This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

63919

Vol. 69, No. 212

Wednesday, November 3, 2004

1See 2 U.S.C. 441a(a)(7)(B)(i)–(ii) for a definition 

of coordinated party expenditures. See also 11 CFR 

109.20(b).

2 ‘‘Independent expenditure’’ is defined in 2 

U.S.C. 431(17) See also 11 CFR 100.16.

3The holding of Colorado I is limited to 

independent expenditures in connection with 

Congressional campaigns. The opinion in Colorado 

I did not address the issue of whether regulation of 

independent expenditures is constitutionally 

permissible in connection with Presidential 

campaigns. (‘‘Since this case involves only the 

provision concerning congressional races we do not 

address issues that might grow out of the public 

funding of presidential campaigns.’’) 518 U.S. at 

612. Thus, the opinion in Colorado I did not reach 

the issue of whether former 11 CFR 110.7(a)(5) 

which prohibited independent expenditures by the 

national committee of a political party in 

connection with a Presidential campaign was 

constitutional. Subsequently, however, BCRA 

effectively repealed section 110.7(a)(5) and the 

Commission replaced the section with 11 CFR 

109.36, which prohibits a national committee of a 

political party from making independent 

expenditures in connection with a presidential 

campaign only in certain circumstances in which 

the national committee of a political party serves as 

the principal campaign committee or authorized 

committee of its Presidential candidate. See

Coordinated and Independent Expenditures; Final 

Rules, 68 FR 421, 447–48 (January 3, 2003).

FEDERAL ELECTION COMMISSION 

11 CFR Parts 102, 106, and 109

[Notice 2004–14] 

Coordinated and Independent 

Expenditures by Party Committees

AGENCY: Federal Election Commission.

ACTION: Final rules.

SUMMARY: The Federal Election 

Commission is removing its rules 

restricting the ability of political party 

committees to make both independent 

expenditures and coordinated party 

expenditures with respect to the same 

candidate’s general election campaign 

for Federal office. The Commission is 

also repealing its rules prohibiting 

political party committees that make 

coordinated party expenditures with 

respect to a candidate from transferring 

funds to, or assigning authority to make 

coordinated party expenditures to, or 

receiving a transfer of funds from, a 

political party committee that has made 

or intends to make an independent 

expenditure with respect to that 

candidate. These rules were originally 

promulgated to implement section 213 

of the Bipartisan Campaign Reform Act 

of 2002. However, in McConnell v. FEC,

the U.S. Supreme Court held that 

section 213 is unconstitutional. 

Therefore, the Commission is now 

removing the rules implementing 

section 213. Further information is 

provided in the SUPPLEMENTARY

INFORMATION that follows.

DATES: Effective Date: December 3, 2004.

FOR FURTHER INFORMATION CONTACT: Mr. 

Brad C. Deutsch, Assistant General 

Counsel, or Mr. Ron B. Katwan, 

Attorney, 999 E Street NW., 

Washington, DC 20463, (202) 694–1650 

or (800) 424–9530.

SUPPLEMENTARY INFORMATION: The 

Notice of Proposed Rulemaking 

(‘‘NPRM’’), on which these final rules 

are based, was published in the Federal 

Register on June 30, 2004. 69 FR 39,373 

(June 30, 2004). The comment period 

closed on July 30, 2004. The 

Commission received three written 

comments on the proposed rules. These 

Final Rules are identical to the rules 

proposed in the NPRM. 

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 that follow were 

transmitted to Congress on October 28, 

2004. 

Explanation and Justification 

To conform its regulations to the 

Supreme Court’s invalidation of section 

213 of the Bipartisan Campaign Reform 

Act of 2002 (Pub. L. 107–155 (Mar. 27, 

2002)) (‘‘BCRA’’) in McConnell v. FEC,

540 U.S. 93, 199–205 (2003), the 

Commission is removing its regulations 

at 11 CFR 109.35 and deleting any crossreferences to that section in other 

regulations. 

I. 11 CFR 102.6—Transfer of Funds; 

Collecting Agents 

The Commission is revising section 

102.6 by deleting the cross-reference to 

section 109.35, which is being removed. 

II. 11 CFR 106.8—Allocation of 

Expenses for Political Party Committee 

Phone Banks That Refer to Clearly 

Identified Federal Candidate 

The Commission is revising section 

106.8 by deleting the cross-reference to 

section 109.35, which is being removed. 

III. 11 CFR 109.30—How Are Political 

Party Committees Treated for Purposes 

of Coordinated and Independent 

Expenditures? 

The Commission is revising section 

109.30 by deleting the cross-references 

to section 109.35, which is being 

removed. 

IV. 11 CFR 109.33—May a Political 

Party Committee Assign Its Coordinated 

Party Expenditure Authority to Another 

Political Party Committee? 

The Commission is revising section 

109.33 by deleting the cross-reference to 

section 109.35, which is being removed. 

V. 11 CFR 109.35—What Are the 

Restrictions on a Political Party 

Committee Making Both Independent 

Expenditures and Coordinated Party 

Expenditures in Connection With the 

General Election of a Candidate? 

Under the Federal Election Campaign 

Act of 1971 (the ‘‘Act’’), as amended, 2 

U.S.C. 431 et seq., a national committee, 

State committee, or a subordinate 

committee of a State committee of a 

political party may make expenditures 

in coordination with a Federal 

candidate for that candidate’s general 

election campaign 1 up to prescribed 

limits without these expenditures 

counting against the party committee’s 

contribution limits. 2 U.S.C. 441a(d)(1)–

(3); 11 CFR 109.32. While the Act limits 

coordinated expenditures, the Supreme 

Court has determined that political 

party committees may make unlimited 

‘‘independent expenditures,’’ 2 which 

are not coordinated with a candidate or 

a candidate’s authorized committees or 

agents. See Colorado Republican 

Federal Campaign Committee v. FEC,

518 U.S. 604 (1996) (‘‘Colorado I’’).3

BCRA section 213 amended 2 U.S.C. 

441a(d), by prohibiting political party 

committees, under certain conditions, 

from making both coordinated party 

expenditures and independent 

expenditures with respect to the same 

candidate, and from making transfers 

63920 Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Rules and Regulations 

and assignments to other political party 

committees. 2 U.S.C. 441a(d)(4). 

In 2002, the Commission promulgated 

rules at 11 CFR 109.35 to implement 

BCRA section 213. Coordinated and 

Independent Expenditures, Final Rules, 

68 FR 421, 422 (January 3, 2003). 

Subsequently, in McConnell v. FEC,

the Supreme Court found BCRA section 

213 unconstitutional. The Court held 

that by requiring political parties to 

choose between coordinated and 

independent expenditures during the 

post-nomination, pre-election period, 

BCRA section 213 placed an 

unconstitutional burden on the parties’

right to make unlimited independent 

expenditures. 540 U.S. at 199–205. 

Accordingly, the NPRM proposed 

removing the regulations at 11 CFR 

109.35, which implemented BCRA 

section 213.

The Commission received three 

comments on this rulemaking. The 

Internal Revenue Service submitted a 

comment informing the Commission 

that it had no comments. A second 

comment, while urging the Commission 

to remove the regulations implementing 

BCRA section 213 on the grounds that 

it was unconstitutional, primarily 

addressed issues beyond the scope of 

this rulemaking. A third brief comment 

concerned issues also not within the 

scope of this rulemaking. The 

Commission received no comments 

opposing the removal of its regulations 

at 11 CFR 109.35 as proposed in the 

NPRM. Accordingly, the Commission is 

removing and reserving section 109.35 

because the statutory foundation for this 

section, 2 U.S.C. 441a(d)(4), has been 

invalidated by the Supreme Court in 

McConnell v. FEC.

VI. 11 CFR 109.36—Are There 

Circumstances Under Which a Political 

Party Committee Is Prohibited From 

Making Independent Expenditures? 

The Commission is revising section 

109.36 by deleting the word 

‘‘additional’’ in the heading of section 

109.36, because, as a result of the 

removal of section 109.35, the 

circumstances described in section 

109.36 are the only circumstances under 

which a political party committee is 

prohibited from making independent 

expenditures. 

Certification of No Effect Pursuant to 5 

U.S.C. 605(b) [Regulatory Flexibility 

Act] 

The attached rules will not have a 

significant economic impact on a 

substantial number of small entities. 

The basis of this certification is that the 

national, State, and local party 

committees of the two major political 

parties are not small entities under 5 

U.S.C. 601 because they are not small 

businesses, small organizations, or small 

governmental jurisdictions. 

To the extent that political party 

committees may fall within the 

definition of ‘‘small entities,’’ their 

number is not substantial. In addition, 

the rules do not add but remove 

restrictions applicable to political party 

committees.

List of Subjects 

11 CFR Part 102

Political committees and parties, 

reporting and recordkeeping 

requirements. 

11 CFR Part 106

Political candidates, campaign funds, 

political committees and parties. 

11 CFR Part 109

Coordinated expenditures, 

independent expenditures, political 

committees and parties.

■ For the reasons set out in the preamble, 

the Federal Election Commission is 

amending Subchapter A of Chapter I of 

Title 11 of the Code of Federal 

Regulations as follows:

PART 102—REGISTRATION, 

ORGANIZATION, AND 

RECORDKEEPING BY POLITICAL 

COMMITTEES (2 U.S.C. 433)

■ 1. The authority citation for part 102 

continues to read as follows:

Authority: 2 U.S.C. 432, 433, 434(a)(11), 

438(a)(8), 441d.

■ 2. Section 102.6 is amended by 

revising paragraph (a)(1)(ii) to read as 

follows:

§ 102.6 Transfers of funds; collecting 

agents. 

(a) * * *

(1) * * *

(ii) Subject to the restrictions set forth 

at 11 CFR 300.10(a), 300.31 and 

300.34(a) and (b), transfers of funds may 

be made without limit on amount 

between or among a national party 

committee, a State party committee and/

or any subordinate party committee 

whether or not they are political 

committees under 11 CFR 100.5 and 

whether or not such committees are 

affiliated.

* * * * *

PART 106—ALLOCATIONS OF 

CANDIDATE AND COMMITTEE 

ACTIVITIES

■ 3. The authority citation for part 106 

continues to read as follows:

Authority: 2 U.S.C. 438(a)(8), 441a(b), 

441a(g).

■ 4. Section 106.8 is amended by 

revising paragraph (b)(2)(ii) to read as 

follows:

§ 106.8 Allocation of expenses for political 

party committee phone banks that refer to 

a clearly identified Federal candidate.

* * * * *

(b) * * *

(2) * * *

(ii) A coordinated expenditure or an 

independent expenditure, subject to the 

limitations, restrictions, and 

requirements of 11 CFR 109.10, 109.32, 

and 109.33; or

* * * * *

PART 109—COORDINATED AND 

INDEPENDENT EXPENDITURES (2 

U.S.C. 431(17), 441a(a) AND (d), AND 

PUB. L. 107–155 SEC. 214(c))

■ 5. The authority citation for Part 109 

continues to read as follows:

Authority: 2 U.S.C. 431(17), 434(c), 

438(a)(8), 441a, 441d; Sec. 214(c) of Pub. L. 

107–155, 116 Stat. 81.

■ 6. Section 109.30 is revised to read as 

follows:

§ 109.30 How are political party 

committees treated for purposes of 

coordinated and independent 

expenditures? 

Political party committees may make 

independent expenditures subject to the 

provisions in this subpart. See 11 CFR 

109.36. Political party committees may 

also make coordinated party 

expenditures in connection with the 

general election campaign of a 

candidate, subject to the limits and 

other provisions in this subpart. See 11 

CFR 109.32 through 11 CFR 109.34.

■ 7. Section 109.33 is amended by 

revising paragraph (a) to read as follows:

§ 109.33 May a political party committee 

assign its coordinated party expenditure 

authority to another political party 

committee? 

(a) Assignment. The national 

committee of a political party and a 

State committee of a political party, 

including any subordinate committee of 

a State committee, may assign its 

authority to make coordinated party 

expenditures authorized by 11 CFR 

109.32 to another political party 

committee. Such an assignment must be 

made in writing, must state the amount 

of the authority assigned, and must be 

received by the assignee committee 

before any coordinated party 

expenditure is made pursuant to the 

assignment.

* * * * *

Federal Register / Vol. 69, No. 212 / Wednesday, November 3, 2004 / Rules and Regulations 63921

■ 8. Section 109.35 is removed and 

reserved.

§ 109.35 [Removed and reserved]

■ 9. Section 109.36 is amended by 

revising the heading to read as follows:

§ 109.36 Are there circumstances under 

which a political party committee is 

prohibited from making independent 

expenditures?

* * * * *

Dated: October 28, 2004. 

Bradley A. Smith, 

Chairman, Federal Election Commission.

[FR Doc. 04–24475 Filed 11–2–04; 8:45 am] 

BILLING CODE 6715–01–P

SMALL BUSINESS ADMINISTRATION

13 CFR Part 105

RIN 3245–AF24

Standards of Conduct and Employee 

Restrictions and Responsibilities

AGENCY: U.S. Small Business 

Administration.

ACTION: Direct final rule.

SUMMARY: The Small Business 

Administration (SBA) amends its 

regulations governing employee 

standards of conduct by deleting 

references to Supplemental Standards of 

Ethical Conduct and revising the 

descriptions of the headings for Office 

of the Government Ethics (OGE) 

regulations. The effect of these 

amendments is to make SBA’s 

Standards of Conduct and Employee 

Restrictions and Responsibilities a more 

precise statement of existing authorities 

applicable to the ethical conduct of SBA 

employees.

DATES: This direct final rule is effective 

January 3, 2005, without further action, 

unless adverse comment is received by 

December 3, 2004. If adverse comment 

is received, SBA will publish a timely 

withdrawal of the direct final rule in the 

Federal Register.

ADDRESSES: You may submit comments, 

identified by RIN number, by any of the 

following methods: (1) Federal 

eRulemaking Portal: http://

www.regulations.gov; (2) e-mail: 

robert.gangwere@sba.gov. Include RIN 

number in the subject line of the 

message; (3) Fax: (202) 481–5275; (4) 

mail: Robert L. Gangwere, Deputy 

General Counsel, Office of General 

Counsel, U.S. Small Business 

Administration, 409 3rd Street, SW., 

Washington, DC 20416; (5) hand 

delivery/courier: 409 3rd Street, SW., 

Washington, DC 20416.

FOR FURTHER INFORMATION CONTACT:

Susan L. Sundberg, Alternate 

Designated Agency Ethics Official, 

Office of General Counsel, U.S. Small 

Business Administration, 409 3rd Street, 

SW., Washington, DC 20416; (202) 619–

0585; e-mail: susan.sundberg@sba.gov.

SUPPLEMENTARY INFORMATION: SBA 

issued regulations governing employee 

standards of conduct on January 26, 

1996, at 61 FR 2399 based on its 

independent authority under the Small 

Business Act, 15 U.S.C. 631 et seq., and 

Executive Order 11222, May 8, 1965. 

According to 5 CFR 2635.105, an agency 

may also issue regulations that 

supplement OGE’s regulations on 

standards of conduct for Executive 

branch employees, which the agency 

determines are necessary and 

appropriate in view of its programs and 

operations. Although SBA’s standards of 

conduct regulations currently make 

general and specific references to 

supplemental regulations, SBA has no 

current plans to issue such 

supplemental regulations. Therefore, it 

is necessary to amend the regulations so 

as not to imply that such supplemental 

regulations exist. The current 

regulations also cross-reference two 

parts of OGE’s regulations, 5 CFR part 

2634 and 5 CFR part 2635, and describe 

them as the Uniform Financial 

Disclosure regulations and the Uniform 

Standards of Ethical Conduct for 

Executive Branch employees, 

respectively. This direct final rule will 

revise these descriptions to make them 

consistent with the actual headings used 

by OGE in its regulations. 

SBA is publishing this rule as a direct 

final rule because the Agency believes 

that this rule is non-controversial; it 

merely makes the Agency’s regulations 

consistent with existing authorities. 

SBA expects no adverse comments on 

this rule. If, however, adverse comments 

are received, SBA will publish a timely 

notice of withdrawal in the Federal 

Register. 

Section-by-Section Analysis 

Section 105.101 notifies employees 

that 5 CFR part 2635 codifies the 

‘‘Uniform Standards of Ethical Conduct 

for Executive Branch employees’’ and 

that 5 CFR part 2634 codifies the 

‘‘Uniform Financial Disclosure 

regulation for Executive Branch 

employees.’’ Because these headings do 

not accurately reflect the headings 

found at 5 CFR parts 2634 and 2635, 

this direct final rule amends § 105.101 

to indicate the accurate headings for 

these OGE regulations. Section 105.101 

also refers employees to SBA 

Supplemental Standards of Ethical 

Conduct at 5 CFR XLIV. This direct final 

rule deletes that reference because such 

regulations do not exist. 

Section 105.402 identifies the 

Designated Agency Ethics Official as the 

official who serves as SBA’s Standards 

of Conduct Counselor, delegates 

authority to that official to designate 

Assistant Standards of Conduct 

Counselors, and describes their 

responsibilities under OGE and SBA 

regulations, including SBA’s 

supplemental regulations. Paragraph 

(b)(4) of this section will be removed in 

order to delete the provision directing 

standards of conduct counselors to rely 

on SBA’s Supplemental Standards of 

Ethical Conduct in making decisions on 

outside employment. SBA will also 

make minor grammatical changes to this 

section to improve clarity. 

Compliance With Executive Orders 

13132, 12988 and 12866, the Regulatory 

Flexibility Act (5 U.S.C. 601–612) and 

the Paperwork Reduction Act (44 

U.S.C. Ch. 35) 

This direct final rule will not have 

substantial direct effects on the States, 

on the relationship between the national 

Government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of Government. Therefore, for the 

purposes of Executive Order 13132, 

SBA determines that this direct final 

rule has no federalism implications 

warranting preparation of a federalism 

assessment. 

This direct final rule meets applicable 

standards set forth in sections 3(a) and 

3(b)(2) of Executive Order 12988, Civil 

Justice Reform, to minimize litigation, 

eliminate ambiguity, and reduce 

burden. The direct final rule does not 

have retroactive or preemptive effect. 

The Office of Management and Budget 

(OMB) has determined that this direct 

final rule does not constitute a 

significant regulatory action under 

Executive Order 12866. 

SBA certifies that this direct final rule 

will not have a significant economic 

impact on a substantial number of small 

entities within the meaning of the 

Regulatory Flexibility Act, 5 U.S.C. 601–

612 because the direct final rule applies 

to SBA employees, not small entities. 

SBA has determined that this direct 

final rule will not impose any new 

reporting or recordkeeping requirements 

under the Paperwork Reduction Act, 44 

U.S.C. Ch. 35.

List of Subjects in 13 CFR Part 105

Conflicts of interest, Conduct 

standards, Ethical conduct, Financial 

disclosure, Government employees.