99-29694. Public Financing of Presidential Primary and General Election Candidates  

  • [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
    
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    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
    
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    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
    
    [[Page 61782]]
    
    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
    
    
    

Document Information

Published:
11/15/1999
Department:
Federal Election Commission
Entry Type:
Rule
Action:
Final rule and transmittal of regulations to Congress.
Document Number:
99-29694
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).
Pages:
61777-61782 (6 pages)
Docket Numbers:
Notice 1999-26
PDF File:
99-29694.pdf
CFR: (4)
11 CFR 9007.1
11 CFR 9034.4
11 CFR 9035.3
11 CFR 9038.1