id.
``All speakers, including individuals and the media, use money amassed
from the economic marketplace to fund their speech, and the First
Amendment protects the resulting speech.'' Id. at 351. Accordingly, the
Supreme Court held that ``the rule that political speech cannot be
limited based on a speaker's wealth is a necessary consequence of the
premise that the First Amendment generally prohibits the suppression of
political speech based on the speaker's identity.'' Id. at 350.
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\4\ The Court therefore overruled its previous decisions in
Austin v. Mich. Chamber of Commerce, 494 U.S. 652 (1990), and, in
part, McConnell v. FEC, 540 U.S. 93, 203-09 (2003).
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The Supreme Court further held that, while the government has a
compelling interest in preventing corruption or the appearance of
corruption, ``independent expenditures, including those made by
corporations, do not give rise to corruption or the appearance of
corruption.'' Id. at 357. Thus, the Court invalidated section 30118's
(formerly 2 U.S.C. 441b) restrictions on corporate independent
expenditures and electioneering communications. Id. at 365.
Citizens United also challenged the Act's disclaimer and disclosure
provisions at sections 30104(f) and 30120 (formerly 2 U.S.C. 434(f) and
441d) as applied to the film and three advertisements for the film.
Under the Act, electioneering communications must include a statement
identifying the person responsible for payment for the advertisement.
52 U.S.C. 30120(a) (formerly 2 U.S.C. 441d(a)). Also, any person who
spends more than $10,000 on electioneering communications within a
calendar year must file a disclosure statement with the Commission
providing information about the person making the electioneering
communication, the election to which the communication pertains, and
certain contributors who gave $1,000 or more within a specified time
period. 52 U.S.C. 30104(f)(2) (formerly 2 U.S.C. 434(f)(2)).
The Court rejected the challenge to these statutory requirements
and upheld the reporting provisions because ``transparency enables the
electorate to make informed decisions and give proper weight to
different speakers and messages.'' Citizens United, 558 U.S. at 366-71.
The Court recognized that the Commission's current disclaimer and
disclosure requirements advance the public's ``interest in knowing who
is speaking about a candidate shortly before an election.'' Id. at 369.
``Prompt disclosure of expenditures can provide shareholders and
citizens with the information needed to hold corporations and elected
officials accountable for their positions and supporters.'' Id. at 370.
II. Revised 11 CFR 114.2--Prohibitions on Contributions, Expenditures
and Electioneering Communications
The existing Commission regulation at 11 CFR 114.2(b) implements 52
U.S.C. 30118(a) (formerly 2 U.S.C. 441b(a)) by prohibiting corporations
and labor organizations from making expenditures, including independent
expenditures.\5\ See 52 U.S.C. 30101(17) (formerly 2 U.S.C. 431(17));
see also 11 CFR 100.16(a). This rule also prohibits corporations and
labor organizations from making payments for electioneering
communications unless certain criteria are met. As a result of the
Supreme Court's invalidation of the prohibitions on corporate
independent expenditures and electioneering communications in 52 U.S.C.
30118(a) (formerly 2 U.S.C. 441b(a)),\6\ certain portions of 11 CFR
114.2(b) are no longer valid. Accordingly, the Commission is revising
this regulation to remove the prohibitions on independent expenditures
and electioneering communications.
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\5\ An ``independent expenditure'' is defined by the Act as ``an
expenditure by a person--(A) expressly advocating the election or
defeat of a clearly identified candidate; and (B) that is not made
in concert or cooperation with or at the request or suggestion of
such candidate, the candidate's authorized political committee, or
their agents, or a political party committee or its agents.'' 52
U.S.C. 30101(17) (formerly 2 U.S.C. 431(17)); see also 11 CFR
100.16(a). ``Expressly advocating'' is defined in 11 CFR 100.22.
\6\ See note 3, above, regarding the applicability of the
Citizens United holding to labor organizations.
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A. Removal of 11 CFR 114.2(b)(2)(i)--Prohibition on Corporate and Labor
Organization Expenditures
Current section 114.2(b)(2)(i) prohibits corporations and labor
organizations from making ``expenditures,'' as defined in 11 CFR part
100, subpart D. With certain exceptions, this prohibition applies to
all expenditures, whether they are independent, coordinated, or any
other form of expenditure, including in-kind contributions.\7\
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\7\ An in-kind contribution is an expenditure. 11 CFR
100.111(e)(1). Except as discussed below in the context of
independent-expenditure-only committees and accounts, corporate and
labor organization contributions, including in-kind contributions,
continue to be prohibited after Citizens United. United States v.
Danielczyk, 683 F.3d 611, 614 (4th Cir. 2012). Coordinated
communications and coordinated expenditures continue to be
prohibited because they are forms of in-kind contributions. 52
U.S.C. 30116(a)(7)(B), 30118(a), (b)(2) (formerly 2 U.S.C.
441a(a)(7)(B), 441b(a), (b)(2)); 11 CFR 109.20(b), 109.21(b).
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In the NPRM, the Commission proposed two alternatives for revising
11 CFR 114.2(b)(2)(i). Both alternatives proposed to permit
corporations and labor organizations to make expenditures from their
general treasury funds for communications that are not coordinated with
a candidate or political party, and both alternatives proposed to
maintain the prohibition on corporate and labor organization
expenditures for all communications and other activities that are
coordinated with a candidate or political party as defined in 11 CFR
109.20 or 109.21.
The alternatives differed in that Alternative A proposed removing
the existing broad prohibition on corporate and labor organization
expenditures from general treasury funds and replacing it with a
regulation specifically prohibiting only (a) expenditures that are
coordinated with a candidate or a political party committee and (b)
coordinated communications. This would have permitted all corporate and
labor organization communications that are made without coordinating
with a candidate, a candidate's authorized committee, or a political
party committee, regardless of whether the communications are express
advocacy. Alternative A also proposed permitting expenditures that are
not for communications as long as they were not in-kind contributions,
such as expenditures that are coordinated with candidates or political
party committees.
In contrast, Alternative B proposed amending the prohibition on
corporate and labor organization expenditures to permit independent
expenditures from
[[Page 62800]]
general treasury funds for non-coordinated communications, but this
proposal would have continued to prohibit non-communicative
expenditures (including in-kind contributions) and coordinated
communications. Alternative B, therefore, would have distinguished
expenditures for communications from other types of expenditures.\8\
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\8\ The Commission's coordination regulations distinguish
between communications (e.g., advertisements, mass mailings, phone
banks), 11 CFR 109.21, and ``non-communication'' expenditures (e.g.,
rent or computers), 11 CFR 109.20(b). See Coordinated and
Independent Expenditures, 68 FR 425-26 (Jan. 3, 2003).
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The Commission sought comment on which of the two alternatives was
consistent with Citizens United. The Commission also sought comment on
whether each alternative eliminated too much or too little of the
prohibition on corporate and labor organization expenditures, and
whether each alternative provided clear guidance on the types of
expenditures that corporations and labor organizations may make in
accordance with Citizens United.
The majority of commenters who addressed the two proposed
alternatives for section 114.2(b)(2)(i) supported Alternative A, on the
ground that Citizens United did not distinguish between speech and non-
speech activities. The only relevant distinction, those commenters
argued, is whether spending is coordinated with a candidate or
political party. One commenter argued that Citizens United stands for
the principle ``that activities independent of a campaign lack the
potential corruptive influence of coordinated activities'' and
therefore all independent spending is entitled to First Amendment
protection. Another commenter posited that ``the distinction between
`non-expressive' or `non-speech' and `communicative' elements of
political activities is illusory and constitutionally impermissible.''
Another commenter argued, however, that the Commission should adopt
Alternative B, permitting corporations and labor organizations to make
independent communicative expenditures only, because Citizens United's
holding protects only political speech.
Based on the comments and testimony received and the Commission's
reading of Citizens United and the existing regulations, the Commission
concludes that the Court's holding applies to all non-coordinated
corporate and labor organization expenditures, regardless of whether
they fall within the narrower statutory definition of an ``independent
expenditure.'' The primary basis for this conclusion is the Supreme
Court's finding that expenditures that are not coordinated with
candidates or political party committees are not sufficiently
corruptive to constitutionally justify their prohibition. Accordingly,
the Commission has decided that the regulations should not contain a
prohibition on non-communicative expenditures by corporations and labor
organizations. Rather than adopt Alternative A, which would have
revised paragraph 114.2(b)(2)(i), however, the Commission is removing
this paragraph. This will prevent any potential for confusion over what
types of expenditures corporations and labor organizations are
permitted to make, consistent with the Court's holding that such
entities may not constitutionally be prohibited from making independent
expenditures.
Proposed Alternative A included language that would have prohibited
corporations and labor organizations from making expenditures for
communications or other expenditures in coordination with a candidate,
a candidate's authorized committee, or a political party committee. The
Commission believes that it is unnecessary to include these
prohibitions in this section. In-kind contributions, coordinated
expenditures, and coordinated communications constitute contributions
under the existing regulations at sections 100.52(d)(1), 109.20, and
109.21, respectively, and the prohibition on corporate and labor
organization contributions at current section 114.2(b)(1) (redesignated
as section 114.2(b) by this final rule) remains in force (except as
indicated in the new note to section 114.2(b), discussed below). Adding
the proposed language to section 114.2(b)(2)(i) therefore would be
redundant.
The Commission is, however, appending a note to 11 CFR 114.2 to
reflect the fact that corporations and labor organizations may make
contributions to non-connected political committees that make only
independent expenditures, and to separate accounts maintained by non-
connected political committees for making only independent
expenditures, notwithstanding 11 CFR 114.2(b). In two cases, courts
held that the contribution limits at 52 U.S.C. 30116 (formerly 2 U.S.C.
441a) may not be applied to contributions from individuals to these
``independent-expenditure-only'' political committees and accounts.
SpeechNow.org v. FEC, 599 F.3d 686 (D.C. Cir. 2010) (en banc) (holding
contribution limits inapplicable to individual contributions to non-
connected political committees making only independent expenditures);
Carey v. FEC, 791 F. Supp. 2d 121 (D.D.C. 2011) (enjoining application
of contribution limits to contributions to separate accounts maintained
by non-connected political committees for the purpose of making only
independent expenditures). In light of these decisions and the Supreme
Court's decision in Citizens United, the Commission has recognized that
the statutory and regulatory prohibitions on contributions by
corporations and labor organizations to such independent-expenditure-
only political committees and accounts are no longer enforceable. See
Advisory Opinion 2010-11 (Commonsense Ten); see also FEC Statement on
Carey v. FEC, Oct. 5, 2011, available at http://www.fec.gov/press/press2011/20111006postcarey.shtml. The Commission intends to engage in
a separate rulemaking in response to the SpeechNow and Carey decisions,
but to avoid confusion regarding the prohibition on contributions by
corporations and labor organizations, the Commission is now appending a
note to 11 CFR 114.2--and to the parallel provision in 11 CFR 114.10,
discussed below--to accurately reflect the scope of that prohibition.
B. Removal of 11 CFR 114.2(b)(2)(ii) and (b)(3)--Prohibitions on
Corporate and Labor Organization Express Advocacy Communications and
Electioneering Communications to Those Outside the Restricted Class
Current 11 CFR 114.2(b)(2)(ii) prohibits corporations and labor
organizations from ``making expenditures with respect to a Federal
election . . . for communications to those outside the restricted class
that expressly advocate the election or defeat of one or more clearly
identified candidate(s) or the candidates of a clearly identified
political party.'' Because the Supreme Court held in Citizens United
that corporations and labor organizations have a constitutional right
to make expenditures for express advocacy communications to the general
public, the Commission proposed in the NPRM to remove paragraph
(b)(2)(ii) of section 114.2.
Similarly, current 11 CFR 114.2(b)(3) prohibits corporations and
labor organizations ``from making payments for electioneering
communications to those outside their restricted classes unless
permissible under 11 CFR 114.10 or 114.15.'' Because Citizens United
held that corporations may make electioneering communications to the
[[Page 62801]]
general public, the Commission proposed in the NPRM to remove paragraph
(b)(3) of section 114.2.
The few commenters who addressed the proposed removal of paragraphs
(b)(2)(ii) and (b)(3) all supported removal.
The Commission is removing 11 CFR 114.2(b)(2)(ii) because that
paragraph's prohibition of corporate and labor organization
expenditures for express advocacy communications was invalidated by
Citizens United. Likewise, because Citizens United invalidated the
prohibition on corporate and labor organization payments for
electioneering communications, the Commission is removing 11 CFR
114.2(b)(3). The remaining provision at current 11 CFR 114.2(b)(1) is
being redesignated as 114.2(b).
The Commission is also making a technical revision to section
114.2(a)(1) to maintain the existing prohibitions on certain activity
by national banks and federally chartered corporations. Current section
114.2(a) provides that national banks and federally chartered
corporations are prohibited from making contributions and expenditures,
while paragraph (a)(2) provides that such national banks and
corporations are generally subject to the provisions of part 114. Thus,
the current prohibitions on expenditures, electioneering
communications, and other activity in 11 CFR 114.2(b)(2) and (3) have
applied to national banks and federally chartered corporations by
reference through section 114.2(a)(2). As discussed above, however, the
Commission is removing 11 CFR 114.2(b)(2) and (3) to permit a wider
range of activities by corporations and labor organizations and to
exclude certain such activities from the definitions of contributions
and expenditures. In order to retain the existing prohibition on
national banks and federally chartered corporations making
contributions, expenditures, or electioneering communications,
therefore, the Commission is revising section 114.2(a)(1) to provide
that such entities may engage in activities permitted by part 114
except to the extent that they constitute contributions, expenditures,
or electioneering communications.
The Commission is also revising section 114.2(c) to conform with
changes the Commission is making to sections 114.3 and 114.4, as
described below. Current section 114.2(c) provides that disbursements
for ``activities described in 11 CFR 114.3 and 114.4 will not cause
those activities to be contributions or expenditures, even when
coordinated with [candidates or political party committees] to the
extent permitted in those sections.'' Because some of the activities
conducted under revised sections 114.3 and 114.4 may constitute
expenditures, see infra Sections III-IV, the Commission is revising
section 114.2(c) to remove this reference to expenditures, while
preserving the existing rule that disbursements for activities
described in sections 114.3 and 114.4 may be coordinated with
candidates or political parties to the extent currently permitted under
those sections without constituting contributions. In addition, the
Commission is shortening the second sentence of section 114.2(c), which
currently provides that ``[c]oordination beyond that described in 11
CFR 114.3 and 114.4 shall not cause subsequent activities directed at
the restricted class to be considered contributions or expenditures.''
For clarity, the Commission is removing ``or expenditures'' from this
sentence to reflect that the regulatory criteria for coordinated
expenditures and communications are used to determine whether the
entity making the disbursement has made a contribution, not whether the
entity has made an expenditure. See 11 CFR 109.20(b) (providing that a
coordinated expenditure is an in-kind contribution), 109.21(b)
(providing that coordinated communication is in-kind contribution).
This latter revision is merely a technical clarification and is not
intended to substantively amend the rule in any way.
III. Revised 11 CFR 114.3--Disbursements for Communications to the
Restricted Class by Corporations and Labor Organizations in Connection
With a Federal Election
The Commission is revising the regulations at 11 CFR 114.3 covering
disbursements by corporations and labor organizations for
communications with their restricted classes. The Commission is
maintaining the existing regulatory structure that covers disbursements
for communications to the restricted class in 11 CFR 114.3 and
expenditures for communications beyond the restricted class in 11 CFR
114.4. The Commission is removing the requirement currently at 11 CFR
114.3(c)(4) that corporations and labor organizations not make
decisions regarding whether to provide voter registration or GOTV
assistance on the basis of support for or opposition to particular
candidates or a particular political party. The Commission is not
making any substantive changes to the reporting requirements for
disbursements for communications to the restricted class in 11 CFR
114.3(b).
A. Structure of 11 CFR 114.3 and 114.4
Current 11 CFR 114.3 implements certain statutory exceptions to the
general ban on contributions and expenditures by corporations and labor
organizations. Before Citizens United, corporations and labor
organizations could make express advocacy communications only to their
restricted classes. 52 U.S.C. 30118(a), (b)(2)(A) (formerly 2 U.S.C.
441b(a), (b)(2)(A)). Section 114.3 implements these provisions of the
Act and sets out the requirements for and restrictions on restricted-
class communications, including publications; candidate and party
appearances; phone banks; and voter registration and GOTV drives. The
Act establishes specific reporting requirements for communications made
by corporations and labor organizations to their restricted classes and
exempts disbursements for such communications from the definition of
expenditure, regardless of whether the communications are express
advocacy. 52 U.S.C. 30101(9)(B)(iii) (formerly 2 U.S.C.
431(9)(B)(iii)).
The Commission's current regulation at 11 CFR 114.4 sets out the
restrictions and prohibitions for communications by corporations and
labor organizations outside of the restricted class.
The NPRM proposed maintaining the current structure, with 11 CFR
114.3 addressing disbursements for communications made to the
restricted class and 11 CFR 114.4 addressing disbursements for
communications outside the restricted class.
The Commission received comments from two commenters on the
structure of 11 CFR 114.3 and 114.4. One commenter said that 11 CFR
114.3 and 114.4 could be made more understandable by combining and
shortening the provisions. Another commenter, however, recommended that
the Commission maintain the current division. That commenter noted that
important reporting and coordination-related distinctions remain
between how corporations and labor organizations communicate with their
restricted classes and with the general public. The commenter said that
the current division between the provisions provides useful clarity to
corporations and labor organizations.
The Commission has decided that the regulations should continue to
distinguish between communications to the restricted class and
communications to the general public because, as the commenter noted,
the Act imposes differing reporting regimes for each such
[[Page 62802]]
communication. Therefore, while the Commission is revising both 11 CFR
114.3 and 114.4, it is maintaining the structure of those provisions.
B. Revised 11 CFR 114.3(b)--Reporting of Disbursements for
Communications to the Restricted Class
Section 114.3(b) of the Commission's regulations requires that
corporations and labor organizations report, in accordance with 11 CFR
100.134 and 104.6, disbursements for express advocacy communications
made to the restricted class. The Act exempts express advocacy
communications made by corporations and labor organizations to their
restricted class from the definition of ``expenditure.'' 52 U.S.C.
30101(9)(B)(iii) (formerly 2 U.S.C. 431(9)(B)(iii)). The Act requires,
however, that corporations and labor organizations that make
disbursements for express advocacy communications to their restricted
class in excess of $2,000 for any election file quarterly reports in an
election year and pre-election reports for any general election. 52
U.S.C. 30101(9)(B)(iii), 30104(a)(4)(A)(i), (ii) (formerly 2 U.S.C.
431(9)(B)(iii), 434(a)(4)(A)(i), (ii)). This statutory requirement is
implemented in the Commission's regulations at current 11 CFR
100.134(a), 104.6(a), and 114.3(b).
For communications beyond the restricted class, section 30104(c) of
Title 52 (formerly 2 U.S.C. 434(c)) requires that ``every person (other
than a political committee) who makes independent expenditures in an
aggregate amount or value in excess of $250 during a calendar year''
report such expenditures to the Commission. Because corporations and
labor organizations are ``persons'' under the Act, they are subject to
the reporting requirements of 52 U.S.C. 30104(c) (formerly 2 U.S.C.
434(c)).
The NPRM did not propose any changes to 11 CFR 114.3(b) because
Citizens United did not affect the provision of the Act at 52 U.S.C.
30101(9)(B)(iii) (formerly 2 U.S.C. 431(9)(B)(iii)) that exempts
disbursements for express advocacy communications to the restricted
class from the definition of ``expenditure'' and establishes the
reporting requirement for such communications. The NPRM sought
comments, however, on how a corporation or labor organization should
report spending for express advocacy communications directed both to
the restricted class and outside the restricted class. Specifically,
the NPRM asked whether a single disbursement for an express advocacy
communication that is made both to the general public and the
restricted class results in the entire disbursement being treated as an
independent expenditure for reporting purposes, or whether instead the
disbursement should be allocated between the cost of reaching the
restricted class and the cost of reaching outside the restricted class.
Under the latter approach, the corporation or labor organization would
report the allocated expenses separately under the two reporting
regimes.
The Commission received comments on this topic from four
commenters. None recommended eliminating or revising 11 CFR 114.3(b).
One commenter said that when an independent expenditure reaches
both the general public and members of the restricted class the entire
disbursement should be treated as an independent expenditure. Another
commenter opined that most organizations will report broadcast
communications to the general public as independent expenditures
because even if the communication reaches members of the restricted
class, the majority of recipients will be members of the general
public. A third commenter pointed out that independent expenditures by
separate segregated funds already likely reach members of the
restricted class, yet there is no suggestion that these communications
should be subject to any special reporting requirement. This commenter
suggested that, as a practical matter, any non-targeted mass
communication (such as broadcast communications) should be reported as
an independent expenditure, while targeted communications can be
allocated. Another commenter, however, disagreed and argued that
because, by statute, communications to the restricted class are neither
contributions nor expenditures, mass communications should not be
automatically reported entirely as independent expenditures but perhaps
should be subject to some form of allocation.
Several of the commenters said that allocating between
disbursements for communications to the restricted class and
independent expenditures would not be burdensome. Most of the
commenters, however, emphasized that organizations already are
allocating between these types of communications, and suggested that
the Commission need not create a mandatory allocation regime. One
commenter noted that under section 501(c) of the Internal Revenue Code,
many organizations currently track communications to their members for
tax reporting reasons.
Several commenters said that allocating between restricted class
communications and communications to the general public would not be
difficult for targeted communications, such as email, direct mail, and
telephone calls. One of these commenters recommended that if the
Commission were to require allocation for communications that reach
both the restricted class and the general public, such a requirement
should be subject to several exceptions. First, any allocation should
require only a reasonable estimation of the numbers of potential
recipients of each class. Second, because qualified non-profit
corporations (``QNCs''), discussed further below, were permitted to
make express advocacy communications both to the restricted class and
to the general public prior to Citizens United, they should remain able
to do so and not be subject to mandatory allocation. Third, if an
express advocacy communication is not specifically targeted to the
restricted class, the corporation or labor organization should not be
required to allocate and should have the option of treating the entire
cost as an independent expenditure. Finally, this commenter recommended
that any allocation regulation include a safe harbor provision that
would specify that a communication to the restricted class that entails
de minimis dissemination to the public may be treated entirely as a
disbursement for a communication to the restricted class.
One of the commenters addressed the actual mechanics of reporting
payments for both types of communications to the Commission. The
commenter stated that having corporations and labor organizations
report disbursements for communications to the restricted class and
independent expenditures together on the same form would be confusing
because filers are required to certify on Form 5 (the form for
reporting independent expenditures by persons other than political
committees) that independent expenditures are not coordinated with any
candidate or party, while communications to the restricted class may be
coordinated. The commenter also pointed out that unlike some
independent expenditures, disbursements for communications to the
restricted class are not required to be reported within 24 or 48 hours
of when they are made.
The Commission is sensitive to the concerns of many of the
commenters that imposing any rigid allocation regime would complicate
reporting for many corporations and labor organizations. The Commission
is therefore not revising the reporting requirements at 11 CFR
114.3(b). The Commission notes that allocation is possible only for
express advocacy
[[Page 62803]]
communications that are specially targeted to known recipients in the
restricted class. Communications such as telephone, direct mail, and
email communications may be so targeted since the recipients are
generally known and can be identified either as members of the
restricted class or as members of the general public. Therefore, these
communications may be allocated. In contrast, communications such as
some broadcast, print, Internet, and outdoor advertising cannot be
suitably targeted, since the recipients are not identifiable. For such
communications, the entire cost should be reported as an independent
expenditure.
The final rule does include a minor change to the heading of 11 CFR
114.3(b) to clarify that the provision applies only to express advocacy
communications that are made to the restricted class.
C. Revised 11 CFR 114.3(c)(4)--Voter Drives and Get-Out-the-Vote
Activity Directed at the Restricted Class
The Commission is revising 11 CFR 114.3(c)(4) to remove the
requirement that corporations and labor organizations conducting voter
registration or GOTV drives aimed at the restricted class not make
decisions regarding whether to provide assistance on the basis of
support for or opposition to particular candidates or a particular
political party.
For purposes of the Act's corporate and labor organization
prohibitions, ``contribution or expenditure'' is defined to exclude
``nonpartisan registration and get-out-the-vote campaigns by a
corporation aimed at its stockholders and executive or administrative
personnel and their families, or by a labor organization aimed at its
members and their families.'' 52 U.S.C. 30118(b)(2)(B) (formerly 2
U.S.C. 441b(b)(2)(B)). The Act further excludes from the definition of
``expenditure'' ``communications by a corporation to its stockholders
and executive or administrative personnel and their families or by a
labor organization to its members and their families on any subject.''
52 U.S.C. 30118(b)(2)(A) (formerly 2 U.S.C. 441b(b)(2)(A)).
Current 11 CFR 114.3(c)(4) provides that a corporation or a labor
organization may conduct voter registration and GOTV drives ``aimed at
its restricted class.'' Section 114.3(c)(4) states that voter
registration and GOTV drives include providing transportation to the
place of registration and to the polls. The current provision further
permits such drives to include express advocacy communications, ``such
as urging individuals to register with a particular political party or
to vote for a particular candidate.'' 11 CFR 114.3(c)(4). The current
provision, however, also prohibits corporations and labor organizations
from withholding or refusing to give information and other assistance
regarding registering or voting ``on the basis of support for or
opposition to particular candidates, or a particular political party.''
Id.
The NPRM proposed two alternatives to revise paragraph (c)(4).
Alternative A proposed removing the existing prohibition on
corporations and labor organizations withholding or refusing to give
information or other assistance on the basis of support for or
opposition to particular candidates or a particular political party.
Alternative B would not have made any changes to current 11 CFR
114.3(c)(4) and therefore would have retained the current prohibition
on tying the provision of information and other assistance to positions
on candidates or political parties.
1. Alternative A
This alternative proposed to permit voter registration and GOTV
activities in which the corporation or labor organization withholds or
refuses to provide information or other assistance regarding
registering or voting based on support for or opposition to particular
candidates or a particular party--i.e., activities that do not qualify
as ``nonpartisan.'' Instead, Alternative A proposed to prohibit
corporations and labor organizations from acting in ``cooperation,
consultation, or concert with, or at the request or suggestion of'' any
candidate or political party in conducting voter registration or GOTV
drives.
Alternative A also would have retained nonpartisan voter
registration and GOTV drives as an exception to the definition of
``contribution or expenditure.'' See 52 U.S.C. 30118(b)(2)(B) (formerly
2 U.S.C. 441b(b)(2)(B)). Corporations and labor organizations currently
do not have to report to the Commission under 52 U.S.C. 30104(c)(1)
(formerly 2 U.S.C. 434(c)(1)) disbursements for nonpartisan voter
registration and GOTV, since such disbursements are not expenditures.
Thus, voter registration and GOTV drives would have been permissible
under Alternative A, regardless of whether the drives met the
conditions of the statutory ``nonpartisan'' exception, but corporations
or labor organizations conducting nonpartisan drives would not have
been required to report disbursements for them (unless they otherwise
met the requirement to be reported as disbursements for express
advocacy communications to the restricted class under 52 U.S.C.
30101(9)(B)(iii) (formerly 2 U.S.C. 431(9)(B)(iii))).
2. Alternative B
Alternative B proposed making no changes to the existing regulation
at 11 CFR 114.3(c)(4). Thus, under Alternative B, as under Alternative
A, a corporation or labor organization would have continued to be able
to make voter registration or GOTV communications, including express
advocacy, to its restricted class under 11 CFR 114.3(c)(4).
Furthermore, under both alternatives, voter registration and GOTV
drives conducted in accordance with proposed 11 CFR 114.3(c)(4) would
have remained exempt from the definition of ``expenditure'' under 52
U.S.C. 30118(b)(2)(B) (formerly 2 U.S.C. 441b(b)(2)(B)). Alternative B,
however, would have maintained the prohibition on withholding or
refusing to provide information or other assistance regarding
registration or voting based on support for or opposition to particular
candidates or a particular party. Additionally, corporations and labor
organizations would have continued to be prohibited from engaging in
non-communicative activities related to voter registration and GOTV
drives other than those conducted in accordance with proposed 11 CFR
114.3(c)(4).
As discussed in Section II.A, above, one alternative proposed in
the NPRM for conforming the Commission's regulation at 11 CFR
114.2(b)(2)(i) to the decision in Citizens United was to specifically
exclude expenditures for communications (i.e., ``independent
expenditures'') from the broader prohibition on expenditures, while
still prohibiting corporate and labor organization in-kind
contributions, coordinated expenditures, and expenditures that do not
involve communications. In promulgating the current regulation at 11
CFR 114.3(c)(4), the Commission similarly distinguished between the ``
`pure speech' aspects of the drives [that] may be partisan,'' and the
non-speech activity aspects of the drives that ``must be conducted in a
nonpartisan manner.'' Explanation and Justification for Part 114, H.R.
Doc. No. 95-44, at 105 (1977) (``1977 E&J''). The Commission's
implementation of section 30118(b)(2)(B)'s (formerly U.S.C.
441b(b)(2)(B)) nonpartisan requirement reflects this distinction
between ``pure speech'' and non-speech elements of voter registration
and GOTV drives. Thus, as with proposed Alternative B for 11 CFR
114.2(b)(2)(i) discussed
[[Page 62804]]
above, Alternative B for 11 CFR 114.3(c)(4) would have distinguished
between speech and non-speech activity by leaving intact the
regulation's current distinction between communicative advocacy and
other advocacy.
The Commission received six comments on the proposed revisions to
11 CFR 114.3(c)(4). The majority of the commenters supported
Alternative A, arguing that it was consistent with the Court's decision
and rationale in Citizens United. Several of these commenters argued
that Alternative B was not consistent with Citizens United because its
holding extends to both communicative and non-communicative forms of
independent expenditures. One commenter stated that the distinction
between communicative and non-communicative expenditures was
``particularly inapplicable to the targeting of voters based on likely
political preferences'' for voter registration and GOTV drives, given
that such activity expressing support for or opposition to a candidate
or party is inherently communicative. Another commenter also stated
that voter registration activity is highly regulated at the federal,
state, and local levels under other laws, and that the Commission
should defer to those laws and bodies in regulating voter registration
activity. Another commenter noted that voter registration drives and
GOTV activity implicate associational rights.
One commenter opined that the proposal in Alternative A that would
exempt only nonpartisan voter drives and GOTV activities aimed at the
restricted class from the definition of expenditure was inconsistent
with the statute. That commenter argued that the Act permits a
corporation or labor organization to communicate with its restricted
class on any subject. The commenter further noted that 11 CFR
114.3(c)(4) has long provided that voter registration and GOTV drives
``may include communications containing express advocacy, such as
urging individuals to register with a particular party or to vote for a
particular party or to vote for a particular candidate,'' and that such
activities may be coordinated with candidates and political parties.
The commenter went on to state that Alternative A erred in suggesting
that the Commission can require a corporation or labor organization to
report its spending on voter registration or GOTV activity directed at
the restricted class that failed to meet the nonpartisan criteria at
proposed 11 CFR 114.3(c)(4)(ii). The commenter argued that absent
express advocacy, there is no requirement under the Act that a
corporation or labor organization report its voter registration or GOTV
activities aimed at the restricted class.
One commenter supported Alternative B, stating that corporations
and labor organizations should have a strong incentive to provide voter
registration and GOTV activities without regard for candidate or party
preference because minority and low-income voters frequently register
to vote through non-governmental voter registration drives. The
commenter also opined that nonpartisan GOTV activities are more
effective than partisan ones. The commenter went on to argue that
Alternative B is consistent with the holding in Citizens United because
voter registration and GOTV activities are non-communicative, and the
holding in Citizens United applies only to speech.
As discussed above, the Commission finds that the holding in
Citizens United applies to all corporate and labor organization
expenditures that are not coordinated and do not otherwise constitute
in-kind contributions. Therefore, the Commission is removing the
requirement that corporations and labor organizations not withhold or
refuse to provide information or other assistance regarding registering
or voting based on support for or opposition to particular candidates
or a particular party.
Accordingly, the Commission is revising 11 CFR 114.3(c)(4) to
follow the approach in proposed Alternative A, although the final rule
is not identical to the language proposed in Alternative A. Revised
section 114.3(c)(4)(i) tracks the language of current 11 CFR
114.3(c)(4), stating that corporations and labor organizations may
conduct voter registration and GOTV drives aimed at the restricted
class, that such drives include providing transportation to the place
of registration or to the polls, and that these drives may include
express advocacy.
Revised section 114.3(c)(4)(ii) sets out the exemption for
nonpartisan drives from the definition of ``contributions or
expenditures'' pursuant to 52 U.S.C. 30118(b)(2)(B) (formerly 2 U.S.C.
441b(b)(2)(B)). The paragraph describes nonpartisan drives in the same
way as the current regulation: To qualify for the exemption, the drive
must be conducted so that information and other assistance in
registering or voting is not withheld or refused based on support for
or opposition to particular candidates or a particular party.
The Commission agrees with the commenter that the Act exempts from
the definition of ``contribution or expenditure'' communications on any
subject (including communications that are express advocacy) between a
corporation or a labor organization and its restricted class. 52 U.S.C.
30118(b)(2)(A) (formerly 2 U.S.C. 441b(b)(2)(A)). However, because the
Act specifically exempts only nonpartisan voter registration and GOTV
drives aimed at the restricted class from the definition of
``contribution or expenditure,'' 52 U.S.C. 30118(b)(2)(B) (formerly 2
U.S.C. 441b(b)(2)(B)), the Commission concludes that such nonpartisan
voter registration and GOTV drives must be treated differently from
other drives. Thus, new section 114.3(c)(4)(iii) affirms that
corporations and labor organizations may make disbursements for voter
registration and GOTV drives aimed at the restricted class that do not
qualify as nonpartisan, but the revised regulation does not
categorically exempt these disbursements from the definition of
``expenditure.''
Although 11 CFR 114.3(c)(4) does not expressly address reporting,
express advocacy communications to the restricted class are subject to
the requirements at 52 U.S.C. 30101(9)(B)(iii), 30104(a)(4)(A)(i)-(ii),
(c)(1) (formerly 2 U.S.C. 431(9)(B)(iii), 434(a)(4)(A)(i)-(ii),
(c)(1)); 11 CFR 100.134(a) (requiring reporting when disbursements for
express advocacy communications to restricted class aggregate in excess
of $2000 per election), 104.6 (same), 114.3(b) (same). Disbursements
made under new section 114.3(c)(4), therefore, will be reported as
express advocacy communications to the restricted class if the activity
includes express advocacy (and exceeds the $2000 reporting threshold).
Because the Act still prohibits corporations and labor
organizations from making contributions,\9\ new paragraph (c)(4)(iii)
provides that disbursements by corporations and labor organizations for
voter registration and GOTV drives may not constitute coordinated
expenditures, coordinated communications, or contributions, as those
terms are defined in Commission regulations.
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\9\ As discussed in Section II.A, above, corporations and labor
organizations may make contributions to independent-expenditure-only
committees and accounts.
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IV. Revised 11 CFR 114.4-- Disbursements for Communications in
Connection With a Federal Election by Corporations and Labor
Organizations Beyond the Restricted Class
The Commission is revising 11 CFR 114.4, which covers disbursements
for communications by corporations and labor organizations beyond the
[[Page 62805]]
restricted class in connection with a federal election. Prior to
Citizens United, corporations and labor organizations were prohibited
from making independent expenditures and electioneering communications.
Current section 114.4 carves out certain communications from that
prohibition and the prohibition on coordinated communications by
corporate and labor organizations. The regulation permits certain
communications and activities directed outside the restricted class,
both to employees outside the restricted class and to the general
public. This section also permits certain communications made to those
outside the restricted class to be coordinated, to a limited extent,
with candidates. For example, section 114.4(b) covers candidate and
party appearances on corporate or labor organization premises or at a
meeting, convention, or other function that is attended by employees
outside the restricted class, 114.4(c)(6) covers endorsements, and
114.4(c)(7) covers candidate appearances at certain educational
institutions.
Current section 114.4(c) identifies the types of communications
that corporations and labor organizations are permitted to make to the
general public: (1) Voter registration and voting communications; (2)
official registration and voting information; (3) voting records; (4)
voter guides; (5) endorsements; (6) candidate appearances on
educational institution premises; and (7) electioneering
communications. It also sets forth the relevant requirements and
restrictions that apply to each of these types of communication.
The Commission is removing all prohibitions on express advocacy in
the communications described in 11 CFR 114.4(c). The Commission is also
reorganizing 11 CFR 114.4(c) to include an explicit prohibition on
corporations and labor organizations coordinating with candidates or
party committees, pursuant to the Commission's coordination
regulations, on communications to the general public. Finally, the
Commission is making several minor revisions to 11 CFR 114.4, discussed
below.
A. Revised 11 CFR 114.4(a)--General
The Commission is making minor clarifying changes to paragraph (a).
Current 11 CFR 114.4(a) provides that any communications that a
corporation or labor organization makes to the general public may also
be made to the restricted class and to its employees outside the
restricted class. Current paragraph (a) also provides that
communications described in section 114.4 may be coordinated with
candidates and political committees only to the extent permitted in
section 114.4.
The NPRM proposed reorganizing paragraph (a) and making several
clarifying language changes. The Commission received one comment on the
proposal to revise 11 CFR 114.4(a). The commenter agreed with the
proposal and suggested inserting ``the phrase `among others' before
`the general public' in proposed [section] 114.4(a) . . . [i]n order to
conform with the general division of individuals between the
`restricted class' and the `general public.' ''
The Commission is adopting the changes proposed in the NPRM without
the additional language proposed by the commenter. Although the
Commission agrees with the commenter that communications made to the
general public as described in 11 CFR 114.4 may also be made to the
restricted class, the Commission believes that 11 CFR 114.4(a) already
makes this clear. Like current 11 CFR 114.4(a), the revised provision
states that communications by a corporation or labor organization
beyond its restricted class, addressed in paragraphs (b) and (c), may
be coordinated with candidates and political committees only to the
extent permitted by section 114.4.
Revised 11 CFR 114.4(a) also states that voter registration and
GOTV drives, further addressed in paragraph (d), may not include
coordinated expenditures, coordinated communications, or contributions,
as those terms are defined in Commission regulations. This language is
meant to indicate that corporations and labor organizations remain
prohibited from making contributions under the Act and Commission
regulations.\10\ 52 U.S.C. 30118(a), (b)(2) (formerly 2 U.S.C. 441b(a),
(b)(2)); 11 CFR 114.2(a).
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\10\ As discussed in Section II.A, above, corporations and labor
organizations may make contributions to independent-expenditure-only
committees and accounts.
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B. Revised 11 CFR 114.4(c)--Communications by a Corporation or Labor
Organization to the General Public
The Commission is making several revisions to 11 CFR 114.4(c). The
Commission is removing the prohibitions on express advocacy and is
adding a provision to explicitly state that corporations and labor
organizations may make independent expenditures and electioneering
communications. The Commission is also consolidating into revised
section 114.4(c)(1) the prohibition on corporations and labor
organizations coordinating with candidates and political party
committees in making communications to the general public, thereby
replacing the multiple references to this prohibition in current
section 11 CFR 114.4(c). However, the final rules maintain the existing
exemption from the definitions of contribution and expenditure for
activities that meet certain criteria, such as not constituting express
advocacy and not being coordinated with any candidate or political
party. The final rules thus reflect the fact that corporations and
labor organizations may make independent expenditures and
electioneering communications after Citizens United, while the final
rules also maintain the status quo regarding the activities that, under
the current regulations, are not contributions or expenditures. See
infra Section VIII (discussing conforming amendment to 11 CFR
114.1(a)(2)(x)). Finally, the Commission is removing 11 CFR
114.4(c)(8), which states that corporations and labor organizations may
make only certain electioneering communications.
Current 11 CFR 114.4(c) addresses communications by corporations
and labor organizations to the general public and includes specific
provisions on seven types of such communications, listed above. With
certain exceptions, each of the provisions within paragraph (c)
currently prohibits coordinating any such communication with a
candidate or a candidate's committee or agent.
1. Revised 11 CFR 114.4(c)--Communications by a Corporation or Labor
Organization to the General Public
The NPRM proposed adding to paragraph (c)(1) a general prohibition
on corporations or labor organizations acting in cooperation,
consultation, or concert with or at the request or suggestion of a
candidate, a candidate's committee or agent, or a political party
committee or its agent regarding the preparation, content, and
distribution of any of the specific types of communications described
at proposed 11 CFR 114.4(c)(2)-(6). The proposed general prohibition
would replace the separate prohibitions on coordination contained in
each paragraph of current 11 CFR 114.4(c)(2)-(6).
Current 11 CFR 114.4(c)(2)-(6) govern voter registration and GOTV
communications; official voter registration and voting information;
voting records; voter guides; and endorsements. The NPRM proposed
generally retaining these paragraphs to
[[Page 62806]]
provide specific information about some of the types of communications
that corporations and labor organizations might wish to make. The
current versions of these paragraphs, however, each prohibit
corporations or labor organizations from expressly advocating the
election or defeat of clearly identified candidates in these
communications. Proposed 11 CFR 114.4(c)(2)-(6) would have eliminated
the prohibition on express advocacy in each paragraph for
communications that are not coordinated with any candidate or political
party.
Four commenters commented on the proposed changes to 11 CFR
114.4(c). One commenter supported the proposed sentence stating that
corporations and labor organizations may make independent expenditures
and electioneering communications because a change is required by
Citizens United. Another commenter did not support adding that proposed
sentence, believing it superfluous given the Commission's proposal to
add similar language in 11 CFR 114.10.
Several commenters did not favor the proposed changes to 11 CFR
114.4(c)(1) and (c)(2)-(6), instead preferring removal of 11 CFR
114.4(c)(2)-(6). These commenters reasoned that a list of certain
permissible communications to the general public is no longer necessary
because corporations and labor organizations may now make independent
expenditures and electioneering communications. Because Commission
regulations already contain criteria for when a communication is
``coordinated,'' these commenters further argued, adding a prohibition
on coordination is unnecessary. One commenter contended that 11 CFR
114.4(c)(1) should be revised to include a reference to the regulations
that set out the tests for coordinated expenditures and coordinated
communications, at 11 CFR 109.20 and 109.21, respectively. The
commenter expressed concern that the proposed regulation appeared to
create a new coordination test for activities relating particularly to
the communications in 114.4(c)(2)-(6).
Another commenter suggested that to the extent that the Commission
retains text from current 11 CFR 114.4(c)(2)-(6), it should be placed
with similar provisions elsewhere in the regulations and combined to
avoid redundancy. Another commenter said that the Commission should
clarify that communications of the types listed in 11 CFR 114.4(c)(2)-
(6) are not subject to reporting, absent express advocacy.
The Commission is revising 11 CFR 114.4(c)(1) by removing the
explicit authorization for QNCs (as defined at 11 CFR 114.10(c)) to
make communications containing express advocacy to the general public.
See infra Section VI. After Citizens United, corporations and labor
organizations may make express advocacy communications to the general
public that are not coordinated with candidates or political parties.
Hence, this permission for QNCs is now superfluous. In its place, the
Commission is adding an explicit regulatory acknowledgment that
corporations and labor organizations may make independent expenditures
and electioneering communications and directing corporations and labor
organizations to revised 11 CFR 114.10.\11\
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\11\ As discussed further in Section VI, below, the Commission
is revising 11 CFR 114.10 to provide clear guidance on the
regulatory requirements applicable to corporations and labor
organizations that make independent expenditures and electioneering
communications, including reporting and disclaimers.
---------------------------------------------------------------------------
Additionally, the Commission is adding to 11 CFR 114.4(c)(1) a
general reference to the existing prohibition on corporations and labor
organizations coordinating with candidates or political party
committees, as provided for in the Commission's coordination
regulations, in making any of the communications covered by 11 CFR
114.4(c)(2)-(6). Revised section 114.4(c)(1) does not alter the status
quo with respect to the coordination of activities described in section
114.4(c)(2)-(6).\12\ The Commission is not extending the coordination
restriction to the activities permitted in paragraph 114.4(c)(2)(7)
because that provision--which governs ``candidate appearances on
educational institution premises''--necessarily entails a certain
amount of coordination between the hosting institution and a candidate.
See 11 CFR 114.4(c)(7)(ii)(A) (requiring institution to ``make [ ]
reasonable efforts to ensure'' that certain aspects of candidate's
appearance ``are not conducted as campaign rallies or events'').
Pursuant to revised section 114.4(a), discussed above, these candidate
appearances at educational institutions ``may be coordinated with
candidates and political committees only to the extent permitted'' by
paragraph 114.4(c)(7).
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\12\ In addition, as to 11 CFR 114.4(c)(6), concerning a
corporation's or labor organization's endorsement of a candidate,
the Commission notes that the prohibition on coordinating with a
candidate or political party committee applies to the communication
of that endorsement to the general public. See infra Section IV.B.5
(explaining how the general prohibition on coordination does not
apply to endorsement-related communications to the restricted
class). However, the Commission has previously recognized
``organizations need to discuss various issues with candidates and
their staff when deciding [whom] to endorse.'' Corporate and Labor
Organization Activity; Express Advocacy and Coordination with
Candidates, 60 FR 64260, 64270 (Dec. 14, 1995).
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The Commission recognizes that, after Citizens United, corporations
and labor organizations are free to make independent expenditures and
electioneering communications, even without regulatory language to that
effect. Nonetheless, the Commission believes that the language being
added to 11 CFR 114.4(c)(1) to codify and implement the primary holding
of Citizens United makes the regulations more clear in this regard.
The Commission is retaining paragraphs (c)(2)-(6) to provide
specific information about some of the other types of communications
that corporations and labor organizations might make.\13\ The
Commission agrees with the commenters that corporations and labor
organizations are not limited to the types of communications enumerated
in paragraphs (c)(2)-(6). The Commission believes, however, that it is
helpful to corporations and labor organizations to retain a non-
exhaustive list of types of communications that corporations and labor
organizations might permissibly make. The Commission also intends these
regulations, as revised, to make clear that the activities that have
been exempt from the definitions of contribution and expenditure under
the current regulations remain exempt under the revised regulations.
Corporations and labor organizations that were previously familiar with
the regulations setting out constraints on making certain
communications may find it helpful to have an affirmative
acknowledgment of their ability to make the listed communications, as
well as clarification regarding the continuing exemption from the
definition of contribution and expenditure for activities that were
exempt even before Citizens United.
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\13\ The NPRM did not propose any changes to paragraph 11 CFR
114.4(c)(7), and the Commission is retaining this provision, as
well.
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All five of these paragraphs currently prohibit corporations or
labor organizations from expressly advocating the election or defeat of
clearly identified candidates in these communications and from
coordinating with candidates or political party committees in making
the communications. The Commission is removing the prohibitions on
express advocacy in 11 CFR 114.4(c)(2)-(6) but continuing the
prohibition on corporations and labor organizations coordinating with
any candidate or political party in making these
[[Page 62807]]
communications. The Commission agrees with the commenter that the
revisions are consistent with the decision in Citizens United.
2. Revised 11 CFR 114.4(c)(2)--Voter Registration and Get-Out-The-Vote
Communications
The Commission is maintaining the provision at 114.4(c)(2), which
states that corporations and labor organizations may make voter
registration and GOTV communications to the general public, but is
making several revisions to the provision.
For the reasons previously stated, the Commission agrees with the
commenters that corporations and labor organizations are not limited to
the types of communications set out in 114.4(c)(2)-(6), including voter
registration and GOTV communications. The Commission believes, however,
that maintaining this list of types of communications as revised may
provide helpful guidance. Thus, the Commission is revising and
retaining 11 CFR 114.4(c)(2) in the final rules.
As discussed above, the Commission is revising 11 CFR 114.4(c)(2)
to remove the prohibitions on express advocacy and coordination in
voter registration and GOTV communications made by corporations and
labor organizations. However, the final rules maintain the existing
exemption from the definition of contribution and expenditure for voter
registration and GOTV communications that do not constitute express
advocacy and that are not coordinated with any candidate or political
party regarding the preparation and distribution of such
communications. The final rule thus reflects that, after Citizens
United, corporations and labor organizations may make independent
expenditures and electioneering communications, while the final rule
also maintains the status quo regarding the communications that, under
the current regulations, are not contributions or expenditures.
The Commission is also revising 11 CFR 114.4(c)(2) by removing the
list of media currently in that provision. Current 11 CFR 114.4(c)(2)
contains a list of media through which corporations and labor
organizations may make voter registration and GOTV communications to
the general public. The list currently includes: ``posters, billboards,
broadcasting media, newspapers, newsletter[s], brochures, or similar
means of communication with the general public.'' 11 CFR 114.4(c)(2).
The NPRM proposed adding to the list mail, Internet communications,
emails, text messages, and telephone calls, and sought comment on
whether any other methods of communications should be included. The
NPRM also asked whether a list of media through which corporations and
labor organizations may make voter registration and GOTV communications
to the general public is necessary at all, or whether the Commission
should simply state generically that such communications to the general
public are permissible. Besides the comments on the general proposal to
revise 11 CFR 114.4(c), discussed above, the Commission did not receive
comments on the specific proposed changes to 11 CFR 114.4(c)(2).
The Commission recognizes that corporations are free to make any
independent expenditures or electioneering communications to the
general public, including voter registration and GOTV communications. A
list of certain media through which corporations and labor
organizations might make these communications--a list that would likely
need to be periodically updated as technology and media evolve--is not
necessary. Therefore, the final rule at 11 CFR 114.4(c)(2) does not
include the list that appears in the current provision.
3. Revised 11 CFR 114.4(c)(3)--Official Registration and Voting
Information and Revised 11 CFR 114.4(c)(4)--Voting Records
Other than the comments on the general proposal to revise 114.4(c),
described above, the Commission did not receive comments on the
specific proposed revisions to 114.4(c)(3) and (c)(4). For the reasons
explained above, the Commission is revising the provisions at 11 CFR
114.4(c)(3) and (c)(4) to remove the prohibitions on express advocacy,
consistent with Citizens United. Additionally, as discussed in Section
IV.B.1 above, the Commission is removing the prohibitions on
coordination in the making of such communications because those
specific prohibitions are unnecessary in light of the general
prohibition on coordinated communications and coordinated expenditures
in the final rule at 11 CFR 114.4(c)(1).
Revised 11 CFR 114.4(c)(3) and (c)(4) do, however, maintain the
existing exemptions from the definition of contribution and expenditure
for the corporate and labor organization activity addressed in those
provisions. Thus, under both current and revised 11 CFR 114.4(c)(3), a
payment by a corporation or labor organization for the distribution of
official voter registration or voting information does not constitute a
contribution or expenditure, provided that the corporation or labor
organization does not, in connection with such activity (1) expressly
advocate the election or defeat of a clearly identified federal
candidate or candidates of a clearly identified political party, (2)
encourage registration with any particular political party, or (3)
coordinate with any candidate or political party concerning the
reproduction and distribution of the information. Similarly, the
preparation and distribution of voting records under 11 CFR 114.4(c)(4)
is not a contribution or expenditure, provided that the voting records
do not expressly advocate the election or defeat of a clearly
identified federal candidate or candidates of a clearly identified
political party, and that the corporation or labor organization does
not coordinate with any candidate, group of candidates, or political
party as to the content and distribution of such voting records. The
final rules thus reflect that after Citizens United, corporations and
labor organizations may make independent expenditures and
electioneering communications, while the final rules also maintain the
status quo regarding the communications that, under the regulations,
are not contributions or expenditures.
4. Revised 11 CFR 114.4(c)(5)--Voter Guides
The Commission is making several revisions to conform the voter
guide rules in 11 CFR 114.4(c)(5) to the decision in Citizens United
that corporations and labor organizations may make independent
expenditures and electioneering communications to the general public.
Current 11 CFR 114.4(c)(5) sets forth certain requirements for and
restrictions on the preparation and distribution to the general public
of voter guides by corporations and labor organizations. This provision
currently requires that voter guides present the positions of two or
more candidates on campaign issues and requires that all candidates for
a particular seat or office be given an equal opportunity to respond.
It further prohibits the corporation or labor organization from giving
greater prominence to any one candidate or substantially more space for
a candidate's responses, and from including an electioneering message
in the voter guide or accompanying materials. The NPRM proposed
eliminating each of these requirements and prohibitions.
In addition to the comments on the general proposal to revise 11
CFR 114.4(c)(2)-(6), discussed above, the Commission received comments
on its
[[Page 62808]]
proposed changes to 11 CFR 114.4(c)(5) from one commenter. The
commenter supported the proposed changes on the basis that they are
consistent with Citizens United.
The Commission agrees and is adopting the revisions proposed in the
NPRM, with certain changes. As discussed above, the Commission believes
that maintaining a non-exhaustive list of types of communications that
corporations and labor organizations may wish to make to the general
public may provide guidance to corporations and labor organizations.
However, the Commission is removing the requirements and restrictions
in current 114.4(c)(5), as proposed, to reflect that after Citizens
United corporations and labor organizations may make independent
expenditures and electioneering communications. Additionally, as
discussed in Section IV.B.1 above, the Commission is removing the
prohibitions on coordination in the making of such communications
because a prohibition on coordinated communications and coordinated
expenditures is in the final rule at 11 CFR 114.4(c)(1).
However, the final rule maintains the existing exemption from the
definition of contribution and expenditure for payments by a
corporation or labor organization for the preparation and distribution
of voter guides that meet the historical criteria for permissibility
under current 11 CFR 114.4(c)(5)(i) and (ii). The Commission is
transferring these criteria to paragraph (c)(5)(ii) and rewording them
to account for their revised purpose--that is, to determine whether the
activity is exempt from the definitions of contribution or expenditure,
rather than to determine whether the activity is permissible--but is
otherwise leaving the provisions unchanged. The final rule thus
reflects that after Citizens United, corporations and labor
organizations may make independent expenditures and electioneering
communications, while the final rule also maintains the status quo
regarding the communications that, under the current regulations, are
not contributions or expenditures.
5. Revised 11 CFR 114.4(c)(6)--Endorsements
The Commission is making several revisions to conform its rule on
endorsements to the decision in Citizens United that corporations and
labor organizations may make independent expenditures and
electioneering communications targeted to the general public.
Current 11 CFR 114.4(c)(6) permits endorsement of candidates by
corporations and labor organizations and sets out certain requirements
for and restrictions on such endorsements. Current 11 CFR 114.4(c)(6)
permits a corporation or labor organization to communicate the
endorsement only to its restricted class through specific types of
publications and prohibits these publications from being distributed to
the general public other than at a de minimis level. Current 11 CFR
114.4(c)(6) then sets out the circumstances under which a corporation
and labor organization may announce an endorsement to the general
public.
The NPRM proposed removing the restrictions on the manner of
announcing a corporation's or labor organization's endorsement of a
candidate and the reference to publishing endorsements only to the
restricted class to conform to the Court's decision in Citizens United.
The Commission received comments on its proposed changes to 11 CFR
114.4(c)(6) from two commenters. One commenter agreed with the proposed
changes because the commenter said they are consistent with Citizens
United. The other commenter disagreed with the proposal to keep the
list of types of communication at 11 CFR 114.4(c)(2)-(6) generally,
because, after Citizens United, there is no reason to enumerate
specific examples of permissible communications. The commenter went on
to state, however, that to the extent that the Commission were to
decide to retain the list, 11 CFR 114.4(c)(6) should be revised to
remove the reference to communications with the restricted class. The
commenter noted that section 114.4 addresses communications to the
general public, and therefore the reference to the restricted class is
misplaced. Furthermore, because of the proposed language in 11 CFR
114.4(c)(1) that would prohibit coordination in the making of the
communications listed in 11 CFR 114.4(c)(2)-(6), the regulation, as
proposed, could be read to prohibit coordination in coordinating
endorsements to the restricted class.
The Commission agrees with the commenter that supported the
revisions because they were consistent with the decision in Citizens
United. As discussed above, the Commission believes that it is helpful
to corporations and labor organizations to maintain a non-exhaustive
list of types of communications corporations and labor organizations
may wish to make to the general public. Thus, the Commission is
adopting the revisions proposed in the NPRM, with several changes.
First, the Commission agrees with the commenter that argued that the
reference to communications with the restricted class in 11 CFR
114.4(c)(6) could be read to prohibit coordination in communicating
endorsements to the restricted class. Accordingly, the Commission is
revising this provision to note that communications of endorsements to
the restricted class may be coordinated as provided in 11 CFR 114.3(a).
Second, the final rule maintains the existing exemption from the
definitions of contribution and expenditure for disbursements to
finance public announcements of endorsements by a corporation or labor
organization. Under the final rule, such disbursements that meet the
historical criteria for permissibility under current 11 CFR
114.4(c)(6)--criteria relating to the manner of announcing the
endorsement and restricting coordination thereof--will remain exempt
from the definitions of contribution and expenditure. The final rule
thus reflects that after Citizens United, corporations and labor
organizations may make independent expenditures and electioneering
communications, while the final rule also maintains the status quo
regarding the communications that, under the current regulations, are
not contributions or expenditures.
6. Removal of 11 CFR 114.4(c)(8)--Electioneering Communications
The Commission is removing 11 CFR 114.4(c)(8) to conform the
regulations to the decision in Citizens United.
Current 11 CFR 114.4(c)(8) permits corporations and labor
organizations to make electioneering communications to the general
public only to the extent permitted under current 11 CFR 114.15.
Section 114.15, in turn, permits corporations and labor organizations
to make electioneering communications unless the communication is
susceptible of no reasonable interpretation other than as an appeal to
vote for or against a clearly identified federal candidate. As
discussed in Section VII.B below, the Commission is removing section
114.15. Current 11 CFR 114.4(c)(8) further permits QNCs to make
electioneering communications to the general public in accordance with
current 11 CFR 114.10. As discussed below, the Commission is also
removing the portions of section 114.10 that address QNCs.
The NPRM proposed eliminating 11 CFR 114.4(c)(8) in its entirety
because Citizens United struck down the prohibition on corporations and
labor organizations making electioneering communications. The
Commission received one comment in support of the
[[Page 62809]]
proposed deletion, stating that the proposal is consistent with
Citizens United. The Commission agrees. Because Citizens United struck
down the prohibition on corporations and labor organizations making
electioneering communications, the exceptions to the prohibition at
current 11 CFR 114.4(c)(8) are superfluous.
C. Revised 11 CFR 114.4(d)--Voter Registration and Get-Out-The-Vote
Drives
The Commission is revising 11 CFR 114.4(d) to remove the
requirements that corporations and labor organizations engaging in
voter registration or GOTV drives directed at the general public: (1)
not withhold or refuse to provide assistance on the basis of support
for or opposition to particular candidates or a particular political
party; and (2) not make any communication expressly advocating the
election or defeat of any clearly identified candidate or political
party as part of those drives. The final rules will continue to exempt
nonpartisan voter registration and GOTV drives from the definition of
``expenditure,'' in accordance with 52 U.S.C. 30101(9)(B)(ii) (formerly
2 U.S.C. 431(9)(B)(ii)).
For purposes of the prohibition on expenditures by corporations and
labor organizations, the Act defines ``expenditure'' to include ``any
purchase, payment, distribution . . . or anything of value . . . for
the purpose of influencing any election for Federal office.'' 52 U.S.C.
30101(9)(A)(i), 30118(b)(2) (formerly 2 U.S.C. 431(9)(A)(i),
441b(b)(2)). The Act exempts from the definition of expenditure
``nonpartisan activity designed to encourage individuals to vote or to
register to vote.'' 52 U.S.C. 30101(9)(B)(ii) (formerly 2 U.S.C.
431(9)(B)(ii)). Current 11 CFR 114.4(d) permits corporations and labor
organizations to conduct voter registration and GOTV drives aimed at
the general public and states that such drives include providing
transportation to the place of registration and to the polls. The
current provision prohibits such drives from including express advocacy
communications and states that the drives may not be coordinated with
any candidate or political party. The current provision also prohibits
corporations or labor organizations from: (1) withholding or refusing
to give information and other assistance regarding registering or
voting on the basis of support for or opposition to particular
candidates or a particular political party; (2) directing the drives
primarily at individuals based on registration with a particular party;
and (3) paying individuals conducting such drives on the basis of
number of individuals registered or transported to the polls who
support a particular candidate or candidates or political party.
The NPRM proposed two alternatives to revise 11 CFR 114.4(d). Both
alternatives would have removed the prohibition on communications
expressly advocating the election or defeat of candidates or political
parties made in connection with a voter registration or GOTV drive.
Alternative A, which the Commission is adopting in part as its final
rule, also would have removed all of the existing requirements and
prohibitions regarding voter registration and GOTV drives, with the
exception of the prohibition on coordination with candidates or
political parties. Alternative A also would have maintained the
exemption from the definition of ``expenditure'' under 52 U.S.C.
30101(9)(B)(ii) (formerly 2 U.S.C. 431(9)(B)(ii)) for voter
registration and GOTV drives that meet the existing requirements and
prohibitions.
Alternative B would have made no changes to the existing regulation
at 11 CFR 114.4(d), except to remove the prohibition on corporations
and labor organizations making communications expressly advocating the
election or defeat of clearly identified candidates currently at 11 CFR
114.4(d)(1).
The Commission received comments from five commenters on the
proposed changes to 11 CFR 114.4(d). All five of the commenters
generally supported Alternative A over Alternative B, although several
commenters expressed concerns with Alternative A, as discussed further
below. None of the commenters supported Alternative B. Many of the
commenters noted that after Citizens United corporations and labor
organizations are free to engage in independent political spending. One
commenter stated that the Commission has no statutory basis to treat
voter registration or GOTV activity that is not ``nonpartisan'' as an
expenditure, absent express advocacy. This commenter argued that
Alternative A was thus incorrect to the extent that it proposed to do
so. One commenter contended that voter registration is subject to
extensive regulation at both the federal and state levels, and that the
Commission should defer to these other laws absent a clear directive.
The commenter went on to argue that as a matter of policy, the
Commission should craft its rules to promote civic engagement and
political participation by giving ``wide berth'' to voter registration
and GOTV activity, except where the Act explicitly imposes restraints
on it.
Two commenters stated that Alternative B was not consistent with
the Court's decision in Citizens United.
The Commission agrees with the commenters that proposed Alternative
A is consistent with the Court's decision in Citizens United because
that alternative reflects corporations' and labor organizations' right
to now make independent expenditures and electioneering communications
beyond the restricted class. The Commission is therefore revising 11
CFR 114.4(d) to remove the prohibition on express advocacy, as well as
the other restrictions on corporations and labor organizations engaging
in voter registration drives and GOTV activity directed at the general
public. These restrictions are: withholding or refusing to provide
assistance on the basis of support for or opposition to particular
candidates or a particular party; directing the drives primarily at
individuals based on registration with a particular party; and paying
individuals conducting such drives on the basis of number of
individuals registered or transported to the polls who support a
particular candidate or candidates or political party. Revised 11 CFR
114.4(d) does not include a prohibition on coordination because, as
discussed above, the prohibition on coordination in the context of
voter registration and GOTV drives is addressed in 11 CFR 114.4(a).
Additionally, the Commission notes that 52 U.S.C. 30101(9)(B)(ii)
(formerly 2 U.S.C. 431(9)(B)(ii)) exempts ``nonpartisan'' voter
registration drives and GOTV activity from the definition of
``expenditure.'' Therefore, the Commission is also revising 11 CFR
114.4(d) to implement that statutory exemption by providing that voter
registration and GOTV drives that meet the historical criteria for
permissibility under current paragraphs 114.4(d)(1)-(6) (which, except
for the coordination prohibition being consolidated in section
114.4(a), are being transferred to paragraphs 114.4(d)(2)(i)-(v))
continue to constitute nonpartisan activity exempt from the definition
of ``expenditure.'' This revision is not intended to indicate that all
voter registration and GOTV drives falling outside the ``nonpartisan''
exemption are necessarily expenditures or that they must always be
reported. Voter registration and GOTV drives that are not
``nonpartisan'' are governed by the general statutory and regulatory
definitions of ``expenditure'' and any attendant reporting obligations
in the Act and Commission regulations. See 52
[[Page 62810]]
U.S.C. 30101(9)(A), 30104(c), 30118(b)(2) (formerly 2 U.S.C. 431(9)(A),
434(c), 441b(b)(2)); 11 CFR 100.111(a), 104.4(a), 109.10(b)-(e).
V. No Changes to 11 CFR 114.9--Use of Corporate or Labor Organization
Facilities
The Commission is not, at this time, revising 11 CFR 114.9, which
governs the use of corporate and labor organization facilities for
political activity. The NPRM did not propose any changes to the
regulation but asked whether 11 CFR 114.9 should be revised in light of
Citizens United.
The Commission's regulations generally treat the unreimbursed use
of corporate or labor organization facilities in connection with
federal elections as expenditures and, in certain circumstances,
contributions. See 11 CFR 114.9(a)-(d) (detailing reimbursement
requirements for use of corporate or labor organization facilities).
Such expenditures and contributions were generally prohibited before
Citizens United. See 52 U.S.C. 30118(a) (formerly 2 U.S.C. 441b(a)).
Section 114.9, however, established certain limited exceptions to the
prohibition, allowing minimal usage of these facilities by certain
individuals. For more than minimal usage, section 114.9 requires
corporations and labor organizations to obtain reimbursement from
individuals who use these facilities in connection with federal
elections. 1977 E&J, H.R. Doc. No. 95-44, at 115; see also Internet
Communications, 71 FR 18589, 18611 (Apr. 12, 2006); Advisory Opinion
1985-26 (General Mills) (concluding that employee's failure to
reimburse corporation for corporation's distribution of campaign
materials could result in prohibited corporate expenditure). Though
Citizens United invalidated the prohibition on independent expenditures
by corporations and labor organizations, it did not call into question
the prohibition on contributions by corporations and labor
organizations.\14\ 558 U.S. at 358.
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\14\ As discussed in Section II.A, above, corporations and labor
organizations may make contributions to independent-expenditure only
committees and accounts.
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The Commission received two comments on 11 CFR 114.9. One commenter
implied that the Commission should change its regulation because the
Commission should not limit independent political speech after Citizens
United. The other commenter urged the Commission to wait to consider
any changes to 11 CFR 114.9 in a future rulemaking. The commenter
contended that the regulation warrants revisiting after Citizens United
but also recognized that the rule remains pertinent for setting
guidelines for corporations and labor organizations to know when they
must potentially report an individual's activity as an independent
expenditure by the corporation or labor organization. The commenter
further noted that to the extent that 11 CFR 114.9 implements the
contribution prohibition at 52 U.S.C. 30118(a) (formerly 2 U.S.C.
441b(a)), it remains valid after Citizens United.
The Commission agrees that 11 CFR 114.9 remains relevant after
Citizens United and that changes are not necessary at this time. The
holding of Citizens United, however, moots the application of 11 CFR
114.9 as an exception to the independent expenditure ban struck down in
that case.
VI. Revised 11 CFR 114.10--Corporations and Labor Organizations Making
Independent Expenditures and Electioneering Communications
The Commission is revising 11 CFR 114.10 to provide cross-
references to the regulations applicable to corporate and labor
organization independent expenditures and electioneering
communications. Such independent expenditures and electioneering
communications are now subject to various requirements, including
reporting obligations and disclaimers, and the Commission intends to
facilitate the identification of the relevant regulations on these
topics by listing them in revised section 114.10. The revised
regulation is not designed to impose any new requirements on the making
of independent expenditures and electioneering communications, but
simply to provide a single regulation that will outline the various
requirements.
The Commission promulgated current 11 CFR 114.10 primarily in
response to the Supreme Court's decision in Massachusetts Citizens For
Life, Inc. v. FEC, 479 U.S. 238 (1986) (``MCFL''). The Court there
considered the application of the independent expenditure prohibition
in 52 U.S.C. 30118 (formerly 2 U.S.C. 441b) to MCFL, a nonprofit
corporation organized to promote certain ideological views. The Court
concluded that nonprofit, ideological groups such as MCFL did not pose
the potential for corruption through ``unfair deployment of wealth for
political purposes'' and therefore did not implicate the concerns that
prompted regulation of corporate electoral activity by Congress. See
MCFL, 479 U.S. at 259-61. In response to MCFL, the Commission adopted
11 CFR 114.10, creating a regulatory exception to the independent
expenditure ban in section 30118 (formerly 2 U.S.C. 441b) for
organizations with the same characteristics as MCFL, referred to as
QNCs. After Congress enacted BCRA's electioneering communications
provisions in 2002, which included the prohibition on electioneering
communications by corporations, the Commission added an exception in 11
CFR 114.10 to allow QNCs to make electioneering communications.
Because Citizens United made these exceptions for QNCs unnecessary,
the NPRM proposed to revise 11 CFR 114.10, or, alternatively, to delete
the regulation in its entirety. The NPRM specifically sought comments
on a proposal to remove current paragraphs (a) through (c) and (e)(1),
as these regulations specifically apply only to QNCs. The NPRM proposed
to redesignate the provisions currently at 11 CFR 114.10(d), (e)(2),
and (f) through (i)--each of which currently relates to permissible
independent expenditures and electioneering communications by QNCs--and
expand them to apply to all corporations and labor organizations that
make independent expenditures and electioneering communications. These
provisions include: (1) the reporting requirements for independent
expenditures or electioneering communications at 11 CFR 114.10(e)(2);
(2) the solicitation disclaimer requirement at 11 CFR 114.10(f); (3)
the non-authorization disclaimer requirement at 11 CFR 114.10(g); (4)
the provision in 11 CFR 114.10(h) permitting establishment of
segregated bank accounts for electioneering communication
disbursements; and (5) 11 CFR 114.10(i), which states that nothing in
section 114.10 authorizes any organization exempt from taxation under
26 U.S.C. 501(a) to carry out any activity that it is prohibited from
undertaking by the Internal Revenue Code. The NPRM asked whether
maintaining these regulations, as revised to apply to corporations and
labor organizations in general, would be necessary or appropriate.
The Commission received comments on the general proposal to delete
and revise certain provisions of current 11 CFR 114.10 from three
commenters. All three commenters expressed the view that the exception
for QNCs is no longer necessary after Citizens United. One commenter
generally supported the proposal to maintain certain provisions of 11
CFR 114.10 as a ``guide'' to corporations and labor organizations
making independent expenditures and
[[Page 62811]]
electioneering communications. This commenter noted that ``affirmatory
regulatory language can serve important public information purposes.''
The commenter did not agree with the proposed changes to current 11 CFR
114.10(c), discussed further below. Another commenter opined that to
the extent that the Commission retained any of current 11 CFR
114.10(d)-(i), those provisions should be placed with similar
provisions elsewhere in the regulations and combined to avoid
repetition.
The Commission is revising 11 CFR 114.10 as described below.
A. Removal of Current 11 CFR 114.10(a)-(c)
The Commission is removing the provisions currently located at 11
CFR 114.10(a)-(c) in their entirety. These provisions currently contain
the exemption for QNCs from the prior prohibition on corporations
making independent expenditures and electioneering communications.
Specifically, current 11 CFR 114.10(a) sets out the scope of section
114.10 as applying to ``those nonprofit corporations that qualify for
an exemption'' from the corporate contribution and expenditure
prohibition in 11 CFR 114.2. Current paragraph 114.10(b) defines
certain terms and phrases relevant to the QNC exception, and current 11
CFR 114.10(c) sets out the criteria for being a QNC.
As discussed above, several commenters noted that an exception to
the ban on independent expenditures and electioneering communications
for QNCs is not necessary after Citizens United. The Commission agrees.
Because Citizens United struck down the statutory bans on independent
expenditures and electioneering communications for all corporations and
labor organizations, the regulatory exceptions for QNCs are now
superfluous. The Commission is therefore removing current 11 CFR
114.10(a)-(c).
B. Revised 11 CFR 114.10(a)--Independent Expenditures and
Electioneering Communications by Corporations and Labor Organizations
The Commission is revising current 11 CFR 114.10(d) and
redesignating it as 11 CFR 114.10(a).
Current 11 CFR 114.10(d) specifically permits QNCs to make
independent expenditures and electioneering communications. The NPRM
proposed expanding certain provisions of current 11 CFR 114.10(d) to
cover all corporations and labor organizations. As discussed above, the
NPRM sought comments on whether it would be helpful for corporations
and labor organizations to have a regulation explicitly recognizing
their ability to make independent expenditures and electioneering
communications. The NPRM asked whether the regulation should instead
more broadly state that corporations and labor organizations may make
any communication in connection with an election so long as it is not a
coordinated communication under 11 CFR 109.21, or, alternatively,
whether it would be sufficient to remove the current prohibitions in 11
CFR 114.2(b)(2) and (b)(3) on corporations and labor organizations
making disbursements for independent expenditures and electioneering
communications using general treasury funds.
The Commission received comments from two commenters on the
specific proposal to recognize explicitly that corporations and labor
organizations are free to make independent expenditures and
electioneering communications. One commenter argued that such a
provision would be helpful even if explicit regulatory recognition was
not necessary. The commenter expressed the view that the Commission's
proposal would help the public understand how the law has changed after
Citizens United and could provide reassurance to those seeking to
engage in political speech. The other commenter also supported the
Commission's proposal, stating that the proposed revision would
succinctly communicate the core holding of Citizens United. The
commenter also suggested that the Commission add language to proposed
11 CFR 114.10(a) to state that corporations and labor organizations may
make ``other public communications as defined in 11 CFR [100.26] in
connection with an election,'' in addition to independent expenditures
and electioneering communications.
The Commission agrees that a regulation stating that corporations
and labor organizations may make independent expenditures and
electioneering communications is not necessary. The Commission also
agrees, however, that providing such a regulation alongside the other
new regulations will provide guidance and reassurance to entities
seeking to engage in political speech after Citizens United. The
Commission is therefore revising current 11 CFR 114.10(d) to state
explicitly that corporations and labor organizations may make
independent expenditures and electioneering communications and to
indicate that such communications are subject to certain regulatory
requirements applicable to all entities that make such communications.
The Commission is not, however, adding the language suggested by
the commenter to specifically state that corporations and labor
organizations may make ``other public communications'' as that term is
defined in 11 CFR 100.26. Unlike independent expenditures and
electioneering communications, which are specific categories of
communications subject to regulation under the Act and Commission
regulations, the term ``public communication'' merely identifies
certain means of communication. Compare 11 CFR 100.26 (definition of
``public communication''), with 11 CFR 100.16 (definition of
``independent expenditure''), and 100.29 (definition of
``electioneering communication''). Although some public communications
may constitute independent expenditures or electioneering
communications based upon other characteristics of the communications,
no provision of the Act or Commission regulations addresses the
permissibility of public communications per se. Thus, the Commission
determines that it is unnecessary to include specific language
permitting corporations and labor organizations to make public
communications.
Revised 11 CFR 114.10(d) (now being redesignated paragraph
114.10(a), as proposed in the NPRM) also restates the prohibition on
corporations and labor organizations making coordinated expenditures,
coordinated communication, or contributions, as those terms are defined
in Commission regulations. As discussed in Section II.A, above, the
Commission is appending a note to section 114.10 to reflect the fact
that this prohibition (regarding which the Commission intends to
undertake a separate rulemaking) does not apply to contributions to
non-connected political committees that make only independent
expenditures or to separate accounts maintained by non-connected
political committees for making only independent expenditures.
C. Revised 11 CFR 114.10(b)--Reporting Independent Expenditures and
Electioneering Communications
The Commission is revising current 11 CFR 114.10(e)(2) by removing
the reference to QNCs and by expanding the language of the provision to
state that all corporations and labor organizations that make
independent expenditures or electioneering communications above
threshold amounts must file reports
[[Page 62812]]
according to other applicable regulations. The Commission is also
redesignating 11 CFR 114.10(e)(2) as 11 CFR 114.10(b) and removing
current 11 CFR 114.10(e)(1) in its entirety.
Current 11 CFR 114.10(e)(1) sets out the procedures for
demonstrating QNC status. Current 11 CFR 114.10(e)(2) sets forth the
reporting requirements for QNCs making independent expenditures or
electioneering communications. The NPRM proposed expanding the language
in current 11 CFR 114.10(e)(2) to include independent expenditures and
electioneering communications made by all corporations and labor
organizations and to remove the reference to QNCs. The reporting
regulations cross-referenced in proposed 11 CFR 114.10(e) apply to
``every person'' who makes independent expenditures or electioneering
communications in excess of certain amounts. 11 CFR 104.4(a),
104.20(b). The definition of ``person'' includes corporations and labor
organizations. See 52 U.S.C. 30101(11) (formerly 2 U.S.C. 431(11)); 11
CFR 100.10. The NPRM asked whether it is necessary or helpful to have
an additional regulation that specifically states that corporations and
labor organizations are subject to these reporting requirements.
The Commission received comments from two commenters on the
specific proposal to revise current 11 CFR 114.10(e). Both commenters
supported the proposal, with one commenter arguing that it would
communicate the application of current statutory and regulatory
reporting requirements to corporate and labor organization independent
expenditures and electioneering communications. The other commenter
stated that corporations and labor organizations should be explicitly
informed of their rights after Citizens United.
The Commission agrees with the commenters. Although the revised
provision at 11 CFR 114.10(b) is not necessary given that the reporting
requirements currently apply to corporations and labor organizations
making independent expenditures or electioneering communications, the
Commission has determined that it would be helpful to corporations and
labor organizations making such communications to have a single
provision at 11 CFR 114.10 that directs those entities to other
relevant regulations. The Commission is therefore revising current 11
CFR 114.10(e)(2) and redesignating it as section 114.10(b) as proposed
in the NPRM. New 11 CFR 114.10(b)(1) states that corporations and labor
organizations that make independent expenditures aggregating in excess
of $250 with respect to a given election in a calendar year must file
reports according to 11 CFR part 114 and sections 104.4(a) and
109.10(b)-(e). Revised 11 CFR 114.10(b)(2) states that corporations or
labor organizations that make electioneering communications aggregating
in excess of $10,000 in a calendar year must file the statements
required by 11 CFR 104.20(b).
D. Removal of 11 CFR 114.10(f)--Solicitation; Disclosure of Use of
Contributions for Political Purposes
Current 11 CFR 114.10(f) requires that a QNC's solicitations for
donations disclose to potential donors that their donations may be used
for political purposes, such as supporting or opposing candidates.
The NPRM proposed revising 11 CFR 114.10(f) by maintaining this
requirement and expanding it to cover solicitations for donations that
may be used for political purposes where the solicitations are made by
any corporation or labor organization. Even though the QNC exception is
no longer necessary, the NPRM asked whether the current solicitation
disclosure requirement for QNCs should be expanded to cover all
corporations and labor organizations to ensure that recipients of
solicitations have information about how their donations may be used,
in order to make informed decisions. The NPRM further sought comment as
to whether the Commission should require corporations and labor
organizations to state in such disclosures that the funds received may
be used specifically for independent expenditures or electioneering
communications, as opposed to for ``political purposes'' generally.
The NPRM also asked whether the regulatory requirement that QNC
solicitations include disclaimers is now superfluous in light of
Citizens United and should be deleted in its entirety or whether
language in that opinion regarding disclosure and disclaimers means
that the Commission may and should continue to specifically require
that QNCs disclose to potential donors and contributors the potential
uses of their funds. The NPRM then asked whether, if the Commission
were to retain the solicitation disclaimer requirement for QNCs, it
should also retain the definition of ``QNC'' at current 11 CFR
114.10(c) to identify the corporations subject to the disclaimer
requirement.
The requirement at current section 114.10(f) derives from the
Supreme Court's decision in MCFL. Express Advocacy; Independent
Expenditures; Corporate and Labor Organization Expenditures, 60 FR
35292, 35303 (July 6, 1995). In holding the prohibition on corporate
independent expenditures unconstitutional as applied to QNCs, the
Supreme Court reasoned that ``[t]he rationale for regulation is not
compelling with respect to independent expenditures by [MCFL]'' because
``[i]ndividuals who contribute to [MCFL] are fully aware of its
political purposes, and in fact contribute precisely because they
support those purposes.'' MCFL, 479 U.S. at 260-61. ``Given a
contributor's awareness of the political activity of [MCFL], as well as
the readily available remedy of refusing further donations, the
interest [of] protecting contributors is simply insufficient to support
Sec. 441b's [now 52 U.S.C. 30118's] restriction on the independent
spending of MCFL.'' Id. at 262 (emphasis added).
In Citizens United, the Court upheld the disclaimer requirements of
52 U.S.C. 30120(d)(2) (formerly 2 U.S.C. 441d(d)(2)) and the disclosure
requirements of 52 U.S.C. 30104(f) (formerly 2 U.S.C. 434(f)). 558 U.S.
at 366-71. In analyzing the disclaimer requirements, the Court
recognized that ``[t]he disclaimers required by [section 30120(d)(2)]
`provide the electorate with information,' McConnell [v. FEC, 540 U.S.
93,196 (2003)], and thereby `insure that the voters are fully informed'
about the person or group who is speaking, Buckley [v. Valeo, 424 U.S.
1,76 (1976)].'' Citizens United, 558 U.S. at 368 (additional citation
omitted). Regarding disclosure requirements, the Court reiterated its
previous explanation that ``disclosure is a less restrictive
alternative to more comprehensive regulations of speech.'' Id. at 369
(citing MCFL, 479 U.S. at 262). The Court further recognized that
``disclosure permits citizens and shareholders to react to the
[political] speech of corporate entities in a proper way. This
transparency enables the electorate to make informed decisions and give
proper weight to different speakers and messages.'' Id. at 371.
The Commission received comments from four commenters on the
Commission's proposed retention and revision of current 11 CFR
114.10(f). None of the commenters supported the Commission's proposal.
Several commenters argued that the Commission lacks statutory authority
to expand the disclaimer requirement for a number of reasons. First,
the Act's disclaimer requirement applies only to solicitations for
contributions as defined under the Act, while the Commission's proposal
would also apply to
[[Page 62813]]
solicitations for donations that are not contributions. Furthermore,
the proposed disclaimer that funds may be used for ``political
purposes'' would go beyond the information required by the Act, namely,
that a solicitation state who paid for the solicitation and whether it
was authorized by a candidate or a candidate's political committee. One
commenter opined that the Court's upholding of the disclaimer
requirements at issue in Citizens United cannot be read to approve the
imposition of ``new disclaimer requirements whenever [the Commission]
believes there is a reason to do so.''
One commenter argued that the characteristics of QNCs that made the
current disclaimer requirement important--that QNCs are ``established
specifically `for the promotion of political ideas' '' (quoting 60 FR
at 35297)--do not apply to other types of organizations that would be
covered by the proposed regulation. The commenter went on to note that
contrary to the Court's observation in MCFL that the class of
organizations affected by the Court's decision ``may . . . be small,''
479 U.S. at 264, the proposed solicitation rule would apply to every
corporation and labor organization, ``many and perhaps most of which
will not use their funds for `political purposes' however that term is
defined.'' Another commenter argued that the existing requirements of
11 CFR 114.10(f) were neither based on a statutory directive nor
compelled by the Supreme Court's decision in MCFL.
Another commenter noted that all so-called 501(c)(4), (c)(5), and
(c)(6) organizations are permitted to engage in political campaign
activity and therefore `` `may' use the funds for that purpose.'' The
proposed disclaimer language would be misleading, this commenter
contended, if the organization does not actually use the funds for
political purposes. Yet another commenter discussed the operation of
the proposed regulation alongside the requirement at 11 CFR
104.20(c)(9), which requires corporations that report electioneering
communications to disclose each person who donates for the purpose of
furthering such communications. The commenter stated that because of
the reporting requirement at 11 CFR 104.20(c)(9), some corporations may
specifically choose not to seek donations specifically for the purpose
of furthering electioneering communications, yet the corporations would
be required by the proposed regulation to inform potential donors that
their donations may be used for political purposes such as supporting
or opposing candidates. This commenter further contended that an
interest in protecting donors from funding speech with which they
disagree is not a valid basis for regulation after Citizens United.
Several commenters also expressed concern about the difficulty of
implementing the Commission's proposal. These commenters opined that
several of the terms proposed by the Commission were vague or
overbroad. Specifically, commenters stated that ``solicitation,''
``donation,'' and ``political purposes'' are not clearly defined in the
Act and Commission regulations for purposes of the proposed disclaimer.
One commenter stated that the proposed regulation did not define
``donation,'' and that although ``contribution'' is defined, the Act
does not require a solicitation of a contribution to include any
statements concerning the potential use of the funds solicited. The
commenter noted that ``donation'' is defined in the Commission's
regulations, but that this definition applies only to 11 CFR part 300.
See 11 CFR 300.2(e). Moreover, the commenter opined, the definition is
broad and does not require any nexus to an election: As defined, the
term ``donation'' could ``reach even union solicitations of dues
payments from members.'' The commenter went on to state that this
application ``would intrude upon a complex and longstanding federal
labor law framework.'' The commenter further stated that the proposed
use of ``solicit'' was unclear. In the commenter's view, the broad
definition of that term provided in the candidate/party context in BCRA
and applied to solicitations of contributions to separate segregated
funds could turn routine statements by labor organizations during
organizing campaigns and other non-election related contexts into
``solicitations'' that would trigger the proposed disclaimer. Finally,
the commenter argued that the term ``political purposes,'' if
undefined, would fail to correspond with any of the ``precise
categories of political behavior'' that the Act identifies and
regulates, such as independent expenditures and electioneering
communications.
Another commenter indicated that the proposal might be acceptable
if it were limited to requiring disclosure by those who might use
donations for independent expenditures and electioneering
communications. The commenter asserted that this would be consistent
with the decision in FEC v. Survival Education Fund, 65 F.3d 285 (2d
Cir. 1995), which allowed requiring disclosure of contributions
earmarked for political speech that the Supreme Court has held may be
regulated, even where the speaker is not a political committee.
Finally, the Commission received one comment in response to the
NPRM's question as to whether to retain the disclaimer requirement
applicable only to QNCs. The commenter did not support that approach,
stating that ``retaining a solicitation disclaimer for organizations
that could have qualified for QNCs in the past would be confusing at
best.'' The commenter went on to state that there is no reason why a
501(c)(4) organization would be treated differently in this context
from other nonprofit organizations, business corporations, and labor
organizations.
The Commission concludes that it should not maintain the disclaimer
requirement of current section 114.10(f) or expand it to cover
solicitations made by other corporations or labor organizations. The
Commission agrees with the commenters who noted that the proposed
disclaimer requirement, which previously applied only to QNCs, is
unclear. There is also no longer any reason to specifically regulate
the activities of QNCs (as discussed above). Therefore, the Commission
is not adopting the revised regulation as proposed in the NPRM, and is
removing current 11 CFR 114.10(f).
E. Revised 11 CFR 114.10(c)--Non-Authorization Notice
The Commission is revising current 11 CFR 114.10(g) as described
below and redesignating the provision as 11 CFR 114.10(c).
Current 11 CFR 114.10(g) requires that QNCs comply with the
disclaimer requirements of 11 CFR 110.11. Section 110.11, in turn,
implements 52 U.S.C. 30120 (formerly 2 U.S.C. 441d), which requires
that certain communications identify the person who paid for the
communication and state whether the communication is authorized by any
candidate or candidate's committee, and which sets out the technical
requirements for these disclaimers. The requirements of 52 U.S.C. 30120
(formerly 2 U.S.C. 441d) and 11 CFR 110.11 apply to express advocacy
public communications and to electioneering communications made by any
person. Because the Act defines ``person'' to include corporations and
labor organizations, these provisions apply equally to corporations and
labor organizations. 52 U.S.C. 30101(11) (formerly 2 U.S.C. 431(11)).
The Court in Citizens United upheld the disclaimer provisions of 52
U.S.C. 30120 (formerly 2 U.S.C. 441d). 558 U.S. at 366-72.
[[Page 62814]]
The NPRM proposed revising current 11 CFR 114.10(g) by expanding it
to require that all corporations and labor organizations comply with 11
CFR 110.11. The NPRM asked whether such a regulation would be useful,
given that the requirements at 52 U.S.C. 30120 (formerly 2 U.S.C. 441d)
and 11 CFR 110.11 already apply to corporations and labor organizations
because they are ``persons'' under the Act.
The Commission received one comment on the specific proposal to
revise current 11 CFR 114.10(g). The commenter supported the proposal
because it would succinctly communicate the disclaimer requirement
applicable to corporations and labor organizations making express
advocacy public communications and electioneering communications.
The Commission is revising the regulation at current 11 CFR
114.10(g) as proposed in the NPRM. As noted above, the Commission
acknowledges that 52 U.S.C. 30120 (formerly 2 U.S.C. 441d) and the
corresponding regulatory provision at 11 CFR 110.11 already apply to
``any person'' making express advocacy public communications or
electioneering communications, and so a specific regulation stating
that corporations and labor organizations are subject to the disclaimer
requirements at 11 CFR 110.11 is not necessary. The Commission agrees
with the commenter, however, that including such a provision in the
list of applicable provisions at 11 CFR 114.10 would be a helpful guide
for corporations and labor organizations. The Commission is also
redesignating current 11 CFR 114.10(g) as 11 CFR 114.10(c).
F. Revised 11 CFR 114.10(d)--Segregated Bank Account
The Commission is revising current 11 CFR 114.10(h) to state that a
corporation or labor organization may establish a segregated bank
account for funds to be used for the making of electioneering
communications. The Commission is also redesignating current 11 CFR
114.10(h) as 11 CFR 114.10(d).
Current 11 CFR 114.10(h) states that a QNC ``may, but is not
required to, establish a segregated bank account into which it deposits
only funds donated or otherwise provided by individuals, as described
in 11 CFR part 104, from which it makes disbursements for
electioneering communications.'' The current regulation at 11 CFR
114.10(h) implements 52 U.S.C. 30104(f)(2)(E) (formerly 2 U.S.C.
434(f)(2)(E)), which sets out the reporting requirements for
disbursements to pay for electioneering communications out of
segregated bank accounts. Aside from this reporting requirement,
however, the Act does not otherwise affirmatively state that a person
may establish such a segregated account. Furthermore, 11 CFR 114.10(h)
is the only place in the current regulations that affirmatively states
that a person may, but is not required to, set up such a segregated
bank account, and this regulation is limited to QNCs.
The NPRM proposed revising current 11 CFR 114.10(h) by removing the
reference to QNCs and by expanding the provision to state that all
corporations or labor organizations may establish such accounts. The
NPRM asked whether such a regulation is necessary, given that the
reporting requirements in the Act already contemplate the existence of
these segregated bank accounts. The NPRM further asked whether the
Commission should adopt a broader regulation that would permit, but not
require, any person (other than a political committee \15\) to
establish such an account. Finally, the NPRM asked whether, in the
alternative, the Commission should require corporations and labor
organizations that make independent expenditures and electioneering
communications to use a segregated bank account.
---------------------------------------------------------------------------
\15\ Political committees do not file electioneering
communication reports. See 11 CFR 104.20(b).
---------------------------------------------------------------------------
The Commission received one comment on the specific proposal to
revise current 11 CFR 114.10(h). The commenter agreed with the
Commission's proposal to revise the provision to explicitly provide the
segregated-account option to all corporations or labor organizations
that make disbursements for electioneering communications. The
Commission also received one comment stating that the Commission should
not create a requirement that persons must use a segregated bank
account for funds used to make electioneering communications. The
commenter opined that the Act explicitly makes such an account
permissive, rather than mandatory. The commenter went on to state that
even as to voluntary segregated bank accounts, the Act contemplates
such accounts only for electioneering communications and not for
independent expenditures. The commenter argued that requiring the use
of such accounts would be ``highly burdensome.'' Finally, the commenter
noted that even without such a segregated account, corporations and
labor organizations are subject to the Act's reporting and disclaimer
requirements for independent expenditures and electioneering
communications.
The Commission agrees with the commenter who supported the proposed
changes to 11 CFR 114.10(h) and shares many of the concerns of the
commenter who advised against making the use of segregated bank
accounts mandatory. The Commission is therefore revising current 11 CFR
114.10(h) as proposed in the NPRM to state affirmatively that a
corporation or labor organization may establish a segregated bank
account for funds to be disbursed for electioneering communications.
For the reasons stated above, the Commission is also removing the
reference to QNCs and redesignating the provision as 11 CFR 114.10(d),
and, as explained below in Section IX, is conforming this paragraph to
section 104.20(c)'s clarification regarding the sources of funds that
permissibly may be deposited into such accounts.
G. Revised 11 CFR 114.10(e)--Activities Prohibited by the Internal
Revenue Code
The Commission is revising current 11 CFR 114.10(i) by removing the
reference to QNCs, and by redesignating the provision as 11 CFR
114.10(e).
Current 11 CFR 114.10(i) states that nothing in section 114.10
shall be construed to authorize any organization exempt from taxation
under 26 U.S.C. 501(a), ``including any [QNC],'' to carry out any
activity that the organization is prohibited from undertaking by the
Internal Revenue Code. The NPRM proposed the removal of the reference
to QNCs because, as discussed above, maintaining QNCs as a separate
category of entity is unnecessary after Citizens United.
The Commission received no comments on the specific proposal to
revise current 11 CFR 114.10(i). The Commission is now adopting that
proposal for the reasons stated above and in the NPRM.
VII. Removal of 11 CFR 114.14 and 114.15
In the NPRM, the Commission proposed to remove existing 11 CFR
114.14 and 114.15 in their entirety. These sections prohibit
corporations and labor organizations from using general treasury funds
to finance electioneering communications that are the functional
equivalent of express advocacy and permit using such funds to finance
other electioneering communications. Because Citizens United held that
corporations and labor organizations may use their general treasury
funds to make all electioneering communications, the Commission is
removing these sections that distinguished between permissible and
impermissible electioneering communications.
[[Page 62815]]
A. Removal of 11 CFR 114.14--Restrictions on Corporate and Labor
Organization Funds
The Commission is removing section 114.14 from the regulations.
Section 114.14 provides that corporations and labor organizations may
not give or provide funds to any person for the purpose of paying for
electioneering communications that are not permissible under 11 CFR
114.15, i.e., for electioneering communications that are functionally
equivalent to express advocacy. Because section 114.14 is a
prophylactic regulation designed to prohibit corporations and labor
organizations from doing through other persons what they could not do
directly, the decision in Citizens United has rendered the prohibition
unnecessary. The Commission therefore proposed in the NPRM to remove
this section. The Commission received one comment addressing the
proposed removal of section 114.14, which supported the proposed
removal.
As a result of Citizens United, corporations and labor
organizations may now finance electioneering communications. Section
114.14, which prohibits corporations and labor organizations from
providing funds to other persons for the purpose of making
electioneering communications, is therefore no longer necessary as a
means of preventing circumvention of the prohibition on corporate and
labor organization electioneering communications. The Commission is
removing that section.
B. Removal of 11 CFR 114.15--Permissible Use of Corporate and Labor
Organization Funds for Certain Electioneering Communications
The Commission is removing section 114.15 from the regulations.
This section currently sets forth the criteria for electioneering
communications that corporations and labor organizations may
permissibly finance from their general treasuries because they are not
the ``functional equivalent'' of express advocacy. See generally Wis.
Right to Life, Inc. v. FEC, 551 U.S. 449 (2007) (``WRTL''). Because
corporations and labor organizations are no longer prohibited from
making electioneering communications following Citizens United, the
Commission sought comment on whether this section or portions of it
should be removed. The NPRM noted that a number of other regulations
contain references to section 114.15 and sought comment on whether such
cross-references should be removed.
The Commission received three comments addressing the proposed
removal of section 114.15. Two commenters supported removal because the
``functional equivalent'' test codified in that provision is no longer
relevant to whether a corporation or labor organization may make an
electioneering communication. One commenter argued that the Commission
should retain the ``functional equivalent'' test because the concept is
utilized but not fully set forth at 11 CFR 109.21, as discussed below.
The Commission is removing section 114.15. Because Citizens United
invalidated the prohibition on corporations and labor organizations
making electioneering communications, this section's delineation
between permissible and impermissible electioneering communications is
no longer necessary.
One commenter addressed the issue of cross-references to section
114.15 in other regulations and stated that the multi-factor test set
forth in section 114.15 for determining whether communications
constitute the functional equivalent of express advocacy would still be
useful for purposes of determining when communications are coordinated
with a candidate or political party committee under 11 CFR 109.21. The
commenter argued that section 109.21 relies on a test similar to
section 114.15 to determine whether speech is the functional equivalent
of express advocacy. Retaining the test at section 114.15, the
commenter continued, would be helpful because section 109.21 does not
contain the same test set forth at section 114.15.
Although section 109.21 includes ``the functional equivalent of
express advocacy'' as part of the ``content'' prong of the Commission's
coordination standard, that section does not refer to section 114.15.
When the Commission added the ``functional equivalent'' language to
section 109.21, the Commission stated that it would ``be guided by the
Supreme Court's reasoning and application of the test'' as explained in
WRTL and Citizens United, and declined to incorporate into section
109.21 the factors set forth at section 114.15. Coordinated
Communications, 75 FR 55947, 55953-94 (Sept. 15, 2010). The Commission
therefore concludes that no change to section 109.21 is necessary.
In sum, the Commission is removing section 114.15. As discussed in
Section IX, below, the Commission is also revising the reporting
regulations at 11 CFR 104.20(c) to reflect the removal of section
114.15 and to otherwise implement the Court's decision in Citizens
United.
VIII. Revised 11 CFR 114.1(a)--Definitions
The Commission is making two technical revisions to the general
provisions of 11 CFR 114.1(a) to conform this regulation to the other
changes to part 114 described above. First, the Commission is revising
11 CFR 114.1(a)(2)(ii) to clarify the cross-reference to certain voter
registration and GOTV activity that is exempt from the definitions of
``contribution'' and ``expenditure''; the reference will now be to
revised paragraph 114.3(c)(4)(ii), rather than to section 114.3. See
supra Section III.C. Second, the Commission is revising paragraph
114.1(a)(2)(x) to reflect the revisions throughout part 114 regarding
permissible corporate and labor organization activity. As revised,
paragraph 114.1(a)(2)(x) will continue to provide that activity that
was permissible under part 114 prior to these revisions (such as
activity specified in paragraphs 114.4(b) and 114.4(c)(7)) remains
exempt from the definitions of ``contribution'' and ``expenditure,''
and therefore from the definition of ``independent expenditure,'' while
previously impermissible activity that is now permissible pursuant to
Citizens United and the instant revisions will be subject to this
definitional exemption only as provided in the revised provisions
themselves.
In addition, the Commission is removing the reference in 11 CFR
114.1(a) to the Public Utility Holding Company Act (formerly 15 U.S.C.
79l(h)), as that statute was repealed in 2005. Public Law 109-58,
section 1263, 119 Stat. 974 (2005).
IX. Revised 11 CFR 104.20(c)--Contents of Electioneering Communication
Disclosure Statements
In the NPRM, the Commission requested comments on whether it should
amend its disclosure rules for electioneering communications, 11 CFR
104.20, in light of Citizens United.
Current section 104.20(c) specifies the contents of reports that
persons making electioneering communications must file. The information
that must be reported under that section varies depending on how the
electioneering communication is financed. See 11 CFR 104.20 (c)(1)-
(9).\16\ Specifically,
[[Page 62816]]
paragraph (c)(7)(i) provides that if the electioneering communication
disbursements are paid from a segregated bank account consisting solely
of funds contributed by individuals (other than foreign nationals), the
reporting entity must disclose the name and address of each person who
donated at least $1,000 to that segregated bank account since the first
day of the preceding calendar year. Paragraph (c)(7)(ii) also applies
to electioneering communication disbursements paid from a segregated
bank account and requires the same disclosure but permits the reporting
entity to receive funds into the account from labor organizations and
corporations, provided that any electioneering communications financed
from the account do not constitute the functional equivalent of express
advocacy under current section 114.15. Paragraph (c)(8) provides that
if a person other than a corporation or labor organization makes an
electioneering communication without using the segregated account
option under paragraph (c)(7), the person must disclose the name and
address of each donor who donated at least $1,000 to the reporting
person since the first day of the preceding calendar year. Finally,
paragraph (c)(9) requires corporations and labor organizations that
make electioneering communications ``pursuant to 11 CFR 114.15'' to
disclose the name and address of each donor who donated at least $1,000
to the corporation or labor organization since the first day of the
preceding calendar year for the purpose of furthering electioneering
communications.
---------------------------------------------------------------------------
\16\ Paragraphs (c)(7)(i) and (c)(8) were promulgated as part of
the implementation of the electioneering communication provisions of
BCRA. The Commission later added paragraphs (c)(7)(ii) and (c)(9),
and slightly revised paragraphs (c)(7)(i) and (c)(8), to implement
the Supreme Court's decision in WRTL, 551 U.S. 449.
---------------------------------------------------------------------------
The Commission requested comments on whether section 104.20(c)(7)
should continue to distinguish funds donated by individuals from those
donated by corporations or labor organizations. The Commission received
one comment in response to this request. The commenter questioned the
basis for any continued distinction after Citizens United's holding
that corporations and labor organizations may finance electioneering
communications. The Commission agrees with the commenter that the
current division of section 104.20(c)(7) into separate provisions
distinguishing individual funds from corporate and labor organization
funds is no longer necessary. Because an electioneering communication--
regardless of whether it is functionally equivalent to express
advocacy--may now be financed with individual, corporate, or labor
organization funds, there is no longer any need for the Commission's
regulations to distinguish accounts based on which persons contribute
to them or whether the electioneering communications they finance are
functionally equivalent to express advocacy.
Accordingly, the Commission is combining paragraphs (c)(7)(i) and
(c)(7)(ii) into new paragraph (c)(7). As revised, paragraph (c)(7)
permits any person (including a corporation or labor organization)
making electioneering communications to do so from a segregated account
consisting of donations from all persons who may lawfully finance
electioneering communications. A reporting entity using this option
would report the name and address of each person who donated at least
$1,000 to the segregated account since the first day of the preceding
calendar year, as under the current regulation. For clarity, the
revised regulation also specifically lists the entities that may not
contribute to the segregated accounts because they are prohibited from
financing electioneering communications: foreign nationals (as defined
at 11 CFR 110.2(a)(3)), national banks, and corporations created by a
law of Congress.\17\
---------------------------------------------------------------------------
\17\ 52 U.S.C. 30118(a), (b)(2), 30121(a) (formerly 2 U.S.C.
441b(a), (b)(2), 441e(a)); 11 CFR 114.2(a), 110.20. Rather than
restating the relevant portion of the definition of ``foreign
national,'' as does current section 104.20(c)(7)(i), the revised
regulation simply cross-references that definition.
---------------------------------------------------------------------------
In paragraphs 104.20(c)(8) and (9), the Commission is removing the
references to 11 CFR 114.15 to conform the paragraphs to the removal of
11 CFR 114.15, discussed in Section VII, above. Finally, the Commission
is adding language to paragraph 104.20(c)(9) to clarify that that
paragraph applies when the reporting entity does not use the segregated
account option of paragraph (c)(7).
Certification of No Effect Pursuant to 5 U.S.C. 605(b) (Regulatory
Flexibility Act)
The Commission certifies that the rules will not have a significant
economic impact on a substantial number of small entities. There are
some small entities that will be affected by these rules,\18\ but the
rules will not have a significant economic impact on them. The primary
impact of the changes is to relieve a funding restriction that had
applied to labor organizations and most corporations. To the extent
that any of these affected entities are small entities, the rules will
allow them to engage in activity that they were previously prohibited
from funding with their general treasury funds. While one likely effect
of the rules will be to increase the number of corporations and labor
organizations that use general treasury funds to make independent
expenditures or electioneering communications, these entities will do
so voluntarily and not because of any new requirement in these rules.
The affected entities will incur some costs in complying with the
reporting requirements for independent expenditures and electioneering
communications, but these costs will not constitute a ``significant
economic impact'' for purposes of the Regulatory Flexibility Act.
Further, the reporting obligations of entities that currently meet the
criteria for treatment as qualified non-profit corporations will not
become more burdensome because of this rulemaking. Therefore, the
attached rule will not have a significant economic impact on a
substantial number of small entities.
---------------------------------------------------------------------------
\18\ The Commission's revisions may affect some for-profit
corporations, labor organizations, individuals, and some non-profit
organizations. Individuals and labor organizations are not ``small
entities'' under 5 U.S.C. 601(6).
---------------------------------------------------------------------------
List of Subjects
11 CFR Part 104
Campaign funds, Political committees and parties, Reporting and
recordkeeping requirements.
11 CFR Part 114
Business and industry, Elections, Labor.
For the reasons set out in the preamble, Subchapter A of Chapter I
of Title 11 of the Code of Federal Regulations is amended as follows:
PART 104--REPORTS BY POLITICAL COMMITTEES AND OTHER PERSONS (52
U.S.C. 30104)
0
1. The authority citation for part 104 is revised to read as follows:
Authority: 52 U.S.C. 30101(1), 30101(8), 30101(9), 30102(i),
30104, 30111(a)(8) and (b), 30114, 30116, 36 U.S.C. 510.
0
2. Revise the part heading to read as shown above.
0
3. In Sec. 104.20, the heading and paragraphs (c)(7) through (c)(9)
are revised to read as follows:
Sec. 104.20 Reporting electioneering communications (52 U.S.C.
30104(f)).
* * * * *
(c) * * *
(7) If the disbursements were paid exclusively from a segregated
bank account consisting of funds provided solely by persons other than
national banks, corporations organized by authority of any law of
Congress, or
[[Page 62817]]
foreign nationals as defined in 11 CFR 110.20(a)(3), the name and
address of each donor who donated an amount aggregating $1,000 or more
to the segregated bank account, aggregating since the first day of the
preceding calendar year.
(8) If the disbursements were not paid exclusively from a
segregated bank account described in paragraph (c)(7) of this section
and were not made by a corporation or labor organization, the name and
address of each donor who donated an amount aggregating $1,000 or more
to the person making the disbursement, aggregating since the first day
of the preceding calendar year.
(9) If the disbursements were made by a corporation or labor
organization and were not paid exclusively from a segregated bank
account described in paragraph (c)(7) of this section, the name and
address of each person who made a donation aggregating $1,000 or more
to the corporation or labor organization, aggregating since the first
day of the preceding calendar year, which was made for the purpose of
furthering electioneering communications.
* * * * *
PART 114--CORPORATE AND LABOR ORGANIZATION ACTIVITY
0
4. The authority citation for part 114 is revised to read as follows:
Authority: 52 U.S.C. 30101(8), 30101(9), 30102, 30104,
30107(a)(8), 30111(a)(8), 30118.
0
5. Section 114.1 is amended by revising the introductory text in
paragraph (a) and paragraphs (a)(2)(ii) and (a)(2)(x) to read as
follows:
Sec. 114.1 Definitions.
(a) For purposes of part 114--
* * * * *
(2) * * *
(ii) Registration and get-out-the-vote campaigns by a corporation
aimed at its stockholders and executive or administrative personnel,
and their families, or by a labor organization aimed at its members and
executive or administrative personnel, and their families, as described
in 11 CFR 114.3(c)(4)(ii);
* * * * *
(x) Any activity that is specifically permitted by part 114, but
this exception does not apply to activities permitted by 11 CFR
114.3(c)(4), 114.4(a), (c)(1)-(6), and (d), and 114.10(a), other than
as provided specifically in those sections.
* * * * *
0
6. Section 114.2 is amended by:
0
a. Revising paragraph (a)(1);
0
b. Removing paragraphs (b)(2) and (b)(3);
0
c. Redesignating paragraph (b)(1) as (b);
0
d. Adding a note to paragraph (b); and
0
e Revising paragraph (c).
The revisions and additions read as follows:
Sec. 114.2 Prohibitions on contributions, expenditures and
electioneering communications.
(a) * * *
(1) Such national banks and corporations may engage in the
activities permitted by 11 CFR part 114, except to the extent that such
activity constitutes a contribution, expenditure, or electioneering
communication or is foreclosed by provisions of law other than the Act.
* * * * *
Note to paragraph (b): Pursuant to SpeechNow.org v. FEC, 599
F.3d 686 (D.C. Cir. 2010) (en banc), and Carey v. FEC, 791 F. Supp.
2d 121 (D.D.C. 2011), corporations and labor organizations may make
contributions to non-connected political committees that make only
independent expenditures, or to separate accounts maintained by non-
connected political committees for making only independent
expenditures, notwithstanding 11 CFR 114.2(b) and 11 CFR 114.10(a).
The Commission has not conducted a rulemaking in response to these
cases.
(c) Disbursements by corporations and labor organizations for the
election-related activities described in 11 CFR 114.3 and 114.4 will
not cause those activities to be contributions when coordinated with
any candidate, candidate's agent, candidate's authorized committee(s)
or any party committee to the extent permitted in those sections.
Coordination beyond that described in 11 CFR 114.3 and 114.4 shall not
cause subsequent activities directed at the restricted class to be
considered contributions. However, such coordination may be considered
evidence that could negate the independence of subsequent
communications to those outside the restricted class by the
corporation, labor organization or its separate segregated fund, and
could result in an in-kind contribution. See 11 CFR 100.16 regarding
independent expenditures and coordination with candidates.
* * * * *
0
7. Section 114.3 is amended by revising paragraphs (b) and (c)(4) to
read as follows:
Sec. 114.3 Disbursements for communications to the restricted class
in connection with a Federal election.
* * * * *
(b) Reporting communications containing express advocacy to the
restricted class. Disbursements for communications expressly advocating
the election or defeat of one or more clearly identified candidate(s)
made by a corporation, including a corporation described in paragraph
(a)(2) of this section, or labor organization to its restricted class
shall be reported in accordance with 11 CFR 100.134(a) and 104.6.
(c) * * *
(4) Registration and get-out-the-vote drives. (i) A corporation or
labor organization may conduct voter registration and get-out-the-vote
drives aimed at its restricted class, except as provided in paragraph
(c)(4)(iii) of this section. Voter registration and get-out-the-vote
drives include providing transportation to the place of registration
and to the polls. Such drives may include communications containing
express advocacy, such as urging individuals to register with a
particular party or to vote for a particular candidate or candidates.
(ii) Disbursements for a voter registration or get-out-the-vote
drive conducted under paragraph (c)(4)(i) of this section are not
contributions or expenditures if the drive is nonpartisan. See 52
U.S.C. 30118(b)(2)(B). A drive is nonpartisan if it is conducted so
that information and other assistance regarding registering or voting,
including transportation and other services offered, is not withheld or
refused on the basis of support for or opposition to particular
candidates or a particular political party.
(iii) A corporation or labor organization may make disbursements to
conduct voter registration and get-out-the-vote drives that are aimed
at its restricted class and that do not qualify as nonpartisan under
paragraph (c)(4)(ii) of this section, provided that the disbursements
do not constitute coordinated expenditures as defined in 11 CFR 109.20,
coordinated communications as defined in 11 CFR 109.21, or
contributions as defined in 11 CFR part 100, subpart B. See also note
to 11 CFR 114.2(b), 114.10(a).
0
8. Section 114.4 is amended by removing paragraph (c)(8) and by
revising the section heading and paragraphs (a), (c)(1) through (c)(6),
and (d) to read as follows:
Sec. 114.4 Disbursements for communications by corporations and labor
organizations beyond the restricted class in connection with a Federal
election.
(a) General. A corporation or labor organization may communicate
beyond the restricted class in accordance with
[[Page 62818]]
this section. Communications that a corporation or labor organization
may make only to its employees (including its restricted class) and
their families, but not to the general public, are set forth in
paragraph (b) of this section. Any communications that a corporation or
labor organization may make to the general public under paragraph (c)
of this section may also be made to the corporation's or labor
organization's restricted class and to other employees and their
families. Communications that a corporation or labor organization may
make only to its restricted class are set forth at 11 CFR 114.3. The
activities described in paragraphs (b) and (c) of this section may be
coordinated with candidates and political committees only to the extent
permitted by this section. For the otherwise applicable regulations
regarding independent expenditures and coordination with candidates,
see 11 CFR 100.16, 109.21, and 114.2(c). Voter registration and get-
out-the-vote drives as described in paragraph (d) of this section must
not include coordinated expenditures as defined in 11 CFR 109.20,
coordinated communications as defined in 11 CFR 109.21, or
contributions as defined in 11 CFR part 100, subpart B. See also note
to 11 CFR 114.2(b), 114.10(a). Incorporated membership organizations,
incorporated trade associations, incorporated cooperatives, and
corporations without capital stock will be treated as corporations for
the purpose of this section.
* * * * *
(c) Communications by a corporation or labor organization to the
general public--(1) General. A corporation or labor organization may
make independent expenditures or electioneering communications pursuant
to 11 CFR 114.10. This section addresses specific communications,
described in paragraphs (c)(2) through (c)(7) of this section, that a
corporation or labor organization may make to the general public. The
general public includes anyone who is not in the corporation's or labor
organization's restricted class. The preparation, contents, and
distribution of any of the communications described in paragraphs (2)
through (6) below must not include coordinated expenditures as defined
in 11 CFR 109.20, coordinated communications as defined in 11 CFR
109.21, or contributions as defined in 11 CFR part 100, subpart B. See
also note to 11 CFR 114.2(b), 114.10(a).
(2) Voter registration and get-out-the-vote communications. (i) A
corporation or labor organization may make voter registration and get-
out-the-vote communications to the general public.
(ii) Disbursements for the activity described in paragraph
(c)(2)(i) of this section are not contributions or expenditures,
provided that:
(A) The voter registration and get-out-the-vote communications to
the general public do not expressly advocate the election or defeat of
any clearly identified candidate(s) or candidates of a clearly
identified political party; and
(B) The preparation and distribution of voter registration and get-
out-the-vote communications is not coordinated with any candidate(s) or
political party.
(3) Official registration and voting information. (i) A corporation
or labor organization may distribute to the general public, or reprint
in whole and distribute to the general public, any registration or
voting information, such as instructional materials, that has been
produced by the official election administrators.
(ii) A corporation or labor organization may distribute official
registration-by-mail forms to the general public. A corporation or
labor organization may distribute absentee ballots to the general
public if permitted by the applicable State law.
(iii) A corporation or labor organization may donate funds to State
or local government agencies responsible for the administration of
elections to help defray the costs of printing or distributing voter
registration or voting information and forms.
(iv) Disbursements for the activity described in paragraphs
(c)(3)(i) through (iii) of this section are not contributions or
expenditures, provided that:
(A) The corporation or labor organization does not, in connection
with any such activity, expressly advocate the election or defeat of
any clearly identified candidate(s) or candidates of a clearly
identified political party and does not encourage registration with any
particular political party; and
(B) The reproduction and distribution of registration or voting
information and forms is not coordinated with any candidate(s) or
political party.
(4) Voting records. (i) A corporation or labor organization may
prepare and distribute to the general public the voting records of
Members of Congress.
(ii) Disbursements for the activity described in paragraph
(c)(4)(i) of this section are not contributions or expenditures,
provided that:
(A) The voting records of Members of Congress and all
communications distributed with it do not expressly advocate the
election or defeat of any clearly identified candidate(s) or candidates
of a clearly identified political party; and
(B) The decision on content and the distribution of voting records
is not coordinated with any candidate, group of candidates, or
political party.
(5) Voter guides. (i) A corporation or labor organization may
prepare and distribute to the general public voter guides, including
voter guides obtained from a nonprofit organization that is described
in 26 U.S.C. 501(c)(3) or (c)(4).
(ii) Disbursements for the activity described in paragraph
(c)(5)(i) of this section are not contributions or expenditures,
provided that the voter guides comply with either paragraph
(c)(5)(ii)(A) or (c)(5)(ii)(B)(1) through (5) of this section:
(A) The corporation or labor organization does not act in
cooperation, consultation, or concert with or at the request or
suggestion of the candidates, the candidates' committees or agents
regarding the preparation, contents and distribution of the voter
guide, and no portion of the voter guide expressly advocates the
election or defeat of one or more clearly identified candidate(s) or
candidates of any clearly identified political party; or
(B)(1) The corporation or labor organization does not act in
cooperation, consultation, or concert with or at the request or
suggestion of the candidates, the candidates' committees or agents
regarding the preparation, contents and distribution of the voter
guide;
(2) All of the candidates for a particular seat or office are
provided an equal opportunity to respond, except that in the case of
Presidential and Vice Presidential candidates the corporation or labor
organization may choose to direct the questions only to those
candidates who--
(i) Are seeking the nomination of a particular political party in a
contested primary election; or
(ii) Appear on the general election ballot in the state(s) where
the voter guide is distributed or appear on the general election ballot
in enough states to win a majority of the electoral votes;
(3) No candidate receives greater prominence in the voter guide
than other participating candidates, or substantially more space for
responses;
(4) The voter guide and its accompanying materials do not contain
an electioneering message; and
(5) The voter guide and its accompanying materials do not score or
rate the candidates' responses in such a way as to convey an
electioneering message.
[[Page 62819]]
(6) Endorsements. (i) A corporation or labor organization may
endorse a candidate, and may communicate the endorsement to the
restricted class and the general public. The Internal Revenue Code and
regulations promulgated thereunder should be consulted regarding
restrictions or prohibitions on endorsements by nonprofit corporations
described in 26 U.S.C. 501(c)(3).
(ii) Disbursements for announcements of endorsements to the general
public are not contributions or expenditures, provided that:
(A) The public announcement is not coordinated with a candidate, a
candidate's authorized committee, or their agents; and
(B) Disbursements for any press release or press conference to
announce the endorsement are de minimis. Such disbursements shall be
considered de minimis if the press release and notice of the press
conference are distributed only to the representatives of the news
media that the corporation or labor organization customarily contacts
when issuing non-political press releases or holding press conferences
for other purposes.
(iii) Disbursements for announcements of endorsements to the
restricted class may be coordinated pursuant to 114.3(a) and are not
contributions or expenditures provided that no more than a de minimis
number of copies of the publication that includes the endorsement are
circulated beyond the restricted class.
* * * * *
(d) Voter registration and get-out-the-vote drives--(1) Voter
registration and get-out-the-vote drives permitted. 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. Voter registration and get-out-the-vote
drives include providing transportation to the polls or to the place of
registration.
(2) Disbursements for certain voter registration and get-out-the-
vote drives not expenditures. Voter registration or get-out-the-vote
drives that are conducted in accordance with paragraphs (d)(2)(i)
through (d)(2)(v) of this section are not expenditures.
(i) The corporation or labor organization shall not make any
communication expressly advocating the election or defeat of any
clearly identified candidate(s) or candidates of a clearly identified
political party as part of the voter registration or get-out-the-vote
drive.
(ii) The voter registration drive shall not be directed primarily
to individuals previously registered with, or intending to register
with, the political party favored by the corporation or labor
organization. The get-out-the-vote drive shall not be directed
primarily to individuals currently registered with the political party
favored by the corporation or labor organization.
(iii) These services shall be made available without regard to the
voter's political preference. Information and other assistance
regarding registering or voting, including transportation and other
services offered, shall not be withheld or refused on the basis of
support for or opposition to particular candidates or a particular
political party.
(iv) Individuals conducting the voter registration or get-out-the-
vote drive shall not be paid on the basis of the number of individuals
registered or transported who support one or more particular candidates
or political party.
(v) The corporation or labor organization shall notify those
receiving information or assistance of the requirements of paragraph
(d)(2)(iii) of this section. The notification shall be made in writing
at the time of the registration or get-out-the-vote drive.
* * * * *
0
9. Section 114.10 is revised to read as follows:
Sec. 114.10 Corporations and labor organizations making independent
expenditures and electioneering communications.
(a) General. Corporations and labor organizations may make
independent expenditures, as defined in 11 CFR 100.16, and
electioneering communications, as defined in 11 CFR 100.29.
Corporations and labor organizations are prohibited from making
coordinated expenditures as defined in 11 CFR 109.20, coordinated
communications as defined in 11 CFR 109.21, or contributions as defined
in 11 CFR part 100, subpart B.
Note to paragraph (a): Pursuant to SpeechNow.org v. FEC, 599
F.3d 686 (D.C. Cir. 2010) (en banc), and Carey v. FEC, 791 F. Supp.
2d 121 (D.D.C. 2011), corporations and labor organizations may make
contributions to non-connected political committees that make only
independent expenditures, or to separate accounts maintained by non-
connected political committees for making only independent
expenditures, notwithstanding 11 CFR 114.2(b) and 11 CFR 114.10(a).
The Commission has not conducted a rulemaking in response to these
cases.
(b) Reporting independent expenditures and electioneering
communications. (1) Corporations and labor organizations that make
independent expenditures aggregating in excess of $250 with respect to
a given election in a calendar year shall file reports as required by
11 CFR part 114, 104.4(a), and 109.10(b)-(e).
(2) Corporations and labor organizations that make electioneering
communications aggregating in excess of $10,000 in a calendar year
shall file the statements required by 11 CFR 104.20(b).
(c) Non-authorization notice. Corporations or labor organizations
making independent expenditures or electioneering communications shall
comply with the requirements of 11 CFR 110.11.
(d) Segregated bank account. A corporation or labor organization
may, but is not required to, establish a segregated bank account into
which it deposits only funds donated or otherwise provided by persons
other than national banks, corporations organized by authority of any
law of Congress, or foreign nationals (as defined in 11 CFR
110.20(a)(3)), as described in 11 CFR 104.20(c)(7), from which it makes
disbursements for electioneering communications.
(e) Activities prohibited by the Internal Revenue Code. Nothing in
this section shall be construed to authorize any organization exempt
from taxation under 26 U.S.C. 501(a) to carry out any activity that it
is prohibited from undertaking by the Internal Revenue Code, 26 U.S.C.
501, et seq.
0
10. Sections 114.14 and 114.15 are removed and reserved.
On behalf of the Commission,
Dated: October 9, 2014.
Lee E. Goodman,
Chairman, Federal Election Commission.
[FR Doc. 2014-24666 Filed 10-20-14; 8:45 am]
BILLING CODE 6715-01-P