Requiring Reporting of Exchanges of Email Lists

AGENCY:

Federal Election Commission.

ACTION:

Notification of disposition of petition for rulemaking.

SUMMARY:

The Commission announces its disposition of a Petition for Rulemaking filed on June 28, 2019. The Petition asks the Commission to revise existing reporting rules to state that mailing lists received or disbursed as part of an equal-value exchange must be reported. For the reasons described below, the Commission is not initiating a rulemaking at this time.

DATES:

September 5, 2024.

ADDRESSES:

Copies of the comments and the Petition for Rulemaking are available on the Commission's website, https://www.fec.gov/fosers/ (REG 2019-03 Requiring Reporting of Exchanges of Email Lists (2019)), and at the Commission's Public Records Office, 1050 First Street NE, Washington, DC, Monday through Friday between the hours of 9 a.m. and 5 p.m.

SUPPLEMENTARY INFORMATION:

The Federal Election Campaign Act, 52 U.S.C. 30101-45 (the “Act”), and Commission regulations require political committees to report “all receipts” and “all disbursements.” Specifically, 52 U.S.C. 30104(b)(2) requires political committees to report both the “total amount of all receipts” generally and the “total amount of all receipts” in certain specified categories, namely: contributions; loans; Federal funds; rebates; refunds; offsets to operating expenditures; transfers from affiliated committees (and, for political party committees, transfers from another political party committee regardless of whether it is affiliated); and dividends, interest, and “other forms of receipts.”

Through a series of advisory opinions, the Commission has concluded that an equal-value exchange of mailing lists is neither a contribution, donation, or transfer of funds or any other thing of value. Therefore, it is “a non-reportable event.”

Then, in REG 2003-03 (Mailing Lists), the Commission proposed, and ultimately declined, to issue new regulations on mailing list sales, rentals, and equal-value exchanges. In the notice of proposed rulemaking, the Commission proposed “to adopt formally its historical approach . . . or to modify those approaches . . . and to provide candidates and political committees with more comprehensive guidance on commercial transactions involving mailing lists.” For equal-value exchanges, the Commission proposed to treat them neither as a contribution nor a reportable receipt if the exchange satisfies three elements. First, the parties must ascertain in advance the “usual and normal charge” for the mailing list. Second, the mailing lists must be of “equal value.” And third, the mailing list exchange must be a “ bona fide arm's length transaction with commercially reasonable terms.”

After reviewing the comments received on the proposed rule and holding a public hearing, the Commission decided not to proceed to final rules. In doing so, the Commission relied on comments asserting that the appropriate factors for determining the usual and normal charge and whether a transaction is commercially reasonable will “vary considerably depending upon the circumstances.” Because the Commission could not conclude that any particular test would be “sufficiently flexible and comprehensive to address all circumstances to which the proposed rules would apply,” it terminated the rulemaking through a Notice of Disposition.

A decade and a half later, on June 28, 2019, the Commission received a Petition for Rulemaking (“Petition”) from Campaign Legal Center (“CLC”) asking the Commission to “amend 11 CFR 104.3 to clarify that the receipt or disbursement of a mailing list or other valuable information is subject to the reporting requirements in section 104.3.” Specifically, CLC asked the Commission to “clarify” that a list not subject to disclosure as a “contribution” or “expenditure,” such as a list received or provided as part of an equal-value exchange, “must nevertheless be reported as `other receipts' under 11 CFR 104.3(a)(2)(viii), or `other disbursements,' under 11 CFR 104.3(b)(ix).” The Petition argued that Advisory Opinions 1981-46 (Dellums), 1982-41 (Dellums), and 2002-14 (Libertarian National Committee)—in which the Commission concluded that the equal-value exchange of mailing lists consistent with industry practice is neither a contribution nor otherwise reportable under the Act—are “contrary to the plain text of the law, which requires disclosure of `all receipts' and `all disbursements,' not merely contributions, expenditures, or transfers.”

The Commission published a notification of availability on August 28, 2019, asking for public comment on the Petition. The Commission received three timely comments from individuals and three late comments from CLC. Of the individual comments, two supported and one opposed the Petition. CLC's comments urged the Commission to prioritize this and other pending regulatory matters.

In deciding whether to initiate a rulemaking in response to a petition, the Commission generally considers five factors. They are (1) the Commission's statutory authority; (2) policy considerations; (3) the desirability of proceeding on a case-by-case basis; (4) the necessity or desirability of statutory revision; and (5) available agency resources.

After considering these factors and reviewing the comments received on the Petition, the Commission has decided not to initiate a rulemaking at this time. The Commission previously expended considerable resources on this issue during its consideration of REG 2003-03 (Mailing Lists); indeed, construing the Act to require the reporting of equal-value exchanges of mailing lists, as the Petition requests, would likely raise the same thorny questions of valuation that led the Commission to terminate the 2003 rulemaking. Commenters in that rulemaking explained that the value of a particular mailing list often depends on factors outside of the content of the list itself, such as the identities of the buyers and sellers, the number of times the recipient plans to use the list, whether there are any restrictions placed on using the names received, and even media coverage of a particular issue, event, or candidate. Absent compelling evidence of a need to reopen these issues in a new rulemaking, doing so would not be a good use of agency resources, particularly given the Commission's numerous other pending rulemaking petitions and ongoing rulemaking projects.

Nor is the Commission aware of any widespread misuse of mailing list exchanges to thwart the purposes of the Act and warrant Commission rulemaking action. The Petition provided only a single example of potential misuse, which the Commission appropriately addressed through its enforcement process.

Furthermore, the context in which the terms “all receipts” and “all disbursements” appear in the Act validates the Commission's longstanding conclusion that equal-value exchanges of mailing lists are “non-reportable events.” Unlike the exchange of one list for another list of equal value, the forms of “receipts” enumerated in section 30104(b)(2) all serve to improve the reporting committee's financial position. Thus, under traditional canons of statutory construction, the equal-value exchange of mailing lists—which would not itself change the reporting committee's financial position—does not lend itself to being a “receipt” subject to the Act's reporting requirements. Moreover, reading the statutory term “receipt” to require reporting the value of a mailing list received in an equal-value exchange because it is “received” in the most literal sense of the word (as the Petition appears to suggest) would lead to absurd results, such as requiring political committees to assign a value to and report everything they have “received,” including uncompensated volunteer services and other goods and services that are not “contributions” under the Act.

Additionally, the equal-value exchange of mailing lists is better suited to disposition on a case-by-case basis through advisory opinions and the enforcement process, as the Commission has been doing for the past 40 years. The Commission has issued several advisory opinions over the course of four decades on the treatment of mailing lists, several of which are referred to above. The Commission also previously conducted the 2003 rulemaking to consider whether to change its historical case-by-case practice to valuing mailing list exchanges and ultimately concluded that a case-by-case approach is the right way to go. Further, a case-by-case approach is more appropriate if, as several commenters in the prior rulemaking indicated, the proper valuation of a mailing list often depends on case-by-case facts.

Finally, there does not appear to be great public interest in the proposed rulemaking. The Commission received only six public comments in response to its Notice of Availability, half of which came from the petitioner here.

Accordingly, after considering the comments received regarding the Petition and in consideration of each of the factors discussed, the Commission declines to initiate a rulemaking in response to the Petition.

[FR Doc. 2024-19900 Filed 9-4-24; 8:45 am]

BILLING CODE 6715-01-P