[Federal Register Volume 64, Number 219 (Monday, November 15, 1999)]
[Rules and Regulations]
[Pages 61777-61782]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29694]
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FEDERAL ELECTION COMMISSION
11 CFR Parts 9007, 9034, 9035 and 9038
[Notice 1999-26]
Public Financing of Presidential Primary and General Election
Candidates
AGENCY: Federal Election Commission.
ACTION: Final rule and transmittal of regulations to Congress.
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SUMMARY: The Commission is revising several portions of its regulations
governing the public financing of Presidential primary and general
election campaigns. These regulations implement the provisions of the
Presidential Election Campaign Fund Act (``Fund Act'') and the
Presidential Primary Matching Payment Account Act (``Matching Payment
Act''), which indicate how funds received under the public financing
system may be spent. In addition, these statutes require the Commission
to audit publicly financed campaigns and seek repayment where
appropriate. The revised rules modify the Commission's audit
procedures. They also address the ``bright line'' between primary and
general election expenses, and the formation of Vice Presidential
committees prior to nomination. Further information is provided in the
supplementary information that follows.
DATES: Further action, including the publication of a document in the
Federal Register announcing an effective date, will be taken after
these regulations have been before Congress for 30 legislative days
pursuant to 26 U.S.C. 9009(c) and 9039(c).
FOR FURTHER INFORMATION CONTACT: Ms. Rosemary C. Smith, Assistant
General Counsel, 999 E Street, NW., Washington, DC. 20463, (202) 694-
1650 or toll free (800) 424-9530.
SUPPLEMENTARY INFORMATION: The Commission is publishing today the final
text of revisions to its regulations governing audits of public
financing of Presidential campaigns, 11 CFR 9007.1 and 9038.1. In
addition, the final rules at 11 CFR 9034.4(e)(1) and (3) govern the
division of expenditures between primary and general election campaign
committees. New rules set out in 11 CFR 9035.3 address situations where
a Vice Presidential campaign committee is formed prior to the date on
which that candidate's political party selects its Presidential and
Vice Presidential nominees. The new and revised regulations implement
26 U.S.C. 9007, 9034, 9035, and 9038.
On December 16, 1998, the Commission issued a Notice of Proposed
Rulemaking (NPRM) in which it sought comments on proposed revisions to
these regulations and on a number of other aspects of the Commission's
public funding regulations. 63 FR 69524 (Dec. 16, 1998). In response to
the NPRM, written comments addressing these topics were received from
Perot for President '96; Common Cause and Democracy 21 (joint comment);
Lyn Utrecht, Eric Kleinfeld, and Patricia Fiori (joint comment); the
Democratic National Committee; and the Republican National Committee.
The Internal Revenue Service stated that it has reviewed the NPRM and
finds no conflict with the Internal Revenue Code or regulations
thereunder. Subsequently, the Commission reopened the comment period
and held a public hearing on March 24, 1999, at which the following
witnesses presented testimony on these issues: Lyn Utrecht (Ryan,
Phillips, Utrecht & MacKinnon), Joseph E. Sandler (Democratic National
Committee), and Thomas J. Josefiak (Republican National Committee).
Please note that the Commission has already published separately
final rules regarding other aspects of the public funding system. For
example, revised candidate agreement regulations require federally
financed Presidential committees to file their reports electronically.
See Explanation and Justification of 11 CFR 9003.1 and 9033.1, 63 FR
45679 (August 27, 1998). Those regulations took effect on November 13,
1998. See Announcement of Effective Date, 63 FR 63388 (November 13,
1998). In addition, the Commission has issued two sets of final rules
governing the matchability of contributions made by credit and debit
cards, including those transmitted over the Internet. See Explanation
and Justification of 11 CFR 9034.2 and 9034.3, 64 FR 32394 (June 17,
1999); Explanation and Justification of 11 CFR 9036.1 and 9036.2, 64 FR
42584 (Aug. 5, 1999). The effective date for the new matching fund
rules was January 1, 1999. See Announcements of Effective Date, 64 FR
51422 (Sept. 23, 1999) and 64 FR 59607, (Nov. 3, 1999). Final rules
concerning coordinated party committee expenditures in the pre-
nomination period and reimbursement by the news media for travel
expenses have also been issued. See Explanation and Justification of 11
CFR 110.7, 9004.6 and 9034.6, 64 FR 42579 (Aug. 5, 1999) and
Announcement of Effective Date, 64 FR 59606 (Nov. 3, 1999). In
addition, final rules concerning GELAC funds, capital assets, primary
compliance and winding down costs, documentation of disbursements,
digital images of matching fund documentation, convention committees
and host committees have also been issued. See Explanation and
Justification, 64 FR 49355 (Sept. 13, 1999).
Sections 9009(c) and 9039(c) of Title 26, United States Code,
require that any rules or regulations prescribed by the Commission to
carry out the provisions of Title 26 of the United States Code be
transmitted to the Speaker of the House of Representatives and the
President of the Senate 30 legislative days before they are finally
promulgated. The final rules that follow were transmitted to Congress
on Nov. 9, 1999.
Explanation and Justification
Section 9007.1 Audits
In 1995, the Commission amended 11 CFR 9007.1, 9007.2, 9038.1, and
9038.2 to reduce the amount of time it takes to audit publicly funded
Presidential committees, to make repayment determinations, and to
complete the enforcement process for these committees. One change was
the elimination of a Commission-approved Interim Audit Report, which
was replaced by a staff-produced Exit Conference Memorandum that is
provided to the audited committee at the exit conference. These steps
were taken to ensure adherence to the three year time period specified
in 26 U.S.C. 9007(c) and 9038(c) for notifying publicly funded
committees of the Commission's repayment determinations. After
operating under the streamlined procedures during the 1996 election
cycle, the Commission began to consider further changes to ensure the
audit and repayment processes are completed as fairly and expeditiously
as possible.
The narrative portion of the 1998 NPRM presented two alternatives
to the current audit procedures. The first approach is to return to the
audit procedures used for the 1992 Presidential candidates who received
primary or general election funding. Under the previous system, the
Commission's Audit Division conducted an exit conference at the close
of audit fieldwork to discuss its preliminary findings and
recommendations. However, no written Exit Conference
[[Page 61778]]
Memorandum was prepared or presented to the committee during the exit
conference. Instead, an Interim Audit Report containing a preliminary
calculation of future repayment obligations was subsequently prepared
for consideration and approval by the Commission in executive session.
After that, the audited committee had an opportunity to submit
materials disputing or commenting on matters contained in the Interim
Audit Report. Next, the Audit Division prepared a Final Audit Report
containing initial repayment determinations. The Final Audit Report was
considered by the Commission in an open session. Twenty-four hours
before the Final Audit Report was released to the public, copies were
provided to the candidate and the committee.
The second alternative set out in the NPRM is to retain many of the
current audit procedures, with the exception that the Exit Conference
Memorandum would be approved by a majority vote of four Commissioners
before it is presented to the candidate's committee during the exit
conference. In addition to these alternatives, the NPRM sought comments
on making no changes to the audit procedures used for the 1996
Presidential campaign committees.
Several written comments and witnesses at the public hearing
addressed the Commission's audit procedures. Three written comments
urged the Commission to retain the current procedures for conducting
post-election audits. One of these stated that the interest of the
public in a rapid resolution of each audit is paramount, particularly
given that the public funds for the program come from voluntary tax
check-offs by individual taxpayers. This commenter praised the
streamlined process put in place for the 1996 audits for enabling the
agency's audit staff to work efficiently, with no waste of time. The
commenter believed that the experience with certain well-publicized
1996 audits showed that both the press and the American public
understand that audit reports are staff documents until expressly
approved by the Commission. Two commenters opposed any change that
would cloak more of the audit process in secrecy as contrary to the
spirit of the Government in the Sunshine Act. They felt there was great
public benefit in seeing the staff recommendations and the Commission's
disposition of them.
In contrast, two of the witnesses at the hearing urged the
Commission to return to the previous system or to find a way to produce
greater interaction between the Commissioners and the audited
committees earlier in the process. It was suggested that at a minimum,
the Commission should change the procedure so that the Exit Conference
Memorandum is approved by the Commission in closed session. These
witnesses indicated that the goal of the new system, which was to
expedite the audit process, has not been achieved. One of them argued
that it is harmful to the regulated community and the credibility of
the Commission when staff exit conference findings are publicly
disclosed without prior input from the Commissioners, and are later
substantially modified by the Commission. Another concern expressed is
that the current system forces committees to devote substantial
resources to responding to Audit Division conclusions and legal
theories that are not necessarily supported by the Commission. One of
these witnesses also maintained that the current system does not
adequately protect confidentiality, and does not produce a fair and
balanced presentation of a committee's financial picture.
After carefully considering the comments and testimony on the
various alternatives, the Commission has decided to retain certain
elements of the current procedures, such as the exit conference, while
also returning to some of the previous procedures. Thus, the Exit
Conference Memorandum is being dropped in favor of a Preliminary Audit
Report that will be approved by the Commission before it is provided to
the audited committee after the exit conference. The Commission
anticipates that a written legal analysis will be prepared to assist
the Commission in its consideration of the Preliminary Audit Report.
This step will ensure that before audited committees are asked for a
response to the Audit staff's findings, they are apprised of the
Commission's preliminary views on various financial aspects of their
campaign operations as well as the legal issues raised by those
activities. These changes are incorporated into revised paragraphs
(b)(2)(iii), (c) and (d)(1) of section 9007.1. These portions of the
regulations have also been reorganized so that the Preliminary Audit
Report is addressed in paragraph (c).
Please note that Commission consideration of draft Preliminary
Audit Reports will usually be done either by using its tally voting
procedures or in executive session. Closure of these discussions to the
general public is generally appropriate under the Government in the
Sunshine Act because the premature disclosure of this information would
be likely to have a considerable adverse effect on future Commission
actions. See 5 U.S.C. 552b(c) and 11 CFR 2.4(b). Closing the discussion
is also appropriate for those situations where the Commission
reasonably contemplates that the discussion may lead to an enforcement
action, the issuance of a subpoena, or litigation.
The new procedure has the advantage that when the staff-prepared
final Audit Report is subsequently released, the public and the press
may be assured that this document reflects the views expressed by the
Commission at the time the Preliminary Audit Report was approved, as
well as the committee's response to the Preliminary Audit Report.
A significant consideration in changing these procedures is the
length of time it takes to complete the entire process in light of the
statutory requirement that any notification of a repayment be made no
later than three years after the end of the matching payment period or
after the date of the general election. 26 U.S.C. 9007(c) and 9038(c).
In Dukakis v. Federal Election Commission, 53 F.3d 361 (D.C. Cir. 1995)
and Simon v. Federal Election Commission, 53 F.3d 356 (D.C. Cir. 1995),
the court determined that the preliminary calculation contained in the
Interim Audit Report did not constitute sufficient notification of
repayment obligations. Thus, the court concluded that the Commission's
previous regulation at 11 CFR 9038.2(a)(2), which stated that the
Interim Audit Report constituted notification, was inconsistent with
the statute. Simon at 360.
The Commission notes that the time involved in obtaining Commission
approval of the Preliminary Audit Report may, in some instances, make
it more difficult to notify committees of their repayment requirements
within the three year time frame established by 26 U.S.C. 9007(c) and
9038(c). Nevertheless, this initial investment of time may be balanced
by significant time savings during the later stages of the process if a
number of issues have been resolved earlier.
Please note that the amendments to section 9007.1 of the
regulations also apply to the audits of the federally financed
convention committees under 11 CFR 9008.11.
Section 9034.4 Use of Contributions and Matching Payments
The Fund Act, the Matching Payment Act, and the Commission's
regulations require that publicly financed Presidential candidates use
primary election funds only for expenses incurred in connection with
primary elections, and that they use general
[[Page 61779]]
election funds only for general election expenses. 26 U.S.C. 9002(11),
9032(9); 11 CFR 9002.11 and 9032.9. These requirements are necessary to
effectuate the spending limits for both the primary and the general
election, as set forth at 2 U.S.C. 441a(b) and 26 U.S.C. 9035(a). See
also 11 CFR 110.8(a) and 9035.1(a)(1).
In 1995, the Commission sought to provide more specific guidance as
to which expenses should be attributed to a candidate's primary
campaign and which ones should be considered general election expenses.
Consequently, paragraph (e)(1) of section 9034.4 was promulgated at
that time to specify that the costs of goods or services used
exclusively for the primary must be attributed to the primary.
Similarly, any expenditures for goods or services used exclusively for
the general election had to be attributed to the general election.
Paragraphs (e)(2) through (e)(7) established a number of specific
attribution rules for polling expenses, campaign offices, staff costs,
campaign materials, media production and distribution costs, campaign
communications and travel costs, which were largely based on the timing
of the expenditure. One of the purposes of these rules was to eliminate
much of the time- and labor-intensive work of examining thousands of
individual expenditures, thereby helping to streamline the audit
process.
During the last Presidential election cycle, several questions were
raised regarding the application of the ``bright line'' rules,
including the application of the specific provisions in paragraphs
(e)(2) through (e)(7) instead of the general rule set out in former
paragraph (e)(1). The NPRM proposed adding an additional sentence to
paragraph (e)(1) to indicate that the specific rules were intended to
apply to ``mixed'' expenditures that are used in both the primary and
the general election campaigns. One witness opposed what was perceived
to be a new ``benefit derived'' standard. This witness argued for
preserving the original bright line standard in the 1995 regulations in
lieu of any of the changes proposed. Please note, the NPRM did not
intend to suggest that the bright line rules were to be replaced by a
new ``benefit derived'' standard. However, given the confusion
generated by the proposed amendatory language, it is not being included
in the final rules that follow. Instead, paragraph (e)(1) is being
modified to more clearly state that the general rule applies only to
goods or services not covered by the more specific provisions of
paragraphs (e)(2) through (e)(7) of section 9034.4.
The Commission has also decided, that certain additional revisions
to these rules are warranted. For example, paragraph (e)(3) of section
9034.4 is being amended to resolve questions that have come up
regarding payroll and overhead costs for the use of campaign offices
prior to the candidate's nomination. The previous rules had specified
that such expenses must be attributed to the primary election unless
the office is used by persons working exclusively on general election
preparations. ``Exclusive use'' was not defined in the rules, and
questions arose as to whether the term meant several hours, or days, or
weeks. The NPRM suggested changing this exception to apply to periods
when the campaign office is used only by persons working ``full time''
on general election campaign preparation, or in the alternative,
dropping the exclusive use exception with regard to overhead and salary
expenses. The public comments indicated that a ``full time'' standard
would not be clearer that ``exclusive use.''
To resolve these difficulties, the Commission has decided to remove
the ``exclusive use'' exception from paragraph (e)(3) governing office
overhead and salaries, and also from the general rule in paragraph
(e)(1). Instead, under the revised rule, salary and overhead costs
incurred between June 1 of the Presidential election year and the date
of the nomination are treated as primary expenses. However,
Presidential campaign committees have the option of attributing to the
general election an amount of salary and overhead expenses incurred
during this period up to 15% of the primary election spending limit,
which is set forth at 11 CFR 110.8(a)(1). This approach recognizes that
during this period, some campaign staff and a portion of the
committee's state and national office space must necessarily be devoted
to general election activities. The 15% figure has the advantage of
simplicity and ease of application. It is intended to give campaigns a
reasonable amount of flexibility, and is based on an estimate of the
highest amount that similarly situated campaigns have spent on salary
and overhead costs during a comparable three-month period in the 1996
election cycle. The revised regulation does not permit committees to
demonstrate that they have actually incurred a higher amount because
the ``bright line'' rules are intended to avoid a resource-intensive
system that requires the creation, maintenance, and review of
considerable paperwork to document these types of costs.
Please note that other revisions have already been made to
paragraph (e) of section 9034.4 to reflect that not all candidates may
accept public funding in both the primary and the general election. See
final rules at 64 FR 49355 (Sept. 13, 1999). At that time paragraph (e)
was amended to indicate that it applies to Presidential campaign
committees that accept federal funds for either election. Thus, the 15%
limitation specified in paragraph (e)(3) applies to those committees
that accept federal funding for the general election but not the
primary. In addition, a new sentence is also being added to paragraph
(e)(3) to clarify that overhead and payroll expenses for winding down
and compliance activities are covered by paragraph (a)(3) of section
9034.4.
Another concern expressed by the commenters is the manner in which
the 1995 bright line rules were interpreted and applied during the
audits of the 1996 campaigns. Some comments opposed extending the
bright line rules for candidate committees to party committees. The
Commission notes that a variety of issues involving party committee
coordinated expenditures may be addressed in a new rulemaking.
Section 9035.3 Contributions to and Expenditures by Vice Presidential
Committees
The NPRM sought comments on a possible new rule to clarify the
status of expenditures made by political committees formed by Vice
Presidential candidates prior to their official nomination at their
parties' conventions. It has been the Commission's policy in the past
to permit such committees to raise contributions and make expenditures
for the purpose of defraying the travel, lodging and subsistence
expenses of the eventual Vice Presidential nominee and his or her
entourage during the nominating convention. However, during the 1996
Presidential election cycle, concerns were raised that these committees
have the ability to raise and spend substantially more money than what
is needed to cover convention costs. Consequently, this situation
presented an opportunity for Vice Presidential committees to be used
prior to the date of nomination to supplement the limited amounts that
publicly funded Presidential candidates may spend on their primary
campaigns. Another concern is that some who have made the maximum
contribution permitted by the FECA to a Presidential primary candidate
may seek to evade these statutory limits by making additional
contributions to the campaign committee of the person
[[Page 61780]]
chosen to be that candidate's Vice Presidential running mate.
For these reasons, the Commission is adding new section 9035.3 to
specify when contributions to, and expenditures by, Vice Presidential
committees shall be aggregated with contributions to and expenditures
by the primary campaign of that party's eventual Presidential nominee
for purposes of the contribution and expenditure limitations. Paragraph
(a) of this new section provides for such aggregation beginning on the
date that either the future Presidential or Vice Presidential nominee
publicly indicates that the two candidates intend to run on the same
ticket. Aggregation of contributions and expenditures will also begin
when the Vice Presidential candidate accepts an offer to be the running
mate, or when the committees of these two candidates become affiliated
under 11 CFR 100.5(g)(4). Please note that with regard to expenditures,
paragraph (b) limits the application of new section 9035.3 to the
campaign expenditures made by a candidate who becomes the Vice
Presidential nominee of his or her party, thus excluding others who
lose the Vice Presidential nomination.
Both of the comments addressing new section 9035.3 opposed certain
aspects of the proposed rule. One comment argued that Vice Presidential
committees are entirely separate from any Presidential committee until
the Vice Presidential candidate is nominated at the convention. This
commenter also expressed concerns that by aggregating expenses, the
presidential campaign committee could inadvertently exceed the spending
limits. The Commission agrees that Presidential committees must monitor
this spending, just as state party committees must track expenditures
by subordinate party committees to ensure compliance with the
coordinated spending limits of 2 U.S.C. 441a(d). The commenter also
noted that those who contribute to both the Presidential candidate and
the Vice Presidential candidate risk exceeding the primary contribution
limits. The Commission agrees that the recipient committees need to
aggregate contributions from the same contributor to prevent the making
or acceptance of excessive contributions. This is no different than the
requirement to aggregate contributions made to affiliated committees.
Paragraph (b) of the new section also contains an exception
permitting a Vice Presidential candidate and his or her family and
staff to attend the party's nominating convention without having the
cost of their transportation, lodging, and subsistence attributed to
the party's Presidential candidate. One commenter agreed that Vice
Presidential candidates should be able to raise money to pay these
expenses. It was also suggested that the Vice Presidential committee
should be able to pay legal and accounting expenses incurred during the
background checks of the prospective Vice Presidential nominee. The
Commission agrees with this suggestion and is promulgating new language
to cover these legal and accounting costs. In addition, the costs of
raising funds for these limited travel, subsistence, legal and
accounting expenses also do not need to be treated as expenditures of
the Presidential primary candidate. Please note, if a Vice Presidential
committee has excess funds after the nomination, 11 CFR 113.2 governs
the use of these funds.
A commenter questioned the Commission's statutory authority for the
new regulation and noted that 2 U.S.C. 441a(b)(2) treats expenditures
made on behalf of a Vice Presidential nominee as expenditures on behalf
of the party's Presidential nominee. See also 11 CFR 110.8(f). This
provision of the FECA, however, is not applicable prior to the
nomination of the Vice Presidential candidate. The Commission notes
that at the time section 441a(b)(2) of the FECA was enacted, Congress
may not have anticipated that both the Presidential candidates and
their running mates may be known well before the actual date of
nomination. Nevertheless, the Commission disagrees with the commenter's
assumption that attribution under any other situation is contrary to
the statute. In recent years, the primaries in many states have been
moved to earlier dates in the election year. This means that
Presidential candidates may reach their primary spending limits earlier
in the election year, which may encourage the creation of Vice
Presidential campaign committees at an earlier stage of the process
than Congress anticipated when enacting the FECA. The Commission's new
regulations merely make explicit that once a Vice Presidential running
mate is chosen, the authorized committees of the two candidates would
ordinarily be considered affiliated. See 2 U.S.C. 441a(a)(5) and 11 CFR
100.5(g)(4) and 110.3. Moreover, nothing in the FECA or the Matching
Payment Act specifically bars pre-nomination aggregation of
contributions or expenditures under these circumstances.
Section 9038.1 Audit
This section sets forth procedures for auditing the campaign
committees of primary election candidates who receive federal funds.
The changes to paragraphs (b)(2)(iii), (c) and (d)(1) of this section
follow the revisions to 11 CFR 9007.1(b)(2)(iii), (c) and (d)(1), as
discussed above.
Certification of No Effect Pursuant to 5 U.S.C. 605(b) [Regulatory
Flexibility Act]
The attached final rules will not, if promulgated, have a
significant economic impact on a substantial number of small entities.
The basis for this certification is that very few small entities will
be affected by these rules, and the cost is not expected to be
significant. Further, any small entities affected have voluntarily
chosen to receive public funding and to comply with the requirements of
the Presidential Election Campaign Fund Act or the Presidential Primary
Matching Payment Account Act in these areas.
List of Subjects
11 CFR Part 9007
Administrative practice and procedure, Campaign funds.
11 CFR Parts 9034 and 9035
Campaign funds, Reporting and recordkeeping requirements.
11 CFR Part 9038
Administrative practice and procedure, Campaign funds.
For the reasons set out in the preamble, Subchapters E and F of
Chapter I of Title 11 of the Code of Federal Regulations are amended as
follows:
PART 9007--EXAMINATIONS AND AUDITS; REPAYMENTS
1. The authority citation for part 9007 continues to read as
follows:
Authority: 26 U.S.C. 9007 and 9009(b).
2. In Sec. 9007.1, paragraphs (b)(2)(iii) and (c) and the second
sentence of paragraph (d)(1) are revised to read as follows:
Sec. 9007.1 Audits.
* * * * *
(b) * * *
(2) * * *
(iii) Exit conference. At the conclusion of the fieldwork,
Commission staff will hold an exit conference to discuss with committee
representatives the staff's preliminary findings and recommendations
that the
[[Page 61781]]
staff anticipates it will present to the Commission for approval.
Commission staff will advise committee representatives at this
conference of the committee's opportunity to respond to these
preliminary findings; the projected timetables regarding the issuance
of the Preliminary Audit Report, the Audit Report, and any repayment
determination; the committee's opportunity for an administrative review
of any repayment determination; and the procedures involved in
Commission repayment determinations under 11 CFR 9007.2.
* * * * *
(c) Preliminary Audit Report: Issuance by Commission and committee
response.
(1) Commission staff will prepare a written Preliminary Audit
Report, which will be provided to the committee after it is approved by
an affirmative vote of four (4) members of the Commission. The
Preliminary Audit Report may include--
(i) An evaluation of procedures and systems employed by the
candidate and committee to comply with applicable provisions of the
Federal Election Campaign Act, the Presidential Election Campaign Fund
Act and Commission regulations;
(ii) The accuracy of statements and reports filed with the
Commission by the candidate and committee; and
(iii) Preliminary calculations regarding future repayments to the
United States Treasury.
(2) The candidate and his or her authorized committee may submit in
writing within 60 calendar days after receipt of the Preliminary Audit
Report, legal and factual materials disputing or commenting on the
proposed findings contained in the Preliminary Audit Report. In
addition, the committee shall submit any additional documentation
requested by the Commission. Such materials may be submitted by counsel
if the candidate so desires.
(d) * * *
(1) * * * The Commission-approved audit report may address issues
other than those contained in the Preliminary Audit Report. * * *
* * * * *
PART 9034--ENTITLEMENTS
3. The authority citation for part 9034 continues to read as
follows:
Authority: 26 U.S.C. 9034 and 9039(b).
4. Section 9034.4 is amended by revising paragraphs (e)(1) and
(e)(3) to read as follows:
Sec. 9034.4 Use of contributions and matching payments.
* * * * *
(e) * * *
(1) General rule. Any expenditure for goods or services that are
used for the primary election campaign, other than those listed in
paragraphs (e)(2) through (e)(7) of this section, shall be attributed
to the limits set forth at 11 CFR 9035.1. Any expenditure for goods or
services that are used for the general election campaign, other than
those listed in paragraphs (e)(2) through (e)(7) of this section, shall
be attributed to the limits set forth at 11 CFR 110.8(a)(2), as
adjusted under 11 CFR 110.9(c).
* * * * *
(3) State or national campaign offices. Prior to the date of the
last primary election in a Presidential election year, overhead and
salary costs incurred in connection with state or national campaign
offices shall be attributed to the primary election. With regard to
overhead and salary costs incurred on or after June 1 of the
Presidential election year, but before or on the date of nomination,
the committee may attribute to the general election an amount not to
exceed 15% of the limitation on primary-election expenditures set forth
at 11 CFR 110.8(a)(1). Overhead and payroll costs associated with
winding down the campaign and compliance activities shall be governed
by paragraph (a)(3) of this section.
* * * * *
PART 9035--EXPENDITURE LIMITATIONS
5. The authority citation for part 9035 continues to read as
follows:
Authority: 26 U.S.C. 9035 and 9039(b).
6. Section 9035.3 is added to read as follows:
Sec. 9035.3 Contributions to and expenditures by Vice Presidential
candidates.
(a) Aggregation of contributions and expenditures. For purposes of
the limitations on contributions and expenditures of this part and part
110, contributions to, and expenditures by, the authorized committee of
a candidate who becomes the nominee of a political party for the office
of Vice President of the United States shall be aggregated with
contributions to and expenditures by the publicly funded primary
candidate who obtains that political party's nomination for the office
of President of the United States, provided that the contributions to
or expenditures by the authorized committee of the Vice Presidential
candidate were made on or after the date on which--
(1) The Presidential or Vice Presidential candidate publicly
indicates that the two candidates intend to run on the same ticket;
(2) The candidate for the office of Vice President accepts an offer
by the publicly funded primary candidate for the office of President,
or by the Presidential candidate's agent(s), to run on the same ticket;
or
(3) The Presidential and Vice Presidential committees become
affiliated pursuant to 11 CFR 100.5(g)(4)(i) or (ii).
(b) Exceptions. The following expenditures, if incurred by the
authorized committee of a candidate who subsequently becomes the
nominee of a political party for the office of Vice President of the
United States, will not be aggregated under paragraph (a) of this
section:
(1) The cost of attendance by the candidate, the candidate's
family, and the candidate's authorized committee's staff at a political
party's national nominating convention, including the cost of
transportation, lodging, and subsistence;
(2) The cost of legal and accounting services associated with
background checks during the Vice Presidential selection process; and
(3) The cost of raising funds for the expenses listed in paragraphs
(b)(1) and (b)(2) of this section.
PART 9038--EXAMINATIONS AND AUDITS
7. The authority citation for part 9038 continues to read as
follows:
Authority: 26 U.S.C. 9038 and 9039(b).
8. In Sec. 9038.1, paragraphs (b)(2)(iii) and (c) and the second
sentence of paragraph (d)(1) are revised to read as follows:
Sec. 9038.1 Audit.
* * * * *
(b) * * *
(2) * * *
(iii) Exit conference. At the conclusion of the fieldwork,
Commission staff will hold an exit conference to discuss with committee
representatives the staff's preliminary findings and recommendations
that the staff anticipates it will present to the Commission for
approval. Commission staff will advise committee representatives at
this conference of the committee's opportunity to respond to these
preliminary findings; the projected timetables regarding the issuance
of the Preliminary Audit Report, the Audit Report, and any
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repayment determination; the committee's opportunity for an
administrative review of any repayment determination; and the
procedures involved in Commission repayment determinations under 11 CFR
9038.2.
* * * * *
(c) Preliminary Audit Report: Issuance by Commission and committee
response.
(1) Commission staff will prepare a written Preliminary Audit
Report, which will be provided to the committee after it is approved by
an affirmative vote of four (4) members of the Commission. The
Preliminary Audit Report may include--
(i) An evaluation of procedures and systems employed by the
candidate and committee to comply with applicable provisions of the
Federal Election Campaign Act, the Presidential Election Campaign Fund
Act and Commission regulations;
(ii) The accuracy of statements and reports filed with the
Commission by the candidate and committee; and
(iii) Preliminary calculations regarding future repayments to the
United States Treasury.
(2) The candidate and his or her authorized committee may submit in
writing within 60 calendar days after receipt of the Preliminary Audit
Report, legal and factual materials disputing or commenting on the
proposed findings contained in the Preliminary Audit Report. In
addition, the committee shall submit any additional documentation
requested by the Commission. Such materials may be submitted by counsel
if the candidate so desires.
(d) * * *
(1) * * * The Commission-approved audit report may address issues
other than those contained in the Preliminary Audit Report. * * *
* * * * *
Dated: November 9, 1999.
Scott E. Thomas,
Chairman, Federal Election Commission.
[FR Doc. 99-29694 Filed 11-12-99; 8:45 am]
BILLING CODE 6715-01-U
