[Federal Register Volume 65, Number 217 (Wednesday, November 8, 2000)]
[Proposed Rules]
[Pages 66936-66938]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-28601]


=======================================================================
-----------------------------------------------------------------------

FEDERAL ELECTION COMMISSION

11 CFR Parts 100, 102 and 104

[Notice 2000-19]


Rulemaking Petition: Reporting by Political Action Committees 
Notice of Disposition

AGENCY: Federal Election Commission.

ACTION: Notice of Disposition of Petition for Rulemaking.

-----------------------------------------------------------------------

SUMMARY: The Commission announces its disposition of a Petition for 
Rulemaking filed on September 20, 1999 by the Project on Government 
Oversight (``POGO''). The Petition urged the Commission to revise 
various rules concerning reports filed by political action committees 
(``PACs''). The Commission has decided not to initiate a rulemaking in 
response to the Petition at this time. The Petition is available for 
inspection in the Commission's Public Records Office, through its 
FAXLINE service, and on its website, www.FEC.gov.

DATES: November 2, 2000.

FOR FURTHER INFORMATION CONTACT: Ms. Rosemary C. Smith, Assistant 
General Counsel, or Ms. Mai T. Dinh, Attorney, 999 E Street, NW., 
Washington, DC 20463, (202) 694-1650 or (800) 424-9530.

SUPPLEMENTARY INFORMATION: On September 20, 1999, the Commission 
received a Petition for Rulemaking from POGO. The Petition urged the 
Commission to take six actions with regard to reports filed by PACs by 
revising various sections in 11 CFR parts 100, 102, and 104.
    The Commission published a Notice of Availability (``NOA'') on the 
Petition on October 13, 1999, 64 FR 55440. The NOA stated that several 
of the recommended actions address Commission internal procedures that 
are not properly the subject of rulemaking. Therefore, the Commission 
sought comments only on the four suggested actions that can be 
addressed through rulemaking.
    The Commission received twenty-one timely comments and four late 
comments in response to the NOA from twenty-four commenters. Detailed 
comments were submitted by Congresswoman Carolyn B. Maloney; Democracy 
Advocate, U.S. Public Interest Research Group; Money and Politics Iowa; 
Institute for Social Justice; University of Maryland Department of 
Government and Politics; Michigan Citizen Action; Ohio Citizen Action; 
Common Cause; Center for Responsive Government; University of Akron's 
Ray C. Bliss Institute of Applied Politics; and Project on Government 
Oversight. In addition to these comments, the Commission received 
comments expressing general support for the Petition from two 
individuals and substantially similar comments from eleven commenters 
including Colby College, Illinois Legislative Studies Center Sunshine 
Project, and Government Accountability Project. On November 2, 2000, 
the Commission voted to decline to open a new rulemaking in response to 
the Petition at this time for reasons stated below.

[[Page 66937]]

A. Issues on Which Comments Were Sought in the NOA

    In the NOA, the Commission identified four recommendations in the 
Petition that were appropriate for rulemaking and sought comments on 
these recommendations. The issues on which comments are sought include 
(1) revising 11 CFR 100.6 to require PACs to list, as an affiliated 
organization on their Statement of Organization, any soft money account 
to which they forward checks; (2) revising 11 CFR 102.9(a)(3) to 
require candidates who receive PAC contributions to maintain records 
that list each PAC's full name and Commission identification number, 
and revising 11 CFR 100.12 to require them to include this information 
on their FEC reports; (3) revising 11 CFR 104.8(d)(4) to require PACs 
to notify the Commission within ten days of receiving a returned 
contribution; and (4) revising 104.13(a)(2) to require PACs to notify 
candidates within ten days of any in-kind contribution.
    All of the commenters expressed support for the Petition and 
encouraged the Commission to adopt all six of POGO's recommendations 
through rulemaking. The commenters who submitted the substantially 
similar comments stated that the Commission should initiate a new 
rulemaking project to correct problems with reporting by PACs because 
``proper disclosure is at the core of what the Commission should be 
doing, making these reforms vital to the continued integrity of the 
FEC.'' Other commenters characterized the recommendations as ``common-
sense,'' ``simple bookkeeping procedures,'' ``minor,'' or 
``technical'', that would improve the Commission's operations and the 
reporting and disclosure procedures resulting in more accurate 
information. Three commenters also supported these recommendations 
because they would make campaign finance information more 
understandable to the public. Three commenters made detailed comments 
on one specific recommendation. Their comments are discussed below.

1. Soft Money Accounts

    The Petition suggested that the Commission amend section 100.6 to 
require ``federal PACs [to] list as an affiliated organization on their 
statement of organization or amendment thereto, any soft money 
account(s) to which it forwards checks.'' The Commission has concluded 
that it would be more appropriate to address this issue, if at all, in 
the context of the soft money rulemaking project rather than in a 
separate rulemaking project.

2. Eliminate Irregular PAC Names

    The Petition recommended that the FEC require PACs and political 
committees to use the PACs' full names and PAC FEC identification 
numbers when making, receiving, or reporting PAC contributions. POGO 
pointed to the FEC's PACRONYMS publication, a guide to PAC names, as 
illustrative of the need for use of uniform names. The Petition 
suggested that amendments to sections 102.9(a)(3), 102.10, and 100.12 
would achieve this result. The Commission has amended its forms and 
electronic filing software to allow all political committees to include 
the names and FEC identification numbers of political committees on 
Schedule A on a voluntary basis.

3. Candidates Report Returned Contributions

    The Petition urged the Commission to amend section 104.8(d)(4) to 
require PACs to notify the Commission of a returned contribution within 
ten days of the PAC's receipt of the returned contribution. Three 
commenters included comments specific to this recommendation. They 
expressed concerns about the impact of the lack of such notice on 
candidates who refuse to accept PAC contributions. The commenters 
argued that these candidates may be unfairly challenged by the press or 
the public on their assertions that they do not accept PAC 
contributions if a PAC reports making a contribution but does not 
report in a more timely manner that the contribution was returned.
    Generally, the Federal Election Campaign Act (``FECA'') requires 
unauthorized committees to file their reports to the Commission on a 
monthly basis, or on a quarterly basis during an election year, and on 
a semi-annual basis during a non-election year. See 2 U.S.C. 434(a)(4), 
11 CFR 104.5(c). Nothing in the FECA requires unauthorized committees 
to report returned contributions within ten days of receipt. Therefore, 
an amendment to the FECA would be necessary before the Commission could 
amend its rules to require reporting returned contributions within ten 
days.

4. Notify Candidates of All ``In-Kind'' Contributions

    The Petition suggested that the Commission amend section 
104.13(a)(2) to require PACs to notify candidates of all ``in-kind'' 
services provided to the candidate within ten days of providing the 
services. Nothing in the FECA requires unauthorized committees to 
notify candidates when they make in-kind contributions. Consequently, a 
statutory amendment would be needed before the Commission could impose 
a new ten day reporting requirement on unauthorized committees.

B. Issues Not Appropriate for Rulemaking

    The Petition also contains three recommendations that the 
Commission concluded could not be implemented through rulemaking.\1\ 
See NOA, 64 FR 55440 (October 13, 1999). Further discussion of these 
recommendations follows below.
---------------------------------------------------------------------------

    \1\ The Petition's first recommendation actually contained two 
separate recommendations--first, to compare PAC disbursements with 
candidate receipts and second, to require PACs to list soft money 
accounts as affiliated organizations. The second recommendation was 
included among the list of recommendations on which the Commission 
sought comments in the NOA.
---------------------------------------------------------------------------

1. Compare PAC Disbursements With Candidate Receipts

    The Petition recommended that the FEC compare PAC disbursements 
with candidate receipts and adopt procedural steps to trigger Requests 
for Additional Information (``RFAI'') if there are discrepancies above 
a certain dollar amount. While the Commission recognizes the POGO's 
concerns, this recommendation goes to internal procedures and is not an 
appropriate subject for rulemaking.

2. Group FEC Data by Two and Six-year Campaign Cycles

    The Petition recommended that the FEC's system in the Public Record 
Office and on the Internet allow users to list contributions by 
individuals and PACs on an election-cycle basis. The recent amendment 
to FECA contained in the Treasury and General Government Appropriations 
Act, 2000, Public Law 106-58, 106th Cong., Section 640, 113 Stat. 430 
(1999), mandating election-cycle reporting provided the authorization 
for the Commission to amend its regulations to implement election-cycle 
reporting. The Commission has published final rules at 11 CFR part 104, 
65 FR 42619 (July 11, 2000), and has revised its forms to implement 
election-cycle reporting for authorized committees. See id. at 42620-
42623 (Explanation and Justification of the final rules for Election 
Cycle Reporting by Authorized Committees). It is also in the process of 
converting to election-cycle reporting, which should allow retrieval of 
information on an election-cycle basis.

3. Eliminate Duplicate Entries

    POGO stated that its report highlighted the problem of duplicate

[[Page 66938]]

entries in the Commission's databases. To address this problem, the 
Petition suggested that the Commission's systems identify transactions 
that appear to be duplicates and that the Reports Analysis Division 
send out request for additional information notices to clarify the 
duplication. As stated above, the Commission's internal procedures, 
including RFAI notices, are not an appropriate subject for rulemaking. 
However, the Commission notes that the upcoming expansion of its 
electronic filing program may eliminate many duplicate entries.

C. Additional Issues Not Included in the Petition

    Two commenters included three additional suggestions in their 
comments on the Petition. They are: (1) Implement better enforcement 
tools such as random audits, the publication of a list of committees 
who file incomplete reports, and a schedule of fees for non-compliance; 
(2) require electronic filing for all committees; and (3) require 
Senate candidates to file reports directly with the FEC. One of these 
commenters also added another recommendation requiring multi-candidate 
entities to issue separate checks to each separate recipient. Because 
these suggestions are beyond the scope of the Petition for Rulemaking, 
the Commission will not initiate a new rulemaking project in response 
to these additional recommendations. In addition, some of the 
suggestions, such as random audits, are beyond the Commission's 
statutory authority.
    However, the Commission has implemented or is about to implement 
new programs and procedures since the publication of the NOA that 
address several of these issues. The new Administrative Fines program, 
65 FR 31787 (May 19, 2000) ( to be codified at 11 CFR part 111, subpart 
B), that went into effect in July, 2000, will assess civil money 
penalties in accordance with the schedules of penalties on political 
committees who fail to file their reports in a timely manner. The 
Commission will also require political committees whose annual 
contributions or expenditures exceed or are expected to exceed $50,000 
to file their reports electronically beginning in January, 2001. 65 FR 
38415 (June 21, 2000) (to be codified at 11 CFR 104.18). However, 
electronic filing cannot be extended to all political committees absent 
further amendments to the FECA. A legislative change would also be 
needed for senatorial candidates to file directly with the FEC. 
However, the Secretary of the Senate has automated the transfer of 
information from the Senate Public Records' Office to the FEC and the 
information can be viewed in electronic form on the Commission's 
website at www.FEC.gov.
    While the Commission has decided not to initiate a new rulemaking 
in response to this petition, changes the Commission is making to its 
operations, computer systems, forms, and regulations, as described 
above, will further POGO's goal of enhancing timely and accurate 
dissemination of campaign finance information to the public. 
Accordingly, no further action on the Petition for Rulemaking will be 
taken at this time. See 11 CFR 200.4.

    Dated: November 2, 2000.
Darryl R. Wold,
Chairman, Federal Election Commission.
[FR Doc. 00-28601 Filed 11-7-00; 8:45 am]
BILLING CODE 6715-01-P