This file contains archived live captions of the open meeting of the Federal Election Commission held on January 11, 2018. This file is not a transcript of the meeting, and it has not been reviewed for accuracy or approved by the Federal Election Commission.

    
    >> CAROLINE HUNTER:  Good morning, everybody.  Happy New Year.  The open meeting of the Federal Election Commission for Thursday, JanuaryÊ11th, will come to order.  Thank you.  Welcome.
    The one and only item on the agenda is an NPRM for REG2014, and reporting multistate IEs and ECs.  And we have a presentation from both the office of general counsel and from Debbie Chacona from RAD.
    First, Debbie.  
    >> Agenda document, 1801A, whether they may make independent expenditures.  It would allow candidate committees to make independent expenditures and one that would not.  The draft proposes changes to provide a method for candidate committees to report independent expenditures.  The draft NPRM addresses the independent expenditures and electioneering and publicly distributed in multiple states that don't target.  It proposes three alternatives that differ in terms of when the reporting thresholds would be met and how communications would be reported.
    A draft NPRM seeks public comments on proposed alternatives within 60 days of publication in the Federal Register.  And Esther Gyory is here too.
    >> Good morning, Commissioners.  I wanted to go over, specifically talking about the issuing regarding the disclosure method for multistate independent expenditures, so that part of the NPRM.  
    The multistate independent expenditures came to the Reports Analysis Division when several PACs began disclosing independent expenditures that didn't include a state for the candidate's office sought as required on the Schedule E, which is where itemized independent expenditures are disclosed.  This omission triggered a request for additional information or RFAI from RAD, requesting that it disclose state.  
    In our conversations with committees who received this RFAI, we directed them to AO201128 which instructs committees to divide the cost of IEs by the number of states that have not yet held primary elections.
    The response we received from many committees was that it results in inaccurate reporting and could result in less disclosure, and they didn't feel comfortable signing their reports using this approach.  
    Instead, many committees began to disclose these IEs as single expenditures with a notation of nationwide.  Using this method, some committees still opted not to provide a state, while others listed only the states where an IE was disseminated.  As mentioned previously, failing to provide the state could result in RAD sending RFAI, and highlights in the RAD and review and referral procedures.  I'm happy to answer any questions.
    >> CAROLINE HUNTER: Thank you.  That was very helpful.  I wanted to highlight that this is an issue that's been going on for several years, and we strive to fix and give the public guidance on how to report these.  We are trying to do it in advance of the presidential elections.  So we have a little bit of time but we don't want to find ourselves during the election cycle not having a clear way for people to report these types of IEs.  So thank you to all of you for that.
    Any questions from anybody? 
    Madam Vice Chair?
    >> ELLEN WEINTRAUB: Thank you.  Not a question, but a comment.  This NPRM raises a couple of not very sexy issues but, you know, potentially, you know, IÊ I doubt if we are going to get thousands and thousands of comments from the public but I hope we will get some comments from people who are affected and who care about these issues.  We're trying to come up with some practical solutions to real problems that people have out there and trying to go about their political business andÊ and report what they are doing accurately to the public.
    So there's a couple of issues in here and they areÊ they are notÊ they are not entirely related to each other, but they are kind of independent problems.  The first one came up in the context of a MER, where a Senate committee made an independent expenditure, and the complaint was raised saying, well, wait a minute, there are only supposed to be supportingÊ an authorized committee is only supposed to be supporting one candidate and that is the candidate that the authorized committee has organized around supporting and how can they make independent expenditures?  And that isÊ as aÊ that sounds right as a statutory matter but then we were confronted with a lot of case law starting with Colorado Republican and going through Citizens United and all the progeny that says there can't be any limits on independent expenditures in general.  And then the question was:  Well, why would this type of committee be limited in a way that no other kind of entity is?
    So the Commission dismissed that, but theÊ the question remains as to whether under the statute an authorized committee can make independent expenditures.  And I don'tÊ I don't actually think the answer is obvious.  So I wouldÊ I would appreciate input from the public on this.
    And one thought that occurred to me within the last 24 hours as I was thinking this through, I realized that I had been viewing this issue entirely through the framework of that case, where it was kind of a one off.  You had an authorized committee for a sitting Senator, who was running for reelection and one independent expenditure.  But the way the alternative that would allow that in this proposed rule is written, it says that authorized committees would be allowed to make independent expenditures in any amount.  So I started to wonder whether it would be change the analysis if an independent committee started making a lot of independent expenditures, essentially functioning like a multicandidate committee rather than an authorized committee.
    It's all hard money.  It's all disclosed.  I thought about the possibility of somebody who decided to retire, sitting on a large war chest and they can't just hand their war chest over to a favored successor, a child, a spouse, but maybe they could just use all the money in theirÊ in their principal campaign committee to run independent expenditures on behalf of their favorite successor.  They could also convert their account to a multistateÊ a multicandidate committee and do it anyway.  So does it ultimately matter?  I'm not sure.
    But I would like to raise the question in a more direct way so that people can think about it and I would appreciate people commenting on thatÊ on that issue as to, you know, whether it makes a difference and so I'm going to propose that we add to page 13 at the end of line 7 of the draft, two sentences.  "If the Commission adopts alternative B, authorized committees would be allowed to make independent expenditures in any amount.  What are the implications of authorized committees potentially using substantial portions of their resources on independent expenditures?"
    And did I getÊ is it B or A?  Did I get the right alternative?
    >> CAROLINE HUNTER: I think it's A.
    >> A is the alternative that would permit them to make independent expenditures.
    >> ELLEN WEINTRAUB: If the commission adopts alternative A.  Is it A or B?
    >> It's B.
    >> ELLEN WEINTRAUB: Was I right the first time?
    >> Yes.
    >> ELLEN WEINTRAUB: Okay.  All right.  Alternative B.  The one that allows the independent expenditures.
    So if the commission adopts alternative B, authorized committees would be allowed to make independent expenditures in any amount, what are the implications of authorized committees potentially using substantial portions of their resources on independent expenditures?
    And, again, just to sort of directly raise that as a question for people to comment on, I'm not sure what the answer is, but I would be interested in what people have to say.
    On the second topic, there are three different proposals for how toÊ how to go about handling this question, which has been a bit vexing.  You know, we were presented with the Western RepresentativeÊ representation PAC and a few years ago and we had a wonderful moment of bipartisan agreement and issued a opinion that everybody hated.  So we are going to try to do it better.
    The third proposal in there is a little bitÊ it sounds a little bit complicated.  It would try and allocate according to congressional districts as aÊ sort of as a proxy for where the money is really being spent, and where it's going to have the most impact, but theÊ but the point of it is that we wouldÊ we would build the formula into the software.  So for people using our filing software, if they are not using our filing software, we would have a calculator on the website where people could plug in.  We are running this IE.  It's going to beÊ this is when we are running it and this is how much we are spending and because we know when all the primaries are, our software would spit out the answer of how it would be disclosed and it would, in fact, potentially simplify things for people.
    And our IT people assure me that this is completely doable and that we can handle this.
    So that'sÊ that's one alternative and, again, I'm really interested in hearing what people whoÊ both people who have been struggling to figure out to report these, as well as the people who are trying to figure out where the money is going, which of these three alternatives or some other alternative that people come up with might be the best way of going forward.
    >> CAROLINE HUNTER: Thank you.  Alternative A and B have been discussed numerous times over the past few years and those have been out forÊ I believe even for public comment at one point, but at one point we thought about doing this as a policy statement, instead of an NPRM.  So people have seen policy A and policy B, sort of many times over past couple of years.  Policy C is one that Commissioner Weintraub has added to the mix.
    The software is not ready yet but you are correct that we have all spoken to Mr.ÊPalmer and he says that it would be ready in time for the presidential cycle.  But, I mean, that's our hope.  That's the goal.  It's not officially ready yet.
    >> ELLEN WEINTRAUB: And I believe the way the proposal is written, we would not require people to do this until our software would be ready to make the audit calculation for them.
    >> CAROLINE HUNTER: Yes.  Yes. 
    Okay.  Any other comments? 
    Commissioner Petersen?
    >> MATTHEW PETERSEN: Thank you, Madam Chair.  I'm pleased that we are going to undertake this rulemaking.  As the Vice Chair said, it may not be the sexiest of issues, but I thinkÊ I think that they still are important and I think that they continue a theme that's been present in some of the other rulemaking activity that we have recently been considering than is adapting commission rules to account for the new ways in which political communications are disseminated and consumes in the contemporary world which we know are quite different than they were in the four plus decades since the passage of the federal election campaign act.
    We have previously voted out a Notice of Proposed Rulemaking on the technological modernization, which among other things addresses fundraising by means of text messaging and online payment processors, and would acknowledge the technological advances we have seen in the political realm by updating terminology found in commission regulations.
    In addition, just a few months ago, the commission instructed the office of general council to begin drafting a Notice of Proposed Rulemaking on the applicability of disclaimer requirements to political ads on sites such as Facebook, Google, to text message, advertisements that are character limited and small banner ads that can be found on mobile devices, all of which are communications that are quite different from the traditional radio and television, newspaper, and direct mail advertising, that Congress had in mind when it first enacted the disclaimer requirements, a number of decades ago.
    So similarly, in this document, we are contemplating adapting our rules to address a phenomenon that wasn't really present when the independent expenditure regime was first enacted.  And that phenomenon is theÊ is nationwide or multistate political advertising during the presidential primary season.
    As we know, the fundamentals our reporting regime were first enacted as part ofÊ back in the early 1970s, and at that time, I suppose the prospect of running nationwide or multistate independent expenditures was possible but it wasn't reallyÊ it would have been so cost prohibitive to notÊ I would assume to not have been contemplated by those who enacted both the 1971 act and the amendments to that act in 1974.
    What first made nationwide or multistate independent expenditures feasible was the advent of cable television.  Just doing a little research, it's the case that a nationwide ad buy on cable television may be only about 10 to 20% the cost of what a similar ad buy would be on network television.  And in addition to the advent of cable television, obviously, the Internet has revolutionized the manner in which political speech is disseminated and has made nationwide a multistate, independent expenditures even more cost feasible.
    As my colleagues have mentioned, we had unanimous advisory opinion back inÊ I think we actually passed it in 2012, but it'sÊ it's advisory opinion 201128, the western representation PAC, advisory opinion, and I think we have all heard from many sources on different occasions that the allocation methodology that's set forth in that advisory opinion is complex and can be somewhat cumbersome and so it's for that reason that we are considering one half ofÊ you know, a significant element to this rulemaking, is whether or not we can update our regulations in a way that would still allow us to achieve the informational interests that underlie our current independent expenditure regime, while at the same time making it simpler and easier for those who engage in independent expenditures that either are disseminated nationwide or in multiple states, allowing them to do it in a way that's reported to the commission.
    Can we meet those same goals, meeting the informational interests while at the same time making it easier and simpler?  I think that's a very worth while question to explore.  And I hope that anybody who is out there listening and will be reading about this meeting will offer their comments.  We do have different alternatives and so whatever information we can receive from those who would be impacted by this would be especially useful.
    And, of course, the other important issue that will be addressed in this rulemaking is the treatment of independent expenditures by the authorized committees of federal candidates.  The Vice Chair went through the relevant case law that's touched on the issue of independent spending, and, you know, obviously our current rules don't contemplate it, that authorized committees making such independent expendituresÊ and I think it's an interesting issue to explore and I look forward to hearing the comments that we'll receive back on that issue as well.
    So like I said, I'm pleased that we're undertaking this rulemaking exercise.  I plan to support the draft that's before us.  I thank the Chair for her efforts and the Vice Chair has made significant contributions as well.  I look forward to working with all of my colleagues.
    This is a doable rulemaking and I hope we can reach a successful conclusion in the near future.  I plan to support this at the appropriate time.
    >> CAROLINE HUNTER: Thank you.
    Any other comments?  Are we ready for a motion? 
    Is there a motion?  Madam Vice Chair.
    >> ELLEN WEINTRAUB: Thank you, Madam Chair.  I move that we approve agenda document number 1801A asÊ with the amendment that I described earlier, adding a couple of sentences on page 13, and that we direct the staff to have it published in the Federal Register.
    I think that's all we need to say. 
    >> CAROLINE HUNTER: All right.  All those in favor.  
    [ÊChorus of ayesÊ]
    Opposed?
    The motion passes unanimously.
    Thank you.
    That is the last one and only item on the agenda for today.  Just want to let people know that we'reÊ the plan is to talk about volunteer mail at the next open meeting.  In the spirit of trying to do things that help the public and people who have to follow our rules comply with them, in encouraging the voluntary compliance of our laws.  So it started today and we'll move on to volunteer mail on the next public meeting and I look forward to working with all of you in 9 new year, and all of the staff.  Thank you very much.
    Mr.ÊPalmer, are there any management or administrative matters the Commission needs to discuss today? 
    >> Madam Chair, there are no such matters.
    >> CAROLINE HUNTER: Thank you.  This meeting is adjourned.  Thank you.
    (End of meeting)