Proposed Rule2022-27779
Rulemaking Petition: Disgorgement of Contributions
Primary source
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Published
December 22, 2022
Issuing agencies
Federal Election Commission
Abstract
On August 25, 2022, the Federal Election Commission received a Petition for Rulemaking asking the Commission to amend or clarify its regulations regarding the refunding of contributions that violate the source prohibitions or amount limitations of the Federal Election Campaign Act ("the Act"). The petitioner requests that the Commission amend its regulations to permit committees to disgorge illegal contributions to the United States Treasury, and to provide that the Commission may require disgorgement when, according to the petitioner, a refund would be unjust and create incentives for future lawbreaking.
Full Text
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<title>Federal Register, Volume 87 Issue 245 (Thursday, December 22, 2022)</title>
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[Federal Register Volume 87, Number 245 (Thursday, December 22, 2022)]
[Proposed Rules]
[Pages 78611-78612]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27779]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 87, No. 245 / Thursday, December 22, 2022 /
Proposed Rules
[[Page 78611]]
FEDERAL ELECTION COMMISSION
11 CFR Parts 103, 104, 9007, 9014, and 9038
[Notice 2022-23]
Rulemaking Petition: Disgorgement of Contributions
AGENCY: Federal Election Commission.
ACTION: Rulemaking petition: notification of availability.
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SUMMARY: On August 25, 2022, the Federal Election Commission received a
Petition for Rulemaking asking the Commission to amend or clarify its
regulations regarding the refunding of contributions that violate the
source prohibitions or amount limitations of the Federal Election
Campaign Act (``the Act''). The petitioner requests that the Commission
amend its regulations to permit committees to disgorge illegal
contributions to the United States Treasury, and to provide that the
Commission may require disgorgement when, according to the petitioner,
a refund would be unjust and create incentives for future lawbreaking.
DATES: Comments must be submitted on or before February 21, 2023.
ADDRESSES: All comments must be in writing. Commenters may submit
comments electronically via the Commission's website at <a href="http://sers.fec.gov/fosers/">http://sers.fec.gov/fosers/</a>, reference REG 2022-06.
Each commenter must provide, at a minimum, his or her first name,
last name, city, and state. All properly submitted comments, including
attachments, will become part of the public record, and the Commission
will make comments available for public viewing on the Commission's
website and in the Commission's Public Records Office. Accordingly,
commenters should not provide in their comments any information that
they do not wish to make public, such as a home street address,
personal email address, date of birth, phone number, social security
number, or driver's license number, or any information that is
restricted from disclosure, such as trade secrets or commercial or
financial information that is privileged or confidential.
FOR FURTHER INFORMATION CONTACT: Mr. Robert Knop, Assistant General
Counsel, or Mr. Tony Buckley, Attorney, Office of the General Counsel,
at (202) 694-1650 or (800) 424-9530.
SUPPLEMENTARY INFORMATION: On August 25, 2022, the Commission received
a Petition for Rulemaking from the Campaign Legal Center
(``Petition''). The Petition asks the Commission to ``amend or clarify
the scope and remedies provided in Sec. 103.3 to promote the robust
enforcement of FECA.'' Petition at 8.
The Petition notes that ``Commission regulations currently state
that committee treasurers must examine `all contributions received for
evidence of illegality,' and `shall refund' illegal contributions to
the contributors.'' Petition at 1. (citing 11 CFR 103.3(b)). The
Petition further notes that the requirement that committees refund
improper contributions ``is not required by FECA.'' Petition at 2. The
Petition asserts that refunding illegal contributions can undermine the
enforcement purposes of FECA by unjustly rewarding those making illegal
contributions. According to the Petition, ``when those caught brazenly
violating the law are rewarded with the return of the money they
contributed--the tool of their illegal activity--it sends the regulated
community and the public a very troubling message that the FEC permits
violators to profit from their violations.'' Petition at 2.
The Act prohibits committees from accepting contributions in excess
of certain limits or from certain sources. See, e.g., 52 U.S.C.
30116(a) (limiting the amount a committee may accept from a person);
30118(a) and 30119(a) (prohibiting a committee from accepting
contributions from corporations, labor organizations, national banks,
and federal contractors); but see <a href="http://SpeechNow.org">SpeechNow.org</a> v. Fed. Election
Comm'n, 599 F.3d 686 (D.C. Cir. 2010) (en banc) (striking down
contribution limits as applied to independent expenditure-only
committees). Commission regulations generally require a committee
treasurer to ascertain whether a contribution exceeds the amount
limitations or is from a prohibited source. See 11 CFR 103.3(b). A
contribution determined to exceed the amount limitations may be
redesignated, reattributed, or returned to the contributor. See 11 CFR
103.3(b)(3). A contribution determined to be from an improper source
must be returned to the contributor. See 11 CFR 103.3(b)(1) and (2).
In Advisory Opinion 1996-05 (Kim), a political committee asked how
it should reimburse contributions that it belatedly discovered to be
unlawful corporate contributions made in the names of others. The
Commission concluded that the requestor may refund the contributions to
the corporation or, in the alternative, pay the amount of the
contributions to the United States Treasury. Subsequently, in an
unrelated matter, Fireman v. FEC, 44 Fed. Cl. 528 (1999), the Court of
Federal Claims held that 11 CFR 103.3(b)(1) and (2) mandated a refund
of all illegal contributions to the contributors regardless of the
circumstances, and thereby rejected the Commission's interpretation of
11 CFR 103.3(b)(1) and (2) as permitting disgorgement of illegal
contributions to the United States Treasury.
According to the Petition, ``[m]any recent FEC enforcement matters
involving prohibited contributions have resulted in a partial or
complete contribution refund to the violator, undercutting the effect
of any civil penalty.'' Petition at 6. As one example, the Petition
cites Matter Under Review (MUR) 7450, where a federal contractor made
$525,000 in illegal contributions and agreed to pay a $125,000 civil
penalty but had already recovered $500,000 as a contribution refund
before the Commission's enforcement action was completed. Petition at
6-7.
The petition argues that ``[t]he near certainty that federal
contractors will recover their illegal contributions--more than
offsetting any civil penalties the Commission assesses--undermines the
deterrent effect of enforcing the federal contractor contribution
ban.'' Petition at 7. The Petition urges the Commission ``to amend or
clarify its regulations to explicitly recognize that illegal
contributions may be disgorged, and that the Commission may require the
disgorgement of illegal contributions in appropriate circumstances.''
Petition at 8.
The Commission seeks comment on the Petition. The public may
inspect the
[[Page 78612]]
Petition on the Commission's website at <a href="http://sers.fec.gov/fosers/">http://sers.fec.gov/fosers/</a>.
The Commission will not consider the Petition's merits until after
the comment period closes. If the Commission decides that the Petition
has merit, it may begin a rulemaking proceeding. The Commission will
announce any action that it takes in the Federal Register.
Dated December 16, 2022.
On behalf of the Commission,
Allen J. Dickerson,
Chairman, Federal Election Commission.
[FR Doc. 2022-27779 Filed 12-21-22; 8:45 am]
BILLING CODE 6715-01-P
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