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contains regulatory documents having general

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are keyed to and codified in the Code of

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Rules and Regulations Federal Register

4975 

Vol. 71, No. 20 

Tuesday, January 31, 2006 

FEDERAL ELECTION COMMISSION 

11 CFR Parts 109 and 300 

[Notice 2006–1] 

Definitions of ‘‘Agent’’ for BCRA 

Regulations on Non-Federal Funds or 

Soft Money and Coordinated and 

Independent Expenditures 

AGENCY: Federal Election Commission. 

ACTION: Revised Explanation and 

Justification. 

SUMMARY: The Federal Election 

Commission is publishing a revised 

Explanation and Justification for its 

definitions of ‘‘agent’’ in its regulations 

on coordinated and independent 

expenditures, and non-Federal funds, 

which are commonly referred to as ‘‘soft 

money.’’ The regulations, which are 

being retained, implement the 

Bipartisan Campaign Reform Act of 

2002 by defining ‘‘agent’’ as ‘‘any person 

who has actual authority, either express 

or implied’’ to perform certain actions. 

These definitions do not include 

persons acting only with apparent 

authority. These revisions to the 

Explanation and Justification are in 

response to the decision of the U.S. 

District Court for the District of 

Columbia in Shays v. FEC. Further 

information is provided in the 

supplementary information that follows. 

DATES: Effective date is January 31, 

2006. 

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 

Bipartisan Campaign Reform Act of 

2002, Pub. L. 107–155, 116 Stat. 81 

(2002) (‘‘BCRA’’) amended the Federal 

Election Campaign Act of 1971, as 

amended, 2 U.S.C. 431 et seq. (the 

‘‘Act’’). In 2002, the Commission 

promulgated regulations in order to 

implement BCRA’s new limitations on 

party, candidate, and officeholder 

solicitation and use of non-Federal 

funds. 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’’). 

The Commission also approved final 

rules implementing BCRA’s provisions 

regarding payments by political 

committees and other persons for 

communications that are coordinated 

with a candidate, a candidate’s 

authorized committee, or a political 

party committee, as well as other 

expenditures that are made either in 

coordination with, or independently 

from, candidates and political party 

committees. Final Rules and 

Explanation and Justification for 

Coordinated and Independent 

Expenditures, 68 FR 421 (Jan. 3, 2003) 

(‘‘Coordination Final Rules’’). 

Many of BCRA’s provisions and the 

regulations implementing BCRA apply 

not only to principals, such as 

candidates, political party committees, 

or other entities, but also to their agents. 

See 67 FR at 49081–82; 68 FR at 421– 

22. Before BCRA was enacted, the 

Commission’s regulations at former 11 

CFR 109.1(b)(5) (2001) defined ‘‘agent’’ 

only for purposes of establishing 

whether an expenditure made by an 

individual was made independent of a 

candidate or political party. The 

definition was limited to ‘‘any person 

who has actual oral or written authority, 

either express or implied, to make or to 

authorize the making of expenditures, or 

[* * *] any person who has been placed 

in a position within the campaign 

organization where it would reasonably 

appear that in the ordinary course of 

campaign-related activities he or she 

may authorize expenditures.’’ The 

definition of ‘‘agent’’ at former section 

109.1(b)(5) did not apply to any 

fundraising activities. 

When implementing BCRA in 2002, 

the Commission did not seek comment 

on whether it should retain the preBCRA definition of ‘‘agent.’’ Rather, the 

Commission sought comment on 

whether a principal should be held 

liable if an agent has actual, as opposed 

to apparent, authority to engage in the 

alleged actions at issue, and whether a 

principal should be held liable only if 

an agent has express, rather than 

implied, authority to act. See Notice of 

Proposed Rulemaking on Prohibited and 

Excessive Contributions; Non-Federal 

Funds or Soft Money, 67 FR 35654, 

35658 (May 20, 2002). The Commission 

also sought comment on whether the 

term ‘‘agent’’ should be left undefined 

in the Commission’s rules and 

interpreted instead based on common 

law principles of agency. Id. 

The final rules adopted by the 

Commission in 2002 contained two 

identical definitions of ‘‘agent’’ for the 

regulations on coordinated and 

independent expenditures (11 CFR 

109.3) and the soft money regulations 

(11 CFR 300.2(b)). Both rules defined 

‘‘agent’’ as ‘‘any person who has actual 

authority, either express or implied,’’ to 

perform certain actions. The 

Commission decided to exclude from 

the BCRA rules defining ‘‘agent’’ those 

persons acting only with apparent 

authority. The 2002 BCRA rules sought 

to limit a principal’s liability for the 

actions of an agent to situations where 

the principal had engaged in specific 

conduct to create an agent’s authority. 

The Commission was concerned that by 

including apparent authority in the 

definitions of ‘‘agent’’ it would expose 

principals to liability based solely on 

the actions of a rogue or misguided 

volunteer and ‘‘place the definition of 

‘agent’ in the hands of a third party.’’ 

See Soft Money Final Rules, 67 FR at 

49083; Coordination Final Rules, 68 FR 

at 424–425. Accordingly, the 

Commission’s BCRA definitions did not 

include the second part of the pre-BCRA 

definition, which had covered only 

limited aspects of apparent authority, 

specifically, apparent authority based 

on ‘‘a position within the campaign 

organization.’’ 

In 2004, the Commission’s post-BCRA 

definitions of ‘‘agent’’ were reviewed by 

the U.S. District Court for the District of 

Columbia in Shays v. FEC, 337 F. Supp. 

2d 28 (D.D.C. 2004) (‘‘Shays’’), aff’d, 414 

F.3d 76 (D.C. Cir. 2005) (pet. for reh’g 

en banc denied Oct. 21, 2005) (No. 04– 

5352). The District Court held that the 

Commission’s decision not to include 

apparent authority within the 

definitions of ‘‘agent’’ was an acceptable 

and permissible construction of the term 

under the Act. Shays at 84. The court 

found that Congress had not directly 

spoken to the question at issue, 

satisfying the first step of Chevron 


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4976 Federal Register / Vol. 71, No. 20 / Tuesday, January 31, 2006 / Rules and Regulations 

1The first step of the Chevron analysis, which 

courts use to review an agency’s regulations, asks 

whether Congress has directly spoken to the precise 

questions at issue. The second step considers 

whether the agency’s resolution of an issue not 

addressed in the statute is based on a permissible 

construction of the statute. See Shays at 51–52 

(citing Chevron, U.S.A., Inc. v. Natural Res. Def. 

Council, 467 U.S. 837, 842–43 (1984)). 2The court also noted that individuals with 

apparent authority ‘‘are therefore not technically 

‘agents’ with regard to the activity at issue; it is only 

by their actions and those of their ‘principal’ that 

they are deemed to act as agents for purposes of 

establishing liability.’’ Id. at 84, citing Restatement 

(Second) of Agency 8, cmt. a. 

3The written comments and a transcript of the 

hearing are available at http://www.fec.gov/law/ 

law_rulemakings.shtml under Definition of Agent 

for BCRA Regulations on Coordinated and 

Independent Expenditures and Non-Federal Funds 

or Soft Money. 

4See McConnell v. FEC, 504 U.S. 93, 159–61 

(2003). 

5See Kolstad v. American Dental Ass’n, 527 U.S. 

526, 542 (1999) (‘‘The common law as codified in 

the Restatement (Second) of Agency (1957), 

provides a useful starting point for defining [the] 

general common law [of agency].’’) 

review.1 Id. at 71, 84. The court 

determined that ‘‘the Commission’s 

construction of the term ‘agent’ is 

faithful to the literal terms of the 

statute.’’ Id. at 71–72, 81–86 (finding 

that both definitions ‘‘survive[] Chevron 

review’’). Specifically, the District Court 

concluded, ‘‘the term ‘agent’ is subject 

to different interpretations and the 

FEC’s interpretation of the term 

complies with an acceptable 

interpretation of the statute.’’ Id. at 84. 

The court emphasized that the Shays 

plaintiffs ‘‘provide[d] no basis for the 

conclusion that the term ‘agent’ has 

developed a ‘settled meaning under 

* * * the common law,’ or that the 

meaning includes those acting with 

apparent authority.’’ Id. at 83. The 

District Court noted, ‘‘Black’s Law 

Dictionary provides that the term in its 

normal parlance does not include those 

acting with apparent authority.’’ Id. 

(emphasis added).2 Accordingly, the 

court ‘‘conclude[d] that the term ‘agent’

does not have a settled common law 

meaning that includes those acting with 

apparent authority.’’ Id. 

While upholding the Commission’s 

definition under Chevron, the District 

Court found that the Commission’s 

Explanation and Justification for the 

definitions of ‘agent’ at 11 CFR 109.3 

and 300.2(b) did not satisfy the reasoned 

analysis requirement of the 

Administrative Procedure Act (‘‘APA’’) 

on three grounds. See Shays at 72, 88; 

see also 5 U.S.C. 553. First, the court 

found that the Commission had not 

adequately explained why it departed 

from its pre-BCRA definition of ‘agent,’

by not including the portion of the 

definition that covered certain 

applications of apparent authority. 

Shays at 87. Second, the court found 

that the Commission had not addressed 

the impact that its construction of the 

term ‘‘agent’’ might have on preventing 

circumvention of the Act’s limitations 

and prohibitions and on preventing the 

appearance of corruption, two policies 

that Congress sought to advance in 

passing BCRA. Id. at 72, 87. Third, the 

court found that the Commission’s main 

concern in excluding apparent authority 

from the definitions—namely, to 

prevent a candidate or political party 

committee from being held liable for the 

actions of a rogue or misguided 

volunteer who purports to act on behalf 

of the candidate or committee—was 

‘‘not supported by the law of agency 

* * *.’’ Id. at 87. 

The court remanded the definitions to 

the Commission for further action 

consistent with its opinion. Id. at 130. 

The Commission did not appeal this 

portion of the District Court decision. 

In response to the Shays decision, the 

Commission issued a Notice of 

Proposed Rulemaking, which was 

published in the Federal Register on 

February 2, 2005. Notice of Proposed 

Rulemaking on the Definitions of 

‘‘Agent’’ for BCRA Regulations on NonFederal Funds or Soft Money and 

Coordinated and Independent 

Expenditures, 70 FR 5382 (Feb. 2, 2005) 

(‘‘NPRM’’). The NPRM sought comment 

on several alternatives, which were (1) 

whether to continue to exclude apparent 

authority from its definitions of ‘‘agent’’

at 11 CFR 109.3 and 300.2(b); (2) 

whether to add apparent authority to 

these definitions; (3) whether to return 

to the pre-BCRA definition; and (4) 

whether to adopt a different definition 

of ‘‘agent’’ covering certain applications 

of apparent authority while excluding 

others. The comment period closed on 

March 4, 2005. The Commission 

received six written comments from 

eleven commenters on the proposed 

rules. Additionally, the Commission 

received a letter from the Internal 

Revenue Service indicating, ‘‘the 

proposed rules do not pose a conflict 

with the Internal Revenue Code or the 

regulations thereunder.’’ The 

Commission held a hearing on this 

rulemaking on May 17, 2005. Four 

commenters testified at the hearing. For 

purposes of this document, the terms 

‘‘comments’’ and ‘‘commenter’’ apply to 

both written comments and oral 

testimony at the public hearing.3

The commenters were divided 

between those who favored adding 

apparent authority to the definitions of 

‘‘agent’’ and those who supported 

retention of the 2002 rule. The 

Commission has decided, after carefully 

weighing the relevant factors, including 

its extensive experience in investigating 

and prosecuting statutory violations, to 

retain the current definitions in 11 CFR 

109.3 and 300.2(b) and to provide this 

revised Explanation and Justification for 

the decision to exclude apparent 

authority from these definitions. The 

Commission has decided that its current 

definitions of ‘‘agent’’: (1) As required 

by BCRA, cover individuals engaged in 

a broad range of activities specifically 

related to BCRA-regulated conduct, 

thereby dramatically increasing the 

number of individuals and type of 

conduct subject to the Act, especially 

when compared to the Commission’s 

pre-BCRA definition of agent; (2) cover 

the wide range of activities prohibited 

by BCRA and the Act, thereby providing 

incentives for compliance, while 

protecting core political activity 

permitted by BCRA and affirmed by the 

U.S. Supreme Court in McConnell 4 that, 

under an apparent authority standard, 

could otherwise be restricted or subject 

to Commission investigation; and (3) are 

best suited for the political context, 

which is materially different from other 

contexts in which apparent authority is 

applicable. 

Explanation and Justification 

11 CFR 109.3 and 300.2(b)—Definitions 

According to the common law 

definition of actual authority, as 

codified in the Restatement (Second) of 

Agency (1958) (‘‘Restatement’’), an 

agent’s actual authority is created by 

manifestations of consent (express or 

implied) made by the principal to the 

agent.5 Restatement 7. Apparent 

authority, by contrast, is the result of 

manifestations the principal makes to a 

third party about a person’s authority to 

act on the principal’s behalf. 

Restatement 8. Apparent authority is 

created where the principal’s words or 

conduct ‘‘reasonably interpreted, causes 

the third person to believe that the 

principal consents to have the act done 

on his behalf by the person purporting 

to act for him.’’ Overnite Transp. Co. v. 

NLRB, 140 F.3d 259, 266 (D.C. Cir. 

1998) (quoting Restatement 27). 

Moreover, to have apparent authority 

‘‘the third person must not only believe 

that the individual acts on behalf of the 

principal but, in addition, ‘either the 

principal must intend to cause the third 

party to believe that the agent is 

authorized to act for him, or he should 

realize that his conduct is likely to 

create such belief.’ ’’ Id. (quoting 

Restatement 27, cmt. a) (emphasis 

added). 


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Finally, apparent authority may be 

created not only by manifestations the 

principal makes directly to a third party, 

but, in addition, ‘‘as in the case of 

[actual] authority, apparent authority 

can be created by appointing a person 

to a position, such as that of manager or 

treasurer, which carries with it generally 

recognized duties; to those who know of 

the appointment there is apparent 

authority to do the things ordinarily 

entrusted to one occupying such a 

position, regardless of unknown 

limitations which are imposed upon the 

particular agent.’’ Restatement 27, cmt. 

a. 

The Supreme Court has emphasized 

that not every aspect of agency law 

needs to be incorporated into a Federal 

statute when it is not necessary to 

effectuate the statute’s underlying 

purpose. See, e.g., Faragher v. City of 

Boca Raton, 524 U.S. 775, 803 n.3 

(1998) (The ‘‘obligation here is not to 

make a pronouncement of agency law in 

general or to transplant [the Restatement 

(Second) of Agency into a Federal 

Statute, but] is to adapt agency concepts 

to the [Statute’s] practical objectives.’’). 

In construing the term ‘‘agent,’’ the 

Commission believes that the current 

definitions of ‘‘agent,’’ which are based 

on actual authority, either express or 

implied, best effectuate the intent and 

purposes of BCRA and the Act. 

The Commission’s current definitions 

of ‘‘agent’: (1) As required by BCRA, 

cover individuals engaged in a broad 

range of activities specifically related to 

BCRA-regulated conduct, thereby 

dramatically increasing the number of 

individuals and types of conduct subject 

to the Act, especially when compared to 

the Commission’s pre-BCRA definition 

of agent; (2) cover the wide range of 

activities prohibited by BCRA and the 

Act, thereby providing incentives for 

compliance, while protecting core 

political activity permitted by BCRA 

and affirmed by the U.S. Supreme Court 

in McConnell that, under an apparent 

authority standard, could otherwise be 

restricted or subject to Commission 

investigation; and (3) are best suited for 

the political context, which is materially 

different from other contexts in which 

apparent authority is applicable. 

1. As required by BCRA, the 

Commission’s definitions of ‘‘agent’’

cover individuals engaged in a broad 

range of activities specifically related to 

BCRA-regulated conduct, thereby 

dramatically increasing the number of 

individuals and types of conduct subject 

to the Act, especially when compared to 

the Commission’s pre-BCRA definition 

of agent. 

In implementing BCRA, the 

Commission adopted regulations that 

defined ‘‘agent’’ based on a broad range 

of activities specifically related to 

BCRA-regulated conduct, thereby 

dramatically increasing the number of 

individuals who met the definitions of 

an ‘‘agent’’ of a candidate, political 

party committee, or other political 

committee. The Commission’s preBCRA independent expenditure rules 

limited the definitions of ‘‘agent’’ to 

‘‘any person who has actual oral or 

written authority, either express or 

implied, to make or to authorize the 

making of expenditures, or [* * *] any 

person who has been placed in a 

position within the campaign 

organization where it would reasonably 

appear that in the ordinary course of 

campaign-related activities he or she 

may authorize expenditures.’’ 11 CFR 

109.1(b)(5)(2001). 

Campaign committees typically 

authorize very few people to make 

expenditures, and typically limit those 

powers to employees under the 

campaign’s direct control. The number 

of positions within a campaign 

organization where it would reasonably 

appear that a person could make 

expenditures is similarly limited. 

Therefore, the Commission’s pre-BCRA 

definition of ‘‘agent’’ captured only a 

small number of individuals within a 

campaign organization. Moreover, by 

defining agency based on authority to 

make expenditures, the Commission’s 

pre-BCRA definition did not restrict 

individuals involved in the solicitation 

and receipt of funds specifically 

prohibited by BCRA. 

In enacting BCRA, Congress extended 

the scope of agency for purposes of the 

Act to include persons with the 

authority to solicit and receive funds, 

thereby increasing significantly the 

number of persons subject to the Act. 

Accordingly, the Commission’s soft 

money regulations define ‘‘agents’’ as 

individuals with actual authority to 

solicit or receive funds. See, e.g., 11 CFR 

300.2(b)(1)(i) (‘‘solicit, direct or receive 

funds’’) and 300.2 (b)(3) (‘‘solicit, 

receive, direct, transfer, or spend 

funds’’). In contrast to the pre-BCRA 

rule, the current definition applies to 

the solicitation of funds generally, and 

is not limited to activities based on 

statutorily defined terms, such as 

expenditures or contributions. The 

number of individuals involved in 

fundraising for a campaign can reach 

hundreds and, in the case of 

presidential campaigns and national 

party committees, potentially thousands 

of individuals, most of whom are 

volunteers. Therefore, the number of 

individuals subject to the Commission’s 

current definition of ‘‘agent’’ in the soft 

money regulations is far greater than the 

number of individuals who were subject 

to the pre-BCRA regulation, while the 

type of activity restricted is specifically 

related to BCRA-regulated conduct. 

The Commission’s current definition 

of ‘‘agent’’ in its coordination 

regulations defines agents as individuals 

with actual authority to request, make, 

or be materially involved with the 

production of certain types of 

communications. 11 CFR 109.3. In 

contrast to the pre-BCRA rule, this 

definition applies to a wide range of 

activities related to the creation and 

distribution of political 

communications, and is not limited to 

activities based on statutorily defined 

terms, such as expenditures or 

contributions. For example, the rule 

captures individuals who, on behalf of 

a Federal candidate, have actual 

authority, ‘‘to provide material 

information to assist another person in 

the creation, production, or distribution 

of any communication.’’ 11 CFR 

109.3(b)(5). Therefore, the rule not only 

captures a much larger set of 

individuals than the pre-BCRA rule, but 

also captures the proper type of activity 

prohibited by the coordination 

regulations, i.e., activities related to the 

production and distribution of 

communications. 

After examining the Commission’s 

pre- and post-BCRA enforcement record, 

the Commission has determined that the 

decision to limit agency to those with 

actual authority, express or implied, has 

not had a material impact on its ability 

to prosecute cases in the three years the 

rule has been in place. In the 

Commission’s experience in 

administering and enforcing the Act 

since promulgating the current rules in 

2002, excluding apparent authority from 

the definitions of ‘‘agent’’ has not 

facilitated circumvention of the Act nor 

led to actual or apparent corruption. 

Commenters both favoring and opposing 

the regulations in their current form 

agreed that there is no evidence that the 

operation of the current definitions of 

‘‘agent’’ in the 2003–2004 election cycle 

in any way undermined the success of 

BCRA cited by its Congressional 

sponsors. When asked at the hearing 

whether the lack of apparent authority 

had led to circumvention of the Act, a 

representative of a major reform 

organization testified, ‘‘I don’t know of 

any specific situation.’’ The 

Commission concurs with this 

conclusion. 

In upholding the Commission’s 

definitions of ‘‘agent’’ under Chevron, 

the District Court observed, ‘‘it is not 

readily apparent that the regulation on 

its face creates the potential for gross 

abuse’’ and ‘‘in the end simply finds 


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6The Commission notes that regardless of 

whether it includes apparent authority in the 

definition of ‘‘agent,’’ for the candidate to be liable 

in this scenario under existing Commission 

regulations prohibiting soft money solicitations, the 

fundraising chair must be ‘‘acting on behalf’’ of the 

candidate when he or she makes the soft money 

solicitation. See 11 CFR 300.10(c)(1) (‘‘An officer or 

agent acting on behalf of a national party committee 

or a national congressional campaign committee;’’) 

and 300.60(c) (‘‘Agents acting on behalf of a Federal 

candidate or individual holding Federal office;’’) 

(emphases added). As the Commission noted in the 

Soft Money Final Rules, ‘‘a principal can only be 

held liable for the actions of an agent when the 

agent is acting on behalf of the principal, and not 

when the agent is acting on behalf of other 

organizations or individuals. Specifically, it is not 

enough that there is some relationship or contact 

between the principal and agent; rather, the agent 

must be acting on behalf of the principal to create 

potential liability for the principal.’’ Soft Money 

Final Rules, 67 FR at 49083. 

Plaintiffs’’ concerns [that the definitions 

would allow circumvention of the Act] 

to be too amorphous and speculative at 

this stage to mandate the reversal of the 

Commission’s regulation.’’ Shays at 85–

86. The record evidence developed and 

reviewed in this rulemaking and the 

Commission’s prosecutorial experience 

support the District Court’s conclusion. 

Nevertheless, if the Commission 

should encounter evidence of actual or 

apparent corruption or of circumvention 

of the Act in the future, the Commission 

has the authority to revisit the 

regulation and take action as 

appropriate, including an approach 

targeted to the specific problems that are 

actually found to occur. 

2. Actual authority, either express or 

implied, is a broad concept that covers 

the wide range of activities prohibited 

by BCRA and the Act, thereby providing 

appropriate incentives for compliance, 

while protecting core political activity 

permitted by BCRA and affirmed by the 

U.S. Supreme Court in McConnell that, 

under an apparent authority standard, 

could otherwise be restricted or subject 

to Commission investigation. 

Based on a careful review of the 

relevant factors, the Commission has 

found that inclusion of apparent 

authority in the Commission’s 

definitions of ‘‘agent’’ is not necessary 

to implement BCRA or the Act, and that 

actual authority is sufficient to prevent 

circumvention and the appearance of 

corruption. In arguing for an apparent 

authority standard, some commenters 

erroneously stated that the 

Commission’s current definitions of 

‘‘agent’’ were too narrow because they 

failed to capture various hypotheticals 

involving allegedly prohibited activity. 

These hypotheticals included: (a) 

Actions by individuals with certain 

titles or positions within a campaign 

organization or party committee; (b) 

actions by individuals where the 

candidate privately instructed the 

individual to avoid raising non-Federal 

funds; (c) actions by individuals acting 

under indirect signals from a candidate; 

and (d) actions by individuals who 

willfully kept a candidate, political 

party committee, or other political 

committee ignorant of their prohibited 

activity. As discussed further below, 

actual authority, either express or 

implied, sufficiently addresses this 

hypothetical behavior. Moreover, a 

principal’s private instructions or 

indirect signals to agents, or a 

principal’s attempts to keep himself 

ignorant of an agent’s activities, do not 

implicate apparent authority, which 

involves manifestations by a principal 

to a third person rather than to the 

agent. 

While the Commission’s actual 

authority standard is sufficiently broad 

to address this activity, it also protects 

core political activity permitted by 

BCRA and affirmed by the U.S. Supreme 

Court in McConnell that, under an 

apparent authority standard, could 

otherwise be restricted or subject to 

Commission investigation. Therefore, 

the Commission’s current definitions of 

‘‘agent’’ best effectuate the intent and 

purpose of BCRA and the Act, and 

create the appropriate incentives for 

candidates, party committees, and other 

political committees to ensure that their 

employees and volunteers are familiar 

with, and comply with, BCRA’s soft 

money and coordination provisions. 

a. Actions of individuals with certain 

titles or positions. Apparent authority is 

not necessary to capture impermissible 

activity by persons holding certain titles 

or positions within a campaign 

organization, political party committee, 

or other political committee. A title or 

position is most frequently part of the 

grant of actual authority, either express 

or implied, to act on behalf of a 

principal. The scope of the authority 

created will depend on the title given 

and the understanding of the agent and 

the principal. For example, an 

individual with the title of fundraising 

chair of a campaign has actual authority 

to raise funds on behalf of that 

campaign. See Restatement 27, cmt a. 

Fundraising is within the scope of a 

fundraising chair’s actual authority. 

Later actions by a principal, reasonably 

understood by the agent, can expand the 

scope of authority under either express 

or implied actual authority. Thus, even 

if the definitions of ‘‘agent’’ are limited 

to persons acting with actual authority, 

a person may be an agent as a result of 

actual authority based on his or her 

position or title within a campaign 

organization, political party committee, 

or other political committee. 

b. Actions by individuals where the 

candidate privately instructed the 

individual to avoid raising non-Federal 

funds. The Commission’s current 

definitions of ‘‘agent’’ are sufficiently 

broad to capture actions by individuals 

where the candidate authorizes an 

individual to solicit Federal funds on 

his or her behalf, but privately instructs 

the individual to avoid raising nonFederal funds. One commenter’s 

scenario proposed, ‘‘a Federal candidate 

publicly named a fundraising chairman 

who thus was vested with the apparent 

authority of the candidate, but where 

the candidate privately instructed the 

agent to avoid raising non-Federal 

funds. Suppose further that the 

fundraiser nonetheless solicits soft 

money.’’ Contrary to the commenter’s 

assertion, the fundraising chairman in 

this scenario could be an agent for the 

purpose of soliciting funds under the 

Commission’s current regulations.6

Because raising funds is within the 

fundraising chair’s scope of actual 

authority, soft money solicitations on 

behalf of the candidate are prohibited. 

As an agent of a federal officeholder the 

fundraiser would be liable for any such 

violation. In addition, the candidate/ 

principal may also be liable for any 

impermissible solicitations by the agent, 

despite specific instructions not to do 

so. See U.S. v. Investment Enterprises, 

Inc., 10 F.3d 263, 266 (5th Cir. 1993) 

(determining that it is a settled matter of 

agency law that liability exists ‘‘for 

unlawful acts of [] agents, provided that 

the conduct is within the scope of the 

agent’s authority’’); see also Restatement 

216 (‘‘A master or other principal may 

be liable to another whose interests have 

been invaded by the tortious conduct of 

a servant or other agent, although the 

principal does not personally violate a 

duty to such other or authorize the 

conduct of the agent causing the 

invasion.’’); Restatement 219(1) (‘‘A 

master is subject to liability for the torts 

of his servant committed while acting in 

the scope of their employment.’’). 

c. Actions by individuals acting under 

indirect signals from a candidate. The 

Commission’s current definitions of 

‘‘agent’’ are sufficiently broad to capture 

actions by individuals acting under 

indirect signals from a candidate. 

Commenters raised concerns that 

candidates could withhold actual 

authority to violate the law, but attempt 

to signal indirectly that the agent should 

ignore his or her express instructions 

and solicit illegal soft money 

nevertheless. Several commenters 

described this as the use of a ‘‘wink and 

a nod’’ that would authorize the agent 

to act illegally. Contrary to what these 

commenters suggested, however, the 


hsrobinson on PROD1PC70 with RULES
Federal Register / Vol. 71, No. 20 / Tuesday, January 31, 2006 / Rules and Regulations 4979 

7See note 6, above. 

8Federal candidates and officeholders may raise 

non-Federal funds in limited circumstances. See 2 

U.S.C. 441i(e)(1)(B), (2), and (3). 

9 In order to preserve an individual’s ability to 

raise funds for multiple organizations, the 

Commission’s current regulations specifically 

require an agent to be acting on behalf of a 

candidate or party committee to be subject to 

BCRA’s soft money prohibition. See note 6, above. 

principal’s indirect signals give the 

fundraiser actual authority to raise 

money, and by implication, to do so 

illegally. See Restatement 26, cmt. c 

(‘‘[authority to perform a particular act] 

may be inferred from words or conduct 

which the principal has reason to know 

indicate to the agent that he is to do the 

act for the benefit of the principal’’). 

Moreover, because apparent authority is 

based on communications between the 

principal and a third party, if the 

principal indirectly signaled to the 

agent that the agent should violate the 

law, the principal’s actions would not 

create apparent authority. Apparent 

authority does not further the 

Commission’s efforts to prevent this 

type of misconduct. 

d. Actions by individuals who 

willfully keep a candidate, political 

party committee, or other political 

committee ignorant of their prohibited 

activity. The Commission’s current 

definitions of ‘‘agent’’ are also 

sufficiently broad to capture actions by 

individuals who willfully keep a 

candidate, party committee, or other 

political committee ignorant of their 

prohibited activity. In another scenario, 

commenters maintained that ‘‘so long as 

agents keep their principals sufficiently 

ignorant of their particular practices 

* * * those operating with apparent 

authority could exploit their positions 

to continue soliciting and directing soft 

money contributions, continue peddling 

access to their principals, and continue 

by virtue of their apparent authority to 

perpetuate the appearance if not the 

reality of corruption.’’

Assuming that apparent authority in 

this scenario is based on a position like 

that of fundraising chair, the agent 

would have actual authority to raise 

funds and thus the candidate would be 

liable for the agent’s illegal soft money 

solicitations, if done on the candidate’s 

behalf, even if the solicitations were 

made without the candidate’s 

knowledge.7 Moreover, under actual 

authority, a principal cannot avoid 

liability through attempts to keep 

himself ignorant of his or her agent’s 

actions. See Restatement 43 

(‘‘Acquiescence by the principal in 

conduct of an agent whose previously 

conferred authorization reasonably 

might include it, indicates that the 

conduct was authorized; if clearly not 

included in the authorization, 

acquiescence in it indicates 

affirmance.’’) 

Thus, for all the reasons discussed 

above, actual authority, whether express 

or implied, is a broad concept that 

provides candidates, political party 

committees, and other political 

committees with the appropriate 

incentives to monitor the conduct of 

those whom they hold out to the public 

as their agents. 

e. Apparent authority based on direct 

manifestations a principal makes to a 

third party is not necessary to 

implement the purposes of BCRA and 

the Act because the Commission’s soft 

money and coordination regulations 

would, in many situations, reach the 

principal’s own conduct directly. In 

addition, apparent authority based on 

direct manifestations a principal makes 

to a third party is not necessary to 

implement the purposes of BCRA and 

the Act because the Commission’s soft 

money and coordination regulations 

would, in many situations, reach the 

principal’s own conduct directly. Where 

a Federal candidate creates apparent 

authority to solicit soft money for a 

volunteer, employee, or consultant by 

talking directly to a third party, in many 

situations, the conversation between the 

candidate and the third party will 

constitute a solicitation by the candidate 

in and of itself. For example, assume a 

Federal candidate informs a contributor 

that an illegal soft money contribution 

to Jane Doe’s gun owners’ rights 

organization would greatly benefit the 

Federal candidate’s campaign. 

Regardless of whether Jane Doe has 

authority to act on behalf of the Federal 

candidate, the Federal candidate would 

face liability based on his or her own 

comments to the contributor. Not only 

is the principal’s statement likely 

captured by the Commission’s current 

regulations, the Commission is currently 

conducting a rulemaking to expand its 

definition of ‘‘solicit’’ at 11 CFR 

300.2(m), as it was understood by the 

Shays court, and in light of the Court of 

Appeals decision in Shays v. FEC. See 

Notice of Proposed Rulemaking on the 

Definitions of ‘‘Solicit’’ and ‘‘Direct’’, 70 

FR 56599 (Sept. 28, 2005); see also 

Shays v. FEC, 414 F.3d 76, 105–07 (D.C. 

Cir. 2005) (holding the Commission’s 

definitions of ‘‘to solicit’’ and ‘‘to 

direct’’ did not survive the first step of 

Chevron review.). Under this approach, 

liability for statements to third parties 

will rest directly on candidates, rather 

than indirectly through purported 

agents. 

f. Actual authority protects core 

political activity permitted by BCRA and 

affirmed by the U.S. Supreme Court in 

McConnell that, under an apparent 

authority standard, could otherwise be 

restricted or subject to Commission 

investigation. 

While the Commission’s current 

regulations are sufficiently broad to 

create appropriate incentives for 

candidates, party committees, and other 

political committees to ensure that their 

employees and volunteers are familiar 

with, and comply with, BCRA’s soft 

money and coordination provisions, the 

current regulations also preserve the 

ability of individuals to solicit funds on 

behalf of multiple entities. BCRA 

restricts the ability of Federal 

officeholders, candidates, and national 

party committees to raise non-Federal 

funds. BCRA does not prohibit 

individuals who are agents of the 

foregoing from also raising non-Federal 

funds for other political parties or 

outside groups.8 As the Supreme Court 

made clear in McConnell, even ‘‘party 

officials may also solicit soft money in 

their unofficial capacities.’’ McConnell, 

504 U.S. at 159–61. The Commission 

recognized in the Soft Money Final 

Rules that ‘‘individuals, such as State 

party chairmen and chairwomen, who 

also serve as members of their national 

party committees, can, consistent with 

BCRA, wear multiple hats, and can raise 

non-Federal funds for their State party 

organizations without violating the 

prohibition against non-Federal 

fundraising by national parties.’’ Id.; see 

also Restatement 13 (‘‘merely acting in 

a manner that benefits another is not 

necessarily acting on behalf of that 

person.’’).9

An apparent authority standard 

would potentially subject individuals 

conducting permissible fundraising 

activities to Commission complaints 

and investigations. Such a result would 

unduly burden participation in 

permissible political activity. For 

example, assume Candidate meets 

Contributor who mentions he is from 

Trenton, New Jersey. Candidate 

mentions to Contributor that he knows 

a politically prominent 

environmentalist named Tom who is 

also from Trenton. Candidate praises 

Tom’s involvement in an environmental 

group in New Jersey and says, ‘‘Say 

hello to Tom if you see him, and tell 

him to give me a call. Tom is an old 

friend and one of the reasons I keep 

getting elected.’’ In fact, Tom has not 

spoken to the Candidate in over a year, 

and knows him only though past efforts 

to lobby him on tightening 

environmental laws. Contributor later 

meets Tom, who solicits Contributor for 


hsrobinson on PROD1PC70 with RULES
4980 Federal Register / Vol. 71, No. 20 / Tuesday, January 31, 2006 / Rules and Regulations 

10This rulemaking does not impact the role of 

apparent authority in the enforcement or 

interpretation of commercial obligations between 

political committees and vendors. See, e.g., Karl 

Rove & Co. v. Thornburgh, 39 F.3d 1273 (5th Cir. 

1994). 

a soft money contribution to the 

environmental group. 

If a complaint was filed with the 

Commission, the Commission could, 

under an apparent authority standard, 

investigate whether Contributor 

reasonably believed Tom was 

Candidate’s agent, and if so, whether 

Tom made the solicitation on behalf of 

Candidate. However, under an actual 

authority standard, there is no actual 

authority between Tom and Candidate, 

thereby ending the Commission’s 

inquiry into his conduct and preserving 

his ability to remain active in his 

environmental organization. 

In reaching this conclusion, the 

Commission is mindful that both the 

Supreme Court in McConnell and the 

commenters agreed that citizen 

participation in both Federal campaigns 

and with organizations that may raise 

soft money is permissible under BCRA. 

3. Liability premised on actual 

authority is best suited for the political 

context, which is materially different 

from contexts where apparent authority 

is applicable. 

The Commission emphasizes that the 

decision to exclude apparent authority 

from its definitions of ‘‘agent’’ is 

informed by the difference between the 

political context in which the 

Commission’s definitions of ‘‘agent’’

operate, and the non-political contexts 

in which apparent authority is normally 

applied.10

Electoral campaigns are materially 

different from many commercial 

endeavors in that campaigns must 

depend on broad participation by 

volunteers. Unlike commercial agents, 

political volunteers have an affirmative 

interest in promoting and working 

toward the campaign’s goals based on 

personal and ideological, rather than 

economic, incentives. Unlike 

commercial principals, campaigns 

welcome the assistance and support of 

nearly any volunteer, regardless of their 

expertise, availability, or exact reasons 

for supporting the campaign. A 

commercial principal does not 

customarily rely on a large number of 

mainly inexperienced volunteers to 

carry out its commercial purposes. 

Moreover, a commercial principal 

typically does not have a large number 

of people willing to work on its behalf 

for no economic benefit and without the 

commercial principal’s knowledge. See, 

e.g., AO 1999–17 (discussing campaign 

volunteers’ independent Internet 

activities on behalf of a presidential 

campaign). 

As the Commission pointed out in the 

Soft Money Final Rules, in most nonpolitical contexts, the purpose of 

apparent authority is ‘‘to protect 

innocent third parties who have 

suffered monetary damages as a result of 

reasonably relying on the 

representations of individuals who 

purported to have, but did not actually 

have, authority to act on behalf of [the] 

principals. Unlike other legislative 

areas, BCRA does not affect individuals 

who have been defrauded or have 

suffered economic loss due to their 

detrimental reliance on unauthorized 

representations.’’ 67 FR 49082. See, e.g., 

United States v. One Parcel of Land, 965 

F.2d 311, 318–19 (7th Cir. 1992) 

(‘‘ ‘Apparent authority’ is a vehicle by 

which a principal is held vicariously 

liable to an innocent third party for 

injury resulting from the 

misrepresentations or misdeeds of the 

principal’s agent who acted with 

apparent authority from the principal.’’); 

Fraioli v. Lemcke, 328 F. Supp. 2d 250, 

278–79 (D.R.I. 2004) (‘‘The doctrine of 

apparent authority exists to promote 

business and protect a third party’s 

reasonable reliance on an agency 

relationship.’’); Hammett v. VTN Corp., 

1989 WL 149261 at *6 (E.D. La. 1989). 

Instead, an overriding purpose of 

BCRA, and the purpose to which the 

rules interpreting agency are drafted, is 

to prevent circumvention of the Act and 

actual corruption or the appearance 

thereof. Applying apparent authority 

concepts developed to remedy fraud 

and economic loss to the electoral arena 

could restrict permissible electoral 

activity where there is no corruption or 

the appearance thereof. 

As the Supreme Court noted in 

Buckley v. Valeo, ‘‘encouraging citizen 

participation in political campaigns 

while continuing to guard against the 

corrupting potential of large financial 

contributions to candidates’’ is an 

important goal of the Act. Buckley v. 

Valeo, 424 U.S. 1, 36 (1976). In the 

Commission’s judgment, the potential of 

apparent authority to restrict activity 

that would not circumvent the statute or 

give the appearance of corruption 

outweighs any possible benefits that 

may be derived from providing 

candidates and party committees with 

additional incentives for monitoring 

their campaign workers, especially 

given the fact that actual authority is a 

broad concept that already creates 

appropriate incentives for such 

monitoring. 

Conclusion 

This revised Explanation and 

Justification, thus, addresses the three 

concerns articulated by the District 

Court in Shays. First, the Commission 

determined that its current definitions 

of ‘‘agent,’’ by focusing on authority to 

engage in a broad range of activities 

specifically related to BCRA-regulated 

conduct rather than only on 

expenditures, dramatically increases the 

number of individuals and types of 

conduct subject to the Act, and 

therefore, properly implements BCRA’s 

prohibitions. 

Second, the Commission has 

attempted to address the District Court’s 

concern regarding prevention of 

circumvention of the Act and the 

appearance of corruption by explaining 

(1) that there is, at present, no evidence 

of corruption or circumvention under 

the current definitions of ‘‘agent’’ that 

dictates a change in Commission 

regulations; (2) that even without 

inclusion of apparent authority, the 

Commission’s soft money and 

coordination regulations would reach 

situations where the principal makes 

direct manifestations to a third party 

regarding a person’s authority to act on 

the principal’s behalf; and (3) that even 

without inclusion of apparent authority, 

reliance on actual authority, express or 

implied, still reaches most situations 

where agency is based on title or 

position. 

Third, this revised Explanation and 

Justification addresses the District 

Court’s concern regarding a perceived 

misunderstanding of the law of agency, 

by explaining that the Commission’s 

decision now to continue to exclude 

apparent authority from the definitions 

of ‘‘agent’’ is not based on an 

assumption, noted by the court, that 

‘‘rogue agents’’ might potentially create 

liability for campaigns, party 

committees, or other political 

committees solely through the agents’

own actions. Instead, the revised 

Explanation and Justification recognizes 

that apparent authority does, in fact, 

require affirmative conduct by a 

principal (whether through title or 

position or through direct 

manifestations to a third party), and that 

there are persuasive policy reasons for 

excluding apparent authority from the 

definitions of ‘‘agent.’’

Dated: January 24, 2006. 

Michael E. Toner, 

Chairman, Federal Election Commission. 

[FR Doc. 06–853 Filed 1–30–06; 8:45 am] 

BILLING CODE 6715–01–P 


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