Candidate Solicitation at State, District, and Local Party Fundraising Events, 37649-37654 [05-12863]

Agencies

• Federal Election Commission

[Federal Register Volume 70, Number 125 (Thursday, June 30, 2005)]
[Rules and Regulations]
[Pages 37649-37654]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-12863]


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FEDERAL ELECTION COMMISSION

11 CFR Part 300

[Notice 2005-17]


Candidate Solicitation at State, District, and Local Party 
Fundraising Events

AGENCY: Federal Election Commission.

ACTION: Revised Explanation and Justification.

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SUMMARY: The Federal Election Commission is publishing a revised 
Explanation and Justification for its rule regarding appearances by 
Federal officeholders and candidates at State, district, and local 
party fundraising events under the Federal Election Campaign Act of 
1971, as amended (``FECA''). The rule, which is not being amended, 
contains an exemption permitting Federal officeholders and candidates 
to speak at State, district, and local party fundraising events 
``without restriction or regulation.'' These revisions to the 
Explanation and Justification conform to the decision of the U.S. 
District Court for the District of Columbia in Shays v. FEC. Further 
information is provided in the supplementary information that follows.

DATES: Effective June 30, 2005.

FOR FURTHER INFORMATION CONTACT: Ms. Mai T. Dinh, Assistant General 
Counsel, Mr. Robert M. Knop, Attorney, or Ms. Margaret G. Perl, 
Attorney, 999 E Street, NW., Washington, DC 20463, (202) 694-1650 or 
(800) 424-9530.

SUPPLEMENTARY INFORMATION: The Bipartisan Campaign Reform Act of 2002 
(``BCRA''), Pub. L. 107-155, 116 Stat. 81 (2002), limits the amounts 
and types of funds that can be raised in connection with Federal and 
non-Federal elections by Federal officeholders and candidates, their 
agents, and entities directly or indirectly established, financed, 
maintained, or controlled by, or acting on behalf of Federal 
officeholders or candidates (``covered persons''). See 2 U.S.C. 
441i(e). Covered persons may not ``solicit, receive, direct, transfer 
or spend'' non-Federal funds in connection with an election for 
Federal, State, or local office except under limited circumstances. See 
2 U.S.C. 441i(e); 11 CFR part 300, subpart D.
    Section 441i(e)(3) of FECA states that ``notwithstanding'' the 
prohibition on raising non-Federal funds, including Levin funds, in 
connection with a Federal or non-Federal election in section 
441i(b)(2)(C) and (e)(1), ``a candidate or an individual holding 
Federal office may attend, speak, or be a featured guest at a 
fundraising event for a State, district, or local committee of a 
political party.'' Id. During its 2002 rulemaking to implement this 
provision, the Commission considered competing interpretations of this 
provision. The Commission decided to promulgate rules at 11 CFR 
300.64(b) construing the statutory provision to permit Federal 
officeholders and candidates to attend, speak, and appear as featured 
guests at fundraising events for a State, district, and local committee 
of a political party

[[Page 37650]]

(``State party'') ``without restriction or regulation.'' See Final 
Rules on Prohibited and Excessive Contributions: Non-Federal Funds or 
Soft Money, 67 FR 49064, 49108 (July 29, 2002).
    In Shays v. FEC, the district court held that the Commission's 
Explanation and Justification for the fundraising provision in 11 CFR 
300.64(b) did not satisfy the reasoned analysis requirement of the 
Administrative Procedure Act, 5 U.S.C. 553 (2000) (``APA''). See 337 F. 
Supp. 2d 28, 93 (D.D.C. 2004), appeal pending No. 04-5352 (D.C. Cir.). 
The court held, however, that the regulation did not necessarily run 
contrary to Congress's intent in creating the fundraising exemption, 
was based on a permissible construction of the statute, and did not 
``unduly compromise[] the Act's purposes.'' Id. at 90-92 (finding the 
regulation survived Chevron review).\1\ The Commission did not appeal 
this portion of the district court decision.
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    \1\ The district court described the first step of the Chevron 
analysis, which courts use to review an agency's regulations: ``a 
court first asks `whether Congress has directly spoken to the 
precise question at issue. If the intent of Congress is clear, that 
is the end of the matter; for the court, as well as the agency, must 
give effect to the unambiguously expressed intent of Congress.''' 
See Shays, at 51 (quoting Chevron, U.S.A., Inc. v. Natural Res. Def. 
Council, 467 U.S. 837, 842-43(1984)). In the second step of the 
Chevron analysis, the court determines if the agency interpretation 
is a permissible construction of the statute which does not ``unduly 
compromise'' FECA's purposes by ``creat[ing] the potential for gross 
abuse.'' See Shays at 91, citing Orloski v. FEC, 795 F.2d 156, 164-
65 (D.C. Cir. 1986) (internal citations omitted).
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    To comply with the district court's order, the Commission issued a 
Notice of Proposed Rulemaking to provide proposed revisions to the 
Explanation and Justification for the current rule in section 300.64. 
See Notice of Proposed Rulemaking on Candidate Solicitation at State, 
District and Local Party Fundraising Events, 70 FR 9013, 9015 (Feb. 24, 
2005) (``NPRM''). As an alternative to providing a new Explanation and 
Justification for the current rule, the NPRM also proposed revisions to 
current section 300.64 that would prohibit Federal officeholders and 
candidates from soliciting or directing non-Federal funds when 
attending or speaking at State party fundraising events. See id. at 
9015-16. The NPRM sought public comment on both options.
    The public comment period closed on March 28, 2005. The Commission 
received eleven comments from sixteen commenters in response to the 
NPRM, including a letter from the Internal Revenue Service stating 
``the proposed explanation and the proposed rules do not pose a 
conflict with the Internal Revenue Code or the regulations 
thereunder.'' The Commission held a public hearing on May 17, 2005 at 
which six witnesses testified. The comments and a transcript of the 
public hearing are available at https://www.fec.gov/law/law_
rulemakings.shtml under ``Candidate Solicitation at State, District and 
Local Party Fundraising Events.'' For the purposes of this document, 
the terms ``comment'' and ``commenter'' apply to both written comments 
and oral testimony at the public hearing.
    The commenters were divided between those supporting the current 
exemption in section 300.64 and those supporting the alternative 
proposed rule. Several commenters urged the Commission to retain the 
current exemption as a proper interpretation of 2 U.S.C. 441i(e)(3). 
One commenter argued that section 441i(e)(3) created a total exemption 
because Congress knew that State and local parties requested Federal 
officeholders and candidates to speak at these fundraisers to increase 
attendance, but that these appearances do not create any quid pro quo 
contributions for the speaker. Some commenters stressed the importance 
of the relationship between Federal and State candidates and stated 
that the current exemption properly recognizes the need for Federal 
officeholders and candidates to participate in State party fundraising 
events.
    Some commenters viewed the alternative proposed rule requiring a 
candidate to avoid ``words of solicitation'' as problematic because it 
would necessitate Commission review of speech at such events. These 
commenters asserted that the alternative rule would cause Federal 
officeholders and candidates to refuse to participate in State party 
fundraising events for fear that political rivals will attempt to seize 
on something in a speech as an impermissible solicitation. One 
commenter noted that Federal officeholders and candidates, who are 
attending State party fundraisers, are expected to thank attendees for 
their past and continued support for the State party, and without a 
complete exemption, such a courtesy could be treated as a solicitation.
    Another commenter noted that party committees and campaign staff 
have worked hard over the past two years doing training, following 
Commission meetings and advisory opinions, and absorbing enforcement 
cases as they have developed. Another commenter noted that State 
parties have already had to adjust their fundraising practices during 
the 2004 election cycle to comply with BCRA. Two commenters argued that 
further regulatory changes at this point would only increase the costs 
of compliance and fundraising for State parties that already operate on 
a small budget.
    In contrast, some commenters supported the alternative proposed 
rule that would bar Federal candidates and officeholders from 
soliciting non-Federal funds when appearing and speaking at State party 
fundraising events. Some commenters argued that the Shays opinion, 
while upholding section 300.64 under Chevron, criticized the 
Commission's interpretation as ``likely contraven[ing] what Congress 
intended * * * as well as * * * the more natural reading of the statute 
* * *.'' (Quoting Shays, 337 F. Supp. 2d at 91.) Thus, these commenters 
argued that the structure of section 441i(e) as a whole, as well as the 
specific wording of section 441i(e)(3), when compared to the exceptions 
for candidates for State and local office and certain tax-exempt 
organizations (sections 441i(e)(2) and (e)(4), respectively), 
demonstrate that section 441i(e)(3) should not be construed as a total 
exemption from the soft money solicitation prohibitions. Accordingly, 
these commenters argued that the legislative history of BCRA better 
supports the interpretation in the alternative proposed rule. These 
commenters also argued that the Commission's proposed Explanation and 
Justification did not sufficiently address the district court's concern 
as to why the Commission believed that monitoring speech at State party 
fundraising events is more difficult or intrusive than in other 
contexts where solicitations of non-Federal funds are almost completely 
barred. Shays, 337 F. Supp. 2d at 93. Finally, these commenters noted 
that Federal officeholders and candidates should be able to distinguish 
speaking from ``soliciting,'' as they are required to do in other 
situations such as charitable activity governed by the Senate Ethics 
Rules or political activity regulated by the Federal Hatch Act, 5 
U.S.C. 7323, and could properly tailor their speeches to comply with 
the alternative proposed rule.
    The Commission has decided, after carefully weighing the relevant 
factors, to retain the current exemption in section 300.64 permitting 
Federal officeholders and candidates to attend, speak, or be featured 
guests at State party fundraising events without restriction or 
regulation. The reasons for this decision are set forth below in the 
revised Explanation and Justification for current section 300.64.

[[Page 37651]]

Explanation and Justification

11 CFR 300.64--Exemption for Attending, Speaking, or Appearing as a 
Featured Guest at Fundraising Events

11 CFR 300.64(a)
    The introductory paragraph in 11 CFR 300.64 restates the general 
rule from the statutory provision in section 441i(e)(3): 
``[n]otwithstanding the provisions of 11 CFR 100.24, 300.61 and 300.62, 
a Federal candidate or individual holding Federal office may attend, 
speak, or be a featured guest at a fundraising event for a State, 
district, or local committee of a political party, including but not 
limited to a fundraising event at which Levin funds are raised, or at 
which non-Federal funds are raised.''
    The Commission clarifies in section 300.64(a) that State parties 
are free within the rule to publicize featured appearances of Federal 
officeholders and candidates at these events, including references to 
these individuals in invitations. However, Federal officeholders and 
candidates are prohibited from serving on ``host committees'' for a 
party fundraising event at which non-Federal funds are raised or from 
signing a solicitation in connection with a party fundraising event at 
which non-Federal funds are raised, on the basis that these pre-event 
activities are outside the statutory exemption in section 441i(e)(3) 
permitting Federal candidates and officeholders to ``attend, speak, or 
be a featured guest'' at fundraising events for State, district, or 
local party committees.
11 CFR 300.64(b)
    In promulgating 11 CFR 300.64(b), the Commission construes 2 U.S.C. 
441i(e)(3) to exempt Federal officeholders and candidates from the 
general solicitation ban, so that they may attend and speak ``without 
restriction or regulation'' at State party fundraising events. The 
Commission bases this interpretation on Congress's inclusion of the 
``notwithstanding paragraph (1)'' phrase in section 441i(e)(3), which 
suggests Congress intended the provision to be a complete exemption. 
See Cisneros v. Alpine Ridge Group, 508 U.S. 10, 18 (1993) (``[T]he 
Courts of Appeals generally have ``interpreted similar 
``notwithstanding'' language * * * to supercede all other laws, stating 
that a clearer statement is difficult to imagine.' '') (internal 
citation omitted).
    Although some commenters argue that section 441i(e)(3) of FECA does 
not permit solicitation because Congress did not include the word 
``solicit'' in that exception, the Shays court stated: ``[w]hile it is 
true that Congress created carve-outs for its general ban in other 
provisions of BCRA utilizing the term `solicit' or `solicitation,' see 
2 U.S.C. 441i(e)(2), (4), these provisions do not conflict with the 
FEC's reading of Section (e)(3).'' See Shays, 337 F. Supp. 2d at 90; 
see also Shays at 89 (``However, as Defendant observes, `if Congress 
had wanted to adopt a provision allowing Federal officeholders and 
candidates to attend, speak, and be featured guests at state party 
fundraisers but denying them permission to speak about soliciting 
funds, Congress could have easily done so.' '').
    Furthermore, construing section 441i(e)(3) to be a complete 
exemption from the solicitation restrictions in section 441i(e)(1) 
gives the exception content and meaning beyond what section 
441i(e)(1)(B) already permits. Section 441i(e)(1)(A) establishes a 
general rule against soliciting non-Federal funds in connection with a 
Federal election. Section 441i(e)(1)(B) permits the solicitation of 
non-Federal funds for State and local elections as long as those funds 
comply with the amount limitations and source prohibitions of the Act. 
In contrast to assertions by commenters that without section 441i(e)(3) 
candidates would not be able to attend, appear, or speak at State party 
events where soft money is raised, the Commission has determined that 
under section 441i(e)(1)(B) alone, Federal officeholders and candidates 
would be permitted to speak and solicit funds at a State party 
fundraiser for the non-Federal account of the State party in amounts 
permitted by FECA and not from prohibited sources. See Advisory 
Opinions 2003-03, 2003-05 and 2003-36. Section 441i(e)(3) carves out a 
further exemption within the context of State party fundraising events 
for Federal officeholders and candidates to attend and speak at these 
functions ``notwithstanding'' the solicitation restrictions otherwise 
imposed by 441i(e)(1). Interpreting section 441i(e)(3) merely to allow 
candidates and officeholders to attend or speak at a State party 
fundraiser, but not to solicit funds without restriction, would render 
it largely superfluous because Federal candidates and officeholders may 
already solicit up to $10,000 per year in non-Federal funds from non-
prohibited sources for State parties under section 441i(e)(1)(B).
    The Commission agrees with one commenter who stated that the ``more 
natural'' interpretation of 2 U.S.C. 441i(e)(3) is that found in 
current section 300.64. The Commission also believes that such an 
interpretation is more consistent with legislative intent. Section 
300.64(b) effectuates the careful balance Congress struck between the 
appearance of corruption engendered by soliciting sizable amounts of 
soft money, and preserving the legitimate and appropriate role Federal 
officeholders and candidates play in raising funds for their political 
parties. Just as Congress expressly permitted these individuals to 
raise and spend non-Federal funds when they themselves run for non-
Federal office (see 2 U.S.C. 441i(e)(2)), and to solicit limited 
amounts of non-Federal funds for certain 501(c) organizations (see 2 
U.S.C. 441i(e)(4)), Congress also enacted 2 U.S.C. 441i(e)(3) to make 
clear that Federal officeholders and candidates could continue to play 
a role at State party fundraising events at which non-Federal funds are 
raised. The limited nature of this statutory exemption embodied in 11 
CFR 300.64 is evident in that it does not permit Federal officeholders 
and candidates to solicit non-Federal funds for State parties in 
written solicitations, pre-event publicity or through other fundraising 
appeals. See 11 CFR 300.64(a).
    The commenters also stressed the importance of the unique 
relationship between Federal officeholders and candidates and their 
State parties. They emphasized that these party fundraising events 
mainly serve to energize grass roots volunteers vital to the political 
process.
    By definition, the primary activity in which persons attending or 
speaking at State party fundraising events engage is raising funds for 
the State parties. It would be contrary to BCRA's goals of increasing 
integrity and public faith in the campaign process to read the statute 
as permitting Federal officeholders and candidates to speak at 
fundraising events, but to treat only some of what they say as being in 
furtherance of the goals of the entire event. As one commenter noted 
regarding Federal candidate appearances at State party fundraising 
events, ``the very purpose of the candidate's invited involvement--or 
at least a principal one--is to aid in the successful raising of money. 
So there is little logic, and undeniably the invitation to confusion, 
in allowing candidates to speak and appear in aid of fundraising 
purposes, while insisting that the candidate's speech be free of 
apparent fundraising appeals.'' Determining what specific words would 
be merely ``speaking'' at such an event without crossing the line into 
``soliciting'' or ``directing'' non-Federal funds raises practical 
enforcement concerns. See 11 CFR 300.2(m) (definition of ``to 
solicit'') and 300.2(n) (definition of ``to direct''). A regulation

[[Page 37652]]

that permitted speaking at a party event, the central purpose of which 
is fundraising, but prohibited soliciting, would require candidates to 
perform the difficult task of teasing out words of general support for 
the political party and its causes from words of solicitation for non-
Federal funds for that political party. As the U.S. Supreme Court 
stated in Buckley v. Valeo:

    [W]hether words intended and designed to fall short of 
invitation would miss that mark is a question both of intent and of 
effect. No speaker, in such circumstances, safely could assume that 
anything he might say upon the general subject would not be 
understood by some as an invitation. In short, the supposedly clear-
cut distinction between discussion, laudation, general advocacy, and 
solicitation puts the speaker in these circumstances wholly at the 
mercy of the varied understanding of his hearers and consequently of 
whatever inference may be drawn as to his intent and meaning.

424 U.S. 1, 43 (1976); see also Village of Schaumburg v. Citizens for a 
Better Environment, 444 U.S. 620, 632 (1980) (noting that 
``solicitation is characteristically intertwined with informative and 
perhaps persuasive speech seeking support for particular causes or for 
particular views''); Thomas v. Collins, 323 U.S. 516, 534-35 (1945) 
(stating that ``[g]eneral words create different and often particular 
impressions on different minds. No speaker, however careful, can convey 
exactly his meaning, or the same meaning, to the different members of 
an audience * * * [I]t blankets with uncertainty whatever may be said. 
It compels the speaker to hedge and trim''); Grayned v. City of 
Rockford, 408 U.S. 104, 116 (1972) (holding that ``[t]he nature of a 
place, ``the pattern of its normal activities, dictate the kinds of 
regulations of time, place and manner that are reasonable.' * * *The 
crucial question is whether the manner of expression is basically 
incompatible with the normal activity of a particular place at a 
particular time.'').
    A complete exemption in section 300.64(b) that allows Federal 
officeholders and candidates to attend and speak at State party 
fundraising events without restriction or regulation avoids these 
significant concerns. A number of commenters noted the potential impact 
of these concerns if the Commission did not retain current 11 CFR 
300.64(b). For example, one commenter ``strongly urge[d] the Commission 
not to adopt a `speak but don't solicit' rule. As noted in the NPRM 
itself, such a rule would `require candidates to tease out' appropriate 
words from inappropriate ones.'' This commenter further stated that he 
``also fear[s] the outcome if a `middle ground' is adopted, wherein 
federal officeholders and candidates could attend fundraisers but not 
use words that might be deemed solicitation for money. This would, 
first and foremost, open up a whole new battleground in politics, as 
every statement made by a Congressman at his party's Jefferson/Jackson 
day (or Lincoln Day) dinner will be scrutinized to see if it complies 
with requirements.'' Another commenter noted that current 11 CFR 300.64 
``applies only to the speeches that a Federal officeholder or candidate 
may give at a State or local party event. It reflects the practical 
realities of these events. As a featured speaker, an officeholder is 
expected to thank the attendees for their past and continued support of 
the party. Without the current exemption, this common courtesy might 
well be treated as a violation of the ban on the solicitation of non-
Federal funds. The Commission would then be placed in the position of 
determining whether a normal and expected expression of gratitude or 
request for support crosses some indeterminate line and violates the 
law.'' Another commenter urged the Commission to retain the current 
regulation so that Federal officeholders and candidates would not be 
exposed to ``legal jeopardy'' because the proposed alternative rule 
would leave ``too much opportunity for someone to second guess and 
misinterpret a speech made at this type of event.'' The same commenter 
stated that the Commission is faced with the question of whether or not 
to adopt a rule ``that allows candidates and officeholders to be placed 
at the mercy of those who would misinterpret or mischaracterize the 
speech they give.''
    At the hearing, the Commission explored a number of scenarios 
involving a Federal officeholder or candidate speaking at a party 
fundraising event. The discussion illustrates the difficulty for not 
only the Commission, but also Federal officeholders and candidates, in 
parsing speech under the alternative proposed rule. For example, when 
asked whether statements like ``I'm glad you're here to support the 
party,'' and ``thank you for your continuing support of the party,'' 
constitute solicitation, the commenters who favor the alternative 
proposed rule could not give definitive answers. They acknowledged that 
the word ``support'' may be construed as a solicitation when spoken at 
a fundraising event but not when spoken at other types of events. 
Likewise, commenters who favored the current rule expressed uncertainty 
as to whether these phrases would be construed as solicitations when 
spoken at a fundraising event.
    The commenters disagreed as to whether a Federal officeholder or 
candidate delivering a speech under a banner hung by the State party 
reading ``Support the 2005 State Democratic ticket tonight'' would be 
construed as impermissible solicitation unless explicit disclaimers 
were included in the speech. Some commenters noted that even a ``pure 
policy'' speech, otherwise permissible at a non-fundraising event, 
could constitute an impermissible solicitation in the context of a 
State party fundraising event. Finally, many commenters could not 
provide a clear answer as to whether a policy speech that included a 
statement of support for the ``important work'' of the State party 
chairman on a particular issue (such as military base closures in the 
state) could be construed as an impermissible solicitation. In each of 
these examples the commenters stated that an analysis of the particular 
facts and circumstances surrounding the speech would be required in 
order to determine whether a speech would be solicitation. However, the 
commenters analyzed the facts and circumstances differently, and when 
presented with the same facts and circumstances, they could not come to 
agreement on whether the speech was a solicitation.
    The inability of the commenters to provide clear answers to these 
scenarios demonstrates how parsing speech at a State party fundraising 
event is more difficult than in other contexts and why it would be 
especially intrusive for the Commission to enforce the alternative 
proposed rule. As illustrated during the discussion at the hearing and 
observed by one of the commenters, whether a particular message is a 
solicitation may depend on the person hearing the message--what one 
person interprets as polite words of acknowledgement may be construed 
as a solicitation by another person. The likelihood of this 
misinterpretation occurring increases at a State party fundraising 
event because of the Federal officeholders' and candidates' unique 
relationship to, and special identification with, their State parties.
    The Commission believes that the alternative rule would, as a 
practical matter, make the statutory exception at 2 U.S.C. 441i(e)(3) 
for appearances at State and local party fundraising events a hollow 
one. Given that the Federal officeholder's appearance would be, by 
definition, at a fundraising event, it would be exceedingly easy for 
opposing partisans to file a facially plausible complaint that the 
candidate or Federal

[[Page 37653]]

officeholder's words or actions at the event constituted a 
``solicitation.'' In such circumstances, the Commission believes that 
Federal officeholders and candidates would be reluctant to appear at 
State party fundraising events, as doing so would risk complaints, 
intrusive investigations, and possible violations based on general 
words of support for the party.
    Some commenters argued that Federal officeholders and candidates 
should be able to distinguish between permissible speech and an 
impermissible solicitation under the alternative rule because Federal 
employees are already required to make such judgments when involved in 
political activity pursuant to the Hatch Act. See 5 U.S.C. 7323; 5 CFR 
734.208(b). Under the Hatch Act and its implementing regulations, a 
Federal employee ``may give a speech or keynote address at a political 
fundraiser * * * as long as the employee does not solicit political 
contributions.'' See 5 CFR 734.208, Example 2. However, there are 
significant differences between the requirements of the Hatch Act and 
the Commission's regulations which make it much easier for Federal 
employees to know which words are words of solicitation under the Hatch 
Act scheme, than under the alternative proposed rule.
    Although the Hatch Act restriction appears similar to the proposed 
alternative rule banning Federal officeholders and candidates from 
soliciting money when speaking at State party fundraising events, the 
Hatch Act is a narrower standard that provides clear guidance to 
speakers to distinguish permissible speech. First, the implementing 
regulations for the Hatch Act contain a narrow definition of 
``solicit'' meaning ``to request expressly'' that another person 
contribute something. See 5 CFR 734.101. Thus, for example, the Hatch 
Act regulations explain that an employee may serve as an officer or 
chairperson of a political fundraising organization so long as they do 
not personally solicit contributions, see 5 CFR 734.208, Example 7, 
while Federal officeholders and candidates may not serve in such 
capacity under 2 U.S.C. 441i(e) and 11 CFR 300.64. Moreover, in order 
to violate the Hatch Act, a Federal employee must ``knowingly'' solicit 
contributions--a higher standard than that employed in FECA and 
Commission regulations. Thus, a Federal employee would not be penalized 
for unintentionally crossing the line into ``solicitation'' under the 
Hatch Act, whereas the alternative proposed rule would reach situations 
where the Federal officeholder or candidate speech could be construed 
as an impermissible solicitation, regardless of the speaker's knowledge 
or intent.
    A commenter cited the Senate Ethics Manual explaining Rule 35 of 
the Senate Code of Official Conduct, arguing that Federal officeholders 
and candidates know how to ask for money and avoid asking for money. 
The Senate rule targets solicitation of gifts from registered lobbyists 
and foreign agents and applies to situations not analogous to State 
party fundraising events. Rule 35 prohibits Senators and their staff 
from soliciting charitable donations from registered lobbyists and 
foreign agents but makes an exception, among others, for a fundraising 
event attended by fifty or more people. Thus, at a fundraising event 
attended by fifty or more people, including registered lobbyists and 
foreign agents, senators do not need to be concerned that their speech 
soliciting charitable donations is an impermissible solicitation of a 
gift under Rule 35.
    Many commenters stressed the need for Federal officeholders and 
candidates to have clear notice regarding what speech would be 
allowable at these State party fundraising events, as the unwary could 
unintentionally run afoul of a more restrictive rule. A complete 
exemption in section 300.64(b) that allows Federal officeholders and 
candidates, in these limited circumstances, to attend and speak at 
State party committee fundraising events without restriction or 
regulation, including solicitation of non-Federal or Levin funds, 
avoids these concerns and the practical enforcement problems they 
entail. The exemption provides a straightforward, clear rule that 
Federal officeholders and candidates may easily comprehend and that the 
Commission may practically administer. It also fully complies with the 
plain meaning of BCRA.
    Furthermore, as noted above, current 11 CFR 300.64 is carefully 
circumscribed and only extends to what Federal candidates and 
officeholders say at the State party fundraising events themselves. The 
regulation tracks the statutory language by explicitly allowing Federal 
candidates and officeholders to attend fundraising events and in no way 
applies to what Federal candidates and officeholders do outside of 
State party fundraising events. Specifically, the regulation does not 
affect the prohibition on Federal candidates and officeholders from 
soliciting non-Federal funds for State parties in fundraising letters, 
telephone calls, or any other fundraising appeal made before or after 
the fundraising event. Unlike oral remarks that a Federal candidate or 
officeholder may deliver at a State party fundraising event, when a 
Federal candidate or officeholder signs a fundraising letter or makes 
any other written appeal for non-Federal funds, there is no question 
that a solicitation has taken place that is restricted by 2 U.S.C. 
441i(e)(1). Moreover, it is equally clear that such a solicitation is 
not within the statutory safe harbor at 2 U.S.C. 441i(e)(3) that 
Congress established for Federal candidates and officeholders to attend 
and speak at State party fundraising events.
    Finally, there does not appear to be evidence of corruption or 
abuse under the current rule that dictates a change in Commission 
regulations. Commenters both favoring and opposed to the regulation in 
its current form agreed that there is no evidence that the operation of 
this exemption in the past election cycle in any way undermined the 
success of BCRA cited by its Congressional sponsors. Congress 
specifically allowed Federal candidates and officeholders to attend and 
speak at State party fundraising events. The statute permits attendance 
where non-Federal funds are being raised, and policing what may be said 
in both private and public conversations with donors at such events 
does little to alleviate actual or apparent corruption. One commenter 
pointed out that most of these fundraising events require a 
contribution to the State party as the cost of admission, and do not 
present a significant danger of corruption from solicitation at the 
event itself by speakers. As one commenter noted, ``it is difficult to 
identify any regulatory benefit to be derived by additional 
restrictions on what a candidate might say to an audience that already 
has chosen to attend and contribute [when] without any overt 
solicitation, the candidate's appearance at the event already makes 
clear the importance that she attaches to the party's overall campaign 
efforts.'' The Commission agrees with the commenters that additional 
restrictions on what a candidate may say once at the fundraising event 
provides little, if any, anti-circumvention protection since, as one 
commenter noted in oral testimony, ``the ask has already been made * * 
* The people are already there. They are motivated to be there'' and 
the funds have already been received by the party committee before the 
Federal candidate and officeholder speaks at the fundraising event. A 
commenter observed, ``most political events I am familiar with involve 
the raising of funds as a condition of admission as opposed to a 
solicitation at an event.''

[[Page 37654]]

Another commenter stated that ``in most instances the money for the 
event has already been raised. Therefore, the candidate or 
officeholder's appearance and speech [are] not a solicitation.''
    Another commenter noted that most of these fundraising events are 
small-dollar events targeted at grass roots volunteers where donations 
are usually less than $100, and do not include corporations or single-
interest groups. An additional commenter stated that ``Congress knew 
that state and local party committees request officeholders speak at 
party events to increase attendance and the party's yield from the 
event. It was also aware that speeches at these events are unlikely of 
themselves to foster the quid pro quo contributions that the law seeks 
to curb.'' Thus, many of these events already comply with amount 
limitations and source prohibitions for solicitation under section 
441i(e)(1)(B). In contrast, other commenters asserted that there was a 
potential for abuse if Federal candidates and officeholders make phone 
calls from the event asking donors for non-Federal funds, or gather 
together a group of wealthy donors and label it a ``State party 
fundraising event'' in order to benefit from the exemption in section 
300.64. However, in response to Commission questioning at the hearing, 
no commenter could point to any reports of such activity in the past 
election cycle. If the Commission detects evidence of abuse in the 
future, the Commission has the authority to revisit the regulation and 
take action as appropriate, including an approach targeted to the 
specific types of problems that are actually found to occur.

Additional Issues

1. Other Fundraising Events

    In the NPRM, the Commission sought public comment regarding certain 
advisory opinions issued by the Commission permitting attendance and 
participation by Federal officeholders and candidates at events where 
non-Federal funds would be raised for State and local candidates or 
organizations, subject to various restrictions and disclaimer 
requirements. See NPRM at 9015; Advisory Opinions 2003-03, 2003-05, and 
2003-36. Some commenters stated that the analysis in those advisory 
opinions was correct and consistent with BCRA's exceptions permitting 
Federal officeholders and candidates to raise money for State and local 
elections within Federal limits and prohibitions under section 
441i(e)(1)(B). One commenter noted that these advisory opinions were 
based on the Commission's regulation at 11 CFR 300.62, which was not 
challenged in the Shays litigation and need not be reexamined here. 
Another commenter urged the Commission to incorporate the holdings of 
these advisory opinions into its regulations so that Federal 
officeholders and candidates could continue to rely on them. One 
commenter also suggested that any additional restrictions beyond the 
disclaimers required in these advisory opinions would raise 
constitutional concerns. In contrast, other commenters asserted that 
these advisory opinions were incorrect and that the Commission should 
supersede them with a regulation that completely bars attendance at 
soft money fundraising events that are not hosted by a State party. The 
Commission does not believe it is necessary to initiate a rulemaking to 
address the issues in Advisory Opinions 2003-03, 2003-05, and 2003-36 
at this time.

2. Levin Funds

    The Commission also sought comment on how it should interpret 2 
U.S.C. 441i(b)(2), (e)(1), and (e)(3) in light of language from Shays 
stating that Levin funds are ``funds `subject to [FECA's] limitations, 
prohibitions, and reporting requirements.' '' See NPRM at 9016. Most 
comments regarding this inquiry opposed any interpretation of these 
provisions that would allow Federal officeholders and candidates to 
solicit Levin funds without restriction, with some commenters noting 
that the Commission has consistently referred to Levin funds as non-
Federal funds, including in recent final rules published in 2005. 
However, one commenter stated that Federal officeholders and candidates 
should be allowed to raise Levin funds. This issue of interpretation 
was relevant only to the alternative approach proposed in the NPRM. 
Because the Commission has decided to retain its rule in section 300.64 
with a revised Explanation and Justification, the Commission need not 
further address this question of statutory interpretation.

    Dated: June 23, 2005.
Scott E. Thomas,
Chairman, Federal Election Commission.
[FR Doc. 05-12863 Filed 6-29-05; 8:45 am]
BILLING CODE 6715-01-P