Notice of proposed rulemaking on technological modernization (2016)

On November 2, 2016, the Commission published a Notice of Proposed Rulemaking (NPRM) on Technological Modernization in the Federal Register (81 Fed. Reg. 76416). The NPRM proposes revisions to over 100 FEC regulations to reflect technological advances and their impact on the financing of campaigns for federal office. The Commission requests public comment on the proposed revisions. Comments must be submitted in writing on or before December 2, 2016.

Background

The Commission has noted that the campaign finance statutes, as well as its own regulations, predate many technological advances and the growing use of electronic transactions, communications and recordkeeping by political committees. On May 2, 2013, the Commission published in the Federal Register an Advance Notice of Proposed Rulemaking (ANPRM) seeking comment on possible updates to its regulations to address these technological advances.

NPRM

Proposed general definitions. In order to account for electronic documents and transactions, the Commission proposes to add new definitions to 11 CFR part 100 for "record," "written, writing, and in writing," and "signature and signed," and to revise the definition of "file, filed, and filing." The proposed definitions clarify that documents and transactions can be either tangible or electronic and reflect the Commission's interest in being flexible to other emerging forms of electronic documentation, records, and communications.

Electronic contributions. The Commission proposes to revise 11 CFR 110.1, 110.2 and 102.8 to describe when electronic contributions are considered "made" and "received." Under the proposed rules, electronic contributions would be considered made when the contributor authorizes the transaction and received when the authorization of the electronic transaction is received.

The Commission would also revise its forwarding and earmarking regulations to account for modern commercial payment practices. Under the Commission's proposed revisions, the forwarding requirement at 11 CFR 102.8 would be triggered at the payment processor's receipt of the contributor's authorization, even if the contributor's funds have not been received. The Commission would also revise 11 CFR 110.6 to exempt commercial payment processors from the definition of conduit or intermediary. The Commission also proposes to exempt third-party merchant "pass-through" accounts (over which political committees exercise no ownership or control) from treatment as a "campaign depository" under 11 CFR 103.3 and to revise recordkeeping requirements to ensure that records of electronic receipts include sufficient information associating contributions with their deposit in the political committee’s campaign depository.

Other electronic contributions and disbursements. Because some non-cash electronic payment methods — particularly prepaid cards and internet-based alternative mediums of exchange — have characteristics very similar to cash, the Commission proposes to revise its regulations regarding "cash" payments to apply the limitations on contributions of cash or currency at 11 CFR 110.4(c) to contributions made by prepaid cards. The Commission seeks comments on this proposal and on whether it should also revise its regulations to treat contributions of bitcoin and other internet-based alternative mediums of exchange as cash contributions or as in-kind contributions.

The Commission proposes updating references to contributions and disbursements by check in 11 CFR 102.10, 103.3, 110.1 and 110.6 and several other regulations to account for electronic transfers and records of electronic receipts. It would, for example, also revise the recordkeeping regulations at 11 CFR 102.9(b)(2) to allow for electronic transactions that do not produce "cancelled checks." The Commission would make similar revisions to enable electronic contributions to SSFs at 11 CFR 102.6(c) and to allow for electronic transfers of funds forwarded to the SSF by custodians at 11 CFR 114.6(d).

The Commission's current presidential public funding regulations allow a political committee to receive matching funds for electronic credit card contributions only if the committee records the contributor's name and credit card number. In light of modern payment security practices and in recognition of the risks attendant upon storing credit card numbers, the Commission proposes revising 11 CFR 9034.2 to eliminate this requirement.

The Commission also proposes to revise several provisions in 110.1, 110.2 and 9003.3 concerning the designation and attribution of contributions. To ensure that the regulations apply uniformly to electronic and non-electronic transactions, the Commission proposes removing the reference to a "check, money order, or other negotiable instrument" from several provisions. The Commission also proposes that joint contributions be indicated by "the signature of each contributor in writing," without reference to a written instrument.

References to outmoded technologies. Finally, the Commission proposes to update regulatory terminology to reflect technological advances and to remove references to outmoded technologies. Among the changes are to remove (or replace with updated technologies) references to telegrams, telephones, typewriters, audio tapes, microfilm, magnetic tape, and facsimiles. For example, the Commission would replace the reference to typewriters with "computers," and add "internet service" to lists that include "telephone service."

The Commission is also considering whether to revise certain regulatory references to "websites" to accommodate newer technologies, such as mobile applications, e-book readers, and wearable devices that take on characteristics similar to websites. These proposals include updating the definition of "public communication" in 11 CFR 100.26 to include "internet-enabled device or application[s]," as well as to update the disclaimer provisions at 11 CFR 110.11 to include political committees' "websites and internet applications." The Commission would also revise the definition of "federal election activity" to exclude de minimis costs incurred by state, district or local party committees for certain activities associated with mobile applications.

Public comments

All comments must be in writing. Commenters are encouraged to submit comments electronically via the Commission’s website at http://sers.fec.gov/fosers, reference REG 2013-01, or by email to techmod@fec.gov. Alternatively, commenters may submit comments in paper form, addressed to the Federal Election Commission, Attn: Neven F. Stipanovic, Acting Assistant General Counsel, 999 E Street, N.W., Washington, DC 20463. All comments must include the first name, last name, city, state, and zip code of the commenter, or they will not be considered. The Commission will post all comments to its website at the conclusion of the comment period.

Resources:

• Federal Register notice (November 2, 2016) [PDF]
• Commission regulations