Federal Register: November 19, 2002 (Volume 67, Number 223)
DOCID: FR Doc 02-28886
FEDERAL ELECTION COMMISSION
Veterans Affairs Department
CFR Citation: 11 CFR Parts 102 and 110
DOCUMENT ID: [Notice 2002-22]
NOTICE: Part IV
DOCUMENT ACTION: Final rules and transmittal of regulations to Congress.
Contribution Limitations and Prohibitions
EFFECTIVE DATES: January 1, 2003.
The Federal Election Commission is issuing these final rules to implement amendments made by the Bipartisan Campaign Reform Act of 2002 (``BCRA'') to the contribution limitations and prohibitions of the Federal Election Campaign Act of 1971, as amended (``FECA'' or ``the Act''). These rules increase the limits on contributions made by individuals and political committees; index certain contribution limits for inflation; prohibit contributions by minors to candidates, authorized committees and committees of political parties and donations by minors to committees of political parties; and prohibit contributions, donations, expenditures, independent expenditures and disbursements by foreign nationals. These rules also revise the Commission's rules for designating contributions to particular elections and attributing contributions to particular donors. Further information is provided in the Supplementary Information that follows.
Federal Election Commission,
The Bipartisan Campaign Reform Act of 2002, Public Law 107155, 116 Stat. 81 (Mar. 27, 2002), contains extensive and detailed amendments to the Federal Election Campaign Act of 1971, as amended, 2 U.S.C. 431 et seq. This is one of a series of rulemakings the Commission is undertaking to implement the provisions of BCRA.
Section 402(c)(1) of BCRA establishes a general deadline of 270 days for the Commission to promulgate regulations to carry out BCRA. The President of the United States signed BCRA into law on March 27, 2002, so the 270day deadline is December 22, 2002.
Because of the brief period before the deadline for promulgating these rules, the Commission received and considered public comments expeditiously. The Notice of Proposed Rulemaking (``NPRM'') on which these final rules are based was published in the Federal Register on August 22, 2002. 67 FR 54,366 (Aug. 22, 2002). The written comments were due by September 13, 2002. The names of commenters and their comments are available at http://www.fec.gov/register.htm under ``Contribution Limitations and Prohibitions.'' The NPRM stated that the Commission would hold a hearing on the proposed rules if it received a sufficient number of requests to testify. After reviewing the comments received and in light of the relatively small number of requests to testify, the Commission decided not to hold a public hearing on this rulemaking. A notice canceling the proposed hearing was published on the Commission's website on October 2, 2002 (http://www.fec.gov/press/ 20021002cancel.html) and in the Federal Register on October 7, 2002, 67 FR 62,410 (Oct. 7, 2002).
Under the Administrative Procedures Act, 5 U.S.C. 553(d), and the Congressional Review of Agency Rulemaking Act, 5 U.S.C. 801(a)(1), agencies must submit final rules to the Speaker of the House of Representatives and the President of the Senate and publish them in the Federal Register at least 30 calendar days before they take effect. The final rules on contribution limitations and prohibitions were transmitted to Congress on November 8, 2002.
The final rules address five major topics: (1) Increased limits on contributions made by certain persons to candidates, by political party committees to Senate candidates, and by individuals in a 2year period; (2) indexing of certain contributions limits for inflation; (3) prohibition on contributions, donations, expenditures, independent expenditures and disbursements by foreign nationals; (4) prohibition on contributions by minors to candidates, authorized committees, and committees of political parties and on donations by minors to committees of political parties; and (5) designating contributions to particular elections and attributing contributions to particular contributors.
Four of the five topics involve implementing specific provisions of BCRA. BCRA's amendments to 2 U.S.C. 441a(a) that increase contribution limits for individuals and political committees are implemented by amending 11 CFR 110.1, 110.2 and 110.5 and adding new Sec. 110.17 on indexing the contributions limits for inflation. BCRA's amendments to 2 U.S.C. 441e to strengthen and expand the ban on campaign contributions and donations by foreign nationals is implemented by removing and reserving 11 CFR 110.4(a), the former regulation addressing foreign nationals, and adding new Sec. 110.20. BCRA's ban on contributions by minors to Federal candidates and contributions and donations by minors to committees of political parties at 2 U.S.C. 441k is implemented by removing 11 CFR 110.1(i)(2), the former regulation addressing contributions by minors, and adding new Sec. 110.19.
In light of BCRA's focus on contribution limits, the Commission has
also decided to streamline its rules for redesignating contributions
for a particular election and reattributing contributions to particular
contributors. These changes are reflected in amendments to 11 CFR 110.1(b)(5) and 110.1(k)(3).
Explanation and Justification
11 CFR 102.9 Accounting for Contributions and Expenditures
Recordkeeping requirements play a crucial role in ensuring compliance with FECA's and BCRA's contributions limitations, as noted in the NPRM. 64 FR at 54,372. Accordingly, the Commission sought comment on a variety of proposals to modify the recordkeeping requirements in 11 CFR 102.9. Two commenters were opposed to any change; one noted that electronic records should be sufficient, provided they are in readable form. Another commenter supported the Commission's proposal to require political committees to maintain photocopies or electronic copies of contributors' checks. The Commission has determined that requiring retention of photocopies or electronic copies of contributors' checks will facilitate audits that determine compliance with contribution limits. Therefore, 11 CFR 102.9(a) is amended to require political committee treasurers to maintain either a fullsize photocopy or a digital image of each check or written instrument by which a contribution is made. If a political committee elects to retain digital images, it must be prepared to provide the Commission with the computer equipment and software needed to retrieve and read the digital images at no cost to the Commission. New 11 CFR 102.9(a)(4).
Additionally, the Commission is also amending the supporting
evidence requirements for redesignations and reattributions in connection with other changes made to redesignations and
reattributions, as explained below in the discussion of 11 CFR 110.1(l).
Paragraph (e)(1) of 11 CFR 102.9 is amended to clarify that its
requirements apply to contributions designated in writing by the
contributor pursuant to 11 CFR 110.1(b)(2)(i), contributions treated as
such pursuant to 11 CFR 110.1(b)(2)(ii), contributions redesignated in
writing by the contributor pursuant to new 11 CFR 110.1(b)(5)(ii)(A),
or contributions designated by presumption pursuant to new 11 CFR
110.1(b)(5)(ii)(B). New paragraph (e)(2) makes the standard for
acceptable accounting methods explicit by stating that the committee's
records must demonstrate that, prior to the primary election, recorded
cash on hand was at all times equal to or in excess of the sum of
general election contributions received less the sum of general
election disbursements made. Additionally, a technical change is made
to recodify existing regulatory text as new paragraph (e)(3) in order
to clarify that the requirement for candidates not in the general
election to refund any contributions designated or treated as
contributions for the general election applies to all candidates and authorized committees.
11 CFR 110.1 Contributions by Persons Other Than MultiCandidate Political Committees
1. 11 CFR 110.1(a) Scope
Section 110.1(a) sets out the scope of the regulations in 11 CFR
110.1. The final rules in this paragraph contain amended citations to
the provisions concerning minors and foreign nationals. This final rule
is substantially identical to the proposed rule, and the Commission did not receive any comments concerning paragraph (a).
2. 11 CFR 110.1(b)(1) Increases in Limitations on Contributions to Candidates
The Act limits the amount that individuals and certain other persons may contribute to candidates and political committees, including political party committees with respect to Federal elections. 2 U.S.C. 441a(a)(1). The preBCRA provisions of the Act permitted persons to contribute up to $1,000 to Federal candidates per election and up to $20,000 per calendar year to political committees established and maintained by national political parties. For contributions made on or after January 1, 2003, BCRA amends 2 U.S.C. 441a(a)(1)(A) to increase the amount persons may contribute to Federal candidates to $2,000 per election. Section 110.1(b)(1), which contains the contribution limitation of 2 U.S.C. 441a(a)(1)(A), is therefore, being amended to incorporate the new increased $2,000 contribution limit. Paragraph (b)(1) in the final rules, with some minor revisions, is substantially identical to proposed paragraph (b)(1) in the NPRM. The Commission did not receive any comments on this provision.
FECA also permits certain persons to contribute up to $5,000 per year to any other political committees. 2 U.S.C. 441a(a)(1)(C). This contribution limit was left unchanged by BCRA. However, BCRA did revise 2 U.S.C. 441a(a)(1) by adding paragraph (D), which permits persons to make up to $10,000 in contributions to a political committee established and maintained by a State committee of a political party in a calendar year. This statutory provision was implemented by the addition of new paragraph (c)(5) to Sec. 110.1. See Prohibited and Excessive Contributions: NonFederal Funds or Soft Money Final Rules, 67 FR 49,063 (July 29, 2002).
BCRA mandates that the limit for contributions by individuals and other persons under 2 U.S.C. 441a(a)(1)(A) be increased every odd numbered year by the percentage difference in the price index between the current year and the base year of 2001. 2 U.S.C. 441a(c)(1)(B). The mechanics of the indexing are set forth in 11 CFR 110.17, which is discussed below. However, in order to alert the reader that the contribution limits are adjusted every two years, Sec. 110.1(b)(1)(i) contains a cross reference to section 110.17. Additionally, paragraph (b)(1)(ii) sets forth the 2year time period in which the increased contribution limits are to be in effect. That 2year period starts the day after the previous general election and ends on the day of the next regularly scheduled general election.
Because the contribution limits may change every two years, depending upon the consumer price index, paragraph (b)(1)(iii) states that the Commission will publish the new contribution limits in effect in the Federal Register every oddnumbered year and maintain that information on its website. One commenter supported this change. 3. 11 CFR 110.1(b)(3) Net Debts Outstanding
The NPRM raised the issue of the effect of the increase on contribution limits due to the inflation adjustment on contributions made after an election that are used to satisfy the net debts outstanding of a candidate's authorized committees related to that previous election. The NPRM sought comment on the following hypothetical: If the contribution limit were to be increased from $2,000 to $2,100, effective November 3, 2004, and contributor X makes a $2,000 contribution to candidate Y in October of 2004, could contributor X make a $100 contribution after November 3, 2004 designated for that general election, provided that candidate Y's principal campaign committee still has net debts outstanding?
The Commission received several comments concerning this issue. All the commenters who addressed this, including the Congressional sponsors of BCRA, argued against permitting the increase in the contribution limits to apply to contributions made to pay off net debts outstanding from any election held prior to the increase in the contribution limits. Instead, these commenters proposed that any increased contribution limits should only apply to elections held after the date on which the indexing triggers a higher contribution limit. Several of these commenters noted the confusion that would ensue for both contributor and recipient committees if multiple contribution limits applied to the same election. The Commission agrees with this reasoning. In addition, it finds no evidence that Congress intended candidates in a deficit position after an election to have the benefit of accepting larger contributions than candidates who have no debts outstanding for that election. Consequently, the Commission is persuaded that the increase in the contribution limits should not be applied to previous elections. This interpretation will reduce the occurrence of multiple changes to the contribution limits for elections. The Commission also notes that the retroactive application of 2 U.S.C. 441a(c)(1)(C) specifically begins on the date after the previous general election, and can thus be construed to mean that the increase in the contribution limits does not apply to any previous election.
To make clear that the increase in contribution limits cannot be
used to retire net debts outstanding from previous elections, the
Commission is amending Sec. 110.1(b)(3)(iii). This regulation sets
forth the conditions under which candidates may accept contributions to
retire net debts outstanding after the date of a previous primary or
general election. The Commission is renumbering the two existing
conditions as paragraphs (b)(3)(iii)(A) and (B) and is adding the [[Page 69930]]
additional requirement at paragraph (b)(3)(iii)(C) that contributions received for net debts outstanding arising from previous elections do not exceed the contribution limitations in effect on the date of such election.
4. 11 CFR 110.1(b)(5)(ii) Redesignations
In the NPRM, the Commission stated that BCRA's renewed focus on
contribution limits coincided with the Commission's consideration of
updating and streamlining its rules for designating contributions for a
particular election or attributing contributions to particular
contributors. See NPRM, 67 FR at 54,371. Under existing regulations,
all contributions are either designated in writing by the contributor,
11 CFR 110.1(b)(2)(i), or treated as contributions for the next
election after the contribution is made. 11 CFR 110.1(b)(2)(ii). This
is in order to ensure that no person contributes more than the
individual contribution limit to any candidate with respect to a
particular election. 2 U.S.C. 441a(a)(1)(A). Commission regulations
permit political committees in certain circumstances to obtain a written redesignation signed by the contributor. 11 CFR
110.1(b)(5)(ii). The Commission presented proposed rules in the NPRM that would permit the authorized committees of candidates to redesignate contributions pursuant to a presumption in certain circumstances. NPRM, 67 FR at 54,376. Additionally, the NPRM proposed amending the rules pertaining to reattribution of contributions similar to the rules on redesignation. This proposal is addressed in the Explanation and Justification for 11 CFR 110.1(k)(3)(ii), discussed below.
One commenter applauded the Commission's consideration of the contribution redesignation regulations that it characterized as ``confusing and burdensome both for committees and contributors.'' In contrast, several commenters noted that BCRA neither requires nor anticipates a reexamination of the redesignation rules. BCRA's silence on these issues led one commenter to the conclusion that these issues would be more appropriately addressed in a separate rulemaking that does not arise from BCRA, while another found the Commission's reexamination welltimed, as an effort to simplify FECA compliance generally, which will improve the ability of political committees to comply with the new requirements of BCRA. In light of the new contribution limits and other statutory changes in BCRA, the Commission has concluded that this rulemaking provides an appropriate vehicle for simplifying the rules governing redesignation.
B. 11 CFR 110.1(b)(5)(ii)(A) Existing Redesignation Rule
Because the Commission has decided to provide for an alternative
method for redesignation of contributions, 11 CFR 110.1(b)(5)(ii)
requires a technical amendment in order to incorporate the new
provision within this section. Thus, this rulemaking redesignates
former 110.1(b)(5)(ii)(A) and (B) as 110.1(b)(5)(ii)(A)(1) and (2),
respectively. This rulemaking does not amend the regulatory language of these provisions.
C. 11 CFR 110.1(b)(5)(ii)(B) Redesignation of Certain Excessive Primary Contributions
Current 11 CFR 110.1(b)(5) sets forth the procedure for the
redesignation of excessive contributions to candidates and authorized
committees from any person, except multicandidate committees and those
persons prohibited from making contributions. See 11 CFR 110.1(a). When
seeking a redesignation of an excessive contribution, a committee
treasurer must offer the contributor a refund and obtain a signed,
written redesignation from the contributor within 60 days of the
treasurer's receipt of the contribution. See 11 CFR 110.1(b)(5)(ii).
These requirements apply to excessive contributions that were
designated in writing by the contributor, 11 CFR 110.1(b)(5)(i)(A) and
(B), or that were not designated in writing by the contributor, 11 CFR
110.1(b)(5)(i)(C) and (D), in which case 11 CFR 110.1(b)(2)(ii) treats
the contributions as made for the next election for that Federal office
after the contributions are made.\1\ In addition to written
redesignations, the Commission is amending 11 CFR 110.1(b)(5) to permit
authorized committees to redesignate contributions that would otherwise
be excessive without obtaining a signed, written document under certain circumstances, as discussed below.
\1\ These requirements apply whether the contributions are excessive on their face or in aggregation with other contributions, 11 CFR 110.1(b)(5)(i)(A) and (C), or were designated for an election and were made after the election, but cannot be accepted because the contributions exceed net debts outstanding from the past election, 11 CFR 110.1(b)(5)(i)(B), or were received after an election but undesignated, and the authorized committee has net debts outstanding from the previous election. 11 CFR 110.1(b)(5)(i)(D).
As proposed in the NPRM, the Commission is amending these regulations to include a mechanism to simplify redesignation procedures for certain excessive primary contributions by using a presumption. See NPRM, 67 FR at 54,371, new 11 CFR 110.1(b)(5)(ii)(B). This presumption applies only when a contributor makes an excessive contribution to a candidate's authorized committee before a primary election that is not designated in writing for a particular election. In such circumstances, a candidate's authorized committee may presume that the contributor intended to contribute any excessive amount to that candidate's general election, without obtaining written permission from the contributor to treat the excess as a general election contribution. This presumption should not be inferred, however, in instances where the contributor has expressly designated a contribution in writing for a different election.
The Commission agrees with the commenter who noted the reasonableness of a presumption that a contributor of a large contribution to a primary election campaign would also support the general election campaign of the same candidate. That commenter reasoned that the primary and general elections occur in the same year and are two stages of one process to elect a candidate to a particular office. However, the Commission disagrees with another commenter who argued that written redesignations most often serve as barriers to contributor intent, which in the commenter's view is generally to support the candidate to the maximum extent possible. The Commission retains its rules on written redesignations in all other situations described in 11 CFR 110.1(b)(5)(i)(A) through (D). Only in the specific circumstance presented in new 11 CFR 110.1(b)(5)(ii)(B) will the presumption suffice to replace a written redesignation.
Thus, the Commission is revising Sec. 110.1(b)(5)(ii)(B) to permit
an authorized committee to redesignate excessive contributions to the
general election if the following conditions are satisfied. First, the
contribution must be made before the primary election. Second, the
contribution must not have been designated in writing for another
election. Third, the contribution would be excessive if treated as a
contribution made for the primary election, and fourth, the
redesignation does not cause the contributor to exceed any other
contribution limit. These conditions are set forth in paragraphs
(b)(5)(ii)(B)(1) through (4), respectively. The committee must be
permitted to accept general election contributions in order to
designate contributions by presumption. Therefore, if a presidential candidate's
authorized committee accepts public funding in the general election, the presumption is available to any such committees only to the extent they are permitted to accept contributions to a general election legal and accounting compliance fund. The final rule also requires that the authorized committee notify the contributor of the redesignation. This requirement is discussed in further detail below.
D. 11 CFR 110.1(b)(5)(ii)(B)(5) and (6) Notice to Contributors
With respect to the redesignation of certain primary contributions, the NPRM included two alternatives, Alternatives 1A and 1B. See proposed 11 CFR 110.1(b)(5)(ii)(B), NPRM, 67 FR at 54,371 and 54,376. The alternatives differed in whether an authorized committee employing the presumption to redesignate a contribution would be required to notify the contributor that such action is being taken. Alternative 1A would not have required any notification to the contributor, while Alternative 1B would have required notification through the addition of paragraphs (b)(5)(ii)(B)(5) and (6). See NPRM, 67 FR at 54,371 and 54,376.
Alternative 1A was designed to minimize the administrative burden on authorized committees when a contributor's intent could be reasonably inferred. See id. at 54,371. Some commenters preferred this approach. One viewed it as a better balance between the Commission's need to ensure that committees follow procedures and the committees' need for flexibility. Greater flexibility for the committees was the basis for another commenter's support. Another found Alternative 1A to be consistent with contributor intent and with BCRA's change in the individual aggregate contribution limit from an annual to an election cycle basis. See 2 U.S.C. 441a(a)(3). The Commission notes, however, that BCRA changes the individual aggregate contribution limit to a bi annual basis that only approximates the election cycle for the U.S. House of Representatives. More importantly, Congress did not change the per candidate contribution limits from a perelection to an election cycle basis.
Alternative 1B in the Commission's proposal would have required that the authorized committee inform the contributor that a portion of the contribution is being redesignated to the general election, and that the contributor may request a refund instead. As with Alternative 1A, no confirmation from the contributor would have been required.
This alternative attracted the support of several commenters, as well. One commenter found that the presumption combined with notice to the contributor reasonably approximates contributor intent, with notice ensuring that any other contributor intent can be honored. Similarly, another argued Alternative 1B strikes the appropriate balance between the administrative burden imposed on authorized committees and the need to honor contributor intent, noting that some primary election contributors might plan to support a different candidate in the general election. Another commenter supported the notice required under Alternative 1B because it would provide an opportunity for the contributor to ``optout'' and receive a refund, instead of permitting the redesignation, and because it is more likely to prevent the contributor from inadvertently making an excessive contribution to the general election.
The Commission has determined that notifying contributors is necessary when authorized committees redesignate excessive contributions that were initially considered primary contributions by operation of 11 CFR 110.1(b)(2)(ii) to be general election contributions. The Commission has therefore adopted Alternative 1B as proposed in the NPRM, with clarification to the notice procedure as described below. See NPRM, 67 FR at 54,371 and 54,376. The Commission believes that, in the precise circumstances discussed, it is reasonable to infer that the contributor of an otherwise excessive primary contribution would likely not object to redesignating a portion of that contribution to the general election campaign. The contributor's check establishes the contributor's intent to contribute the funds to the candidate's authorized committee. The contribution limits in FECA prohibit the excessive contributions at issue, so the presumption permits the authorized committee to honor the contributor's intent in a manner that avoids a violation of law by both the recipient committee and the contributor.
The notice and refund procedure serves to confirm the presumption that a contributor of an excessive, undesignated contribution to the primary election would consent to a redesignation of the excessive portion of the contribution to the general election. The authorized committee may assume acquiescence on the part of the contributor if the contributor does not respond to the notification. However, if the contributor does not want the contribution to be redesignated, the notice provides a mechanism by which the contributor may object to the redesignation and request a refund or a reattribution under 11 CFR 110.1(k)(3)(ii). Additionally, the Commission notes that the trigger for a committee's use of the presumptionan undesignated excessive contributionsuggests the contributor may benefit from information about the contribution limits in FECA. Contributors need to know if a contribution was redesignated or reattributed so that they can avoid an inadvertent excessive contribution. Any authorized committee that seeks to retain a contribution that would otherwise constitute a violation of law can fairly be required to notify the contributor of the means by which it has remedied the violation of law. Thus, new paragraph (b)(5)(ii)(B)(5) requires the treasurer to notify the contributor of the redesignation and provide an opportunity to the contributor to request a refund. In such a notice, the committee may, if it wishes, also seek a written reattribution under 11 CFR 110.1(k)(3)(ii)(A); however, authorized committees are not required to include this information in the notice pursuant to 11 CFR 110.1(b)(5)(ii)(B)(5).
Authorized committees may notify contributors by paper mail, email,
fax, or any other written method. The authorized committee must do so
within sixty days of the treasurer's receipt of the contribution. See
new 11 CFR 110.1(b)(5)(ii)(B)(6). The notice must be written in order
to avoid opportunities for fraud, so the option to communicate orally
has been deleted from paragraph (b)(5)(ii)(B)(6). The sixtyday
requirement protects contributor intent by providing notice on a reasonably contemporaneous basis.
E. 11 CFR 110.1(b)(5)(ii)(C) Redesignation of Certain Excessive General Election Contributions
The Commission sought comment on whether to permit backwardlooking
presumptions, so that excessive general election contributions received
after a primary election could be designated by an authorized committee
to pay off primary debt. See NPRM, 67 FR at 54,371. Three commenters
favored a backwardlooking presumption in certain circumstances. One
supported the presumption in the situation described, provided that the
authorized committee has net debts outstanding for the primary
election. Another supported the presumption, provided that it is
limited to elections in the same election cycle. A third supported the
presumption, provided that the contributor receives notice. Finally, one commenter argued against such a
backwardlooking presumption because it would require more complex considerations by the contributors. However, the Commission notes that the burden of calculating net debts outstanding for the primary election falls on the authorized committees, not on the contributors.
The Commission has determined that the backwardlooking
presumption, in limited circumstances, should apply subject to the same conditions as the redesignation presumption in 11 CFR
110.1(b)(5)(ii)(B). The Commission notes that current 11 CFR 110.1(b)(3)(iv) permits a candidate in the general election to pay primary election debts and obligations with general election contributions. Thus, if a contributor designates in writing that a non excessive contribution should be considered for the general election, the recipient committee may nonetheless use those funds to pay primary debts, pursuant to 11 CFR 110.1(b)(3)(iv). In this situation, it would be incongruous if a recipient committee had less flexibility with contributions that are not designated in writing than it would have with those that are designated in writing.
Consequently, the Commission has incorporated such a presumption in
new 11 CFR 110.1(b)(5)(ii)(C). The presumption can be applied to an
excessive contribution that is made after the primary election date,
but before the general election and that was not designated in writing
by the contributor. 11 CFR 110.1(b)(5)(ii)(C)(1) and (2). The committee
must have more net debts outstanding as calculated under 11 CFR
110.1(b)(3)(ii) from the primary than the excessive portion of the
contribution. 11 CFR 110.1(b)(5)(ii)(C)(5). The conditions in 11 CFR
110.1(b)(5)(ii)(C)(3), (4), (6), and (7) are similar or identical to
the conditions set forth in 11 CFR 110.1(b)(5)(ii)(B)(3), (4), (5), and
(6), respectively. It is important to note, however, that if a
contributor makes an excessive contribution and designates the
contribution in a signed writing for the general election, then the
authorized committee would be required to obtain a signed writing from
the contributor to redesignate any portion of the contribution to the primary. See new 11 CFR 110.1(b)(5)(ii)(C)(2).
5. 11 CFR 110.1(c) Contributions to Political Party Committees
The preBCRA provisions of the Act permitted persons to contribute up to $20,000 per calendar year to the political committees established and maintained by the national political parties. BCRA amends 2 U.S.C. 441a(a)(1)(B) to increase the amount that may be contributed by individuals and certain other persons to political committees established and maintained by national political parties to $25,000 per calendar year. Consequently, the Commission is amending 11 CFR 110.1(c)(1) to increase the amount that may be contributed by those covered by 2 U.S.C. 441a(a)(1)(B) to committees established and maintained by national political parties to $25,000 per year. No comments were received on this change. Paragraph (c)(2) of this section provides that these committees consist of the national committees, and the House and Senate campaign committees.
The Commission is adding new paragraphs (c)(1)(i), (ii) and (iii) to Sec. 110.1. These paragraphs parallel new paragraphs (b)(1)(i), (ii) and (iii) discussed above. Paragraph (c)(1)(i) provides for application of the indexing provisions at 11 CFR 110.17 to the contribution limitation for contributions to national party committees. New paragraph (c)(1)(ii) establishes the twoyear period in which the indexing is applied. New paragraph (c)(1)(iii) provides for the periodic publication by the Commission of the increased contribution limits. When proposed in the NPRM, the new paragraphs (c)(1)(i) and (c)(1)(iii) received no comments. These paragraphs are left substantially unchanged from the NPRM in the final rules. The comments relating to paragraph (c)(1)(ii) regarding the timing of the increase in the contribution limit due to the application of the indexing provisions are addressed below in the Explanation and Justification for new Sec. 110.17.
6. 11 CFR 110.1(i) Contributions by Spouses
As explained below in the Explanation and Justification for new 11 CFR 110.19, 2 U.S.C. 441k prohibits contributions made by minors to Federal candidates and contributions and donations to committees of political parties, but it does not prohibit contributions or donations to other types of political committees such as corporate and labor organization separate segregated funds and nonconnected political committees (often referred to as ``PACs'').
The proposed rules would have amended the preBCRA provision
governing contributions by minors at former 11 CFR 110.1(i)(2) to
reflect this point. The Commission has decided instead to move the pre
BCRA minors provision to new 11 CFR 110.19 so that all of the
provisions regarding minors are addressed in one section of the
regulations. Therefore, the final rules move the minors provision at
former 11 CFR 110.1(i)(2) to new 11 CFR 110.19(d). As a result of this
move, Sec. 110.1(i) addresses only contributions by spouses, a
provision that is unchanged. Therefore the final rules amend the title
of paragraph (i) to ``Contributions by Spouses'' to reflect the remaining focus of this paragraph.
7. 11 CFR 110.1(k)(3)(ii) Reattribution
In connection with the proposed amendments to the redesignation
rules, the NPRM also included a similar proposal to amend the
reattribution rules. Current 11 CFR 110.1(k)(3) sets forth the
procedures for the reattribution of excessive contributions to other
joint contributors. Contributions from more than one person must
include each contributor's signature, and each such contributor is
attributed an equal share of the contribution unless other instructions
are provided. 11 CFR 110.1(k)(1) and (2). A committee may ask a
contributor who made an excessive contribution if a joint contribution
was intended. 11 CFR 110.1(k)(3)(i). In order to reattribute a
contribution in such a situation, a committee treasurer must offer the
contributor a refund and must obtain within sixty days of the
contribution a written reattribution signed by each of the
contributors. 11 CFR 110.1(k)(3)(ii). (Unlike redesignation, which is
limited to authorized committees because of the relationship of the contribution to particular elections pursuant to 2 U.S.C.
441a(a)(1)(A), the reattribution procedure is available to all political committees, any of which could receive joint contributions.) The commenters who supported the Commission's proposal to amend the redesignation rules also supported the proposal to amend the reattribution rules for the same reasons. Likewise, commenters who did not favor the Commission's proposal regarding redesignation also did not support amending the reattribution rules at this time.
B. The Proposal and Comments
The Commission proposed a presumption related to reattribution in
the NPRM. When funds are contributed by a check or other written
instrument with two or more names imprinted on the check, but with only
one signature, the entire contribution is attributed to the individual
whose signature appears on the check. See 11 CFR 104.8(c) and 110.1(k)(1). Alternatives 2A and 2B in proposed 11 CFR
110.1(k)(3)(ii)(B) in the NPRM both included a presumption that with respect to such contributions that are excessive, a committee would [[Page 69933]]
be permitted to presume that the contribution should be attributed equally among those whose names appeared on the check or other instrument. See NPRM, 67 FR at 54,371 and 54,377. Like the redesignation alternatives, Alternative 2B would have required the recipient committee to notify the contributors, while Alternative 2A would not have required any notice. See id.
Three commenters opposed both Alternatives 2A and 2B. The three agreed that inferring a nonsigner's intent to contribute in the absence of any indication from that individual is extremely unreliable and carries a greater risk of error than the redesignation presumption. One commenter observed that the nonsigner might not support the same candidates and political committees that the signer supports. Even if he or she does support the same candidates, if the nonsigner is unaware of the contribution, he or she may inadvertently make an excessive contribution to the same committee. Another of the three found Alternative 2B unacceptable because the burden of ``opting out,'' that is, choosing to request a refund instead of permitting the reattribution, would be on the contributor, whereas the commenter believed the burden should be on the recipient committee. A fourth commenter agreed with the presumption, arguing that contributors do not generally believe more than one signature would be required because usually only one person signs a particular check. This commenter also argued that any indication of intent to make a joint contribution should suffice, citing examples of accompanying correspondence, a donor card, or a notation on a check. Under such circumstances, this commenter would not require notification. In the absence of any indication of such an intent, this commenter supports the approach of Alternative 2B, which would require the recipient committee to notify the contributors of the reattribution.
C. 11 CFR 110.1(k)(3)(ii)(A) Existing Reattribution Rule
Because the Commission has decided to provide for an alternative
method for reattribution of contributions, 11 CFR 110.1(k)(3)(ii)
requires a technical amendment in order to incorporate the new
provision within this section. Thus, this rulemaking redesignates
former Sec. 110.1(k)(3)(ii)(A) and (B) as Sec. 110.1(k)(3)(ii)(A)(1)
and (2), respectively. This rulemaking does not amend the regulatory language of these provisions.
D. 11 CFR 110.1(k)(3)(ii)(B) Presumption of a Reattribution
The Commission has concluded that the changes required by BCRA provide an appropriate occasion to promulgate regulations that will provide authorized committees with additional means of reattributing certain contributions. Thus, it has adopted Alternative 2B with two modifications. Under paragraph (k)(3)(ii)(B)(1), if an excessive contribution is made with a written instrument with more than one individual's name imprinted upon it, but only one signature, the permissible portion of the contribution will be attributed to the signer, and the committee may reattribute any excessive portion of the contribution to any other individual whose name is imprinted on the written instrument. Thus, the final rule differs from the proposed rule in that the proposed rule would have divided excessive contributions equally among the names listed on the check. The final rule takes a different approach in order to attribute the maximum permissible amount to the signer because that contributor's intent is clear. Only excessive funds would be reattributed pursuant to the presumption to another contributor whose name appears preprinted on the check, and only to the extent that this reattribution would not cause that other individual to exceed his or her contribution limit.
The Commission has determined that notice to the contributors is essential to make any presumption in this situation reasonable. The political committee employing this presumption is required to notify all contributors and offer the signer contributor a refund under paragraph (k)(3)(ii)(B)(2).
As noted in the NPRM, the Commission and political committees have
devoted significant resources to ensure compliance with the
reattribution requirements. The Commission agrees with the commenter
who noted that joint contributors often indicate their intention to
jointly contribute in some fashion other than by both signing one
personal check. However, the Commission also agrees that a presumption
based only on an individual's name appearing on a check is not reliable
standing alone. Consequently, the Commission is adopting the
requirement that political committees notify all of the joint
contributors to whom any portion of the contribution is reattributed.
The committee may make the notice in any written form and must do so
within sixty days of the treasurer's receipt of the contribution. See
new 11 CFR 110.1(k)(3)(ii)(B)(3). The sixtyday requirement protects
contributor intent by providing notice on a reasonably contemporaneous basis. Like the redesignation notice provision, section
110.1(k)(3)(ii)(B)(3) has been clarified to permit notice by any written method, including email. Authorized committees may, if they choose, provide contributors with a single notice as to any permissible redesignation and any permissible reattribution.
E. Other Proposals Relating to Redesignation and Reattribution for Which No Changes to the Rule Are Being Made
(1) 11 CFR 110.2 Multicandidate Contributions
Current 11 CFR 110.2(b)(5) sets forth the procedure for
redesignation of excessive contributions made by multicandidate
committees. In the NPRM, the Commission asked commenters to address
whether excessive contributions from multicandidate committees should
be subject to any form of redesignation by presumption. Only one
commenter supported any such application, while two opposed it. These
two argued that a signed writing should be required from multicandidate
committees because these committees are likely to be sufficiently
familiar with the existing Commission requirements so that the higher
standard of specificity required from them is not burdensome. The
Commission agrees that the redesignation presumption is inappropriate
for multicandidate committees, so no change has been made to 11 CFR 110.2.
(2) Expanding the Redesignation Presumption Beyond the Election Cycle
The Commission also asked in the NPRM if presumptions that would
permit authorized committees to redesignate contributions beyond the
current election cycle to either earlier or subsequent cycles were
appropriate. See NPRM, 67 FR at 54,371. Only one commenter supported
any presumption that reaches beyond a current cycle; that commenter
argued that redesignations to elections in future cycles were
acceptable if the contributors were notified. The other commenters
argued that any presumptions should be limited to the current cycle.
One said inferring donative intent would be difficult as the extent to
which a contributor supports a candidate can vary significantly from
one election cycle to another. Another noted that this might be so because candidates' positions on issues can change, and
candidates are likely to face different opponents in previous or subsequent cycles. Another noted that recordkeeping would be complicated for the committees (which may change from one election to the next), the contributors, and the Commission if such a presumption were adopted. The Commission agrees with many of these comments and has decided to limit the redesignation and reattribution presumptions to within one election cycle.
(3) Separate Accounts for Redesignated Contributions
The Commission asked in the NPRM if it should revise 11 CFR 102.9 to require that an authorized committee maintain a separate account for general election contributions accepted before the primary election occurs. See NPRM, 67 FR at 54,37172. Three commenters addressed this proposal. Two commenters who opposed the requirement stated that separate accounts are unnecessary. One argued that the public record consists of all of a candidate committee's accounts combined, even if the funds are in fact in separate accounts. Consequently, they argued that the public record, which specifies to which election contributions are designated, would not be augmented by a committee's maintenance of separate accounts. Should an authorized committee be subject to a Commission audit, this commenter argued that the Audit Division is capable of calculating whether a committee spent general election funds on the primary election campaign. Another commenter noted that separate accounts do not ``specifically aid in compliance'' and that separate accounts are not required by BCRA. One commenter supported the requirement, arguing that the Commission has a valid concern regarding the use of general election funds in a primary election campaign, which could permit the contributor and the committee to effectively double the contribution limit with respect to the primary election. This commenter also argued that separate accounts are a modest burden for committees and may be preferable to maintaining separate books and records.
Although the Commission believes maintaining a separate account is the best way for an authorized committee to show its compliance with the prohibition on spending general election contributions in connection with a primary election, the Commission is reluctant to require that authorized committees maintain separate accounts when other means of accounting, which may be better suited to an organization, will suffice to prevent the use of general election contributions in connection with a primary election. Consequently, the Commission declines to amend 11 CFR 102.9 in this regard.
(4) Eliminating the Signature Requirements
The Commission sought comment on whether it should eliminate the signature requirement for all redesignations and reattributions under 11 CFR 110.1 and 110.2, and instead permit authorization from the contributor by email or through oral communications with the contributor when the recipient committee creates and maintains a contemporaneous signed record of the conversation. See NPRM, 67 FR at 54,371.
All of the commenters who addressed this issue thought an email should suffice, instead of a writing signed by the contributor. Some commenters were opposed to permitting committees to memorialize conversations to serve as documentation of redesignations or reattributions, as discussed above in connection with 11 CFR 110.1(l).
In adopting the new means of redesignation and reattribution in 11
CFR 110.1(b)(5)(ii)(B), 110.1(b)(5)(ii)(C), and 110.1(k)(3)(ii)(B), the
Commission has concluded that no contributor response is required for
the reattributions and redesignations pursuant to the new presumptions,
so no contributor signature is required. However, the designation and
attribution regulations require contributor signatures in other instances. See, e.g., 11 CFR 110.1(b)(4)(ii), new
110.1(b)(5)(ii)(A)(2), 110.1(k)(1), and new 110.1(k)(3)(ii)(A)(2). In these situations, the regulations require a response from the contributor, and thus require the response to be in writing and signed by the contributor in order to prevent fraud and to clearly indicate who is contributing. Cf. 11 CFR 104.8(c) (requiring contributions to be reported as made by the last person signing the instrument). While email may be an appropriate vehicle for contacting contributors such as new 11 CFR 110.1(b)(5)(ii)(B)(6) and (C)(7) or for contributor responses in some instances, it may raise complicating issues that have not been addressed in this rulemaking. For example, with respect to reattributions, how could a committee determine whether both contributors have consented to the reattribution? The Commission has concluded that permitting email to replace a contributor's signature should be undertaken in connection with a rulemaking that considers all of the instances in Commission regulations in which this issue is present, rather than making that change in some instances, but not others, and in the absence of a full consideration of issues similar to the one raised above. Therefore, the Commission has concluded that existing rules should not be amended in this rulemaking to eliminate the signature requirements across the board or to permit email messages to take the place of signed written redesignations or reattributions under revised 11 CFR 110.1(b)(5)(ii)(A)(2) or 11 CFR
110.1(k)(3)(ii)(A)(2). Consequently, no further changes to the regulations are being made in this rulemaking.
8. 11 CFR 110.1(l)(4) and (5) Supporting Evidence
As noted in the NPRM, the adoption of the notification approach requires 11 CFR 110.1(l)(4) to be amended to specify the supporting evidence required to be retained under such an approach. See NPRM, 67 FR at 54,371. A fullsize copy of the check or written instrument, any signed writings from the contributors that accompanied the contribution, and the political committee's notices required for redesignations under 11 CFR 110.1(b)(5)(ii)(B) or (C) or reattributions under 11 CFR 110.1(k)(3)(ii)(B) are included among the supporting evidence that must be retained for the redesignation or reattribution to be effective. See new 11 CFR 110.1(l)(4)(ii). Paragraph (l)(5) has also been revised to state that if a political committee fails to retain the notices, then the presumptions for the redesignations or the reattributions will not be effective.
Some commenters supported the proposal that would have permitted committees to orally notify contributors and write a memorandum regarding the conversation to document it. Others opposed this aspect of the proposal as an inherently unreliable process that would provide too great an opportunity for fraud and abuse. The Commission agrees with the latter comments, so the final rules with regard to the redesignation and reattribution presumptions require the notice to be in writing, including by email. See new 11 CFR 110.1(b)(5)(ii)(B)(6); 110.1(b)(5)(ii)(C)(7); and 110.1(k)(3)(ii)(B)(3).
One technical correction is included in 11 CFR 110.1(l)(5) as well.
The citation to paragraph (l)(2) in the first sentence should be to paragraph (l)(1) instead.
11 CFR 110.2 Contributions by Multicandidate Political Committees
Section 110.2 sets forth the dollar limits on contributions made by multicandidate committees, as generally established by 2 U.S.C. 441a(a)(2). BCRA substantially amended the contribution limit for certain types of multicandidate committees specified in 2 U.S.C. 441a(h), which is addressed in Sec. 110.2. As a result, the Commission is amending the regulations to reflect the new limits set forth in more detail below.
Under preBCRA 2 U.S.C. 441a(h), the Republican and Democratic Senatorial campaign committees or the national committee of a political party or any combination of such committees were permitted to contribute up to $17,500 to a candidate for election or nomination for election to the U.S. Senate during the year of the election. BCRA amends this section of the Act to increase the amount that may be contributed by these committees to Senatorial candidates to $35,000 on or after January 1, 2003. Consequently, 11 CFR 110.2(e), which contains this contribution limit, is being amended to increase the limit to $35,000.
New paragraph (e)(1) sets forth the amended contribution limit. The
Commission did not receive any comment on its proposal to amend
paragraph (e)(1). New paragraph (e)(2) parallels the provisions in
Sec. 110.1(c)(1)(i), (ii) and (iii) and 110.1(b)(1)(i), (ii) and
(iii). New paragraph (e)(2) provides for the application of the
indexing provisions at 11 CFR 110.17 to this contribution limitation
and establishes the twoyear period in which the increased contribution
limits are in effect. New paragraph (e)(2) also provides for the
periodic publication by the Commission of the increased contribution
limit. When first proposed in the NPRM, this paragraph received one
comment supporting the intention to publish information regarding the
adjusted contribution limit. The comments relating to paragraph (e)(2)
that concern the timing of the increase in the contribution limit due
to the application of the indexing provisions are addressed in the Explanation and Justification for new Sec. 110.17, below.
11 CFR 110.4 Contributions in the Name of Another; Cash Contributions
Previously, 11 CFR 110.4(a) set forth regulations implementing the prohibitions on contributions and expenditures by foreign nationals codified at 2 U.S.C. 441e. In light of the amendments to 2 U.S.C. 441e contained in BCRA, Sec. 110.4(a) is being removed and reserved, and new 11 CFR 110.20 is being created to implement BCRA's prohibition on contributions, donations, expenditures, independent expenditures, and disbursements by foreign nationals.
In addition, the section heading has been changed to cover the two
topics addressed in this section: (1) Contributions made in the name of another and (2) cash contributions.
11 CFR 110.5 Aggregate BiAnnual Contribution Limitations for Individuals
Aside from the limits on the dollar amounts that individuals may contribute to candidates and political committees, 2 U.S.C. 441a(a)(3) also contains aggregate limits on the amount that individuals may give within a specified period of time. These contribution limits are set forth in the Commission's regulations at 11 CFR 110.5. However, as with Sec. Sec. 110.1 and 110.2 discussed above, BCRA substantially amended the FECA by restructuring the aggregate contribution limits. As a result, the Commission is amending the regulations in Sec. 110.5 to reflect the new contribution limits in BCRA.
1. 11 CFR 110.5(a) Scope
Section 110.5(a) sets forth the scope of the regulations in 11 CFR 110.5. The final rules in this paragraph contain amended citations to the provisions concerning minors and foreign nationals. This final rule is identical to the proposed rule, on which the Commission received no comments.
2. 11 CFR 110.5(b) BiAnnual Limitations
BCRA amends the provisions in FECA that establish the total amount of contributions that may be made by individuals within the prescribed time periods. Under former 2 U.S.C. 441a(a)(3), individuals were permitted to make no more than $25,000 in aggregate contributions per calendar year. This section was revised by BCRA to establish new bi annual aggregate limits that permit individuals to make up to $95,000 in contributions, including up to $37,500 in contributions to candidates and their authorized committees, and up to $57,500 in contributions to any other political committees. 2 U.S.C. 441a(a)(3)(A) and (B). The $57,500 aggregate contribution limit contains a further restriction in that no more than $37,500 of this amount may be given to political committees that are not the political committees of national political parties. 2 U.S.C. 441a(a)(3)(B).
Current 11 CFR 110.5(b) is being amended to incorporate the increased biannual aggregate contribution limits, which are effective on January 1, 2003. New paragraph (b)(1)(i) contains the new biannual aggregate limit for contributions to candidates and their authorized committees. New paragraph (b)(1)(ii) contains the new biannual aggregate limit for contributions to other political committees. The Commission received no comments on the changes to paragraphs (b)(1)(i) and (ii) of this section.
Sections 441a(i)(1)(C) and 441a1(a)(1)(B) of FECA contain an exception to the biannual contribution limits for individuals. Under these new provisions of BCRA, the individual contribution limits to candidates for the U.S. House of Representatives and U.S. Senate are increased during certain limited time periods if the candidate is opposing another candidate who makes expenditures from his or her personal funds above a certain threshold. Contributions made under these increased dollar limits do not apply to the individual contributor's biannual aggregate limits. 2 U.S.C. 441a(i)(1)(C) and 441a1(a)(1)(B). Accordingly, new Sec. 110.5(b)(2) reflects this exception, which will be addressed in greater detail in a separate rulemaking concerning the socalled ``millionaires'' amendment.'' One commenter, while agreeing generally with proposed paragraph (b)(1)(iii), suggested that the language in the draft rule was not direct enough in making this point. The Commission agrees and thus, new paragraph (b)(2) states more precisely the circumstances under which the individual biannual limits on contributions do not apply to contributions coming under 2 U.S.C. 441a(i)(1)(C) or 441a1(a)(1)(B).
Section 110.5(b)(3) provides for the increase, if necessary, in the
biannual aggregate contribution limits by the percent difference in
the price index, as described in 11 CFR 110.17. The issues relating to
the relationship of the statutory time frame for aggregating
contributions and the inflation adjustment time frame are discussed
below regarding 11 CFR 110.17(b). New paragraph (b)(4) states the
Commission's intention to publish information regarding the adjusted
contribution limits in the Federal Register and on the Commission's Web
site. One commenter supported publishing the adjusted contribution
limits. New paragraphs (b)(3) and (b)(4) contain provisions parallel to
that found 11 CFR 110.1(b) and (c) and 110.2(e). These paragraphs of
the final rules contain minor wording revisions but are nearly identical to the
proposed versions, on which the Commission received no comments. 11 CFR 110.9 Violations of Limitations
The final rules at 11 CFR 110.9, formerly entitled, ``Miscellaneous
provisions,'' are being amended to address only violations of the
contribution and expenditure limitations. Other provisions in 11 CFR
110.9 addressing fraudulent misrepresentations, the price index
increase, and the voting age population are being or will be amended
and moved in this rulemaking and other BCRA rulemaking projects.\2\ The
title of section 110.9 is also being changed to ``Violations of
limitations'' to reflect these changes. Finally, the final rules add
the word ``knowingly'' in two places pertaining to the acceptance of
contributions in violation of the limitations and prohibitions set
forth in 11 CFR part 110. This revision mirrors the knowledge
requirement in 2 U.S.C. 441a(f) and 441f. No comments were received on this revision or the reorganization of these provisions.
\2\ The BCRA rulemaking project entitled ``Other Provisions'' will address the fraudulent misrepresentation provisions. See Notice of Proposed Rulemaking (``NPRM'') at 67 FR 55,348, 55,356 (Aug. 29, 2002). The BCRA rulemaking project entitled ``Coordination and Independent Expenditures'' will address the voting age population provisions. See NPRM at 67 FR 60,042, 60,060 ( Sept. 24, 2002).
The prohibition on contributions by minors is contained in 2 U.S.C. 441k and not in 2 U.S.C. 441a of the Act. Therefore, the Commission notes that in instances where a candidate, an authorized committee, or a committee of a political party knowingly accepts a contribution from a minor, it would be in violation of Sec. 110.9 only if the contribution is made in the name of another, but not if the contribution was made with the minor's own funds. See 2 U.S.C. 441a(f)(''no candidate or political committee shall knowingly accept any contribution * * * in violation of the provisions of this section'').
11 CFR 110.17 Price Index Increase
PreBCRA 2 U.S.C. 441a(c) mandated yearly indexing to inflation of the expenditure limitations established by 2 U.S.C. 441a(b) (the limits on expenditures by candidates for nomination and election to the office of President of the United States who accept public funding) and 2 U.S.C. 441a(d) (the limits on expenditures by national party committees, State party committees, or their subordinate committees in connection with the general election campaign of candidates for Federal office). BCRA amends 2 U.S.C. 441a(c) to extend the inflation indexing to: (1) The limitations on contributions made by persons under 2 U.S.C. 441a(a)(1)(A) (contributions to candidates) and 441a(a)(1)(B) (contributions to national party committees); (2) the biannual aggregate contribution limits applicable to individuals now found at 2 U.S.C. 441a(a)(3); and (3) the limitation on contributions made to U.S. Senate candidates by certain political party committees at 2 U.S.C. 441a(h). 2 U.S.C. 441a(c)(1)(B). Under the statute, the adjustments for inflation for 2 U.S.C. 441a(a)(1)(A), 441a(a)(1)(B), 441a(a)(3) and 441a(h) are to be made only in oddnumbered years and such increases are to be in effect for the 2year period beginning on the first day following the date of the general election in the preceding year and ending on the date of the next regularly scheduled general election. 2 U.S.C. 441a(c)(1)(C).
Former 11 CFR 110.9(c), which described the expenditure limits
subject to inflation indexing, did not include any of the new inflation
indexing discussed above. In order to address the price indexing for
the new contributions and expenditures limitations in a comprehensive
manner, the Commission is adding new Sec. 110.17 to track the changes to 2 U.S.C. 441a(c).
1. 11 CFR 110.17(a) Price Index Increases for Party Committee Expenditure and Presidential Candidate Expenditure Limitations
New Sec. 110.17(a) replaces and restates, with some minor rewording, former section 110.9(c) regarding the price index increases that apply to the political party committee and Presidential candidate spending limits established by 11 CFR 110.7 and 110.8. However, paragraph (a) contains one important change from former section 11 CFR 110.9(c). Section 110.9(c) had incorrectly stated that the expenditure limitations established by Sec. Sec. 110.7 and 110.8 would be increased by the annual percent difference of the price index, as certified to the Commission by the Secretary of Labor. Section 441a(c) of the Act does not use an annual percent difference of the price index to calculate the increases. Instead, it requires the use of the percent difference between the price index for the 12 months preceding the beginning of the calendar year in which the change is made and the base period. For the party committee expenditures limitations and the Presidential candidate expenditures limitations, the base period is calendar year 1974, with each change remaining in effect for a calendar year. Consequently, paragraph (a) of new 11 CFR 110.17 correctly states the standard to be applied and deletes the term ``annual'' from the regulation. The Commission received no comment on this change. 2. 11 CFR 110.17(b) Price Index Increases for Contributions by Persons, by Political Party Committees to Senatorial Candidates, and the Bi Annual Aggregate Contribution Limitation for Individuals
As noted above, BCRA increased the number of contribution limitations now subject to price index increases. 2 U.S.C. 441a(c)(1)(B). New 11 CFR 110.17(b) tracks BCRA by providing that the following contribution limits will be indexed to inflation: 11 CFR 110.1(b)(1) (limits for persons contributing to candidates and authorized political committees); 11 CFR 110.1(c)(1) (limits for contributions made to national party committees); 11 CFR 110.2(e) (limits for contributions made by party committees to Senatorial candidates); and 11 CFR 110.5 (biannual aggregate contribution limits for individuals). New Sec. 110.17(b)(1) specifies that these contribution limitations will be increased during oddnumbered years and that the increased limit would be in effect for a twoyear period.
The NPRM raised the issue of the interaction between the statutory provision that indexes certain contribution limits, 2 U.S.C. 441a(c)(1)(C), and the various contribution limits themselves. Particular focus was centered on the retroactive effective date in the indexing provision as it relates to the two calendar yearbased aggregate contribution limit of 2 U.S.C. 441a(a)(3).
In the NPRM, the Commission proposed at 11 CFR 110.5(b)(3) to interpret the statute in a way that required donors to aggregate contributions using the twoyear period referenced in the effective date language of the indexing provision, rather than the 'January 1 of odd year through December 31 of even year' time frame of Section 441a(a)(3).
Several commenters, including the Congressional sponsors of BCRA,
urged that the Commission not adopt the proposed approach and instead
apply the calendar year approach set forth in the statutory provision
setting out the contribution limit itself. The commenters noted that
the inflation adjustment language was confusing and its effective date
language stems largely from an intention to assure that the revised
`per election' limit on giving to candidates was revised after each
general election. They urged, in essence, that the Commission simplify [[Page 69937]]
application of the inflation adjustment provision so that for affected limits based on calendar year aggregations, the effective date would only affect the next upcoming calendar yearbased period. This would mean that the inflation adjustments
FOR FURTHER INFORMATION CONTACT
Ms. Mai T. Dinh, Acting Assistant General Counsel, Mr. J. Duane Pugh, Acting Special Assistant General Counsel (redesignations and reattributions), or Attorneys Mr. Michael G. Marinelli (contribution limitations), Ms. Dawn M. Odrowski (contributions by minors) or Ms. Anne A. Weissenborn (foreign nationals), 999 E Street, NW., Washington, DC 20463, (202) 6941650 or (800) 4249530.