This section of the FEDERAL REGISTER

contains regulatory documents having general

applicability and legal effect, most of which

are keyed to and codified in the Code of

Federal Regulations, which is published under

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

The Code of Federal Regulations is sold by

the Superintendent of Documents. Prices of

new books are listed in the first FEDERAL

REGISTER issue of each week.

Rules and Regulations Federal Register

69631 

Vol. 70, No. 221 

Thursday, November 17, 2005 

1 In addition to political party committees, these 

regulations are equally applicable to State, district, 

and local party organizations that do not qualify as 

political committees. See 11 CFR 300.33(a)(1) and 

(2). 

2There are four types of FEA: Type 1—Voter 

registration activity during the period that begins on 

the date that is 120 days before a regularly 

scheduled Federal election is held and ends on the 

date of the election; Type 2—Voter identification, 

get-out-the-vote activity, or generic campaign 

activity conducted in connection with an election 

in which a candidate for Federal office appears on 

the ballot; Type 3—A public communication that 

promotes or supports, or attacks or opposes a 

clearly identified candidate for Federal office; and 

Type 4—Services provided during any month by an 

employee of a State, district, or local committee of 

a political party who spends more than 25 percent 

of his or her compensated time during that month 

on activities in connection with a Federal election. 

See 2 U.S.C. 431(20) and 11 CFR 100.24. 

3Levin funds are funds that are raised by State, 

district, or local party committees and organizations 

pursuant to the restrictions in 11 CFR 300.31 and 

disbursed subject to the restrictions in 11 CFR 

300.32. See 11 CFR 300.2(i). 

4All comments on the NPRM are available at 

http://www.fec.gov/law/ 

law_rulemakings.shtml#levin. 

5 ‘‘Federal funds’’ are funds that comply with the 

limits, prohibitions, and reporting requirements of 

the Act. See 11 CFR 300.2(g). 

FEDERAL ELECTION COMMISSION 

11 CFR Part 300 

[Notice 2005–26] 

$5,000 Exemption for Disbursements 

of Levin Funds by State, District, and 

Local Party Committees and 

Organizations 

AGENCY: Federal Election Commission. 

ACTION: Final rule. 

SUMMARY: The Federal Election 

Commission is eliminating from its 

regulations an exemption allowing 

State, district, and local committees and 

organizations of a political party to use 

only Levin funds to pay for certain types 

of Federal election activity aggregating 

$5,000 or less in a calendar year. In 

Shays v. FEC, the District Court 

invalidated the exemption and 

remanded the regulation to the 

Commission for further action 

consistent with the court’s opinion. The 

Commission appealed this ruling, and 

the Court of Appeals for the D.C. Circuit 

affirmed the District Court’s decision. 

The repeal of this rule means that State, 

district, and local political party 

committees and organizations must pay 

for these specific types of Federal 

election activity either entirely with 

Federal funds, or with a mix of Federal 

funds and Levin funds. Further 

information is provided in the 

supplementary information that follows. 

DATES: The rules at 11 CFR 300.32(c)(4) 

are effective on December 19, 2005. 

FOR FURTHER INFORMATION CONTACT: Mr. 

Brad C. Deutsch, Assistant General 

Counsel, or Ms. Cheryl A.F. Hemsley, 

Attorney, 999 E Street, NW., 

Washington, DC 20463, (202) 694–1650 

or (800) 424–9530. 

SUPPLEMENTARY INFORMATION: The 

Commission issued a Notice of 

Proposed Rulemaking (‘‘NPRM’’) 

proposing to eliminate from its 

regulations at 11 CFR 300.32(c)(4) an 

exemption that had allowed State, 

district, and local committees of a 

political party 1 to pay for certain types 

of Federal election activity (‘‘FEA’’) 2

aggregating $5,000 or less in a calendar 

year entirely with Levin funds 3

(‘‘$5,000 Exemption’’). The NPRM also 

requested comments on the possibility 

of creating a new, restructured 

exemption. The NPRM was published in 

the Federal Register on February 2, 

2005. 70 FR 5385 (February 2, 2005). 

The comment period closed on March 4, 

2005. The Commission received five 

comments from ten commenters on the 

proposed rules.4 Eight commenters 

favored elimination of the $5,000 

Exemption and one commenter favored 

maintaining the $5,000 Exemption. 

Additionally, the Commission received 

a comment 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 is issuing 

final rules eliminating the $5,000 

Exemption and is declining to adopt a 

restructured exemption. 

Under the Administrative Procedure 

Act, 5 U.S.C. 553(d), and the 

Congressional Review of Agency 

Rulemaking Act, 5 U.S.C. 801(a)(1), 

agencies must submit final rules to the 

Speaker of the House of Representatives 

and the President of the Senate and 

publish them in the Federal Register at 

least 30 calendar days before they take 

effect. The final rule that follows was 

transmitted to Congress on November 

10, 2005. 

Explanation and Justification 

11 CFR 300.32(c)—Conditions and 

Restrictions on Spending Levin Funds 

The Bipartisan Campaign Reform Act 

of 2002 (‘‘BCRA’’), Pub. L. 107–155, 116 

Stat. 81 (2002), amended the Federal 

Election Campaign Act of 1971 (the 

‘‘Act’’), 2 U.S.C. 431 et seq., in many 

respects. Section 441i(b)(1) of the Act, 

as added by BCRA, provides that State, 

district, and local political party 

committees generally must use Federal 

funds 5 to pay for FEA. However, the 

Levin Amendment (2 U.S.C. 441i(b)(2)) 

provides an exception for two types of 

FEA, for which State, district, and local 

political party committees may allocate 

disbursements between Federal funds 

and Levin funds in accordance with 

allocation ratios determined by the 

Commission. 2 U.S.C. 441i(b)(2); see 

also 11 CFR 300.2(i), 300.32, and 

300.33. Types 1 and 2 FEA, which 

involve certain voter registration, getout-the-vote, voter identification, and 

generic campaign activity, are allocable 

between Federal and Levin funds, so 

long as the activities do not refer to a 

clearly identified Federal candidate 

(‘‘allocable Type 1&2 FEA’’). See 2 

U.S.C. 441i(b)(2)(B)(i) and 11 CFR 

300.32(c). 

In 2002, the Commission promulgated 

regulations at 11 CFR Part 300 

implementing BCRA. See Final Rules 

and Explanation and Justification for 

Prohibited and Excessive Contributions; 

Non-Federal Funds or Soft Money, 67 

FR 49064 (July 29, 2002). Specifically, 

11 CFR 300.32(c)(4) required any State, 

district, or local committee or 

organization of a political party that 

disburses more than $5,000 for allocable 

Type 1&2 FEA in a calendar year either 

to pay for such allocable FEA entirely 

with Federal funds or to allocate the 

disbursements between Federal funds 

and Levin funds. The same provision 

also created a ‘‘de minimis exemption’’ 

for any State, district, or local party 

committee or organization whose 

disbursements for allocable Type 1&2 

FEA aggregate $5,000 or less in a 

69632 Federal Register / Vol. 70, No. 221 / Thursday, November 17, 2005 / Rules and Regulations 

calendar year, thereby permitting such 

party committees and organizations to 

pay for these expenses entirely with 

Levin funds. 

The $5,000 Exemption was one of 

several regulations at issue in Shays v. 

FEC, 337 F.Supp.2d 28 (D.D.C. 2004) 

(‘‘Shays District’’), aff’d, 414 F.3d 76 

(D.C. Cir. July 15, 2005) (‘‘Shays 

Appeal’’), reh’g en banc denied (October 

21, 2005) (No. 04–5352). The District 

Court in Shays District held that the 

$5,000 Exemption in 11 CFR 

300.32(c)(4) was inconsistent with 

Congress’s intent, as expressed in 

BCRA, to require State, district, and 

local party committees to pay for 

allocable Type 1&2 FEA either solely 

with Federal funds or with an allocated 

mix of Federal funds and Levin funds. 

Shays District at 114–17. 

The Commission appealed the District 

Court’s ruling regarding several of its 

regulations, including 11 CFR 

300.32(c)(4). On July 15, 2005, the Court 

of Appeals for the D.C. Circuit affirmed 

the District Court’s invalidation of the 

$5,000 Exemption. Shays Appeal at 115. 

In affirming the District Court’s 

invalidation of the $5,000 Exemption, 

the Court of Appeals concluded that the 

Commission had failed to establish that 

the $5,000 Exemption was ‘‘in fact de 

minimis.’’ Shays Appeal at 114. The 

Court of Appeals also concluded that 

because Congress had exercised its 

judgment in enacting the Levin 

Amendment, ‘‘Congress’s rationale for 

including activities in the Levin 

Amendment obviously affords no 

justification for excluding them from 

Levin allocation, the very form of 

regulation Congress chose.’’ Id. 

(emphasis in original). 

The NPRM proposed to eliminate 

entirely the $5,000 Exemption in 11 

CFR 300.32(c)(4). In response to the 

NPRM, eight commenters urged the 

Commission to eliminate the $5,000 

Exemption altogether. These 

commenters stated that BCRA was clear 

on its face and argued that the Levin 

Amendment itself reflected Congress’s 

narrowly-drawn exception allowing 

State, district, and local party 

committees to use only Federal funds or 

to allocate between Federal and Levin 

funds for allocable Type 1&2 FEA. Four 

of the commenters noted that the Levin 

Amendment was, itself, a compromise 

reached during Congressional 

deliberation. These commenters 

asserted that Congress had 

contemplated that Levin funds always 

would be used in combination with 

Federal funds for allocable Type 1&2 

FEA, recognizing that FEA activities 

influence Federal elections. 

On the other hand, one commenter 

favored retaining the $5,000 Exemption, 

stating that the exemption did not 

undermine Congressional intent. 

Specifically, this commenter asserted 

that absent the $5,000 Exemption, a 

strict application of the Levin 

Amendment would lead to suppression 

of ‘‘local grassroots activity in favor of 

non-party or large institutional party 

activity’’ and that this was ‘‘an unlikely 

objective’’ for Congress. 

1. Elimination of the Current $5,000 

Exemption. In light of the conclusions 

reached by the Court of Appeals in 

Shays Appeal, which precluded 

retaining the current rule, the 

Commission has decided to eliminate 

the $5,000 Exemption from paragraph 

(c)(4) of section 300.32. Thus, revised 

paragraph (c)(4) requires State, district, 

and local committees and organizations 

of political parties to pay for all 

allocable Type 1&2 FEA either entirely 

with Federal funds or with an allocated 

mix of Federal funds and Levin funds, 

without regard to the total amount of 

their annual disbursements. The 

wording of revised 11 CFR 300.32(c)(4) 

also includes a conforming revision that 

replaces the word ‘‘may’’ with ‘‘must’’

to reflect unambiguously that State, 

district, and local party committees and 

organizations must choose between 

paying for such expenditures either 

entirely with Federal funds or with an 

allocated mix of Federal funds and 

Levin funds. 

2. Rejection of a Restructured 

Exemption. As noted above, the NPRM 

also requested comments on a possible 

restructuring of the exemption in 

section 300.32(c)(4) to mirror the 

reporting exception contained in section 

434(e)(2)(A) of the Act, which exempts 

State, district, and local party 

committees from reporting FEA if they 

have combined receipts and 

disbursements for FEA (whether 

allocable or not) that together aggregate 

to less than $5,000 in a calendar year. 

Seven commenters addressed the 

restructuring proposal, all of them 

asserting that any restructured 

exemption would be contrary to 

Congressional intent. 

As discussed above, the Court of 

Appeals held that the careful balance 

already reflected in the Levin 

Amendment represents Congress’s 

exercise of its judgment, and effectively 

precludes the Commission from 

promulgating a further exemption 

unless such an exemption were ‘‘truly 

de minimis.’’ Shays Appeal at 114. In 

light of the comments received in this 

rulemaking and the decision of the 

Court of Appeals, the Commission has 

decided not to adopt the restructuring 

proposal contained in the NPRM. 

Certification of No Effect Pursuant to 5 

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

The Commission certifies that the 

attached final rule does not have a 

significant economic impact on a 

substantial number of small entities. 

The basis for this certification is that the 

organizations affected by this final rule 

are State, district, and local party 

committees and organizations, which 

are not ‘‘small entities’’ under 5 U.S.C. 

601. These not-for-profit committees do 

not meet the definition of ‘‘small 

organization,’’ which requires that the 

enterprise be independently owned and 

operated and not dominant in its field. 

5 U.S.C. 601(4). State political party 

committees are not independently 

owned and operated because they are 

not financed and controlled by a small 

identifiable group of individuals, and 

they are affiliated with the larger 

national political party organizations. In 

addition, the State political party 

committees representing the Democratic 

and Republican parties have a major 

controlling influence within the 

political arena of their State and are 

thus dominant in their field. District 

and local party committees are generally 

considered affiliated with the State 

committees and need not be considered 

separately. To the extent that any State 

party committees representing minor 

political parties might be considered 

‘‘small organizations,’’ the number 

affected by this final rule is not 

substantial. 

List of Subjects in 11 CFR Part 300 

Campaign funds, Nonprofit 

organizations, Political candidates, 

Political committees and parties, 

Reporting and recordkeeping 

requirements. 

■ For the reasons set out in the 

preamble, the Federal Election 

Commission is amending Subchapter C 

of Chapter I of Title 11 of the Code of 

Federal Regulations as follows: 

PART 300—NON-FEDERAL FUNDS 

■ 1. The authority citation for Part 300 

continues to read as follows: 

Authority: 2 U.S.C. 434(e), 438(a)(8), 

441a(a), 441i, 453. 

■ 2. Section 300.32 is amended by 

revising paragraph (c)(4) to read as 

follows: 

§ 300.32 Expenditures and disbursements. 

* * * * * 

(c) Conditions and restrictions on 

spending Levin funds. * * * 

Federal Register / Vol. 70, No. 221 / Thursday, November 17, 2005 / Rules and Regulations 69633 

1Pub. L. 108–458, 118 Stat. 3638, 3751–53 (Dec. 

17, 2004). 

2For purposes of section 10(k), the term 

‘‘depository institution’’ includes an uninsured 

branch or agency of a foreign bank, if the branch 

or agency is located in a state of the United States. 

See 12 U.S.C. 1820(k)(2)(A). The FDIC has made a 

minor technical change to the definition of 

‘‘depository institution’’ in its regulation to 

recognize that the term may include uninsured 

branches or agencies of foreign banks for these 

purposes. 

3For purposes of the post-employment restriction 

of section 10(k), the term ‘‘depository institution 

holding company’’ means a bank holding company 

or a savings and loan holding company, and also 

includes, among other things, a foreign bank that 

has a branch, agency, or commercial lending 

company subsidiary in the United States. 

(4) The disbursements for allocable 

Federal election activity must be paid 

for either entirely with Federal funds or 

by allocating between Federal funds and 

Levin funds according to 11 CFR 300.33. 

* * * * * 

Dated: November 10, 2005. 

Scott E. Thomas, 

Chairman, Federal Election Commission. 

[FR Doc. 05–22778 Filed 11–16–05; 8:45 am] 

BILLING CODE 6715–01–P 

DEPARTMENT OF THE TREASURY 

Office of the Comptroller of the 

Currency 

12 CFR Parts 4 and 19 

[Docket No. 05–19] 

RIN 1557–AC94 

FEDERAL RESERVE SYSTEM 

12 CFR Parts 263 and 264a 

[Docket No. R–1230] 

FEDERAL DEPOSIT INSURANCE 

CORPORATION 

12 CFR Parts 308 and 336 

RIN 3064–AC92 

DEPARTMENT OF THE TREASURY 

Office of Thrift Supervision 

12 CFR Parts 507 and 509 

[No. 2005–48] 

RIN 1550–AB99 

One-Year Post-Employment 

Restrictions for Senior Examiners 

AGENCIES: Office of the Comptroller of 

the Currency (OCC), Treasury; Board of 

Governors of the Federal Reserve 

System (Board); Federal Deposit 

Insurance Corporation (FDIC); and 

Office of Thrift Supervision (OTS), 

Treasury. 

ACTION: Final rule. 

SUMMARY: The OCC, Board, FDIC and 

OTS (the Agencies) have jointly adopted 

final rules to implement section 6303(b) 

of the Intelligence Reform and 

Terrorism Prevention Act of 2004 

(Intelligence Reform Act), which 

imposes post-employment restrictions 

on senior examiners of depository 

institutions and depository institution 

holding companies. Under section 

6303(b), and the Agencies’ final 

implementing rules, a senior examiner 

employed by an Agency or a Federal 

Reserve Bank (Reserve Bank) may not 

knowingly accept compensation as an 

employee, officer, director, or 

consultant from certain depository 

institutions or depository institution 

holding companies he or she examined, 

or from certain related entities, for one 

year after the examiner leaves the 

employment or service of the Agency or 

Reserve Bank. If an examiner violates 

the one-year restriction, the statute 

requires the appropriate Federal 

banking agency to seek an order of 

removal and prohibition, a civil money 

penalty of up to $250,000, or both. 

Section 10(k) will become effective on 

December 17, 2005. 

DATES: Effective Date: December 17, 

2005. 

FOR FURTHER INFORMATION CONTACT:

OCC: Mitchell Plave, Counsel, 

Legislative and Regulatory Activities 

Division, (202) 874–5090; Stuart 

Feldstein, Assistant Director, Legislative 

and Regulatory Activities Division, 

(202) 874–5090; or Barrett Aldemeyer, 

Senior Counsel, Administrative and 

Internal Law Division, (202) 874–4460, 

Office of the Comptroller of the 

Currency, 250 E Street, SW., 

Washington, DC 20219. 

Board: Cary K. Williams, Assistant 

General Counsel, (202) 452–3295, 

Kieran J. Fallon, Assistant General 

Counsel, (202) 452–5270, Andrea 

Tokheim, Attorney, (202) 452–2300, 

Legal Division; William Spaniel, Deputy 

Associate Director, (202) 452–3469, or 

Jinai Holmes, Senior Financial Analyst, 

(202) 452–2834, Division of Banking 

Supervision and Regulation; for users of 

Telecommunication Devices for the Deaf 

(TDD) only, contact (202) 263–4869. 

FDIC: Robert J. Fagan, Ethics Program 

Manager, Legal Division, (202) 898–

6808; Stephen P. Gaddie, Special 

Assistant to the Deputy Director, 

Division of Supervision and Consumer 

Protection, (202) 898–6575; Richard 

Osterman, Senior Counsel, Legal 

Division, (202) 898–7028; and Kymberly 

K. Copa, Counsel, Legal Division, (202) 

898–8832, Federal Deposit Insurance 

Corporation, 550 17th Street, NW., 

Washington, DC 20429. 

OTS: Elizabeth Moore, Special 

Counsel, Litigation Division, (202) 906–

7039; or Karen Osterloh, Special 

Counsel, Regulations and Legislation 

Division, (202) 906–6639, Chief 

Counsel’s Office, Office of Thrift 

Supervision, 1700 G Street, NW., 

Washington, DC 20552. 

SUPPLEMENTARY INFORMATION: 

I. Background 

Under section 6303(b) of the 

Intelligence Reform Act,1 which added 

a new section 10(k) to the Federal 

Deposit Insurance Act (FDI Act), an 

officer or employee of an Agency or 

Reserve Bank who acts as a ‘‘senior 

examiner’’ for a particular depository 

institution may not, within one year 

after terminating employment with the 

relevant Agency or Reserve Bank, 

knowingly accept compensation as an 

officer, director, employee or consultant 

from that depository institution or any 

company (including a bank holding 

company or savings and loan holding 

company) that controls the depository 

institution.2 Section 10(k) imposes a 

similar post-employment restriction on 

an officer or employee who acts as the 

‘‘senior examiner’’ of a particular 

depository institution holding company, 

but in these circumstances, the postemployment restrictions apply to 

relationships with the depository 

institution holding company and any 

depository institution subsidiary of the 

holding company.3 The restrictions in 

section 10(k) apply only to examiners 

who served as a senior examiner for a 

particular depository institution or 

holding company for two or more 

months during the final twelve months 

of their employment at the Agency or 

Reserve Bank. 

If a senior examiner violates the oneyear post-employment restrictions in 

section 10(k), the statute requires the 

appropriate Federal banking agency to 

initiate proceedings to impose an order 

of removal and prohibition or a civil 

money penalty, or both, on the former 

senior examiner. Congress directed each 

Agency to prescribe regulations to 

administer and carry out section 10(k), 

including rules, regulations or 

guidelines to define the scope of 

persons who are ‘‘senior examiners.’’

The post-employment restrictions in 

section 10(k) are in addition to any 

other conflict of interest and ethics rules 

and restrictions that may apply to