35530 Federal Register / Vol. 52, No. 183 / Tuesday, September 22, 1987 / Rules and Regulations

Authority: Secs. 1-19, 48 Stat. 31, as 

amended; 7 U.S.C. 601-674.

§ 987.112a [Amended]

2. Sections 987.112a(b){3) (i) and (ii) of 

Subpart—Administrative Rules (7 CFR 

987.101-987.172), are amended by 

inserting the words “two pounds or 

more” in place of the words “more than 

two pounds”.

Dated: September 15,1987.

Robert C. Keeney,

Deputy Director, Fruit and Vegetable

Di vision. Agricultural Marketing Service.

[FR Doc. 87-21836 Filed 9-21-87; 8:45 am]

BILLING CODE 3410-02-M

FEDERAL ELECTION COMMISSION

11 CFR Parts 100 and 110

[N o tice 1987-1 1]

Contributions to and Expenditures by

Delegates to National Nominating

Conventions

AGENCY: Federal Election Commission. 

ACTION: Final rule; transmittal of 

regulations to Congress.

SUMMARY: The Commission has revised 

its regulations at 11 CFR 110.14 

governing the role of delegates and 

delegate committees in the Presidential 

delegate selection process. These 

regulations implement the contribution 

and expenditure limitations applicable 

to delegates and delegate committees, 

and set forth the reporting obligations of 

delegate committees under the Federal 

Election Campaign Act (“the Act” or 

“FECA”), 2 U.S.C. 431 et seq. The 

revisions clarify the distinction between 

the treatment of individual delegates 

and the treatment of delegate 

committees under these rules. The 

amended rules also establish criteria for 

determining whether delegate 

committees are affiliated with the 

campaign committee of the Presidential 

candidate they support. In addition, the 

Commission has made several 

corresponding amendments to 11 CFR 

100.5(e), 110.1 and 110.2 to bring those 

provisions into conformity with the 

revised delegate selection rules. Further 

information on these revisions is 

provided in the supplementary 

information which follows.

DATES: Further action, including the 

announcement of an effective date, will 

be taken after these regulations have 

been before Congress for 30 legislative 

days pursuant to 2 U.S.C. 438(d).

FOR FURTHER INFORMATION CONTACT:

Ms. Susan E. Propper, Assistant General 

Counsel, 999 E Street, NW., Washington,

DC 20463, (202) 376-5690 or (800) 424- 

9530.

SUPPLEMENTARY INFORMATION: The 

Commission is publishing today the final 

text of revised rules governing the 

delegate selection process at 11 CFR 

110.14. The Commission is also 

publishing conforming amendments to 

§ § 100.5,110.1 and 110.2 to reflect the 

changes made in the delegate selection 

regulations.

On March 4,1987, the Commission 

issued a Notice of Proposed Rulemaking 

seeking comments on proposed 

revisions to these regulations. 52 FR 

6580. Three comments were received in 

response to the Notice. A public hearing 

was scheduled for April 22,1987, but 

was subsequently cancelled because no 

requests to testify were received.

Section 438(d) of Title 2, United States 

Code, requires that any rule or 

regulation prescribed by the 

Commission to carry out the previsions 

of Title 2 of the United States Code be 

transmitted to the Speaker of the House 

of Representatives and the President of 

the Senate 30 legislative days before 

they are finally promulgated. These 

regulations were transmitted to 

Congress on September 17,1987.

Explanation and Justification

The Notice of Proposed Rulemaking 

raised several questions concerning the 

role of draft committees and 

multicandidate committees closely 

associated with potential Presidential 

candidates in the delegate selection 

process, but did not put forward draft 

language to resolve the issues presented. 

One comment addressed these areas. 

The Commission also raised the same 

questions concerning multicandidate 

committees in a separate rulemaking 

regarding affiliation between political 

committees. See 51 FR 27183 (July 30, 

1986). The Commission has concluded 

that it is more appropriate to address 

the multicandidate committee questions 

in the affiliation regulations rather than 

in the delegate regulations. Similarly, 

the Commission has decided that it 

would be better to address the draft 

committee issues in a separate 

rulemaking project at a later date. 

Consequently, the revised delegate 

selection regulations do not specifically 

cover these areas.

Section 110.14 Contributions to and

expenditures by delegates and delegate

committees.

Section 110.14 of the Commission’s 

regulations establishes guidelines for 

delegates and delegate committees as to 

the impact of the FECA on a range of 

activities they may wish to undertake in 

the process of selecting delegates to a

national nominating convention. Under 

§ 110.14, funds received and spent for 

delegate selection activities are 

contributions and expenditures made to 

influence federal elections. This results 

from the definition of “election,” which 

includes both a national nominating 

convention and a primary election held 

to select delegates to such a convention. 

2 U.S.C. 431(1) (B) and (C).

Consequently, only funds permissible 

under the Act may be used for such 

activities. However, because delegates 

are not candidates for federal office 

under the FECA, individual delegates 

are not subject to the same limitations 

on contributions they receive or the 

same reporting requirements as federal 

candidates. By contrast, delegate 

committees that qualify as political 

committees under 2 U.S.C. 431(4) have 

the same reporting requirements and are 

subject to the same contribution limits 

as other political committees, with 

certain limited exceptions explained 

below. The Commission’s regulations 

also contain provisions explaining when 

certain expenditures by delegates and 

delegate committees may trigger the 

limits on contributions to a federal 

candidate, or may affect a publiclyfinanced Presidential candidate’s 

spending limits.

A major focus of the revisions to 

§ 110.14 is the reorganization of this 

section to clarify which provisions apply 

to individual delegates and which ones 

apply to delegate committees. Section 

110.14 has also been retitled 

“Contributions to and expenditures by 

delegates and delegate committees” to 

reflect this reorganization. The 

provisions pertaining to contributions 

made to an individual delegate and 

expenditures made by that delegate are 

located in new paragraphs (d), (e) and

(f). The corresponding provisions that 

apply to delegate committees are set 

forth in new paragraphs (g), (h) and (i). 

The other major change in § 110.14 is the 

addition of new paragraphs (j) and (k), 

which provide guidance as to when 

delegate committees may be deemed to 

be affiliated with a Presidential 

candidate’s authorized committee or 

with other delegate committees.

Section 110.14(a) Scope.

This paragraph generally follows the 

current rule by stating that § 110.14 

applies to all levels of the delegate 

selection process. Although no 

substantive changes have been made, 

paragraph (a) was slightly reworded for 

clarity and designated “Scope.”

In response to a question posed in the 

' Notice of Proposed Rulemaking, one 

commenter urged the Commission to
^°* -^3 / Tuesday, September 22, 1987 / Rules and Regulations 35531

amend this provision to state more 

precisely what activities are part of the 

delegate selection process. Given that 

delegate selection procedures vary from 

state to state and from party to party, 

the Commission has concluded that 

more detailed language would not 

provide sufficient flexibility to examine 

individual situations.

Section 110.14(b) Definitions.

There is no change in the definition of 

“delegate” in paragraph (b)(1).

The definition of "delegate 

committee” in paragraph (b)(2) has been 

revised to make clear that a delegate 

committee may not necessarily be a 

political committee under the Act. 

Consequently, only delegate committees 

that qualify as political committees 

under 11 CFR 100.5 are required to 

register with the Commission pursuant 

to Part 102 and file reports of receipts 

and disbursements in accordance with 

Part 104.

Section 110.14(c) Funds received and

expended; prohibited funds.

Section 110.14(c)(1) contains new 

language to clarify that funds received 

or disbursements made for the purpose 

of furthering the selection of a delegate 

to a national nominating convention are 

contributions or expenditures made for 

the purpose of influencing a federal 

election. This represents a continuation 

of previous Commission policy. S ee

Explanation and Justification for 11 CFR 

110.14, 45 FR 34865, 34866 (May 23,1980); 

AO 1980-5; and AO 1975-12.

This paragraph also sets forth two 

exceptions to the general rule, following 

current § 110.14(a) (1) and (2). First, fees 

paid by a delegate to a State or 

subordinate State party committee as a 

condition for ballot access as a delegate 

are not contributions or expenditures for 

the purpose of influencing federal 

elections. Payments made to a State 

party committee by individuals who 

seek to qualify for selection as delegates 

are analogous to payments made by 

candidates for Federal office as a 

condition of ballot access that are 

specifically excluded from the definition 

of “contribution” and “expenditure.” 2 

U.S.C. 431 (8)(B)(xiii); and 431(9)(B)(x); 11 

CFR 100.7(b)(18); and 11 CFR 

100.8(b)(19). See also AO 1980-5. The 

second category of payments that are 

exempted are administrative expenses 

incurred by a State or subordinate State 

party committee in connection with the 

sponsoring of conventions or caucuses 

during which delegates to a national 

nominating convention are selected.

Paragraph (c)(2) follows current 

§ 110.14(f) by requiring that all funds 

received and disbursements made for

the purpose of furthering a delegate’s 

selection to a national nominating 

convention, including payments required 

as a condition of ballot access and 

administrative expenses incurred by a 

State or subordinate State committee, be 

made from funds permissible under the 

Act. The Commission received one 

comment strongly supporting the 

permissible funds requirement.

Section 110.14(d) Contributions to a

delegate.

This paragraph generally follows 

current § 110.14(c) in explaining the 

application of the contribution limits to 

contributions made to individual 

delegates. Although no substantive 

changes have been made, this paragraph 

has been reorganized for clarity. 

Contributions to delegates are not 

subject to the limits on contributions to 

candidates or political committees set 

forth at 11 CFR 110.1 and 110.2 because 

delegates do not come within the 

definition of “candidate” in the Act. 2 

U.S.C. 431(2). However, contributions 

from an individual to a delegate are 

subject to that individual’s $25,000 

annual limit on contributions because 

the aggregate annual limit applies 

generally to all contributions made for 

the purpose of influencing a federal 

election.

The Commission received one 

comment on this section, which 

supported the requirement that 

contributions to delegates count against 

the individual contributor’s $25,000 

annual contribution limit. The 

commenting organization also urged the 

Commission to revise the regulations in 

certain respects. It suggested treating 

authorized and committed delegates as 

agents of the Presidential candidate’s 

principal campaign committee, and 

counting contributions to and 

expenditures by such delegates against 

the committee’s contribution limits. 

Alternatively, the commenter proposed 

counting such contributions and 

expenditures against the candidate’s 

limits only in the event that the 

individual delegate is directly or 

indirectly financed by the Presidential 

candidate or the campaign committee. 

The Commission does not believe that 

such a substantial change in the 

regulations is necessary. If there is 

evidence in a particular case 

demonstrating that an individual 

delegate is in fact serving as an agent of 

a Presidential campaign committee or of 

a delegate committee, the Commission’s 

regulations allow for the attribution of 

the delegate’s contributions and 

expenditures to the committee. The new 

provisions on affiliation of delegate

committees also resolve some of the 

commenter’s concerns.

Section 110.14(e) Expenditures by a

delegate to advocate only his or h er

selection.

New paragraph (e) follows current 

§ 110.14(d) regarding expenditures by 

delegates to advocate only their own 

selection. This provision has been 

reorganized for clarity, but contains no 

substantive changes.

Section 110.14(f) Expenditures by a

delegate referring to a candidate for

public office.

New § 110.14(f) governs delegate 

expenditures for communications which 

advocate the delegate’s selection and 

which also include information on or 

reference to a candidate for public 

office, including a Presidential 

candidate. The new provisions 

concerning such “dual purpose” 

expenditures are based on current 

§ 110.14(d)(2), although they have been 

revised in several respects. First, the 

“dual purpose” expenditure provisions 

have been reorganized into two separate 

paragraphs. New § 110.14(f) governs 

dual purpose expenditures made by 

individual delegates, and the 

corresponding provisions for delegate 

committees are located in new 

§ 110.14(i). Second, the new regulations 

apply to references to candidates for 

any public office, not just references to 

Presidential candidates. This revision 

recognizes that delegates and delegate 

committees may wish to mention 

federal, state or local candidates in their 

campaign materials. Although the 

Commission considered more 

fundamental changes to these 

provisions, it decided to continue the 

overall approach taken in the current 

rules. None of the public comments 

addressed the possible changes to these 

regulations put forth by the Commission.

Paragraph (f)(1) generally follows 

current § 110.14(d)(2)(i) with regard to 

“dual purpose” expenditures that are 

made in connection with volunteer 

activities. Such expenditures are neither 

contributions subject to the § 110.1 

contribution limits, nor subject to the 

§ 110.8 spending limits for Presidential 

candidates, provided that two 

conditions are satisfied. The materials 

must be used in connection with 

volunteer activity, and the expenditures 

cannot be made for general public 

communications or political advertising. 

This provision is based on the so-called 

“coattail” exemption from the definition 

of contribution in 2 U.S.C. 431(8)(B)(xi). 

This exemption applies to delegate 

expenditures because it applies to
35532 Federal Register / Vol. 52, No, 183 / Tuesday, September 22, 1987 / Rules and Regulations

payments by candidates for public 

office. Although delegates are not 

candidates for federal office under the 

Act, they may be considered candidates 

for public office. As the Commission has 

stated previously, this exemption is 

intended to encourage volunteer activity 

in the delegate selection process and to 

permit delegates to campaign as part of 

a team. Explanation and Justification for 

11 CFR 110.14, 45 FR 34865, 34867 (May 

23,1980); See also 125 Cong. Rec. H23815 

(Sept. 10,1979) (statement of Rep. 

Frenzel).

Paragraph (f)(2) governs “dual 

purpose” expenditures by delegates 

involving the use of general public 

political advertising, such as 

broadcasting, newspapers, magazines, 

billboards and direct mail. This 

provision has been slightly revised from 

current § 110.14(d)(2)(ii) for clarity, but 

has not been changed substantively. 

Thus, this paragraph applies the 

standards established by the FECA at 2 

U.S.C. 431 (8) and (17) to determine 

whether such expenditures by 

individual delegates are in-kind 

contributions or independent 

expenditures for the candidates referred 

to in the communications. As in-kind 

contributions, such delegate 

expenditures are subject to the 

contribution limits of 11 CFR 110.1 and 

the Presidential candidate’s spending 

limits under 11 CFR 1104J. Although 

individual delegates do not have to 

report making such in-kind 

contributions, the recipient candidate's 

committee does incur reporting 

obligations. On the other hand, if the 

delegate’s expenditures qualify as 

independent expenditures, they are not 

subject to limitation in amount, but they 

must be made and reported in 

accordance with the requirements of 11 

CFR Part 109.

Paragraph (f)(3), which is based upon 

the provisions of current 

§ 110.14(d)(2)(ii)(A)(2), addresses 

delegate expenditures for the purpose of 

disseminating, distributing or 

republishing a candidate’s campaign 

materials. It has been amended in two 

respects. First, the wording of this 

provision has been revised to recognize 

that delegates might wish to republish 

materials produced by federal 

candidates other than Presidential 

candidates. Second, the new language 

clarifies that such expenditures are inkind contributions subject to the 

contribution limits and reportable by the 

federal candidate whose material is 

used. The new provision follows the 

current rule by not requiring such 

expenditures to be charged against a 

publicly financed Presidential

candidate’s spending limits unless they 

were made with the cooperation or prior 

consent of, or in consultation with, or at 

the request or suggestion of the 

candidate or his or her campaign 

committee.

New § 110.14(f)(4) follows current 

§ 110.14(d)(2)(ii)(D) in defining the term 

“direct mail” for the purposes of the 

delegate selection regulations.

Section 110.14(g) Contributions made

to and by a delegate committee.

New § 110.14(g) follows current 

§ 110.14(d) in applying the contribution 

limitations and reporting requirements 

of the Act to contributions made and 

received by delegate committees. The 

Commission has reorganized this 

provision, but has made no substantive 

revisions. Thus, contributions received 

from a Presidential candidate’s 

campaign committee will count against 

that candidate’s spending limits under 

11 CFR 110.8 if the candidate elects to 

receive public financing.

Section 110.14(h) Expenditures by a

delegate committee to advocate only the

selection o f one or more delegates.

The Commission has added new 

§ 110.14(h) to the regulations to provide 

a more complete explanation of how the 

contribution and expenditure limits 

apply to delegate committee 

expenditures that advocate only the 

selection of one or more delegates. This 

provision, which generally follows new 

§ 110.14(e), states that such 

expenditures are not considered to be 

contributions to any candidate, and are 

not subject to the § 110.1 contribution 

limits. Similarly, they are not chargeable 

to the expenditure limits of any 

Presidential candidate under § 110.8(a). 

Finally, new paragraph (h) continues the 

current requirement that delegate 

committees must report these 

expenditures in accordance with 11 CFR 

Part 104.

Section 110.14(i) Expenditures by a

delegate committee referring to a

candidate fo r public office.

New § 110.14(i) has been added to the 

delegate selection regulations to provide 

an explicit statement concerning 

expenditures by delegate committees for 

communications which advocate the 

selection of one or more delegates and 

which also include information on or 

reference to a candidate for public 

office, including a Presidential 

candidate. This provision parallels new 

1110.14(f), which governs “dual 

purpose” expenditures made by 

individual delegates. New paragraph (i) 

was included in response to questions 

that were raised during the 1984

Presidential election cycle as to whether 

the "dual purpose” expenditure 

provision (current § 110.14(d)(2)) applied 

only to individual delegates, or to 

delegate committees as well. See MURs 

1667 and 1704 (1984). The Commission 

has previously stated that the “dual 

purpose” expenditure rules apply to 

delegates who form political 

committees. See AO 1980-5. Moreover, 

current paragraph (d)(2) contains 

parentheticals indicating that delegate 

committees must report such 

expenditures. Thus, new § 110.14(i) 

represents a continuation of the 

Commission’s previous approach with 

regard to delegate committee 

expenditures.

New § 110.14(i)(l) generally follows 

revised § 110.14(f)(1) by explaining 

when “dual purpose” expenditures by 

delegate committees made in connection 

with volunteer activities are not treated 

as contributions to the federal 

candidates mentioned. However, 

delegate committees must report such 

expenditures, although individual 

delegates need not do so.

“Dual purpose” expenditures by 

delegate committees for general public 

communications or political advertising 

are covered in new § 110.14(i)(2). This 

provision generally follows new 

§ 110.14(f)(2) and the current rules in 

setting forth the conditions under which 

such “dual purpose” expenditures must 

be treated as in-kind contributions to or 

independent expenditures on behalf of 

the candidates mentioned.

During this rulemaking, the 

Commission considered alternatives to 

the current requirement that delegate 

committee expenditures for general 

public political advertising be allocated 

between the delegates and the 

candidates mentioned. One possibility 

was to not allow allocation, and to treat 

the entire expenditure as an in-kind 

contribution or independent expenditure 

for the candidate named. The opposite 

approach would be to eliminate the 

need for allocation by considering the 

entire expenditure to be solely for the 

purpose of influencing the selection of 

the delegates mentioned. The 

Commission has decided to reject both 

of these alternatives, and to reaffirm the 

current approach requiring allocation. 

The FECA establishes standards as to 

what is considered an in-kind 

contribution and what is an independent 

expenditure. 2 U.S.C. 431 (8) and (17). 

Those standards apply to disbursements 

by delegate conirtiittees. in precisely the 

same way that they apply to 

disbursements made by other persons 

and political committees. Consequently, 

the Commission’s regulations must
Federal Register / Vol, 52, No. 183 / Tuesday, September 22, 1987 / Rules and Regulations 35533

continue to apply these standards to 

delegate committees.

The Commission notes that in 

allocating “dual purpose” expenditures 

under § 110.14(i)(2), delegate committees 

should be guided by the general 

principles set out in the allocation 

regulations at 11 CFR Part 106. Thus, the 

amount to be attributed to each delegate 

or candidate should reflect the benefit 

reasonably expected to be derived. 11 

CFR 106.1(a). This can be based on 

readily apparent factors such as the 

number of candidates mentioned and 

the amount of space or time accorded to 

each.

Paragraph (i)(3) addressee 

expenditures by delegate committees to 

disseminate, distribute or republish a 

candidate’s campaign materials. It 

follows new § 110.14(f)(3), except that 

delegate committees must report such 

expenditures in the same manner as 

they report other types of expenditures.

New § 110.14(i)(4), which explains 

what is meant by the term “direct mail,” 

follows new § 110.14(f)(4).

Section 110.14(j) Affiliation o f a

delegate committee with a Presidential

candidate’s authorized committee.

The Commission has added new 

§ 110.14(j) to provide guidance as to 

when a delegate committee will be 

considered affiliated with the authorized 

committee of the Presidential candidate 

it supports. Paragraph (j)(l) states that 

these two committees are affiliated if 

they are established, financed, 

maintained or controlled by the same 

person, such as the Presidential 

candidate, or the same group of persons. 

Paragraph (f)(2) sets forth a list of 

factors that the Commission may 

consider in making affiliation 

determinations. These provisions 

implement the statutory requirement 

that, for purposes of the contribution 

limitations, all political committees 

established, financed, maintained or 

controlled by the same person or group 

of persons be treated as a single 

political committee. 2 U.S.C. 441a(a)(5).

The Notice of Proposed Rulemaking 

indicated that questions arose during 

the 1984 Presidential election cycle 

concerning possible affiliation between 

delegate committees and a Presidential 

candidate’s authorized committee. See

Matters Under Review 1667 and 1704 

(1984). Specifically, the Notice sought 

comment as to when the relationship 

between two such committees is 

sufficiently close that they must be 

treated as affiliated under the Act. The 

Commission also posed the question as 

to what circumstances should cause the 

committees to be considered affiliated 

p erse, and what circumstances should

raise a presumption of affiliation. 

Comments were also requested as to the 

types of interactions that demonstrate 

common establishment, financing, 

maintenance or control.

One comment was received on these 

issues. The commenter took the position 

that delegate committees and 

Presidential campaign committees 

should be affiliated p er se if any 

delegate associated with the delegate 

committee is formally authorized by the 

Presidential candidate or runs on the 

ballot as committed to that candidate. 

The commenting organization advocated 

a case-by-case approach for delegate 

committees consisting solely of 

uncommitted delegates, and submitted a 

list of proposed factors that it felt are 

particularly significant in this regard.

The commenter urged the Commission 

to adopt this approach to prevent 

circumvention of the contribution and 

expenditure limits.

The Commission has evaluated the 

affiliation issues in light of the public 

comment and the Commission’s 

previous advisory opinions and 

compliance matters, particularly MURs 

1667 and 1704, and has decided that a 

p er se rule would not be advisable. 

Although a p erse approach would 

eliminate the need for extensive and 

intrusive investigations, one problem is 

that it would not give the Commission 

sufficient flexibility to examine these 

situations on a case-by-case basis. 

Nevertheless, Presidential campaigns 

and prospective delegates need 

guidance as to whether specific actions 

will jeopardize their nonaffiliated status. 

Accordingly, the Commission is 

including in the new rules a set of 

indicia of affiliation to be applied in 

examining the relationship between 

delegate committees and Presidential 

campaign committees.

The indicia focus on several pertinent 

factors that the Commission has 

considered in other situations involving 

delegate committees. These include: 

Common or overlapping staff; direct and 

indirect financing of the delegate 

committee; providing other goods or 

services, including a mailing list; and 

directing or organizing the specific 

campaign activities to be undertaken by 

the delegate committee. In general, the 

presence of any particular factor or 

factors will not automatically result in a 

finding of affiliation. However, the 

presence of these factors and the extent 

to which the committees engage in such 

activities may be considered by the 

Commission in making its determination 

and can increase the likelihood that the 

committees will be deemed affiliated.

There are several consequences 

resulting from a finding of affiliation

between a delegate committee and a 

Presidential campaign committee. First, 

the two affiliated committees share a 

single contribution limit with regard to 

all contributions they make or receive. 

This means that individual contributions 

to the delegate committee must be 

aggregated with any contributions made 

by those individuals to the candidate’s 

campaign committee for that election. 

Such aggregation serves to further the 

goal of minimizing “the adverse impact 

on the statutory scheme caused by 

political committees that appear to be 

separate entities pursuing their own 

ends, but are actually a means for 

advancing a candidate’s campaign.”

H.R. Rep. No. 94-1057, 94th Cong., 2d 

Sess. 57-58 (1976). It is also supported 

by the statutory requirement that “all 

contributions made by a person, either 

directly or indirectly, on behalf of a 

particular candidate . . . shall be treated 

as contributions from such person to 

such candidate.” 2 U.S.C. 441a(a)(8).

Another consequence of affiliation is 

that there is no limit on the amount of 

funds that may be transferred between 

the two affiliated committees. 11 CFR 

102.6(a). The amount transferred from a 

Presidential candidate’s authorized 

committee to an affiliated delegate 

committee is not treated as a 

contribution to that delegate committee 

or as an expenditure by the Presidential 

committee.1 Consequently, the transfer, 

itself, is not subject to the contribution 

limits set forth in § 110.1 and § 110.2, 

and does not trigger the expenditure 

limits of § 110.8. However, all of the 

delegate committee’s expenditures, 

including expenditures made from the 

funds transferred, automatically count 

against the Presidential candidate’s 

spending limits, as a result of affiliation.

Finally, it is impossible for a delegate 

committee affiliated with a Presidential 

campaign committee to make 

independent expenditures on behalf of 

the Presidential candidate.

Section 110.14(h) Affiliation between

delegate committees.

New § 110.14(k} has been added to the 

delegate regulations to address 

affiliation between different delegate 

committees. It states that the criteria for 

affiliation set out at 11 CFR 100.5(g) will 

be applied to determine whether 

delegate committees are affiliated with 

each other. Under § 100.5(g)(2), delegate 

committees are affiliated if they are

1 The disbursement should be reported as a 

transfer to an affiliated committee and not as a 

contribution or expenditure. The recipient 

committee should also report receipt of the transfer. 

See 11 CFR 104.3(a)(Z){v).
35534 Federal Register / Vol. 52, No. 183 / Tuesday, Septem ber 22, 1987 / Rules and Regulations

established, financed, maintained or 

controlled by thé same corporation, 

labor organization, person or group of 

persons, including any parent, 

subsidiary, branch, division, department 

or local unit thereof. The indicia of 

affiliation set out at §100.5(g)(2)(ii) will 

be used to ascertain whether the 

delegate committees are commonly 

established, financed, maintained or 

controlled.

If the Commission finds that two or 

more delegate committees are affiliated, 

the committees will share a single 

contribution limit for all contributions 

made or received. This means that they 

must aggregate contributions received 

from the same contributor. In addition, 

the affiliated delegate committees must 

aggregate the contributions they make to 

the same candidate or political 

committee, including any expenditures 

that qualify as in-kind contributions to 

such candidate. Finally, affiliated 

delegate committees must file separate 

financial disclosure reports under Part 

104, and must list affiliated committees 

on their statements of organization. See

11 CFR 102.2.

Conforming Amendments

In addition to the foregoing revisions 

to 11 CFR 110.14, several additional 

amendments have been made to other 

sections of the Commission’s regulations 

for clarification and to make those 

sections consistent with the new 

language of 11 CFR 110.14. The revisions 

are located in 11 CFR 100.5(e), 110.1 and

110.2. The Commission received no 

public comments on these changes.

Section 100.5 Political committee.

The definition of “delegate 

committee” in § 100.5(e)(5) has been 

revised to follow the definition in new 

§ 110.14(b)(2).

Section 110.1 Contributions by persons

other than multicandidate political

committees.

New paragraph (m) has been added to 

§ 110.1 to provide that the contribution 

limits set forth in that section do not 

apply to contributions made to an 

individual delegate, but are applicable 

to contributions given to a delegate 

committee. The new language is 

consistent with current § 110.14 (c) and

(e) and new § 110.14 (d)(1) and (g)(1), 

and does not represent a substantive 

change in this area.

Section 110.2 Contributions by

multicandidate political committees.

There are no substantive changes in 

this section. However, new paragraph (j) 

has been added to state that the § .110.2. 

limits on contributions by

multicandidate committees do not apply 

to funds given to an individual delegate, 

but are applicable to contributions made 

to a delegate committee. This provision 

follows new § 110.1{m) and is consistent 

with both current and new § 110.14.

List of Subjects

11 CFR Part 100

Campaign funds, Elections.

11 CFR Part 110

Campaign funds, Elections, Political 

candidates, Political committees and 

parties.

For the reasons set out in the 

preamble, Subchapter A, Chapter I of 

Title 11, Code of Federal Regulations is 

amended as follows:

PART 100—SCOPE AND DEFINITIONS

(2 U.S.C. 431)

1. The authority citation for Part 100 

continues to read as follows:

Authority: 2 U.S.G. 431, 438(a)(8).

2.11 CFR Part 100 is amended by 

revising § 100.5(e)(5) to read as follows:

§ 100.5 Political committee (2 U.S.C. 431

(4), (5), (6)).

■k It * * #

(e) * * *

(5) Delegate committee. A delegate 

committee is a group of persons that 

receives contributions or makes 

expenditures for the sole purpose of 

influencing the selection of one or more 

delegates to a national nominating 

convention. The term "delegate 

committee” includes a group of 

delegates, a group of individuals seeking 

selection as delegates and a group of 

individuals supporting delegates. A 

delegate committee that qualifies as a 

political committee under 11 CFR 100.5 

must register with the Commission 

pursuant to 11 CFR Part 102 and report 

its receipts and disbursements in 

accordance with 11 CFR Part 104. (See 

definition of “delegate” at 11 CFR 

110.14(b)(1).)

*****

PART 110—CONTRIBUTION AND

EXPENDITURE LIMITATIONS AND

PROHIBITIONS

3. The authority citation for Part 110 

continues to read as follows:

Authority: 2 U.S.C. 431(8), 431(9), 432(c)(2), 

437d(a)(8), 438(a)(8), 441a, 441b, 441d, 441e, 

441f, 441g, 44lh, and 441i.

4. Section 110.1 is amended by adding ; 

paragraph (m) to read as follows:

§110.1 Contributions by persons other

than multicandidate political committees (2

U.S.C. 441a(a)(1)).

★ * ★ * *

(m) Contributions to delegates and

delegate committees. (1) Contributions 

to delegates for the purpose of furthering 

their selection under 11 CFR 110.14 are 

not subject to the limitations of this 

section.

(2) Contributions to delegate 

committees under 11 CFR 110.14 are 

subject to the limitations of this section.

5. Section 110.2 is amended by adding 

paragraph (j) to read as follows:

§ 110.2 Contributions by multicandidate

political committees (2 U.S.C. 441a(a)(2)).

★ ★ h h ★

(j) Contributions to delegates and

delegate committees. (1) Contributions 

to delegates for the purpose of furthering 

their selection under 11 CFR 110.14 are 

not subject to the limitations of this 

section.

(2) Contributions to delegate 

committees under 11 CFR 110.14 are 

subject to the limitations of this section.

6. Section 110.14 is revised to read as 

follows:

§ 110.14 Contributions to and

expenditures by delegates and delegate

committees.

(a) Scope. This section sets forth the 

prohibitions, limitations and reporting 

requirements under the Act applicable 

to all levels of a delegate selection 

process.

(bj Definitions—(1) Delegate. Delegate 

means an individual who becomes or 

seeks to become a delegate, as defined : 

by State law or party rule, to a national , 

nominating convention or to a State, 

district, or local convention, caucus or 

primary that is held to select delegates 

to a national nominating convention.

(2) Delegate committee. A delegate 

committee is a group of persons that 

receives contributions or makes 

expenditures for the sole purpose of 

influencing the selection of one or more 

delegates to a national nominating 

convention. The term “delegate 

committee” includes a group of 

delegates, a group of individuals seeking 

selection as delegates and a group of 

individuals supporting delegates. A 

delegate committee that qualifies as a 

political committee under IT CFR 100.5 

must register with the Commission 

pursuant to 11 CFR Part 102 and report 

its receipts and disbursements in 

accordance with 11 CFR Part 104.

(c) Funds received and expended;

Prohibited funds. (1) Funds received or 

disbursements made for the purpose of 

furthering the selection of a delegate to
Federal Register / Vol. 52, No, 183 / Tuesday, Septem ber 22, 1987 / Rules and Regulations 35535

a national nominating convention are 

contributions or expenditures for the 

purpose of influencing a federal election, 

see 11 CFR 100.2 (c)(3) and (e), except 

that—

(i) Payments made by an individual to 

a State committee or subordinate State 

committee as a condition for ballot 

access as a delegate are not 

contributions or expenditures. Such 

payments are neither required to be 

reported under 11 CFR Part 104 nor 

subject to limitation under 11 CFR 110.1; 

and

(ii) Payments made by a State 

committee or subordinate State party 

committee for administrative expenses 

incurred in connection with sponsoring 

conventions or caucuses during which 

delegates to a national nominating 

convention are selected are not 

contributions or expenditures. Such 

payments are neither required to be 

reported under 11 CFR Part 104 nor 

subject to limitation under 11 CFR 110.1 

and 110.2.

(2) All funds received or 

disbursements made for the purpose of 

furthering the selection of a delegate to 

a national nominating convention, 

including payments made under 

paragraphs (c)(l)(i) and (c)(l)(ii) of this 

section, shall be made from funds 

permissible under the Act. See 11 CFR 

Parts 110,114 and 115.

(d) Contributions to a delegate. [ 1)

The limitations on contributions to 

candidates and political committees 

under 11 CFR 110.1 and 110.2 do not 

apply to contributions made to a 

delegate for the purpose of furthering his 

or her selection; however, such 

contributions do count against the 

limitation on contributions made by an 

individual in a calendar year under 11 

CFR 110.5.

(2) Contributions to a delegate made 

by the authorized committee of a 

presidential candidate count against the 

presidential candidate’s expenditure 

limitation under 11 CFR 110.8(a).

(3) A delegate is not required to report 

contributions received for the purpose of 

furthering his or her selection.

(e) Expenditures by delegate to

advocate oniv his or her selection. (1)

Expenditures by a delegate that

advocate only his or her selection are 

neither contributions to a candidate, 

subject to limitation under 11 CFR 1104; 

nor chargeable to the expenditure limits 

of any Presidential candidate under 11 

CFR 110.8(a). Such expenditures may 

include, but are not limited to: Payments 

for travel and subsistence during the 

delegate selection process, including the

national nominating convention, and

payments for any communications 

advocating only the delegate’s selection.

(2) A delegate is not required to report 

expenditures made to advocate only his 

or her selection.

(f) Expenditures by a delegate

referring to a candidate for public

office—(1) Volunteer activities that do

not use public political advertising, (i) 

Expenditures by a delegate to defray the 

costs of certain campaign materials 

(such as pins, bumper stickers, 

handbills, brochures, posters and yard 

signs) that advocate his or her selection 

and also include information on or 

reference to a candidate for the office of 

President or any other public office are 

neither contributions to the candidate 

referred to nor subject to limitation 

under 11 CFR 110.1 provided that:

(A) The materials are used in 

connection with volunteer activities; and

(B) The expenditures are not for costs 

incurred in the use of broadcasting, 

newspapers, magazines, billboards, 

direct mail or similar types of general 

public communication or political 

advertising.

(ii) Such expenditures are not 

chargeable to the expenditure limitation 

of a presidential candidate under 11 

CFR 110.8(a).

(iii) A delegate is not required to 

report expenditures made pursuant to 

this paragraph.

(2) Use o f public political advertising.

A delegate may make expenditures to 

defray costs incurred in the use of 

broadcasting, newspapers, magazines, 

billboards, direct mail or similar types of 

general public communication or 

political advertising to advocate his or 

her selection and also include 

information on or reference to a 

candidate for the office of President or 

any other public office.

(i) Such expenditures are in-kind 

contributions to a Federal candidate if 

they are made in cooperation, 

consultation or concert with, or at the 

request or suggestion of, the candidate, 

his or her authorized political 

committee(s), or their agents. See 11 

CFR 100.7(a)(iii)(A); 2 U.S.C.

441a(a)(7)(B).

(A) The portion of the expenditure 

allocable to a Federal candidate is 

subject to the contribution limitations of 

11 CFR 110.1.

(B) A Federal candidate’s authorized 

committee must report the portion of the 

expenditure allocable to the candidate 

as a contribution pursuant to 11 CFR 

Part 104.

(C) The portion of the expenditure 

allocable to a presidential candidate is 

chargeable to the presidential 

candidate s expenditure limitation under 

11 CFR 110.8(a).

(ii) Such expenditures are 

independent expenditures under 11 CFR

Part 109 if they are made for a 

communication expressly advocating 

the election or defeat of a clearly 

identified Federal Candidate that is not 

made with the cooperation or with the 

prior consent of, or in consultation with, 

or at the request or suggestion of, the 

candidate or any agent or authorized 

committee of such candidate.

(A) Such independent expenditures 

must be made in accordance with the 

requirements of 11 CFR Part 109.

■(B) The delegate shall report the 

portion of the expenditure allocable to 

the Federal candidatè as an independent 

expenditure in accordance with 11 CFR

109.2.

(3) Republication o f candidate

materials. Expenditures made to finance 

the dissemination, distribution or 

republication, in whole or in part, of any 

broadcast or materials prepared by a 

Federal candidate are in-kind 

contributions to the candidate.

(i) Such expenditures are subject to 

the contribution limits of 11 CFR 110.1.

(ii) The Federal candidate must report 

the expenditure as a contribution 

pursuant to 11 CFR Part 104.

(iii) Such expenditures are not 

chargeable to the presidential 

candidate’s expenditure limitation under 

11 CFR 110.8 unless they were made 

with the cooperation, or with the prior 

consent of, or in consultation with, or at 

the request or suggestion of, the 

candidate or any agent or authorized 

committee of such candidate.

(4) For purposes of this paragraph, 

“direct mail” means any mailing(s) by 

commercial vendors or any mailing(s) 

made from lists that were not developed 

by the delegate.

(g) Contributions made to and by a

delegate committee. (1) The limitations 

on contributions to political committees 

under 11 CFR 110.1 and 110.2 apply to 

contributions made to and by a delegate 

committee.

(2) Contributions to a delegate 

committee count against the limitation 

on contributions made by an individual 

in a calendar year under 11 CFR 110.5.

(3) A delegate committee shall report 

contributions it makes and receives 

pursuant to 11 CFR Part 104.

(h) Expenditures by a delegate

committee to advocate only the

selection o f one or more delegates. (1) 

Expenditures by a delegate committee 

that advocate only the selection of one 

or more delegates are neither 

contributions to a candidate, subject to 

limitation under 11 CFR 110.1 nor 

chargeable to the expenditure limits of 

any Presidential candidate under 11 CFR 

110.8(a). Such expenditures may include 

but are not limited to: Payments for
35536 Federal Register / Vol 52, No. 183 / Tuesday, September 22, 1987 / Rules and Regulations

travel and subsistence during the 

delegate selection process, including the 

national nominating convention, and 

payments for any communications 

advocating only the selection of one or 

more delegates,

(2) A delegate committee shall report 

expenditures made pursuant to this 

paragraph.

(1) Expenditures by a delegate

committee referring to a candidate for

public office—{1) Volunteer activities

that do not use public political

advertising, (i) Expenditures by a 

delegate committee to defray the costs 

of certain campaign materials (such as 

pins, bumper stickers, handbills, 

brochures, posters and yard signs) that 

advocate the selection of a delegate and 

also include information on or reference 

to a candidate for the office of President 

or any other public office are neither 

contributions to the candidate referred 

to, nor subject to limitation under 11 

CFR 110.1 provided that:

(A) The materials are used in 

connection with volunteer activities; and

(B) The expenditures are not for costs 

incurred m the use of broadcasting, 

newspapers, magazines, billboards, 

direct mail or similar types of general 

public communication or political 

advertising.

(ii) Such expenditures are not 

chargeable to the expenditure limitation 

of a presidential candidate under 11 

CFR 110.8(a).

(iii) A delegate committee shall report 

expenditures made pursuant to this 

paragraph.

(2) Use o f public political advertising.

A delegate committee may make 

expenditures to defray costs incurred in 

the use of broadcasting, newspapers, 

magazines, billboards, direct mail or 

similar types of general public 

communication or political advertising 

to advocate the selection of «ne or more 

delegates and also include information 

on or reference to a candidate for the 

office of President or any other public 

office. If such expenditures are in-kind 

contributions or independent 

expenditures under paragraphs (i) or (ii) 

below, the delegate committee shall 

allocate the portion of the expenditures 

relating to the delegated) and 

candidate(s) referred to in the 

communications between them and 

report the portion allocable to each.

(i) Such expenditures are in-kind 

contributions to a Federal candidate if 

they are made in cooperation, 

consultation or concert with or at the 

request or suggestion of the candidate, 

his or her authorized political 

committee(s), or their agents.

(A) The portion of the expenditure 

allocable to a Federal candidate is

subject to the contribution limitations of 

11 CFR 110.1. The delegate committee 

shall report the portion allocable to the 

Federal candidate as a contribution inkind.

(B) The Federal candidate’s 

authorized committee shall report the 

portion of the expenditure allocable to 

the candidate as a contribution pursuant 

to 11 CFR Part 104.

(C) The portion of the expenditure 

allocable to a presidential candidate is 

chargeable to the presidential 

candidate’s expenditure limitation under 

11 CFR 110.8(a).

(ii) Such expenditures are 

independent expenditures under 11 CFR 

Part 109 if they are made for a 

communication expressly advocating 

the election or defeat of a clearly 

identified Federal candidate that is not 

made with the cooperation or with the 

prior consent of, or in consultation with, 

or at the request or suggestion of, the 

candidate or any agent or authorized 

committee of such candidate.

(A) Such independent expenditures 

must be made in accordance with the 

requirements of 11 CFR Part 109.

(B) The delegate committee shall 

report the portion of the expenditure 

allocable to the Federal candidate as an 

independent expenditure in accordance 

with 11 CFR 109.2.

(3 ) Republication o f candidate

materials. Expenditures made to finance 

the dissemination, distribution or 

republication, in whole or in part, of any 

broadcast or materials prepared by a 

Federal candidate are in-kind 

contributions to the candidate.

(i) Such expenditures are subject to 

the contribution limitations of 11 CFR 

110.1. The delegate committee shall 

report the expenditure as a contribution 

in-kind.

(ii) The Federal candidate’s 

authorized committee shall report the 

expenditure as a contribution pursuant 

to 11 CFR Part 104.

(iii) Such expenditures are not 

chargeable to the presidential 

candidate's expenditure limitation under 

11 CFR 110.8 unless they were made 

with the cooperation or with the prior 

consent of, or in consultation with, or at 

the request or suggestion of, the 

candidate or any agent or authorized 

committee of such candidate.

(4) For purposes of this paragraph, 

"direct mail’’ means any mailing(s) by 

commercial vendors or any mailing(s) 

made from lists that were not developed 

by the delegate committee or any 

participating delegate.

(j) Affiliation o f delegate committees

with a Presidential candidate’s

authorized committee. (1) For purposes 

of the contribution limits of 11 CFR 110.1

and 110.2, a delegate committee shall be 

considered to be affiliated with a 

Presidential candidate’s authorized 

committee if both such committees are 

established, financed, maintained or 

controlled by the same person, such as 

the Presidential candidate, or the same 

group of persons.

(2) Factors the Commission may 

consider in determining whether a 

delegate committee is affiliated under 

paragraph (j)(l) of this section with a 

Presidential candidate’s authorized 

committee may include, but are not 

limited to:

(I) Whether the Presidential candidate 

or any other person associated with the 

Presidential authorized committee 

played a significant role in the formation 

of the delegate committee;

(ii) Whether any delegate associated 

with a delegate committee is or has been 

a staff member of the Presidential 

authorized committee;

(iii) Whether the committees have 

common or overlapping officers or 

employees;

(iv) Whether the Presidential 

authorized committee provides funds or 

goods in a significant amount or on an 

ongoing basis to the delegate committee, 

such as through direct or indirect 

payments for administrative, 

fundraising, or other costs, but not 

including the transfer to a committee of 

its allocated share of proceeds jointly 

raised pursuant to 11 CFR 102.17 or 

9034.8;

(v) Whether the Presidential 

candidate or any other person 

associated with the Presidential 

authorized committee suggested, 

recommended or arranged for 

contributions to be made to the delegate 

committee;

(vi) Similar patterns of contributions 

received by the committees;

(vii) Whether one committee provides 

a mailing list to the other committee;

(viii) Whether the Presidential 

authorized committee or any person 

associated with that committee provides 

ongoing administrative support to the 

other committee;

(ix) Whether the Presidential 

authorized committee or any person 

associated with that committee directs 

or organizes the specific campaign 

activities of the delegate committee; and

(x) Whether the Presidential 

authorized committee or any person 

associated with that committee files 

statements or reports on behalf of the 

delegate committee.

(k) Affiliation between delegate

committees. Delegate committees will 

be considered to be affiliated with each
35537 Federal Register / Vol 52, No. 183 / Tuesday, September 22, 1987 / Rules and Regulations

other if they meet the criteria for 

affiliation set forth at 11 CFR 100.5(g). 

Scott E. Thomas,

Chairman, Federal Election Commission.

Dated: September 17,1987.

[FR Doc. 87-21788 Filed 9-21-87; 8:45 am] 

BILLING CODE 6715-01-M

FEDERAL RESERVE SYSTEM

12 CFR Part 202

[R eg. B; D ocket No. R -0 5 8 0 ]

Equal Credit Opportunity;

Determination of Effect of State Laws

(Wisconsin)

a g e n c y : Board of Governors of the 

Federal Reserve System. 

a c t io n : Preemption determination.

s u m m a r y : The Board is publishing in 

final form a determination as to whether 

certain provisions in the Family Code of 

Wisconsin are inconsistent with the 

Equal Credit Opportunity Act (ECOA) or 

Regulation B and therefore preempted. 

The Board has made a determination 

not to preempt any of the provisions in 

question.

EFFECTIVE DATE: November 1,1987.

FOR FURTHER INFORMATION CONTACT*.

Kathleen S. Brueger, Attorney, Division 

of Consumer and Community Affairs, at 

(202) 452-2412 (for TDD users only, 

Earnestine Hill or Dorothea Thompson, 

Telecommunications Device for the 

Deaf, at (202) 452-3544), Board of 

Governors of the Federal Reserve 

System, Washington, DC 20551.

SUPPLEMENTARY INFORMATION:

(1) General.

Section 705(f) of the ECOA authorizes 

the Board to determine whether an 

inconsistency exists between a 

provision of the act and a state law 

relating to credit discrimination. If, in 

addition to being inconsistent, a state 

law provides no greater protection for 

credit applicants than does the federal 

law, the state law is preempted to the 

extent of the inconsistency, and 

creditors in that state may not follow the 

inconsistent state requirement. In 

addition, section 705(b) of the ECOA 

provides that consideration or 

application of state property laws 

directly or indirectly affecting 

creditworthiness do not constitute 

discrimination under the act.

This determination regarding 

Wisconsin law is issued under authority 

delegated to the Director of the Division 

of Consumer and Community Affairs, as 

set forth in the Board's Rules Regarding

Delegation of Authority (12 CFR Part 

265).

(2) Discussion o f Wisconsin law and

final determination.

The Board examined Wisconsin 

Statutes §§ 766.56(3)(b), 766.565(5), and 

766.56(2)(d) to determine whether 

requirements imposed by these sections 

are inconsistent with the ECOA or the 

Board’s Regulation B, which implements 

the act. On October 6,1986, the Board 

published a preliminary determination 

(51 FR 35521). In that notice, the Board 

proposed to preempt a portion of 

§ 766.565(5), specifically, the 

requirement that creditors terminate 

certain accounts in response to a 

unilateral request to do so from a 

nonapplicant spouse. The Board 

proposed not to preempt § § 766.56(3)(b) 

or 766.56(2)(d), dealing with marital 

status and other inquiries, as no 

inconsistency was found between these 

sections and the federal law. Ten 

comments were received in response to 

the proposed determination.

After analysis and review, the Board 

has determined that Wisconsin may 

properly be viewed as a community 

property state for Regulation B 

purposes. This determination takes into 

account the presumption (established by 

the Wisconsin statute) that all property 

acquired and all debts incurred during 

the marriage are community debts, as 

well as the stated legislative intent that 

marital property is a form of community 

property. Therefore, the marital status 

inquiries allowed under § 766.56(2)(d) 

and the inquiry as to marital status and 

name and address of the spouse 

required under § 766.56(3)(b) are not in 

conflict with the federal act or 

regulation. In a community property 

state it is permissible for creditors to 

obtain information about the 

nonapplicant spouse under 

§ 202.5(c)(2)(iv) of Regulation B, and to 

ask about marital status under 

§ 202.5(d)(1).

The Board also considered whether 

the language of § 766.56(2)(d) to the 

effect that a creditor may inquire 

whether the applicant is “married, 

unmarried or separated, under a decree 

of legal separation,” is inconsistent with 

the federal law. At issue is the use of the 

words “under a decree of legal 

separation,” since the federal law 

prescribes that only the terms 

“married,” “unmarried,” and 

“separated” are to be used in any 

inquiry into marital status. The Board 

has concluded that the language in 

§ 766.56(2)(d) is not mandatory and only 

clarifies the nature of the permissible 

inquiry. Under §§ 202.5(d) and 202.2(u) 

of Regulation B, creditors may explain to 

applicants the state law meaning of the

terms “married,” “unmarried,” or 

“separated.” Thus, no conflict exists 

between § 766.56(2)(d) of the Wisconsin 

law and § 202.5(d)(1) of Regulation B.

Finally, the Board considered an 

inconsistency between § 766.565(5) of 

the Wisconsin law and § 202.7(a) of 

Regulation B. Section 202.7(a) prohibits 

creditors from refusing to grant an 

individual account to a creditworthy 

applicant on the basis of marital status. 

Under § 766.565(5), a nonapplicant 

spouse is able unilaterally to terminate 

an account, leaving the applicant (who 

already has been found creditworthy) 

unable to maintain an open-end account 

with that creditor. The applicant may 

also be precluded from obtaining an 

account in the future from that creditor, 

since the creditor may consider a prior 

termination by the spouse in the 

evaluation process and may refuse on 

that basis to open a new account for the 

applicant.

While a clear inconsistency exists 

between the state law and the federal, 

the Board has made a determination not 

to preempt the state law. This 

determination is based on § 705(b) of the 

ECOA and implementing § 202.6(c) of 

Regulation B, which allow creditors to 

take into account state property laws 

that directly or indirectly affect 

creditworthiness. Although the Board 

believes that a strong legal argument 

can be made that § 766.565(5) primarily 

governs the extension of credit and the 

relationship between the creditor and 

the nonapplicant spouse, the Board has 

concluded after lengthy analysis that an 

equally valid basis exists for finding 

that § 766.565(5) governs the exercise of 

a property right since it establishes a 

nonapplicant spouse's authority over 

marital property in which he or she has 

or will have an ownership interest. For 

example, the right to terminate an openend account, created by § 766.565(5), 

provides a mechanism by which the 

nonapplicant spouse can limit the 

availability of his or her interest in 

marital property for debts incurred 

under the open-end credit plan granted 

to the applicant spouse. Consequently, 

the Board has determined that 

§ 766.565(5) is entitled to deference 

under § 705(b) of the ECOA and 

§ 202.6(c) of Regulation B, and is not 

preempted by the act or the regulation.

List of Subjects in 12 CFR Part 202

Banks, Banking, Civil rights,

Consumer protection, Credit, Federal 

Reserve System, Marital status 

discrimination, Minority groups,

Penalties, Sex discrimination, Women.