Daily Rules, Proposed Rules, and Notices of the Federal Government
Section 318 of the Bipartisan Campaign Reform Act of 2002, Pub. L. 107-155, 116 Stat. 81 (Mar. 27, 2002) (“BCRA”), amended the Federal Election Campaign Act of 1971, as amended, 2 U.S.C. 431
The United States Supreme Court held BCRA section 318 to be unconstitutional in
The practical effect of these changes is to return the substance of the regulations to its pre-BCRA state, with a single exception. The Commission has amended the requirement that a Minor
These final rules are based on proposed rules that the Commission published for comment in the
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
This rulemaking amends 11 CFR 110.1(a) by deleting the reference to 11 CFR 110.19. Section 110.1 concerns contributions to candidates and political party committees by persons other than multi-candidate political committees.
The Commission is returning 11 CFR 110.1(a) to its pre-BCRA state because the statutory prohibition on contributions by Minors no longer exists. As revised, contributions by Minors are once again subject to the provisions of 11 CFR 110.1.
This rulemaking amends 11 CFR 110.5(a) by deleting the reference to 11 CFR 110.19. Section 110.5 sets out aggregate biennial contribution limits for individuals. After BCRA section 318 prohibited Minors from making contributions to candidates and political committees, the Commission amended 11 CFR 110.5(a) to exclude individuals prohibited from making contributions under 11 CFR 110.19 (
The Commission is returning 11 CFR 110.5(a) to its pre-BCRA state, because the statutory prohibition on contributions by Minors no longer exists. As revised, contributions by Minors are once again subject to the aggregate biennial limitations of 11 CFR 110.5.
The Supreme Court's decision in
Although it no longer regulates donations by Minors, revised 11 CFR 110.19 continues to regulate contributions by Minors. Specifically, revised 11 CFR 110.19 permits Minors to contribute to Federal candidates and political committees in an amount that does not exceed the contribution limits that apply to individuals generally, so long as three conditions are met. These conditions are virtually identical to those currently in 11 CFR 110.19(c)(1) through (c)(3), which themselves were taken from the Commission's pre-BCRA rule governing contributions by Minors.
Accordingly, the Commission is redesignating former 11 CFR 110.19(c) as revised 11 CFR 110.19. It is redesignating former paragraph (c)(1) as revised 11 CFR 110.19(a); revising and redesignating former paragraph (c)(2) as revised 11 CFR 110.19(b); and redesignating former paragraph (c)(3) as revised 11 CFR 110.19(c). As redesignated, the conditions in revised 11 CFR 110.19 will apply to all contributions by Minors.
The Commission's regulations have imposed special conditions on contributions by Minors since 1977.
Revised paragraph (a) of 11 CFR 110.19 requires the decision to contribute to a Federal candidate or political committee to be made knowingly and voluntarily by the Minor. This condition is identical to the proposed rule in the NPRM and former 11 CFR 110.19(c)(1).
Consistent with the Supreme Court's decision in
The Commission has decided not to establish a minimum age for the making of contributions. In rejecting BCRA's minimum age of 18 years in
In the NPRM, the Commission also invited comments on whether it should establish a rebuttable presumption that individuals below a certain age cannot “knowingly and voluntarily” decide to make a contribution, or whether it should combine a categorical prohibition with a rebuttable presumption similar to the approach adopted by some jurisdictions with regard to the tort liability of children. One commenter rejected the analogy to tort law, arguing that the age at which a child should be held responsible for negligence is not a valid indicator of when a child can make a knowing decision to give away money. The other commenter embraced the analogy to tort law and recommended that the Commission establish a three-tiered approach, with any child below seven years of age rebuttably presumed not to have knowingly and voluntarily decided
The Commission considers the approach advocated by the commenter to be unnecessarily complicated and unwieldy. It also concludes that a rebuttable presumption is not a sufficiently flexible means of ensuring that contributions by others are not made in the names of Minors. Accordingly, the Commission has decided not to adopt any presumptions in the revised rule.
In light of the fact that the Commission is returning the “knowing and voluntary” standard in revised 11 CFR 110.19(a) to its pre-BCRA state, the Commission takes this opportunity to provide general guidance on the types of factors that it has considered in past enforcement actions to determine whether a Minor made a contribution “knowingly and voluntarily.” The Commission emphasizes, however, that it determines the outcome of each enforcement action involving contributions by Minors in light of all relevant and available facts. In any given case, the Commission may consider factors in addition to those listed here, and need not consider all of the factors listed.
One factor that the Commission typically considers is the age of the Minor at the time the contribution was made.
The Commission has also considered whether the value of the Minor's contribution, if attributed to an adult member of the Minor's immediate family (such as a parent, legal guardian, or sibling), would cause that family member to exceed the contribution limitations of the Act and Commission regulations.
Another potential consideration is whether the Minor has a history of making routine financial decisions. Minors with a history of making routine decisions about their personal finances, such as how to earn money, how to manage and invest their money, and how to spend their money, may be more likely to make a knowing and voluntary decision to spend their money on political contributions than Minors without such a history.
Other potentially relevant factors include the Minor's history of donating funds and the source of the funds contributed. A Minor with a history of donating funds to social, political, or cultural groups or causes may be more likely to make a knowing and voluntary decision to contribute than would a Minor whose giving pattern does not demonstrate a personal and substantial interest in social, political or cultural issues. By the same token, a Minor who makes a contribution from funds that the Minor earned through, for example, an after-school job, may have a greater personal interest in how those funds are spent, and thus be more likely to make a knowing and voluntary decision to contribute, than would a Minor who makes a contribution from passive income that the Minor received from, for example, a family trust.
Revised paragraph (b) of 11 CFR 110.19 requires the funds, goods or services contributed to be owned or controlled by the Minor. As examples of the types of funds that could meet the requirement, the regulation lists income earned by the Minor, the proceeds from a trust for which the Minor is the beneficiary, or funds withdrawn by the Minor from a financial account opened and maintained in the Minor's name.
Revised paragraph (b) is the same as the proposed rule in the NPRM and former 11 CFR 110.19(c)(2), with two exceptions. The first exception concerns the requirement in the proposed rule and former 11 CFR 110.19(c)(2) that the funds, goods or services contributed be owed or controlled “exclusively” by the Minor. NPRM, 69 FR at 18842; 11 CFR 110.19(c)(2) (2004). The revised rule continues to require a Minor to own or control the funds, goods or services contributed, but it no longer requires the Minor to exercise exclusive ownership or control.
In the NPRM, the Commission invited comments on whether the exclusivity requirement in former 11 CFR 110.19(c)(2) was permissible in light of the Supreme Court's decision in
The commenters opined that the exclusivity requirement was not narrowly tailored, and that it created a potential conflict with state laws governing a Minor's ability to control assets without parental consent. One commenter suggested that the Commission remove the word “exclusively” from the regulation. The other commenter suggested that the Commission amend the regulation to focus on whether a Minor has unlimited control over or access to the funds contributed, by prohibiting contributions from accounts over which the Minor has no control, such as accounts established under the Uniform Gifts to Minors Act and the Uniform Transfers to Minors Act, and by permitting contributions from accounts to which the Minor has complete access through checks issued in only the Minor's name or an ATM card issued to the Minor, even if a parent or legal guardian co-signed for the account.
The Commission is deleting the requirement that the ownership or control that a Minor must exercise over the funds, goods or services contributed be exclusive. The Supreme Court reaffirmed in
Removing the exclusivity requirement will help to focus future inquiries on the substance of a Minor's contribution, rather than on the form of a Minor's bank account.
In addition, the remaining criteria in 11 CFR 110.19 have not changed. A contribution by a Minor continues to be permissible only if “the decision to contribute is made knowingly and voluntarily by the Minor,” and “the contribution is not made from the proceeds of a gift, the purpose of which was to provide funds to be contributed, or is not in any other way controlled by another individual.”
The second way in which revised 11 CFR 110.19(b) differs from the proposed rule in the NPRM and former 11 CFR 110.19(c)(2) is in one of the examples. The proposed rule and former 11 CFR 110.19(c)(2) listed “a savings account opened and maintained exclusively in the Minor's name” as an example of the types of funds that could qualify under former 11 CFR 110.19(c)(2). 11 CFR 110.19(c)(2) (2004).
The Commission is making three changes to this example in revised 11 CFR 110.19(b), for purposes of conformity and clarification. First, the Commission is deleting the word “exclusively” from the example, in conformity with the change to the text of 11 CFR 110.19(b), as discussed above. Second, the Commission is inserting the words “funds withdrawn by the Minor from” before “a savings account” in the example. As originally worded, the example seemed to require a Minor to contribute his or her entire account, which was not the Commission's intent. Third, the Commission is substituting the term “financial account” for “savings account” in the example, in recognition of the different kinds of accounts that a Minor might maintain today with banks, credit unions, brokerage firms, and similar institutions.
Revised paragraph (c) in 11 CFR 110.19 provides that a permissible contribution “is not made from the proceeds of a gift, the purpose of which was to provide funds to be contributed, or is not in any other way controlled by another individual.” This requirement is identical to the proposed rule in the NPRM and former 11 CFR 110.19(c)(3).
The Commission certifies that the attached rules will not have a significant economic impact on a substantial number of small entities. The basis of this certification is that these rules apply only to individuals 17 years of age or younger. Such individuals are not small entities under 5 U.S.C. 601. Moreover, these rules remove existing restrictions in accordance with controlling Supreme Court precedent and do not impose any additional costs on contributors, candidates, or political committees.
Campaign funds, Political committees and parties.
2 U.S.C. 431(8), 431(9), 432(c)(2), 437d, 438(a)(8), 441a, 441b, 441d, 441e, 441f, 441g, 441h and 36 U.S.C. 510.
An individual who is 17 years old or younger (a Minor) may make contributions to any candidate or political committee that in the aggregate do not exceed the limitations on contributions of 11 CFR 110.1 and 110.5, if—
(a) The decision to contribute is made knowingly and voluntarily by the Minor;
(b) The funds, goods, or services contributed are owned or controlled by the Minor, such as income earned by the Minor, the proceeds of a trust for which the Minor is the beneficiary, or funds withdrawn by the Minor from a financial account opened and maintained in the Minor's name; and
(c) The contribution is not made from the proceeds of a gift, the purpose of which was to provide funds to be contributed, or is not in any other way controlled by another individual.