Bipartisan Campaign Reform Act; implementation: Non-Federal funds; to solicit and to direct definitions,
[Federal Register: September 28, 2005 (Volume 70, Number 187)]
[Proposed Rules]
[Page 56599-56606]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28se05-17]
Proposed Rules Federal Register
This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules.
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FEDERAL ELECTION COMMISSION
11 CFR Part 300
[Notice 2005-24]
Definitions of ``Solicit'' and ``Direct''
AGENCY: Federal Election Commission.
ACTION: Notice of proposed rulemaking.
SUMMARY: The Federal Election Commission requests comments on proposed revisions to its definitions of the terms ``to solicit'' and ``to direct'' for its regulations on raising and spending Federal and non- Federal funds. Current Commission regulations define ``to solicit'' as ``to ask that another person make a contribution, donation, transfer of funds, or otherwise provide anything of value.'' The regulations define ``to direct'' as ``to ask a person who has expressed an intent to make a contribution, donation, or transfer of funds, or to provide anything of value, to make that contribution, donation, or transfer of funds, or to provide that thing of value.'' These rules were challenged in Shays v. FEC. Upholding a District Court decision, the Court of Appeals held that the Commission's definitions of ``to solicit'' and ``to direct'' were invalid because they violated Congress's intent. The Commission has filed a petition for a rehearing en banc of the Court of Appeals decision. At the same time, to comply with the decisions of the District Court and the Court of Appeals, the Commission is issuing this Notice of Proposed Rulemaking regarding its definitions of ``to solicit'' and ``to direct.'' No final decision has been made by the Commission on the issues presented in this rulemaking. Further information is provided in the supplementary information that follows.
DATES: Comments must be received on or before October 28, 2005. The Commission will hold a hearing on the proposed rules on November 14 or 15, 2005, or both, at 10 a.m. Anyone wishing to testify at the hearing must file written comments by the due date and must include a request to testify in the written comments.
ADDRESSES: All comments must be in writing, must be addressed to Mr. Brad C. Deutsch, Assistant General Counsel, and must be submitted in either e-mail, facsimile, or paper copy form. Commenters are strongly encouraged to submit comments by e-mail or fax to ensure timely receipt and consideration. E-mail comments must be sent to either solicitdirect@fec.gov or submitted through the Federal eRegulations
Portal at http://www.regulations.gov. If e-mail comments include an
attachment, the attachment must be in either Adobe Acrobat (.pdf) or Microsoft Word (.doc) format. Faxed comments must be sent to (202) 219- 3923, with paper copy follow-up. Paper comments and paper copy follow- up of faxed comments must be sent to the Federal Election Commission, 999 E Street, NW., Washington, DC 20463. All comments must include the full name and postal service address of the commenter or they will not be considered. The Commission will post comments on its Web site after the comment period ends. The hearing will be held in the Commission's ninth-floor meeting room, 999 E Street, NW., Washington, DC.
FOR FURTHER INFORMATION CONTACT: Mr. Brad C. Deutsch, Assistant General Counsel, Mr. Jonathan Levin, Senior Attorney, or Mr. Ron B. Katwan, Attorney, 999 E Street, NW., Washington, DC 20463, (202) 694-1650 or (800) 424-9530.
SUPPLEMENTARY INFORMATION: The Bipartisan Campaign Reform Act of 2002 (``BCRA''), Pub. L. 107-155, 116 Stat. 81 (2002), amended the Federal Election Campaign Act of 1971, as amended, 2 U.S.C. 431 et seq. (the ``Act''), by adding to the Act new restrictions and prohibitions on the receipt, solicitation, and use of certain types of non-Federal funds (i.e., funds that do not comply with the amount limits, source prohibitions, and reporting requirements of the Act),\1\ which are commonly referred to as ``soft money.'' The terms ``to solicit'' and ``to direct'' are central to three core provisions of BCRA. First, national parties ``may not solicit * * * or direct'' soft money. 2 U.S.C. 441i(a)(1). Second, national, State, district, and local party committees may not solicit any non-Federal funds or direct any donations to certain entities organized under chapter 501(c) or 527 of the Internal Revenue Code. 2 U.S.C. 441i(d); 11 CFR 300.11 and 300.37. Third, Federal candidates and officeholders ``shall not * * * solicit'' or ``direct'' funds in connection with any election unless the funds comply with the Act's contribution limits and prohibitions. 2 U.S.C. 441i(e)(1)(A) and (B); see also 2 U.S.C. 441i(e)(2)-(4). In addition, BCRA added prohibitions on soliciting contributions or donations from foreign nationals and on fraudulent solicitations. 2 U.S.C. 441e(a)(2) and 441h(b). However, neither BCRA nor FECA contains a definition of either ``to solicit'' or ``to direct.''
\1\ See 11 CFR 300.2(k).
On July 29, 2002, the Commission promulgated regulations implementing BCRA's new limits on raising and spending of non-Federal funds by party committees, and Federal candidates and officeholders. Final Rules and Explanation and Justification for Prohibited and Excessive Contributions: Non-Federal Funds or Soft Money, 67 FR 49064 (July 29, 2002) (``Soft Money Final Rules''). These regulations for the first time defined the terms ``to solicit'' and ``to direct.'' Section 300.2(m) defines ``to solicit'' as ``to ask that another person make a contribution, donation, transfer of funds, or otherwise provide anything of value, whether the contribution, donation, transfer of funds, or thing of value, is to be made or provided directly, or through a conduit or intermediary.'' 11 CFR 300.2(m). The Commission defined ``to direct'' as ``to ask a person who has expressed an intent to make a contribution, donation, or transfer of funds, or to provide anything of value, to make that contribution, donation, or transfer of funds, or to provide that thing of value, including through a conduit or intermediary.'' 11 CFR 300.2(n).
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Overview of Court Decisions
In Shays v. FEC, 337 F. Supp.2d 28 (D.D.C. 2004) (``Shays District''), aff'd, Shays v. FEC, 414 F.3d 76 (D.C. Cir. 2005) (pet. for reh'g en banc filed Aug. 29, 2005), the District Court held that the Commission's definitions of ``to solicit'' and ``to direct'' did not survive
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the second step of Chevron review.\2\ Shays District at 77, 79. The Court of Appeals for the D.C. Circuit affirmed the District Court's decision but instead held that the Commission's definitions of ``to solicit'' and ``to direct'' did not survive the first step of Chevron review.\3\ Shays v. FEC, 414 F.3d 76, 105-07 (D.C. Cir. July 15, 2005) (``Shays Appeal'').
\2\ The District Court described the first step of the Chevron analysis, which courts use to review an agency's regulations: ``a court first asks `whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.' '' See Shays District, at 51 (quoting Chevron, U.S.A., Inc. v. Natural Res. Def. Council, 467 U.S. 837, 842-43 (1984)). In the second step of the Chevron analysis, the court determines if the agency's interpretation is a permissible construction of the statute that does not ``unduly compromise'' FECA's purposes by ``creat[ing] the potential for gross abuse.'' See Shays District at 91, citing Orloski v. FEC, 795 F.2d 156, 164-65 (D.C. Cir. 1986) (internal citations omitted).
\3\ See note 2.
The Court of Appeals held that the Commission's definition of ``to solicit'' was limited to explicit, direct requests for money and, consequently, left ``unregulated `a wide array of activity' * * * that the term `solicit' could plausibly cover.'' Id. at 104. Specifically, the Court of Appeals determined that the Commission's definition excluded indirect requests for money, ``coded statements,'' and ``winks and nods.'' Id. The Court of Appeals concluded that by limiting ``to solicit'' to explicit, direct requests for money, and thus permitting indirect requests for funds, the Commission's definition allows candidates and parties to circumvent BCRA's prohibitions and restrictions on non-Federal funds and thereby violates ``Congress's intent to shut down the soft-money system.'' Id. at 105-06.
The Court of Appeals also concluded that the narrow definition of ``to solicit'' was inconsistent with BCRA's rejection of the ``magic words'' standard for advocacy advertisements. Id. at 106. The court explained that ``whereas pre-BCRA law permitted unregulated financing of ads lacking `explicit words of advocacy of election or defeat of a candidate,' BCRA adopts more robust standards for communication oriented towards elections--a change understood to reflect Congress's judgment that the old standard was `functionally meaningless.' '' Id. (internal citations omitted). The Court of Appeals agreed with the District Court's observation that the Commission's ``interpretation of `solicit' and `direct' is similar to the pre-BCRA express advocacy test and would allow candidates and parties to avoid regulation by simply refraining from using certain `magic words.' '' Id.
As to the term ``to direct,'' the District Court held that the Commission's definition was not a permissible construction of the statute on two grounds. First, the District Court determined that the term ``to direct'' had more than one meaning but that the Commission's definition of ``to direct'' did not comport with any dictionary definition of the term. Shays District at 76. Second, the District Court held that the Commission's definition of ``to direct'' was subsumed under its definition of `to solicit' because ``[t]he Commission's definition of ``solicit'' covers all requests, regardless of what expressions a requestee may or may not have made.'' Id. at 77. The District Court concluded that, as defined by the Commission, the term ``to direct'' had no meaningful function in the regulations. Id. Subsequently, the Court of Appeals held that the Commission's definition of ``to direct'' was invalid because it effectively defined ``to direct'' as ``to ask'' (namely, to ask someone who has expressed an intent to make a contribution or donation) and thus, like the definition of ``to solicit'' and contrary to Congress's intent, limited ``to direct'' to explicit requests for funds. The Court of Appeals did not reach the question of whether ``to avoid statutory redundancy, `direct' must mean more than `ask in response,' when `solicit' means `ask' plain and simple.'' Shays Appeal at 107.
The Court of Appeals affirmed the District Court's order that had remanded both definitions to the Commission for further action consistent with its opinion. Id. The Commission has filed a petition for a rehearing en banc of the Court of Appeals decision. In the event the Commission prevails on rehearing, the Commission may terminate this rulemaking proceeding prior to adoption of final rules.
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11 CFR 300.2(m)--Definition of ``To Solicit''
This NPRM proposes a revised definition of ``to solicit'' in section II-A below. The Commission is also considering several other alternatives, which are presented in section II-B below.
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Proposed Revised Definition
To comply with the Shays decisions, the Commission proposes to revise 11 CFR 300.2(m) by defining ``to solicit'' as ``to ask, suggest, or recommend that another person make a contribution, donation, transfer of funds, or otherwise provide anything of value, whether it is to be made or provided directly or through a conduit or intermediary. A solicitation is a written or oral communication, whether explicit or implicit, construed as a reasonable person would understand it in context.''
By including the terms ``suggest'' and ``recommend'' and by explicitly incorporating a reasonable person standard into the revised definition of ``to solicit,'' the Commission seeks to clarify that ``to solicit'' covers not only communications that explicitly and directly request contributions or donations, but also communications that implicitly or indirectly attempt to motivate another person to make a contribution or donation and also covers all such communications regardless of whether they use certain ``magic words.'' Thus, the proposed amendments to the definition would make clear that the following communications cited by the Court of Appeals as examples of communications that would escape regulation under the current definition of ``solicit,'' are, in fact, solicitations under the current rules: (1) ``It's important for our State party to receive at least $100,000 from each of you in this election'' and (2) ``X is an effective State party organization; it needs to get as many $100,000 contributions as possible.'' Shays Appeal at 103.
The revised definition explicitly embodies two principles that already form the basis of the Commission's current definition of ``to solicit'': (1) A solicitation must involve an affirmative verbalization (whether written or oral) and (2) a communication is a solicitation only if a reasonable person would understand the communication to be asking another person to make a contribution or donation. First, as the Commission explained in the BCRA rulemaking on foreign national contributions and donations, ``[b]y using the term `ask,' the Commission defined `solicit' to require some affirmative verbalization or writing, thereby providing members of Congress, candidates and committees with an understandable standard.'' Final Rules and Explanation and Justification for Contribution Limitations and Prohibitions, 67 FR 69928, 69942 (Nov. 19, 2002) (``Foreign National Final Rules''). Under the current regulation, the focus of any determination as to whether a communication is a solicitation is the plain meaning of the words used in the communication. Similarly, in assessing which communications constitute solicitations for purposes of determining whether the funds received in response to the communication are contributions, the Commission focuses on ``the plain
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meaning of the words used in the communication.'' Final Rules and Explanation and Justification for Political Committee Status, Definition of Contribution, and Allocation for Separate Segregated Funds and Nonconnected Committees, 69 FR 68056, 68057 (Nov. 23, 2004) (``Political Committee Status Final Rules'').
Second, while requiring some affirmative verbalization, the Commission clarified in the Foreign National Final Rules that it does not intend to restrict the current definition of ``to solicit'' only to communications explicitly asking for contributions or donations but rather ``intended to include `a[ny] palpable communication reasonably understood to convey a request for some action * * *.' '' Foreign National Final Rules at 69942. However, the current rule is limited to communications that ask another person to make a contribution or donation, and does not include any other type of political speech, such as statements of political support.
Thus, in determining whether a communication constitutes a solicitation, the Commission currently looks to whether, in context, the communication would be reasonably understood to ask that another person make a contribution or donation. The Commission believes that the Court of Appeals interpreted the current rule more narrowly than is warranted. The Commission does not regard the term ``ask'' as requiring the use of only certain specified ``magic words.'' Last year, in the Explanation and Justification for new rules regarding contributions received in response to solicitations, the Commission stated that solicitations are not limited to communications ``that use specific words or phrases that are similar to a list of illustrative phrases.'' Political Committee Status Final Rules at 68057.
The Commission emphasizes that the reasonable person standard is an objective test that does not turn on subjective interpretations of a communication. Thus, focusing on the plain meaning of the words used in the communication as reasonably understood leaves the person making the communication with substantial control over whether the communication comes within the definition of ``solicit.''
By revising the definition of ``to solicit'' to reflect explicitly these two principles, the proposed rule would address the Court of Appeals' concern that the Commission's current definition permits circumvention of the Act's limits and prohibitions by allowing solicitation through indirect requests for contributions or donations. The Commission seeks comment on this proposal. Would the proposed definition be too broad or too narrow? Would it reduce the opportunities for circumvention of the Act or the actuality or appearance of corruption? Would it properly effectuate Congressional intent? Would it provide sufficient guidance to candidates, their authorized committees, and political party committees, or their agents? Would it affect the exercise of political activity, and if so, how? Would it be practical to enforce?
The proposed regulation defines ``to solicit'' as ``to ask, suggest, or recommend.'' This list is not intended to be comprehensive but, as explained above, is merely intended to make clear that ``to solicit'' encompasses both direct and indirect requests for contributions or donations. Nevertheless, the Commission seeks comment on whether additional terms should be added to the definition of ``to solicit'' or whether one or more of the terms included in the proposed definition should be removed.
The Commission notes that the proposed rule at 11 CFR 300.2(m) would retain the statement, included in the current rule, that merely providing information or guidance as to the requirements of a particular law is not solicitation.
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Alternative Proposals
The Commission also seeks comment on the following five alternatives to the definition proposed above. First, the Commission seeks comment on whether to modify the definition of ``to solicit'' proposed in section II-A by not including an explicit reasonable person standard. Alternative One would thus revise the second sentence of the definition proposed in section II-A to provide that ``a solicitation is a written or oral communication, whether explicit or implicit.''
Second, the Commission seeks comment on whether, instead, to begin with the current definition of ``to solicit'' (i.e. current 11 CFR 300.2(m)) and to modify the current definition to make clear that the regulation applies not only to explicit requests or communications that use certain ``magic words'' but also to indirect, implied requests for contributions or donations. Alternative Two would provide that ``to solicit means to ask, explicitly or implicitly, that another person make a contribution, donation, transfer of funds, or otherwise provide anything of value.'' Alternative Two, like the current rule, would not include the terms ``suggest'' or ``recommend'' or an explicit reasonable person standard. The Explanation and Justification for Alternative Two would also make clear that a solicitation requires an actual request for funds and does not in any way apply to other types of political speech, such as statements of political support for an organization.
The third alternative on which the Commission seeks comment would not change the current definition of ``to solicit'' at all. Instead, Alternative Three would revise the Explanation and Justification for the current definition to clarify that the current definition embodies the two principles set out above. Under Alternative Three, the Explanation and Justification would state that to qualify as a solicitation, a communication (1) must involve an affirmative verbalization (whether written or oral) and (2) must be reasonably understood in context to be asking another person to make a contribution or donation. The Commission seeks comment on whether this is a proper interpretation of the current rule and is otherwise appropriate. Would revising the Explanation and Justification for the current definition, without amending the definition itself, be consistent with the decision of the Court of Appeals in Shays? Would the current definition of ``to solicit,'' if explained with reference to these two principles, be too broad or too narrow? The Commission seeks comments on whether other statements should be added to the Explanation and Justification for the current definition to explain better what communications are covered by the current rules. Is there any evidence that the current definition of ``to solicit'' has led to circumvention of the Act or the actuality or appearance of corruption? Would the current definition, along with a revised Explanation and Justification, provide a standard that is sufficiently clear to make enforcement of the Commission's BCRA rules practical?
Fourth, as indicated above, the Commission has filed a petition for a rehearing en banc of the Court of Appeals decision. In the event the Commission should prevail on rehearing, the Commission seeks comment on whether it should adopt a definition that limits solicitations to explicit requests for contributions or donations. Alternative Four would define ``to solicit'' to mean ``to ask explicitly, by oral or written communication, that another person make a contribution, donation, transfer of funds, or otherwise provide anything of value.'' Would such an alternative definition be consistent with, and should it draw on, the approach
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adopted when the Commission promulgated 11 CFR 100.57(a), which provides that funds received in response to certain communications must be treated as contributions under the Act? As indicated above, the Explanation and Justification for 11 CFR 100.57(a) stated that the regulation ``requires an examination of only the text of a communication. The regulation turns on the plain meaning of the words used in the communication and does not encompass implied meanings or understandings. It does not depend on reference to external events, such as the timing or targeting of a solicitation, nor is it limited to solicitations that use specific words or phrases * * *.'' Political Committee Status Final Rules, 69 FR at 68057.
The fifth alternative would be to provide no definition for ``to solicit.'' Several Commission regulations concerning corporate and labor organization activity in 11 CFR part 114 use the terms ``solicit'' and ``solicitation'' without defining them. See, e.g., 11 CFR 114.5(g), 114.6, 114.7, and 114.8. The Commission is considering whether, instead of revising its definition of ``to solicit,'' it should repeal that definition and leave the term undefined for purposes of 11 CFR part 300, allowing the meaning of ``to solicit'' to develop on a case-by-case basis through the advisory opinion and enforcement processes. The Commission seeks comment on whether the meaning of the term ``to solicit'' is sufficiently understandable to candidates, their authorized committees, political party committees, and others governed by BCRA such that a definition by regulation is unnecessary. Does the discussion of the meaning of ``to solicit'' in the Court of Appeals decision provide sufficient guidance to candidates, their authorized committees, and political party committees so that a definition through regulation is not needed? \4\ If the Commission decides not to define ``to solicit,'' should it provide additional guidance by including examples of what would and would not be a solicitation in the Explanation and Justification?
\4\ See Shays Appeal at 105-07.
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Conduct
The Court of Appeals observed that solicitations include indirect requests through conduct such as ``winks and nods.'' Shays Appeal at 104-05 (relying on Wisconsin Dep't of Revenue v. William Wrigley, Jr. Co., 505 U.S. 214, 223 (1992) for the proposition that the term ``solicitation of orders'' ``includes, not just explicit verbal requests for orders, but also any speech or conduct that implicitly invites an order''). The Commission notes that while the proposed definition retains the principle that a solicitation must involve an affirmative verbalization, it also takes into account the context in which the communication is made. Thus, words that would not by their plain meaning convey a solicitation, may in some contexts be reasonably understood as one when, for example, they are accompanied by ``winks and nods.'' Similarly, words that would by their plain meaning normally be understood as a solicitation, may not constitute one when taken in context, for example, when the words are used as part of a joke or parody. The Commission seeks comment on whether, in determining if a communication is a solicitation, it is appropriate to consider the non- verbal context of that communication. Does BCRA require the Commission to consider the non-verbal aspects of a communication in determining whether a solicitation has occurred? If the Commission includes the non-verbal aspects of a communication in its definition of ``to solicit,'' will Federal officeholders, candidates, their authorized committees, political party committees, and their agents have adequate notice of the range of statements and actions that are covered by the definition?
The Commission seeks comment on whether it should modify the definition of ``to solicit'' proposed in section II-A, above, by including solicitations conveyed largely through conduct. This modification would revise the second sentence of the rule proposed in section II-A to provide that ``a solicitation is a written or oral communication or conduct, whether explicit or implicit, construed as a reasonable person would understand it in context.'' Is the inclusion of conduct in the definition of ``to solicit'' necessary to comply with the decision of the Court of Appeals? Is it necessary to prevent circumvention of the Act, or actual or apparent corruption? The Commission seeks examples of communications largely conveyed through conduct that should constitute solicitations.
If the Commission does not adopt the proposed definition of ``to solicit'' discussed in section II-A, but rather decides to adopt one of the alternatives discussed in section II-B, should it also include solicitations largely conveyed through conduct in that alternative?
The Commission also invites comment regarding a Federal candidate or officeholder's appearance at a fundraising event (other than an event held by a State, district, or local party) where non-Federal funds are being raised. The Commission raised this issue in a related rulemaking, in which it decided to revise the Explanation and Justification for the Commission's rules at 11 CFR 300.64(b). These rules permit Federal candidates and officeholders to attend and speak at State, district, and local party fundraising events ``without restriction or regulation.'' \5\ See Revised Explanation and Justification for Final Rules on Candidate Solicitation at State, District, and Local Party Fundraising Events, 70 FR 37649 (June 30, 2005).
\5\ 11 CFR 300.64 implements 2 U.S.C. 441i(e)(3).
In certain advisory opinions, the Commission has permitted attendance and participation by Federal candidates and officeholders at fundraising events for non-Federal funds held by State and local candidates, or by non-Federal political organizations, so long as the solicitations included, or were accompanied by, a disclaimer adequately indicating that the Federal candidate or officeholder was only asking for Federally permissible funds. See Advisory Opinions 2003-03, 2003- 05, and 2003-36.\6\ The Commission requests comment on whether these advisory opinions, allowing attendance and limited participation at such functions, subject to various restrictions and disclaimer requirements, struck the proper balance. Alternatively, are these advisory opinions inconsistent with BCRA's language or Congressional intent and should they therefore be superseded? Does the explicit permission granted in 2 U.S.C. 441i(e)(3) to attend, speak, or be a featured guest at State, district, and local party fundraising events, by implication, indicate that Congress sought to prohibit Federal candidates and officeholders from doing so at other fundraising events unless such events are exclusively raising Federal funds? \7\
\6\ Copies of these advisory opinions can be found at http://www.fec.gov/law/advisoryopinions.shtml .
\7\ See 2 U.S.C. 441i(e)(1)(B) (permitting solicitations by Federal candidates for State candidates so long as such solicitations comply with the source prohibitions and amount restrictions under the Act for Federal candidates). See also 2 U.S.C. 441i(e)(4) (permitting certain solicitations, with restrictions, by Federal candidates and officeholders for funds to be used by certain tax-exempt organizations for certain types of Federal election activity).
Should attendance by Federal candidates and officeholders at fundraising events (other than events held by State, district, or local party committees) where non-Federal funds are being raised constitute a solicitation in and of itself? Alternatively, should the disclaimer and other requirements set forth in Advisory Opinions 2003-03,
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2003-05, and 2003-36 be incorporated into the Commission's regulations? If a Federal candidate or officeholder does not comply with the ``disclaimer'' requirements set forth in Advisory Opinions 2003-03, 2003-05 and 2003-36, does mere attendance at these fundraising events where non-Federal funds are being raised constitute a solicitation of non-Federal funds in and of itself? In the absence of any ``disclaimers,'' would a ``pure policy'' speech delivered by a Federal officeholder or candidate at an event raising non-Federal funds be a solicitation if the Federal candidate or officeholder stands under a banner reading ``Support the 2005 State Democratic ticket tonight''?
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Examples of Solicitation
The Commission recognizes that the proposed definition of ``solicit,'' like the current definition, may require the Commission to determine what constitutes solicitation on a case-by-case basis in enforcement matters or advisory opinion requests. In order to provide candidates and political party committees with additional guidance on how the proposed standard would be applied, the Commission is also considering whether to incorporate, either into the Explanation and Justification accompanying the final rule or into the regulation itself, two sets of examples--one of types of communications that would constitute solicitations, and one of types of communications that would not constitute solicitations.
As indicated above, several Commission regulations concerning corporate and labor organization activity in 11 CFR part 114 use the terms ``solicit'' and ``solicitation'' without defining them. See, e.g., 11 CFR 114.5(g), 114.6, 114.7, and 114.8. However, several advisory opinions explain what would or would not constitute a solicitation of contributions to a corporation's separate segregated fund (``SSF''). See, e.g., Advisory Opinions 2003-14, 2000-07, 1999-06, 1991-03, 1988-02, 1983-38, 1982-65, and 1979-13. In those advisory opinions, the Commission generally concluded that the mere publication of the activities conducted by an SSF was not in and of itself a solicitation if the publication did not encourage the recipient of the message to support the SSF, or if the information conveyed in the message did not facilitate the making of contributions to the SSF.
Drawing in part on these advisory opinions and the broader principles expressed in them, the Commission is considering whether to include the following as examples of types of communications that would constitute solicitations:
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Informing a person how to contribute to a candidate, committee, or organization. For example:
``Send all contributions to the following address:''
``I am not permitted to ask for contributions, but unsolicited contributions can be accepted at the following address:''
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Informing a person of who, or how many persons, have contributed to a candidate, political committee, or organization, along with a favorable description of the candidate, political committee, or organization, or the goals or purposes of the candidate, committee, or organization.
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Informing a person of a fundraising event and recommending that the person attend, even where a contribution or donation is not required for admission.
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Informing a person at a fundraising event,\8\ or at some other event sponsored by a candidate, political committee, or organization, that the person is able to contribute to that candidate, political committee, or organization or to some other candidate, political committee, or organization. For example:
\8\ The Commission has interpreted section 441i(e)(3) to permit candidates and Federal officeholders to solicit non-Federal funds at State party fundraising events. See 11 CFR 300.64; Revised Explanation and Justification for Final Rules on Candidate Solicitation at State, District, and Local Party Fundraising Events, 70 FR 37649.
``You are at the limit of what you can directly contribute to my campaign, but you can further help my campaign by assisting the State party.''
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A statement that those who contribute may incur some kind of benefit, however intangible. For example:
``I will not forget those who contribute at this crucial stage.''
``The Senator will be very pleased if we can count on you for $10,000.''
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Expressing to a person the need of the candidate, committee, or organization for funds or something of value. For example:
``It's important for our State party to receive at least $100,000 from each of you in this election.''
``X is an effective State party organization; it needs to get as many $100,000 contributions as possible.''
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Stating that (or how) a candidate, committee, or organization will benefit from a contribution or donation. For example:
``The money we raise will allow us to communicate our strategy through Labor Day.''
``Your immediate commitment to this project would mean a great deal to the entire party and to me personally.''
``All contributions will help the party's election prospects in November.''
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Expressing hope that the donor will continue to support the donee financially. For example:
``I appreciate all you've done in the past for our party in this State. Looking ahead, we face some tough elections. I'd be very happy if you could maintain the same level of commitment to (or support for) our State party this year.''
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A written communication that provides a method of making a contribution or donation regardless of the text of the communication. For example, providing an addressed envelope and a reply card allowing contributors to select the dollar amount of their contribution or donation to the candidate, political party committee or organization.
The Commission is also considering whether to include the following as examples of types of communications that would not constitute ``solicitations:''
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Describing or praising the activities of a candidate, committee, or organization in and of itself. For example:
``Our Senator has done a great job for us this year. The policies she has vigorously promoted in the Senate have really helped the economy of this State.''
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Identifying the candidates a committee supported with past contributions it received, in and of itself. For example:
``Thanks to your contributions we have been able to support our President, Senator, and Representative during the past election cycle.''
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Expressing gratitude for contributions and donations without expressing hope that the donor will make subsequent contributions or donations. For example:
``Thank you for your support.''
The Commission seeks comment on a number of issues related to the above examples. Should examples of what does or does not constitute a solicitation appear in the Explanation and Justification that would accompany the final rule containing a definition of ``to solicit'' or should they be incorporated into the rule itself? Would such a list of examples be helpful in providing guidance to candidates, political party committees, and other political organizations?
The Commission also seeks comment on whether any of the above- listed examples should not be incorporated
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into either the Explanation and Justification or the rule. Are there other examples not included above, that should be incorporated into the Explanation and Justification or into the rule itself? With respect to the ninth example of communications that would constitute solicitations, should the rule or the Explanation and Justification specify that providing an addressed envelope and a reply card allowing contributors to select the dollar amount of their contribution or donation to the candidate, political party committee or organization is always a solicitation, regardless of the content of the written communication because it already constitutes facilitation of the making of a contribution under 11 CFR 114.2(f)(2)(ii)? Should the rule or Explanation and Justification also specify that providing the address of a Web page that is specifically dedicated to facilitating the making of contributions or donations online, or a phone number that is specifically dedicated to facilitating the making of contributions or donations, would always constitute a solicitation? Regarding the third example of communications that would not constitute solicitations, comment is also sought on whether a slightly modified version of that example would also not be a solicitation: ``Thank you for your continued/continuing support.'' Should the following be included as an example of what is not a solicitation: ``Thank you for your past support.''
As explained above, some of the principles underlying the examples set out above are derived from advisory opinions addressing corporate solicitations for contributions to SSFs under 11 CFR part 114. The Court of Appeals concluded that the fact that these advisory opinions construed ``solicit'' broadly as covering indirect requests ``reinforces our sense that Congress anticipated a similarly broad construction of that term here [i.e., BCRA's provisions regarding solicitation].'' Shays Appeal at 106. However, the Court of Appeals also noted that `` `solicit' could carry different meanings in different contexts.'' Id. Thus, solicitations of contributions from employees to a corporate SSF can raise concerns about the voluntariness of the solicited contributions that may differ from situations covered by 11 CFR part 300, which generally do not raise such concerns. The Commission seeks comment on the general issue of whether there are differences between these two types of situations that would make it inappropriate to apply principles derived from situations involving corporate solicitations to other solicitations by candidates, political parties, their agents, or entities directly or indirectly established, financed, maintained, or controlled by them. Alternatively, are these two contexts sufficiently similar such that it would be appropriate to apply the same principles to both?
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11 CFR Part 114--Corporate and Labor Organization Activity
As indicated above, certain Commission regulations concerning corporate and labor-organization activity in 11 CFR part 114 use the terms ``solicit'' and ``solicitation'' without defining them. See, e.g., 11 CFR 114.5(g), 114.6, 114.7, and 114.8; see also 11 CFR 104.7(b)(2). Should the Commission continue to leave the term ``to solicit'' undefined in the regulations governing corporate and labor- organization activity? In the alternative, should it incorporate the proposed definition of ``to solicit'' for the regulations regarding non-Federal funds in 11 CFR part 300 into the corporate and labor- organization regulations in 11 CFR part 114?
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11 CFR 110.20(a)(6)--Foreign Nationals
The Commission notes that its regulations prohibiting contributions, donations, expenditures, independent expenditures, and disbursements by foreign nationals currently incorporate the definition of ``to solicit'' in the regulations regarding non-Federal funds. See 11 CFR 110.20(a)(6). The Commission proposes to continue to use the same definition of ``to solicit'' for both the regulations regarding non-Federal funds and the foreign national prohibitions, but also invites comments on whether there are reasons for providing two different, independent definitions of the term.
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11 CFR 300.2(n)--Definition of ``To Direct''
The Commission proposes to revise 11 CFR 300.2(n) by defining ``to direct'' as ``to guide a person who has expressed an intent to make a contribution, donation, transfer of funds, or otherwise provide anything of value, by identifying a candidate, political committee or organization, for the receipt of a contribution, donation, transfer of funds, or thing of value. The contribution, donation, transfer, or thing of value may be made or provided directly or through a conduit or intermediary.''
As indicated above, although the Court of Appeals held that the Commission's definition of ``to direct'' was invalid because it effectively defined ``to direct'' as ``to ask'' and thus, like the definition of ``to solicit,'' limited ``to direct'' to explicit requests for funds, the court did not provide guidance on how ``to direct'' should be defined. However, the District Court did provide such guidance. Specifically, the District Court observed that the term ``to direct'' has more than one meaning. It ``can mean `[t]o guide (something or someone),' as in to inform someone of where he or she can make a donation. The word can also mean `[t]o instruct someone with authority,' as in to order someone to make a donation.'' Shays District at 76 (quoting Black's Law Dictionary 471 (7th ed. 1999)).
The Commission proposes to amend the definition of ``to direct'' to use the meaning, ``to guide.'' This meaning is consistent with BCRA's statutory language, which states in relevant part that the national committee of a political party may not ``direct to another person a contribution, donation, or transfer of funds or anything of value.'' 2 U.S.C. 441i(a)(1) (emphasis added). See also 2 U.S.C. 441i(d) (``A national, State, district, or local committee of a political party * * * shall not solicit any funds * * * or direct any donations to an entity * * *.'') (emphasis added). The preposition ``to'' following the term ``to direct'' in these statutory provisions would appear to indicate that Congress intended the use of ``to direct'' in BCRA to mean ``to guide.'' The Commission seeks comment on whether this is a correct interpretation of the statute.
Moreover, the second meaning of ``to direct'' as ``to instruct with authority'' would appear to be a form of asking, suggesting, or recommending--the terms proposed rule 300.2(m) uses to define ``to solicit.'' In other words, the definition of ``to solicit'' proposed in this NPRM already covers all forms of asking, suggesting, or recommending, regardless of whether they are backed by authority. Accordingly, to the extent that ``instructing someone with authority'' to make a contribution or donation is reasonably understood to be asking, suggesting, or recommending someone to make such a contribution or donation, it is already encompassed by the definition of ``to solicit'' proposed in this NPRM. Thus, defining ``to direct'' as to ``instruct someone with authority'' would appear to deprive the term of a meaningful role in the regulation by subsuming it under the meaning of ``to solicit.'' \9\
\9\ See Shays District at 77.
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By making clear that ``to direct'' applies to different actions, the proposed revision is responsive to the holding in Shays District that the current definition of ``to direct'' is subsumed under the current definition of ``to solicit,'' and is therefore redundant. Specifically, under the proposed rule, ``to direct'' would encompass situations where a person has already expressed an intent to make a contribution or donation that would advance a particular interest, but lacks the identity of an appropriate candidate or organization to which to make that contribution or donation. The act of direction would consist of providing the contributor with the identity of an appropriate recipient for the contribution or donation. These actions are not covered by the term ``to solicit'' because soliciting, under both the current and the proposed definition, is an attempt to motivate a person to contribute or donate, but would not apply to a person who merely provides information about possible recipients to another person who has already expressed intent to contribute or donate.
The proposed definition of ``to direct'' depends upon ``identification'' of a candidate, political committee, or organization. Examples of such ``identification'' would include providing the names of such candidates, political committees, or organizations, as well as providing any other sufficiently detailed contact information such as a Web or mail address, phone number, or the name or other contact information of a committee's treasurer, campaign manager, or finance director.
The Commission notes that the proposed rule at 11 CFR 300.2(n) would retain the statement, included in the current rule, that merely providing information or guidance on the requirements of particular law is not direction.
The Commission invites comments on the proposed definition of ``direct.'' Is the definition too broad or too narrow? Would the proposed revision reduce the opportunities for circumvention of the Act or actual or apparent corruption? Does it provide sufficient guidance to candidates and political party committees? Would it affect the exercise of political activity, and if so, how?
The Commission also seeks comment on whether providing a person who has expressed intent to contribute or donate with a long list of candidates, political committees, or organizations constitutes direction. Specifically, is there a point at which a list might identify so many candidates, political committees, or organizations from which the person may choose that the list would no longer constitute ``direction?'
Alternatively, understanding that ``to direct'' means ``to guide,'' the Commission is also considering whether to leave the term undefined for purposes of 11 CFR part 300, allowing the meaning of ``to direct'' to develop further through the advisory opinion and enforcement processes. The Commission seeks comment on this alternative proposal. As long as it is made clear that ``to direct'' means ``to guide,'' is the term ``to direct'' sufficiently clear to candidates, their authorized committees, and political party committees such that a definition by regulation is unnecessary?
The Commission notes that the words ``directed'' and ``direction'' appear in the Commission's earmarking rules regarding contributions directed through a conduit or intermediary under 2 U.S.C. 441a(a)(8). See 11 CFR 110.6(a), (d). Neither the Act nor the Commission's regulations implementing the earmarking rules defines the words ``directed'' and ``direction'' as they are used in these provisions. However, the Explanation and Justification for 11 CFR 110.6 states that in determining whether a person has direction or control, ``the Commission has considered such factors as whether the conduit or intermediary controlled the amount and timing of the contribution, and whether the conduit selected the intended recipient.'' Final Rules for Affiliated Committees, Transfers, Prohibited Contributions, Annual Contribution Limitations and Earmarked Contributions, 54 FR 34098, 34108 (August 17, 1989). Thus, the word ``direction'' in the earmarking rules means ``instructing with authority.'' For the reasons explained above, this meaning for ``to direct'' would seem to be subsumed under the definition of ``to solicit.'' Nevertheless, the Commission seeks comment on whether the term ``to direct'' in BCRA should be interpreted to parallel the earmarking rules regarding contributions directed through a conduit or intermediary. The word ``direction'' in the Commission's earmarking rules has been applied, for example, in Advisory Opinions 2003-23, 1991-29, 1986-4, 1980-46, and 1975-10 and MURs 1028 and 2314. Do these precedents provide a sufficient frame of reference that renders unnecessary a definition for purposes of 11 CFR part 300?
Certification of No Effect Pursuant to 5 U.S.C. 605(b) [Regulatory Flexibility Act]
The Commission certifies that the attached proposed rules if promulgated would not have a significant economic impact on a substantial number of small entities. The basis for this certification is that the organizations affected by these rules are the national, State, district, and local party committees of the two major political parties and other political committees, which are not small entities under 5 U.S.C. 601 because they are not small businesses, small organizations, or small governmental jurisdictions. National, State, district, and local party committees and any other political committees affected by these proposed rules are not-for-profit committees that do not meet the definition of ``small organization,'' which requires that the enterprise be independently owned and operated and not dominant in its field. State political party committees are not independently owned and operated because they are not financed and controlled by a small identifiable group of individuals, and they are affiliated with the larger national political party organizations. In addition, the National and State political party committees representing the Democratic and Republican parties have a major controlling influence within the political arena of their State and are thus dominant in their field. District and local party committees are generally considered affiliated with the State committees and need not be considered separately.
Most other political committees affected by these rules are not- for-profit committees that do not meet the definition of ``small organization.'' Most political committees are not independently owned and operated because they are not financed by a small identifiable group of individuals. Most political committees rely on contributions from a large number of individuals to fund the committees' operations and activities.
To the extent that any State party committees representing minor political parties or any other political committees might be considered ``small organizations,'' the number affected by this rule is not substantial.
Finally, candidates and other individuals operating under these rules are not small entities.
List of Subjects in 11 CFR Part 300
Campaign funds, Nonprofit organizations, Political candidates, Political committees and parties, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, the Federal Election Commission proposes to amend Subchapter C of Chapter I of Title 11 of
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the Code of Federal Regulations as follows:
PART 300--NON-FEDERAL FUNDS
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The authority citation for part 300 would continue to read as follows:
Authority: 2 U.S.C. 434(e), 438(a)(8), 441a(a), 441i, 453.
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Section 300.2 would be amended by revising paragraphs (m) and (n) to read as follows:
Sec. 300.2 Definitions.
* * * * *
(m) To Solicit. For the purposes of part 300, to solicit means to ask, suggest, or recommend that another person make a contribution, donation, transfer of funds, or otherwise provide anything of value, whether it is to be made or provided directly or through a conduit or intermediary. A solicitation is a written or oral communication, whether explicit or implicit, construed as a reasonable person would understand it in context. A solicitation does not include merely providing information or guidance as to the requirement of particular law.
(n) To Direct. For the purposes of part 300, to direct means to guide a person who has expressed an intent to make a contribution, donation, transfer of funds, or otherwise provide anything of value, by identifying a candidate, political committee or organization, for the receipt of a contribution, donation, transfer of funds, or thing of value. The contribution, donation, transfer, or thing of value may be made or provided directly or through a conduit or intermediary. Direction does not include merely providing information or guidance as to the requirement of particular law. * * * * *
Dated: September 22, 2005. Scott E. Thomas, Chairman, Federal Election Commission.
[FR Doc. 05-19330 Filed 9-27-05; 8:45 am]
BILLING CODE 6715-01-P
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