Empty drop-down box appears for custom data used for 'Contacts'

An empty secondary drop-down box appears when creating a new custom data group that is used for "Contacts'.

To recreate:
1) Select create a new custom data group
2) Select 'Contacts" in the "used for" box
3) Observe that a secondary qualifying drop box appears, but it is empty and offers no choices.

Either there should be some choices to select or it should not be visible.