Final rules on reporting contributions bundled by lobbyists, registrants and their PACs

On December 18, 2008, the Commission approved final rules regarding disclosure of contributions bundled by lobbyists/registrants and their political action committees (PACs). These rules implement Section 204 of the Honest Leadership and Open Government Act of 2007 (HLOGA) by requiring “reporting committees” (authorized committees of federal candidates, leadership PACs and political party committees) to disclose certain information about any lobbyist/registrant or lobbyist/registrant PAC that forwards, or is credited with raising, two or more bundled contributions aggregating in excess of the reporting threshold within a “covered period” of time. These requirements apply to both in-kind and monetary contributions.

The reporting threshold for 2009 is $16,000 and is indexed annually for inflation.

Lobbyist/registrants and their PACs

The rules define a lobbyist/registrant as a current registrant (under section 4(a) of the Lobbying Disclosure Act of 1995 (the LDA)) or an individual listed on a current registration or report filed under sections4(b)(6) or 5(b)(2)(C) of the LDA. 11 CFR 104.22(a)(2). A lobbyist/registrant PAC is any political committee that a lobbyist/registrant “established or controls.” 11 CFR 100.5(e)(7) and 104.22(a)(3). For the purposes of these rules, a lobbyist/registrant “established or controls” a political committee if he or she is required to make a disclosure to that effect to the Secretary of the Senate or Clerk of the House of Representatives. 11 CFR 104.22(a)(4)(i). If the political committee is not able to obtain definitive guidance from the Senate or House regarding its status, then it must consult additional criteria in FEC regulations. Under these criteria, a political committee is considered a lobbyist/registrant PAC if:

•  It is a separate segregated fund whose connected organization is a current registrant; (11 CFR 104.22(a)(4)(ii)(A)); or
• A lobbyist/registrant had a primary role in the establishment of the committee or directs the governance or operations of the committee. (Note that the mere provision of legal compliance services or advice by a lobbyist/registrant would not by itself meet these criteria.) (11 CFR 104.22(a)(4)(ii)(B)(1) and (2)). 

Disclosure is triggered based on the activity of persons “reasonably known” by the reporting committee to be lobbyist/registrants or lobbyist/registrant PACs. In order for reporting committees to determine whether a person is reasonably known to be a lobbyist/registrant or lobbyist/registrant PAC, the rules require reporting committees to consult the Senate, House and FEC websites. 11 CFR 104.22(b)(2)(i). The Senate and House websites identify registered lobbyists and registrants, while the FEC website identifies whether a political committee is a lobbyist/registrant PAC. A computer printout or screen capture showing the absence of the person’s name on the Senate, House or FEC websites on the date in question may be used as conclusive evidence demonstrating that the reporting committee consulted the required websites and did not find the name of the person in question. 11 CFR 104.22(b)(2)(ii). Nevertheless, the reporting committee is required to report bundled contributions if it has actual knowledge that the person in question is a lobbyist/registrant or lobbyist/registrant PAC even if the committee consulted the Senate, House and FEC websites and did not find the name of the person in question. 11 CFR 104.22(b)(2)(iii).

Covered periods

An authorized committee, Leadership PAC [FN1] or party committee (collectively “reporting committees”)  must file new FEC Form 3L when it receives two or more bundled contributions aggregating in excess of $16,000 from a lobbyist/registrant or lobbyist/registrant PAC during a specified time period. That time period, called a “covered period,” is defined in HLOGA as January 1 through June 30, July 1 through December 31 and any reporting period applicable under the Federal Election Campaign Act (the Act). 2 U.S.C. § 434(i)(2); 11 CFR 104.22(a)(5). As a result, covered periods will typically coincide with a committee’s regular FEC reporting periods, except that bundling reports filed in July and January will also cover the preceding six months. One exception permits monthly filers to file Form 3L on a quarterly basis, if they choose.

Semi-annual covered period. All reporting committees with bundled contributions to disclose must file a report covering the semi-annual periods of January 1 through June 30 and July 1 through December 31. 11 CFR 104.22(a)(5)(i). Totals for the first six months of the year will appear on quarterly filers’ July 15 report and on monthly filers’ July 20 report.[FN2] All reporting committees will disclose totals for the second half of the year on their January 31 Year-End Report. 

Quarterly covered period. The covered period for reporting committees that file campaign finance reports on a quarterly schedule in an election year includes the semiannual periods above and also the calendar quarters beginning on January 1, April 1, July 1 and October 1, as well as the pre- and post-election reporting periods (including runoff or special elections), if applicable. 11 CFR 104.22(a)(5)(ii) and (v). Authorized committees of House and Senate candidates have the same quarterly covered period for a non-election year as in an election year. However, Leadership PACs or party committees that file quarterly in an election year file campaign finance reports semi-annually in a non-election year. Therefore, in a non-election year, these reporting committees must file lobbyist bundling disclosure only for the semi-annual covered periods, and the pre- and post-special election reporting periods, if applicable. Some authorized committees of Presidential candidates may also file quarterly reports. 

Monthly covered period. For reporting committees that file campaign reports on a monthly basis, the covered period includes the semi-annual periods above and each month in the calendar year, except that in election years they file for the pre- and post-general election reporting periods in lieu of the November and December reports. 11 CFR 104.22(a)(5)(iii). As noted above, reporting committees that file campaign finance reports monthly may elect to file their lobbyist bundling disclosure on a quarterly basis. 11 CFR 104.22(a)(5)(iv). Reporting committees wishing to change their lobbyist bundling disclosure from monthly to quarterly must first notify the Commission in writing. Electronic filers must file this request electronically. A reporting committee may change its filing frequency only once in a calendar year. 11 CFR 104.22(a)(5)(iv). 

Bundled contributions 

The disclosure requirements apply to two distinct types of bundled contributions: those that are forwarded to the reporting committee by a lobbyist/registrant or lobbyist/registrant PAC and those that are received directly from the contributor and are credited by the reporting committee to a lobbyist/registrant or lobbyist/registrant PAC. 

A forwarded contribution is one that is delivered, either physically or electronically, to the reporting committee by the lobbyist/registrant or lobbyist/registrant PAC, or by any person that the reporting committee knows to be forwarding a contribution on behalf of a lobbyist/registrant or lobbyist/registrant PAC. These contributions count toward the bundling disclosure threshold regardless of whether the committee awards any credit to the lobbyist/registrant or lobbyist/registrant PAC.[FN3] 11 CFR 104.22(a)(6)(i). 

Bundled contributions also include those received from the original contributor when the contributions are credited by the reporting committee to a lobbyist/registrant or lobbyist/registrant PAC through records, designations or other means of recognizing that a certain amount of money has been raised by that lobbyist/registrant or lobbyist/registrant PAC. 11 CFR 104.22(a)(6)(ii). The final rules outline ways that a reporting committee may be considered to “credit” a lobbyist/registrant or lobbyist/registrant PAC for raising contributions. 

For example, a reporting committee may credit lobbyist/registrants or lobbyist/registrant PACs through records (written evidence, including writings, charts, computer files, tables, spreadsheets, databases or other data or data compilations stored in any medium from which information can be obtained). 11 CFR 104.22(a)(6)(ii)(A). Designations or other means of recognizing that a lobbyist/registrant or lobbyist/registrant PAC has raised a certain amount of money include, but are not limited to: 

• Titles given to persons based on their fundraising; 
  
• Tracking identifiers assigned by the reporting committee and included on contributions or contribution-related material that may be used to maintain information about a person’s fundraising; 
• Access, for example through invitations to events, given to lobbyist/registrants or lobbyist/ registrant PACs as a result of their fundraising levels; or 
• Mementos given to persons who have raised a certain amount of contributions. 11 CFR 104.22(a)(6)(ii)(A)(1)-(4). 

Note, however, that the rules exclude from the definition of “bundled contribution” any contribution made from the personal funds of the lobbyist/registrant or his or her spouse, or from the funds of the lobbyist/registrant PAC. 11 CFR 104.22(a)(6)(iii). 

Disclosure requirements 

As noted above, the Commission has created new FEC Form 3L, Report of Contributions Bundled by Lobbyists/Registrants and Lobbyist/Registrant PACs, to accommodate the new disclosure requirements. Reporting committees must use the form to disclose: 

• Name of each lobbyist/registrant or lobbyist/registrant PAC; 
• Address of each lobbyist/registrant or lobbyist/registrant PAC; 
• Employer of each lobbyist (if an individual); and
• The aggregate amount of bundled contributions forwarded by or received and credited to each. 

Electronic filers are required to file Form 3L electronically. A new release of FECFile will be available from the FEC. 

Reporting committees must maintain records of any bundled contributions that aggregate in excess of the reporting threshold and are reported on Form 3L. Reporting committees must keep sufficient documentation of the information contained in the reports to check their accuracy and completeness and must keep those records for three years after filing FEC Form 3L. 11 CFR 104.22(f).

The Commission has additionally revised FEC Form 1, Statement of Organization, to allow political committees to identify themselves as Leadership PACs or lobbyist/ registrant PACs. As of March 29, 2009, political committees that meet the definition of “lobbyist/registrant PAC” or Leadership PAC must identify themselves as such when filing FEC Form 1 with the Commission. Political committees that meet the definition of “lobbyist/registrant PAC” or Leadership PAC that have already filed FEC Form 1 must amend their FEC Form 1 no later than March 29, 2009, to identify themselves as such. 

Additional information 

The new rules will take effect on March 19, 2009, and recordkeeping requirements begin on this date. Reporting committees must also begin tracking their bundled contributions as of this date. Compliance with the reporting requirements for reporting committees is required after May 17, 2009. Reports filed in accordance with these rules need not include contributions bundled by lobbyist/ registrants if the contributions are received before March 19. Contributions bundled by lobbyist/registrant PACs need not be reported if they are received by April 18. The final rules and their Explanation and Justification were published in the Federal Register on February 17, 2009, and are available on the FEC website at http://sers.fec.gov/fosers/showpdf.htm?docid=11860.

FOOTNOTES

1/ A leadership PAC is defined as a political committee that is directly or indirectly established, financed, maintained or controlled by a candidate or individual holding federal office but which is not an authorized committee of the candidate or individual and which is not affiliated with an authorized committee of the candidate or individual, except that Leadership PAC does not include a political committee of a political party. 11 CFR 100.5(e)(6).

2/ In a non-election year, committees that file only semi-annually will file Form 3L on July 31 and January 31.

3/ These rules do not affect the existing recordkeeping and reporting provisions that require each person who receives and forwards contributions to a political committee to forward certain information identifying the original contributor and, for contributions received and forwarded to an authorized committee, the reporting and recordkeeping requirements by persons known as “conduits” or “intermediaries.” See 11 CFR 102.8 and 110.6.